Month: September 2017

A Market In Which “Shocks No Longer Shock”: Deutsche’s Kocic Explains How To Trade It

Back in June, one of Wall Street’s more philosophical derivatives strategists, DB’s Aleksandar Kocic looked at the state of the market and postulated that far from “stable” the existing risk  “equilibrium” is one which can be described as “metastable“, the result of widespread complacency, and which he compared to an avalanche where “a totally innocuous event can trigger a cataclysmic event (e.g. a skier’s scream, or simply continued snowfall until the snow cover is so massive that its own weight triggers an avalanche.” Putting it in his usual post-modernist style, Kocic said that “complacency encourages bad behavior and penalizing dissent – there is a negative carry for not joining the crowd, which further reinforces bad behavior.”

This is the source of the positive feedback that triggers occasional anxiety attacks, which, although episodic, have the potential to create liquidity problems. Complacency arises either when everyone agrees with everyone else or when no one agrees with anyone. In these situations, which capture the two modes of recent market trading, current and the QE period, the markets become calm and volatility selling and carry strategies define the trading landscape. But, calm makes us worry, and persistent worrying causes fear, and fear tends to be reinforcing.

Kocic framed the current state of the market as follows:

 

Unfortunately, the relentless grind ever lower in volatility, which as reported yesterday has resulted in both the lowest average September VIX on record…

 

… as well as the lowest September monthly settlement on record and only the second sub-10 monthly settlement… 

… appears to have finally unsettled Kocic’ expectations, even if ever so tacitly implied, for a spike higher in suppressed vol, and as he writes in his latest ruminations on volatility, “as volatility continues to be unfazed by what lies ahead in the near term, short of surprises in inflation, we are likely to linger at low levels.”

Following up to his note from last week, which explained how the Fed’s fake “transparency” killed long-term investor, Kocic writes that “as transparency became the word of the decade, by its very nature it created the forces that push everything to the surface. Things exist thanks only to the attention they produce. There is no room for ambiguity.” 

Which ties in to the current news cycle, a relentless barrage of flashing red headlines, one scarier than the other, yet which on aggregate have zero adverse impact on volatility, and certainly on risk assets, which on Friday spiked to a new all time high following the latest last-second VIX-smash. Or, as Kocic puts it, “although shocks (political and other) keep arriving in the market, they seem to be appearing at what looks like predictable time intervals (usually, on Fridays). Practically every week, there is a new issue that eclipses the previous one, and we lose interest in past issues, before there is any semblance of resolution.”

And with traders’ attention spans already severely lacking, this habituation to hyperbolic, staccato newsflow means that not only is the market not discounting the future as Matt King postulated several months ago, but it is no longer able to even respond to the present, to wit:

Shocks, if they are predictable, lose their spell and gradually become facts of life. Predictable political shocks feed back into their source. Due to their antagonistic character, they gradually erode the ability to make consensus and reduce the ability to legislate, making further reforms at least questionable, if not highly unlikely. The market “euphoria” (aka the Trump trade) that followed immediately after the elections is being perceived as increasingly remote. Despite all the promises of reflation of the economy, fiscal stimulus, expectation of economic turnaround, no change is on the horizon. We are stuck with the status quo, albeit a noisy one.

So what does this mean for risk assets, and markets? According to the Deutsche analyst, “despite all the distortions and disruptions introduced by the central banks’, which has created a semi-permanent state of exception, markets have not lost one main characteristic, their adaptability. As the markets are getting inoculated against event risk, volatility continues to be under pressure. While we are distancing ourselves from the idea of political change, the Fed is seen, once again, as the main source of volatility. However, the Fed’s position is an uncomfortable one. The main problem it faces is the balance between preventing inflation from becoming a risk while at the same time not causing a rapid and substantial rise of rates. This requires a high level of fine tuning. It means that the Fed has to continue with rate hikes, but the hikes have to be done carefully without triggering the bond unwind.”

The implication for vol traders is that contrary to warnings of market “metastability” and “suppressed cataclysmic vol events”, Kocic – in many ways pulling a Hugh Hendry of his own – comes to the admission that fighting the Fed’s control over vol has become a futile pastime, and even though further complacency is in the cards, “continued vol selling” is encouraged.

… the market gradually, and reluctantly, trails behind the Fed, one hike at a time, and adjusts expectations on the go, without taking a longterm view on the Fed. It is difficult to see how this can lead to any excitement capable of inspiring higher volatility. As long as things evolve according to this scenario, everything shoiuld remain “predictable” with occasional noise that the market has learned to ignore. This is an environment that is bearish for volatility. It fosters further complacency and encourages continued vol selling.

Finally, Kocic takes a “Greek” detour and asks whether in this environment, in which every shock is ignored by a market now programmed to sell vol no matter what, “there is hope for Gamma?” Here is his answer:

In our recent publications, we have extracted one possible measure of liquidity from the volume data of Treasury futures. This measure quantifies sensitivity of the price to changes in trading volume. The liquidity index is expressed as a negative log of this sensitivity, so that large sensitivity corresponds to low liquidity and vice versa. The figure shows the (smoothed) liquidity (on the inverted axis) overlaid with the 3M10Y– low vol goes hand in hand with high liquidity.

 

 

Liquidity has a logical connection with volatility. This starts at the very short end and propagates across the term structure: By making a price, market makers are implicitly short volatility for which they are required to allocate risk capital and the bid/ask spread (which is an indirect measure of liquidity) is the compensation they receive for this risk exposure. All else equal, the ability to hedge an option is a function of liquidity of the underlying, and the option prices should reflect that. From the figure, we note that post 2004, with the disappearance of mortgage negative convexity hedging and the growth of  volume on the exchanges, liquidity has been providing a lower bound for gamma – whenever gamma reached this lower bound, it has been pushed up. Also, the departures from that lower bound have been increasingly rarer and short lived. This holds not only for rates, but for equities as well.

 

As volatility continues to be unphased by what lies ahead in the near term, short of surprise in inflation, we are likely to linger at low levels. In that context, liquidity constraints are going to define the lower bound on gamma.

As a reminder, none of this is new: those who have traded this market (for more than just a few years) instead of merely commenting on it, will recall all those vol traders who lost their jobs in early 2007 when vol crashed so hard, there literally wasn’t a swaptions market. If Kocic is right, vol traders in 2017 (and perhaps 2018) will suffer the same fate. Of course, the 2007 episode is best remembered not for the the vol linked pink slips, but the explosion in VIX shortly thereafter and the resultant near collapse of the US financial system. Despite the Fed’s relentless pressure, trillions in liquidity injections and vol selling, we see nothing that has changed since then, and no reason why this time will be different.

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“The Bombs Are Still Falling” – MSNBC Urges Government Censorship Of Social Media “To Protect Democracy”

Authored by Chris Reeves via NewsBusters.org,

On Friday’s Morning Joe, Willie Geist hosted a panel to discuss the latest news on the Russian hacking narrative regarding Facebook ads that were purportedly used by Russian intelligence to stoke "racial tensions" during the 2016 presidential election.

The panel’s primary reaction, with only one dissenting voice, was to call for increased government "regulation" and financial “penalties in the hundreds of millions” to shut down alleged Russian influencers.

