Month: September 2019

Authored by Matthew Ehret via The Strategicd Culture Foundation,

To the chagrin of those authors of color revolutions who have invested so much time and energy in their attempts to undermine national sovereignty as seen in Hong Kong today, not only have their plans to overthrow Bashar al Assad, and President Maduro failed, but even their simpler objectives to foment separatist movements among ethnic minorities in China (such as the Uyghurs and Tibetan Buddhists) collapsed miserably. The reason for this failure is simple.

China has allied with a growing array of nations to create a comprehensive international program operating on every imaginable level of human activity which is essentially… creative.

Take the Belt and Road Initiative (BRI) as an example. This program has evolved in its six years of existence from an idea which most establishment hacks wrote off as wildly utopian, to becoming the primary force for world development today. Rather than being a crystalized, defined idea, the BRI is flexible and open to change which frustrates insecure technocrats due to the fact that it is not susceptible to formulas while its effects increase the hope and optimism of all effected by demonstrating not only that peoples’ lives can improve, but that the government which effects such improvement may not be worth hating and fearing as these minorities are told they should.

This creative power should not be a mystery as the principle of “win-win” cooperation is much more in harmony with natural law than the twisted Hobbesian world view of zero sum geopolitics that has brought the world to the brink of nuclear war and economic collapse.

The Case of Hong Kong and the BRI

In the case of Hong Kong, a former British colony still infested with deep-seated Anglo-American intelligence and banking ties, the commitment to join the BRI began to arise as early as 2016 with the first BRI Summit that since became an annual event.

By 2017, Hong Kong Chief Executive Carrie Lam announced that she would do everything in her power to ensure the region’s full participation in the BRI – with a focus on the growing “Macau-Guangdong-HK Greater Bay Area” economic zone which incorporates two independent administrative regions into a unified China policy. Macau was a Portuguese colony until it was returned to China in 1999. In the course of dozens of BRI conferences since 2016, Carrie Lam has made the point that the region’s financial services, legal and logistic capacities can provide invaluable support to the BRI while its ports make it a key node in the Maritime component of the New Silk Road. Arguably the most important element in this mix is Hong Kong’s unique cultural character making it a key spiritual connection between east and west which geopolitical ideologues such as Samuel P. Huntington and Sir Bernard Lewis demanded could not exist.

As Mrs. Lam announced this policy, key Pacific nations long thought to be under the yolk of western geopoliticians such as Malaysia, South Korea, the Philippines, and even Japan increasingly made their intentions to join BRI known, putting the U.S-led containment of China at risk.

The 2019 BRI Summit in Hong Kong

The 4th annual Hong Kong Belt and Road Summit took place from September 10-11 featuring 5800 guests from business, academia, finance and non-governmental organizations committed to accelerating Hong Kong’s involvement with the BRI. Mrs. Lam, as well as leaders of China’s government addressed the opening assembly making the point that Hong Kong’s future lies in participation in this win-win alliance.

Xie Feng, commissioner of the Foreign Affairs Ministry of Hong Kong went the furthest in his remarks calling out the foreign influences manipulating Hong Kong saying “Foreign forces have intervened, distorting the truth, and trying to protect those in the wrong and let them get away with it. With this continuous intervention of black hands, violence cannot stop and the rule of law cannot be upheld.”

While China’s interests were well represented, the British Empire was not to be ignored. Unlike the Americans who entirely boycotted the event, the British demonstrated their superior understanding of manipulation once more by not only attending but taking over a major panel at the event.

The Empire Poisons the Well

Among the many presentations, a highly attended panel discussion stood out like a sore thumb on the theme of Geopolitical Risks of the Belt and Road Initiative featuring four Oxford-trained speakers led by Sir Richard Shirreff, former NATO Supreme Commander for Europe and moderated by Andrew Weir, Chairman of the Listing Committee of the Hong Kong Stock Exchange, the Global BRI Forum and honored “Member of the British Empire”. Other Oxford-trained panelists include “Risk-assessment professional Peter Burnett (CEO of Standard Charter Bank, former head of UBS and current chair of the BRI Committee of the HK Association of Banks), and Michael Barrow, CEO of MB Secure Financial.

