Month: January 2018

Authored by Daniel Lacalle via The Mises Institute,

The most recent consensus estimates for global Gross Domestic Product growth show a healthy “synchronised” development in most economies.

 

Expectations for the major economies are much stronger than what economists expected at the end of 2016 for the next three years. Seems all concerns about a global slowdown and subsequent recession have disappeared. What has changed?

China

The first major driver of this newfound optimism is China. The Chinese economy has not slowed down as aggressively as predicted nor has the Yuan devalued as much as feared. The counterpart is that deleveraging and structural reforms have vanished from the China debate. Chinese total debt has surpassed 300%. In the first ten months of the year, money supply has increased by 9.2%, significantly above estimates. From January to October 2017, China has added more debt than the UK, EU, US and Japan together, and that should be a cause of concern in the next months.

Bond yields are already rising in China and the stubborn decision of the government to “print” an official growth above 6% is also creating significant imbalances in the economy that will be more difficult to solve if ignored.

Political Catalysts

The second factor behind the current wave of optimism can be found in the excessive risk attached to political catalysts in the past two years. As economists, many of us were concerned about the different events in the political calendar, from Brexit to the Trump presidency, to the French and German elections. None of these events have generated a dramatic negative effect on the major economies.

The feared “rise of protectionism” did not happen, and trade growth rose above expectations, and economic recovery accelerated throughout the year. In effect, many were wrong attaching too much risk to political events, but this has led to an opposite effect. By the end of 2017 what we can read out of consensus estimates is that political risk has been all but ignored.

Inflation Expectations

The third relevant factor has been the gradual increase in inflation expectations. For many, it does not matter that it comes mostly from rising food and energy, two elements that are not positive economic growth drivers in most major economies. These analysts just see that inflation is picking up and that must be good. Well, it is not. Productivity growth is still very poor in OECD countries and core inflation rising is not driving real wages higher.

If we look at 2018 and 2019 expectations, the risks of rising debt and elevated bond and risky asset valuations are being completely ignored. Global debt stands above 325% of GDP, an all-time high even though solvency and liquidity ratios have deteriorated according to Moody’s. Meanwhile, bonds and equities continue to post record-high levels. Today, this excess risk-taking in financial assets is evident and clearly beyond fundamental valuations, and should be addressed. Extremely loose monetary policy is driving risky assets to constantly higher valuations and the risk of a financial bubble is clear.

Looming Risks

Once we look at the global economy from the risk relative to opportunity perspective we can easily conclude that the concerted action of global central banks has disguised risks under a massive cloud of debt and money supply. As such, it may be the case that 2018 does not bring a recession, but it is at the same time a concern that the optimism is based on excessive leverage and risk-taking. Again.

Today’s Synchronized Growth Can Easily Become the Synchronized Crisis of Tomorrow

Let us think of the risks to a growth period that is based on ignoring high debt and financial bubbles.

It is likely to cause a wider recession when the effects of extremely loose policies moderate.

It is also likely to be hard to combat by central banks as they have run out of tools.

Furthermore, credit growth is unlikely to pick up when the level of debt has risen so quickly in low productivity sectors, fueled by low interest rates.

The main issue of the current recovery is that it is slower than any other in history and at the same time the world has not seen a significant cleansing of the imbalances of the major economies. Brazil is likely to exit recession with its industrial overcapacity intact, for example. This will likely drive a more pronounced decline when monetary policies normalize.

This is a very similar problem to the one of the European Union, where virtually no government would be able to absorb a modest rise in interest rates of 0.25% without increasing deficits. When two of the largest economies in the world, the European Union and China, have used extreme monetary policies to disguise their structural problems, we need to be aware of the risks.

What Could Cause the First Domino to Fall?

We must pay attention to the domino effect of extreme monetary policy. The major central banks’ balance sheets accumulate $20 trillion of assets, and interest rates are at the lowest level in 3,000 years. Even if some economists believe that this is not a problem because “there is no inflationary pressure,” we should at least understand the risk of an economy that has grown addicted to extreme monetary expansion.

