Gary Shilling: "Q2 GDP Was Closer To 1% Than To 3%. It Could Even Be A Negative Number"

This week, in the aftermath of the Q1 -2.9% GDP disaster, the biggest “non-recessionary” drop in 67 years which was blamed on harsh weather (because there have never been harsh winters in the past 67 years), we get the first glimpse of what Q2 GDP was in the US economy. It is expected to print just shy of 3%. However, one person disagrees: Gary Shilling believes that not only will Q2 GDP be closer to 1% than to 3%, there is a fairly good chance it could be negative, which of course would mean that the US economy has officially entered a recession.

Shilling’s take:

Special Report: No Spring Thaw

The consensus of economists looks for second quarter real GDP growth, which will be released July 30, of 3% vs. the first quarter at annual rates. It believes the 2.9% drop in the first quarter was cold weather-driven, and a rebound in the second quarter is the prelude to 3%-plus growth in the second half of the year. As in the last several years, the herd is likely to be disappointed.

Consumer spending is 69% of GDP and it barely grew in the quarter. According to monthly data, real consumer spending fell 0.2% in April and 0.1% in May. June’s numbers aren’t released yet, but based on the correlation with retail sales, which are available for June, real consumer outlays rose just 0.1%. The jump in March from weak January and February gave consumer spending a higher starting point for the second quarter so we believe it rose 1.3% from the first quarter.

With the ongoing business cost-cutting and job growth focused on hamburger flippers, hotel desk clerks and other lowpaid jobs, real wage growth to support consumer spending has been absent. Emphasis has also been on lower-paid part-time jobs. In June, they rose 1.1 million while full-timer positions dropped 708,000.

Elsewhere, real federal as well as state and local spending probably continued their declining trends. Plant and equipment spending didn’t help much. Volatile durable goods shipments rose just 0.5% in the second quarter from the first at annual rates, and that’s before reductions for inflation.

Residential construction was probably weak in the second quarter following declines in the fourth and first quarters. The earlier recovery in housing was driven by rentals, not new homeowners who are suppressed by uncertain jobs, low credit scores, the lack of 20% downpayments, huge student loan debts and the knowledge that house prices can and did fall by one-third. New home sales, the sequel to recent new building, slid 8.1% in June from May and were  off 3% in the second quarter from the first.

After declines in April and May in total private residential and nonresidential construction, June’s numbers, yet to be reported, would have to be the highest this year to keep the second quarter total from falling from the first quarter, before inflation reductions.

Net exports, the difference between U.S. exports and imports, were weak in April and May. Even with a $2 billion improvement in June, the quarterly total would knock $22 billion, or 0.5 percentage points, off annual real GDP in the second quarter. Note that the $70 billion drop in the first quarter cut real GDP by 1.5 percentage points.

The big unknown, as usual, is inventory investment. Since it’s the difference between sales and production, it’s highly volatile and notoriously subject to revisions. But barring a big jump in inventories, second quarter real GDP growth was probably a lot closer to 1% than 3%. It could even be a negative number.

A low second quarter real GDP number will kill the conviction that the first quarter drop was only an anomaly and it will spawn agonizing reappraisals for the rest of the year. It could put the Fed on hold at least into 2016 and be great for Treasury bonds. But for stocks, look out below!


via Zero Hedge http://ift.tt/1lKwB5g Tyler Durden

Gary Shilling: “Q2 GDP Was Closer To 1% Than To 3%. It Could Even Be A Negative Number”

This week, in the aftermath of the Q1 -2.9% GDP disaster, the biggest “non-recessionary” drop in 67 years which was blamed on harsh weather (because there have never been harsh winters in the past 67 years), we get the first glimpse of what Q2 GDP was in the US economy. It is expected to print just shy of 3%. However, one person disagrees: Gary Shilling believes that not only will Q2 GDP be closer to 1% than to 3%, there is a fairly good chance it could be negative, which of course would mean that the US economy has officially entered a recession.

Shilling’s take:

Special Report: No Spring Thaw

The consensus of economists looks for second quarter real GDP growth, which will be released July 30, of 3% vs. the first quarter at annual rates. It believes the 2.9% drop in the first quarter was cold weather-driven, and a rebound in the second quarter is the prelude to 3%-plus growth in the second half of the year. As in the last several years, the herd is likely to be disappointed.

Consumer spending is 69% of GDP and it barely grew in the quarter. According to monthly data, real consumer spending fell 0.2% in April and 0.1% in May. June’s numbers aren’t released yet, but based on the correlation with retail sales, which are available for June, real consumer outlays rose just 0.1%. The jump in March from weak January and February gave consumer spending a higher starting point for the second quarter so we believe it rose 1.3% from the first quarter.

With the ongoing business cost-cutting and job growth focused on hamburger flippers, hotel desk clerks and other lowpaid jobs, real wage growth to support consumer spending has been absent. Emphasis has also been on lower-paid part-time jobs. In June, they rose 1.1 million while full-timer positions dropped 708,000.

Elsewhere, real federal as well as state and local spending probably continued their declining trends. Plant and equipment spending didn’t help much. Volatile durable goods shipments rose just 0.5% in the second quarter from the first at annual rates, and that’s before reductions for inflation.

Residential construction was probably weak in the second quarter following declines in the fourth and first quarters. The earlier recovery in housing was driven by rentals, not new homeowners who are suppressed by uncertain jobs, low credit scores, the lack of 20% downpayments, huge student loan debts and the knowledge that house prices can and did fall by one-third. New home sales, the sequel to recent new building, slid 8.1% in June from May and were  off 3% in the second quarter from the first.

After declines in April and May in total private residential and nonresidential construction, June’s numbers, yet to be reported, would have to be the highest this year to keep the second quarter total from falling from the first quarter, before inflation reductions.

Net exports, the difference between U.S. exports and imports, were weak in April and May. Even with a $2 billion improvement in June, the quarterly total would knock $22 billion, or 0.5 percentage points, off annual real GDP in the second quarter. Note that the $70 billion drop in the first quarter cut real GDP by 1.5 percentage points.

The big unknown, as usual, is inventory investment. Since it’s the difference between sales and production, it’s highly volatile and notoriously subject to revisions. But barring a big jump in inventories, second quarter real GDP growth was probably a lot closer to 1% than 3%. It could even be a negative number.

A low second quarter real GDP number will kill the conviction that the first quarter drop was only an anomaly and it will spawn agonizing reappraisals for the rest of the year. It could put the Fed on hold at least into 2016 and be great for Treasury bonds. But for stocks, look out below!


via Zero Hedge http://ift.tt/1lKwB5g Tyler Durden

Rand Paul: Republicans Can Only Win if "They Become More Live and Let Live"

Rand Paul: Republicans Can Only Win if “They Become More
Live and Let Live”, Interview by Nick Gillespie. Edited by Paul
Detrick.

