Tag: news

Authored by Jacob Shapiro via MauldinEconomics.com,

Almost a year ago to the day, we wrote an article titled “The Geopolitics of 2017 in Four Maps.” The premise was simple: We picked out four of the best maps our graphic designers (TJ Lensing, Jay Dowd, and Mandy Walsh) had made in the past year. We selected the maps based not only on how awesome they were, but also on how closely they linked to our predictions for the year ahead. As it turned out, that article was one of our most popular in 2017.

We return this year with a similar concept in mind. Here is some of our best graphic design work from the past year, with an explanation of why each graphic is crucial for understanding the geopolitical forces to watch in the year ahead.

Map 1: The Coming Conflict Between China and Japan

Source: Geopolitical Futures  (Click to enlarge)

2017 was not kind to certain aspects of our East Asia forecast. (Here is our report card on last year’s forecasts.) We expected the US to launch a pre-emptive strike against North Korea’s nuclear program. The strike never materialized, in large measure because of objections by South Korea, which is unwilling to sacrifice Seoul to keep the US out of range of Kim Jong Un’s missiles.

We don’t expect that to change in 2018. There will be no repeat of the Korean War. At most, the US will launch a limited tactical strike to slow North Korea’s progress toward a deliverable, long-range nuclear weapon. In other words, the world is going to get used to the idea of a nuclear North Korea. That takes the focus in the region away from the back-and-forth threats between Kim and US President Donald Trump and places it firmly on the Sino-Japanese relationship.

Theirs is a relationship that has remained steady for many decades, and with good reason. After all, China and Japan have many economic interests in common. But a nuclear North Korea changes the game. It would signal to Japan that a US security guarantee is perhaps not worth what it once was—and that means Japan will become more aggressive in pursuing its own interests. It would signal to China that the US is all bark and no bite, and that Trump is a paper tiger. 

In 2017, Xi Jinping became the newest dictator in China, and Shinzo Abe pulled off a stunning electoral comeback in Japan, cementing his mandate for years to come. They are two powerful leaders of two powerful countries with a history of mutual mistrust and a hunch that the US is too self-absorbed to throw its weight around in the region the way it used to. That means China and Japan will begin competing with each other directly—on the Korean Peninsula, in Southeast Asia, and as shown above, in areas that both claim for themselves.

Map 2: Persia Rises

Source: Geopolitical Futures (Click to enlarge)

The Middle East in 2017 was all about the war against the Islamic State. It created strange bedfellows. Russia coordinated its military activities with the United States. The cooperation between Turkey and Iran, historical rivals, was unprecedented. The Arab states put aside their differences and their disdain for the Bashar Assad regime and devoted their resources to the Islamic State’s defeat.

As it turned out, the war was successful. IS no longer holds meaningful territory in the Middle East—just a few isolated pockets in Syria and Iraq. The victor of this war was Iran, which is poised to be the most consequential actor in the region in 2018. As the map shows, Iran has at various times been powerful enough to dominate the Middle East. The Islamic State’s defeat is Iran’s best chance to realize its regional ambitions.

Everything is set up well for Iran. Its influence over its old nemesis Iraq has become quite strong. The preservation of the Assad regime means the preservation of one of Iran’s most powerful allies. The end of the war against IS means Hezbollah can retreat from the battlefield and get back to ruling Lebanon… and causing problems for Israel. And all of this means Iran’s dream of projecting power out to the Mediterranean is within its grasp.

We don’t expect Iran to complete its objectives. First of all, Iran’s geography makes power projection difficult, even with significant allies in the region. But second and more important, Turkey is stronger than Iran. However, Turkey is not yet ready to assert that strength. That means 2018 will belong to Iran. It must make its moves now if it is to press its advantage successfully. In the long term, a new Persian empire will fail to materialize. But in 2018, Iran’s pursuit of empire will define Middle Eastern affairs.

Chart 3: Oil’s Glass Ceiling

Source: Geopolitical Futures (Click to enlarge)

This chart shows the range of break-even oil prices for new wells in the US Lower 48, the Gulf of Mexico, and Canada. For many of these wells, the break-even point has dipped well below $60 a barrel. And that means 2018 is going to be another year of oil prices that are too low to solve the fundamental problems of Iran, Saudi Arabia, and Russia in particular.

At the time of writing, oil prices have actually spiked to near $70. There are a host of reasons for this: cold weather, political uncertainty, and an unexpectedly large decline in US crude stocks. The thing to keep in mind is that even with many OPEC nations respecting crude production cuts, supply will outweigh demand in 2018.

For Iran, that means less money to spend on its adventurism abroad. For Saudi Arabia, it means more political upheaval as the young, new crown prince attempts to do what no Saudi ruler before him has been able to do: make Saudi Arabia more than an artificial state held together by oil profits. For Russia, it means a choice between cutting social spending, cutting defense spending, or running its economy into the ground (none of which are particularly savory options from Moscow’s point of view).

Absent a major event that knocks out one of the main crude producers—and we don’t see such an event happening in 2018—we expect oil prices to remain around the $60 range, perhaps even slightly lower. We can’t predict the exact price, but we can predict continued problems for oil-dependent states as well as record-high levels of US production.

Map 4: Shuffling Deck Chairs on Europe

Source: Geopolitical Futures (Click to enlarge)

Perspective maps are my favorite kind of map that we make. Even the subtlest change in perspective can completely alter the way you view a situation. This map of Europe from the United Kingdom’s perspective is a case in point. It also happens to highlight some of the issues we expect to dominate European affairs in the year ahead.

