Month: August 2018

Authored by Adam Taggart via PeakProsperity.com,

As far as existential threats to the human species go, pandemics rank near the top of the list.

What’s the probability of an agbressive, highly-fatal outbreak occuring soon? Is it high enough to worry about?

And if one occurs, what can/should we do to protect ourselves and our loved ones?

To address these questions, we interview John M. Barry, author of the award-winning New York Times best-seller The Great Influenza: The Epic Story of the Deadliest Plague in History. John was the only non-scientist to serve on the US government’s Infectious Disease Board of Experts and has served on advisory boards for MIT’s Center for Engineering System Fundamentals and the Johns Hopkins Bloomberg School of Public Health. He has consulted on influenza preparedness and response to national security entities, the George W. Bush and Obama White Houses, state governments, and the private sector.

His verdict? The risk of a massively fatal world-wide pandemic like the 1918 Spanish flu is remote, but very real — and is heightened by the hyper-connectedness of our modern society (i.e., the ease and speed with with people can travel). And our readiness for such an outbreak is woefully lacking:

An often-overlooked part of the damage a virulent pandemic can do is its impact on supply chains and the economy.

If you’ve got 20 to 30% of your air traffic controllers sick at the same time, what’s that going to do to your economy?

Most of the power plants in the United States are still coal powered. They get their coal, most of them, from Wyoming. You see these enormous trains – that’s a highly skilled position, the engineers who move those trains which are a mile and a half long. Suppose they’re out. You’re not going to have power in many of the power plants.

These are things that we don’t automatically think of as relating to a pandemic. Even a mild one that makes a lot of people sick without killing them will wreak an economic impact.

In terms of the health care system, practically all of the antibiotics are imported. If you interrupt those supply chains then you start getting people dying from diseases that are unrelated to influenza that they would otherwise survive. We had a small example of that with saline solutions bags which were produced in Puerto Rico. Because of the hurricane, Puerto Rico was no longer producing them; so we had tremendous shortages in those bages after the hurricane. Other suppliers worldwide have picked up the slack, so that’s not a problem today.

But in a pandemic, you’re going to have supply chain issues like that simultaneously all over the world. So you’re not going to be able to call on any reserve, anywhere, because everybody’s going to be in the same situation whether you talk about hypodermic needles or plastic gloves — any of that stuff. The supply chain issues in a moderate pandemic are a real problem. If you’ve got a severe pandemic, the hospitals can’t cope. There are many fewer hospital beds per capita than there used to be because everything has gotten more efficient. In this past year’s bad influenza season, many, many hospitals around the country were so overwhelmed they all but closed their emergency rooms and weren’t talking any more patients for any reason.

There’s just no slack in the system. What efficiency does is eliminate as much as possible what’s considered waste, but that waste is slack. And when you have a surge in something, you need that slack to take care of the surge. If I were grading generously I would give us a D in terms of overall preparedness. If we had a universal influenza vaccine, maybe we’d be relatively okay, but we don’t.

Click the play button below to listen to Chris’ interview with John M. Barry (56m:47s).

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Iranian President Hassan Rouhani and his advisors are likely scrambling over what strategy to agree on, if any, in response to President Trump’s unexpected and unprecedented Monday offer of “no preconditions” talks with Rouhani.

An official response to Trump’s surprise words — “I would certainly meet with Iran if they wanted to meet. I don’t know if they’re ready yet” — issued at a White House press conference was not immediately forthcoming afterward or throughout the day Tuesday. 

However, while Tehran’s top leadership has kept mum on what it might be thinking, lawmakers in Iran’s parliament didn’t hold back Tuesday, with the deputy speaker of parliament declaring “it would be a humiliation” for Iran’s leaders to sit down with Trump.

According to the AFP-associated Iranian affairs journal Bourse & Bazaar:

Skepticism was rife in Iran on Tuesday after US President Donald Trump offered talks, with one lawmaker saying negotiations would be a “humiliation.”

The country’s top leaders did not give an immediate response to Trump’s statement a day earlier that he would meet them “any time” without preconditions.

But several public figures said it was impossible to imagine negotiations with Washington after it tore up the 2015 nuclear deal in May. 

Iran’s semi-official Fars News which typically reflects a more Islamic conservative angle, quoted Ali Motahari, the deputy speaker of parliament, as follows on Tuesday: “With the contemptuous statements (Trump) addressed to Iran, the idea of negotiating is inconceivable. It would be a humiliation.” 