Original release date was July 23, 2014 and original writeup is
below.

“I think Republicans could only win in general if they become
more live and let live,” Sen. Rand Paul (R-Ky.) tells Reason TV
at Lincoln Labs’ Reboot
Conference
, which was held July 18-20 in San Francisco.

Paul sat down with Nick Gillespie to talk about the future of
the GOP, the need to reach the 80-million-strong Millennial
Generation, why having a strong national defense doesn’t mean
constant military interventions, and what Washington, D.C. can
learn from the entrepreneurial culture of Silicon Valley.

When asked whether he would vote to end the taxpayer-funded
Export-Import Bank, which helps foreign companies buy U.S.
products, is widely seen as a leading example of corporate welfare,
and is coming up for a vote in September, Paul replied:

Absolutely. If I’m a Republican and I’m going out and saying,
“We have limited resources and we can’t have everyone on food
stamps,” by golly I need to be a Republican who says “we’re not
giving one penny of corporate welfare.”

About 13 minutes. 

Interview by Nick Gillespie. Edited by Paul Detrick. Shot by
Detrick and Tracy Oppenheimer. Music by Podington Bear and
photos by Elvert
Barnes
 and thisisbossi.

Subscribe to Reason TV’s YouTube channel to receive
automatic notification when new videos go live and scroll down for
HD, Flash, MP4, and MP3 versions.

Below is a rush transcript of the conversation. All quotes
should be checked against the video.

REASON: Hi I’m Nick Gillespie with Reason TV, we’re at the
reboot 2014 Conference and we’re talking with Senator Rand Paul
from Kentucky. Senator, thanks for talking with us.

RAND PAUL: Glad to be with you, Nick.

REASON: What can the rest of the country learn from Silicon
Valley?

PAUL: Y’know I think the amazing thing out here, is the
relentless energy and drive to move forward, and they don’t wait to
say “Hey, how can government fix this, or how can even somebody
else fix it?” They fix it themselves or they find a niche, like
they find taxi cabs have a monopoly and they ask “how are we going
to stop a monopoly?” and they start Uber. So I think it’s just the
amazing ingenuity and amazing that they’re not going to wait for
somebody else to do it.

REASON: They’re not even thinking about government, they’re
getting on with their business and then dealing with it
afterwards.

PAUL: Right.

REASON: What can Silicon Valley learn from other parts of
the country?

PAUL: Well I think one of the things is that Silicon Valley
went pretty Democrat, they supported the president. I think they
just need to reevaluate and say, “All the things we do here, the
success of Silicon valley, would that happen if we had a big
government that had internet taxes and internet regulation? Would
Silicon Valley have ever developed if big government got in the way
of the development of the internet?” In fact, people say that the
beauty of the internet and why it’s developed so phenomenally is
that every other industry we have in the country is heavily
regulated. It’s one of the few industries that really has very
little regulation. 

REASON: Why do you think Silicon Valley has gotten more
politicized, at least since the Microsoft anti-trust case in the
early 2000s? Why has it gone so Democratic then?

PAUL: I don’t think they’re complete comfortable in either
party. And I know you and Matt [Welch] have written about the
demographics of where people are, and I truly believe the
conclusion that a plurality of people are no longer Republican or
Democrat. Silicon Valley I would put right in that demographic. If
you ask people out here, “Are you more fiscally conservative? Less
taxes than the president? Less regulations?” they’ll say, “Yeah,
I’m more conservative than the president.” “Are you more moderate,
more liberal than the Republicans on social issues?” They’ll say,
“yes.” They don’t fit neatly in either category. I think they’re
primed for someone who would come to them with a message that’s not
entirely Republican and not entirely Democrat. 

REASON: You gave a speech here at the Reboot Conference and you
were talking about how a company like Uber, or many internet
services, they create their own regulation where even the drivers
and the riders are being regulated. Does that new model of
regulation work in, say, the coal industry? Can you do that new
form of regulation in old industries?

PAUL: I don’t know, that’s a good question. But there is a
question of externalities that in a way the two parties regulate
but a third party is affected like air pollution and things. Many
libertarians over time have written over how property rights should
be able to stop pollution, or limit pollution, although it’s fairly
complicated in the sense that it’s not an all or none. Sometimes
society will tolerate somewhat. We all drive cars. We all have
electricity. So there’s some emissions and we have to, as a
society, develop what is acceptable. Could that be done by the
crowd responding to pollution? I’m not positive, but I do think
that there are many things where government becomes overzealous in
regulations, whereas the crowd, the people who buy stuff and judge
as you sell it to me, they want a good product, but they also want
an honest product that’s fair and without safety concerns. It’s a
better role for the crowd to regulate things than the government
because the government only knows the downside of regulation, they
don’t look at the upside of employment and distribution of
products.

REASON: Talk a little bit about benefit corporations. You’ve
been speaking a lot about that, and that seems to be pretty much in
tune with Silicon Valley or the tech community. What is a benefit
corporation and why do you think they’re important?

PAUL: A benefit corporation allows a corporation to do something
they think is good for the environment or good for people and they
don’t have to look as strictly at their bottom line. To me it goes
along with the freedom argument that if you own your business, you
tell your shareholders what you’re going to do. You either always
maximize profit or you’re gonna mostly maximize profit and
sometimes do things for the environment. I think businesses should
have that freedom. I’ve supported something called a B-Corporation
that allows you to file and say “Y’know what? Sometimes we’re going
to do something that’s a bit more expensive when we get rid of our
waste because we believe in keeping the environment clean.”

REASON: This seems to be part of a broader social movement where
work is a form of self-expression in a way that it may not have
been 50 or 60 years ago.

PAUL: To me, if you talk about the health of the psyche, or the
health of the soul, I think work’s an amazing thing. It’s a lot
like what [Cato Institute president] John Allison says is “earned
self esteem.” No one can give you self esteem. Self esteem’s
important, and we’ve got a culture that loves self esteem so we
want to give it to everybody. It’s like “2+2=5” and “oh Johnny, we
want you to feel good about that.” Johnny needs to learn that 2+2=4
and then he can feel good about it and then he’ll earn his
self-esteem. It’s also that, really our culture, we need to really
reinforce with people how important work is, not as punishment, but
as reward. And so, from a governmental point of view, that I want
everybody to work. I will have plans that will have everybody work,
not as punishment but as reward. 