The UK is going to leave the European Union in 2019. 2018 will feature a great deal of political melodrama as negotiations between the EU and UK occupy headlines. But the headlines will not capture the issues of real importance. What matters is not whether there will be a UK-EU trade deal. We expect there will be simply because the EU (i.e., Germany) trades a lot with the UK, and the UK in turn trades a lot with the EU. It is in neither side’s interests to fail to reach an agreement.

But the UK’s exit means London’s foreign policy toward Europe must now revert to a prior form. We’ve already seen the beginnings of this process with the recently signed Polish-UK defense treaty. What’s the goal for the UK? To ensure that no country on the European continent becomes strong enough to project power across the English Channel.

Another intriguing element of this map is that at its center are two countries whose relationship more than any other will define EU affairs in 2018: Poland and Germany. Poland is fed up with Germany’s disproportionate influence in the EU and is nervous about what losing the UK, a counterbalancing force to Germany within the bloc, will mean. The EU will be tested in several areas, and separatism won’t go away, but the Polish-German disagreement on the EU’s future will be the most important issue to watch.

Chart 5: NAFTA’s Resilience

Source: Geopolitical Futures (Click to enlarge)

NAFTA negotiations are heating up so much that even Canada is becoming a tough negotiator. Jokes aside, one of GPF’s major forecasts for 2018 is that NAFTA will remain in place, despite whatever threats are bandied about or whatever letters of intent Trump signs. This chart goes a long way toward explaining why.

The only way we know to analyze highly politicized debates like the one surrounding NAFTA is to tune out the rhetoric. Interests take precedence over words and politics. And the interests here—for all three countries—require that NAFTA stay in place. The chart shows very clearly why this is the case for Canada and Mexico—trade with the US is an overwhelmingly important part of their economies. 

But the chart doesn’t quite say everything about the US angle. US trade with NAFTA partners is large, but it doesn’t come close to US trade volumes with the rest of the world. We can’t forget, though, that the US is made up of 50 states, and two of the most influential of those states—California and Texas—are deeply invested in NAFTA’s continued existence. And California and Texas are by no means the only states whose economies rely on trade with NAFTA partners.

As with the Brexit-EU negotiations, expect a good deal of political soap opera performances around NAFTA, especially on the question of whether Trump will try to take the US out of the trade pact unilaterally (a step that is as likely to lead to years of domestic litigation as it is to an actual US exit). Expect also that at the end of the day, NAFTA will remain in place, no matter how badly the three sides insult each other.

*  *  *

These are some of GPF’s best maps and charts of 2017, and each sheds light on what will be the important stories in 2018. China and Japan will compete for power in Asia. Iran will try to reshape the Middle East to suit its interests. Oil prices will remain too low for Iran’s, Saudi Arabia’s, and Russia’s liking. Poland and Germany will square off over who gets to make the rules in Brussels, while the UK will go back to being an outsider, working to balance powers on the Continent. And NAFTA, for all the political drama to come, will remain in place.

It should be an interesting year.

*  *  *

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• Last week, a four page memo detailing FBI abuse of FISA warrants against the Trump campaign was circulated within the US House of Representatives
• Amid calls from several Congressional Republicans, the hashtag #ReleaseTheMemo immediately went viral
• In an effort to downplay genuine public concern, a “Russian propaganda” tracking website used primarily by Democrats and Neoconservatives has suggested that #ReleaseTheMemo went viral thanks to Russian bots
• California Reps. Dianne Feinstein and Adam Schiff sent a letter to Facebook and Twitter CEO’s on Tuesday, asking that they take action against the Russian scourge
• Meanwhile, Twitter’s internal analysis of the hashtag has thus far found that authentic American accounts, not Russians, are driving #ReleaseTheMemo, according to The Daily Beast

Despite 63 GOP lawmakers petitioning for the release of an explosive four-page memo detailing FISA warrant abuse against the Trump campaign, California Democrats Dianne Feinstein and Adam Schiff have fired off an embarrassing letter to the CEO’s of Twitter and Facebook, imploring the social media giants to take action against Russian bots pushing the hashtag #ReleaseTheMemo. (Feinstein, ironically, #ReleasedTheTranscripts of closed-door Congressional testimony by Fusion GPS co-founder Glenn Simpson in early January in an effort to influence public opinion).

securingdemocracy.org

Using information gleaned from the “Alliance for Securing Democracy” propaganda website which supposedly tracks 600 Twitter accounts “linked to Russian influence operations” and counts Neocon Bill Kristol as an advisor – the letter from Feinstein and Schiff reads in part: 

Dear Mr. Dorsey and Mr. Zuckerberg: 

We seek your companies’ urgent assistance. Public reports indicate that accounts linked to the Russian government are again exploiting Twitter and Facebook platforms in an effort to manipulate Public opinion. These recent Russian efforts are intended to influence congressional action and undermine Special Counsel Mueller’s investigation… 

…we seek your assistance in our efforts to counter Russia’s continuing efforts to manipulate public opinion and undermine American democracy and the rule of law…

…Several Twitter hashtags, including #ReleaseTheMemo, calling for release of these talking points attacking the Mueller investigation were born in the hours after the Committee vote. According to the German Marshall Fund’s Alliance for Securing Democracy, this effort gained the immediate attention and assistance of social media accounts linked to Russian influence operations. By Friday, January 19, 2018, the #ReleaseTheMemo hashtag was “the top trending hashtag among Twitter accounts believed to be operated by Kremlin-linked groups.” Its use had “increased by 286,700 percent” and was being used “100 times more than any other hashtag” by accounts linked to Russian influence campaigns. These accounts are also promoting an offer by WikiLeaks to pay up to $1 million to anyone who leaks this classified partisan memo. 

