Month: February 2018

Goldman has long had a love, hate relationship with bitcoin: while JPM’s Jamie Dimon was slamming it and threatening anyone caught trading it with termination, Lloyd Blankfein was planning the rollout of a cryptotrading desk. While other brokerages were shunning futures trading, Goldman told clients “your money is welcome here.” On the other hand, from a purely fundamental standpoint, Goldman was more ambivalent, unwilling or unable to embrace the currency, yet laying out under what conditions it may succeed as money, which nonetheless was a far cry from JPM’s blanket determination that bitcoin is a pyramid scheme.

Then, this morning, the market awoke to a Goldman report that was released on Monday evening, in which as we reported earlier, Steve Strongin – Head of Goldman’s Global Investment Research – said that the current generation of cryptocurrencies is unlikely to survive even if blockchain technology endures:

Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive…. To my eye, they still seem too primitive to be the long-term answer.

Asked if the market is accurately pricing the likelihood that several—if not most—of the current cryptocurrencies will ultimately fail?, his answer was surprisingly pessimistic:

I don’t believe it is. People seem to be trading cryptocurrencies as though they’re all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they all seem to move as a single asset class. But if you believe this is a “few-winnerstake-most” situation, then the potential for retirement depreciation should be taken into account. And because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.

To be sure, Goldman did highilight some of the notable highlights of bitcoin, chief among which is the unprecedented value storage density, which is why Goldman’s commodity chief proposes calling them not cryptocurrencies but rather cryptocommodities.

Despite being called cryptocurrencies, bitcoin and other digital assets are better described as “cryptocommodites.” A financial security—currencies included—has a claim or liability attached to it, as it is “secured” to an underlying real asset. Just as equity is secured to the future earnings of a real company, a dollar bill is secured to the US government and its tax revenue. In contrast, commodities have no obligation or liability to any government, company, or other entity. Given that bitcoin has no liability to any entity, it is a good like any other commodity. Bitcoin just happens to be the first digital commodity—in contrast to financial assets and money, which have long been digitized.

In most economies, a standard digital bank account provides ease of storage, secure transactions, and a positive carry. However, it is still a claim on a bank, and the funds cannot be concealed and transported without alerting regional authorities. To the extent that this is a problem, bitcoin solves it better than any other commodity (although other cryptocurrencies are starting to offer superior privacy and anonymity). This suggests that black markets and less developed regions without a reliable banking system would be the obvious sources of demand for cryptocurrencies.

But the most remarkable feature of cryptos: how much value they can concentrate in virtually no physical space.

Unlike other storage commodities like oil, gold, platinum, diamonds, and even cash, there is no need to hold much physical material to own bitcoin; even a technology as obsolete as the 3½ inch floppy disk can hold almost 30,000 private keys. There is no theoretical upper limit to the value of bitcoins in a wallet, but if we assume each wallet secured by this disk contains as much as the largest wallet today (180,000 BTC), this single disk could “hold” all bitcoins in existence and remain less than 0.5% full. Assuming a bitcoin market cap of roughly $190bn (as of late January), this disk would be the equivalent to either: 95% of the 4,583 tons of gold in Fort Knox, or 1,344 Very Large Crude Carrier supertankers of oil.

Goldman’s conclusion:

On net, cryptocurrencies have superior physical attributes relative to other commodities for concealing and transporting large amounts of wealth, which could be valuable in dark markets and some areas that lack reliable banking systems. But a long list of hurdles remains for cryptocurrencies to reach the equivalence of precious metals in financial markets, and these will be difficult to overcome anytime soon. In the meantime, we believe gold still offers the best store of wealth given how institutionalized it has become over 3,000 years of active trading versus five years for bitcoin.

So bitcoin… or gold? To Goldman that is the question. Meanwhile, for your viewing pleasure, here is Goldman’s chart showing the annotated history of bitcoin’s Rise… and recent fall. The question is what happens next.

via Zero Hedge http://ift.tt/2BMmsrF Tyler Durden

If it seems like it was just a few days ago  that we reported of the biggest ever inflow into equities, it’s because that’s precisely when it happened. It was then that according to BofA CIO Michael Hartnett, we observed a “non-stop euphoria cabaret” in which markets saw a record $33.2bn inflow to equity funds, record $12.2bn inflow to active funds, $1.5bn into gold (50-week high), as well as record inflows to tech & TIPS.