This panel was particularly interesting as it provided transparent insight into the current sophistry being used by a weak, desperate and dangerous British Empire which seeks to undermine Xi’s Grand Design by redefining its “operating system” by destroying those aspects which generate creative change.

After acknowledging the irrefutable positive effects of the BRI as all good Delphic arguments must, the panelists quickly went to work to get the audience to understand the “risk” this project has created for the world system with Sir Richard going so far as to compare China as the “New Roman Empire summoning African leaders to the capital”. The knight was joined by Barrow who had the nerve to argue that China’s ignorance of the “science of risk analysis” has caused an explosion of resentment from people whose lives are changed against their will leading “to an increase of Islamic extremism” in places like Mozambique!!!

The BRI Delenda Est

These “risk analysis experts” complain that when a mega-project, such as a dam, or railway, or new industrial hub is built the consequences are not entirely predictable. This complaint merely covers the fact that imperialists are also control-freaks who want to maintain their God-like feeling of control by denying all change to nations seeking a better way of life. Whenever scientific and technological progress are introduced justly into a society, that change transforms all of the socio-economic, political relationships both within that society as well as that society’s relationship to the external world- and that is simply what they hate.

Hence, the unfortunate conclusion that all geopoliticians must come to: Creativity= evil.

What exactly did these “risk assessment professionals” propose to subvert the BRI?

1. That China is wrong to pursue “Top Down planning” but must transform its operating procedures into the same “market-driven”, bottom up process which also underlies globalization (and keeps bottom up thinkers from seeing the real invisible power structure manipulating the show behind a wall of complexity from the top).

2. That ALL risk must be assessed on ALL levels BEFORE projects are built by teams of professionals deployed as “boots on the ground” to “get under the skin of nations”. A new bureaucracy of risk managers would be a perfect mode of throwing sand into the gears of the BRI and rendering its momentum impotent.

3. Once this new operating system is created, Sir Richard and his friends argued that China must only build projects in nations which have first solved the meaningless term “corruption” (citing the USA, Britain and Canada as examples of corruption-free societies), and only projects which make minimal environmental impact should be considered by this new reformed BRI. All Oxford panelists shared their belief that de-centralization and monetarist standards must replace the current “sovereignty-driven” model.

Of course, what these arguments propose is merely that China’s BRI become the instrument for a British-run new world order which the failing Anglo-American system was originally meant to be. This process is akin to a virus trying to infect a new host.

Risk Management: “World Problematique Revived”

This new sophistical argument is nothing but a modified “science of World Problematique” created by a team of French and British imperialists in the 1950s and 1960s and which underlies the creation of systems analysis as well as modern ecology.

This “science” was premised upon the cynical belief that future states of humanity can be forecast by denying those positive potentials which our creative discoveries can create to resolve human problems. In denying this driving principle of human life, its adherents asserted that the future could be known by first analyzing the infinite array of “problems” which humanity creates by attempting to make life better for ourselves. By identifying those “problems” which lead to dis-equilibrium (aka: creative change), those problems can more easily be ironed out in a perfectly pre-determined world of blah. This anti-creative ideology is the basis for the End of History thesis published in the midst of the Soviet Collapse in 1991.

It is an irony not to be missed, that not only does World Problematique underlie “right wing” neo conservatism, but is also at the root of the rise of the “new left” ecological movement as its leading adherents included Sir Alexander King who used it to create the Club of Rome in 1969 and a new green technocracy governed by the quasi-science of systems analysis which is more focused upon depopulation than actually cleaning the environment.