If these reports are accurate, we are witnessing an ongoing attack by the Russian government through Kremlin-linked social media actors…

…We understand Facebook at Twitter have developed significant expertise in identifying inauthentic and malicious accounts. Further, your forensic investigations into Russian government exploitation of your platforms during the 2016 U.S. election have helped expose to the American public the vast extend of Russia’s covert influence efforts. We therefore request that your companies conduct an in-depth forensic examination of this real-time activity on your platforms…” 

That said, contrary to the ASD’s Russophobic website, by The Daily Beast claims  that internal Twitter sources confirm that the #ReleaseTheMemo hashtag has been pushed by actual Americans. 

a knowledgeable source says that Twitter’s internal analysis has thus far found that authentic American accounts, and not Russian imposters or automated bots, are driving #ReleaseTheMemo. There are no preliminary indications that the Twitter activity either driving the hashtag or engaging with it is either predominantly Russian.

In short, according to this source, who would not speak to The Daily Beast for attribution, the retweets are coming from inside the country.

Meanwhile, the Kremlin’s reach must know no bounds – as GOP lawmakers have been fervently pushing for the release of said memo…

Earlier this morning, I examined the classified, four-page memo from @HouseIntelComm regarding the FBI, DOJ, and the so-called #RussianCollusion. To put it simply, “WOW.” I joined the call to #ReleaseTheMemo. Americans deserve truth and transparency. pic.twitter.com/r2RJnLNaUL

— Rep. Jody Hice (@CongressmanHice) January 19, 2018

Just read the classified doc @HPSCI re FISA abuse. I’m calling for its immediate public release w/relevant sourced material. The public must have access ASAP! #Transparency

— Lee Zeldin (@RepLeeZeldin) January 18, 2018

The classified report compiled by House Intelligence is deeply troubling and raises serious questions about the upper echelon of the Obama DOJ and Comey FBI as it relates to the so-called collusion investigation.

— Ron DeSantis (@RepDeSantis) January 18, 2018

While the report is classified as Top Secret, I believe the select committee should, pursuant to House rules, vote to make the report publicly available as soon as possible. This is a matter of national significance and the American people deserve the truth.

— Ron DeSantis (@RepDeSantis) January 18, 2018

Rep. Jim Jordan (R-OH) nods his head *Yes* before conceding he can’t talk specifics when Sean Hannity asks if Comey knew about FISA abuses. #ReleaseTheMemo pic.twitter.com/CyldDY4CuZ

— Josh Caplan (@joshdcaplan) January 19, 2018

In response to the Democrats’ latest attempt at diversion, people are mocking Feinstein and Schiff, as they should:

Schiff and Feinstein (who have done nothing but leak/obstruct) sent a letter to Twitter’s CEO Dorsey & Facebook CEO Zuckerberg demanding they investigate “Russian bots & trolls” surrounding the hashtag #ReleaseTheMemo. This is how desperate they’ve become. h/t @ByronYork pic.twitter.com/VNWpetKkhW

— Nick Short 🇺🇸 (@PoliticalShort) January 23, 2018

#MondayMotivation is a Russian plot to destroy American democracy according to the ever ridiculous ‘Hamiliton 68’. But don’t worry, Senator Feinstein and Congressman Schiff will surely call for a Congressional investigation. https://t.co/Q1iCzGKx4W pic.twitter.com/G0mP3oPRAY

— Julian Assange ⌛ (@JulianAssange) January 23, 2018

Hey Schiff and Feinstein..

Keep trying to distract from the actual memo with your “muh Russian bots” hysteria.

The American people can see right through it. https://t.co/d5KREmsCBm

— Paul Joseph Watson (@PrisonPlanet) January 23, 2018

Both Schiff and Feinstein complain about the #ReleaseTheMemo hashtag being in the top social media trends and claim it can’t possibly be concerned Americans; they are Russian bots.#facepalm

— Bill Mitchell (@mitchellvii) January 23, 2018

Assuming this is real, Schiff & Feinstein trying to convince the CEO’s of Facebook & Twitter to ‘crack down’ on the ‘Russian bot’ driven ‘fake’ call to #ReleaseTheMemo is beyond pathetic. https://t.co/qIYaK9AGOJ

— Stealth Jeff (@drawandstrike) January 23, 2018

Pathetic indeed. The letter can be read in its entirety below:

 

 

 

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Authored by Bob Livingston via Personal Liberty Digest,

One of the great myths of our time is that America is a capitalistic country. It is not, and has not been close to capitalistic for more than 150 years.

 

Capitalism is a social system in which an individual’s rights, including his rights to own property, are recognized and all property is privately owned. In a capitalistic society, governments acknowledge that individuals and companies can and should compete for their own economic gain, and the prices of goods and services are determined by the free market. The role of government in capitalistic societies is to ensure that markets function without interference and to protect individuals from fraud and/or the use of physical force by others.

Capitalism is not about greed. Capitalism is about human freedom, or as we term it, personal liberty. As Adam Smith posited in Wealth of Nations, when individuals are permitted to pursue their self-interest through markets, they are amazingly good at finding ways of bettering not only themselves but society as well.

In Capitalism: The Unknown Ideal, Ayn Rand writes:

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force.

In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control…

In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate. They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit.

