As if the market needed something else to spur volatility, The Bank of Japan chose tonight to cut the size of its purchases of 5-to-10 year JGBs (from 450bn to 430bn yen). While yen initially strengthened, it is now tumbling and Japanese stocks absurdly rallying, presumably because yields on the bonds are rising.
So just to clarify – Bank of Japan tapering is causing Treasury selling (10Y +1.5bps), which is pushing the dollar higher, thus sending yen tumbling…
And stocks jumping… Look what you have done Mr Kuroda.
Bloomberg’s Mark Cranfield notes that the BoJ’s timing coincides with the contract trading near the top end of its range for this year, which suggests net market positioning had been skewed long.
As one veteran trader noted: “this would be the perfectly bad timing to cause a JGB VaR shock: just as Italy and Spain get anti-establishment govs, as Trump declares trade war on the world, and as US payrolls looms.”
But on the bright side, he added, “at least we will get some volume in JGB markets tonight.”
In China, where firearms are tightly restricted, it’s probably no surprise that those who want to hurt people found another way to do it. The dramatic rise of knife attacks around the world shows that the problem these days isn’t with guns. It’s with people.
Mass knife attacks have become so common over the years that a Chinese police department recently released a video to teach citizens how to defend themselves against knife-wielding assailants and it has gone viral, with 16 million views in just a few days. It has subtitles and some great advice that even I would be able to follow.
All humor aside, some folks in the US who want to do away with the Second Amendment are probably saying smugly, “Well, knife attacks are bad, but only people with GUNS can kill dozens of victims quickly.”
13 people were seriously injured by a knife-wielding assailant at a shopping mall in Beijing earlier this year. One woman died from her injuries.
This tells me that it isn’t really a problem with guns. It’s a problem with people.
Instead of school shootings, they have school knifings.
While in the United States, school shootings have become shockingly commonplace, what many don’t know is that in China, where gun control is strict, school knife attacks are a frequent threat. On the very same day as the Sandy Hook shooting in the United States, a man with a knife injured 22 children and one adult at a school in Chenpeng village in the southern province of Guangxi.
Knife attacks at schools in China are common. Last year, a man climbed over the wall of a kindergarten and attacked 11 students. None suffered life-threatening injuries.
In 2016, a man in the southern province of Hainan stabbed 10 children before killing himself, authorities said. And another man killed three students at a school in 2014 before jumping off a building.
Perhaps the worst spate of stabbings occurred in 2010 when attackers targeted schools on three consecutive days. (source)
There have been mass knife attacks all over the world.
In the UK, there has been a deadly knife attack every third day of 2018. In 2017, Met Police recorded 37,443 recorded knife offenses and 6,694 gun offenses. The problem is so bad that a judge has suggested banning the sale of large kitchen knives and that those who already have kitchen knives should file them down to avoid stabbings.
These are just a few examples and I haven’t dug any further than the first page of Google. I could go on and on, but I think you get the point.
What happens if you take away guns
In each of these cases, something different was blamed.
Some of the attackers were shouting “Allahu Akbar” as they stabbed their victims.
Some of the attackers cited crippling stress.
Some of the attackers said they were bullied or mistreated.
Some of the attackers were mentally ill and had a history of psychological problems.
Some of the attackers had religious and ethnic differences from their victims.
One attacker just didn’t like disabled people.
You can’t fix people who want to harm others for their various reasons by taking away guns. You can only make it harder for the rest of us to defend ourselves against them.
Take away guns, and you get knives. Take away knives and you get improvised explosives. There is no way to take away the yen that some people have to kill others.
And if I am involved in a knife-fight, well, personally, I’d rather take a gun.
Former Director of National Intelligence James Clapper – a central figure in the “Russiagate” spy scandal, has earned quite the reputation for various misstatements, lies and even perjury.
Clapper appeared before the Senate to discuss surveillance programs in the midst of a controversy over warrantless surveillance of the American public. He was asked directly, “Does the NSA collect any type of data at all on millions, or hundreds of millions of Americans?”
There was no ambiguity or confusion and Clapper responded, “No, sir. … Not wittingly.” That was a lie and Clapper knew it when he said it.-John Turley
Since the 2016 election, Clapper has landed a job as a paid CNN commentator while peddling a new book, Facts and Fears – all while trying to shift the narrative on the FBI spying on the Trump campaign and pushing unfounded Russian conspiracy theories.
To that end, the Wall Street Journal‘s Holman W. Jenkins, Jr. asks: Why does a former intelligence chief make claims he can’t back up?
***
Clapper Disinformation Campaign
James Clapper, President Obama’s director of national intelligence, gained a reputation among liberals as a liar for covering up the existence of secret data-collection programs.
Since becoming a private citizen, he has claimed that President Trump is a Russian “asset” and that Vladimir Putin is his “case officer,” then when pressed said he was speaking “figuratively.”