The segment started off with Geist introducing the latest reporting on the topic:

GEIST: Twitter says it has shut down more than two-hundred accounts that were tied to the same Russian operatives who bought political ads on Facebook. Of the 450 accounts released by Facebook as part of its investigation, Twitter was able to match 22 of them to its own site. The disclosure by Twitter followed a briefing by company officials to staffers of the Senate and House Intel committees yesterday. Following that meeting, the top Democrat on the Senate committee, Mark Warner, slammed Twitter for its presentation.

 

SEN. MARK WARNER [D-VA]: [playing clip] The presentation that the Twitter team made to the Senate Intel staff today was deeply disappointing. The notion that their work was basically derivative based upon accounts that Facebook had identified showed enormous lack of understanding from the Twitter team of how serious this issue is, the threat it poses to democratic institutions, and, again, begs many more questions than they offered.

 

(…)

 

GEIST: The top Democrat on the House Intel Committee, Adam Schiff, also weighed in on Twitter’s briefing to his committee, releasing a statement that read, in part: "… it is clear that Twitter has significant forensic work to do to understand the depth and breadth of Russian activity during the campaign. This additional analysis will require far more robust investigation into how Russian actors used their platform as a part of their active measures campaign…"

Without any perceptible degree of skepticism about the Democratic Congressmen's claims, Geist then teed up Nicolle Wallace, host of the MSNBC afternoon show Deadline: White House, to talk about social media and the 2016 election more generally:

GEIST: You do get the sense, Nicolle, that Facebook, Twitter, social media was totally clueless about what was happening on their sites during the 2016 campaign.

 

WALLACE: It's worse than that […]. The social media companies are sort of like the worst stereotype of a Republican political organization. They're reactive, they’re opaque, they're defensive, they are very slow to understand the value of transparency. They're totally lawyered up, lobbied up. And they are as a culture, the hubris of thinking that they're all about the public good, when if you take a low-tech analogy, it’s basically like someone got mugged in your backyard and their position is: well, it's not our problem, I mean, we just bought the lot on which the house was built, not our problem.

Donny Deutsch chimed in his agreement with Wallace’s analysis, mainly to suggest that perhaps internet news sites and social media sites need government regulation to make sure that what they post or allow up is accurate:

DEUTSCH: [T]here’s a tremendous irony with these guys, because, the tech guys, these young-, are, are the ones who are revolutionizing the world for betterment, yet the irony is, if I wanna take an ad out on NBC or anyplace else for a laundry detergent, the things I have to go through-

 

WALLACE: [interrupting] It has to work, it has to be real, you have to be real. Right!

 

DEUTSCH: [continues talking over Wallace] -[…] to prove that it’s got 5% more blue crystals in it, yet there is no regulati[on]. There is nothing more important for us, for people watching this show over the next ten and twenty years as the regulation of these companies. They control the flow of communication. […] [W]hat's happening here, as far as our power versus what's happening over here [points to his smart phone], multiply it a thousand-fold and there is no regulation.

Ah, so here we see one of the real reasons for wanting to regulate internet-based news content: it’s out-competing (supposedly) respectable news outlets like MSNBC!

After Deutsch floated the idea of government censorship to get the internet under control, Wallace decided to try her hand at stand-up comedy, declaring:

“One difference though is that we have quality controls, we have standards. […] [A]nd they [internet/social media] should be held to the same standards.”

Well, if we all only had to adhere to MSNBC’s standard for truth, that would make our jobs here much easier!

But on a more serious note, Geist subsequently moved the segment forward to allow New York Times reporter Yamiche Alcindor to summarize her latest findings on “racially divisive Russian ads on Facebook.” Alcindor said:

Facebook admitted to members of the Congressional Black Caucus as well as the subcommittee on the House Oversight Committee that there were ads that were targeting Black Lives Matter and targeting, specifically, ethnic groups […] and allowing people to target, not only for Russian influence, but also target housing ads, employment ads.

 

[…]

 

[A] lot of the members of the Congressional Black Caucus are fuming because they're saying that Russia actually exploited a lot of the racial divisions that already exist in America and used both Facebook and Twitter […] in this way to essentially make people hate each other more.

So, Alcindor and the Congressional Black Caucus think that decades of the Democratic Party and the far left exploiting racial divisions for political gain was totally normal and fine, but now, they demand aggressive government action to stop it when it is being used by the Russians?

Without addressing this glaringly obvious point, the segment then moved in a much more interesting direction as Geist turned to Noah Rothman, associate editor of Commentary Magazine, for his opinion on the whole Russia matter. Although Rothman acceded to the larger narrative about Russians hacking the DNC and weaponizing social media, he did offer some true background to the current story:

First, you probably have to know that Russian intelligence is going to exploit anything they possibly can to do precisely what she was talking about. This isn't new, this is the Kremlin playbook. They have been exacerbating racial tensions in the United States since there [has been] a Russian intelligence organization. As recently as 2014, you had RT talking about police tyranny and an Afro-Maidan, referring to the Ukrainian revolution that ousted the former Ukrainian president Viktor Yanukovych. This is what Russia does. So if you're a media institution and you know that Moscow is going to target your audience, you have to be proactive and aware of that. And, as you say, you have, you had gatekeepers in most institutions. Institutions that are not, you know, aware that they're going to be targeted are the most irresponsible, I would say. But I'm not sure that regulation is something that you can even entertain. This is about responsibility.

Rothman’s point about past Soviet infiltration of the United States was correct, if lacking somewhat in details. Rothman would have done well to point out, in contrast to his characterization of Russian government-owned or funded media, that they actually frequently take stances in support of left-wing causes if those causes serve to diminish America’s international moral authority, particularly as regards anti-war narratives or movements like Black Lives Matter.

It was also refreshing to see someone push back against Wallace and Deutsch’s calls for government censorship and control over the Internet, but that didn’t last. Mark Halperin ultimately decided to make the most straightforward case for the federal government to crack down on "Russian operatives" and fake news with the support of both Wallace and Deutsch:

HALPERIN: [T]here’s some interesting intellectual debates to be had around all this stuff to be sure. But these companies are American companies making a lot of money, dominating our lives, hiding behind a lot of intellectual arguments. And, as the Congressional members of both parties are saying publicly and privately, they are using lobbyists and PR executives and their own platforms to try to limit the disclosure that they make to be accountable. American democracy is under siege and they are hiding behind intellectual arguments.

 

[Deutsch tries to speak at same time as Wallace, then stops]

 

WALLACE: And it's ongoing. I mean, they were involved, some of these Russian-linked Twitter accounts were involved last weekend in helping to sow-

 

EDDIE GLAUDE JR.: [interjecting] Exactly.

 

GEIST: [mumbles agreement] Right.

 

WALLACE: -hatred around the debate about the NFL. This isn’t, we're not at a forensic stage where we're gonna look back at what they did in 2016, we're not even there yet. This is still-

 

HALPERIN: [interrupting] The bombs are still falling.

 

WALLACE: Right.

 

ROTHMAN: [tries to speak, hard to hear] Wait, to what extent is there even a recourse?

 

DEUTSCH: [interrupting] By the way, we can regulate, I’m gonna give you, we can regulate, we can regulate this. We start-, instead of the FCC, it’s the FDC. The Federal Digital Communications company. And there is a body, a governing body there, regulatory body, that when something like this happens, the, the economic consequence, the penalties in the hundreds of millions, you hit ‘em in the pocketbook, they'll figure it out.