REASON: Foreign policy is an issue that you’re at loggerheads a
lot with, not just with establishment Democrats like Barack Obama
or Hillary Clinton but with members of the Republican party like
Chris Christie, John McCain, recently Rick Perry. What is your
foreign policy vision and how do you answer people who say you’re a
“namby pamby isolationist” who just wants to lock everything into a
Fortress America?

PAUL: I think anytime anyone uses the world “namby pamby” we all
fight so if you say that again that’ll probably lead to
fisticuffs.

Seriously, the number one priority of the federal government is
to defend the country. It’s in the constitution, it’s
constitutional, it’s a priority. And for me, if you ask me, when
tax dollars are sent by the people to Washington, where’s the
priority? To me the priority is in defending the country. Now when
we get beyond that, then we would say, “How often should we be
involved with a civil war in Syria?” I think there’s a spectrum
from, “we’re never involved anywhere in the world” or, “we’re
always involved everywhere in the world.” I think for many years,
particularly the last dozen or so, we’ve been very close to
everywhere all the time. I think there have been times in our
history (Eisenhower, Reagan, the first George Bush) where we were
much more towards the middle where we said “y’know what? War’s the
last resort. When we go, we vote on it in Congress, the people’s
representatives have to vote. That’s what the constitution says. We
go reluctantly.” Or as Reagan said in one of his first inaugurals
which I really like, he said, “Don’t mistake our reluctance for war
for a lack of resolve.” I think that’s a good way of putting it. We
should be reluctant for war and I think America wants is someone
who will defend the country, someone who’s wise, and someone who’s
not eager for war. 

REASON: How can this be a hard sell to Republicans? To the
establishment they’re like, “No, this is all wrong.” I mean Dick
Cheney is having his fifth or 10th heart attack every time you say
something like that.

PAUL: I think a few people in Washington don’t really represent
even the Republican movement. If you ask people right now, “Should
we send American GIs back into Iraq,” a majority of Republicans
will say “no.” In fact, what I would allege is that if we had 100
American soldiers who were volunteers and they were sitting here in
the audience, and you were to ask them, “Do you think that we
should go back, do you think you should be sent back?” I think
they’d say “no” now. So I think really the opinion has shifted but
I think the policy-makers are, a lot of the time, a decade behind
the public.

REASON: Do you think it’s going to be hard to untangle the
military industrial complex that Eisenhower and other people warned
about because when you start to say, “Y’know what?” And with the
budget plans you put out it’s not like you increase the baseline
defense spending either by much or if at all. But the contractors,
all the people who are one the tip for military industrial work,
that’s a lot of money.

PAUL: Today I ran into a guy who says, “I was military, my son’s
military,” and he worried about a strong national defense. Even
this gentlemen when I say that I believe it’s a priority, but then
I say, “You know what? We should audit the pentagon because we
can’t have a strong national defense if we’re paying 1000 dollars
for a hammer or 1000 for a toilet seat. So even if you do believe
national defense, which I do, is a priority, you can’t write
unlimited checks because you’ll bankrupt the country. The quickest
way to decline and fall of America is bankruptcy. People have said
that the biggest threat to our national security is bankruptcy. So
really, I think believing in reasonable spending, even in military
is a strong national defense position.

REASON: Reason recently did a poll of millennials, a national
poll. Only 22% called themselves Republicans or leaned that way.
Millennials, there’s 80 million of them, they’re the future
demographically. They overwhelmingly identify in favor of gay
marriage, in favor of pot legalizing, in favor of vaping and online
gambling. Can the Republican party shed the social conservative
issues which seem very central to its concerns? How is that going
to work? Can they win millennials without becoming more
libertarian?

PAUL: I think Republicans can only win in general if they become
more “live and let live.” Grover Norquist will talk about this
sometimes, this “leave me alone” coalition. But in order [for the
party to] work—and this is what a lot of people don’t realize this
and they say “oh well we want the Republicans to be the pro-choice,
pro-gay marriage party—it may not be that but it may be that there
are people in the Republican party that have those positions and
some who don’t, and that we all get along because we believe in
limited government and we acknowledge that the federal government
isn’t going to be involved in some of these issues anyways. And I
think that “live and live, agree to disagree” kind of amalgamation
of people in the party will allow us to be big enough to win. I
agree with you a lot on young people but I think also some other
libertarian issues like right to privacy, the NSA overzealousness.
Young people are concerned about their cell phone, that’s the main
thing they do with every hour of every day. I think if we became
the party that’s going to protect their privacy, you could get a
large switch of Republican vote.

REASON: Final question: The Export-Import Bank is coming up for
reauthorization. This is an FDR program from the mid-1930s; it
helped subsidize purchases of American goods and the Soviet Union,
it is one of the clear cases of crony capitalism. You voted against
reauthorization in 2012. Are you going to vote against
reauthorization again, yes or no?

PAUL: Absolutely. If I’m a Republican and I’m going out and
saying, “We have limited resources and we can’t have everyone on
food stamps,” by golly I need to be a Republican who says “we’re
not giving one penny of corporate welfare.” I’m not for giving
corporate welfare and I think a lot of people, if they knew that we
had to cut all the corporate welfare in order to have a more
reasonable government that can pay for itself, I think all of a
sudden people would say, “that’s an honest Republican.” What they
don’t like is a Republican who says “I’m cutting the food stamps
but by golly I’m keeping the corporate welfare.” It’s an untenable
position and Republicans need to cast that off.

REASON: Alright, we’ll leave it there. Thank you Senator Rand
Paul of Kentucky for talking to Reason TV at the Reboot 2014
Conference. I’m Nick Gillespie.

View this article.

from Hit & Run http://ift.tt/1zjIM1j
via IFTTT

Rand Paul: Republicans Can Only Win if “They Become More Live and Let Live”

Rand Paul: Republicans Can Only Win if “They Become More
Live and Let Live”, Interview by Nick Gillespie. Edited by Paul
Detrick.

Original release date was July 23, 2014 and original writeup is
below.

“I think Republicans could only win in general if they become
more live and let live,” Sen. Rand Paul (R-Ky.) tells Reason TV
at Lincoln Labs’ Reboot
Conference
, which was held July 18-20 in San Francisco.

Paul sat down with Nick Gillespie to talk about the future of
the GOP, the need to reach the 80-million-strong Millennial
Generation, why having a strong national defense doesn’t mean
constant military interventions, and what Washington, D.C. can
learn from the entrepreneurial culture of Silicon Valley.

When asked whether he would vote to end the taxpayer-funded
Export-Import Bank, which helps foreign companies buy U.S.
products, is widely seen as a leading example of corporate welfare,
and is coming up for a vote in September, Paul replied:

Absolutely. If I’m a Republican and I’m going out and saying,
“We have limited resources and we can’t have everyone on food
stamps,” by golly I need to be a Republican who says “we’re not
giving one penny of corporate welfare.”