The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree — and thus keeps the road open to man’s most valuable attribute (valuable personally, socially, and objectively): the creative mind.

Americans no longer have property rights. Think you do?

Try going a year or two without paying tribute to the king (via property taxes) and you’ll see who owns your property. The local sheriff will evict you; the state or local government will seize your property and sell it to the highest bidder or its favorite crony.

Try building a structure on your property… or even remodeling your home. If you don’t obtain the proper permissions (approval for your design, building permits and inspections), you will be fined and forced to tear your structure down. Failure to do so will result in armed agents of the government invading your property, assaulting and incarcerating you until you comply with the government’s demands.

Try damming a creek, tampering with the watershed or capturing water for a pond on your property. You will get a visit from federal agents representing the Environmental Protection Agency and the result will be fines, expensive court costs and possible visits by armed federal agents who will forcibly escort you off your property and into a prison cell.

Try growing livestock or certain plants on your property. Unless you live in an area zoned for agriculture, you will likely get a visit from a local or federal “inspector” who will order you to dispose of your animals and/or uproot your plants in favor of others approved by the local authorities.

Try selling a product you grew or made. You will be forced to comply with regulations regarding harvesting, production, packaging and distribution. You will be forced to act as agent of government and collect government tribute (taxes) which you must then pass along to government — regardless of the time and effort required to comply. Failure to do so will result in fines and/or imprisonment.

Want to inform people about and sell a protocol that experience and use has shown to be beneficial to good health? You must first obtain permission from local and federal agencies, provide proof that your protocol has been tested, tested and retested, regardless of the expense or inconvenience to you. You must then comply with any and all regulations regarding marketing, production, packaging and distribution. Failure to do so will result in seizure of assets, fines and/or imprisonment.

Want to not sell your product for a reason — or no reason at all — not approved by the establishment? That is not allowed and you will find your business shuttered and you will be subject to fines and revocation of your previously-acquired permission to conduct business.

The establishment will tell you that once enter into business you have surrendered your individual rights to the collective, and all your activities must be geared toward the collective good. This is the very definition of force — government force, which is anathema to voluntary exchange and individual liberty.

The federal government works overtime to ensure we are not a capitalist system by passing legislation and enabling federal alphabet soup regulatory agencies to create rules favorable to certain businesses and unfavorable to others. Congressweasels pass tax laws to encourage and discourage behaviors.

The federal government subsidizes certain products, driving up prices and encouraging unsound business practices that skew the market. There are still price controls on food products that were put in place during the Great Depression.

The Federal Reserve, which is not a federal agency but a privately-owned bank, prints money to infinity, which encourages mal-investment and skews the market. It is depreciating your currency.

Here is what has happened to the American people: The money creators, the Federal Reserve and the U.S. Treasury as symbiotic partners, are creating non-substance (fiat money) and “buying” (stealing) substance with it.

Has anyone wondered why “federal money” never gives out? As admitted in congressional testimony and in Federal Reserve publications, the federal money creators can create any amount of “money.” Of course this money is non-substance fiat. It is imaginary numbers that appear either on green pieces of paper called dollars or as computer symbols.

The key word to describe fiat non-substance is infinity. This imaginary money system can be created to infinity and indeed is on its way. The American people (and the world) believe that this non-substance is real money. This is an exercise in an unbelievable and unimaginable delusion that is accepted by the mind as real.

This is socialism at its most perfect creation and it is doing exactly socialism’s work of transferring the wealth and savings of the American people to the state without payment.

Every writer, commentator politician in America refers to the U.S. as a democracy of free enterprise capitalism with individual privacy and property rights. We live in a fiction of freedom perpetuated with semantic corruption that has evolved us into economic fascism. Language and words that support a free society have been turned inside out.

The American economic system, and in fact the world’s economic system is failing, and that failure is being attributed by many on the left (and some on the right) as a failure of capitalism. This is a big laugh to any sober person.

All governments are fronts for monopoly capitalism, and monopoly capitalism has many names: fascism, socialism, communism and democracy. Big business has and will promote every ideology and philosophy known to man to disguise its madness for profits. But one equals the other. They are all immoral systems that use the power of government to exist and to suppress human freedom.

Capitalism is the only moral system. It was American free market capitalism that fueled the growth of the U.S. economic engine beginning in the 1800s and raised the standard of living around the globe, before monopoly capitalism began to exert greater and greater control over the U.S. economic system beginning in the mid-1800s and accelerated after the creation of the Federal Reserve in 1913.

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last 200 years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

Sadly, it’s not just the progressive left and ignorant millennials that oppose free market capitalism. In any discussion forum where true or laissez-faire capitalism is discussed, “conservatives” are quick to make the disclaimer that “we must have some regulation” or, “we can’t have unfettered capitalism.” In truth, most so-called conservatives are really closet socialists. This is a testament to the powerful propaganda we are subjected to.

Throughout history there have been two basic forms of social organization: collectivism and individualism. In the 20th century, collectivism has taken many forms: socialism, fascism, Nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.

The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.

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The billionaire owners of the NFL empire have just been handed the latest indication that their beloved league is in decline – a process that has only been accelerated by the recent politicization of sports.

Whereas tickets for Super Bowl LII were expected to be the most expensive in the history of the game, the Asbury Park Press pointed out Tuesday that football fans who want to watch the Philadelphia Eagles try to win their first Super Bowl since 1960 are in luck: Ticket prices fell $1,200 between Monday and Tuesday, and have continued to slide. However, a set of tickets still isn’t cheap: A set of upper deck tickets can be purchased for $3,450. The same set was priced at $4,650 late Monday afternoon.