So if you are happy living in a world that denies creativity, then a new bureaucracy of risk management is the way to go. If, on the other hand, you are a member of the human species and have faith that we were created for something better, then you might want to applaud China’s Belt and Road Initiative, celebrate Hong Kong’s participation in it, and hope your nation joins if it hasn’t done so yet.

Colombians are among those struggling most with their work-life balance, according to the Organisation for Economic Co-operation and Development (OECD).

Mexicans’ lives aren’t really in balance either, and as Statista’s Katharina Buchholz notes, the United States and the United Kingdom also perform pretty poorly, coming in 11th and 12th out of all 35 OECD member countries (plus Russia, Brazil and South Africa) covered in the Better Life Index for 2019.

You will find more infographics at Statista

The most important aspect for a healthy work-life balance is the amount of time people spend (not) at work. The index also takes into account leisure and personal time, the employment rate of mothers and other factors. The authors of the Better Life Index note that “evidence suggests that long work hours may impair personal health, jeopardise safety and increase stress.”

At the other end of the scale, people in the Netherlands enjoy the best work-life balance.

You will find more infographics at Statista

In the Netherlands, only 0.4 percent of employees work very long hours (50 or more hours a week), the third-lowest rate in the OECD, where the average is 11 percent.

In comparison, 11.1 percent of American employees work very long hours, so the United States doesn’t make it in to the top ten ranking. It ranks 27th out of 38 considered countries. Also, the U.S. is the only OECD country without a national paid parental leave policy – although three states do provide leave payments.

Authored by Jacob Hornberger via The Future of Freedom Foundation,

President Trump’s campaign of “maximum pressure” against Iran reminds me of President Franklin Roosevelt’s similar campaign against Japan prior to the Japanese attack on Pearl Harbor.

After England declared war on Germany, owing to the latter’s invasion of Poland, the American people were overwhelmingly opposed to entry into the war. That was because they recognized that U.S. interventionism into World War I, which cost the lives and limbs of tens of thousands of American soldiers and severely infringed on the liberty of the American people, had accomplished nothing.

Americans had no interest in doing it again. Their mindsets were similar to those of our American ancestors, whose founding foreign policy was to avoid involvement in Europe’s forever wars.

In his 1940 campaign for president, Roosevelt told the American people that he was with them in their opposition to foreign wars. He said to them, “I’ve said this before, but I shall say it again and again and again: Your boys are not going to be sent into any foreign wars.”

The problem is that FDR was lying.

In fact, his secret aim was to circumvent the will of the American people and somehow maneuver the United States into the war.

During that time, U.S. presidents were still complying with the provision in the Constitution that prohibits the president from waging war without first securing a declaration of war from Congress. FDR knew, however, that securing such a declaration was impossible, given the overwhelming sentiment against getting involved in another European war.

So, FDR, who is widely recognized as one of the craftiest politicians in U.S. history, began figuring out a way by which he could embroil the nation in the war despite the fierce opposition of the American people. He decided that if he could provoke Germany into attacking U.S. ships, Congress would give him his desired declaration of war under the principle of self-defense.

So FDR embarked on a campaign of helping Great Britain in its war against Germany, such as by providing it with food, oil, and weaponry under the program called “Lend Lease” and also by using U.S. Naval vessels in assist British forces in the Atlantic. Much to Roosevelt’s chagrin, Germany, however, refused to take his bait and refrained from attacking U.S. Navy vessels.

A back door to war

That caused the wily FDR to look toward the Pacific, with the aim of provoking Japan into “firing the first shot.” His hope was that a war with Japan would provide a “back door” to getting involved in the European war.

So FDR embarked on a campaign aimed at preventing Japan from securing oil for its war machine in China, a plan that might well be serving as a model for Trump’s actions against Iran. FDR’s plan consisted of three main things: Place a tight oil embargo on Japan; seize Japanese assets in the United States; and place humiliating terms on the Japanese in “peace negotiations.”