There are a lot of amazing comments here, particularly from Halperin and Deutsch.

It’s not completely clear what Deutsch means by using a "FDC" "regulatory body" to financially cripple people (or who precisely those people/organizations would be, although based on his following comments it might be Facebook and Twitter that would suffer fines in his mind). However, Halperin’s characterization of protecting people’s right to freedom of speech, guaranteed by the First Amendment, as “hiding behind intellectual arguments” was most chilling.

Thankfully, Rothman stepped in to voice some cogent defense of arguably this country’s most important founding principle: “I suppose there's any number of ways in which the federal government could target an institution that is a media institution that provides a platform for the exercise of the First Amendment. What is the limiting principle there? At what point are we targeting speech that we simply don't like?”

After a brief pause and Deutsch simply interjecting “um,” Wallace tried her Ministry of Truth argument out again:

WALLACE: Well you can't yell […] fire in a movie theater if it's not true. I mean-

 

ROTHMAN: [interrupting] You can if it's on fire.

 

WALLACE: Well, I think the point on Twitter is that some of these things are not true, and-

 

ROTHMAN: [interrupting] That’s, incitement to violence is one thing-

 

WALLACE: -Twitter, Twitter and Facebook have done nothing. I mean money,-

 

ROTHMAN: -and it’s extremely difficult to prove incitement to violence.

 

WALLACE: -mon-, money has a seal to, so that we know when a dollar is real, when a dollar is counterfeit. There are groups that are trying to get the social media companies to have some sort of water seal or to verify the content, the veracity of it.

It was fun to see Rothman trying, ever so subtly, to point out the basic problem with Wallace’s argument, namely: who determines what is and is not true?

But then Halperin, skirting by having to address Rothman’s concerns, decided to seal the deal and make his position extremely clear: “[T]he government shouldn't be the recourse at first, it should be the boards of these companies.” That is, if Facebook and Twitter don’t start censoring in the right way or to the right extent, then Big Brother should do it himself.

It’s nice to know that the media’s support for the free speech rights of NFL football players extends to all of us rubes too!

The panel closed out the lengthy segment by chuckling at the prospect of quick action to "figure out" this "problem" and never addressed the more fundamental question about whether or not what they were proposing was anathema to the U.S. Constitution, either in law or spirit.

We strongly suggest putting down all sharp objects before watching the following…

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Georgetown Bank Teller Steals $185,000 From Homeless Customer With Garbage Bag Full Of Cash

Where did all this money come from?

That’s probably the first question that Phelon Davis of District Heights, Maryland, asked himself when a homeless man shuffled into the Wells Fargo branch in Georgetown where Davis worked as a teller three years ago and tried to deposit a garbage bag full of cash.

His next question was probably "do you think he'd notice if some of it went missing?"

Instead of helping the customer deposit the money into his account, Davis instead decided to take advantage of the situation, setting up a fraudulent second account under the customers’ name and eventually stealing more than $185,000 from the man, according to the Washington Post.

The 29-year-old bank teller stole more than $185,000 from a homeless customer who tried to deposit a garbage bag full of cash at a Wells Fargo branch in Georgetown.

In a deal with prosecutors, Davis pleaded guilty this week to one federal felony count of interstate transportation of stolen property, which is punishable by up to 10 years in prison.

Deepening the intrigue surrounding the story, the court filings didn’t name the man, or furnish an explanation as to how he came to possess such a large sum of cash. It describes the man only as a "street vendor."

Here’s WaPo with more:

The victim was unnamed in court filings but was described as a homeless street vendor and longtime Wells Fargo customer who had more than one account that had gone dormant because of a lack of activity.

 

Court filings did not identify the customer or say why a homeless person would have a large amount of cash in a bag when he showed up at the M Street NW branch where Davis worked. Outside the courtroom, Davis’s attorney, Bruce Allen Johnson Jr., said he also did not know how the individual came to have the cache of cash. “That’s the million-dollar question,” Johnson said.

 

In plea papers, Davis acknowledged that the customer had “thousands of dollars of cash” that he wanted to deposit in October 2014, but he lacked identification. Davis told the customer where to get ID documents and a Social Security card, and also noted the customer “had a surprisingly large balance with the bank,” according to a signed, three-page statement of the crime.

Soon after the customer tried to deposit the cash, Davis fraudulently opened a new account by forging the customer’s signature, set up an ATM card, personal identification number, email address and online logon that he controlled.

He initially funded the account with $3,000 from one of the customer’s other accounts, according to WaPo.

Slowly over the next two years, Davis transferred $177,400 between the customer’s accounts, withdrew $185,440, and transported at least $5,000 withdrawn from ATMs in DC to his home in Maryland – triggering the federal charge.

The customer remained oblivious to the fraud, as he could only see the balance by checking on his account at an ATM.

Davis used the stolen money for a down payment on his home, to pay off personal debt, and fund vacations in Aruba, Jamaica, the Dominican Republic and Mexico.

As part of his plea, Davis agreed to pay back the stolen money, and Assistant US Attorney Kondi J. Kleinman said he would likely face a sentence of 18 to 30 months under federal guidelines. However, the sentencing judge has discretion to assign a longer, or shorter, sentence.  

“Did you, in fact, take money from an account as Mr. Kleinman described?” U.S. Magistrate Robin M. Meriweather asked in the Thursday plea hearing.

 

“Yes, ma’am, I did,” said the soft-spoken Davis.

Davis’s attorney, Johnson, said outside of court that “he greatly regrets the decisions he made and is dedicated to doing everything he can to make it right, including restitution. He is putting everything aside to repay the money and do what he can to repair what he’s done to his name, his reputation and to the victim.”

WaPo reports that a date for Davis’s sentencing hasn’t been set.
 

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Liberal ‘Therapists’ Pen Open Letter Blaming Trump For “National Mental Health Crisis”

Authored by Alex Thomas via SHTFplan.com,

A group of mostly liberal mental health experts has penned an anti-Trump hit piece that declares the president and his tens of millions of supporters responsible for a new mental health crisis that the so-called “experts” claim is hurting anyone who disagrees with Trump policies in general.

The letter, published by various liberal “news” outlets, essentially claims that numerous Trump policies, supported by over 60 million Americans, has led to an increase in extreme mental pain for those who voted for the losing candidate.

“Increasingly, the weight of the current political environment burdens the hearts and minds of Americans and causes anxiety, preoccupation, deepening depression, feelings of helplessness and despair, disgust and horror,” the hyperbolic warning declares.

The authors then made sure to immediately add in not only claims of sexism against Trump and his supporters but the tried and true charge of racism as well.

“Not infrequently, it even rekindles the embers of prior trauma for women and members of marginalized groups whose sense of hard-won safety has been shaken to the core,” the “professionals” continued.

The screed then gets into fake news claims that “rampant dishonesty” is coming from the White House when any objective observer has seen that the establishment mainstream media (and websites publishing this open letter) are the very ones that push actual fake news themselves.

“As mental health professionals, we are troubled by the environment of rampant dishonesty, daily disregard for civil and social norms, and threats toward vulnerable peoples and its impact on the people we work with.

 

We are troubled by policies and rhetoric that undermine progress on environmental protection, humane immigration laws, and racial and gender equity. We believe these developments augur a regression of our evolutionary accomplishments and a dismantling of the quality of life for all Americans.”