Even if you believe these policies have helped to lead the world out of the crisis, which is more than debatable, the next recession will likely be caused by the unintended consequences of cheap money and cheap debt.

We need to pay attention to these rising risks. Extreme complacency is the biggest risk, as I explain in my book Escape from the Central Bank Trap, the next recession will not be caused by housing or the sectors that generated previous recessions. It will be caused by the assets that we perceive as having lowest risk. With $9.5 trillion in negative-yielding bonds, we as economists need to start paying attention to the ramifications of a growing financial-asset bubble that faces a wall of worry once central bank policies start to fade.

The next recession is going to be caused by making the same mistake of the previous ones: denying the the level to which we’ve accumulated risk. It is unlikely that we will see it in 2018, but the main reason is because imbalances are being perpetuated through central-planning.

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Confirming speculation from Bloomberg – which this morning published a piece entitled “Harassment Allegations Could Topple Wynn As GOP Fundraising Chair” – Politico is reporting that Wynn has indeed decided to step aside following reports about his decades-long history of settling dozens of accusations of rape and sexual harassment that was first reported yesterday by the Wall Street Journal.

Las Vegas casino mogul Steve Wynn is stepping down as Republican National Committee finance chair, according to three Republicans familiar with the decision.

The decision follows a Friday report in the Wall Street Journal alleging that Wynn engaged in sexual harassment.

Check back for updates…

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If there is such a thing as financial hell, it is probably Greece… with Illinois coming in close second.

For those unfamiliar, here’s a quick recap: Illinois (rate just one notch above junk) is drowning under a mountain of debt, unpaid bills and underfunded pension liabilities and it’s largest city, Chicago, is suffering from a staggering outbreak of violent crime not seen since gang wars engulfed major cities from LA to New York in the mid-90’s, while rising taxes have prompted a mass exodus with the state lost 1 resident every 4.3 minutes in 2017. 

Here is just a small taste of some of our recent posts on Illinois’ challenges:

• Illinois Pension Funding Ratio Sinks To 37.6% As Unfunded Liabilities Surge To $130 Billion
• Illinois Unpaid Vendor Backlog Hits A New Record At Over $16 Billion
• Illinois Lost 1 Resident Every 4.3 Minutes In 2017, Dropped To 6th Most Populous State
• The State Of Illinois Is “Past The Point Of No Return”
• “What The Hell Is Going On In Chicago” And Other Highlights From Trump’s Speech To FBI Grads

Seen in this light, any irrational actions undertaken by the near-insolvent state would almost make sense, if not be expected. Actually make that irrational and utterly bizarre, such as a proposed offering of a mind-blowing $107 billion in debt – a never before attempted amount in the world of munis – to “fund” the state’s insolvent pension system, which would also assure that Illinois would default (even faster) in the very near future.

According to Bloomberg, Illinois lawmakers are so desperate to shore up the state’s massively underfunded retirement system that “they’re willing to entertain an eye-popping wager: Borrowing $107 billion and letting it ride in the financial markets.“

If that number sounds oddly large, is because it is: an offering of this size would be by far the biggest debt sale in the history of the municipal market, and amount to roughly 50% more debt than bankrupt Puerto Rico accumulated in the run up to its record-setting insolvency.

Putting the proposed deal in context, Illinois had $26.3 billion of general-obligation bonds as of July and the state sold $750 million of bonds in November to pay down unpaid bills that had accumulated during its two-year budget impasse. The state still has $8 billion of unpaid bills even after that issuance, according to the comptroller’s office.

An Illinois Democrat came up with the perfect soundbite framing this head-scratching proposal:

“We’re in a situation in Illinois where our pension debt is just crushing,” Martwick, a Democrat who chairs the committee, said in a telephone interview. “When you have the largest pension debt in the world, you probably ought to be thinking big.”