The same report cited Interior Minister Abdolreza Rahmani Fazli, who slammed Trump’s statement, saying “America is not trustworthy,” and questioning, “After it arrogantly and unilaterally withdrew from the nuclear agreement, how can it be trusted?”

One Iranian government advisor and University of Tehran professor, Mohammad Marandi, who helped negotiate the 2015 nuclear deal, said, “We cannot negotiate with someone who violates international commitments, threatens to destroy countries, and constantly changes his position,” according to Bourse & Bazaar.

.@POTUS on Iran: “I’m ready to meet anytime that they want to and I don’t do that from strength or from weakness. I think it’s an appropriate thing to do… No preconditions. If they want to meet, I’ll meet.” pic.twitter.com/ThZ5euybm3

— FOX Business (@FoxBusiness) July 31, 2018

A new round of US sanctions are set to hit Iran starting August 6. Both current sanctions and news of the impending regimen have already contributed to an economy in severe downward spiral.

Iran’s rial hit a historic low this week after over the weekend the it took a stunning 12.5% dive, falling from 98,000 IRR/USD on Saturday to 116,000 IRR/USD by the close of Sunday. As Forbes noted this kind of classic death spiral hasn’t happened since September 2012. And By Monday the currency hit 119,000 against the dollar on the black market, a new low.

Thus far the only official statement from a top Iranian authority on the possibility of talks was actually issued before Trump’s surprise remark of a “no preconditions” meeting. Foreign ministry spokesman Bahram Ghasemi said on Monday morning, “there is no possibility for talks” — though there’s no way Tehran could have known of the US president’s words ahead of time. “Washington reveals its untrustworthy nature day by day,” Ghasemi had stated, according to the Mehr news agency. 

“Mr. Trump thinks that every morning the world wakes up with him. One should not take him seriously,” Ghasemi added ahead of Trump’s statement.

Though things are clearly not looking positive on the prospect of any kind of renewed direct face to face talks between the White House and Tehran, some Iranian officials have expressed openness. For example the head of parliament’s foreign affairs commision, Heshmatollah Falahatpisheh, told the semi-official ISNA news agency, “Negotiations with the United States must not be a taboo.” And he explained further, “Trump understands that he does not have the capacity to wage war with Iran, but due to historic mistrust, diplomatic ties have been destroyed.”

The White House for its part appears to have played a dangerous game that has involved creating an intense, high pressure environment of stringent sanctions and threat of military force, while simultaneously throwing out the proverbial “carrot” at the very moment things reach breaking point, which seems to be what Trump did Monday. 

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Authored by Ryan McMaken via The Mises Institute,

In his column today, Ron Paul mentions that those who insist the Fed functions with “independence” tend to forget – or at least not mention – the numerous historical episodes in which the Fed did not exercise any such independence.

As an example, Paul mentions the time President Lyndon Johnson

summoned then-Fed Chairman William McChesney Martin to Johnson’s Texas ranch where Johnson shoved him against the wall. Physically assaulting the Fed chairman is probably a greater threat to Federal Reserve independence than questioning the Fed’s policies on Twitter.

For those unfamiliar with the episode, I thought it might be helpful to look at some of the historical context surrounding the situation.

In his book The Man Who Knew: The Life and Times of Alan Greenspan, Sebastian Mallaby writes:

Johnson had pushed Kennedy’s economic policies to their logical extreme. In 1964, he had delivered a powerful fiscal stimulus by signing tax cuts into laws, and he had proceeded to bully the Federal Reserve to keep interest rates as low as possible. When the Fed made a show of resistance [in 1965], Johnson summoned William McChesney Martin, the Fed chairman, to his Texas ranch and physically showed him around his living room, yelling in his face, “Boys are dying in Vietnam, and Bill Martin doesn’t care.”

This was the 1960s version of “you’re either with me or you’re with the terrorists.“

Of course, Johnson didn’t stop at pushing around a central banker. Mallaby continues:

If the tax cuts and low interest rates caused inflationary pressure, Johnson believed he could deal with it with more bullying and manipulation. When aluminum makers raised prices in 1965, Johnson ordered up sales from the government’s strategic stockpile to push prices back down again. When copper companies raised prices, he fought by restricting exports of the metal and scrapping tariffs so as to usher in more imports. The president battled uppity prices for household appliances, paper cartons, newsprint, men’s underwear, women’s hosiery, glass containers, cellulose, and air conditioners; when egg prices rose in 1966, he had the surgeon general issue a warning on the hazards of cholesterol…”