About 13 minutes. 

Interview by Nick Gillespie. Edited by Paul Detrick. Shot by
Detrick and Tracy Oppenheimer. Music by Podington Bear and
photos by Elvert
Barnes
 and thisisbossi.

Subscribe to Reason TV’s YouTube channel to receive
automatic notification when new videos go live and scroll down for
HD, Flash, MP4, and MP3 versions.

Below is a rush transcript of the conversation. All quotes
should be checked against the video.

REASON: Hi I’m Nick Gillespie with Reason TV, we’re at the
reboot 2014 Conference and we’re talking with Senator Rand Paul
from Kentucky. Senator, thanks for talking with us.

RAND PAUL: Glad to be with you, Nick.

REASON: What can the rest of the country learn from Silicon
Valley?

PAUL: Y’know I think the amazing thing out here, is the
relentless energy and drive to move forward, and they don’t wait to
say “Hey, how can government fix this, or how can even somebody
else fix it?” They fix it themselves or they find a niche, like
they find taxi cabs have a monopoly and they ask “how are we going
to stop a monopoly?” and they start Uber. So I think it’s just the
amazing ingenuity and amazing that they’re not going to wait for
somebody else to do it.

REASON: They’re not even thinking about government, they’re
getting on with their business and then dealing with it
afterwards.

PAUL: Right.

REASON: What can Silicon Valley learn from other parts of
the country?

PAUL: Well I think one of the things is that Silicon Valley
went pretty Democrat, they supported the president. I think they
just need to reevaluate and say, “All the things we do here, the
success of Silicon valley, would that happen if we had a big
government that had internet taxes and internet regulation? Would
Silicon Valley have ever developed if big government got in the way
of the development of the internet?” In fact, people say that the
beauty of the internet and why it’s developed so phenomenally is
that every other industry we have in the country is heavily
regulated. It’s one of the few industries that really has very
little regulation. 

REASON: Why do you think Silicon Valley has gotten more
politicized, at least since the Microsoft anti-trust case in the
early 2000s? Why has it gone so Democratic then?

PAUL: I don’t think they’re complete comfortable in either
party. And I know you and Matt [Welch] have written about the
demographics of where people are, and I truly believe the
conclusion that a plurality of people are no longer Republican or
Democrat. Silicon Valley I would put right in that demographic. If
you ask people out here, “Are you more fiscally conservative? Less
taxes than the president? Less regulations?” they’ll say, “Yeah,
I’m more conservative than the president.” “Are you more moderate,
more liberal than the Republicans on social issues?” They’ll say,
“yes.” They don’t fit neatly in either category. I think they’re
primed for someone who would come to them with a message that’s not
entirely Republican and not entirely Democrat. 

REASON: You gave a speech here at the Reboot Conference and you
were talking about how a company like Uber, or many internet
services, they create their own regulation where even the drivers
and the riders are being regulated. Does that new model of
regulation work in, say, the coal industry? Can you do that new
form of regulation in old industries?

PAUL: I don’t know, that’s a good question. But there is a
question of externalities that in a way the two parties regulate
but a third party is affected like air pollution and things. Many
libertarians over time have written over how property rights should
be able to stop pollution, or limit pollution, although it’s fairly
complicated in the sense that it’s not an all or none. Sometimes
society will tolerate somewhat. We all drive cars. We all have
electricity. So there’s some emissions and we have to, as a
society, develop what is acceptable. Could that be done by the
crowd responding to pollution? I’m not positive, but I do think
that there are many things where government becomes overzealous in
regulations, whereas the crowd, the people who buy stuff and judge
as you sell it to me, they want a good product, but they also want
an honest product that’s fair and without safety concerns. It’s a
better role for the crowd to regulate things than the government
because the government only knows the downside of regulation, they
don’t look at the upside of employment and distribution of
products.

REASON: Talk a little bit about benefit corporations. You’ve
been speaking a lot about that, and that seems to be pretty much in
tune with Silicon Valley or the tech community. What is a benefit
corporation and why do you think they’re important?

PAUL: A benefit corporation allows a corporation to do something
they think is good for the environment or good for people and they
don’t have to look as strictly at their bottom line. To me it goes
along with the freedom argument that if you own your business, you
tell your shareholders what you’re going to do. You either always
maximize profit or you’re gonna mostly maximize profit and
sometimes do things for the environment. I think businesses should
have that freedom. I’ve supported something called a B-Corporation
that allows you to file and say “Y’know what? Sometimes we’re going
to do something that’s a bit more expensive when we get rid of our
waste because we believe in keeping the environment clean.”

REASON: This seems to be part of a broader social movement where
work is a form of self-expression in a way that it may not have
been 50 or 60 years ago.

PAUL: To me, if you talk about the health of the psyche, or the
health of the soul, I think work’s an amazing thing. It’s a lot
like what [Cato Institute president] John Allison says is “earned
self esteem.” No one can give you self esteem. Self esteem’s
important, and we’ve got a culture that loves self esteem so we
want to give it to everybody. It’s like “2+2=5” and “oh Johnny, we
want you to feel good about that.” Johnny needs to learn that 2+2=4
and then he can feel good about it and then he’ll earn his
self-esteem. It’s also that, really our culture, we need to really
reinforce with people how important work is, not as punishment, but
as reward. And so, from a governmental point of view, that I want
everybody to work. I will have plans that will have everybody work,
not as punishment but as reward. 

REASON: Foreign policy is an issue that you’re at loggerheads a
lot with, not just with establishment Democrats like Barack Obama
or Hillary Clinton but with members of the Republican party like
Chris Christie, John McCain, recently Rick Perry. What is your
foreign policy vision and how do you answer people who say you’re a
“namby pamby isolationist” who just wants to lock everything into a
Fortress America?

PAUL: I think anytime anyone uses the world “namby pamby” we all
fight so if you say that again that’ll probably lead to
fisticuffs.

Seriously, the number one priority of the federal government is
to defend the country. It’s in the constitution, it’s
constitutional, it’s a priority. And for me, if you ask me, when
tax dollars are sent by the people to Washington, where’s the
priority? To me the priority is in defending the country. Now when
we get beyond that, then we would say, “How often should we be
involved with a civil war in Syria?” I think there’s a spectrum
from, “we’re never involved anywhere in the world” or, “we’re
always involved everywhere in the world.” I think for many years,
particularly the last dozen or so, we’ve been very close to
everywhere all the time. I think there have been times in our
history (Eisenhower, Reagan, the first George Bush) where we were
much more towards the middle where we said “y’know what? War’s the
last resort. When we go, we vote on it in Congress, the people’s
representatives have to vote. That’s what the constitution says. We
go reluctantly.” Or as Reagan said in one of his first inaugurals
which I really like, he said, “Don’t mistake our reluctance for war
for a lack of resolve.” I think that’s a good way of putting it. We
should be reluctant for war and I think America wants is someone
who will defend the country, someone who’s wise, and someone who’s
not eager for war. 