As FDR tightened the embargo noose around Japan’s neck, Japan was left with three choices: capitulate to whatever FDR dictated, withdraw its military forces from China, or strike the United States militarily in the hope of breaking FDR’s oil embargo.

Japan chose the third option. That’s what its attack on Pearl Harbor was all about. It wasn’t the first stage in a Japanese attempt to take over America, as U.S. officials maintained. Instead, it was a way, it was hoped, to impede the U.S. Navy from interfering with Japan’s military takeover of oil fields in the Dutch East Indies.

Of course, FDR played the innocent. We’ve been attacked, he exclaimed. It’s a big surprise for us, he insinuated. We are shocked! Shocked! We had no idea that this was coming! We are totally innocent! We were just minding our own business! This is a day that will clearly live in infamy!

But it’s all a lie. In fact, FDR’s plan had worked brilliantly. He had gotten what he wanted — U.S. involvement in the European war — and with overwhelming support of the American people, most of whom who did not comprehend what Roosevelt had done to embroil the United States in the war.

Trump’s scheme

Trump’s brutal economic embargo on Iran brings to mind what FDR did to Japan. The difference, however, is that Trump’s objective seems different from that of Roosevelt. Seemingly, he isn’t targeting the Iranian people for death with his embargo in the hope of being provided an excuse for attacking Iran. Instead, he seems to be using his embargo simply as a means to force Iranian rulers to comply with his dictates, specifically to force them to agree to his terms for a new nuclear accord.

When Trump withdrew the United States from the accord that it had entered into with Iran under the Obama administration, it was with the aim of arriving at a new accord. Trump figured that by squeezing the economic life out of the Iranian citizenry with his embargo, he could induce Iran’s rulers to return to the bargaining table and enter into a new agreement, one that would be satisfactory to Trump, which he could then trumpet in his campaign for reelection.

What Trump didn’t figure on, however, was the unwillingness of the Iranian regime to go along with his scheme. Their position was quite logical: We have already entered into an agreement with the United States and we have upheld our end of that bargain. Therefore it is up to you to live up to your end rather than asking us to renegotiate what we have already agreed to.

It is also increasingly clear that Iran does not intend to capitulate, no matter how many Iranian citizens Trump and his forces kill with their sanctions. And it certainly shouldn’t surprise anyone if Iran was responsible for the destruction of those Saudi oil facilities. Given that Trump is preventing Iran from selling its oil, why would it surprise anyone that Iran decides to prevent Trump’s close ally, the tyrannical and murderous Saudi regime, from selling its oil?

Ironically, Trump’s plan to squeeze the Iranian people to death with his embargo in the hope of securing a new nuclear accord with Iran might well end up with the same result — war — as FDR’s scheme to squeeze the Japanese with his oil embargo.

According to a new report from Truth in Accounting, the most-indebted states include New Jersey, Illinois, Connecticut, Massachusetts, Hawaii, Delaware, Kentucky, California, and New York. 

Truth in Accounting published the Financial State of the States report, a regional analysis of the most recent state government financial data, on Tuesday, that is one of the most comprehensive studies of the economic conditions of all 50 states. The report includes the most up-to-date state finance and pension data, trends across the states, and key findings.

The report said all 50 states have had to become more transparent in their financial reporting over the last several years, thanks to the implementation of Generally Accepted Accounting Principles set by the Governmental Accounting Standards Board.

Researchers this year uncovered something truly shocking: “40 states do not have enough money to pay all of their bills and in total the states have racked up $1.5 trillion in unfunded state debt.” 

Truth in Accounting ranks the states below according to their Taxpayer Burden or Surplus, which at the end of the day, it’s what the taxpayer is on the hook for.