The transparently biased mental health professionals attempting to act like neutral arbitrators then delve directly into spreading fake news itself while conveniently leaving out anything to do with Antifa which we now know is an actual domestic terrorist orgranization that openly targets Trump supporters.

The recent events in Charlottesville, Virginia, rocked much of the nation. Emboldened by our president, groups of white nationalists are no longer ashamed to appear publicly and speak boldly about their hatred of people of color, Jewish or Muslim faith, LGBTQIA orientation, and immigrants.

 

This kind of hatred has always been with us, but it has been inflamed by President Trump, who claimed to be a president “for all Americans,” but who has declined to take a moral stance on bigotry and instead has set up a situation in which there are apparently two legitimate sides.

Remember, Trump condemned both sides and then made yet another announcement specifically condemning white supremacist groups by name.

The letter then turns to even more lies, this time about DACA and what Trump’s stance is on the controversial executive action taken by the former Obama Administration.

We believe this equivocation on the president’s part to be a complete abdication of his responsibility to be a clear moral voice “for all Americans.” Even more recently the administration barely attempted to disguise the racism at the root of the decision to rescind DACA. Its abject cruelty should not be downplayed.

 

Those with power in Congress to hold President Trump accountable have failed to do so, and indeed, with their recent vote to gut health care, appear to be complicit in undermining the health and welfare of all, particularly children, the aged, the poor, and those in minority populations. Therefore, the responsibility to speak out falls more heavily on the shoulders of individuals and groups, large and small.

Trump didn’t rescind DACA to send away a bunch of hard working people. He ran on a platform to stop executive actions that Obama took because he was unable to get congressional support. Not only that, Trump has stated multiple times that he does not want to deport illegal immigrants who have been here since childhood.

The following Tweets, directly from the president himself, prove that the above paragraph is nothing short of straight nonsense.

He has also given congress SIX MONTHS to actually pass a bill that allows DACA recipients to stay but also includes more border security.

The rest of the letter continues to paint Trump and tens of millions of Americans as perpetrators of crimes against all sorts of groups of people while continuing to push misinformation on statements and actions actually made by the president.

One has to wonder, especially with doctors openly diagnosing Trump as mentally unfit on national T.V, if this is part of a larger operation to eventually remove Donald Trump from office and marginalize over half the country. At the very least, the letter is anything but a bipartisan opinion by medical professionals.

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“This Is Textbook” – Military Officials Defend Trump Administration’s Puerto Rico Response

A steady drumbeat of criticism accusing the White House of not doing enough to hasten the federal government’s relief effort in Puerto Rico has metastasized into yet another political dogfight, as President Trump and the White House respond to an outpouring of outrage from celebrities, politicians and local officials over the administration’s purported inaction over the response.

The backlash to what we imagine the media will soon tag as “Trump’s Katrina” began earlier this week when Hillary Clinton and Marco Rubio urged the president to leverage the full might of the US military to aid the disaster response.

But an emotional plea from San Juan Mayor Carmen Yulin Cruz during a press conference late Friday helped elevate the issue to the forefront of the public’s consciousness, eliciting an avalanche of condemnation from celebrities, Democratic politicians, and basically every group that opposed Trump during the election.

"Hamilton" Writer Lin-Manuel Miranda tweeted that Trump would go "straight to hell" for ignoring the Puerto Rican people.

During her remarks, Cruz – who was standing in front of palates full of water, food and supplies – described the situation in Puerto Rico as something akin to “genocide” before blasting the administration for its allegedly sluggish response to the disaster, drawing a harsh response from Trump, which served only to further elevate the controversy.

The media quickly piled on, with the Washington Post publishing yet another “bombshell” report calling out Trump for choosing to spend last weekend at his golf club in Bedminster, N.J., which the paper alleged contributed to the inadequate disaster response.

But while the backlash to Trump’s remarks has been swift and loud, assessments of the administration’s handling of the response by military officials (people with disaster-recovery experience) have been notably more measured.

Army Lt. Gen. Jeff Buchanan said Friday morning that the Pentagon has 10,000 people helping with the response to Hurricanes Maria and Irma – an unprecedented number. But even that number isn’t enough, he said. Fortunately, the Defense Department is sending more, according to Army Lt. Gen. Jeff Buchanan, who was recently appointed to be the DoD’s liaison with FEMA.  

“We're certainly bringing in more [troops]," Buchanan said on CNN’s “New Day.”

 

"For example, on the military side, we're bringing in both Air Force, Navy, and Army medical capabilities in addition to aircraft, more helicopters. … [But] it's not enough, and we're bringing more in.”

As the Hill points out, the Pentagon initially sent 4,000 troops to help in rescue and restoration efforts to Puerto Rico and the Virgin Islands, but it wasn’t until Thursday, eight days after Maria slammed the Caribbean, that US Northern Command (Northcom) sent Buchanan. However, at least one administration official quickly pointed out that the early phases of the relief effort had been coordinated by the Navy, and that Buchanan's appointment coincided with FEMA taking the reins of the recovery effort.

However, Tom Bossert, Trump’s homeland security adviser, defended the lag between when the storm hit and when Buchanan was appointed.

 

“It didn’t require a three-star general eight days ago,” Bossert said of the government response.

 

When asked whether it was a mistake to not have Buchanan on the ground in Puerto Rico earlier, Bossert replied, “No, not at all.”

 

“In fact, that doesn’t affect the way that we stage equipment and the way we area command and field operational command. This is textbook and it’s been done well,” Bossert told reporters Thursday at the daily White House press briefing.

Indeed, while the media and Trump’s political opponents have implied that the administration waited until this week to organize a meaningful response to the disaster, in reality, the Pentagon has been steadily increasing its help to Puerto Rico and the Virgin Islands after both were slammed by the two Category 5 storms. The Pentagon began deploying more resources early this week, opening a second airfield at the former Naval Station Roosevelt Roads, preparing the hospital ship USNS Comfort to deploy from Norfolk and establishing a caravan of cargo jets filled with equipment and supplies.

As we’ve reported many times, Hurricane Maria – following just two weeks behind Hurricane Irma, another devastating storm – caused unprecedented damage to Puerto Rico’s infrastructure, destroying roads, devastating power grids, and cutting off communications. With many parts of the island completely cut off from the outside world, it was difficult for the military to assess the true extent of the damage and scale up operations accordingly.

In yet another example of how Trump’s opponents have twisted or ignored facts when spinning a self-serving narrative about the administration’s response, Rubio said Friday on CNN that Trump should put the US military in charge of handling and delivering aid to Puerto Rico – ignoring the fact that, until late this week, the Navy had been supervising the response from the sea.

Poviding a notable counterpoint to Mayor Cruz's criticisms, Puerto Rico Gov. Riccardo Rossello has repeatedly thanked and praised the federal response. In a mid-day tweet, Trump thanked Rossello for his praise.  

Trump praised another Puerto Rican politician, Congresswoman Jennifer Gonzalez-Colon, claiming that she has been "wonderful to deal with"…

…And asked the Puerto Rican people not to pay attention to the "fake news."

In an interview with ABC, an anonymous White House official pointed out the irony in Cruz's remarks: Namely, she's been spending more time speaking to the media than helping out herself.

“She has been invited to FEMA command center several times to see operations and be part of efforts but so far has refused to come, maybe too busy doing TV?"

