Tag: news

For years, many had speculated – for which they were promptly cast as tinfoil hat conspiracy theorists – that when it comes to achieving illegal goals, including but not limited to creating “false flag” terrorism and political assassinations, few are as skilled and industrious as the CIA and Mossad. Especially Mossad.

Only, as so often happens, most (if not all) such “conspiracy theories” turn out to be truth, in this case exposed thanks to the work of Israeli investigative journalist Ronen Bergman, whose just published explosive book “‘Rise and Kill First: The secret history of Israel’s targeted killings” details such Israeli plans as the assassination of Palestinian leader Yasser Arafat which included a plot to blow up passenger planes and football stadiums.

Ronen Bergman, the intelligence correspondent for Yediot Aharonot newspaper, persuaded many agents of Mossad, Shin Bet and the military to tell their stories, some using their real names.

The result is the first comprehensive look at Israel’s use of state-sponsored killings.

An excerpt from the book published in the NYT , details how when former Israeli Prime Minister Ariel Sharon was defense minister, he ordered the Israeli army to shoot down a passenger plane carrying hundreds of innocent people Arafat was thought to be on. Arafat was chairman of the Palestine Liberation Organization at the time. Although the plan was eventually called off, it was allegedly one of a list of plans to to assassinate the Palestinian leader.

Bergman spoke to hundreds of intelligence and defense officials and studied classified documents which have revealed a “hidden history, surprising even in the context of Israel’s already fierce reputation.”

“I found that since World War II, Israel has used assassination and targeted-killing more than any other country in the West, in many cases endangering the lives of civilians,” Bermen chillingly wrote, in the process unleashing a whole new series of conspiracies theories, many of which will certainly also be confirmed.

In another assassination attempt in October 1982, Mossad set its sights on a plane which was carrying 30 wounded children, victims of the Sabra and Shatila massacre by Phalange militia in a Palestinian refugee camp in Lebanon.  

According to the book, Tsomet, the Mossad unit which recruits assets overseas, had heard Arafat would take a plane from Athens to Cairo. Caesarea, the Mossad unit responsible for targeted killings, sent two operatives to wait at Athens airport. F-15 fighters were placed on alert. Mossad eventually realized the man was not Arafat, but his brother – who was bringing wounded Palestinian children to Cairo for medical treatment.

As Bergmen explains, he first heard of that assassination plan in 2011, but his source made him promise to wait until a second person came forward with the story. In another case detailed in the book, fighter jets surrounded a commercial flight from Jordan to Tunisia, while in another incident, they disrupted a Boeing 707’s communications, Haaretz reports.  

In addition to Mossad’s apparent penchant for covering up a single assassination among dozens of innocent victims, there is an even more bizarre revelation.

Bergmen writes of an assassination attempt inspired by the movie The Manchurian Candidate. Israelis reportedly sought to turn a Palestinian prisoner into a trained killer. The only problem is that this backfired when, five hours after being released, the prisoner turned himself into the police and explained everything.   

Then there was plain old mass murder: another plan was to take out all of the Palestine Liberation Organization leadership by setting up bombs inside a Beirut stadium where the group were planning to celebrate the anniversary of their first operation against Israel. According to the book, the Israelis also set up cars rigged with explosives outside the stadium, set to detonate minutes after the first explosion to target survivors as they were trying to escape.

The operation was cancelled at the last minute, after a group of officers and the defense minister demanded it be called off.

“You can’t just kill a whole stadium,” an officer remembered telling then-Prime Minister Menahem Begin. “The whole world will be after us.”

Smart.

Meanwhile, Israel’s vendetta with Arafat continued and in 1982, Sharon created a special task force named Salt Fish to take out the PLO leader. He appointed special operations experts, Meir Dagan, who later became head of Mossad, and Rafi Eitan, who was then adviser to the defense minister on counterterrorism matters. The group even debated killing Israeli journalists who were going to interview Arafat in Lebanon in 1982, with the consensus being that, yes, it was worth carrying out such an operation. However, Mossad lost the group on the way to the meeting.

