Month: June 2017

In Latest Flip-Flop, Trump Decides Not To Move Israel Embassy To Jerusalem

The list of campaign promise reversals continues to grow as The FT reports President Donald Trump has decided not to move the US embassy in Israel from Tel Aviv to Jerusalem, in a major reversal of one of his foreign policy campaign pledges.

During the presidential campaign Mr Trump repeatedly vowed to move the US embassy to Jerusalem despite concerns that it would exacerbate tensions between Israel and the Arab world.

Washington's embassy is in Tel Aviv, as are most foreign diplomatic posts. Israel calls Jerusalem its eternal capital, but Palestinians also lay claim to the city as part of an eventual Palestinian state. Both sides cite biblical, historical and political claims. The U.S. Congress passed a law in 1995 describing Jerusalem as capital of Israel and saying it should not be divided, but successive Republican and Democratic presidents have used their foreign policy powers to maintain the U.S. Embassy in Tel Aviv and to back negotiations between Israel and the Palestinians on the status of Jerusalem.

As we noted previously, any decision to break with the status quo is likely to prompt protests from U.S. allies in the Middle East such as Saudi Arabia, Jordan and Egypt. Bill Clinton, George W Bush and Barack Obama all signed repeated six-month waivers postponing the move for national security reasons.

No countries currently have their embassy to Israel in Jerusalem.

So, first China currency manipulation, then Yellen's future, followed by Ex-Im Bank, and NATO, and now, Mr Trump on Thursday followed the path of his predecessors in the Oval Office by taking action to circumvent a Congressional mandate to move the embassy to Jerusalem.

Trump offered no hints at his decision last week on his visit to Israel with his 'old friend' Bibi…

But we do note that he (reportedly) was angry at Palestine's Abbas for "lying."

The White House said in a statement that the decision was made to “maximise the chances of successfully negotiating a deal between Israel and the Palestinians”.

“While President Donald J. Trump signed the waiver under the Jerusalem Embassy Act and delayed moving the U.S. Embassy in Israel from Tel Aviv to Jerusalem, no one should consider this step to be in any way a retreat from the President’s strong support for Israel and for the United States-Israel alliance,” the White House added.

So Saudis 1 – 0 Bibi?

Maybe not, as Axios notes, a source who has been in the process for multiple presidents told Axios, this is Trump defaulting to the status quo. Bureaucrats brief a new president, show them the doomsday forecast of riots, broken peace deals, new security requirements and other issues, and presidents back off. etc.

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California Uses One State Credit Card To Pay Off Another

Gov. Jerry BrownCalifornia Gov. Jerry Brown has a plan to address his state’s hundreds of billions of dollars in unfunded pension liabilities: Borrow money at low rates and invest it in a hopefully higher-yielding state pension fund.

Over the past two decades, several states and localities have borrowed to cover exploding pension liabilities. But the practice is fraught with risk, and it has backfired spectacularly on more than a few occasions. The City of Oakland, for instance, lost $250 million on a similar borrow-and-invest pension funding scheme when projected returns did not pan out. When New Jersey tried borrowing to cover pension obligations, it ended up being charged with securities fraud.

These risks do not seem to bother Brown, whose pension proposal—released as part of his “May Revision” budget—calls for borrowing $6 billion from a state savings account at 1.5 to 3.5 percent interest rates and investing that money in CalPERS, the state’s pension investment fund, which Brown is counting on to make 7 percent returns.

If all goes according to the governor’s plan, that $6 billion investment will be enough to save $11 billion in pension costs and pay back the state savings account. But that’s a pretty big “if,” especially given CalPERS’ recent track record.

In 2014 CalPERS had a return target of 7.8 percent. Instead it brought in a measly 2.4 percent. That was bad, but at least it was better than 2015’s .61 percent return. Last year saw a jump to 5.8 percent—better, but still far below what Brown needs.

Meanwhile, an economic downturn could wreak havoc with CalPERS’ already depressed returns. Indeed, recessions are the main reason this approach to budgeting is so inherently risky.

A comprehensive study by Boston College’s Center for Retirement Research found that states and localities that borrowed funds to cover pension obligations in the years leading up to an economic contraction overwhelmingly witnessed negative returns. CalPERS itself saw a negative 24 percent return on investment during the worst of the Great Recession.