His latest assertion, in a book and interviews, that Mr. Putin elected Mr. Trump is based on non-reasoning that effectively puts defenders of U.S. democracy in a position of having to prove a negative. “It just exceeds logic and credulity that they didn’t affect the election,” he told PBS.
Mr. Clapper not only exaggerates Russia’s efforts, he crucially overlooks the fact that it’s the net effect that matters. Allegations and insinuations of Russian meddling clearly cost Mr. Trump some sizeable number of votes. Hillary Clinton made good use of this mallet, as would be clearer now if she had also made good use of her other assets to contest those states where the election would actually be decided.
Mr. Clapper misleads you (and possibly himself) by appealing to the hindsight fallacy: Because Mr. Trump’s victory was unexpected, Russia must have caused it. But why does he want you to believe that he believes what he can’t possibly know?
There’s been much talk about origins. Let’s understand how all this really began. James Comey knew it was unrealistic that Mrs. Clinton would be prosecuted for email mishandling but also knew it was the Obama Justice Department’s decision to make, own and defend. Why did he insert himself?
The first answer is that he expected Mrs. Clinton to win—and likely believed it was necessary that she win. Secondly he had a pretext for violating the normal and proper protocol for criminal investigations. He did so by turning it into a counterintelligence matter, seizing on a Democratic email supposedly in Russian hands that dubiously referred to a compromising conversation of Attorney General Loretta Lynch regarding the Hillary investigation.
Put aside whether this information really necessitated his intervention. (It didn’t. This is the great non sequitur of the Comey story.) Now adopted, Russia became the rationale for actions that should trouble Americans simply on account of their foolishness.
Think about it: The FBI’s original intervention in the Hillary matter was premised on apparent false information from the Russians. Its actions against the Trump campaign flowed from an implausible, unsupported document attributed to Russian sources and paid for by Mr. Trump’s political opponents.
In surveilling Carter Page, the FBI had every reason to know it was surveilling an inconsequential non-spy, and did so based on a warrant that falsely characterized a Yahoo news article. Its suspicions of George Papadopoulos were based on drunken gossip about Hillary’s emails when the whole world was gossiping about Hillary’s emails.
The FBI’s most consequential intervention of all, its last-minute reopening of the Clinton investigation, arose from “new” evidence that turned out to be a nothingburger.
There is a term for how all this looks in retrospect: colossally stupid. Democrats now have a strong if unprovable case that Mr. Comey changed the election outcome. Mr. Trump has a strong case his presidency has been hobbled by unwarranted accusations. Americans harbor new and serious doubts about the integrity of the FBI.
As an extra kick in the head, its partners in so much idiocy, and perhaps the real fomenters of it, in the Obama intelligence agencies have so far gotten a pass.
If a private informant was enlisted to feel out the Russian connections of a couple of Trump nonentities, this was at least a sensitive and discreet approach to a legitimate question when so many FBI actions were neither.
It was after the election, with the outpouring of criminal leaks and planted disinformation (see Clapper), that a Rubicon was crossed. Consider just one anomaly: Any “intelligence community” worth the name would get to the bottom of foreigner Christopher Steele’s singular intervention in a U.S. presidential election, based as it was on the anonymous whisperings of Russian intelligence officials. Not ours. Our intelligence community is highly motivated not to know these answers because any finding that discredited the Steele dossier would also discredit the FBI’s actions in the 2016 campaign.
It practically goes without saying that all involved now have a stake in keeping the focus on the louche Mr. Trump and threatening him with investigations no matter how far afield from Russia collusion.
You can be a nonfan of Mr. Trump; you can believe he’s peddling a conspiracy theory about FBI and CIA actions during the campaign. But every president has a duty to fight to protect himself and his power. And notice that his conspiracy theory is but the mirror image of the conspiracy theory that his political, institutional, and media enemies have been prosecuting against him since Election Day 2016.
The Central Bank of Russia released a report May 30, stating that crypto assets do not currently threaten global financial stability as the global volume of crypto transactions is very low.
The research paper states that instead of the term “cryptocurrency,” the Financial Stability Board proposes to use the term “crypto asset,” which can be considered a financial asset based on the application of cryptography and distributed ledger technology.
According to the report, crypto assets do not pose a risk to global financial stability, because at present the volume of crypto asset transactions is very low compared to the scale of the global financial system.
The relation of this segment to the financial system is insignificant, according to the report.
The paper states that crypto assets could constitute a risk to financial stability in the case of further market growth, large-scale involvement of retail and institutional investors, banks, and other market players. According the the central bank’s report, the high price volatility of crypto assets prevents them from being a reliable standard of value, means of exchange, and store of value.