The reality is that most fans won’t be lucky enough to get tickets at face value from the team, with the NFL allotting 17.5% of seats in US Bank Stadium to the two teams involved to be slit between the Eagles and the Patriots.

Indeed, prices are softening across the price spectrum. First-row tickets that would have cost more than $20,000 on Monday. They can be had today for around $15,000 now.

 

According to information provided by StubHub on Monday, the average price among the approximately 1,600 tickets they have listed for the game is $6,122, but the market is clearly shifting after the initial surge in prices. In addition, there was a 567-percent increase in purchases from Pennsylvania residents on Monday since Friday, and a 394-percent increase in purchases from New Jersey.

These declines are happening across secondary vendors – it’s not limited to Stubhub. On VividSeats.com, the lowest priced ticket is now $3,412 in the upper deck, down from $4,485 on Monday, when the median list price is $6,494. The most expensive seat has fallen to $30,533, down from $41,400 at day earlier.

Though one set of tickets has experienced a notable appreciation: A 20-person suite that was listed on VividSeats is now $488,275 – up from $405,955 on Monday.

Ticket prices tend to fluctuate as the game approaches, and the highest prices will fall to more reasonable levels. But what’s unclear is just how far prices will fall, and when.

One reporter speculated that the Viking’s loss is fueling the drop. Since the game is being held in Minneapolis, many Vikings fans are now desperate to sell their tickets…

 

With #SuperBowl ticket prices falling, Vikings fans who bought are desperate to sell. @TickPick says 1 Vikings fan who spent $18k on tickets resold them last night for $12k — a $6k loss.

— Daniel Roberts (@readDanwrite) January 22, 2018

 

According to the ticket reseller SeatGeek, where the average ticket was $5,435 on Monday, the final average ticket price for last year’s Super Bowl, when the Patriots played the Atlanta Falcons, was $4,487, while final ticket prices for each of the last three Super Bowls was above $4,000.

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Authored by Adam Taggart via PeakProsperity.com,

Art Berman, 40-year veteran in the petroleum production industry and respected geological consultant, returns to the podcast this week to talk about oil.

 

After the price of oil fell from its previous $100+/bbl highs to under $30/bbl in 2015, many declared dead the concerns raised by peak oil theorists. Headlines selling the “shale miracle” have sought to convince us that the US will one day eclipse Saudi Arabia in oil production. In short: cheap, plentiful oil is here to stay.

How likely is this?

Not at all, warns Berman. World demand for oil shows no signs of abating while the outlook for future production looks increasingly scant. And the competition among nations for this “master resource” will be much more intense in future decades than we’ve been used to:

Since the 1980s, we simply have not been replacing reserves with new discoveries. So how does that work? Well, obviously, we’ve got a lot of oil on production and in reserves, so we’re essentially drawing down our savings account if you want to think about it that way. You can do that for a long time if you’ve got a whole lot of money in your savings account, and we as a planet do. But you can’t do it forever.

Eventually, you either have to stop spending as much so you don’t draw down your savings, or you need to put some money back in the account. And it doesn’t seem like we’re doing much of either, and haven’t been doing much of either for a long time. So the concern is tremendous, at least, in my estimation(…)

We have to go back to FDR to understand that the centerpiece of U.S. foreign policy ever since World War II has been to maintain supply of oil. And, of course, back in FDR’s time, the U.S was 100% oil self-sufficient. I think we produced something like 52% of the world’s supply.

So here’s a guy who, without any immediate supply issues even on the horizon, said “We’ve got to look after our own oil security” and made a deal with Saudi Arabi to provide that.

But now we’ve had the Obama and the Trump administration saying, “We don’t need your stinking oil any more. We’re the big guys on the block.” China’s saying, “Whoa. Here’s an opportunity for us.”

What does that mean to us other than political gamesmanship? Well, whatever else people might believe, the United States still imports 7+ million barrels a day of crude oil. Even if you work to net out our exports, we still import, pretty nearly on average, 6 million barrels a day. That’s a huge volume. We get an awful lot of it from the Middle East. Well, if the Middle East is diverting their supply to countries like China, guess what? It’s not available to us, or it’s not available at the price that we want it. Not to mention that fact that Saudi Arabia’s population is exploding. They’re using more and more of their oil output for domestic consumption, so there’s increasingly less to export.

These should be primary concerns to anyone who even remotely thinks about the future. Certainly to anyone who connects the supply and usage of petroleum to economic wellbeing.

Click the play button below to listen to Chris’ interview with Art Berman (59m:44s).

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The worst-case scenario for North Korea’s missile program is about to become a reality.

During an interview with CBS This Morning on Monday, CIA Director Mike Pompeo repeated his claim that a nuclear North Korea is only a “handful of months” away from being able to strike the US, according to a new report. Previously, the public estimates from the intelligence community were that North Korea still has at least a year to go before it would acquire the capacity to launch a nuclear strike on the Continental US with a high degree of accuracy.

Pompeo added that the US government is working diligently to extend the timeline, while his interviewer, CBS’s Norah O’Donnell pointed out that he said the same thing a few months prior. Pompeo acknowledged this: “It’s true,” he said.

“I hope to be able to say that a year from now as well,” Pompeo said.

O’DONNELL: This September Kim Jong Un detonated a sixth nuclear bomb. … Did we know that was coming?
 