In other words, with left nothing to lose, Illinois may as well go big. So big, in fact, it’s never been seen before.

What is just as shocking is that not even $107 billion would be enough to fully fund the Illinois pension system, which owes $129 billion after years of failing to make adequate annual contributions.

And since the state’s constitution bans any reduction in worker retirement benefits, the government’s pension costs will continue to rise as it faces pressure to pay down that debt, a squeeze that pushed Illinois’s bond rating to the precipice of junk over the summer when the state avoided a historic downgrade below investment grade with a last minute budget deal.

To be sure, Illinois wouldn’t be the first state to issue debt to shore up its pension system: the state did so again back in 2003, when it issued a record $10 billion of them. New Jersey also tried it with catastrophic consequences, seeing its pension shortfall soar again after the state failed to make adequate payments into the system for years. And then there is Detroit’s now infamous pension-fund borrowing in 2005 and 2006 helped push it into bankruptcy.

Will Illinois gamble with a bond offering that – in one deal – could reprice the entire muni bond market? According to Bloomberg, the state legislature’s personnel and pensions committee plans to meet on January 30 to hear more about a proposal advanced by the State Universities Annuitants Association.

The group wants Illinois to issue the bonds this year to get its retirement system nearly fully funded, on one condition: Illinois will pursue the deal assuming that the state can make more on its investments than it will pay in interest.

Ah yes, ye olde IRR: will it be positive or negative?

Naturally, the association which is advocating the plan says it will save the state $103 billion by 2045. That’s because Illinois’s current debt to its pensions grows at the rate that the retirement system expects to earn on its investments, which may be – shall we say – aggressive, and is much higher than the interest rates governments pay to issue municipal bonds.

There is just one problem: whereas Illinois universities expect total returns to keep rising well in the double-digit category, others, such as GMO, forecast real stock returns of -4.7% annually for the next 7 years, while bonds lose 1% in real terms as Mish notes. Offsetting this is the cost of debt, which for the near-junk bonds will likely come out around 6-7% – unless of course the ECB decides to backstop these too – and Illinois Pensions are looking at annual losses of 8%+ every year for the next 7 years.

 

On the surface, the plan appears to be sheer mathematical idiocy, guaranteeing that Illinois pensions are depleted even faster, but that never stopped Illinois before.

According to the abovementioned democrat Robert Martwick, “if it makes sense, we’ll do it, and if it doesn’t we won’t.” Of course, he also said that Illinois has to be “thinking big” and there literally hasn’t been a bigger municipal bond sale ever.

As for the rating agencies, they will be thinking just how deep into junk territory to downgrade Illinois. Indeed, as Bloomberg notes, municipal-bond investors would likely frown upon such a massive sale, to say the least.

“Those types of deals are not typically positively received by the rating agencies or investors,” said Eric Friedland, director of municipal research in Jersey City, New Jersey, for Lord Abbett, which holds about $20 billion of municipal debt, including Illinois’s. “That type of issuance could definitely be a credit negative.”

Needless to say, this kind of issuance contemplated by the association would significantly increase the state’s debt burden, and “will not go over well in the bond market,’” said Richard Ciccarone, Chicago-based president of Merritt Research Services LLC, which analysts municipal finance.

“It absolutely increases default risk. There’s no cushion” Ciccarone said.

But that’s not Illinois problem: at this point the state’s default is only a matter of time, and as such it may as well accelerate it if it means a faster transfer of cash from willing idiots debt investors to the state’s retirees. And considering that Illinois’ general obligations were trading back at par just a few months ago after tumbling in late 2016…

 

… the presence of numerous idiots debt investors who are willing to gamble with other people’s money just to beat treasuries is guaranteed.

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Authored by Chris Hamilton via Econimica blog,

I have made the case that as goes housing starts (blue columns below), so goes jobs creation and more broadly the US economy.  And as goes interest rates (black line below) and deficit spending (on an annual % change basis of total debt (essentially as a % of GDP), red line below), so goes new housing. 