“The feeling was that it was something personal for Sharon,” Air Force commander in Chief Major General David Ivry told Bergmen.

One can almost see why.

Still, despite their best efforts, Arafat continued to evade Mossad’s relentless assassination attempts, in no smart part thanks to the occasional normal human being.

Uzi Dayan, the operation’s commander, told Bergman Arafat was saved by two things, “his interminable good luck and me.”

He explained that he was concerned about civilians being killed in an assassination, and clashed with Eitan over it, who would get angry over missed opportunities. Dayan even withheld intelligence from Eitan to prevent civilian casualties.

Eitan would remind Dayan that he did not have the authority to decide whether or not to drop a bomb. But Dayan nonetheless found a way to take a hand in the decision-making. “All I had to do was to report when the target was ripe from the intelligence point of view,” he said. “So from that point on, each time we knew that bombing would lead to massive civilian casualties, we reported that the target wasn’t ripe from the intelligence angle.”

Based on 1,000 interviews and thousands of documents, and running more than 600 pages, Rise and Kill First makes the case that Israel has used assassination in the place of war, killing half a dozen Iranian nuclear scientists, for instance, rather than launching a military attack. It also strongly suggests that Israel used radiation poisoning to eventually kill Arafat, an act its officials have consistently denied

* * *

It wasn’t just Arafat: poisoned toothpaste that takes a month to end its target’s life. Armed drones. Exploding cell phones. Spare tires with remote-control bombs. Assassinating enemy scientists and discovering the secret lovers of Islamic holy men: these were the techniques Israel used to carry out at least 2,700 assassination operations in its 70 years of existence. While many failed, they add up to far more than any other Western country, the book says.

Bergman, the author of several books, also says that the Israeli secret services sought to interfere with his work, holding a meeting in 2010 on how to disrupt his research and warning former Mossad employees not to speak with him.

He also claimed that President George W. Bush adopted many Israeli techniques after the terrorist attacks of Sept. 11, 2001, and President Barack Obama launched several hundred targeted killings.

Bergman raises moral and legal concerns provoked by state-sponsored killing, including the existence of separate legal systems for secret agents and the rest of Israel. But he presents the operations, for the most part, as achieving their aims. While many credit the barrier Israel built along and inside the West Bank with stopping assaults on Israeli citizens in the early 2000s, he argues that what made the difference was “a massive number of targeted killings.”

One of Bergman’s most important sources was Meir Dagan, a recent head of Mossad for eight years who died in early 2016. Toward the end of his career, Dagan fell out with Prime Minister Benjamin Netanyahu partly over launching a military attack on Iran. Netanyahu said intelligence techniques such as selling the country faulty parts for its reactors — which Israel and the U.S. were doing — weren’t enough.

 

Ex-Mossad Chief Meir Dagan in 2014

Finally, we may have to wait for part 2 of the book to learn how many of Mossad’s other clandestine operations leading to “massive civilian casualties” – with several key prominent examples springing to mind – were not stopped from taking place.

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Authored by Daniel Weldon via Campus Reform,

University of Florida students walked around campus Tuesday with fake menstrual blood on their pants to protest the lack of free feminine hygiene products on campus.

On January 15, a student government committee rejected a proposal to provide free menstrual products to female students through the mandatory Activity and Service Fee, expressing concerns about applying mandatory fees paid by all students towards “funding that would only benefit the female half of the UF student body.”

A student group called “Gatters Matter, Period.,” which began circulating a petition in support of the proposal last fall, responded by organizing a “bleed-in” protest during which roughly two-dozen students stained the back of their pants red, according to The Alligator.

“This is a part of reproductive justice,” Shannon Matthew, who was among the first students to join the protest, told the Alligator. “I’m not ashamed of my period, and I don’t think anyone should be.”

A Facebook event page for the “Are You Seeing Red?” demonstration explains that participants wore “washable dye on our bums, as if we didn’t have a pad and the blood bled through.”

The organizers provided “supplies” for those in need of them, but encouraged students to “bleed-in how ever [sic] you want as well.”