Incidentally, that was the day the S&P hit its all time high, and more importantly, the day BofA also said that its euphoria and panic-buying driven “sell signal” was just triggered for the first time in 5 years, and predicted a 12% selloff in the next three months.

In retrospect, it took just two weeks because that post marked the peak of the market, and it has been non-stop selling since.

But much more troubling than the selling, is the composition: after all, as we showed earlier, the “worst case scenario” according to both JPMorgan and Morgan Stanley is if the liquidation panic was not just systematic funds and various quants puking as a result of the surge in the VIX, but if ordinary retail investors had also joined in: that would be a nightmare outcome for the bulls, as it would mean that the sharp but concentrated relentless selloff, had spread to the broader investing world, and institutions would have no choice but to join.

Specifically, this is what JPM said over the weekend when observing the recent record fund inflows:

If these equity ETF flows start reversing, not only would the equity market retrench, but the resultant rise in bond-equity correlation would likely induce de-risking by risk parity funds and balanced mutual funds, magnifying the eventual equity market sell-off.

And then there was Morgan Stanley:

Today’s moves lower are likely not being driven by systematic supply – this appears to be more discretionary selling. Systematic supply from vol target strategies is largely out of the way now, while consensus trades are getting hit:  NDX is underperforming SPX, momentum is down 1%, and the Passive Factor is up, indicating actively held names are underperforming names better held by passive funds.

Well, we now have confirmation.

According to the just released EPFR weekly fund flow data, what was just two weeks ago a record equity inflow has become a record equity outflow, as the 10% drop in the US stock market has officially launched a selling panic.

As Citi writes tonight, “in the week of 2/7/2018, bond funds had an inflow of US$4.0bn and equity funds lost US$30.6bn to outflows. This was the largest outflow on record from equity funds, which just had their record high inflow of US$33.2bn only two weeks ago. The largest outflow had come from US funds which saw US$32.9bn of outflow. “

Stated simply, this means that one no longer needs the VIX ETN, CTAs or risk pars to launch a liquidation panic: one has already begun, and retail is panicking, desperate to get out of stocks.

Which means that a full on bear market is now in the hands of just two players: institutions, and corporations. In other words, if hedge and mutual funds dont step up, and if companies don’t unleash a buyback tsunami, it’s about to turn very ugly.

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Last week, President Trump announced his proposal for a $1.5 trillion infrastructure program in his State of The Union address to the American people. He failed to mention that over the next decade, the federal government would provide very little money whatsoever for America’s crumbling bridges, rails, roads, and waterways.

 

In fact, Trump’s plan counts on state and local governments working in tandem with private investors to fork up the cash for projects.

In overhauling the nation’s crumbling infrastructure, the federal government is only willing to pledge $200 billion in federal money over the next decade, leaving the remainder of $1.3 trillion for cities, states, and private companies.

Precisely how Trump’s infrastructure program would work remains somewhat of a mystery after his Tuesday night speech, as state transportation officials warned that significant hikes to taxes, fees, and tolls would be required by local governments to fund such projects.

To get an understanding of the severity of America’s crumbling infrastructure. The American Road & Transportation Builders Association (ARTBA) has recently published a shocking report specifying more than 50,000 bridges across the country are rated “structurally deficient.

 

The roads and sidewalks, airports and bridges, are perfect in Dubai. Everything looks clean & strong. In U.S., everything is falling apart!

— Donald J. Trump (@realDonaldTrump) May 19, 2014

 

If the “structurally deficient” bridges were placed end-to-end, they would stretch 1,216 miles or nearly the distance between Miami and New York City, said ARTBA. Cars, trucks, and school buses cross these 54,259 compromised structures more than 175 million times per day, which it is only a matter of time before another Mississippi River Bridge collapse occurs.

Here are the highlights from the report: 

• 54,259 of the nation’s 612,677 bridges are rated “structurally deficient.”
• Americans cross these deficient bridges 174 million times daily.
• Average age of a structurally deficient bridge is 67 years, compared to 40 years for non-deficient bridges.
• One in three (226,837) U.S. bridges have identified repair needs.
• One in three (17,726) Interstate highway bridges have identified repair needs.
• Website features listing of deficient bridges by state and congressional district.

Dr. Alison Premo Black, chief economist for the American Road & Transportation Builders Association (ARTBA), who conducted the analysis, said, “the pace of improving the nation’s inventory of structurally deficient bridges slowed this past year. It’s down only two-tenths of a percent from the number reported in the government’s 2016 data. At current pace of repair or replacement, it would take 37 years to remedy all of them. ” 

Black says, “An infrastructure package aimed at modernizing the Interstate System would have both short- and long-term positive effects on the U.S. economy.”