REASON: How can this be a hard sell to Republicans? To the
establishment they’re like, “No, this is all wrong.” I mean Dick
Cheney is having his fifth or 10th heart attack every time you say
something like that.

PAUL: I think a few people in Washington don’t really represent
even the Republican movement. If you ask people right now, “Should
we send American GIs back into Iraq,” a majority of Republicans
will say “no.” In fact, what I would allege is that if we had 100
American soldiers who were volunteers and they were sitting here in
the audience, and you were to ask them, “Do you think that we
should go back, do you think you should be sent back?” I think
they’d say “no” now. So I think really the opinion has shifted but
I think the policy-makers are, a lot of the time, a decade behind
the public.

REASON: Do you think it’s going to be hard to untangle the
military industrial complex that Eisenhower and other people warned
about because when you start to say, “Y’know what?” And with the
budget plans you put out it’s not like you increase the baseline
defense spending either by much or if at all. But the contractors,
all the people who are one the tip for military industrial work,
that’s a lot of money.

PAUL: Today I ran into a guy who says, “I was military, my son’s
military,” and he worried about a strong national defense. Even
this gentlemen when I say that I believe it’s a priority, but then
I say, “You know what? We should audit the pentagon because we
can’t have a strong national defense if we’re paying 1000 dollars
for a hammer or 1000 for a toilet seat. So even if you do believe
national defense, which I do, is a priority, you can’t write
unlimited checks because you’ll bankrupt the country. The quickest
way to decline and fall of America is bankruptcy. People have said
that the biggest threat to our national security is bankruptcy. So
really, I think believing in reasonable spending, even in military
is a strong national defense position.

REASON: Reason recently did a poll of millennials, a national
poll. Only 22% called themselves Republicans or leaned that way.
Millennials, there’s 80 million of them, they’re the future
demographically. They overwhelmingly identify in favor of gay
marriage, in favor of pot legalizing, in favor of vaping and online
gambling. Can the Republican party shed the social conservative
issues which seem very central to its concerns? How is that going
to work? Can they win millennials without becoming more
libertarian?

PAUL: I think Republicans can only win in general if they become
more “live and let live.” Grover Norquist will talk about this
sometimes, this “leave me alone” coalition. But in order [for the
party to] work—and this is what a lot of people don’t realize this
and they say “oh well we want the Republicans to be the pro-choice,
pro-gay marriage party—it may not be that but it may be that there
are people in the Republican party that have those positions and
some who don’t, and that we all get along because we believe in
limited government and we acknowledge that the federal government
isn’t going to be involved in some of these issues anyways. And I
think that “live and live, agree to disagree” kind of amalgamation
of people in the party will allow us to be big enough to win. I
agree with you a lot on young people but I think also some other
libertarian issues like right to privacy, the NSA overzealousness.
Young people are concerned about their cell phone, that’s the main
thing they do with every hour of every day. I think if we became
the party that’s going to protect their privacy, you could get a
large switch of Republican vote.

REASON: Final question: The Export-Import Bank is coming up for
reauthorization. This is an FDR program from the mid-1930s; it
helped subsidize purchases of American goods and the Soviet Union,
it is one of the clear cases of crony capitalism. You voted against
reauthorization in 2012. Are you going to vote against
reauthorization again, yes or no?

PAUL: Absolutely. If I’m a Republican and I’m going out and
saying, “We have limited resources and we can’t have everyone on
food stamps,” by golly I need to be a Republican who says “we’re
not giving one penny of corporate welfare.” I’m not for giving
corporate welfare and I think a lot of people, if they knew that we
had to cut all the corporate welfare in order to have a more
reasonable government that can pay for itself, I think all of a
sudden people would say, “that’s an honest Republican.” What they
don’t like is a Republican who says “I’m cutting the food stamps
but by golly I’m keeping the corporate welfare.” It’s an untenable
position and Republicans need to cast that off.

REASON: Alright, we’ll leave it there. Thank you Senator Rand
Paul of Kentucky for talking to Reason TV at the Reboot 2014
Conference. I’m Nick Gillespie.

View this article.

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Second US Citizen Infected With Ebola In Liberia

It was a few short hours ago when we reported that as part of the escalating Ebola epidemic in West Africa a US doctor, Kent Brantly had himself succumbed to the deadly virus. Moments ago we found out that a second US doctor from the same aid organization in Liberia, Nancy Writebol, has been infected with Ebola.

Writebol in a June 2011 photo from the Rafiki missionary foundation

From CBS:

Two U.S. citizens are now reported to be infected with the deadly and incurable Ebola virus in West Africa.

 

The first American reported to have contracted the disease is an American doctor working with Ebola patients in Liberia, who tested positive for the deadly virus, North Carolina-based Samaritan’s Purse issued said in a news release on Saturday. 

 

The second person who reportedly tested positive for Ebola is a woman employed by an aid organization in Liberia who is a married mother of two.

 

In a statement on Sunday, Samaritan’s Purse said: “Nancy Writebol is employed by SIM in Liberia and was helping the joint Samaritan’s Purse/SIM team that is treating Ebola patients at the Case Management Center in Monrovia.”

 

Writebol’s age and hometown have not been released at this time.

What is most disturbing is that the two physicians have contracted the lethal disease despite apparently taking much needed precations to avoid infection as the following photos below demonstrate.

kentbrantly1.jpg

Dr. Kent Brantly assists two ELWA Hospital staff in transporting an Ebola patient from the triage unit to the isolation unit in the rain on Tuesday July 22, 2014, in Liberia.

 

kentbrantly4.jpg

Dr. Kent Brantly (right) collects a blood sample from a suspected Ebola patient in the ELWA isolation ward in Liberia




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China Expands Live-Fire Gulf Of Tonkin Military Drills; Warns Of Massive Flight Disruptions

In a surprise announcement, China revealed that in addition to scheduled naval drills to be held near Vietnam (in case there isn’t nearly enough tensions between China and the former US war foe) the country’s Military of Defense announced that it would expand military drills in the East China Sea, which will re-escalate the already boiling territorial disputes which involve Japan, the Philippines and Vietnam. While the scale of the current drills is bigger than in the past, it’s a coincidence the annual exercises are being held at the same time, Beijing News reported yesterday, citing Zhang Junshe, a researcher at Navy Military Research Institute.