Brown is clearly aware of this recessionary risk, saying as he announced his pension proposal that “an economic recovery won’t last forever.” So why is he pushing a proposal that depends on an ongoing economic recovery? The answer, according to that Boston College study, is necessity: Financial pressure, not fiscal wisdom, plays the biggest role in which states and localities go for this option. California currently faces a $5.8 billion budget shortfall, forcing the governor to scramble for any savings he can find.

Needless to say, that’s not how the governor justified his move. He claims his proposal would “reduce unfunded liabilities and stabilize state contribution rates.” A little context: California is looking at anywhere from $242 billion to $767 billion in unfunded pension liabilities. Even if Brown gets those $11 billion, the money will be a drop in the bucket compared to the tab coming due.

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Mattis: US To “Annihilate” Islamic State Caliphate, Civilian Casualties A “Fact Of Life”

Authored by Mike Shedlock via MishTalk.com,

US Defense Secretary James Mattis announced plans on Sunday to ‘Take Apart’ Islamic State Caliphate. Civilian casualties do not matter one bit.

The fight against Islamic State has shifted to “annihilation tactics” to stop potential terrorists who’ve flocked to places such as Iraq and Syria from returning to their home countries to wreak havoc, Defense Secretary James Mattis said Sunday.

 

“We have already shifted from attrition tactics where we shove them from one position to another in Iraq and Syria,” Mattis said on “Face the Nation” on CBS. “Our intention is that the foreign fighters do not survive the fight to return home to North Africa, to Europe, to America, to Asia, to Africa.”

 

“We are going to squash the enemy’s ability to give some indication that they’re — that they have invulnerability, that they can exist, that they can send people off to Istanbul, to Belgium, to Great Britain and kill people with impunity,” Mattis said.

 

Asked about the potential for greater civilian casualties from the stepped-up attacks, Mattis said such losses “are a fact of life.”

 

“The bottom line is we are going to accelerate the campaign against ISIS,” he said. “It is a threat to all civilized nations. And the bottom line is we are going to move in an accelerated and reinforced manner, throw them on their back foot.”

 

He said the U.S. plans to “strip them of any kind of legitimacy” and deny any country from providing Islamic State with any degree of protection as well as dry up the group’s fundraising.

Civilian Pay Price

The Intercept reports THE U.S. HAS RAMPED UP AIRSTRIKES AGAINST ISIS IN RAQQA, AND SYRIAN CIVILIANS ARE PAYING THE PRICE.

ON APRIL 24, a group of Syrian women bundled themselves and their children into a car and attempted to flee the small town of Tabqa, outside of Raqqa. In recent months the sleepy principality had become the site of raging battles between Islamic State militants and U.S.-backed proxy forces, waging a campaign to drive ISIS from the country. Packed into the fleeing car were 11 people, including eight members of the al-Aish family: three women between the ages of 23 and 40, and five children, the youngest one just 6 months old.

 

The al-Aish family’s flight from a warzone was similar to millions of other desperate journeys made by Syrian civilians over the past six years. But they would not make it to safety. As they fled Tabqa, their car was hit by an airstrike, reportedly carried out by the U.S.-led coalition against ISIS in Iraq and Syria. All 11 people were killed in the strike, in what local reports described as a “massacre.”

 

“A U.S.-led coalition warplane targeted heavy machine guns at civilians trying to flee the city of Al-Tabaqa, which is witnessing heavy clashes between gunmen,” reported the local anti-ISIS activist group Raqqa is Being Slaughtered Silently. The air raid led to “the death of a whole family.” Following the attack, photos of the young children from the al-Aish family circulated widely on social media and local news sites, including pictures of 3-year-old Abdul Salam and 6-month-old Ali.

 

The strike that killed the al-Aish family was just one of an estimated 9,029 strikes carried out by the U.S.-led coalition in Syria since 2014. The independent monitoring group Airwars estimates that coalition strikes in Syria and Iraq over the past several years have killed between 3,681 and 5,849 civilians, compounding the suffering of people who have already endured years of civil war. In recent months, local media have reported a steady stream of airstrikes that have hit civilian targets, including several particularly egregious strikes on packed schools and mosques.

 

But worse days for civilians in northern Syria could still be ahead, as the United States and its allies prepare for a terminal offensive against Raqqa — the last urban stronghold of ISIS and the capital of its deteriorating proto-state.