She adds that traffic jams cost the trucking industry $60 billion in 2017 in lost productivity and fuel, which “increases the cost of everything we make, buy or export.”

Other key findings in the ARTBA report:

• Iowa (5,067), Pennsylvania (4,173), Oklahoma (3,234), Missouri (3,086), Illinois (2,303), Nebraska (2,258), Kansas (2,115), Mississippi (2,008), North Carolina (1,854) and New York (1,834) have the most structurally deficient bridges. 

• The District of Columbia (8), Nevada (31), Delaware (39), Hawaii (66) and Utah (87) have the least.

• At least 15 percent of the bridges in six states – Rhode Island (23 percent), Iowa (21 percent), West Virginia (19 percent), South Dakota (19 percent), Pennsylvania (18 percent) and Nebraska (15 percent)—fall in the structurally deficient category.

As Staista’s Niall McCarthy notes, U.S. drivers cross those bridges 174 million times a day and on average, a structurally deficient bridge is 67 years old. Dr. Alison Premo Black carried out the analysis for the ARTBA and she has said that if things continue at their current pace, it would take 37 years to repair all of the bridges that need attention. With a total of 5,067 of them, Iowa has the most structurally deficient bridges, followed by Pennsylvania (4,174) and Oklahoma (3,234).

You will find more statistics at Statista

Here are the most traveled “structurally deficient” U.S. bridges in 2017:

In 2007, the I-35W Mississippi River Bridge in Minneapolis collapsed during an evening rush hour commute, sending cars and trucks diving into the river. Thirteen people were killed and 145 were injured. The incident served as an eye opener to America’s deteriorating infrastructure. Ten years later, not much progress has been made in America’s bridges.

President Trump has undoubtedly over-hyped his proposal for a $1.5 trillion infrastructure program, but for the 50,000 “structurally deficient” bridges across America, it is a race against time for the Trump administration, before the next bridge collapses triggers a mass causality event. We are almost positive this administration does not want this on their plate.

“Every federal dollar should be leveraged by partnering with state and local governments and — where appropriate — tapping into private sector investment to permanently fix the infrastructure deficit,” Mr. Trump said in his State of the Union address.

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For the second time in one month, the US government will be shut down… if only for 3-6 hours, and potentially much longer.

As we explained earlier, a last minute Senate vote to approve the bipartisan “budget-busting, cap-lifting, debt-ceiling extending” two year budget deal is on hold at the moment as Kentucky Sen. Rand Paul prevents its advancement. Furthermore, as discussed earlier, the White House has instructed critical agencies to begin shutdown preparations for a government shutdown should a deal not be reached before midnight when the funding lapse expires.

This now appears certain because as Bloomberg reports, according to House majority whip Steve Scalies, “At this point, we expect next votes in the House to occur at very roughly 3:00-6:00 a.m.”

And since midnight is the deadline for a deal, that would guarantee at least a short U.S. government funding lapse, and potentially a protracted one if for some reason the scheduled vote is once again delayed.

As a reminder, uber-deficit hawk, Rand Paul has been pushing for an amendment to maintain budget caps, but Senate sources say leaders have no plan to give Paul such a concession, meaning that he can continue to prevent a vote until after midnight, when government funding runs out.

As we look at this debate, my hope is that both sides will come together and say, “Enough’s enough. This is the time. Tonight I say no.”

— Senator Rand Paul (@RandPaul) February 9, 2018

When the Senate eventually gets to a vote – some time on Friday morning, the measure will likely have enough support to pass. However, and this is where things get tricky, even if the Senate approves the legislation Thursday night, a suddenly divided House, where Nancy Pelosi’s Dreamer stunt has stumped her Democratic colleagues, still needs to pass it and get it to President Donald Trump’s desk.

In other words, today was bad for the market. Tomorrow could be much worse.

via Zero Hedge http://ift.tt/2nPgSMA Tyler Durden

Authored by Sandor Farkas via Campus Reform,

At a public event on “The Rule of Law in a Time of Polarization,” a Northeastern University professor told the audience that he “wouldn’t mind” seeing President Trump “dead.”