In other words, Johnson was willing to apply pressure to the Fed through means other than making threats or engaging in physical assault. Johnson’s manipulation of prices through strategic stockpiles illustrated that Johnson used a wide array of fiscal and industrial policies to get his way. It’s entirely possible that in addition to demanding the Fed keep rates low, Johnson wanted to show Martin and other voting members at the Fed that Johnson had his own set of tools he could use to stimulate the economy as he saw fit. Politically speaking, Johnson might have been showing the Fed he could provide it political cover by helping to keep inflation low alongside the desired easy-money policy employed by the Fed. Of course, a good economist would point out that using such methods constitutes playing with fire. But there’s no reason to believe that Johnson was particularly interested in good economic theory. He was likely only interested in short-term political gains that might be had from manipulative fiscal policy. 

For good measure, we might note that another account of the Johnson meeting — provided by Martin biographer Robert Bremner in Chairman of the Fed — is this: 

In December 1965, President Lyndon Johnson was pacing in the office at his ranch in Johnson City, Texas, while he waited for William McChesney Martin Jr., the chairman of the Federal Reserve Board, to visit for what Johnson called “a trip to the woodshed.” Two days before, Martin had led the Fed’s board of governors to an increase in the Federal Reserve discount rate, the first in more than five years of uninterrupted economic growth. Through Henry “Joe” Fowler, his Treasury secretary, and Gardner Ackley, his Council of Economic Advisors (CEA) chairman, Johnson had advised Martin to delay the rate increase, and his instructions had been rejected. Few people ignored Lyndon Johnson’s instructions, and he was furious when he heard of the Fed’s move…

The meeting was a classic confrontation. Johnson was a powerful and manipulative president who believed that a Fed tightening would jeopardize the economic expansion and the tax revenues he needed to finance the most important goals of his presidency…

When Martin walked into the office, Johnson immediately accused him of placing himself above the presidency and totally disregarding Johnson’s wishes: “You went ahead and did something that I disapproved of … and can affect my entire term here.” 

As if so often the case among defenders of Fed independence, Bremner writes, “Martin admitted later that he was shaken but determined to stick to his position and not to insult the president of the United States.”

The truth, however, is that it’s impossible to know how much Johnson’s political pressure influenced Martin’s actions. Of course, Martin is going to say he was not influenced in any way, and most commentators on the matter simply take Martin at his word. Credulous observers often assume that since the discount rate rose slightly in early 1966 that Martin “stood his ground.” But how much might the rate have increased without Johnson’s intervention? Indeed, the rate went down again in 1967, and it was only after it became clear that Johnson would not have a third term that we begin to see a significant rise in the discount rate.

Johnson announced he would not run for re-election in March 1968. The Fed’s discount rate then shot up from 4.66 percent in March to 5.5 percent two months later. The last time rates had increased so rapidly had been under the Eisenhower administration. Are we to believe this was just a coincidence? It’s possible, but there’s no reason passively accept the claim that Martin was not influenced by Johnson’s politicking.

Moreover, this sort of thing is impossible to measure, as political scientist Irwin Lester Morris has noted in Congress, The President, and the Federal Reserve. Looking at attempts by presidents to influence monetary policy — such as Johnson’s — Morris writes:

When do presidents achieve their monetary policy objectives? When they are personally convincing and domineering? Possibly, but how would one go about measuring these qualities?

The “qualities” of the political actors here, of course, include both the president and the Fed chair, as well as other voting members at the Fed.

It’s exceedingly difficult to say how much presidents influence these members, although it would be naïve to conclude presidents exercise no influence. After all, in other agencies and branches of the Federal government it is often assumed that efforts at exercising influence are effective — including efforts brought to bear on non-elected, non-partisan officials. Yet, we are to believe that the Fed is immune from all of this. 

As a final note, it is also important to reject the assumption that pressures on the Fed always take the form of efforts to ensure an expansionist monetary policy. There is not actually any reliable empirical evidence for this assumption, as Morris notes in his survey of the research on the Fed and political pressure groups: “At least in the case of the Fed, the assumption that elected officials consistently favor inflationary monetary policies at the expense of price stability is unsubstantiated.”

Politicians are often just as fearful of inflation as they are of a slowdown in economic growth — at least historically — and politicians are not content to simply let the Fed do its own thing out of some vague devotion to “independence.” The Lyndon Johnson episode is just one illustration of this.  

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A SolarCity ex-employee has told ARS Technica that they believe millions of dollars in phantom revenue was recorded by the company – and that after “more than a dozen” people reported the event to the company, and to Elon Musk himself, nothing was done about it. 