While criticism has focused on Trump's reluctance to wave the Jones Act and send in the military, the response hasn't foundered for lack of supplies. Already has hundreds of thousands of pounds of food, water and other emergency necessitites stuck in Puerto Rican ports. The problems are related to circumstances on the ground. The country’s devastated roads, and a shortage of truckers to drive the supplies into devastated areas, has arguably been the biggest impediment to the recovery effort.

But perhaps most tellingly of all, former Navy Captain Jerry Hendrix – a veteran of several disaster response efforts who has no connection to the Trump administration – told Bloomberg that he believed criticisms of the administration’s efforts have been unfair.

Hendrix explained that the Pentagon and FEMA weren’t being recognized for their careful preparations for the storms.

TH: So, it seems like everybody has blasted Trump administration's response to the Puerto Rico crisis. Has that criticism been fair?

 

JH: No, I don’t think so. First of all, there was a fair amount of anticipatory action that is not being recognized. Amphibious ships, including the light amphibious carriers Kearsarge and Wasp and the amphibious landing ship dock Oak Hill were at sea and dispatched to Puerto Rico ahead of the hurricane’s impact.

So far, 16 deaths have been recorded on the island in the aftermath of Hurricane Maria, which made landfall a week-and-a-half ago as a category four storm. More than 80% of the island is without power, and about 40% doesn't have access to potable water. Still, roads are being cleared, airports are reopening, and cell service is being restored. Soon, the public's attention will shift to the mainland, as tens of thousands of Puerto Ricans who’ve seen their homes destroyed by the storms flee the island to stay with relatives until they’re ready to return to the island.

For what it’s worth, mayors of cities with large Puerto Rican populations like New York and Orlando say they are working with the federal goernment to accomodate the influx of temporary residents. New York City Mayor Bill De Blasio has said he expects up to 100,000 disaster victims to stay with relatives and friends in NYC alone.

However, the question remains: When their time comes, will they also denounce the federal response to score cheap political points?

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Why Despite Threats, Turkey Won’t Impose Sanctions On Kurdistan After The Referendum

Submitted by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

High-ranking sources in Kurdistan (Erbil) said that the Kurdish leader Masoud Barzani “expected the sanctions already announced by Baghdad and expects many more sanctions to come in the future”. Nevertheless, “the referendum was an essential step to undertake,” otherwise Barzani would no longer be considered the Kurdish leader.

“We are not afraid of Turkish sanctions because Ankara would lose more than it will gain if the common borders are closed. The Turkish representative promised us (months before the referendum) that harsh political measures will be adopted against Kurdistan but that no economic sanctions would be seriously considered. After all it is up to Turkey to stop sending its oil tankers to recover our oil production at a cheap price if Erdogan considers it a practical move within his own economy,” said the source.

The Erbil leadership knows that the Kurds lived through hunger and genocide throughout the years, sometimes living in the mountains for decades. Therefore, although any threat to their existence won’t be taken lightly, it cannot affect the process of independence that has been put on their desired track. The Kurdish leaders will agree to allow Baghdad to control airports (Erbil and Suleymaniyeh) as requested by Prime Minister Haidar Abadi, and would like to reestablish good neighbor relationships with all surrounding countries, particularly since the declaration of independence may require two or three years to put into concrete effect.

The 1800 km long borders between Kurdistan and the rest of Iraq will force Erbil to send more Peshmerga troops to reinforce its security all along its borders and especially in disputed areas. However, for many countries the referendum has created embarrassment and reshuffled many of the alliances in the Middle East: the implications of this have yet to be considered. It is Turkey that will be holding the key to the success or failure of a new “state” in the Middle East: Iraqi Kurdistan.

A pipeline network connects Iraq’s northern oil fields to the Turkish port of Ceyhan. Photo: Anadolu News Agency.

A pipeline network connects Iraq’s northern oil fields to the Turkish port of Ceyhan. Image source: Anadolu News Agency.

Turkey, a summary of its role in the recent history of Syria and Iraq:

  • Turkey supported the uprising of Sunni tribes in 2014 when these metamorphosed into the “Islamic State” (ISIS) terror group. Ankara didn’t ask its consulate diplomat to abandon the diplomatic mission, and so the diplomatic staff became prisoners in ISIS’ hands, to be later exchanged with hundreds of mujahideen and their families held by Turkey.
  • Ankara allowed the Iraqi Peshmerga to cross its territory into Syria to help the YPG (the Syrian branch of Turkey’s most sworn enemy: the PKK) and recover Ain al-Arab (Kobane) from ISIS in the north of Syria.
  • Turkey opened its borders to Jihadists from al-Qaeda and ISIS under the excuse of “bringing down the Syrian regime of Bashar al-Assad”.
  • Turkey brought down a Russian jet while bombing jihadists along the Syrian borders, pushing Moscow to heavily engage in the Syrian war and give the upper hand to Assad.
  • Turkey allowed al-Qaeda and the foreign fighters of the Turkistani group to occupy the bordering city of Kessab. The city was later recovered but Ankara created another military balance by expulsing from its territory of thousands of members of al-Qaeda who then occupied the city of Idlib, today the center of al-Qaeda in Syria (also known as Hay’at Tahrir al-Sham).
  • Turkey asked its Syrian proxy to pull out of the city of Aleppo, rendering its liberation easier and less costly for the Syrian Army and its allies, which marked a real turning point in the war in Syria.
  • Turkey joined the de-confliction negotiation in Astana (Kazakhstan) after reconciliation with Moscow and the return to normal relations between both countries.
  • Turkey moved its forces into Syria to stop the creation of a Kurdish “state” known as “Rojava” (from al-Hasaka to Efrin) and disrupted a Kurdish Syrian access to the Mediterranean that could have been also used in the future for the Iraqi Kurds in case of sanctions against Iraqi Kurdistan.
  • Turkey considered Iran a “terrorist state sponsor” but kept its diplomatic relationship with Tehran. It increased economic exchanges and fully collaborated with Iran in Astana as partners and guarantors in Syria.
  • Ankara did not hesitate to support the Iraqi Kurds in order to enjoy economic advantages, and to keep its forces in the north of Iraq. Despite many attempts by Baghdad to remove the Turkish troops, Ankara rejected all demands and hid behind “the Kurdistan request” so as to maintain several hundreds of officers and soldiers in Iraq.
  • Turkey is not expected to implement any economic sanctions against Erbil despite Erdogan screaming, “the Kurds will go hungry”. There is no doubt, however, that Turkish officials will continue launching verbal attacks against Barzani but doubt remains about economic sanctions and the cessation of oil purchases.

To sum it up: President Erdogan declared war on the Syrian Kurds but prevented them from losing Kobane; declared war on Assad but supported him to recover Aleppo; declared war on terrorism but allowed ISIS and al-Qaeda to enjoy all support from Turkey and bought oil from ISIS; threatened the Iraqi Kurds but still bought their oil while keeping its hundreds of trucks queuing up on their borders; promised to keep al-Qaeda under control in Idlib during the last Astana meeting, but allowed it to launch military offensives afterwards.

It is obvious that the Iraqi Kurds are aware of Ankara’s unstable and continuously changing of policy, very confident that any other measures by surrounding countries (Iraq and Iran) can be easily overcome in the future, as long as Erdogan is offering alternatives. The cost is that the Iraqi Kurds fall into Ankara’s hands and control, but it looks like Barzani is happy with this outcome: as long as he has his new state, pushing its place onto the Middle East map, right in the middle.