The event was part of Northeastern’s 2018 Myra Kraft Open Classroom series, which explores “the definition of the Rule of Law, what it requires, what happens in its absence, and how it has declined and emerged globally,” as well as how it functions in times of “polarization and technological upheaval.”

The event description notes that the term “Rule of Law” can have different meanings to different people, but asserts that “at its core it involves all members of a political community being subject to the same (well defined) laws and standards and an independent judiciary.”

Barry Bluestone, a professor of political economy at Northeastern’s School of Public Policy and Urban Affairs who served as the school’s founding dean from 2006 to 2012, participated in the January 31 installment of the series, which focused on “Challenges Posed by Economic Inequality & Stagnation” and also featured progressive journalist Robert Kuttner.

On Monday, Northeastern’s School of Public Policy and Urban Affairs posted a video of the two-hour event to its YouTube page, near the end of which Bluestone shared his fantasy of seeing Donald Trump leave the presidency, either through impeachment or death.

“This president that we have is really out of control…sometimes I want to just see him impeached,” Bluestone remarked.

“Other times, quite honestly – I hope there are no FBI agents here – I wouldn’t mind seeing him dead. But, actually I don’t wa…”

Kuttner, seated to his left, quickly interjected, supplying the qualifier, “…of natural causes.”

“Of natural causes,” Bluestone affirmed with a nod to his colleague. “Thank you. Thank you.”

Bluestone pointed to the camera and then to Kuttner saying “FBI,” as if to suggest that any FBI agents listening should heed Kuttner’s hasty correction.

NOTE – The YouTube video has since been removed.

In a statement to Campus Reform, Bluestone elaborated on his remarks, saying that while he wants people to “rise up and oppose” Trump, he was not advocating acts of violence.

“In my opinion, Trump is the most dangerous man on the planet because of his power of using lies and half-truths to galvanize his supporters and his ability to command vast military resources,” he explained. “Would I kill him? No. And I normally abhor violence in all forms.”

At another point during the event, Bluestone referred to Trump as a “plutocratic fascist,” a characterization he told Campus Reform he is standing behind.

“He is risking millions of lives by his wreckless global policies, he and his staff have referred to Muslims and Mexicans in terms not unlike Adolf Hitler’s references to Jews, and he now is taking on the militaristic approach of Stalin and Hitler in wanting to have a massive Military Parade showing off our soldiers and weaponry,” Bluestone contended.

“I refer to him as a Plutocrat because he is doing everything to shore up his own wealth and that of his rich friends,” the professor added. “I refer to him as a fascist because of his autocratic behavior with little concern for social justice or democratic process.”

*  *  *

UPDATE: Renata Nyul, VP of communications for Northeastern, has provided Campus Reform with a statement disavowing Bluestone’s remarks, noting that the school has removed the video from its website.

“Professor Bluestone’s comments do not reflect the views of Northeastern University. The university and its leaders steadfastly oppose violence in all its forms,” the statement asserted. “While faculty members are free to express controversial opinions, the university cannot provide a public platform for comments that could be construed to condone violence. As a result, we have decided to take down the video of this event.”

via Zero Hedge http://ift.tt/2nQMkt8 Tyler Durden

After an insane winning streak in December and January, the Hang Seng has plummeted in the last few days and along with the rest of the major mainland China equity markets – has entered correction.

 

2018 started off so well in China…

 

But after an almost incessant ramp, China and Hong Kong stocks have crashed back to reality in the last few days…

Shanghai Composite is now at 7-month lows…

 

And Hang Seng is down 12% from its highs, back below 30,000…

The Yuan remains on edge as it tumbles most since the Aug 2015 devaluation…

 

And across the water, Japanese stocks are down 13% from their highs…

via Zero Hedge http://ift.tt/2nPdJwp Tyler Durden

A criminal investigation into the death of a Green Beret last June has prompted a broad investigation of SEAL Team 6 – the unit which reportedly took out Osama Bin Laden, reports a military official and two others briefed on the case.

The investigation was ignited following the death of Army Staff Sgt. Logan J. Melgar, who died after allegedly being “choked out” by SEAL Team 6 operator Anthony DeDolph as fellow SEAL Adam Matthews watched, the Intercept reported. The two SEALs are suspected of embezzling cash from operational funds meant for informants in Bamako, Mali.

DeDolph and Matthews brought Melgar, with whom they had shared embassy housing, to a medical clinic in the early-morning hours of June 4 last year. Melgar was unconscious and not breathing. The two SEALs claimed they had found Melgar in that condition and tried to resuscitate him with an emergency tracheotomy. Melgar was pronounced dead at the clinic.