Following the protest, the proposal was discussed at a meeting of the full Student Senate, where the Alligator reports that Senate President Ian Green announced that a decision had been made to provide free menstrual products at the student union starting in February, though he could not offer details about funding because the arrangement had been worked out by Student Body President Smith Meyers, who was unavailable for comment.

During the meeting, some senators pointed out that free menstrual products are already available on campus through the Field and Fork Pantry.

Students are allowed to take up to three bags of menstrual products per week – each containing eight tampons, five liners, and five pads – but student activists retorted that the option is too limited.

“Heteronormativity is rampant on this campus,” complained Sophia Ahmed, one of the organizers of the “bleed-in” protest.

“Today I held a little protest for free menstrual protects. If you saw my butt that was evidence. And I say menstrual not feminine because menstruation should not be gendered. Some men get periods.”

Two student senators, Branden Pearson and Emily Dunson, told The Alligator that they are working to alleviate just such concerns, and hope to secure funding for free menstrual products at several on-campus locations by April 2018.

They estimate that the project will cost just under $5,000, and speculated that the pilot program could eventually be expanded to include roughly 60 gender-neutral restrooms.

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In a second shocking blow to the Russia-collusion-conspiracy-believers, after Twitter found no evidence of meddling in the UK’s Brexit vote, Bloomberg reports that Facebook found there was “insignificant overlap” between Russia-based targeting of ads and those of Trump’s campaign.

Earlier today, Twitter reported that it had examined 13,000 Brexit bots and found that only 1% could be conclusively linked to Russia, and that most of these bots have already been suspended.

And now, as Bloomberg reports, Facebook told a Senate panel that it has detected “only what appears to be insignificant overlap” between targeting of ads and content promoted by a pro-Kremlin Russia group and by the presidential campaign of Donald Trump.

The social-media company said it “does not believe it is in a position to substantiate or disprove allegations of possible collusion” between Russia and the Trump campaign, as part of a written response to questions from the Senate Intelligence Committee released Thursday evening by the panel.

The company answers aren’t likely to quell concerns from lawmakers that the companies may not have found all of the abuse of its networks by Russians or taken enough steps to prevent future actions.

Facebook said it has no evidence that the Russian Internet Research Agency, which disseminated fake news and ads, targeted its efforts based on U.S. voter registration data.

Their targeting was “relatively rudimentary, targeting broad locations and interests,” the company said.

So the Russia collusion conspiracy hangs by the most tenuous of partisan threads… and remember just this week, some of the most infamous faces from the ‘Russians-did-it’ gang – Rep Schiff and Sen Feinstein – demanded Twitter, facebook crackdown on still-active “Russian Bots” that were spreading #ReleaseTheMemo content…

There’s just one problem – 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.

We are nearing peak cognitive dissonance.

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Authored by David Stockman via Contra Corner blog,

In Part 1 we noted that the real evil of Bubble Finance is not merely that it leads to bubble crashes, of which there is surely a doozy just around the bend; or that speculators get the painful deserts they fully deserve, which is coming big time, too; or even that the retail homegamers are always drawn into the slaughter at the very end, as is playing out in spades once again. Daily.

 

Given enough time, in fact, markets do bounce back because capitalism has a inherent urge to grow, thereby generating higher output, incomes, profits, wealth and stock indices. That means, in turn, investors eventually do recover from bubble crashes—notwithstanding the tendency of homegamers and professional speculators alike to sell at panic lows and jump back in after most of the profits have been made—or even at panic highs like the present.

Instead, the real economic iniquity of central bank driven Bubble Finance is that it destroys all the pricing signals that are essential to financial discipline on both ends of the Acela Corridor. And as quaint at it may sound, discipline is the sine qua non of long-term stability and sustainable gains in productivity, living standards and real wealth.

The pols of the Imperial City should be petrified, therefore, by the prospect of borrowing $1.2 trillion during the upcoming fiscal year (FY 2019) at a rate of 6.o% of GDP during month #111 through month #123 of the business expansion; and doing so at the very time the central bank is pivoting to an unprecedented spell of QT (quantitative tightening), involving the disgorgement of up to $2 trillion of its elephantine balance sheet back into the bond market.