Additionally, the paper outlines several risks connected to investment in crypto assets, including the lack of protection of investor rights, risks in the field of preventing money laundering and terrorism financing, lack of market liquidity, operational risks, and the use of leverage.
Earlier this month, the Russian State Duma approved the first reading of new legislation to regulate the crypto industry. The laws define cryptocurrencies and tokens as property, and lay out specifications for interacting with crypto and blockchain-related technologies.
Last week, Russian bank Sberbank CIB and the National Settlement Depository announced a pilot of the country’s first official Initial Coin Offering (ICO).
Head of Sberbank CIB Igor Bulantsev said the bank considers the Russian ICO market to be “highly promising,” emphasizing that many of the bank’s clients “are interested in this new way of fundraising.”
Rustem Kazazi, an American citizen, was just trying to get on a plane to return to his native Albania last October, from Cleveland Hopkins International Airport. He was initially flying to Newark where he’d catch a connection to Albania.
He hoped while in Albania for a few months to do some repair work on a home he still owned there, and possibly to look for another home for his family in his old age. Given facts about the Albanian banking and finance system and the advantages of cash there, he chose to turn his life savings into U.S. dollars and bring them with him to cover expenses related to the above house needs and his long stay rather than deal with bank transfers or anything of the sort.
At an American airport, he was the victim of desperadoes who took everything he had.
Kazazi ran his carry-on luggage through the x-ray machine, like we all must. In that luggage was his life savings in cash, $58,100. There was zero attempt to be clandestine or smuggle-y about it. It was divided into three labeled and marked stacks of $100 bills, all in one envelope with $58,100 written on the outside.
TSA agents noticed the money. Hard not to, I guess. They called Customs and Border Patrol on Kazazi, who took him off to a private room to grill him, as well as strip him naked for a search for, what? money he did not label openly in his carry-on luggage?
While his English is poor and he couldn’t quite understand the agents, they refused him either an interpreter or to summon family for help.
They kept his money, without telling him why, then tried to get him to just get on his flight without it. The receipt they handed him made no reference to the specific amount they’d confiscated. When he refused initially to just go on with his day as if he hadn’t just suffered a horrible crime, they escorted him out of the airport. He contacted his wife in shock and she assured him it must all be some mistake and encouraged him to go forward with his travel plans.
In December CPB finally formally informed him via a “Notice of Seizure” that they’d taken $57,330 from him, $770 less than he insists was actually taken. The Kazazi’s filed all the officially required forms and notices to proceed with trying to get their money back before the legal deadline (after some complications involving confusing deadlines provided by CBP, and including the $770 the CPD seemed to deny it had even stolen). CPB agents tried to finagle the Kazazi’s into withdrawing their demand for federal court action, but failed.
Kazazi and his family today filed a formal motion for return of property under Rule 41(G) against U.S. Customs and Border Patrol and some of its authorities and agents hoping to get his stolen life savings back. The motion was filed with the assistance of consistent civil-forfeiture-justice fighters from the Institute for Justice, and the preceding details were gleaned from it.
The money is hard-earned. Kazazi, now 64 years old, and his family had the (at the time apparent) good fortune to win a visa to enter the U.S. from the State Department in 2005, and has been a citizen since 2010. His wife Lejla has lately been teaching English to immigrants, while Kazazi has worked a series of jobs including busboy, custodian, and parking lot attendant. (He’d been a police officer in Albania himself.)
Customs has chosen to assert that Kazazi’s money is criminal for a grab bag of reasons that don’t necessarily go together and for which they have no proof: “involved in a smuggling/drug trafficking/money laundering operation” or you know, something bad that means they can steal it.
Was Mr. Kazazi guilty of smuggling, drug trafficking, or money laundering? Money can’t commit a crime by itself, one might think, but requires a human accomplice. Lacking any evidence whatever for any such crime on Kazazi’s part, he’s accused or convicted of none of them. Thanks to the sinister legal magic of “civil asset forfeiture,” the feds can just steal the money without proving any crime at all on the owners part.
Except even that evil power, which shouldn’t exist at all, has its procedural limits thanks to the Civil Asset Forfeiture Reform Act of 2000, as Kazazi’s lawsuits argues. According to that law, Customs in order to keep the stolen loot must officially initiate either civil forfeiture or criminal proceedings within 90 days of the complainant demanding an official federal court procedure regarding the property. That deadline, the suit says, expired back in April, but CPB haven’t returned the money. The feds should have no legal recourse but to do that, promptly. But they haven’t, hence the motion filed today.
“pursuant to an administrative search of Mr. Kazazi and his bags, TSA agents discovered artfully concealed U.S. currency. Mr. Kazazi provided inconsistent statements regarding the currency, had no verifiable source of income and possessed evidence of structuring activity,” that is, making cash withdrawals of less than $10,000 to avoid reporting requirements.