POMPEO: Yes. Here’s what we can say. We can always identify that the program is continuing. … We’ll never know the exact nature of what’s taking place. We’ll never know the exact moment that they’re going to continue. But the core risk that the policymakers needed to know was that North Korea’s nuclear weapons program is continuing to expand, advance, become more powerful, more capable, more reliable. Each of those things had been shared with policymakers.
 
O’DONNELL: So to be clear, how close is Kim Jong Un to being able to deliver a nuclear attack to the territorial United States?
 
POMPEO: A handful of months.

O’DONNELL: But correct me if I’m wrong. I do believe you have used that phrase, more than six months ago, you said a handful of months –

POMPEO: It’s true. I hope to be able to say it a year from now as well. … The United States government is working diligently to extend that timeline.

Pompeo’s comments followed North Korea’s November launch of its Hwasong 15 intercontinental ballistic missile, its largest and most sophisticated yet. Kim claimed the missile could hit anywhere on the continental US.

As the New York Post explains, US officials dispute that, suggesting the rocket may only make it to the West Coast when loaded down with a nuclear device, as opposed to dummy payloads used in test launches. The missile’s actual range is less clear, because the nation test fired it nearly straight up rather than horizontally.

There is also the question of whether a genuine warhead could withstand the blistering heat that it would be subject to upon re-entering the earth’s atmosphere.

Meanwhile, anxiety over a potential missile strike has been exacerbated by a false alarm missile alert that provoked a mass panic in the state of Hawaii earlier this month.

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Authored by Daniel Nevins via FFWiley.com,

“Ya gadda have a praaacess”
– British portfolio managers mimicking their American colleagues

When long ago a former employer sent me to London to join the other Americans, or mostly Americans, building out its U.K. office, my job was to create a process. In institutional asset management, process was the American way. For sales presentations and especially dealing with investment consultants, you needed process charts that showed information flowing this way and that and, ultimately, morphing through its travels on the page into repeatable investment decisions. Those charts proved your legitimacy as an institutional manager—regardless of whether they described your actual decision making, they let the community know that you weren’t just a “bunch of gunslingers.” Essentially, you couldn’t build a business without your process charts.

But British consultants were different. They didn’t care so much about your process as they wanted you to knock them over with flair. They wanted imagination, story-telling, charisma. The process charts in your pitchbook didn’t matter as much as the command in your voice. In London, gunslinging was nothing to be ashamed of, as long as you slung with style.

So it all came down to process versus flair. Along with baseball caps and mismatched accents, the clash of cultures depended on which of the two qualities was deemed most important. And along with the accents, in particular, the contrasting approaches explained mimicry performed by amused Brits when the conference room door was comfortably shut or when the pub was crowded enough that voices didn’t carry. Ya gadda have a praaacess.

So today, I give you what else but a few pieces of process. Not a complete one, not even close, but I’ll share two dashboards that compare current stock market conditions to the conditions that shaped past market cycles. The dashboards can support your portfolio decisions, in my opinion, regardless of whether you’re a process Kool-Aid drinking septic or a flair fancying Anglophile. (For the same approach applied to the economy, see “Here’s a Strong Signal from the Economic Dashboard.”)

VCURVE, Redux

I’ll start with an indicator that combines monetary policy and inflation risks. By wrapping the two risks into a single indicator, I can approximate where the Fed stands versus the curve, as in whether policy is ahead of the curve, behind the curve, or somewhere in between. Here’s the calculation:

1. From the current fed funds rate, subtract the lowest rate since the last market correction.

2. Add the change in inflation over the past twelve months

The “VCURVE” indicator is highest when the Fed tightens aggressively but inflation is rising, suggesting policy makers are behind the curve. But the indicator can still flash a warning when just one of the two major risks—policy risk and inflation risk—is elevated. As discussed in my last article, VCURVE spiked upward before or during all S&P 500 (SPY) corrections over the last sixty-four years, although with a growing number of head fakes once Alan Greenspan introduced the Fed put. Here’s a chart I included in the earlier article, which shows all instances of the S&P 500 correcting by more than 10% and for longer than one month:

As you can see, VCURVE correlates strongly with stock price cycles from the mid-1950s to the 1987 market crash, and then less strongly but still significantly over the last three decades. This article covers the last three decades, when VCURVE began serving more head fakes. After Greenspan’s aggressive 1987 crash response and then reinforced by occasional plunge protection thereafter, stocks have often powered through policy and inflation risks, continuing upward despite rate hikes and CPI volatility. In fact, my dashboards will show that bull markets have persisted until something breaks.

The Pre-Recession Plunge

In Dashboard 1, I compare today’s fundamentals to the fundamentals that sunk stock prices during three episodes of severe credit market and real economy breakage. The economy fell into recession in each episode, following a pattern that’s as old as bank loans. First, one or more economic sectors ran into difficulties that led to a jump in loan delinquencies or bond defaults or both. Those delinquencies and defaults may have seemed contained at first, but they soon impaired bank balance sheets and depressed credit conditions. Business earnings weakened alongside or shortly after the deterioration in credit conditions, and, if housing was among the leading sectors as it often is, real house prices fell.

We’ve seen three such “pre-recession plunges” during the last thirty years – namely, the corrections or bear markets of 1990, 2000–2 and 2007–9. Here’s a dashboard comparing the three plunges to present conditions:

While the data shown in Dashboard 1 is imperfect (for example, mortgage delinquency data doesn’t fully capture housing finance insolvencies in 2007, which were concentrated in the structured credit space), I’m comfortable with four observations:

1. The latest VCURVE reading of 1.4% remains below the readings that tend to predict bear markets. (See here for historical thresholds.) So VCURVE isn’t predicting a market top just yet, but it does bear watching as the Fed continues to raise rates.