Much of the early stage of the investigation was spent unwinding the two SEALs’s conflicting statements about how Melgar died. –The Intercept

At first, the SEALs told investigators that Melgar had been intoxicated when they “found him unconscious and not breathing,” however a medical examiner determined that Melgar had no alcohol or drugs in his system at the time of his death, and concluded that the Green Beret died as a result of “homicide by asphyxiation” – specifically, strangulation. 

According to witnesses who have seen the medical examiner’s report, Melgar’s throat and upper torso appeared to have been mutilated in a botched tracheotomy performed by DeDolph – a SEAL medic. 

The SEALs then changed their story, telling military officials that DeDolph – a former professional MMA fighter, had “accidentally choked Melgar during a late-night sparring match in their shared apartment,” according to The Intercept. 

That story was dispelled when Melgar’s wife told investigators that her husband did not participate in MMA or otherwise spar recreationally – causing the SEALs to change their story yet again, according to two sources. 

DeDolph and Matthews told investigators that tension between them and Melgar had been building for weeks, and they ended up in a physical confrontation. The cause of that fight is now at the heart of the case.

A longtime Special Operations consultant who has been briefed on the investigation said Melgar had discovered that the SEALs were stealing cash from the informants fund and told them he was going to report their activity. –The Intercept

According to witnesses, Melgar had been with the SEALs earlier in the evening of June 4, returning to their shared apartment to make a video call to his wife – where he reportedly told her that the SEALs asked him to participate in something that he refused. Melgar did not describe exactly what the SEALs wanted him to do, however a few hours later, Melgar was dead. 

The SEALs have denied stealing money from the informant cash allowance – instead blaming Melgar for the theft, and insisting that they had confronted the Green Beret. 

Cash allowances for the payment of informants typically ranges from $20,000 to $60,000 – and often requires “little more than a handwritten receipt.” Former SEAL Team 6 members say that skimming by members of the unit was common.

The system is ripe for abuse,” said one former SEAL Team 6 leader. “We knew this money wasn’t being tracked, and guys were stuffing their pockets.”

Read more about SEAL Team 6’s crimes here.

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Authored by Ryan McMaken via The Mises Institute,

“Don’t Blame Mental Illness for Mass Shootings” a recent headline at Politico begins, “Blame Men.” To be fair to the author, Laura Kiesel, she probably didn’t choose that title. And to be doubly fair, she doesn’t blame men in general for mass shooting. She does — correctly — point out that the overwhelming majority of people who shoot other people are men. 

These nuances, however, have done little to shield Kiesel from what was probably the expected response. “Politico Blames Masculinity for Mass Shootings. Here’s Why That’s Ridiculous,” an article in The Federalist fires back. Many other responses were less polite. When it comes to mass shootings, it seems that “toxic masculinity” rears its head yet again. 

Many readers, even those not prone to thinking up defenses of men, might think that blaming “men” for mass shootings takes things a bit far. Some might even think that such a claim takes anti-man rhetoric to a new level. 

Such thinking would probably be wrong. There have been other times in American history when men have been blamed for most of society’s ills. And some of those campaigns were even more aggressive than what we might think of as anti-male campaigns today. 

 

Prohibition, after all, and the entire political milieu surrounding it, was often premised on attacking men. Indeed, for Victorian and Progressive reformers around the turn of the twentieth century, the only thing worse than an American male was an immigrant male. A working-class, immigrant Catholic male was perhaps the worst of all. These people were — to use a word recently given new meaning — the “deplorables” of American society 100 years ago.

The Progressive Attack on Men

Among Victorians in the late nineteenth century, and among the later Progressives in the twentieth century, men were singled out as the primary cause of a multitude of social ills ranging from child abuse to poverty. A chief factor  in of all these threats to civilization was alcoholism. The fact that only some men caused such misfortune for their families was not necessarily emphasized. 