[Wesley] Hottot [one of Kazazi’s lawyers] denies that Rustem Kazazi was trying to conceal the cash — he had wrapped it in paper, labeled it and sent it through the scanner in his carry-on bag. The “inconsistent statements” were a result of Kazazi’s poor English language comprehension, Hottot said.
Hottot also noted that the structuring allegation was not included in the seizure notice. “They’ve never mentioned structuring before,” he said. “I think what were really seeing here is some creative Monday-morning quarterbacking by CBP, trying to justify the unjustified.”
the Kazazis saved up their money from jobs they held lawfully in America, and they have 13 years of tax documents and bank statements to prove it. Moreover, the government has never pointed to any evidence of wrongdoing.
“This family’s case, like so many others, shows why civil forfeiture must end,” explained IJ attorney Johanna Talcott. “The Kazazis did nothing wrong and were never charged with a crime, but the government still won’t return their money all these months later. This kind of abuse is far too common because civil forfeiture is an inherently abusive process that will always have disastrous effects on innocent people. Enough is enough.”
CBP also nattered about laws requiring international travelers with sums greater than $10,000 to report them. Kazazi, his lawyers told the Post, knew about those laws and intended to file his legally required forms prior to getting on the Newark flight in which he actually would be leaving the U.S.
He never got the chance. Let’s hope the courts do the right, and legal, thing, demand CPB obey the law and return the stolen money, and give Kazazi a chance to obey the laws regarding disclosure of funds leaving the country by letting him leave the country with his funds.
One year ago, a State Department press event included quite possibly the most epic “deer in the headlights” moment in all of government press briefing history.
During the final press briefing in May of 2017, the State Department put high level official Stuart Jones at the podium to give the daily briefing, and he was asked how the US could call for democracy in Iran while ignoring the fact that one of Washington’s closest Middle East allies is an oppressive autocratic state with an opaque legal system run by strict Islamic sharia courts.
Stuart Jones, who was appointed as U.S. Ambassador to Iraq by former President Barack Obama in 2014 before assuming the title of assistant secretary of state for near eastern affairs in January, took a long, silent pause after an Agence France-Presse reporter asked the official how President Donald Trump could criticize Iran’s democracy, while standing next to Saudi Arabian officials.
Saudi Arabia is an absolute monarchy, where every position of power is appointed by either the king or other members of the Al Saud royal family from which the nation derives its name. Trump recently visited Saudi Arabia, a close ally of the U.S., and took the opportunity to deeply criticize the two nations’ mutual foe, Iran, and its commitment to democracy weeks after it held its presidential election.
My favorite moment in US government press briefings – one year ago today:https://t.co/ehCoWTaAwf
Though clearly hilarious and at the same time appropriately awkward, the incident highlighted the fact that mainstream journalists rarely ask the obvious questions that might so easily expose the glaring hypocrisy of US foreign policy and its leaders.
As Wide Asleep in America blog so aptly described: “In lieu of delivering an actual answer, Jones became visibly uncomfortable, signed audibly, stared blindly into nothingness and said nothing for roughly 18 seconds. You could see the squeaky gears laboring to rotate in his head. You hear the faint trickle of urine run down his thigh. You could feel Jones praying to be suddenly whisked away by a dragon-drawn chariot sent to him by the sun god Helios.”
It’s so beautiful and epic we thought it deserved its own anniversary of remembrance.
But on a more serious note, about six months after Stuart Jones’ internal meltdown moment, a leaked State Department memo obtained by Politico spelled out how Washington merely values the concept of human rights insofar as it can be molded toward propaganda ends. The leaked government memo, made public for the first time in December 2017, instructed top State Department leadership that “Allies should be treated differently — and better — than adversaries.”
“For this reason,” the leaked internal State Department memo argued, “we should consider human rights as an important issue in regard to US relations with China, Russia, North Korea, and Iran. And this is not only because of moral concern for practices inside those countries. It is also because pressing those regimes on human rights is one way to impose costs, apply counter-pressure, and regain the initiative from them strategically.”
As the May 2017 Stuart Jones presser demonstrated, this means countries like Saudi Arabia or Qatar will always be let off the hook in spite of — for example — US ally Saudi Arabia executing over 50 people so far this year, half of them related to nonviolent drug charges, according to HRW. Or this might further translate into government officials choosing to look the other way when allies illegally possess or pursue nuclear or other banned weapons.
Politico explained that the memo encourages government leadership, on up to the level of the Secretary of State, “that we should do exactly what Russian and Chinese propaganda says we do — use human rights as a weapon to beat up our adversaries while letting ourselves and our allies off the hook.”
More recently, one year after the incredible and embarrassing State Department scene, the Council on Foreign Relations (CFR) has delivered an even more astounding propaganda fail which went largely unnoticed in the media. The CFR is among America’s oldest and most establishment think tanks, with a who’s who of government insiders filling up its ranks, and has often played an advisory role on important policy questions to elected officials.