2. Delinquency and default rates are nonthreatening in the sectors most likely to affect stock prices, notwithstanding a recent wave of energy company defaults, which is fading as oil prices rise.

3. Credit conditions look nothing like they did in mid-1990, mid-2000 and late 2007. Spreads for BBB bonds are within twenty basis points of their lows for the millennium, and bank lending standards are mostly benign.

4. Neither S&P 500 earnings nor house prices show signs of an imminent recession.

All things considered, a pre-recession plunge seems unlikely in early 2018, but stay tuned – the fundamentals depicted in Dashboard 1 will certainly change during the year.

The Credit-Contagion Contraction

Removing the three plunges from the six S&P 500 corrections of the last three decades, there are three corrections left. You might recall that the correction in summer 1998 followed Russia’s bond default and the hedge fund Long-Term Capital Management’s near-collapse and bailout. In that instance, the credit market clearly led the equity market, as in the three plunges discussed above.

The other corrections began in April 2010 and April 2011, respectively. In each case, stock prices dropped before anticipated pauses in the Fed’s QE programs, suggesting the bull market may not have been established enough to survive without central banker support. But the 2010 correction also included a flash crash, while the 2011 correction included Standard & Poor’s downgrade of U.S. federal government debt from AAA to AA+. And just as importantly, both corrections breached 10% thresholds near critical points in the Greek debt crisis – EU leaders approved the first Greek bailout in May 2010 and then agreed a second bailout, although subject to austerity measures, in June 2011.

So, with the 1998, 2010 and 2011 corrections overlapping breakage in the world’s debt markets, I’ll include them in a second dashboard that considers credit contagion:

Unfortunately, Dashboard 2’s predictive power is limited, for two reasons. First, credit events sometimes arise without much advance widening of the spreads depicted on the chart. Second, the chart only includes sources of contagion that were most obvious in 1998, 2010 and 2011. If the next market-rattling credit event occurs suddenly in, say, the U.S. municipal bond market, Dashboard 2 won’t be especially helpful.

All that said, it’s notable that spreads in many markets – Portugal, Greece, and many issuers in the emerging market debt indices – fell to post-2010 lows in recent weeks. Credit risks may be building as governments and businesses continue to add debt, but they appear less immediate than before any of the 1998, 2010 and 2011 credit-contagion contractions.

Conclusions

The above dashboards are useful, in my opinion, for checking current conditions against past markets. As of today, they help demonstrate a “virtuous” loop of mutually reinforcing strength in risky assets and the global economy. I recently predicted, looking as far ahead as I think is reasonable, that the loop will keep the economy humming until at least mid-year and will probably support the bull market in stocks through the first quarter.

But my outlook carries risks, as usual.

Stocks are clearly overbought, and they might have priced in greater benefits from the GOP’s tax cuts than businesses will actually realize. (See, for example, this analysis by Morgan Stanley and ZeroHedge.) If present trends continue, the rise in government bond yields might also weigh on stock prices, as happened before the market peaks in 1990, 2000, 2010 and 2011.

And perhaps most importantly, we’ve yet to hear Jerome Powell field a question about stock prices as FOMC chairman. If investors detect any hint that there won’t be such a thing as a Powell put (see here for discussion), stocks would be more vulnerable than the above dashboards imply. In that scenario and certain others, we might learn in hindsight that you would have needed to use your imagination to predict the next bear market. After all, you can’t just rely on process—you might also like to show some flair.

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This could well be one of the most epic less-than-60-second devastating take-down of just about every mainstream media lie on Syria… In case you missed it, an entire panel of guests revolted against well-known conservative commentator S.E. Cupp’s demands that the US “do something” to remove the Assad government during a segment on her CNN HLN show late last week, but it was a comedian that delivered the final death blow, calling Cupp’s recycled regime change talking points “insane”.  

Cupp has for years argued that “US inaction” is to blame for Syria’s woes and has been a consistent and prominent voice on the right calling for increased and more direct military action in the Syrian war – even as top US officials and Pentagon and intelligence insiders have since been very blunt in stating the obvious that only al-Qaeda and ISIS would fill the vacuum should the Assad government be removed by military force.

S.E. Cupp: “Isn’t it time to do something in Syria in a full-throated way?”

During a recent Syria panel discussion on “SE Cupp Unfiltered,” she revisited the idea of regime change, posing the question for the panel: “isn’t it time to do something in Syria in a full-throated way?”

For hawks like Cupp, nothing is ever enough apparently, even as Secretary of State Rex Tillerson has pledged that US forces will occupy… remain in Syria for an indefinite amount of time to support proxy SDF forces on the ground, primarily to “counter Iran” while seeking “political transition” in Damascus.

She introduced the segment with a heatedly emotional appeal to her guest panelists, pleading we “must do something” because “500,000 people died while we did nothing” and arguing that “ignoring all of this… the chemical weapons, ISIS, al-Qaeda, Hezbollah, Iran, Russia… it just gets worse”. Cupp later answered her own question, saying that solving the crisis “is completely possible if you get rid of Assad“. 

But the panel wasn’t buying it. In a rare moment for mainstream network television, the entire group of panelists revolted with each commentator getting more blunt in their pushback against Cupp than the last – until finally stand-up comedian and libertarian commentator Dave Smith apparently couldn’t take Cupp’s smug clichéd and recycled talking points anymore.