The irony that this is happening as China is already conducting a massive live-fire drill off Beibu Bay, also known as Gulf ot Tonkin, will hardly escape readers, although we doubt even China will be so daring as to troll the US with a follow up “false flag” operation that launches a “contained” regional war.  In addition to Tonkin, China is also engaging in a drill in the Bohai Strait next to North Korea, and now: the East China Sea, just to make sure Japan and Taiwan are also covered just in case.

Why is China doing this now, when virtually every corner of the world is on the verge of war? Well, why not: with the rest of the world back into Cold War territory if not worse, China itself has engaged in numerous territorial disputes with its neighbors, so what better option than to be prepared if and when the crisis presents itself: a crisis which everyone knows by now, should never be put to waste. Ironically, that appears to be the tactical thinking behind every other conflict around the globe: all it would take for things to spiral out of control on a global scale is a series of domino-like events resulting from a crisis which everyone thinks can be contained. Incorrectly so.

Most are familiar with the story. For those who aren’t, Bloomberg explains: President Xi Jinping has been expanding the reach of China’s navy and using the added muscle to more aggressively assert territorial claims in the region. Chinese and Japanese ships regularly tail one another off disputed islands in the East China Sea, while deadly, anti-Chinese riots broke out in Vietnam in May after China set up an oil rig in waters also claimed by that country. The Philippines has sought United Nations arbitration in its maritime spat with China.

Not surprisingly, just like with Syria, just like with Ukraine, just like with most wars in the history of the world, the underlying conflict is about one simple thing: energy and natural resources.

China claims much of the South China Sea, which may be rich in energy and mineral deposits, under its “nine dash-line” map first published in 1947, which extends hundreds of miles south from China’s Hainan Island to equatorial waters off the coast of Borneo, taking in some of the world’s busiest shipping lanes. In the East China Sea, Japan and China both lay claims to a chain of uninhabited islands known as Senkaku in Japanese and Diaoyu by the Chinese. The U.S. has said it will come to Japan’s defense in any clash over the islands.

The nine-dash line, shown in green, is picture below:

With the current drills “what’s different from the past is that China is doing it in a more high-profile way, which does make China appear to be raising military tensions,” said Suh Jin Young, a professor emeritus of Chinese politics at Seoul’s Korea University. “But in Chinese eyes, the tensions were begun by the U.S. and Japan, and China thinks it’s only conducting what it has been doing annually.”

More irony: the latest drill announcement takes place during a rare sign of military cooperation with the two countries, China is participating along with the U.S. and Japan in the five-week-long Rim of the Pacific Exercise that runs through Aug. 1 in waters off Hawaii. China’s four ships make up the second-biggest naval contingent after the U.S. of the 22 nations taking part. But not all is at it seems there either because as we reported last week, China has sent a surveillance ship to Hawaii in retaliation to US navy build up in its back yard. Simply said, China is pretending to be a diplomatic ally of the west even as it is actively engaging in trade pacts with Russia and subverting US military influence around its borders, and especially in regions it deems of vital national interest.

It is also notable that as part of the ongoing drills, Chinese airlines last week were ordered to cut a quarter of their flights at a dozen airports, including two in Shanghai, because of “high frequency exercises,” state media reported on July 22. China’s airline regulator has issued an orange alert for massive flight delays in eastern and central regions due to “rainstorms, routine military exercises and other comprehensive factors.” Both China Southern Airlines and China Eastern Airlines said yesterday they expected delays or cancellations.

And while military and civil aviation authorities have taken steps to minimize the impact of the new drills, the Defense Ministry said in the statement, let’s hope no Malaysian, Vietnamese, or Japanese Airline flight ends up mysteriouly diverted over the live fire zone in the South China Sea: not even the US State Department has enough YouTube clip producers and directors to “explain” the global panic that would result.




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Forget What They Say And Watch What They Do

Via Mark St.Cyr,

Once again we are breaking records on a near weekly basis. Week after week and sometimes daily new never before seen in the history of financial markets record prints. Yet, business people across the spectrum don’t feel it, nor are they buying it.

Should one be worried about this conundrum? Financial mavens say no. In earnest, most seem to insinuate one should “Just buy the all time highs and sleep like a baby.” Then again, that’s what they say all the time do they not?

So what is someone to do that doesn’t believe the hype or the meme “it’s different this time” and can’t get that feeling out of their gut for they know – it truly never is?

You pay attention to when implementations seem to be appearing on a near regular basis that can separate you from your money with, or by the force, of law. e.g., The “Gates” Are Closing: SEC Votes Through Money Market Reform

You don’t sit down and draft this stuff up when everything is just ducky. You do it when you know or believe: If this shite hits the fan – its gonna get a whole lot worse even faster.

One of the (and I do mean the) most ominous signs I have seen over the last few years where if something were to go wrong the very place that is supposedly the safest in most people’s eyes and where a great bulk of ordinary people’s money is parked; was just quietly approved permission that in the event they deem as “a panic” (my word not theirs) they will put up gates. i.e., Separate you from your money.

This seemingly inconsequential event as is being portrayed by the under reporting of it through out all the media is absolutely breath-taking. The vast majority of people have absolutely no clue, and for all intents and purposes appear to not want too either. This is where things can go bad very, very, quickly in my opinion.

The troubling fact that gives this issue credence as the one you should pay close attention to, is when you also hear in concert heads of state from not only other countries but right here at home where the tenor and tone starts to ring tones of “bail in” i.e., Bail out was how the banks got your money via you tax dollars. Bail in will be how the banks are going to get your money via your deposits. That’s what surely is being proposed  or considered should another crisis occur and the banks need to be bailed out – again.

“But they told us they wouldn’t do it again with tax payer dollars!” I can hear you say. Well, I can hear the legal ease laced argument now: “They used depositors dollars, not tax payers. After all – depositors knew the risks that money in a money market account wasn’t really the same as cash in the bank! That’s why we feel comfortable with this bail in approach.”

Maybe some of you reading this understand the difference, however I’ll argue the vast majority that have money in money markets have absolutely no idea let alone they were just legally put behind a gate if need be.

As far as they’re concerned if the markets go haywire, they think they’ve played it safe. You watch the moment in today’s social media fueled populace the hysteria that will take off the moment just a few realize they can’t get their money. If that happens all, and I do mean all bets are off.

Remember that pesky little thing that was drilled into everyone’s head as being the root cause of everything that happened during the crisis? It was a thing called leverage, and too much leverage was a very bad thing.

What have we learned over these 5 years? Wall Street can’t get enough of a bad good thing. I guess more must make it better, because leverage today is at heights right along with where we are in stock prices: Above where it was in 2007. I guess it’s back to: Nothing to see here folks please just move along and try the brie, it’s superb!