Agree or Disagree?

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GM Reports Record “Channel Stuffing”: Auto Inventory Highest Since November 2007

As we await all US carmakers to report May auto sales, we remind readers that when we discussed last month’s disappointing monthly car sales report, which badly missing expectations showing the fourth consecutive month of declining auto sales – the first time this has happened since July 2009 –  we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

Of note, we highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016. Indicatively, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not. GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, “reflect strong sales”, as per the press release: “As planned, GM’s inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks.”

Or maybe not, because as Automotive News reporter Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots, this was the highest inventory number in 9.5 years, the highest since Nov. 2007, and, as Bunkley reminds us, “one month before the recession officially began.“

Fast forward to today when GM reported its May results which again disappointed, and were down 1.3% vs estimates of a 4.3% increase, which in turn pressured GM stock. But that’s not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 963,448 units in dealer inventory at the end of May, up nearly 30k from the past month, and representing 101 days of supply, up from an already red-flag raising 100 in April.

In short: GM “channel stuffing” just hit a new all time high, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the month before recession officially began, when GM was still pre-bankruptcy GM, with far greater (if ultimately superfluous and in need of restructuring) production.

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US Construction Spending Plunged In April

If everything is so awesome (which the stock market alone is telling us it is), then why did US construction spending plunge 1.4% in April (worse than the weakest economists' expectations)?

So this is the 3rd worst drop in construction spending in 6 years…

The last time US construction spending plunged like this – global central banks unleashed a coordinated buyiung program to save the world.

This was lower than every one of the 41 estimates and missed expectations by 9 standard deviations…

"probably nothing"

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Gold indicator, nears first buy signal in 6-years

 

During the past 6 years, Gold bugs have seen opportunities come and go in a struggle to recoup the gold bull market magic of a decade ago. Many investors are aware of the US Dollar’s impact on the price of gold. In particular, it has been the US Dollar’s strength that has kept the yellow metal at bay for the past several years.  Could this be changing?

The chart below displays the relationship between the US Dollar and Gold. When the dollar is weaker than gold, the ratio heads lower… and is bullish for gold (see green line). When the US Dollar is stronger than Gold, the ratio heads higher… and is bearish for gold (see red line).

For the past 6 years, this ratio has been rising (leading to a bear market for gold and the precious metals sector). But the Dollar-Gold rally stalled at a convergence of trend line resistance (point 1). The ratio then gave way to a pullback and is currently testing its 6-year rising trend line (point 2).

If the Dollar-Gold ratio breaks support, it will send out its first bullish message in 6-years!

US dollar Gold Ratio Monthly kimble charting solutions

CLICK ON CHART TO ENLARGE

Gold bulls do not want to see this ratio find support at (2), as this rising support line has rough on metals space for 6-years. If a rally takes place at (2), it will continue to be hard sledding for metals.

In 2011 the Power of the Pattern shared that metals should be flat to down for years to come. See post HERE. We were able to come to this conclusion due to the pattern of a currency. This currency/gold pattern could be as important to metal as our call 6-years ago!

The Power of the Pattern updates this chart weekly for Premium and Metals Members. If charts like this in the metals space would be of benefit to you, we would be honored if you were a member.

This post was originally written for See It Markets. To see rest of this post, please click HERE

 

If you would like a copy of our most recent metals report, send us an email at the address below

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GOP Maps Out New Ways to Throw People in Federal Prison

PrisonNew legislation being drafted by House and Senate Republicans would serve essentially as a clearinghouse for their tough-on-crime, tough-on-immigration stances. It would create new mandatory minimums, prepare the feds to imprison thousands more people, find new ways to punish sanctuary cities, and collect biometric and biographic data on anybody immigration takes into custody, regardless of citizenship status.

The 333-page “Building America’s Trust through Border and National Security Act of 2017” is being assembled by two Texans, Sen. John Cornyn and House Homeland Security Chairman Michael McCaul. Like omnibus legislation, it’s a Frankenstein’s monster of cobbled-together bills that probably couldn’t get passed on their own, certainly not before Republicans controlled both Congress and the White House.