This revelation, and others suggesting that SolarCity operated like a “struggling startup” were made as ARS Technica sought comment on a new lawsuit filed against SolarCity, and its parent corporation, Tesla.

The news of a lawsuit alleging that SolarCity is guilty of discriminatory practices against its employees has been making the rounds over the last couple of days: we reported it two days ago when the news first broke and the lawsuit was first made available.

But what was not fleshed out in the original piece – and is now the focus of a new report – is the alleged “tens of hundreds of millions [sic]” of dollars in fake revenue that may have been recorded by SolarCity as a result of fake accounts that the company tacitly may have been aware of. ARS Technica cites “a person with knowledge of the lawsuit who used to work in the San Diego office”, and who spoke under the condition of anonymity. That person stated the following:

A person with knowledge of the lawsuit who used to work in the San Diego office said that “thousands” of bogus SolarCity accounts may have been created by supposedly requesting solar panels for homes that turned out not to exist. Sometimes, these faux deals would be a valid residence but with a fake property owner’s name—the real person did not intend to move ahead with solar panels.

This tactic allegedly resulted, this person said, in tens of hundreds of millions of dollars in phantom revenue. He added that more than a dozen people reported the practice to the relevant human resources representatives, and CEO Elon Musk himself, who never replied. Ars granted anonymity as this person feared reprisal from Tesla.

On top of that, the same employee stated that SolarCity is allegedly just “crap” behind the scenes, noting that the company operated like a “struggling startup”. The disorganization and inefficiency, according to this employee, trickled down all the way from the human resources office to curtailing the amount of sugar and milk they were offering employees with their coffee:

This former San Diego employee also said that, despite working for a high-tech energy company, the SolarCity office, just south of the Marine Corps Air Station Miramar, operated more like a struggling startup, with electrical plugins that didn’t work, spotty office lighting, and even cutting back on sugar and creamer for the shared office coffee.

“Everything else behind the scenes was just crap,” he said.

The report also provides further details about the discrimination lawsuit we wrote about days ago. The lead plaintiff in the case alleges that even after he brought to the company’s attention that he, a gay man, was being berated and called names like “faggot”, “bitch” and “pussy”, that the company did nothing. He also claimed he had reached out to CEO Elon Musk personally, but to no avail. Perhaps Musk was out personally delivering a Model 3 that day.

The lead plaintiff in the case, Andrew Staples, who is gay, also alleged that he was “repeatedly and continuously harassed” by a supervisor from another department, Grant Katzenellenbogen.

“Specifically, this supervising employee continuously harassed Plaintiff Staples by calling him things like ‘bitch,’ ‘pussy’ and ‘faggot,’” his lawyers wrote. “These comments were made to Staples on numerous different days throughout his employment.”

According to the civil lawsuit filed last Wednesday in San Diego County Superior Court, Staples reported the insults and the questionable corporate practices to various managers, including to CEO Elon Musk himself, who seemingly took no action.

Staples was then terminated from his position at the end of May 2017, which he believes was retaliation for his complaints.

Another employee corroborated Staples’ claims:

According to Michael Beardsley, a former Tesla employee who said he was “witness” to much of the allegations outlined in the lawsuit, confirmed the ex-employees’ allegations. Beardsley, who is not named in the lawsuit, provided copies of emails that Staples sent to Tesla HR.

“I really appreciate you taking the time and effort,” Staples wrote on April 14, 2017. “I have voiced my concerns in the past to management, but I haven’t received a response and the seemingly unethical behavior by some on the team hasn’t changed. I can put up with a lot, but to have people that I’m mentoring become frustrated, and some who have come to me in tears over these issues and others disturbs me. I’m concerned that those who are truly putting in the effort and who are upstanding individuals are becoming disheartened.”

He also provided ARS Technica with specific examples of what he called “frat boy locker room crap”, including photos of female colleagues in their panties:

In addition, Beardsley explained, they were sent “incendiary pictures, memes and even pictures of female employees in their panties, etc.” It is not clear under what circumstances such pictures were taken or obtained.

Beardsley provided Ars with an example of a picture of someone he said was a female colleague dressed in what appears to be a bra and underwear running on a lawn at night. The San Diego ex-employee, who corroborated receiving that same picture from a different female colleague, was dismayed by what he called “frat boy locker room crap.”

Perhaps it is this kind of “locker room crap” that Tesla’s CEO finds interesting. Any questions about potential fraud at Solar City on tomorrow’s earnings call, on the other hand, should promptly lead to another “boring” temper tantrum.