Iran and Iraq

The Kurdish referendum pushed Iraq into the arms of Iran when the relationship between Iraqi Prime Minister Haidar Abadi and Iranian officials was at its lowest level. Today Abadi (and most Iraqis) sees in Iran the only sincere partner to count on, and can rely on the Iranian Army and Revolutionary Guards Corps (IRGC) in the case of any military escalation against Kurdistan, particularly in the disputed Iraqi cities, with Kirkuk at the top of the list.

Baghdad is confident that Barzani didn’t take this step without a blessing from the Americans, which is expected to become more visible in the coming months, according to Iraqi officials in Baghdad. It seems Washington decided to swap its relationship with Baghdad with that of Erbil because, apparently, it won’t be able to support both at the same time.

Supporting Erbil is more attractive to the US and its regional allies (particularly Saudi Arabia), in the hope that the Kurdish Iraqi move would trigger the appetite of the Kurdish Iranians (and the Syrian Kurds who are already on this same path). If this happens and we observe an uprising in Iran (the Saudis already promised to support any unrest in Iran), the Iranian economy and that of the government of Baghdad will be both under severe pressure.

Iran supported Barzani in 2014 and provided him with weapons (at a time when the US was denying any support to Iraq, during the 6 months after the fall of Mosul in 2014), but it is today in an undeclared war against Erbil, fully behind Baghdad’s measures and supporting future escalation and punitive steps.

No one can wind back the clock to before the Kurdish referendum. However, it is still possible for Barzani to avoid contributing toward a further mess in this increasingly reshuffled Middle East. He could indeed consider all these issues as an unnecessary concern, similar to a "storm in a tea cup". Unfortunately, it seems the Kurdish leader is determined to continue his path, denying any immediate intent for concrete realization of independence, yet without excluding it.

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Why Madrid Will Never Let Go – Catalonia Is Closer To The Eurozone Than Spain

As we have detailed previously, the Spanish region of Catalonia in the North-Eastern corner of Spain will attempt to hold an independence referendum tomorrow, against the will of the central government in Madrid.

Apart from the Baleares and the Madrid region itself, Catalonia together with its capital Barcelona is one of the most economically-powerful parts of the country.

Notably, as Statista's infographic below shows that the gross domestic product (GDP) per capita of Catalonia lies closer to that of the Eurozone than of Spain as a whole.

Infographic: Catalonia Closer to the Eurozone Than to Spain | Statista

You will find more statistics at Statista

This in mind, it comes as no surprise that Madrid is by all means opposed to letting go of Catalonia.

As The BBC notes, Catalonia, a wealthy region of 7.5 million people in north-eastern Spain, has its own language and culture. It also has a high degree of autonomy, but is not recognised as a separate nation under the Spanish constitution. Pressure for a vote on self-determination has grown over the past five years as austerity has hit the Spanish economy and people hard.

Why is Madrid so opposed?

Spanish Prime Minister Mariano Rajoy stared down Catalan secessionists when they held a trial referendum in 2014, offering no concessions to their demand for a legal vote.

He has pledged to stop the 2017 vote, saying it goes against the constitution which refers to "the indissoluble unity of the Spanish Nation, the common and indivisible homeland of all Spaniards".

 

Which brings to mind the biggest question, what would happen to Spain in case of Catalonia’s secession?

As GEFIRA explains, in terms of the debt sustainability parameters laid down by the Treaty of Maastricht, it’d be the Eurozone debt crisis 2.0.

As Spain now maintains the second year of 3% GDP growth, an even bigger, immediate fiscal threat is looming. After multiple ineffective referendums in the previous years, this time the Catalan government is likely to finally assert independence. What will it look like against the background of the Maastricht financial requirements?

Debt to GDP ratio

The Treaty of Maastricht says it should be 60%. Spain’s debt to GDP ratio was 39% in 2007, but after the financial crisis it gradually rose to 99.4% today. Should Catalonia leave, there are two possible scenarios:

1. Catalonia agrees to take a share of the Spanish total debt, as a “divorce bill”, because after all it benefited from the government spending in Catalonia itself;

 

or

 

2. Catalonia leaves without taking any share of the total Spanish debt.

In the first case, nothing would change, assuming Catalonia would agree to take the share of Spanish debt equal to its share in Spain’s total GDP. In that case, Catalonia accounts roughly for 20% of the Spanish GDP, which means it would take 20% of the Spanish debt. Given that the Spanish debt is right now almost the same size as the Spanish GDP, calculations are rather simple.

Source: Statista.

The second option is rather dramatic. Without Catalonia, Spanish GDP would automatically shrink by 20%, while having to service the entirety of the debt. The debt to GDP percentage ratio would go from 99.4% to 124% overnight.

Deficit to GDP percentage ratio

The Treaty of Maastricht says it should be 3%. Spain has been way outside it since the financial crisis, with a peak at 11% in 2011. For 2016 it was 4.5%.

Here the problem is understanding how much more tax revenue Spain gets from Catalonia than it gives. Catalonia says 11.1€ billion, Spain says 8.5€.

Either way, as the deficit is calculated as expenditure minus revenue, it would be a hole in the revenue of the Spanish government of 8.5 to 11.1€ billion. Last year the deficit/GDP ratio was 4.5%, corresponding to approximately 21€ billion. With the Catalan secession, assuming a 10€ billion hole for simplicity between the estimates of the Spanish and Catalan governments, Spain’s deficit would go up to 60€ billion, while its GDP would shrink by 20%. Result? The deficit to GDP percentage ratio would be 6.7%, back to 2013.

Conclusion

The doomsday scenario would be Spain waking up with a debt equal to 124% of its GDP and growing, due to the 6.7% deficit, which would take another 4-5 years to be contained. The EU’s response to the possibility of Spanish bankruptcy would be predictable: more austerity. It is important to note that while Spain has been growing for the past two years and unemployment is also decreasing, the recipe chosen by the Spanish government, flexibility of the labour market in the form of temporary jobs, has exacerbated income inequality: as the OECD points out that temporary jobs are low-productivity and thus earn low wages; the precariousness of the job prevents improvements in productivity, thus improvement in wages. The poor remains poor, while the rich gets richer and the gap widens.4)

Boosting GDP and employment statistics with mini-jobs is thus masquerading an issue common to other Western countries: the collapse of the middle class.

Catalan independence could prove to be the last nail in the coffin: either Spain goes bankrupt or is forced to implement even more austerity at the risk of facing a revolution from the economically displaced.

*  *  *

And that's why Madrid doesn't want to lose Catalonia…

Once before, in October 1934, shortly before the Spanish Civil War (1936 to 1939) broke out, Catalonia had announced its independence from the rest of Spain. This prompted Madrid to sent the army to Barcelona.

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The Fed’s ‘Quack Treatments’ Are Causing The Stagnation

Authored by EconomicPrism's MN Gordon via Acting-Man.com,

Bleeding the Patient to Health

There’s something alluring about cure-alls and quick fixes. Who doesn’t want a magic panacea to make every illness or discomfort disappear? Such a yearning once compelled the best and the brightest minds to believe the impossible for over two thousand years.