Even as a matter of economics 101, the forthcoming $1.8 trillion of combined bond supply from the sales of the US Treasury ($1.2 trillion) and the QT-disgorgement of the Fed ($600 billion) is self-evidently enough to monkey-hammer the existing supply/demand balances, and thereby send yields soaring.

But that’s barely the half of it. All the laws of economics, which are now being insouciantly ignored by the stock market revilers, are also time and place bound. That is to say, deficit finance in a muscle-bound Welfare State/Warfare State democracy like the US is always a questionable idea.

After all, it is virtually guaranteed based on the budgetary doomsday forces now at work that by 2030 the public debt will approach $40 trillion compared to the $930 billion level where it stood when the Gipper took office in January 1981. In a half century, therefore, the GDP—swollen by inflation notwithstanding—will have grown by 8.5X versus a 43X eruption of the debt.

Even then, that’s the long-trend of the thing: The cyclical context is the far more preposterous part. The very idea of running a 6.0% of GDP deficit at the tail end of what would be the longest business expansion in recorded history is just plain insane. Yet as the Donald and his feuding band of Capitol Hill Republicans stumble from one bi-weekly CR (continuing resolution) fix to the next, they exude complete obliviousness to the fiscal time-bomb strapped to their chests.

Admittedly, the Dems are far worse. Even as they appropriately champion the cause of the Dreamers for the wrong reason (i.e. in pursuit of Democrat voters rather than the real economic need for additional workers and Tax Mules), their true agenda at the moment is stasis and parity. That is, no change (stasis) whatsoever in the $2.5 trillion entitlement monster, but a dollar for dollar increase (parity) in domestic appropriations to match the $80 billion per year defense increase demanded by the GOP hawks (which is most of the GOP).

Our point is that prior to the final betrayal of sound money incepting with Greenspan’s arrival at the Fed in 1987, politicians of both parties had a healthy fear of deficits because in the absence of massive monetization by the central banks, rising deficits tended to cause “crowding out” and soaring interest rates.

In effect, even the quasi-honest monetary policies of the 1953-1987 period generated counter-vailing constituencies for fiscal rectitude. Thus, when interest rates rose, the lobbies for small business, homebuilders, Savings and Loans, farmers and capital goods suppliers predictability brought their political heft to bear in behalf of fiscal restraint.

No more. The Fed’s massive and relentless suppression of yields has eliminated the counter-vailing constituencies for fiscal rectitude and, at length, vaporized the politicians’ fear of deficits.

And understandably so. The public debt is up by 220% from the pre-crisis peak (Q4 2007), while interest expense has risen by only 20%.  With the debt rising 10X faster than its service cost, why would anyone expect the politicians to do anything but kick-the-can?

And worst still, why would they not loose all historical memory that might otherwise warn of the extreme dangers posed by radically expanding the deficit at the tail end of the weakest business cycle in modern history?

Indeed, the Fed’s culpability for the nation’s imminent fiscal catastrophe is doubly evident when the full extent of the above chart’s false price signals is dissected.

To wit, not only has the Fed driven the weighted average cost of the Federal debt to under 1.7% and therefore into negative yield territory when inflation is factored in; it is also the case that its massive debt monetization has further minimized the true cost of the public debt owing to the so-called “profit remittance” to the Treasury.

That is, the Fed collects upwards of $125 billion from the yield on its $4.4 trillion of Treasury and GSE notes, but pays essentially nothing for its liabilities, which are printed from thin air. The Fed’s gross interest income less several billion of operating costs and $25 billion of IOER payments to the banks (an inducement to the banks to keep their excess reserves idle and not lend them out at lower than the Fed’s target funds rate) is therefore returned to the Treasury in a round robin of monetary hocus pocus.

As shown below, after the explosion of the Fed balance sheet from $900 billion at the time of the Lehman meltdown to $4.4 trillion, these payments to the US Treasury soared, reaching a peak of $117 billion in FY 2015. Accordingly, more than 25% of the carry cost of the Federal debt in recent years has been hidden. That is, off-set by this bogus monetary round trip of treasury interest payments to the Fed which mostly come back as profits remittance.