The CFR’s Richard Stengel, a former editor of TIME magazine, told an audience at a CFR event in late April called Political Disruptions: Combating Disinformation and Fake News that governments “have to” direct “propaganda” toward their own populations.
At a Council on Foreign Relations forum about “fake news,” former Editor at Time Magazine Richard Stengel directly states that he supports the use of propaganda on American citizens – then shuts the session down when challenged about how propaganda is used against the third world pic.twitter.com/ClAT5POv7G
— William Craddick (@williamcraddick) May 11, 2018
Stengel, himself a former high level official who headed the US office for Public Diplomacy and Public Affairs at the State Department from 2013 to 2016, is also a regular pundit on MSNBC.
Basically, every country creates their own narrative story and, you know, my old job at the State Department was what people used to joke as the ‘chief propagandist’ job. We haven’t talked about propaganda… I’m not against propaganda. Every country does it, and they have to do it to their own population, and I don’t necessarily think it’s that awful.
Stengel’s personal bio site notes that he “helped create and oversee” the Global Engagement Center at the State Department whose official mission is to “counter propaganda and disinformation from international terrorist organizations and foreign countries” (with a “special focus on Russia”).
The full CFR event. Stengel openly argues in favor of propaganda against US citizens starting at 1:15:26 of the video.
But more worrisome for a guy who openly expresses views clearly implying that he’s “not against propaganda” on the US government’s “own population” is that he was recently named a “distinguished fellow” as part of the Atlantic Council’s Digital Forensic Research Lab (DFRLab).
The Atlantic Council’s Digital Forensic Research Lab today announced a partnership with Facebook to independently monitor disinformation and other vulnerabilities in elections around the world. The effort is part of an initiative to help provide credible research about the role of social media in elections, as well as democracy more generally.
The Digital Forensic Research Lab is launching a partnership with Facebook to support the world’s largest community in its efforts to strengthen democracy…
Though it currently receives little commentary or attention, it must be recalled that Obama administration lifted the prohibition on domestic propaganda in 2013.
Disturbingly, we are probably only just now experiencing the beginning phase of what the State Department and intelligence agencies’ propaganda planners had in mind when the domestic propaganda ban was overturned but these few short years ago.
Today, more now than ever, we are barraged with economic data of which most is lost on the average person. One data point, however, that everyone understands is the price of oil as it directly impacts the average American where it counts the most, in the “wallet.”
The price of oil is plastered just about everywhere from a litany of daily articles to Government policies, the Internet and, ultimately, at every gas station you drive by. Oil prices affect us every day in more ways than just what we are paying for a gallon of gasoline. It affects the cost of just about everything we wear, consume, or utilize, from hard products to services due to rising input costs, fuel surcharges, etc.
This is one reason when the government reports the consumer price index (CPI), and then strips out food and energy to report the core inflation index, it almost always elicits a negative response. Back in 2011, then Fed President William Dudley got a street-corner education in the cost of living when he tried to sell the Fed’s monetary policy to “average Americans.” Dudley tried to explain that while some commodity prices are rising, other prices are falling.
“Today you can buy an iPad2 that costs the same as an iPad 1 that is twice as powerful, you have to look at the prices of all things.”
What he is addressing here is called “hedonics”. Antony P. Mueller wrote a great piece on the “Illusions Of Hedonics” stating that:
“The Bureau of Labor Statistics (BLS) applies “hedonics” when calculating the price indices and for the computation of the real gross domestic product and of productivity. The idea behind hedonics is to incorporate quality changes into prices. This way, a product may be on the market at a higher price, but when the product qualities have augmented more than the price in the eyes of the BLS, it will calculate that the price of this product has actually fallen.
Applying the hedonic technique to a host of goods and services means that even when prices were generally rising, but product improvement are deemed to be larger than the price increases, the calculated inflation rate will fall. With a lower inflation rate, the transformation of nominal gross domestic product (GDP) into real GDP will render a higher result. Likewise, given a constant labor input, productivity will increase. Hedonics opens the door to producing magical results: a lower inflation rate with generally rising prices, a higher growth rate although the economy may be weaker, and a higher productivity number, although productivity would have been declining without the hedonic imputations.”
It is important to understand this concept as it is why Bill Dudley was immediately lambasted by reporters in the audience following his iPad statement with;
“I can’t eat an iPad” and “When was the last time YOU went to a grocery store?”
The reason the “average American” can’t grasp things like “hedonic” adjustments to the inflation index, or even the idea of stripping out volatile food and energy components of CPI to get a core index, is because they live in a world where their daily lives are affixed to the disposable personal income they bring home. The average American gets a paycheck and then must pay not only for rent, utilities, and health insurance, but also food and gas. In their mind why should you exclude the two items that are currently consuming roughly one-fifth of their wages and salaries?