 

Instantaneous relief! No matter what your affliction is, snake oil cures them all. [PT]

 

For example, from antiquity until the late-19th century, bloodletting was used to treat nearly every disease. Reputable medical references recommended bloodletting as a cure for acne, asthma, cancer, epilepsy, gout, indigestion, insanity, leprosy, pneumonia, scurvy, tuberculosis, and everything in between. Bloodletting was even used to treat hemorrhaging.

The practice was simple enough. A surgeon, often a barber, would open a vein and drain blood from the patient. Somehow, this was supposed to cure them of disease.

The fundamental idea was that a sick person could be bled to health. Induced fainting, via bloodletting, was even considered beneficial. However, the results were often fatal.

On December 13, 1799, George Washington returned from a cold-winters horseback ride across his estate with a raspy throat. So, he requested bloodletting to make his sore throat better. Over a ten-hour period, roughly 126 ounces of blood was drained from his system.

The next day Washington’s treatment culminated in perfect success. Because of the bloodletting, Washington never suffered from a sore throat again. He had received a permanent cure. Namely, he croaked.

Wouldn’t a tablespoon or two of honey and lemon have been a better solution to the sore throat problem? Sure, it would have been less effective. But it would have been a great deal less terminal as well.

 

George Washington: so-so land speculator, successful revolutionary & general, founding father, first president of the US, and reportedly no friend of foreign entanglements. Here seen in those all too brief final hours, enjoying a sore throat for the very last time, orbited by family and assorted quacks. We don’t know who’s who in this picture, but this is obviously a room brimming over with decidedly fatal good intentions. There is a picture of Lincoln’s deathbed (which shows his prostrate body crammed into a tiny room with his wife and 15 politicians and generals, who are trying their best to look solemn and grimly resolved to carry on) that gives off similarly morbid vibes. There is a major difference though: almost no-one is contemplating Lincoln with the thoughtful, calculating looks Washington is at the receiving end of here. Lincoln was probably judged a hopeless case and had been crossed off everybody’s Rolodex already (a hole in the head is rarely conducive to one’s continued life and career). By contrast, Washington still offered the quacks a chance to speed up the healing process by devising ingenious ways of killing him. Admittedly, the cure really is hard to beat in terms of its permanence. It is an apodictic certainty that Washington never complained about a sore throat again. [PT]

 

Curing a Debt Problem with Credit

Certainly, repeated observation of the practice must have shown bloodletting’s cure-all powers to be a dubious proposition at best. You’d think that after several thousand years of failure the practice would have been tabled. But it wasn’t.

In fact, by the 17th century, many doctors knew bloodletting was more harmful than beneficial. But the practice persisted for another 200 years. How come?

From what we gather, doctors didn’t want to acknowledge their limitations. Although they had garnered an astute understanding of how the human anatomy functioned, they had yet to discover cures for practically all diseases. Thus, the common belief was that it was better to give a bloodletting treatment than no treatment at all.

These days, many diseases are still without cures. But progress has been made. Doctors and surgeons no longer imagine bloodletting to be the ultimate cure-all. Only a true medical quack would carry out such a barbarous treatment.

Unfortunately, the same cannot be said for present day monetary policy. We live under a system of outright quackery. What else, but a quack monetary system, would prescribe ever increasing expansions of credit as a cure-all for a debt problem?

 

This chart depicts causes and effects of the snake-oil cure applied by our vaunted central planners. It shows federal debt, corporate debt, the broad true money supply, and lastly, economic output as measured by GDP – all indexed to 100 in 1986, the year bubble blower extraordinaire, Alan Greenspan, took the helm at the Fed. However, we want to direct your attention to the cesura of 2008, when Greenspan’s successor, Ben Bernanke was tasked with bailing out yet another imploding bubble of the fiat money era. According to “experts” of his ilk, these things kin of “just happen”. The boom-bust cycle is seen as akin to a natural catastrophe, like an earthquake or an asteroid strike. No-one is ever responsible for it, least of all the people who directly and indirectly manipulate all the figures charted above, and certainly no-one ever “sees it coming”. The latter assertion involves a rather glaring omission – it requires one to ignore the hundreds, or more likely even thousands, of people who did and do see it coming. Why are they so studiously ignored? The problem is probably that the people with the slightly better functioning crystal balls often have a tendency to assign blame correctly. You see, it is not an earthquake after all, and it certainly isn’t a “market failure”, or a “lack of regulations” that is behind the increasingly dangerous succession of ever larger credit expansions and crashes. Stop and think about this chart for a moment. At the time when the Greenspan/Bernanke housing bubble co-production (implemented in line with the unsolicited advice dispensed by another bunch of “experts”*) blew up in everyone’s face, was there anyone who didn’t understand that a giant debt problem had been discovered? There is of course more to it than that; business cycle theory is a tad more intricate. But credit expansion is at its heart, and there always comes a moment in time when understanding that part of it requires nothing but a smattering of common sense. And now ponder the response of the central planners to the debt crisis. What on earth made them think that expanding money and credit at accelerated rates was the “solution” to a giant debt problem? Common sense is evidently in very short supply at the Eccles building – contrary to money from thin air, which they can never run out of. [PT] – click to enlarge.

 

Nonetheless, perpetual increases of credit underpin today’s wild and zany debt based fiat money system. This, no doubt, is akin to attempting to bleed a patient to health. It also guarantees a slow and painful death.

 

Fed Quack Treatments are Causing the Stagnation

On Tuesday, Fed Chair Janet Yellen, a quack, reeled back her78-month plan for the national monetary policy of the United States. If you recall, this was the grand plan she rolled out last week. Apparently, she’s already having some reservations.

At the National Association for Business Economics in Cleveland, Yellen said:

“My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.

 

“Although we judge that inflation will most likely stabilize around 2 percent over the next few years, the odds that it could turn out to be noticeably different are considerable.

 

“In my view, it strengthens the case for a gradual pace of adjustments. Moving too quickly risks over-adjusting policy to head off projected developments that may not come to pass.”

To be fair, Yellen was speaking about the pace at which the Fed will raise the federal funds rate. Though this is different than her plan to unwinding the Fed’s balance sheet, we suspect that, in time, this same rationale will be used to justify further Fed asset purchases.

The point is, the Fed only knows only one cure-all treatment for the economy’s stagnation. Always wrong, but never in doubt. Credit expansion is the Fed’s perennial solution.

 

This seems a very good opportunity to quote Ludwig von Mises, who pointed out: “However conditions may be, it is certain that no manipulations of the banks can provide the economic system with capital goods. What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The boom is built on the sands of banknotes and deposits. It must collapse.” [PT]

 

Alas, like bloodletting barbers of the 19th century, it’s a quack treatment that has buried the economy under irreconcilable levels of debt. Yet the quacks who deliver it are oblivious to the fact that their treatment is not a cure for the economy’s stagnation, but rather the cause. Perhaps in two thousand years from now they’ll come to grips with this.

Footnote:

* The “money quote” Paul Krugman will never be able to live down follows below; not for a lack of trying, mind – once he expended an entire NYT column in a vain attempt to deny that his words actually meant what they obviously mean:

 

“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

 

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California Assemblyman Promises Bill To Ban Gas Cars By 2040

San Francisco Assemblyman Phil Ting would like for you to know that he has every intention of introducing new legislation in 2018 that will (i) make it much more difficult for low-income Californians to buy affordable vehicles and (ii) increase greenhouse gas emissions.  Of course, Ting didn’t word it in exactly that way but his proposal to ban combustion-engine vehicles will inevitably result in both of the unintended consequences above.