Simply, when deficit spending accelerates and interest rates are declining, America builds new housing and the broader economy hums.  However, debt grows far faster than the resultant economic activity, and debt to GDP soars (yellow line).  Conversely, when deficit spending is decelerating and rates are rising (as they are now), new housing creation decelerates/declines and economic recession is imminent.

*When showing the change in deficit spending, I’m showing the year over change in actual federal debt (as per the Treasury), not the White House deficit numbers which do not reflect actual increases to federal debt.

But many people rightly state that federal deficit spending is currently at a half trillion and likely to surge back above a trillion dollars in the near future.  So what am I talking about decelerating deficits???

To help clarify my point when I say deficits are decelerating, the chart below shows total debt (red shaded area), annual federal debt spending in dollars (black line, on a quarterly basis) and annual federal debt spending in % terms (yellow line, also on a quarterly basis).

So the current change in federal debt, on an annual basis, is currently a half trillion dollars and likely set to grow to a trillion plus relatively soon based on demographic changes (slowing SS receipts, larger outlays, Medicare/Medicaid spending, etc.) plus tax cuts reducing tax revenue.  However, it is the correlation of federal debt growth in % terms (yellow line in above chart, representing rate of growth) which seems to have greater impact.

As the total debt grows (total debt now essentially equals GDP), the denominator is larger and the resultant debt spending must be that much larger to have the same impact. For example, to have the same impact as the ’09 debt binge, a $4+ trillion increase (annually) would be necessary to have the same impact as the $0.2 trillion spent in ’83 or the $2.1 trillion spent in ’09.

However, in the next “crisis”, we should expect a $4 trillion jolt (annual) and perhaps as much as $20 trillion in the next episode of this ongoing “crisis” to achieve an ’83 or ’09 like stimuli.  But this may not have nearly the impact as previous.  Typically, deficit spending and interest rate cuts have gone hand in hand but with rates having been at zero for nearly a decade before the recent, minor rise…a move to cut rates from anywhere near current levels back to zero will likely have little impact and not be capable of amplifying the deficit spending.  Perhaps significantly greater debt creation will be necessary to have a like impact as that of ’83 or ’09.  But, of course, the impact on the debt to GDP ratio will be an irrevocable moon shot into Japan style debt to GDP levels.

Perhaps the sanity of an economy built on building new homes for a core population that is now shrinking is highly questionable (chart below)?

And to round it out, the annual growth of the 15-64yr/old US core population versus the Wilshire 5000 (representing the value of all publicly traded US stocks).

What should already be clear will be obvious for everyone…the federal “debt” being created isn’t actually “debt” at all.  It is being created and spent with no intention of ever repaying it and the move back to zero % interest rates (or more likely NIRP) on that “debt” will make clear that it is simply centrally created and centrally directed monetization. 

And the resultant wealth is being centrally directed to a shrinking minority of asset holders at the expense of the vast majority.  The founding fathers worst nightmare come true.

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Submitted by Brecht Jonkers and Andrew Illingworth via Al–Masdar News,

As Turkish and allied militant forces from the so-called Free Syrian Army (FSA) advance further upon Kurdish positions in northern Syria, Turkey has called upon the United States to vacate its military bases in the Syrian district of Manbij. Speaking to reporters on Saturday, Turkish foreign minister Melet Cavusoglu said that Ankara is calling upon the US, its official ally in NATO, to cease any and all support to Syrian Kurdish forces and militias.

Cavusoglu’s statement came mere hours after an official telephone talk between Turkey’s Presidential Spokesman Ibrahim Kalin and US National Security Adviser Herbert Raymond McMaster about the ongoing Turkish invasion of Syrian soil.