This overall attitude grew out of a social environment in which women were slowly gaining in influence in cultural institutions, that set the standard for correct moral behavior. In their book Replacing Misandry, researchers Paul Nathanson and Katherine K Young note:

Though seldom ordained as religious leaders, moreover, women set the agenda also at church. They took their morality into public space with various reform movements, continuing crusades (which had begun with abolitionists in the North) against the evils that they associated with men: prostitution, intemperance, and secularism. Moreover, they were demanding more influence in all spheres of public life. At least partly on the cases of their own self-proclaimed moral and spiritual superiority to men… they demanded the right to vote, the prohibition of “demon rum,” and many other changes…

In her appropriately titled book The Feminization of American Culture Ann Douglas examines these trends and how Victorian women in the late nineteenth century — having been denied the vote — turned to increasing their influence in American institutions through other means: through literature, through churches, and through family connections. 

In many cases, the goal was to “civilize” men through what the reformers’ opponents might have described as excessive “domestication.” 

Thus, for many of the prohibitionists, the abolition of alcohol was not a matter of blandly taking away a threat to public health. Prohibition offered an important step in keeping men at home, out of the saloons, and away from many of their vices. 

Saloon culture, a thoroughly masculine affair at the time, was seen by reformers as both a threat to the family and to a decent political order. Murray Rothbard explains:

The men would repair at night to the saloon for chitchat, discussions, and argument — and they would generally take their political views from the saloonkeeper, who thus became the political powerhouse in his particular ward. 

This institutional framework was especially troubling since it confirmed male Catholics, immigrants, and other undesirables in their ways, thus making them less likely to be converted into the ranks of the Progressives and other reformers. 

Moreover, saloons were incubators for male vices since they enabled men who presumably went home from saloons nightly to beat their wives and children — but only after losing the family’s income on gambling and prostitutes. 

Carrie Nation smashes a saloon with her hatchet. Source: Saturday Evening Post.

But, if alcohol could be prohibited, then the saloons would disappear also. Robbed of their saloons, men would finally be forced to go home to their wives and perhaps become reasonably productive members of society in the process. 

So evident was the need to separate men from their booze that when confronted with the fact that some women opposed prohibition, at least one newspaper editorial concluded the only reason anyone could oppose such a measure was because he or she did not know of the “agony and heartbreak of mothers and wives, the chief sufferers from the liquor traffic.” The unstated participant in this equation was males, without whom alcohol could not be transformed into agony for women. 

A Failed Attempt to Regulate the Family

Nor did this anti-male reformist impulse stop with the success of the eighteenth amendment banning alcohol in 1920. 

As Bill Kauffman explains in his history of the failed Constitutional amendment against child labor in the 1920’s, the drive to ban child labor encompassed far more than just the issue of children working for wages in factories. 

The text of the Amendment directly paved the way for this by stating the federal government shall have the power to “prohibit the labor of persons under eighteen years of age.” The use of the word “labor” was significant, and thus extended the power of Congress far beyond employment for people under the age of eighteen. Both supporters and critics of the amendment interpreted “labor” to mean all labor, including chores performed within the home at the service of the family. Thus, the amendment was interpreted as allowing federal agents to regulate a parent’s ability to require a seventeen-year-old-child to darn a sock, milk a cow, or help in the fields. 

The underlying idea was that families were exploiting children by requiring household chores, and that modern “science” would tell us how to better raise our children instead: “if science determined that sewing buttons was bad for Susie, then Susie’s mom must be prevented [by federal regulators] from passing on seamstress work to the poor girl.”

The fact that these activities could be regulated or prohibited by the state right up until the child was eighteen years old, merely added insult to injury from the parents’ perspective. 

As Kauffman confirms, the cultural undercurrent beneath the Amendment was the fact that it was a continuation of the drive to prohibition:

First — and no one disputed this — the Child Labor Amendment was cousin­-germain to Prohibition. Drunkard fathers had necessitated the Eighteenth Amendment; indolent dads would force the Twentieth. American men, it was implied, were dissolute bums whose failings cried out for Washington’s remedies.

Were men not so unreliable as providers for their families, the thinking went, they wouldn’t need their children to work to make up for it. That is, if men adopted more productive ways — perhaps by eschewing their deplorable masculine vices — their children wouldn’t have to trudge to factories at the cost of their educations. 

There was, of course, plenty of opposition to this rhetoric at the time — even within reformist circles. In 1920, a female Party official at the GOP convention that year felt the need to clarify that “I most emphatically do not believe in the aggressive, antagonistic, anti-man spirit in politics.” At the time, the Republican party was the home of the most aggressive reformers, and many party officials felt the need to separate themselves from these activists, just as some Democratic Party officials today must announce that they don’t support Antifa. The interviewer, a writer for Good Housekeeping, informs the reader that by 1920 “the anti-man period of the woman movement is past. The day of sex-antagonism is past.” The article, which apparently takes an anti-reformist position, may have drifted into some wishful thinking.