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Authored by Pepe Escobar via The Asia Times,

Rhetorical war has far-reaching consequences, including a potential economic slump via the disruption of global oil supplies…

The key take away from the BRICS summit in Johannesburg is that Brazil, Russia, India, China and South Africa – important Global South players – strongly condemn unilateralism and protectionism.

The Johannesburg Declaration is unmistakable:

“We recognize that the multilateral trading system is facing unprecedented challenges. We underscore the importance of an open world economy.”

Closer examination of Chinese President Xi Jinping’s speech unlocks some poignant details.

Xi, crucially, emphasizes delving further into “our strategic partnership.” That implies increased BRICS and Beyond BRICS multilateral trade, investment and economic and financial connectivity.

And that also implies reaching to the next level;

“It is important that we continue to pursue innovation-driven development and build the BRICS Partnership on New Industrial Revolution (PartNIR) to strengthen coordination on macroeconomic policies, find more complementarities in our development strategies, and reinforce the competitiveness of the BRICS countries, emerging market economies and developing countries.”

If PartNIR sounds like the basis for an overall Global South platform, that’s because it is.

In a not too veiled allusion to the Trump administration’s unilateral pullout from the Iran nuclear deal (JCPOA), Xi called all parties to “abide by international law and basic norms governing international relations and to settle disputes through dialogue and differences through consultation,” adding that the BRICS are inevitably working for “a new type of international relations.”

Relations such as these certainly do not include a superpower unilaterally imposing an energy export blockade – an act of economic war – on an emerging market and key actor of the Global South.

Xi is keen to extol a “network of closer partnerships.” That’s where the concept of BRICS Plus fits in. China coined BRICS Plus last year at the Xiamen summit, it refers to closer integration between the five BRICS members and other emerging markets/developing nations.

Argentina, Turkey and Jamaica are guests of honor in Johannesburg. Xi sees BRICS Plus interacting with the UN, the G20 “and other frameworks” to amplify the margin of maneuver not only of emerging markets but the whole Global South. 

So how does Iran fit into this framework?

An absurd game of chicken

Immediately after President Trump’s Tweet of Mass Destruction the rhetorical war between Washington and Tehran has skyrocketed to extremely dangerous levels.

To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!

— Donald J. Trump (@realDonaldTrump) July 23, 2018

Major General Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps’ (IRGC) Quds Force – and a true rock star in Iran – issued a blistering response to Trump: “You may begin the war, but it is us who will end it.”

The IRGC yields massive economic power in Iran and is in total symbiosis with Supreme Leader Ayatollah Khamenei. It’s no secret the IRGC never trusted President Rouhani’s strategy of relying on the JCPOA as the path to improve Iran’s economy. After the unilateral Trump administration pullout, the IRGC feels totally vindicated.

The mere threat of a US attack on Iran has engineered a rise in oil prices. US reliance on Middle East Oil is going down while fracking – boosted by higher prices – is ramping up. The threat of war increases with Tehran now overtly referring to its power to cripple global energy supplies literally overnight.

In parallel the Houthis, by forcing the Yemen-bombing House of Saud to stop oil shipments via the Bab al-Mandeb port, are configuring the Strait of Hormuz and scores of easily targeted pipelines as even more crucial to the flow of energy that makes the West tick.



If there ever was a US attack on Iran, Persian Gulf analysts stress only Russia, Nigeria and Venezuela might be able to provide enough oil and gas to make up for lost supplies to the West. That’s not exactly what the Trump administration is looking for.

Iranian “nuclear weapons” was always a bogus issue. Tehran did not have them – and was not pursuing them. Yet now the highly volatile rhetorical war introduces the hair-raising possibility of Tehran perceiving there is a clear danger of a US nuclear attack or an attack whose purpose is to destroy the nation’s infrastructure. If cornered, there’s no question the IRGC would buy nuclear weapons on the black market and use them to defend the nation.

This is the “secret” hidden in Soleimani’s message. Besides, Russia could easily – and secretly – supply Iran with state-of-the-art defensive missiles and the most advanced offensive missiles.

This absurd game of chicken is absolutely unnecessary for Washington from an oil strategy point of view – apart from the intent to break a key node of Eurasia integration. Assuming the Trump administration is playing chess, it’s imperative to think 20 moves ahead if “winning” is on the cards.

If a US oil blockade on Iran is coming, Iran could answer with its own Strait of Hormuz blockade, producing economic turmoil for the West. If this leads to a massive depression, it’s unlikely the industrial-military-security complex will blame itself.