A source provided Reason a copy of the draft legislation. Among the measures currently included in the bill’s text:

  • The bill includes “Kate’s Law,” legislation designed to increase federal mandatory minimum sentences for illegal immigrants in crime cases. It’s named after Kathryn Steinle, who was killed by a felon who had been deported but returned illegally to the United States. It creates a new mandatory minimum sentences for illegal immigrants who commit crimes. An illegal alien who commits any drug trafficking or violent crime gets a five-year mandatory minimum sentence. If that person had previously been kicked out of the country before for committing a crime, the mandatory minimum sentence jumps to 15 years. In addition, those who continue to return illegally to the United States after being deported (regardless of any criminal record) face 10-year sentences if they get caught.
  • The bill authorizes the construction of “tactical infrastructure”—as in physical barriers or a “wall”—along the southwest border of the United States, and it orders the Department of Homeland Security to get such infrastructure into place by January 2021. It doesn’t specifically define what the infrastructure should look like, and it doesn’t appear to provide for its funding. (It does call for $33 billion to improve border surveillance.) The bill spends 60 pages authorizing a host of border patrol operations and functions.
  • Immigration and Customs Enforcement (ICE) would see a staff increase of 1,500 special agents, 500 of which would be assigned to the border. The number of ICE investigators would increase by 1,000. The bill offers a host of financial incentives and bonuses to hire and keep border patrol officers.
  • The bill’s authors want to fund an increase of “not less than 50 percent per day” over the previous year in the number of prosecutions for illegal border crossings along the Mexican border, and they want to fund all the personnel needs that would entail. The legislation would provide federal grants to border states to assist local law enforcement agents if they help with border control and immigration enforcement.
  • The bill calls for a biometric data collecting system for any person entering and leaving the United States who is not a citizen, and for checking their identities against several databases. (The databases would cover not just suspected terrorists, but also everyone who is in the United States illegally, has violated the terms of their visas, or has overstayed their visas.) It calls for collecting DNA samples from any detained aliens that are subject to deportation.
  • The bill calls for the detention and removal of immigrants who are in the country illegally regardless of any involvement in any other crimes. It also authorizes Homeland Security to detain a deportable alien for removal if he has been tried for a crime, even if he hasn’t been convicted. To make space for all these people, it funds an additional 10,000 beds in the federal detention system.
  • The bill denies federal grants to sanctuary cities. A rival bill introduced recently would cut Department of Justice grants to such cities. This bill goes much further and denies sanctuary cities grants unrelated to policing, such as public works grants and Community Development Block Grants. Such legislation could run afoul of the courts, which have ruled that the feds can’t simply use grant funding as a bludgeon to mandate cooperation unless it’s actually related to the subject of enforcement.
  • The bill also defines what a sanctuary city is, which matters if the bill passes. Sanctuary cities are conventionally known as cities that don’t investigate the citizenship status of residents when they interact with officials or pass that information to ICE. Under this bill, the label would cover any city that refused to “comply” with a federal orderto detain an immigrant for deportation. Right now such “detainer orders” are legally just requests; the federal government cannot currently make cities or counties hold immigrants for them.
  • What on earth do new federal mandatory minimum sentences on people who assault or kill police officers have to do with all this immigration stuff? Nothing. Nevertheless, the bill folds in the “Back the Blue Act,” which creates a host of new and completely unnecessary federal mandatory minimum sentences for anybody who kills or injures a police officer, a judge, or any local public safety officer whose agency receives any sort of federal funding. It calls for a 30-year mandatory minimum sentence for killing an officer, a 20-year minimum for assault with a deadly weapon, a 10-year minimum for assault with injuries, and a 10-year minimum for fleeing the scene. It details the possibility of the death penalty for anybody who kills a law enforcement or public safety officer.

The Hill, which also got a copy of the draft legislation, notes that Cornyn had previously supported federal legislation that actually reduced mandatory minimums and cranked back the war on drugs just a bit. Cornyn’s response to The Hill was that he wasn’t against all mandatory minimums.

But these new mandatory minimums are a political response to fears that are not really rooted in facts. The insistence by law enforcement interests and Trump himself that there’s a “war on police” is simply untrue. To the extent that local police and public safety officers are targets of violence, states are fully capable of punishing such criminals thoroughly.

Similarly, there’s very little evidence that immigrants—legal or illegal—are a pressing source of crime problems in the United States. In fact, there’s plenty of evidence to the contrary.