Indeed, in her updated 1998 preface to The Feminization of American Culture, Douglas suspects that “Amid faux-feminist standards of sexual impropriety, proliferating lawsuits, and a tyrannical pop psychology of victimology, we are now conducting a series of cultural campaigns remarkably like the drives for Purity and Prohibition in which the reform impulses of my [Victorian] subjects culminated in the late nineteenth century.”

So, while the age of “sex-antagonism” is not exactly past — thanks to all parties involved, by the way — there is a difference in the public policy landscape today. No crusade equal in power and scope to the 1920s movement to regulate every aspect of family life is viable — for now. Moreover, drug and alcohol prohibitions, if anything, are going in the opposite direction of what prohibitionists would like to see. Even the gun-abolition movement — which the Kiesel article connects to masculinity — appears to have presently fallen on hard times. In any case, the habit of connecting various social ills to the problem of “men” has a long and well-established history in American politics. Time will tell where the current phase leads. 

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A top-level scientist just confirmed that the Peoples Liberation Army Navy (PLAN) is currently building artificial intelligence–powered nuclear submarines that can think for themselves, according to the South China Morning Post.

According to the scientist, who requested their name be withheld because of the “project’s sensitivity,” told the South China Morning Post that China is in the process of upgrading the legacy computer systems of its older submarine fleets with deep learning algorithms to enhance the thinking skills of commanding officers.

The researcher said incorporating a submarine with AI-augmented brainpower will give China’s navy an advantage during wartime environments and push the technology further than it has ever been before.

“Though a submarine has enormous power of destruction, its brain is actually quite small,” the researcher stated.

The researcher says the AI decision-support system with “its own thoughts” would reduce the emotional decision making by commanding officers’ who often come under the severe stress which could affect critical decision making.

While a nuclear submarine depends on the skill, experience and efficiency of its crew to operate effectively, the demands of modern warfare could introduce variables that would cause even the smoothest-run operation to come unglued.

 

For instance, if the 100 to 300 people in the sub’s crew were forced to remain together in their canister in deep, dark water for months, the rising stress level could affect the commanding officers’ decision-making powers, even leading to bad judgment.

China is embarking into a new era where AI will have a prominent role in the decision making for nuclear submarines during operational usage.

South China Morning Post says the subs’ computer brains are extremely outdated and have never really been upgraded with modern technologies.

First, the technology in most submarine computers tends to predate the vessel’s commissioning. Furthermore, military-grade electronic components have required extensive battle-hardening to withstand shocks, heat or electromagnetic disturbance, sacrificing speed for reliability.

Up till now, the “thinking” function on a nuclear sub, including interpreting and answering signals picked up by sonar, a system for detecting objects under water by emitting sound pulses, has been handled almost exclusively by human naval personnel, not by machines.

The researcher said the AI-infused system must produce basic demands but also be “compact and compatible” with the submarine’s existing computer infrastructure.

“It is like putting an elephant into a shoebox,” the researcher told the South China Morning Post.

“What the military cares most about is not fancy features. What they care most is the thing does not screw up amid the heat of a battle,” he added.

Zhu Min, the lead scientist in China’s deep-water exploration program and researcher at the Chinese Academy of Sciences’ Institute of Acoustics, said China is currently undergoing a modernization of its military through weaponizing systems with AI technologies.

Min warns there need to be systems that safeguard from a “runaway submarine with enough nuclear arsenals to destroy a continent.”

“This is definitely a risk the authorities should consider when introducing AI to a sub,” he added.

South China Morning Post describes how the AI system would work on a nuclear submarine:

Now, through AI technology, a convolutional neural network undergirds so-called machine learning. This structure underpins a decision support system that can acquire knowledge, improve skills and develop new strategy without human intervention.

By mimicking the workings of the human brain, the system can process a large amount of data. On a nuclear submarine, data could come from the Chinese navy’s rapidly increasing observation networks, the submarine’s own sensors or daily interactions with the crew.

An AI assistant could support commanding officers by assessing the battlefield environment, providing insight into how levels of saline in the ocean and water temperature might affect the accuracy of sonar systems. It also could recognize and flag threats from an enemy faster and more accurately than human operators.

An AI assist also could help commanding officers estimate the risks and benefits of certain combat maneuvers, even suggesting moves not considered by the vessel’s captain.