As a practical matter, the bars in the chart below will be heading toward the zero-bound in the next couple of years as IOER payments to the banks continue to soar (as the Fed raises its target funds rate);  and as it is also forced to book “loss provisions” against its annual profits as interest rates rise and the market-to-market value of its $4 trillion+ balance sheet declines sharply.

So suddenly, the current $300 billion interest cost on the public debt will get hit with a double whammy. The weighted average yield on the Federal debt will rise by 200-400 basis points in the years ahead, and the huge off-setting Fed remittance will disappear.

Accordingly, we project that the net interest expense will double to $600 billion within three years and soar past $1 trillion per year well before 2027.

In the face of soaring debt service costs and rising bond market yields, the politicians will finally panic. Having experienced exactly that up close and personal during the early 1980s when the 10-year yield touched nearly 16%, we are quite sure that the old time deficit panic will make a belated resurrection in the Imperial City.

We are also quite sure that it will be too late. In the wake of the GOP’s asinine tax bill and the spending spree now underway, the public debt will soon be growing by $1.5 trillion to $2 trillion per year. Under normalizing interest rates, that alone with add $50 billion to $75 billion per year to the interest tab.

Alas, that happens to be a bigger number than any conceivable package of annual spending cuts or tax increases for which a majority on Capitol Hill could be mobilized.

In short, by the time that rising interest rates and soaring debt service payments are permitted to perform their fear-inducing function among the politicians, there will be no imaginable way to stop the nation’s fiscal doomsday machine.

And that is the real cost of systematically falsifying yields and prices in the bond market.

In part 3 we will address the false signals being broadcast to the Wall Street end of the Acela corridor. But here’s the spoiler alert: Like the case of interest on the public debt, the relevant metrics are bound by both the laws of economics and the time and place in which they are measured.

At the present time, the S&P 500 is trading at the absurd multiple of 26.3X what are estimated to be reported profits for 2017. Yet the sell-side stock peddlers say not to worry because the one-year forward multiple on ex-items earnings is still only in the high teens.

So what!

The business cycle has not been outlawed and this one has at best a few quarters or even a year or two to go. So forward earnings are irrelevant nonsense. They are an interim place holder before the 30% to 50% hit to profits happens when the US economy finally experiences its next rendezvous with recession.

The very idea that you would value the market based on a timeless forward PE multiple is complete baloney, of course. Yet that’s exactly where the Fed’s drastic financial repression and destruction of honest price discovery has led.

That is, to valuation multiples on a trend-adjusted basis that have shot the moon, and to a bubble peak that is desperately searching for its relief pin.

Data Courtesy: St. Louis Fed

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In the latest reminder of the contentious relationship between President Trump and the man who is probing him for “Russian collusion” obstruction, Special Counsel Mueller, the NYT reports that according to four sources, Trump ordered the firing of Mueller last June, however – since Mueller is still clearly employed – the president backed off after White House COunsel Don McGahn threatened to resign rather than carry out the directive.

This is notable because “the West Wing confrontation marks the first time Mr. Trump is known to have tried to fire the special counsel” and “Mueller learned about the episode in recent months as his investigators interviewed current and former senior White House officials in his inquiry into whether the president obstructed justice.”

At the time, Trump listed three conflicts of interest that disqualified Mueller from overseeing the investigation amid reports saying the special counsel was examining a possible obstruction case, even though the underlying motive was alleged collusion with Russia:

• First, Trump cited a “dispute years ago over fees at Trump National golf club;”
• Second, the fact that he was working at the same law firm that “previously represented the president’s son-in-law, Jared Kushner.”
• Third, the fact that Mueller had interviewed to be FBI director shortly before being appointed special counsel.

Hearing about Trump’s intentions, White House counsel, Donald F. McGahn II, reportedly refused to ask the DOJ to dismiss the special counsel, saying he would quit instead.

McGahn disagreed with the president’s case and told senior White House officials that firing Mr. Mueller would have a catastrophic effect on Mr. Trump’s presidency. Mr. McGahn also told White House officials that Mr. Trump would not follow through on the dismissal on his own.