These new mandatory minimums would accomplish two things: filling up federal prisons and eating up tax money. Families Against Mandatory Minimums (FAMM) calculated out the likely costs of both sets of new mandatory minimums, based on current trends. If every police assault with injuries resulted in a federal prison sentence, it would end up costing an additional $900 million per year to imprison just the people who would have been convicted in 2015. The mandatory minimums under Kate’s Law would increase federal prison costs by $2.5 billion a year and would require more than two dozen new federal detention centers (costing more than $9 billion), based on current trends.

Trump may sell Kate’s Law as a way of punishing “bad hombres,” but Molly Gill, director of federal legislative affairs for FAMM, says there are any number of reasons why an immigrant might keep returning to the United States illegally that has nothing to do with committing crimes. Yet they’ll still face harsh prison sentences.

“Someone might come back illegally to work, to attend a funeral, to donate an organ to a dying child, to flee war or religious persecution or a death threat, to see a sick or dying family member,” Gill points out to Reason. “People do persistently come back illegally for totally benign reasons. This bill punishes them the same as a person who illegally reenters the country to commit a terrorist attack, recruit for a drug cartel, or join up with a street gang. Judges should have flexibility to tell the difference, but Kate’s Law won’t let them. It’s going to lock up a lot of people who pose very little real threat to public safety.”

Gill also doubts the idea that the law would serve as a deterrent.

“The possible threat of being caught and given a mandatory minimum sentence is unlikely to outweigh the benefits of fleeing from violence, providing for a family, or reuniting with loved ones,” Gill says. “Kate’s Law is a billion-dollar-a-year gamble that people coming here illegally will suddenly stop because of a mandatory sentence. Congress will lose that bet, and taxpayers will foot a big bill for it.”

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Wanted: Fall Journalism Intern for Our D.C. Office

The Burton C. Gray Memorial Internship program runs year-round in the Washington, D.C. office. Interns work for 12 weeks and receive a $5,000 stipend.

The job includes reporting and writing for Reason and reason.com, helping with research, proofreading, and other tasks. Previous interns have gone on to work at such places as The Wall Street Journal, Forbes, ABC News, and Reason itself.

To apply, send your résumé, up to five writing samples (preferably published clips), and a cover letter by the deadline below to intern@reason.com. Please include “Gray Internship Application” and the season for which you are applying in the subject line.

Paper applications can be sent to:

Gray Internship
Reason
1747 Connecticut Avenue, NW
Washington, DC 20009

Fall internships begin in September. The application deadline is July 1.

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US Manufacturing PMI Drops To 8-Month Lows In May: “Sluggish Sales Prompted Firms To Scale Back Hiring”

The last two months have seen a major divergence between PMI and ISM Manufacturing reports (as the former confirmed today at its lowest final print since September). May's final print of 52.7 was slightly above expectations and the preliminary print.

This is the lowest 'final' print for US Manufacturing PMI since September (while ISM rebounds)…

 

This follows China's Manufacturing PMI 'contraction' overnight…

 

US New order levels increased again in May, although the rate of expansion was the least marked recorded since September 2016. This was mainly linked to subdued client demand.

And in line with China weakness, some manufacturers also cited weak export sales, as highlighted by a slower upturn in new work from abroad than that seen in April.

Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“Manufacturing growth momentum continued to ebb in May, down to its weakest since just before the presidential election.

 

“Manufacturing output, order books and employment all grew at only modest rates as sluggish sales prompted firms to scale back hiring.

 

Exports sales remained especially lacklustre, hampered in part by the relatively strong dollar. The survey also brought signs of companies becoming more cautious about holding inventory.

 

“Factories’ raw material prices meanwhile rose at a sharply reduced rate, which should at least help take pressure off profit margins and also feed through to weaker pressure on consumer price inflation.”

Just another broken brick in the wall of 'soft' data post-trump hope.

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When The “Fix” Increases Systemic Fragility, Things Fall Apart

Authored by Charles Hugh Smith via OfTwoMinds blog,

All the "fixes" have fatally weakened the real economy, and created a dangerous illusion of "wealth," "growth" and solvency.

The "fix" of the last eight years worked, right? This was the status quo's "fix":

1. Massive expansion of debt: sovereign, household and corporate, all in service of a) bringing consumer demand forward b) fiscal stimulus funded by debt c) corporate stock buybacks to boost stock valuations d) asset bubbles in real estate, bonds, stocks, bat guano futures, etc.