There’s no question that Russia and China – the two key BRICS players – will have Iran’s back. First there’s Russia’s participation in Iran’s nuclear and aerospace industries and then the Russia-Iran collaboration in the Astana process to solve the Syria tragedy. With China, Iran as one of the country’s top energy suppliers and plays a crucial role in the Belt and Road Initiative (BRI). Russia and China have an outsize presence in the Iranian market and similar ambitions to bypass the US dollar and third-party US sanctions.

Beam me up, Global South

The true importance of the BRICS Johannesburg summit is how it is solidifying a Global South plan of action that would have Iran as one of its key nodes. Iran, although not named in an excellent analysis by Yaroslav Lissovolik at the Valdai Club, is the quintessential BRICS Plus nation.

Once again, BRICS Plus is all about constituting a “unified platform of regional integration arrangements,” going way beyond regional deals to reach other developing nations in a transcontinental scope.

This means a platform integrating the African Union (AU), the Eurasian Economic Union (EAEU), the Shanghai Cooperation Organization (SCO) as well as the South Asian Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

Iran is a future member of the SCO and has already struck a deal with the EAEU. It’s also an important node of the BRI and is a key member, along BRICS members India and Russia, of the International North-South Transportation Corridor (INSTC), essential for deeper Eurasia connectivity.

Lissovolik uses BEAMS as the acronym to designate “the aggregation of regional integration groups, with BRICS Plus being a broader concept that incorporates other forms of BRICS’ interaction with developing economies.”

China’s Foreign Minister Wang Yi has defined BRICS Plus and BEAMS as the “most extensive platform for South-South cooperation with a global impact.” The Global South now does have an integration road map. If it ever happened, an attack on Iran would be not only an attack on BRICS Plus and BEAMS but on the whole Global South.

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Think China’s new “proactive” fiscal policy shigt will be sufficient to kick start the local economy, and boost global GDP? Think again.

In the latest analysis from Vertical Group’s Gordon Johnson, the strategist writes “that China’s proactive fiscal policy pledge could fall short as servicing its existing credit stock absorbs an increasing share of GDP.”

As a reminder, last week, China’s State Council said it will adopt a proactive fiscal policy, outlining ways to fund ¥1.4tn in bonds to local government for infrastructure & provide ¥1.1tn in tax cuts, among other actions (e.g., R&D tax credits), all while urging no broad-based stimulus.

In Johnson’s view, this is a narrative that is rather reminiscent of ‘14, when the gov’t unleashed a wave of “micro-stimulus” measures after a string of weak data points (i.e., 5 mos. of contracting real estate investment). Yet, as he notes, the most recent PBoC mini-stimulus is much smaller than ‘14, while key restrictions remain in place for real estate/shadow loans (historically growth-driving conduits), compounded by the law of diminishing returns, suggesting a smaller boost from a much larger base this time around.

Moreover, China’s total credit stock is markedly higher now than in ’14, implying more of every yuan in stimulus is going to service outstanding debt. How much? That may well be the critical question to gauge the flow through from any new fiscal policy.

Here is Vertical Group’s answer:

While China exited ’17 with an est. 266% of total credit to GDP, some economists put that ratio at >300% today. On trailing 12-mo. nominal GDP of ¥86.5tn, as of 2Q, this equates to >¥259.5tn in credit, which, assuming an avg. borrowing cost of 6%, means China’s annual debt service is ~¥14.3tn, or 18.0% of GDP – sensitizing interest & credit-to-GDP, to a respective range of 4-7% & 285-320%, puts China’s debt service at 14-22% of GDP.

Johnson’s punchline:

Indeed, China may stimulate more, as it did in ’15-’17, but, as of yet, it is doing far less than in ’14, as an increasing amount of “growth” is required to feed existing debt.

If this analysis is accurate, China will have a far more difficult time not only stimulating its domestic economy this time compared to 2014, but in offshoring the favorable inflationary externalities from its latest expansion. In short: the world’s growth dynamo may be getting choked up with debt, which means that in the next global crisis, China will no longer be able to step in and kickstart global growth. And with central banks running out of securities to monetize, just who will arrest the next recession?

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Authored by Anthony Xie  (Founder of HODLbot), via Hackernoon.com,

Elon Musk is perhaps this century’s most enigmatic figure. For two decades, he’s been unstoppable, uprooting more industries — energy, transportation, payments, space  - than any one person could reasonably expect in a lifetime.