While there has been a lot of pandering from the talking heads about rising oil prices, but what is more important to note is how these price increases in oil “feel” to the average American. The thing that the Fed and most economists miss, in my opinion, is that the average “American” is dealing with a lot of rising cost pressures that aren’t necessarily included in the inflation calculation. Furthermore, while prices of things like oil, commodities, college costs, insurance, healthcare, etc. have been rising; disposable personal incomes have grown at a much slower rates as shown below.
But even that measure of disposable personal incomes in deceiving because the top 20% of wage earners overly skew the data versus the bottom 80%. For the bottom 80% of income earners, disposable incomes are actually more disappointing.
Therefore, even small price increases have a more dramatic effect on the limited amount of disposable personal incomes available to the consumers in the bottom 80%. For many individuals today, the effects of the “financial crisis” have yet to fade as they are still unable to meet the required costs for their standard of living.
United Way has done a study on a group of Americans they call ALICE: Asset Limited, Income Constrained, Employed. The study found that this group does not make the money needed “to survive in the modern economy.” Between families living below the poverty line due to unemployment or disability, and ALICE, the study discovered that 43% of Americans were struggling to cover basic necessities like rent and food.
But even for those who are making ends meet, they aren’t saving either. Northwestern Mutual’s 2018 Planning & Progress Study, which surveyed 2,003 adults, found that 21% of Americans have nothing saved at all for their golden years, and a third of Americans have less than $5,000. To put that into perspective, it means that 31% of U.S. adults could last only a few months on their savings if they had to retire tomorrow.
That data supports the chart below which shows the gap between the inflation-adjusted median standard-of-living versus the disposable income and credit required to pay for it. Beginning in 2007, even after all the disposable income had been spent and credit cards maxed out, there is a growing deficit (currently over $7000) to support the living standard. This is why more individuals than ever are working multiple jobs, not retiring, or just curtailing spending.
Only So Much To Go Around
Of course, when the consumer is under pressure at home, they eventually must reduce consumption. The chart below shows inflation-adjusted oil prices as compared to inflation-adjusted disposable personal income and oil prices. Since oil prices are a direct input cost to so many different aspects of the daily lives of the average “American,” price spikes in oil have a very real impact on the way that consumers “feel” about their ability to make ends meet.
What we find is that when oil prices spike there is an immediate shock to the disposable personal incomes for individuals. For example, during the Iran crisis oil peaked at $109 per barrel, but for consumers it “felt” like $242 a barrel. Then at the peak of the oil market in 2008, when oil traded for $138 a barrel, it felt much closer to $258 as real disposable incomes had declined. Today, as oil trades around $71 a barrel, consumers “feel” like it is closer to $90.
This psychological “cost pressure” obviously impacts the way that consumers behave with their money. While the government tries to massage the differences in inflationary pressures to suppress adjustments to Social Security and Medicare; the average American is rapidly coming to grips with reality.
At some point the process of kicking the can down the road will meet its inevitable conclusion in this game of chicken as consumers continue to leverage themselves to extremes and neglect to save in order to support their standard of living. The evidence is clear that Keynesian economics is a failure, not just recently, but over the last 40-years as increased monetary supply, and lower interest rates, have led to declining wages, savings and the dollar which in turn induced malinvestment.
The declines in income, which have been covered up by increased household leverage as shown above, leaves little true disposable income with which to absorb higher costs from health care, energy, rent and food costs.
At some point, the Fed may well witness another type of deflation, but this time it won’t be just falling prices. Rather, it will be from the masses struggling to maintain a shrinking standard of living as the change shrinks from “Let Them Eat iPads” to just “Eat This!”
A video clip from a new HBO documentary The Final Year has been making its way around the internet, showing a completely devastated Ben Rhodes beside himself as he tried to “process” Hillary Clinton’s historic loss in the 2016 U.S. election.
Rhodes, Obama’s former deputy national security advisor for strategic communications, dons a thousand-yard-stare. “I came outside just to process all this,” Rhodes says, beside himself. “I can’t even…ah, uh…I can’t…I mean I, I, I, I can’t, I can’t, I can’t, I can’t put it into words, I don’t know what the words are.”
Ben Rhodes reacting to Hillary Clinton’s hilarious defeat in 2016 is the funniest part of the new Obama Documentary on HBO.
What makes it even better is throughout the documentary he brags how she is going to win. pic.twitter.com/MGBQNE5ATY
— The Columbia Bugle 🇺🇸 (@ColumbiaBugle) May 30, 2018
Rhodes, like so many others, were convinced Hillary was going to win and that it was #HerTurn. Alas, despite wildly inaccurate polls and an overconfident Clinton, her victory was not to be.