McGahn was also concerned that firing the special counsel would incite more questions about whether the White House was trying to obstruct the Russia investigation.

Trump then backed off.

As the NYT also adds, another option that Trump considered was dismissing the deputy attorney general, Rod J. Rosenstein, and elevating the department’s No. 3 official, Rachel Brand, to oversee Mr. Mueller. Mr. Rosenstein has overseen the investigation since March, when Attorney General Jeff Sessions recused himself.

While Trump has eased back on his direct attacks on Mueller since hiring Ty Cobb, who manages the White House’s relationship with Mr. Mueller’s office,  Trump has wavered for months about whether he wants to fire Mueller, whose job security is an omnipresent concern among the president’s legal team and close aides.

The president’s lawyers, including Mr. Cobb, have tried to keep Mr. Trump calm by assuring him for months, amid new revelations about the inquiry, that it is close to ending.

While it remains to be seen if Trump’s concern that Mueller is out to get him is justified – and based on the recent text message revelations that key FBI agents were notably biased against him one can easily make that case – or if there was indeed “collusion with Russia”, an investigation which has since shifted to one looking at the monetary dealings of Trump and his close circle, as well as “obstruction”, just yesterday Trump told reporters that he is “looking forward” to speaking with Mueller under oath, at which point he will tell the investigator that there was “no collusion.”

And, following today’s Bloomberg report that Mueller’s obstruction probe is set to wrap up much faster than anticipated,  not only will the Trump questioning likely take place in the immediate future, but Mueller’s findings will soon be unveiled.

In the meantime, a parallel inquiry is taking place, one in which the DOJ is investigating just how tainted the FBI’s own probe of Trump may have been all along, and/or whether James Comey and Loretta Lynch interfered to mitigate the FBI’s inquiry into Hillary Clinton’s email server.

The bottom line is that the upcoming showdown between Trump and the “deep state”, in which both sides are investigating each other, will likely be epic.

In the meantime, keep an eye on Trump’s twitter account, and whether the president decides to fire Mueller, only for real this time. After all, few are capable of getting Twitter Trump so furious like the NYT.

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Authored by Jeff Deist via The Mises Institute,

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Uber board member Arianna Huffington’s quest to ensure that Uber will never again countenance the “brilliant jerks” of the Travis Kalanick era has reached an important milestone.

While several executive positions – most notably CFO – remain unfilled following a series of purges of Kalanick loyalists, the company on Tuesday announced that it has taken the unprecedented (for Uber) step of hiring Bo Young Lee, who previously held a similar position at financial firm Marsh, to be the ride-hailing unicorn’s chief diversity and inclusion officer, Recode reported.

The position is C-suite level, and will be the fourth executive appointment under CEO Dara Khosrowshahi, who took the reins in September following Kalanick’s ouster in June.

As Recode reminds us, Lee’s hire will help the company expunge the lingering demons famously exposed by Susan Fowler’s bombshell essay about Uber’s purportedly misogynistic culture in February 2017.

Notably, Eric Holder’s recommendations following his investigation of the company’s culture included promoting Bernard Coleman, global head of diversity and inclusion, by elevating him to a new, more senior role of chief diversity officer. The Holder report also recommended that Coleman report directly to the company CEO and COO.

 

While Uber’s board voted unanimously to adopt the Holder recommendations in full, it decided to keep its options open in regard to the chief of diversity job.

Lee will not be report directly to Khosrowshahi and Harford; instead, she will report to Uber’s chief human resources officer, Liane Hornsey – for now, at least.

Let’s hope Lee’s tenure is smoother than former Apple diversity chief Denise Young Smith, who resigned after having the temerity to suggest that diversity can exist in a group of blond, blue-eyed white men.

 

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Authored by Jeffrey Snider via Alhambra Investments,

There is a fundamental assumption behind any purchasing manager index, or PMI. These are often but not always normalized to the number 50. That’s done simply for comparison purposes and the ease of understanding in the general public. That level at least in the literature and in theory is supposed to easily and clearly define the difference between growth and contraction.