 

Turkish backed forces advancing in Afrin. Image via South Front

Though unconfirmed by officials in Washington, the US-funded Voice of America reports that McMaster “pledged to stop giving arms to YPG Kurdish forces in Syria” during the phone call. However, it is unclear what this would mean on the ground as the Pentagon has in the past attempted to make a linguistic distinction between the YPG per se (Kurdish “People’s Protection Units”) and the Syrian Democratic Forces (the former comprises the bulk of the latter), as well as a distinction between YPG operating in Afrin Canton and the rest of Kurdish forces in Rojava.

Voice of America reports the following of the high level phone call between McMaster and Erdogan’s presidential spokesman:

Turkey said Saturday that Washington has pledged to stop giving arms to YPG Kurdish forces in Syria, as Turkey’s offensive against the U.S.-backed group there enters its eight day. Turkey’s presidency said in a statement that U.S. National Security Adviser H.R. McMaster spoke Friday with Ibrahim Kalin, a spokesman for Turkish President Recep Tayyip Erdogan. McMaster confirmed in the phone conversation that the U.S. would not give weapons to the YPG militia, the statement said. There has been no U.S. confirmation.

While both Turkey and the United States are in violation of international law by entering Syria with military forces without permission by Damascus or a UN mandate, both countries have vastly different interests in the country.

The United States has for years supplied weapons and training to Kurdish militias in northern Syria, causing concerns that they seek an eventual secession of Kurdish-occupied lands from Syria. Turkey on the other hand, having supported so-called “moderate” rebel groups such as the FSA since at least 2015, actively seeks to prevent the existence of a YPG-controlled area to its southern border, as it sees the Syrian Kurdish units as an affiliate of the banned Kurdistan Workers’ Party, which is active within Turkey.

 

Via The Saker

Meanwhile, with the lifting of bad weather and the return of Turkish warplanes and gunships to the skies over northern Syria, pro-Ankara forces have breached the defenses of Kurdish forces in a key area of the Afrin region on Saturday. As reported by Al-Masdar News earlier this morning, so far Saturday has witnessed the Turkish Army and allied Free Syrian Army militias under its command advance inside Afrin from positions near the northwestern border of Turkey and Syria.

Sources report that Free Syrian Army-linked rebel groups and Faylaq al-Sham Islamists managed to seize the village of Ali Beski and the hilltop of Point 740 in the Rajo area of Afrin. The militant advance was backed up by fire support from Turkish attack helicopters which targeted Kurdish positions and movements. The engagement for the two locations in Rajo resulted in a dozen Kurdish casualties of which 10 fighters were killed and two were captured by pro-Turkish rebels.

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Authored by Bill Bonner via InternationalMan.com,

It is always brightest before they turn the lights out.

You can quote us on that, Dear Reader.

Just when you thought things couldn’t get better… guess what?

They don’t. They go dark as a dungeon.

 

Antidote to Optimism

Our task today is to show that however wonderful things may appear in today’s markets and economy, they may not be all that great.

We put our backs into this grim work neither for love nor for money, but simply out of a sense of stern duty.

If not us, who? If not now, when?

Someone must put forward an antidote to the optimism now raging through markets around the world.

Someone must make the case for cynicism, suspicion, and mockery.

Someone must take the other side of the trade.

And so… the work, like shucking oysters on a cold day, falls to us. We open them up… hoping to find a pearl.

Donald Trump, Davos Man

Instead, we find claptrap.

“The elite gathering at Davos [including Donald Trump],” begins a Financial Times article, “takes place against a backdrop of improving economic activity across the world.”

The IMF says it is the “broadest synchronized global growth upswing since 2010.”

The FT goes on to tell us that the world economy is supposed to grow a healthy 3.9% “this year and next” thanks, at least in part, to the sweeping tax reform measure just implemented in the U.S.

Well, well, well. Gosh, it looks as though we were wrong about everything. You can predict the future after all.

As for the tax cut, we didn’t believe that the tax measure would have any positive consequences other than giving us more money.

What economic benefit could be reaped by taking money from one pocket and putting it in another?

Unless Swamp spending were reduced, we reasoned, there could be no net gain from cutting taxes.

Just goes to show what we know.