Of course, let us all remember that it wasn’t her fault – nothing ever is, and that had a laundry list of other people not interfered, she would have won the election.
In the classic 1966 film, A Man for All Seasons, the family of Thomas More – chancellor of England and eventual Catholic saint –counsels Thomas to arrest power-mad Richard Rich because they suspect (correctly) Rich will betray Thomas and because “that man’s bad.” To this, More replies “there’s no law against that.” Another family member retorts: “yes there is – God law.” More answers with: “then God can arrest him.”
Robert Bolt, the learned atheist who penned A Man for All Seasons knew enough about Catholic philosophy to communicate important Catholic concepts with this scene.
Among these is the fact that, in the Catholic view, as voiced by Bolt’s Thomas More, not every sin, moral defect, or character flaw justifies intervention by the state. The fact that Richard Rich was a betrayer and liar was not sufficient, More understood, to apply More’s police powers as Chancellor of England. After all, for centuries, many Church leaders had long agreed that applying state coercion to cure every social ill was often a cure that was worse than the disease. As Thomas Aquinas notes: “Accordingly in human government also, those who are in authority rightly tolerate certain evils, lest certain goods be lost, or certain evils be incurred.”
Moreover in response to the retort that “God’s law” demands action, Aquinas notes that even God himself is tolerant of moral defects:
Human government is derived from the Divine government, and should imitate it. Now although God is all-powerful and supremely good, nevertheless He allows certain evils to take place in the universe, which He might prevent, lest, without them, greater goods might be forfeited, or greater evils ensue.
So, when More jokes that “God can arrest” Rich if He sees fit, More is giving voice to an already established strain of thought in Catholic thinking.
The Modern Preference for State Action on Everything
Needless to say, these ideas of a barely-tolerated and restrained state are long gone in the current crop of modern European bishops who rarely meet a new government program they don’t like.
The latest case in point on this interventionist enthusiasm is this month’s anti-market missive titled “Oeconomicae et pecuniariae quaestiones“ (“Considerations for an ethical discernment regarding some aspects of the present economic-financial system”).
Although often attributed in the media to the current Pope, this document really issues forth from the bowels of the Vatican bureaucracy and reflects not merely the Pope’s thinking but a more general attitude among the European intellectual classes who compose such documents which are read by few, and quickly forgotten.
Nevertheless, the document is worth noting because it highlights the ongoing current trend during this Pontificate toward calling for state action under the cover of a discussion that is ostensibly only about ethical and moral issues.
Kept strictly to the moral and ethical realm of course, such a document would be purely within the competence of bishops who might raise a number of questions as to the moral legitimacy of an individual’s actions within the current economic and financial system.
Nowadays, however, beneath this surface bubbles a constant assumption that coercive action by states is the proper way of dealing with moral shortcomings among individuals.
“Oeconomicae et pecuniariae” contains numerous statements that betray this preference for state action. For instance, the document calls for state regulation of credit instruments, concluding there is a
need for a public regulation, and an appraisal super partes of the work of the rating agencies of credit, becomes all the more urgent, with legal instruments that make it possible to sanction the distorted actions and to prevent the creation of a dangerous oligopoly on the part of a few.
And also:
an imposition of the taxes, when it is equal, performs a fundamental function of equalization and redistribution of the wealth not only in favor of those who need appropriate subsidies, but it also supports the investments and the growth of the actual economy.
And then there is:
it was calculated that a minimum tax on the transactions accomplished offshorewould be sufficient to resolve a large part of the problem of hunger in the world: why can’t we undertake courageously the way of a similar initiative?
At nearly 10,000 words, this is a long and detailed document which describes at length any number of perceived problems in the current economic system.
At many points the document comes to conclusions not supported by the economic data, of course, and one wonders if the world really needs a mid-level Vatican bureaucrat’s take on credit-default swaps, as is given in the text. Perhaps most tellingly, this document, which purports to offer solutions to economic cycles, makes no mention of central banks.
Given the flawed economic analysis — issued by writers in a role not exactly imbued with qualification to comment on such matters — it’s not even clear that the proposed legal sanctions would even solve the stated problems. Nevertheless, it is clear that the authors are attempting to cure a problem of greed through robust state action. They advocate for a number of new taxes and regulations to be implemented within the financial sector by states and their agents — all in the name of expunging vices that were once considered incurable by state intervention.
Ultimately, the authors — as is now common practice — fall back on a concept known as the “universal destination of goods” which correctly — from the Catholic perspective — draws attention to the fact that charity dictates that one always be open to generously and voluntarily sharing one’s possessions with the poor. Ambrose of Milan summed it up in the 4th century:
You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich.1
But how shall this be accomplished? Shall the state be employed to coercively wrest wealth from the hands of “the rich” through threats of violence in order to redistribute it? That is, after all, what taxation is. If so, how can this be called charity, since it is involuntary?