For a while, Elon Musk seemed like our greatest hope. He claimed his sole aim was to fight off humanity’s greatest existential threats. We were enamoured by his optimism, and his grandiose visions of the future.

But something has changed. If you look at today’s headlines about Elon Musk, you won’t find stories about his heroics.

Instead you find the picture of a frantic man falling short of his promises to shareholders, lashing out at critics on Twitter.

The same news outlets that worshipped him are now dragging his name through the dirt.

Quantifying a change in sentiment

Rather than relying on anecdotal evidence, we’re going to quantify this change in sentiment. Reddit is often considered a trend-setter on the internet, so we’ll start there.

I’ve pulled over 250,000 comments mentioning Elon Musk from January 1, 2015 to July 27, 2018.

Here is the number of comments plotted over time.

Following a peak in February, we are coming off the precipice of another period of Musk-mania.

Here are the 25 subreddits with the most mentions of Elon.

Calculating the Sentiment Score of 250,000 Comments

Looking at the # of comments is all fine and dandy, but our real mission is to understand sentiment.

To do so, we’re going to enlist the help of a powerful python library called VADER (Valence Aware Dictionary and sEntiment Reasoner). VADER was specifically designed to help analyze social media text. You can read more from the paper here.

Not that VADER

You can think of VADER as a giant dictionary of sentiment. It looks up a phrase and spits out a sentiment score between -1 and +1.

Here are a few neat things about VADER:

• It can calculate the sentiment for a huge number of words including emojis, slang, and acronyms. 🙏 🔥

• VADER uses punctuation, capitalization, and modifiers to amplify positive or negative sentiment

• The sentiment behind every word is calculated by averaging a large number of human impressions.

Enough talk. Let’s run our comments through VADER to see what we get.

We can see from the big peak in the middle that most of the comments have a neutral score. There also seems to be slightly more area under the right hand side of the plot where sentiment is positive.

Just to gut-check, let’s look at some of the most negative comments.

That’s pretty negative alright

And the most positive.

Wow so wholesome

Measuring Love & Hate  – Avg. Sentiment across Subreddits

There are two ways we can compute average sentiment.

The first way is to simply calculate the average sentiment score across every single comment.

Only subreddits with more than 750 comments mentioning Elon are considered

At a glance, this chart makes a lot of sense.

The top subreddit by average sentiment is /r/IAMA. Elon Musk did a AMA that was extremely well received in 2015. It got 67k upvotes and over 11k comments.

We would also expect higher average sentiment in subreddits that are named after his companies: SpaceX, Teslamotors, and SpaceXLounge. Beyond that, he is also highly praised in subreddits like /r/space and /r/futurology.

The second way we can calculate average sentiment is by calculating the weighted average based on comment score.

We’ll take the score from a comment, and divide it by the total sum of comment scores from that subreddit. Then we’ll multiply the result with our VADER score.

A comment with 10 points for example, will be weighed 10x as much as a comment with 1 point.

Comments with negative score will be weighted in the opposite direction. A negative comment with negative score will end up being treated like a positive comment.

The weighted average score gives us slightly different results.

Only subreddits with more than 750 comments mentioning Elon are considered

Unlike the first method, some subreddits actually have negative average sentiment. It’s possible this is the case because people are more comfortable anonymously upvoting negative comments than writing mean comments themselves.

Surprisingly /r/cars out-edges /r/wallstreetbets as the subreddit that is the most negative towards Elon.

A casual search for “elon” in /r/cars indicates that the subreddit doesn’t like Musk much

Polarizing opinions from investors— /r/investing vs. /r/wallstreet bets

According to our data, /r/investing is generally positive about Elon. We can gut-check this by searching for the top posts mentioning him.

But man oh man, /r/wallstreetbets does not like Elon. We can see that it ranks among the lowest subreddits by average sentiment score. The consensus in the subreddit is that Elon is a poor businessman, who is consistently falling short of his promises.

I found these two posts scrolling through the front page of /r/wallstreetbets today.

Something the alt-right and alt-left can both agree on

Another funny observation is that the two subreddits known for their alternative political stances, /r/the_donald for the alt-right and /r/chapotraphouse for the alt-left, both dislike Elon.

In our data, they rank as two of the lowest subreddits by average sentiment score.

Some classic /r/the_donald posts

Chapo Trap House is a podcast that is closely identified with the “Dirtbag Left”.

Finally they’ve found something to agree on?

A Change of Heart…

Looking at the average sentiment across subreddits doesn’t show us how sentiment changes over time. We’ll need to visualize the data as a time series for that.