Over at The Wall Street Journal, meanwhile, the tax cut has touched off celebrations worthy of VE Day.

Andy Puzder, the former CEO of the Hardee’s and Carl’s Jr. restaurant chains, praises employers for sharing out their extra tax-spared loot with employees.

He also thinks employers should use the opportunity to indoctrinate workers about where the money came from, “otherwise employees may take their pay increase and bonus and not give Republicans the credit they deserve.”

What praise Republicans deserve for switching government funding from above-board tax revenues to surreptitious debt is not clear to us.

But now that we know that it is creating such a powerful, worldwide boom, we wonder why they don’t do more of it.

Perhaps they should cut taxes to zero for everyone and just print the money needed to pay for their boondoggles. What a boom that would set off!

Wealth Redistribution System

Whatever they are doing… it seems to be working.

The U.S. stock market has only been down one single day in all of 2018. And super hedge fund investor Ray Dalio says we’re “going to feel pretty stupid” if we continue to hold cash.

Reporters caught up with Dalio in Davos – where else? – and the great man told them we are in a “Goldilocks period,” where growth is almost guaranteed.

“Things couldn’t be better,” he seemed to say.

Heck, nobody wants to be stupid. So, everyone’s long now. In the latest tally, there are five bulls for every one bear. How much longer can this poor beast hold out?

The unemployment rate, too, is almost a miracle. At 4.1% nationally, it is at a 17-year low.

In some states, it is at a record low. In Mississippi, for example. And California. And in Hawaii, apparently, not a single person could be found who admitted to being jobless.

These glass-half-full figures don’t jibe with the 102 million American adults of working age who really don’t have jobs.

But perhaps in some future installment, the Bureau of Labor Statistics will fully explain the discrepancy… or simply ignore it along with all the rest of the glass-half-empty figures.

Inflation is still below 2%… but only if you follow the feds’ bogus numbers… and don’t count the rampant inflation in the asset markets.

And the stock market, too, requires a special caveat emptor. It is no longer a place where we find out how much companies are worth.

Instead, it is part of a wealth redistribution system: The feds feed fake money into the markets. Assets go up. And the people who own them find themselves with a greater share of the nation’s wealth.

Congrats to the “One Percent”

By pushing fake money onto the financial class, the feds have increased the share of national income made by the “One Percent” to three times what it was in the 1970s.

The bottom share had to go down.

There are 2.3 million people, for example, who earn more than $1 million a year.

And the top 0.1% earn more than $6 million a year.

But the bottom half of the population has an average income of only $16,000. And seven out of 10 Americans, says USA Today, have less than $1,000 in savings.

How is it possible that an economy can be doing so well… when most people in it are worse off?

Casual readers will quickly tag us as bleeding-heart liberals whining about inequality. But we don’t care about “inequality.” What we care about is truth, justice, and the American way.

Which is to say, if a person earns his money honestly, it should be a rough measure of what he deserves. Or at least what other people are willing to pay him.

In a free, win-win world, what you get is related to – if not exactly equal to – what you give.

But in the 1970s, the top 0.1% got 10% of the nation’s income. Now, it gets 20% – twice as much.

What are the rich giving to deserve twice the income share? Are they giving twice as much?

The bottom 90% got 35% of national income as recently as 1980. Now, they only get 25%.

What happened? Do they give so much less? Or is the system rigged against them?

 

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We wonder how many painstaking hours Hillary Clinton’s focus group spent drafting this dumpster fire of a non-apology apology…

In possibly the most tone-deaf response to a “#MeToo” moment since the movement first emerged late last year, Clinton responded to a story about her protecting an adviser accused of sexual harassment with one of the most insincere, tone-deaf and downright baffling explanations in the history of Twitter.

First, Clinton claimed that the young woman – still unnamed – who first reported being harassed by Clinton “spiritual adviser” Burns Strider “was heard” and “had her concerns taken seriously…” (though the facts would suggest the opposite)…

 

A story appeared today about something that happened in 2008. I was dismayed when it occurred, but was heartened the young woman came forward, was heard, and had her concerns taken seriously and addressed.