Smith – though not some usual think tank blowhard that frequents such foreign policy debate panels – expertly schooled Cupp and dismantled her every assumption, demonstrating that it has been precisely US action in the region that has fueled the crisis in Syria, starting with the 2003 invasion of Iraq and continuing with the CIA program to arm the anti-Assad insurgency in Syria. And he did it all in under 60 seconds.

“…The most ridiculous plan that I’ve heard yet… This is insane… ISIS rose because we overthrew Saddam Hussein and then we armed ISIS,” Smith said.  

Watch the full clip below (stand-up comic Dave Smith comes in at the 1:55 mark): 

.@secupp: Isn’t it time to do something in Syria in a full-throated way? https://t.co/wFF8hgefYH

— SE Cupp Unfiltered (@UnfilteredSE) January 19, 2018

Smith’s epic diatribe met with no resistance. He said: 

“Regime change has been an absolute nightmare everywhere that we’ve had it. And the idea that we’re going to go into a civil war and take both sides out is of all of these wars the most ridiculous plan that I’ve heard yet.

And as far as standing back while hundreds of thousands of people die – no one seems to have a problem with doing that in Yemen right now because it’s not the regime that we want to overthrow, it’s the regime we support doing it.

This is insane! ISIS did not rise because we pulled out of Iraq because of a bad decision – we pulled out on Bush’s timeline because we had to because the government of Iraq was no longer going to protect our troops against war crimes.

ISIS rose because we overthrew Saddam Hussein and then we armed ISIS. We need to not intervene in this part of the world – it’s an immoral war, it’s an illegal war. Syria has not attacked America. We have no legitimate reason for our defense to be there, and this is exactly what Obama promised not to do, and what Trump promised not to do.”

Apparently, S.E. Cupp couldn’t come up with any better response other than to half-heartedly say, “I disagree”… before quickly ending the segment.

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Authored by Charles Ortel via Lifezette.com,

Huge, unregulated transnational charities provide unique cover for moving money and other considerations as illegal favors…

A friend of mine, Peter Wing, once actually hid an elephant in plain sight at the castle he built with his bare hands from reclaimed materials near Millbrook, New York.

The evolution of the Clinton Foundation since Oct. 23, 1997, proves that gigantic frauds, spread across the globe under the harsh glare of public attention and in the media, are tough to grasp – and tougher still to police.

Who would imagine, for example, that a former president, an aspiring president and a highly educated only child would work together, purposefully gaming controls at supposed “charities,” produce false and misleading public filings, and do so for more than two decades using a bevy of outside professional advisers and world-renowned directors?

Yet close examination of available facts demonstrates the Clinton Foundation and its network of false-front charity “initiatives” and affiliates remains the largest set of unprosecuted charitable frauds in American history.

In a sad sense, international charities are perfect vehicles for such questionable activities. After all, who can check effectively how much money is in truth raised and where discrete portions of these revenues are disbursed in far-flung corners of the world?

And, as you will see, unregulated and unaudited “charities” allow donors to send much more money towards politicians clandestinely than is allowed under national laws concerning political campaigns.

Meanwhile, international charity also provides cover to disguise payoffs that might unlock mining and energy concessions, telecommunications and other licenses, and largesse (grants and subsidized loans, for example) from multilateral organizations, including the World Bank and the International Finance Corporation, among others.

Though such frauds began escalating in 2002, it is helpful to begin examining the thread illustrating the internationalization of the Clinton Foundation in 2009. Note that was during the first year of the Obama presidency.

What really was happening with the Russia “reset” starting in 2009? Large contributions to political campaigns come with strings attached.

Evidence already in the public domain shows that certain Russians found common cause with green investors, as Peter Schweizer’s work for the Government Accountability Institute explained in “From Russia with Money: Hillary Clinton, the Russian Reset, and Cronyism.”

Under Obama’s leadership, Hillary Clinton’s role in improving America’s relations with Russia started on the wrong foot in March 2009 in Geneva.

Despite this inauspicious beginning, tensions with Russia started to ease. To the consternation of many, the U.S. announced in September 2009 that it would abandon plans to provide a missile defense shield to Poland and other Eastern Europe nations.

By May 2010, Russia surprisingly joined with the U.S. and China to impose fresh sanctions on Iran over that rogue nation’s nuclear programs.

So, after a rocky start, Obama’s rapprochement with Russia seemed to bear tangible fruit. However, the real “gains” likely were occurring for political contributors who also were active investors and financiers for capital projects inside Russia, especially those involving transfers of technology.

Only now that the Trump administration has won confirmation for key appointments within America’s federal law enforcement agencies will the public begin to learn just how extensively the Clinton Foundation and the Clinton Global Initiative (CGI) may have been used as a clearinghouse — one in which to trade cash for political favors and access at Skolkovo in Russia, and more broadly around the world.

Starting in July 2016, the Dallas office of the IRS finally began an investigation into Clinton Foundation public filings, prodded by Rep. Marsha Blackburn (R-Tenn.) and other congressional Republicans.

Missing disclosures concerning donations from foreign governments, and other glaring discrepancies, should have been resolved and should have triggered payment of substantial fines, penalties, and interest to government treasuries long ago.

The American public has an absolute right to learn how charities are abused by politically connected bureaucrats. Congress, the FBI and the Department of Justice must expose what really happened with monies sent towards the Clinton family and their foundation, especially including the Clinton Global Initiative.

For good measure, Americans deserve to know how assiduously — or not — the IRS carried out its work as the 2016 presidential campaign entered its closing days.

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