Here are the rankings (from less indebted to most indebted): 

1. Alaska, $74,200 per taxpayer
2. North Dakota, $30,700
3. Wyoming, $20,800
4. Utah, $5,300
5. Idaho, $2,900
6. Tennessee, $2,800
7. South Dakota, $2,800
8. Nebraska, $2,000
9. Oregon, $1,600
10. Iowa, $700
11. Minnesota, -$200
12. Virginia, -$1,200
13. Oklahoma, -$1,200
14. North Carolina, -$1,300
15. Indiana, -$1,700
16. Florida, -$1,800
17. Montana, -$2,100
18. Arkansas, -$2,300
19. Arizona, -$2,500
20. Nevada, -$3,100
21. Wisconsin, -$3,200
22. Georgia, -$3,500
23. Missouri, -$4,300
24. New Hampshire, -$5,000
25. Ohio, -$6,600
26. Kansas, -$7,000
27. Colorado, -$7,200
28. Washington, -$7,400
29. Maine, -$7,400
30. West Virginia, -$8,300
31. Mississippi, -$10,000
32. Alabama, -$12,000
33. Texas, -$12,100
34. New Mexico, -$13,300
35. Rhode Island, -$13,900
36. South Carolina, -$14,500
37. Maryland, -$15,500
38. Michigan, -$17,000
39. Pennsylvania, -$17,100
40. Louisiana, -$17,700
41. Vermont, -$19,000
42. New York, -$20,500
43. California, -$21,800
44. Kentucky, -$25,700
45. Delaware, -$27,100
46. Hawaii, -$31,200
47. Massachusetts, -$31,200
48. Connecticut, -$51,800
49. Illinois, -$52,600
50. New Jersey, -$65,100

And what was social media’s response to the new report?

One user said: “Look at who has controlled the State Legislatures in all the high debt States – in nearly every case it has been the Democrats, and for many years. Governors come and go – it is the Legislature that really decides if a State will be wild spending or not.” 

Another said: “I live in Illinois. Lifelong Illinoisan. Yes I know it sucks. My 5 year plan is to leave the state before it collapses financially any home value plummets. Property taxes, sales taxes and income taxes are insane over here. DO NOT MOVE HERE.” 

The biggest take away from the report, as explained by one social media user above, is that when the next recession strikes, the most indebted states will collapse.

Authored by Caitlin Johnstone via Medium.com,

Millions of people are uniting in demonstrations worldwide against our civilization’s ecocidal march toward extinction, which makes me so happy to see. It’s really encouraging to see so many young people burning with love for their planet and a hunger to reverse the damage that has been done to our ecosystem by the refusal of previous generations to turn away from our path of devastation. This must continue if we are to survive as a species.

The challenge now is the same perennial challenge which comes up every single time there is a massive and enthusiastic push from the public in a direction that is healthy: such movements always, without exception, become targeted for manipulation by establishment interests. I write all the time about how this has happened with the intrinsically healthy impulse of feminism; I just finished watching an MSNBC pundit proclaim that anyone who still supports Bernie Sanders over Elizabeth Warren is a sexist. This corralling of healthy energy into the advancement of corrupt establishment interests happens with feminism, it happens with the healthy fight against racism and antisemitism, and of course it happens with environmentalism.

Of course it does. People get very emotional when you say this, even if you fully support environmentalism and don’t have any objections to the overall scientific consensus about what’s happening to our environment, but environmentalism is not destined to be the one and only popular movement which establishment interests don’t move mountains to co-opt.

We know that our oligarchic empire will do literally anything, up to and including murdering a million Iraqis, to secure control over energy resources. We know this with absolute certainty. Therefore we can also know with certainty that they are working to ensure that when new energy systems are put in place, they are put in place in a way which allows the oligarchs to retain their power, and ideally to expand it, without losing their thrones to rival plutocrats, to governments, or (worst case scenario) to the rank-and-file public gaining control over their own energy. This agenda is on the table. It is happening.