2. Monetary stimulus, i.e. creating and distributing money at the top of the wealth/power pyramid so corporations and the super-wealthy could buy more assets with free money for financiers issued by central banks.

3. Gaming statistics such as unemployment and metrics such as stock indices to generate the illusion of "growth," "stability" and "wealth."

4. Saying all the right things: the "recovery" is creating millions of jobs, inflation is low, virtue-signaling is more important than actual increases in inflation-adjusted wages, etc.

As Dave of the X22 Report and I discuss in Central Banks Weakened The Economy To The Point Of No Return, Day Of Reckoning Has Arrived (42 min. podcast), this "fix" has fatally weakened the real economy. The cost of maintaining the illusions of "growth," "stability," "wealth" and solvency is extremely high, and hidden from view: systemic fragility has increased to the point of brittleness.

What is fragility? Fragility is the result of an erosion of resilience, redundancy, adaptability, accountability, honesty, feedback and willingness to sacrifice today's consumption for tomorrow's productivity and systemic stability.

The status quo "fix" has gutted resilience, redundancy, adaptability, accountability, honesty, feedback and willingness to sacrifice today's consumption for tomorrow's productivity. Can anyone who isn't a lackey on the payroll of the Powers That Be provide any credible evidence that the U.S. economy is more resilient after eight years of debt-dependent "recovery"?

Sadly, we suffer from an oversupply of well-paid lackeys, factotums, apparatchiks, flunkies, media mouth-pieces and PR hacks and a severe scarcity of unbaised, unspun data points. What little data we do have tells us that the inflation-adjusted wages for the bottom 95% have declined during the "recovery" that made the wealthy much, much wealthier.

As for redundancy–redundancy reduces profits, as it increases costs, so redundancies have been as ruthlessly eliminated as human labor. The slightest disruption in global supply chains means production and transport of essentials collapses in a heap.

And how have the dominant state-protected cartels improved adaptability? They've stifled it at every turn. Higher education has jacked up prices for its overpriced marginal-utility "product," ditto the healthcare/Big Pharma cartels, the military-industrial cartel (hello overpriced, under-performing F-35 and LCS), the banking cartel (love those $35 fees and .01% interest paid on deposits), and all the other cartels that dominate our pay-to-play "democracy."

State-protected cartels and monopolies are the death of competition, transparency and adaptability–all essential dynamics in real solutions.

Accountability in the public/private-sector "swamp" is near-zero. A mumbled apology for malfeasance, a hand-slap fine for fraud, a bribe passed off as a "speech fee", revolving doors between government contractors and government agencies–accountability is non-existent at the top of the wealth-power pyramid, while a nickel-bag dealer gets a tenner (10-year gulag sentence) and the federal prosecutor gets a gold star. Meanwhile, the real criminals skim millions in ill-gotten embezzlements, frauds and cronyist skims are laughing all the way to their remote havens of wealth.

"Honesty" has lost all meaning in public dialog. Supposedly accurate statistics are rigged, and every public utterance is calculated to signal virtue (the acme of Orwellian doublespeak) or appeal to a constituency attuned to key words: utter the key words, and you're home free. Never mind the economy has been hollowed out: you've signaled your virtue and the moral superiority of the constituency.

Feedback has been reduced to a dollar sign. If you pony up millions in campaign contributions and lobbying, your feedback counts. All other feedback is discounted or ignored. Whistleblowers are prosecuted, any reform that threatens the status quo is watered down to meaninglessness, and anyone going public with truthiness is sent to bureaucratic Siberia.

As I explain in my book Why Our Status Quo Failed and Is Beyond Reform, all these fake-reforms only increase the systemic fragility by weakening all the dynamics that generate adaptability, accountability, feedback, transparency, etc.

The status quo is now like a wafer-thin sheet of ice over a deep lake of killing-cold water. To the naive and inexperienced, the ice looks solid; they believe the tall tales of "recovery," growth," "wealth" and solvency.

It's all phony public relations. As a strange as it may sound, PR doesn't make thin ice thick enough to stand on.

All the "fixes" have fatally weakened the real economy, and created a dangerous illusion of "wealth," "growth" and solvency.

Soaring debt and declining earnings = brittle thin ice.


 

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