— Hillary Clinton (@HillaryClinton) January 27, 2018

 

…Then she said she “called her today to tell her how proud I am of her and to make sure she knows what all women should: we deserve to be heard!”

Heard, that is, but still ignored…

 

I called her today to tell her how proud I am of her and to make sure she knows what all women should: we deserve to be heard.

— Hillary Clinton (@HillaryClinton) January 27, 2018

 

 

“To all the little girls watching…never doubt that you are valuable and powerful & deserving of every chance & opportunity in the world.”

— Hillary Clinton (@HillaryClinton) November 9, 2016

 

 

Unsurprisingly, her remarks inspired a flurry of criticism…

 

Yeah, all women deserve to be heard, EXCEPT if they accuse your husband. You are so full of crap. Nobody cares what you have to say anymore. Just go away already.

— Paladin#7 (@7_paladin) January 27, 2018

 

* * *
Later Friday evening, a video surfaced online where Clinton “gave a shoutout to all of the ‘activist bitches supporting bitches.'”

“Hey everyone, I just wanted to say thanks,” Clinton said. “Thanks for your feminism, for your activism, and all I can hope is you keep up the really important, good work.”

 

Supportive Activist Bitch reporting for duty #ImWithHer #feminist #bitch https://t.co/M49KBoKgH7

— Aldea (@ldeaplum) January 27, 2018

 

No, thank you Hillary, for all that you truly represent…

 

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Back in December, Elon Musk tweeted that if his new startup called the Boring Company sold 50,000 hats, it would then start selling flamethrowers.

Seriously, he tweeted that. Later in the month, he tweeted again, “Hats sold out, flamethrowers soon!”

But why focus on flamethrowers and not building tunnels?

Musk is known for making bold promises on deadlines he often can’t keep. He likely over-promised on the Boring Company’s timelines and that is starting to become evident in Los Angeles’ proposed 6.5-mile tunnel project.

“I don’t really trust a private company to watch out for equity because I haven’t seen it happen,” Councilwoman Meghan Sahli-Wells reportedly said.

“It looks super sexy and super easy but it’s half-baked from a public perspective.”

In return, Musk has developed a clever system of distractions like the Roman circus, while he sorts out his failures away from the public eye.

And that is exactly what he is doing here, selling flamethrowers through the Boring Company to distract the audience while he overpromised on tunnel deadlines. This is not the first time Musk has used this trick; he’s been a master of distractions with his other companies including SpaceX and Tesla. So, is Musk a magician, super brilliant or a snake oil salesman with a good pitch?

As reported by The Verge, Redditors in a few Musk-related subreddits noticed earlier this week that the URL “boringcompany.com/flamethrower” redirected users to a subpage on the website asking for a password. One Redditor was able to guess the password: “flame,” which permitted the Redditor access to this:

Behind the clever password: “flame,” the Redditor found a pre-order page, where one could buy a $600 flamethrower. Why not? The page notes that the final version “will be better” than the prototype image above, and the device would ship sometime in April.

 

According to TeslaRati, the flamethrower already exists, and it’s fully functional:

The Boring Co. flamethrower recently made a quiet debut on social media, after writer-musician D.A. Wallach posted a brief clip of himself holding and operating the fiery device while he toured the tunnels being dug by the Elon Musk-led firm.

During the short clip, Wallach could be seen playfully talking to the camera while demonstrating the fiery capabilities of The Boring Co. flamethrower. As noted by an Instagram commenter on Wallach’s post, the device itself appears to be a modified CSI S.T.A.R. XR-5 Airsoft Rifle. Instead of firing rounds of BBs, however, The Boring Co. flamethrower fires a stream of red-hot flame.

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Authored by Charles Hugh Smith via PeakProsperity.com,

How much longer until the pitchforks come out?

 

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