Over the last 3 and a half years, there’s been a slow decline in sentiment. The last 3 months have been among the worst. Only time will tell if this trend will continue.

The subreddits that have experienced the largest downturn in sentiment are /r/cars, /r/wallstreetbets, /r/investing/, and /r/politics.

Conclusion

You either die a hero, or you live long enough to see yourself become the villain.

The internet changes its mind about a lot of people. It’s not surprising that Elon Musk is one of them.

Perhaps Musk’s descent into infamy is self-inflicted. For too long, he has over-promised and under-delivered and now his critics have come home to roost.

Or maybe we are treating Musk like we treat every celebrity. The combination of our obsession for news and drama and the echo-chamber of social media groups turns every tidbit of controversy into an avalanche.

Whatever the reason, the tides are changing.

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Stephen Cohen schooled prominent ‘Never Trump’ neocon and Council on Foreign Relations member Max Boot on CNN’s Anderson Cooper this week on the Trump-Putin Helsinki summit and general charges related to ‘Russiagate’. 

It’s worth watching especially as it underscores why recognized academic experts are rarely given airtime on the mainstream networks if their perspective lies outside the accepted media group-think on Russia. 

“I‘ve been studying Russia for 45 years,” Professor Stephen Cohen said as the debate got heated. “I‘ve lived in Russia, and I’ve lived here.”

But predictably Boot cut him off, leveling the standard ad hominem that’s become the standard fallback retort to any ‘contrarian’ analysis, saying Cohen has been “consistently an apologist for Russia those 45 years.”

“I don’t do defamation of people, I do serious analysis of serious national security problems,” Professor Cohen responded. “When people like you call people like me, and not only me, but people more eminent than me, apologists for Russia because we don’t agree with your analysis, you are criminalizing diplomacy and detente and you are the threat to American national security, end of story.”

“Why do you have to defame somebody you don’t agree with?” Cohen continued. “They used to do that in the old Soviet Union.”

Cohen’s credentials as professor emeritus at Princeton and New York University, author of numerous books on Russian history, and among the world’s most recognized analysts on modern Russia are without parallel when compared to the usual neocon ‘experts’ like Boot, who regularly appear on the network panels and in the op-ed columns.

Cohen said he doesn’t find anything “unusual” about the Helsinki summit — especially nothing worth the level of broad 24/7 media push back that Trump’s private meeting with Putin received. Cohen and Boot sparred over what exactly the two leaders may have discussed, including possibly a resolution related to Russia’s annexation of the Crimea. 

Anderson Cooper posed the following question with an incredulous look on his face: “You’re believing Vladimir Putin on this?”

Cohen responded, “You have to take Putin’s word this is what they talked about,” and added, “I don’t want to shock you, but I believe Vladimir Putin on several things.”

Of course this was too much for the Cooper and Boot — the latter which promptly charged Cohen with being a “Putin apologist”. 

Wow Stephen Cohen makes warmonger @MaxBoot look like a whining infant in CNN debate on “Russian attack” https://t.co/VICfIn0as9

— Abby Martin (@AbbyMartin) July 31, 2018

Boot said elsewhere in the interview that “a lot of intelligence officials think that there is something highly suspect in the relationship between Putin and Trump” based merely on the supposed unwillingness of Trump to level personal criticism against the Russian leader the he does others. 

Cohen responded, “I have no idea what Mr. Boot is talking about… He wants Trump to threaten Russia? Why would we threaten Russia?”

Boot followed with, “Because they’re attacking us, Professor Cohen. Russia is attacking us right now according to Trump’s own director of national intelligence.”

After an intense back-and-forth in which Boot again lazily accused the scholar of being a Putin apologist, Cohen concluded, “I think that Mr Boot would have been happy if Trump had waterboarded Putin at the summit and made him confess.” He said, “Trump carried out an act of diplomacy fully consistent with the history of American presidency. Let us see what comes out of it, then judge.”

* * *

Professor Cohen has a history of challenging powerful media figures, which is why his appearances on networks like CNN or MSNBC are very infrequent, despite his status as a world authority. 

For example at the height of the 2014 Ukraine crisis he made Christiane Amanpour so frazzled that she began yelling antagonistically for show host Wolf Blitzer “to be very careful” in allowing what she called “pro-Russian” views to be expressed across CNN airwaves.

Christiane Amanpour in 2014: We cannot allow “pro-Russian” perspectives on CNN! (begins at 2:25 mark)

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