However, Deng Zhidong, a computer science professor at Beijing’s Tsinghua University, told the South China Morning Post that he doesn’t think the nuclear submarines infused with AI technologies could ever become self-aware and adds, “an AI-powered machine is still a machine. It does not have a life,” he said. “You can shut it down and shift to manual anytime. It will be the same on a nuclear submarine.”

As the world marches towards the next military conflict, which will most certainly be fought by machines, China is making the last needed preparations through AI-infused systems on critical military assets, such as nuclear powered submarines to take the human emotion out of war. The one question we ask: What piece of military hardware will China infuse an AI system on next?

via Zero Hedge http://ift.tt/2nNDRrp Tyler Durden

Authored by Mike Shedlock via MishTalk,

Some Fed presidents want higher inflation targets. About 84% of economists think the Fed should stick with a 2% target…

The Wall Street Journal reports Economists, by Wide Margin, Support 2% Inflation Target.

Federal Reserve officials in recent months have floated ways they might alter the central bank’s 2% inflation goal. But economists surveyed by The Wall Street Journal have a message for the Fed: Don’t touch that target.

About 84% of economists said the Fed should stick with its current target, in large part to avoid damaging the central bank’s credibility.

“Changing the rules could trigger skepticism and uncertainty,” said Lynn Reaser, an economist at Point Loma Nazarene University in San Diego.

The Fed adopted the 2% target in 2012. Now, some officials, including former Chairman Ben Bernanke, say the central bank should examine alternatives that would better help the economy recover from recessions in an era of persistently lower inflation and interest rates.

Inflation has undershot the target for all but two months in the past five years.

That suggests officials would have an even harder time hitting their mark if they raised the target or if they sought to let inflation run high for a time to make up for weak inflation periods.

“It’s like moving the goal post when you can’t put the ball in the net,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.

Just 11% of economists surveyed supported moving to a price-level target and 5% were in favor of raising the inflation target.

Survey Results

• 84% favor of 2%
• 11% want price level targets
• 5% want to raise the target
• 0% correct answer

Correct Answer

Not one economist came up with the correct answer.

There should not be a target at all because there is no economic benefit to inflation.

By now it should be clear that the inflation target has blown major consecutive bubbles.

Inflation, What Is It?

I define inflation as an increase in money supply and credit with credit marked to market. This is how things work in a “practical” sense, in a fiat-credit driven world.

In places like Zimbabwe or Weimar Germany there was little to no credit relatively speaking. Monetary expansion, not credit, is then the sole determinant.

In most of the modern world, viewing inflation solely in terms of money supply is a mistake. Credit expansion is running rampant, just as it was with the housing bubble in 2006. Thus, by my measure, we are in a state of substantial inflation right now.

As we saw in 2007, all hell breaks loose when banks become capital impaired and people do things like “walk away” from mortgages.

Some use the term “debt deflation” for such events. Banks cannot lend when they become credit impaired. Economic expansion stops, and asset prices plunge even though overall prices as measured by the Fed’s preferred measure decline only a small bit.

​Bubbles Everywhere

As a direct result of the Fed’s total incompetence in understanding inflation, bubbles are readily apparent in equities, in junk bonds, and in Bitcoin speculation.

No Economic Benefit to Inflation

My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.

BIS Deflation Study

The BIS did a historical study and found routine price deflation was not any problem at all.

“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

​CPI or PCE deflation is not to be feared.

More precisely, price deflation is a benefit. Falling prices increase purchasing power by definition and thus raise standards of living.

​It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.

​Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.

Debt Deflation Coming Up

Another debt-deflation bubble bursting episode is coming up.

All it takes is an economic slowdown or a change in attitudes of greater fools willing to chase the market higher and higher.

Currency Crisis, Debt Deflation on Deck

Another round of debt deflation. a currency crisis, or both is in the cards. Timing is the only issue. It’s far too late to believe anything reasonable can be done about the mess the Fed has created.

Buy Gold

Do yourself a favor, buy gold. It’s a strong favorite to soar when faith in central banks comes into question.

For further discussion, please see Rate Hike Cycles, Gold, and the “Rule of Total Morons”

Final Irony

We are close to the end of this inflationary cycle just as the average analyst thinks inflation is about to pick up.

It’s not necessary for consumer prices to decline by my definition, but it’s likely they will.

via Zero Hedge http://ift.tt/2nTeTGv Tyler Durden