When it comes to our future, the ruling elites have compelling narratives worked up by teams of talented creatives to sell us the products they want us to buy. They know exactly where they want to herd us.
We just have a notion of “No, not that!” We need a vision or we will fail. pic.twitter.com/tyngFzCdPI

— Caitlin Johnstone ⏳ (@caitoz) September 26, 2019

The ruling elites have many advantages over us, but one of the greatest is the fact that they know exactly what they want and exactly where they’re trying to push things, whereas we the general public, on average, do not. If we only had one positive anti-establishment direction to push in there’d be no stopping us, and as soon as we find one the oligarchs will be done. But in general and on average what we have is a few clear ideas about what we don’t want and a great many vague, frequently contradictory ideas about what we do want. This lack of clarity in direction always leaves us highly susceptible to the influence of any well-funded narrative manager who steps forward to say “Oh yeah I know exactly where we’re going! It’s this way, follow me!”

Luckily for us, there’s a very clear demand we can add into the mix in this new push for environmentalist reforms which runs directly counter to the interests of the empire that is trying to manipulate our healthy impulses: de-fund the Pentagon.

There is no single, unified entity that is a larger polluter than America’s dishonestly labeled “Department of Defense”. Its yearly carbon output alone dwarfs that of entire first-world nations like Sweden and Portugal; if the US military were its own country it would rank 47th among emitters of greenhouse gasses, meaning it’s a worse polluter than over 140 entire nations. That’s completely separate from the pollution already produced by the US itself. None of the sociopathic corporations whose environmental impact is being rightly criticized today come anywhere remotely close to that of the Pentagon. They are going under the radar.

On Earth Day, MintPress brings you a piece originally published last May, on the U.S. Department of Defense’s toxic legacy throughout the world. The DoD produces more hazardous waste than the five largest U.S. chemical companies combined.https://t.co/iw0tqHyWXj

— MintPress News (@MintPressNews) April 22, 2019

And that’s just greenhouse gas emissions, which the Pentagon’s poisonous effects on our environment are in no way limited to. As journalist Whitney Webb highlighted in an excellent article for Mintpress News about the wildly neglected subject of the US military’s ecological toxicity:

“Producing more hazardous waste than the five largest US chemical companies combined, the US Department of Defense has left its toxic legacy throughout the world in the form of depleted uranium, oil, jet fuel, pesticides, defoliants like Agent Orange and lead, among others.”

Webb documents how the US “has conducted more nuclear weapons tests than all other nations combined”, how US military interventionism in Iraq “has resulted in the desertification of 90 percent of Iraqi territory, crippling the country’s agricultural industry and forcing it to import more than 80 percent of its food,” and how “US military bases, both domestic and foreign, consistently rank among some of the most polluted places in the world.”

“While the US military’s past environmental record suggests that its current policies are not sustainable, this has by no means dissuaded the US military from openly planning future contamination of the environment through misguided waste disposal efforts,” Webb writes.

“Last November, the US Navy announced its plan to release 20,000 tons of environmental ‘stressors,’ including heavy metals and explosives, into the coastal waters of the US Pacific Northwest over the course of this year.”

This is all a massive environmental burden to take on for a branch of the government which provides no other service to anyone beyond bullying the rest of the world into obedience, wouldn’t you agree? So get rid of it.

Surely with all this talk about the huge, sweeping changes that are required to avert climate catastrophe we’re not going to overlook the world’s single worst polluter just because a few think tankers and their plutocratic sponsors believe it’s important for the US-centralized power alliance to retain total global hegemony? If we’re making huge, sweeping changes, the completely needless globe-spanning US war machine would be the obvious place to start.

That’s something we can inject into the mainstream dialogue as this environmental movement grows, and the cool thing about it is that the establishment manipulators can’t reject it or they’ll expose themselves. It’s something we can demand that they can’t legitimately say no to. We can surf this clear, concrete, exciting and utterly indisputable idea on the surging momentum of these climate demonstrations, and the same healthy impulse to save our planet that these budding activists are now embodying will lift it right up and carry it to the top of mainstream awareness. No sane person will reject this, so if anyone pushes back against it to say “No, not that,” they’ll immediately spotlight the insane agendas they serve.