But is every 50 the same? That’s ultimately at issue in 2018. The assumption is that a 50 is a 50, and that they are comparable on an apples to apples basis. Behind that postulation is symmetry.

We can illustrate the process with some stylized thought experiments. IHS Markit, for example, asks thousands of vetted corporate executives in the second half of each and every month whether overall and in particular pieces of their business has it improved, deteriorated, or stayed the same compared to the previous month. We can think, then, of a 50 for the index or subindex as something like 33% saying improved, 33% saying deteriorated, and the last third claiming it’s the same.

It’s intuitive that if from that position the following month 40% are in the improved column because 7% moved out of deteriorated, leaving 26% with that view and still 33% at “the same”, the headline index moving up to 53 would be consistent with actual economic improvement. That part is uncontroversial.

What’s left out of every calculation is the degree to which something is changing. If we move from 33/33/33 to something like 25/50/25, that’s entirely consistent with the index plunging below 50 and the economy most likely in some state of downturn. And if a few months or a year later the survey results go back to 33/33/33, then the headlines’ return to 50 would be consistent as if things are stabilizing. If it then goes 40/26/33, does that necessarily mean growth has been restored?

The reason these surveys aren’t more in depth is this implicit idea that when growth is resumed it is resumed at the same general trend as before (symmetry). It’s another one of those mathematical shortcuts (the fewer the variables the better) that when first designed appeared to be trivial because economic history, particularly postwar economic history, had always obeyed symmetry (leading Milton Friedman to confidently assert his “plucking model” in 1993).

 

The last decade has broken all ideas of symmetry, yet 50’s remain undistinguished. What is the state of the economy when going from 33/33/33 = 50 to 25/50/25 < 50 those answering the survey question with “deteriorating” find that deterioration on average to be severe, say 10% or more? In historical terms, that may fall outside of prior experience on the downside, just as the Great “Recession” did for every main statistic.

The real issue is in recovery, or enough recovery, if you will. If going from 25/50/25 < 50 with an average 10% decline in the middle proportion leads to eventually, say, 50/25/25 but this time with only an average 1% gain in the “improving” category, does the resulting index well above 50 really equal the same readings above 50 from before the contraction? No.

 

We aren’t supposed to worry about those situations because by all modern historical accounts this isn’t possible. The statistical PMI’s were designed for simplicity because it was assumed greater detail among relative changes wasn’t necessary for that reason.

 

Using GDP provides us with incontrovertible evidence that symmetry isn’t a given. We know there are cases where asymmetry is possible because there it is (and it’s global), and its presence in GDP data tells us this is an economy-wide problem rather than some industry-specific idiosyncrasy. Obviously, there is much more included in GDP as a proxy for the whole economy than exists in just the manufacturing sector.

Using the ISM Manufacturing PMI compared instead directly against the Federal Reserve’s Industrial Production data, specifically its manufacturing component, we find unsurprisingly the absence of symmetry there, too. In terms of PMI’s, it has the effect, as described above, of showing why direct PMI comparisons are now tricky if not impossible. The interpretation of these numbers can’t be the same as it once was.

In October 2017, the ISM reported a headline PMI calculation that had jumped to 60.8. An index above 60 hasn’t been seen since the middle of 2004. Immediately, the media reported their stories all using the same language about the highest for manufacturing in more than a decade. Manufacturing must be booming.

 

The IP subindex, however, disabuses any such notion with prejudice. According to the Fed’s far more detailed data, US manufacturing in October (a month provided a large hurricane-assisted boost) was just 8% more than it was when the ISM last indicated 60 thirteen years before. As hard as it may be for some to believe given all the rhetoric about how great the economy has been lately, manufacturing in October, despite a 60 for the ISM, was still 2.6% less than it was in December 2007! In 2017, manufacturing, according to the Fed, increased all of 2.6% (not good) and mostly because of that gain in October.

In reference to what I wrote last week, this is a bit less blatant in its dishonesty surrounding the “boom.” PMI’s, very much like the unemployment rate, are not meant for this economy, the one where symmetry was left behind a decade ago. They are simply unable to normalize to the shrinking because they assume right from the start it just isn’t possible. A 50 is a 50, or a 60 a 60, because everyone still believes long run economic trends just don’t all of a sudden break.