As the Sacramento Bee points out this morning, Ting has promised to introduce his destructive legislation in January saying at some point you just need to “put a line in the sand.”

France and the United Kingdom are doing it. So is India. And now one lawmaker would like California to follow their lead in phasing out gasoline- and diesel-powered vehicles.

 

When the Legislature returns in January, Assemblyman Phil Ting plans to introduce a bill that would ban the sale of new cars fueled by internal-combustion engines after 2040. The San Francisco Democrat said it’s essential to get California drivers into an electric fleet if the state is going to meet its greenhouse gas reduction targets, since the transportation sector accounts for more than a third of all emissions.

 

“The market is moving this way. The entire world is moving this way,” Ting said. “At some point you need to set a goal and put a line in the sand.”

 

“California is used to being first. But we’re trying to catch up to this,” Ting said.

Meanwhile, we suspect that Ting will ignore the fact that California’s previous attempt to push electric cars on consumers has been a complete failure…presumably because people would prefer to not spend way more for a car that has half the performance of a gas car and doubles their electricity bill…just a hunch.

California already committed five years ago to putting 1.5 million “zero-emission vehicles,” such as electric cars and plug-in hybrids, on the road by 2025. By that time, the state wants these cleaner models to account for 15 percent of all new car sales.

 

But progress has been modest so far, as consumers wait for prices to drop and battery ranges to improve, or opt for large trucks and SUVs that are not available among electric offerings. Slightly more than 300,000 zero-emission vehicles have now been sold in California, and they accounted for just under 5 percent of new car sales in the state in the first half of the year.

Phil Ting

On the upside, Ting’s proposed ban on gas vehicles would come a full 10 years later than the timeline floated by Mary Nichols of the California Air Resources Board last week.  Per Bloomberg:

Governor Jerry Brown has expressed an interest in barring the sale of vehicles powered by internal-combustion engines, Mary Nichols, chairman of the California Air Resources Board, said in an interview Friday at Bloomberg headquarters in New York. Brown, one of the most outspoken elected official in the U.S. about the need for policies to combat climate change, would be replicating similar moves by China, France and the U.K.

 

“I’ve gotten messages from the governor asking, ‘Why haven’t we done something already?’” Nichols said, referring to China’s planned phase-out of fossil-fuel vehicle sales. “The governor has certainly indicated an interest in why China can do this and not California.”

 

California has set a goal to cut carbon dioxide emissions by 80 percent from 1990 levels by 2050. Rising emissions from on-road transportation has undercut the state’s efforts to reduce pollution, a San Francisco-based non-profit said last month.

 

“To reach the ambitious levels of reduction in greenhouse gas emissions, we have to pretty much replace all combustion with some form of renewable energy by 2040 or 2050,” Nichols said. “We’re looking at that as a method of moving this discussion forward.”

 

“There are people who believe, including who work for me, that you could stop all sales of new internal-combustion cars by 2030. Some people say 2035, some people say 2040,” she said. “It’s awfully hard to predict any of that with precision, but it doesn’t appear to be out of the question.”

Of course, the irony that seems to be lost on Phil Ting, Jerry Brown and Mary Nichols is that, according to Morgan Stanley, electric cars generate more CO2 than they save.  As a stark reminder to our left-leaning political elites who created companies like Tesla with massive subsidies, Morgan Stanley pointed out that while electric cars don’t burn gasoline they do have to be charged using electricity generated by coal and other fossil fuels.

This is where Tesla, along with China’s Guoxuan High-Tech fall short.

 

“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.”

 

In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.”

 

Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.

Meanwhile, despite Brown’s desire for “Hope & Change,” even the U.S. Energy Information Administration says that “renewables” will represent less than 20% of electricity generation in the U.S. by 2040.

Energy

Oh well, when Ting succeeds it making it impossible for low-income California families to afford cheap transportation to work, we’re sure he’ll be all too happy to introduce additional legislation deeming electric cars to be a “right” of all U.S. citizens and mandating that “millionaire, billionaire, private jet owners” pay more in taxes to subsidize that “constitutionally protected right.”

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“They Won’t Know What Hit Them” Shocking Undercover Footage Exposes Antifa’s “Premeditated” Violence

As if the public needed any more evidence that violence is a central part of Antifa’s mission, conservative comedian Steve Crowder has published footage that he and his producer surreptitiously recorded after infiltrating a local Antifa cell and accompanying it to a protest at the University of Utah.

The shockingly candid footage offers a disturbing glimpse into the innerworkings of Antifa – a loosely organized band of far-left agitators – and the central tenant of violent resistance that encapsulates the group's philosophy. The footage primarily focuses on a transgender woman, the purported leader of a small cell of Antifa protesters, who can be heard telling Crowder's producer that she’s armed with a handgun, and that she expects reinforcements to arrive later with “two AKs”. The organizer can also be heard recommending that Crowder’s producer buy a small blade at a military surplus store and strap it to his ankle “just in case.”

What they show appears to confirm that the group protesters were planning to disrupt a speaking event hosted by conservative commentator and Daily Wire founder Ben Shapiro, whom Antifa has accused of being a nazi despite the fact that he is Jewish. Shapiro's recent appearances at UC Berkeley and other university campuses drew protests, with demonstrators labeling him a “fascist.”

But perhaps the most surprising thing about the footage was the fact that mainstream media reporters AND police essentially told Crowder & Co. to get lost when they shared it with them.

In another shocking excerpt, the Antifa leader – whom Crowder didn’t name because he said he didn’t want to “dox” anybody, though he added that police have confirmed that they have been monitoring her – described a plan to lure right-wing demonstrators to a secluded area where, presumably, they would be attacked by Antifa.

“Plain clothes, hard tactics, I don’t think they’ll know what hit them. Because they’re not prepared for what we’re planning,” the organizer says at one point.

In the video, another unnamed Antifa member who goes by the pseudonym Clark can be heard explaining that the difference between Antifa and other activist groups is a “willingness to respond with violence.”

As we’ve reported time and time again, Antifa protesters have been inciting violence across the country since Trump’s upset victory in November, beginning with protests during Trump’s inauguration that quickly turned violent in destructive.

According to Fox 13 News in Salt Lake City, Crowder published the undercover video Thursday that purports to show far left-wing protesters distributing weapons ahead of the speech. Crowder’s production team presented the video to police moments after it was recorded.

Yet after evaluating the video, the police determined that there was no credible threat.

“Police looked at the video, evaluated other information available to them, and determined the individuals did not pose a credible threat that warranted action,” Nelson told Fox 13 News.

Similarly violent clashes instigated by members of the far-left group erupted on the campus of UC Berkeley in early February, where members of the group hurled Molotov cocktails and attacked “facists” and “nazis” who were attending a speaking event by Milo Yiannopoulos, causing extensive property damage on campus.

While both the mainstream media and more mainstream leftists initially defended the group, public sentiment has soured on the group.

Several media organizations – including the LA Times, Washington Post, the Atlantic, Bloomberg and the Wall Street Journal – have criticized the group’s violent tactics. A month ago, it was reported that the FBI and the Department of Homeland Security classified Antifa as a "domestic terrorist" group in internal communications that described them as "primary instigators of violence at public rallies" going back to at least April 2016 when the reports were first published."

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