How does one think others will react to their monthly “money market” balances when that other hidden jewel that was reported to be implemented takes effect? You know, the one that will allow the legal “breaking of the buck.”

How will the first people with significant sums (significant is a relative word) feel when they politely inquire on why their “balance” doesn’t seem to quite jive with what they believe it should state?

How do you think they’ll react if it’s during a 3%,5%,10%, out of the blue generic market correction? How about if they then decide screw it – they want it under their mattress only to be informed. “Ah we’re sorry, we wont can’t do that at this time.” Then what? Again, all bets are off in my opinion.

I discussed in an article not that long ago about how many were missing the point on the “getting in” to this market and forgetting the real issue is about having the ability to “get out.” Many took that as if I was complaining or taking issue as some sulking boy crying wolf and not even a shiatsu ever appearing. It was far from that.

What I see far too often today is nobody either remembers (for they’re new to investing or business overall and didn’t have money at work during the crisis) Or, they’ve bought into the hype that this market is supported by fundamentals that prove not only these levels are “fairly priced and based on sound economic fundamentals” but that pigs can fly because they’re actually legitimate offspring of unicorns.

The issue that needs to be pointed out again, and again, and again is the fact of just how quickly bad things can happen at these heights. And – based on why. i.e., The Federal Reserve’s current interventionist monetary policies.

All the economic numbers touted as “proof positive” why this market is to be believed will be the exact reasoning many will need to embrace when they look at their money market balances and ask themselves, “Huh?”

I’ll never forget during the real panic as the market fell, sometimes in an outright free fall. Suddenly all the people who were touted across the financial media for their stock prowess were facing cameras slack-jawed and dumb founded. Some were even near incoherent in trying to sound as if they knew what was taking place but obviously had no clue.

This wasn’t years after a bull run where people were caught off guard, this was months, and some of it was no further away than the next earnings cycle. The meme right before everything went bad then? “Just buy in at these now even better prices!” Sound familiar?

I remember watching one of the financial shows where Mohamed El-Erian was talking. Although I don’t agree with all his viewpoints, I gained a lot of respect for him that day for the way he honestly answered a question poised by one of the talking heads. A question was posited in reference to what people should be or should have done during one of the panic days. He replied back (I’m paraphrasing to the best of my ability as I can remember) “He hadn’t any idea of what was happening or where it would go or end that day.” He told the story of his wife calling him asking what she should do and the best advice he could think of was to tell her, “to go to the ATM and withdraw as much as you can.” For even he had no idea.

That took great candor on his part to state that in my view. It also was a wake up call to anyone that if the some of the smartest credible guy’s in the business of money and markets didn’t have a clue – what did that say about the rest of them.

Today, these markets are at heights that even a correction down to those previous record levels would feel like the world is coming to an end. And what has been made more clear if one is paying attention?

If there were to be another panic of any sorts access to an ATM may be the least of most people’s problems. But there’s no need to be concerned. The world today is a far more tranquil stable place or environment than it’s ever been. Not only that: “The Fed’s got your back!” Right?

Nothing to see here folks, move along is today’s newest battle rally cry.

For myself I’m still a believer that opportunity abounds no matter the times if one truly remembers and understands: Some of the greatest opportunities in both one’s personal and business life, is if you can keep you wits about you while everyone is losing theirs. That’s the true reason why you always need to pay attention and have plans of action in place.

Personally, I’m paying even more attention now than I have in recent years for as Andrew Carnegie famously said, “The older I get the less I pay attention to what men say, and pay more attention to what they do.”

I believe watching the fortification or installment of legal “gates” as a barrier to one’s money is far more important than hearing another reason why I need to “buy the all time high” for the gazillionth time. But that’s just me.




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US Releases Satellite Images Allegedly Proving Russian Shelling Of East Ukraine

A week after Russia revealed photos of Ukraine deploying Buk missiles in the east as well as radar proof of Ukraine warplanes in the vicinity of MH-17, the US has yet to present any of the incontrovertible evidence supposedly in its possession that proves it was the separatists who shot down the plane, a narrative which has already propagated through western media. Instead, several hours ago the US. Office of the Director of National Intelligence released satellite images taken by the private civilian company Digital Globe (and thus not government sourced), which US officials say offer proof that Russian forces have been shelling eastern Ukraine in a campaign to assist rebel groups fighting Ukraine’s government in Kiev.

The WaPo reports:

The grainy photographs, taken between Wednesday and Saturday, are labeled as indicating fire from multiple rocket launchers inside Russia and targets they have struck inside Ukraine. The Pentagon and State Department first accused Russian artillery of firing directly into Ukraine on Thursday. The charges were repeated Friday, although no evidence was offered.

 

The high-altitude images released Sunday “provide evidence that Russian forces have fired across the border at Ukrainian military forces, and that Russia-backed separatists have used heavy artillery, provided by Russia, in attacks on Ukrainian forces from inside Ukraine,” according to labels on the pictures by the Office of the Director of National Intelligence.

 

The most recent photograph, taken Saturday, shows what is described as “blast marks” from rocket launcher fire on the Russian side of the border, and “impact craters” inside Ukraine.

 

A photograph labeled as taken Wednesday shows a row of vehicles described as “self-propelled artillery only found in Russian military units, on the Russian side of the border, oriented in the direction of a Ukrainian military unit within Ukraine.” On the other side of the border, “the pattern of crater impacts near the Ukrainian military unit indicates strikes from artillery fired from self-propelled or towed artillery, vice multiple rocket launchers,” it said.

Time has more:

One image dated July 25/26 shows what DNI claims is “ground scarring” on the Russian side of the border from artillery aimed at Ukrainian military units in Ukraine, as well as the resultant ground craters on the Ukrainian side of the border:

 

 

A slide from a day earlier is said to show self-propelled artillery on the Russian side of the border oriented toward Ukraine, with impact areas near Ukrainian military units:

 

Another of the DigitalGlobe photos released by the Obama administration:

Curiously, the US State Department is urging those seeking objective data on this unfolding development to follow the US ambassador to Ukraine, Geoffrey Pyatt, the same person who was intercepted in plotting the downfall of the former Ukraine government in a leaked recorder conversation with US assistant secretary of state, Victoria Nuland, of “Fuck the EU” fame:

And from Pyatt:

Nonetheless, one does have to wonder: why would the ODNI, which shares intelligence with the NSA, have to resort to private-sector satellite imagery as proof? If there is anyone who has definitive evidence of anything happening in the world at any given moment and as seen from space, it would be the NSA.