We know now that they do, yet no one is rushing out to create a new generation of statistics and PMI’s. For that to happen Economists (who prepare these things) would have to admit that Economics itself is fundamentally, perhaps irretrievably, flawed. That’s not happening anytime soon, so this “boom” will go on without any boom.

That’s even more the case given what’s happening on the other side of the PMI’s. While manufacturing “sentiment” is up, non-manufacturing sentiment is down. IHS Markit reports today that while its manufacturing index hit a 34-month high of 55.5 (like a lot of things, back to about 2014 levels) its services estimate dropped to a 9-month low (53.3). That brought the composite PMI (a combination of manufacturing plus services) down to an 8-month low of just 53.8, a number that has been recently much closer to downturn than upturn.

Regardless of symmetry considerations, that would appear to indicate a general slowing in the US economy to end 2017 and begin 2018 (from an already lowered starting point).

In other words, it’s a boom that isn’t a boom doing less while not booming. They call Economics the “dismal science” for the wrong reasons; it’s not a science, but it is a miserable excuse for one.

via RSS http://ift.tt/2DM1QAu Tyler Durden

Air Force One is in need of new refrigerators to the tune of $24 million, but an industry expert swears it’s not just price gouging by greedy Boeing, reports Defense One.

“It’s not a contractor issue, it is a requirements issue,” said Richard Aboulafia, vice president of analysis at the Teal Group consulting firm. “It’s not getting people rich.”

Stringent requirements by The White House Military Office and the Air Force are the cause. While the Air Force One galley is fairly large, Air Force One houses giant, unseen refrigerators and freezers below the passenger cabin, giving the President’s official airliner the ability to store 3,000 meals – enough to feed passengers and crew for weeks if necessary. 

The project is expected to be completed in 2019 – five years before two new Air Force One replacements are slated to roll out.

Air Force One Galley

And despite the refrigerators utilizing “available industry technology,” they must be highly customized. One Air Force spokesman noted “The engineering required to design, manufacture, conduct environmental testing and obtain Federal Aviation Administration certification are included in the cost.”

In December, the Air Force awarded Boeing a $23.7 million contract to replace two of the chillers, which cool eight compartments. Boeing declined to comment on the deal, referring all questions to the Air Force.

The refrigerators on the plane date to 1990, when the Air Force received the customized 747 from Boeing. –Defense One

Although serviced on a regular basis, reliability has decreased with failures increasing, especially in hot/humid environments, Air Force spokesman Ann Stefanek said in an email to Defense One. “The units are unable to effectively support mission requirements for food storage.” In December of 2016, then President-elect Trump picked a fight with Boeing over its $4 billion Obama-era contract to replace Air Force One. After the President tweeted his opposition to the deal, the Air Force bought two undelivered Boeing 747-8 intercontinental aircraft originally destined for a bankrupt Russian firm (Transaero). 

Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!

Donald J. Trump (@realDonaldTrump) December 6, 2016

Hopefully they won’t have lithium ion batteries, assuming of course Trump is a two-term President.

Lithium ion batteries should not be allowed to be used in aircraft. I won’t fly on the Boeing 787 Dreamliner – it uses those batteries.

— Donald J. Trump (@realDonaldTrump) March 20, 2014

And in what was perhaps a little “art of the deal” meets “the Apprentice,” less than three months after the U.S. Government placed their new, double order of cheaper Air Force Ones – Trump made a very public showing of Boeing Commercial Airlines CEO Kevin McAllister and Singapore Airlines CEO Goh Choon Phong shaking hands in the White House’s Roosevelt Room over a $14 billion deal to supply 39 airplanes.

Singapore Airlines CEO Goh Choon Phong, Boeing commercial airplanes CEO Kevin McAllister

Trump touted the deal as a boon for US employment “In terms of the orders it’s about $13.8 billion and most importantly it’s about 70,000 jobs.”

via RSS http://ift.tt/2FgZnLr Tyler Durden