Apparently, in the minds of many modern bishops, this is, in fact, a perfectly legitimate function of the state — and it can then in the minds of advocates be termed “charity” or a matter of “the common good.”
An earlier view, however, regarded charity quite differently.
Augustine, in his letter to a wealthy woman named Proba, admonishes her to be charitable:
Many holy men and women, using every precaution against those pleasures in which she that lives, cleaving to them, and dwelling in them as her heart’s delight, is dead while she lives, have cast from them that which is as it were the mother of pleasures, by distributing theirwealth among the poor, and so have stored it in the safer keeping of the treasury of heaven.
But, Augustine notes, this act of redistribution must be up to the wealthy person herself, since:
If you are hindered from doing this by some consideration of duty to your family, you know yourself what account you can give to God of your use of riches. For no one knows what passes within a man, but the spirit of the man which is in him.” We ought not to judge anything before the time until the Lord come who both will bring to light the hidden things of darkness, and will make manifest the counsels of the hearts, and then shall every man have praise of God.
In this view, not even a bishop is in a position to determine the extent to which a wealthy person needs his or her possessions. How much more ridiculous would it be, then, to claim that civil authorities ought to be in the position of redistributing wealth to “equalize” incomes and punish those who are insufficiently “charitable?”
Note that Augustine — unlike his modern episcopal brethren — does not wax philosophical about the 5th-century version of credit-default swaps, or lecture Proba on whether or not she should be employing tax shelters.
Yes, it’s true that the economies of the late Roman Empire were far less sophisticated that those of today. But had Augustine taken his cues from a 21st century Vatican bureaucrat, he surely could have come up with a variety of ways to “suggest” specific regulations and taxes on the part of local civil authorities.
In the modern world, one could imagine that scene with Thomas More playing out quite differently. “Arrest that man” would rarely be met with a retort of “there’s no law against that.” Instead, we’d hear endless demands for states to arrest, reform, and impose virtue on hapless citizens who happen to invest in the “wrong” investment instruments, or purchase the “wrong” goods. If it is “God’s law” that the wealthy give freely to the poor, then why rely merely on admonition and moral suasion? Why not force on them an economic system where “charity” is mandatory under penalty of a lengthy prison sentence? Indeed, when we have such a powerful state at our fingertips, why tolerate any deviation at all?
Sure, Aquinas might have insisted that God tolerates countless shortcomings and vices in people in order to avoid other evils — such as those of an unrestrained state. But Aquinas didn’t have a modern bureaucratic state at his disposal. We do. And surely, we know better.
President Trump is expecting a Friday delegation from North Korea to deliver a letter from leader Kim Jong Un, two days after Kim’s right-hand man, Kim Yong-chol, met with US Secretary of State Mike Pompeo for two days of discussions as the two nations attempt to salvage their planned nuclear summit.
Yong-chol was blacklisted from visiting the United States until recently.
Substantive talks with the team from #NorthKorea. We discussed our priorities for the potential summit between our leaders. pic.twitter.com/y5sMadd84v
“In my conversation w/chairman Kim Jong Un in Pyongyang & today with vice chairman Kim young Chol, I have been clear that Trump & the U.S. objective is consistent & well known. The complete, verifiable & irreversible denuclearization of the Korean peninsula.” -Pompeo #NorthKoreapic.twitter.com/3NycGijcIw
In comments to reporters Thursday before boarding Air Force One for a trip to meet with families affected by a school shooting earlier this month, President Trump said that talks between US and North Korean diplomats were going “very well.”
“They’re going to be coming down to Washington on Friday. And a letter is going to be delivered to me from Kim Jong Un,” he said.
Trump said that while he’s not sure if an agreement is taking shape, the negotiations “are in good hands” after the he pulled out of talks amid heightened rhetoric from Kim’s government over their nuclear ambitions and comments made about Vice President Mike Pence.
Hours later, Trump indicated he was still open to meeting with Kim – penning a letter to the North Korean leader which reads in part:
I was very much looking forward to being there with you. Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it is inappropriate, at this time, to have this long-planned meeting. Therefore, please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place. You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God they will never have to be used.
I felt a wonderful dialogue was building up between you and me, and ultimately, it is only that dialogue that matters. Some day, I look very much forward to meeting you. In the meantime, I want to thank you for the release of the hostages who are now home with their families. That was a beautiful gesture and was very much appreciated.
Meanwhile a senior State Department official tells the BBC that Pompeo and Kim Yong-chol have been trying to get to know each other better after initial meetings in Pyongyang earlier in the year – however they needed to close the gap in understanding between the extent and pace of North Korean nuclear disarmament before the summit with Trump could proceed.