To be sure, Russia once again promptly responded:

A Russian Defense Ministry spokesman, Maj. Gen. Igor Konashenkov, charged Sunday that the United States is getting most of its intelligence data on the Russian military from social media and suggested it turn to more “trustworthy” information, the ITAR-TASS news agency reported.

 

Konashenkov denied recent U.S. statements that Russia, after first decreasing the number of troops it has deployed along the Ukrainian border, has now increased them to at least 15,000. Regular international inspections under the international Open Skies Treaty, he said, “have not registered any violations or undeclared military activity on the part of Russia in the areas adjacent to the Ukrainian border.”

The bottom line is perhaps best summarized by WaPo: “As the ground war between Russia-backed separatist forces in eastern Ukraine and government troops has escalated this past week, charges and countercharges between Russia and the West have reached fever pitch.”

So while the “evidence” of the downing of MH17 by separatists will at this point likely not be forthcoming with the event having taken place over a week ago (at least not from the US State Department) aside from administration assurances that it is “common sense” that the rebels fired the missile, expect the “evidentiary” campaign to refocus back on the hostilities in east Ukraine, where as has been the case from the beginning of the conflict in March, it will be merely a continuation of the “he said, she said” propaganda war waged on both sides that the whole world has by now grown accustomed to, and where it is increasingly becoming clear that just like in the Syria conflict, the underlying motive is a very simple one: gas.




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A New York City Smoker Group Suing to End E-Cigarette Ban in Restaurants and Bars

On Tuesday July 22, 2014, the New York City based smokers group
named Citizens Lobying Against Smokers Harassment, charged in a
lawsuit filed in Manhattan Supreme Court that the ban on
e-cigarettes being smoked in restaurants and bars is illegal
because the ban has nothing to do with protecting New Yorkers from
second hand smoke

For more on this topic watch the reasonTV short titled Thank
You for Vaping: Libertarian vs. New York City’s E-Cig
Ban. 

Original text below the video.

“[E-cigarettes] are just as important for public health as
childhood vaccines, antibiotics, sewer treatment, and water
treatment,” says anti-smoking activist Bill Godshall of Smokefree
Pennsylvania. “And [it’s] one of the craziest situations because
the public health authorities [want to] ban them.”

On April 28, 2014, Reason, the Museum of Sex, and Henley
Vaporium
 co-hosted a party to celebrate how e-cigarettes
are saving lives—and to flout a ridiculous new law in New York that
bans their use in many public places. (More on that in a
moment.)Vaping at the Museum of Sex ||| Credit: Anthony Collins

E-cigarettes, which are battery-powered devices that replace
carcinogenic smoke with water vapor, have proven to be remarkably
effective at helping habitual smokers quit tobacco cigarettes.
While we don’t know yet if e-cigarettes has any long-term adverse
health consequences, it’s highly unlikely that they’re as dangerous
as regular smokes.

“[S]imple common sense would tell us that inhaling their
ingredients, as compared to inhaling the thousands of chemicals
from tobacco combustion (the smoke), is highly likely to be less
harmful,” writesDr.
Gilbert Ross of the American
Council on Science and Health
.

And yet federal regulators are determined to severely limit the
use of e-cigarettes. In 2009, the Food and Drug Administration
(FDA) attempted to block their sale altogether, but a
federal judge intervened
. On April 24, 2014, the FDA proposed
regulations that would require e-cigarettes manufacturers to
obtain Ex-Smoker Amier Carmel ||| Credit: Anthony Collinsthe agency’s approval for each of their products, a process
that Ross estimates could cost over a million dollars and would
likely drive the small players (which currently dominate the
industry) out of business. This would dramatically curtail the
variety of e-cigarettes products on the market, thus limiting the
options of smokers looking for an alternative to regular
cigarettes.

New York City, Boston, Chicago, Los Angeles, along with other
cities, states, and counties have passed laws banning the use of
e-cigarettes in offices, bars, parks, and other public places.
These laws make little sense, argues Ross, because “there are no
toxins in so-called second-hand vapor.” E-cigarettes generally emit
no odor, and the vapor they give off rapidly dissipates.

At the stroke of midnight on the evening of the Reason event,
the New York City e-cigarettes ban took effect, giving attendees an
opportunity to openly flout the law.

Click here to
read Jacob Sullum’s take on the FDA proposed regulations.

Click here for
more photos of the event.

About 3:15.

Shot, produced, and edited by Jim Epstein. Photos by Anthony
Collins.

View this article.

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China Cements Eurasian Trade Routes With Great Silk Road Revival: The Infographic

When it comes to the rise of Eurasia as the ascendent axis set to oppose US global hegemony, conventional wisdom focuses on the roles of China and Russia. However, the changing geopolitical landscape is certainly far more nuanced than merely the “west” versus the BRICS, and as the following infographic from SCMP shows, China has been quietly working to recreate one of the most legendary trade routes, “the Silk Road“, linking Africa to the Middle East (Iraq and Iran) to India, to Indonesia and all culminating in Beijing, while at the same time the reverse leg of the route goes to Kazakhstan, Moscow and ultimately, Germany. The purpose: “to enhance political and economic ties with southeast Asia and beyond.”

As SCMP reports, China has set up a 10 billion yuan fund to support infrastructure projects under the umbrella of the silk road plan. Initially floated in relation to Asean countries, the idea has grown to include ports such as Colombo and Gwadar. China is already working with Malaysia to upgrade the Malaysian port of Kuantan and Cambodian officials have made clear their enthusiasm in developing port infrastructure.

Container port data compiled by the United Nations shows China is already the world’s biggest merchant marine operator. Around a quarter of the world’s container tonnage passed through Chinese ports in 2012. The 155 million twenty foot equivalent Unites (TEUs) handled by Chinese ports dwarfs the 43 million handled by the second biggest operators, the United States. Customs administration figures show around 40,000 ships entered and left Chinese ports in the first half of 2014.

By naming the project the maritime silk road, Xi Jinping links the concept to the ancient sea routes piled by Admiral Zheng He in the 15th century. As head of a huge and technologically advanced fleet, Zheng He restored large-scale maritime trade after centuries of disruption, confirming China’s status as the leading source of goods, technology and information for the rest of the world.

In June this year China’s 2,400 year-old Grand Canal, which historically linked sections of the silk road, was awarded Unesco heritage status, as were large portions of the ancient overland silk road. The 11,179 kilometer Yunxinou International Railway linking Chongqing and Xinjiang with Europe and, commonly referred to as the “New Silk Road”, runs alongside many of these ancient caravan tracts.

The message China is trying to send to the west by recreating trade routes that defined its dominance in global trade, and which would enmesh the entire eastern hemisphere into one massive trade zone, hardly needs to be clarified.

Infographic below:




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