The US does not need any more military power than what other normal nations have: enough to defend its own easily defended shores from unprovoked attack. Anything beyond that, and certainly the hundreds of environmentally toxic military bases circling our planet, exists solely for the benefit of murderous dominating imperialists and sociopathic war profiteers. Demanding a reversal of US military expansionism as a part of the environmental movement is sane on its face and will benefit everyone, and it will also help highlight all unwholesome elements of empire loyalism.

*  *  *

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Chinese police searched the house of Zhang Qi, 57, the former mayor of Danzhou, and found a large amount of cash, as well as 13.5 tons of gold in ingots in a secret basement of his home, according to local media.

In addition to the mayoral post, Qi held others including Secretary of the Communist Party.

According to unofficial reports, in addition to the $625 million worth of gold, cash worth 268 billion yuan ($37 billion) was discovered [ZH: seems highs to us].

The video prompted some witty social media responses…

Smaug! pic.twitter.com/96lWnZbTVZ

— Michael McGuire (@mmcguirenc) September 28, 2019

pic.twitter.com/U3e2AdYB2y

— Kyle LaSalle (@Pitaman75) September 27, 2019

pic.twitter.com/lsShzSEpHK

— Berry ₿itcoin (@BerryBlockchain) September 27, 2019

Luxurious real estate with a total area of ​​several thousand square meters, which the former city manager had been reportedly hiding, was the icing on the cake in this massive haul for the Chinese Anti-Corruption Committee.

Qi was investigated by the Central Commission for Discipline Inspection (CCDI), the party’s internal disciplinary body, and the National Supervisory Commission, the highest anti-corruption agency of China, in September 2019.

According to China’s anti-corruption laws, Qi will be executed.

One day after it rocked markets with a report that the US Treasury was preparing to impose quasi capital controls on China, by limiting US investors portfolio flows into China and limiting the listing of Chinese corporations on US exchanges, news which sent the S&P sharply lower and hammered US-listed Chinese companies such as Alibaba and Baidu, Bloomberg is now refuting its own scoop with a report that a U.S. Treasury official said there are no current plans to stop Chinese companies from listing on U.S. exchanges.

“The administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time,” Treasury spokeswoman Monica Crowley told Bloomberg in an emailed statement on Saturday, responding to Bloomberg’s report on various measures under consideration by the U.S., “including delisting Chinese companies from U.S. exchanges.”

That said, Crowley’s statement didn’t address or rule out any all of the proposed “capital-controlling” measures, including limiting US investors’ exposure to the Chinese market through government pension funds, and ways to put caps on the Chinese companies included in stock indexes managed by U.S. firms.

In retrospect, the response by Columbia Threadneedle’s Ed Al-Hussainy to the original Friday report appears to have come closest to the mark, when he said that “this one is a non-starter. Even this administration will have a hard time making the case for capital controls at this scale. Just another market burp.”

Riding high on the wave of its own now refuted scoop, Bloomberg earlier quoted Citigroup which termed the alleged Treasury proposal “the most extreme potential American move against China in the escalating rivalry between the world’s largest two economies: restricting access to U.S. finance.” Even so, Bloomberg had to concede that the practical implications of such a step would be limited at best as U.S. investment in China’s domestic markets are limited with  residents holding only $203 billion of long-term mainland Chinese financial assets as of June, little more than double that held in South Africa; by comparison the market capitalization of Chinese companies on three key U.S. exchanges as of February was approximately $1.2 trillion.

Commenting on the report – at least before its official denial – Assymetric Advisors strategist Amir Anvarzadeh said that “it obviously adds yet another layer of uncertainty and does not bode well for a positive outcome for coming trade negotiations,” adding that “it will force Chinese firms to relist in Hong Kong and China.”

Some, such as Arkera global macro strategist Viraj Patel, noted that “potentially delisting Chinese companies from US stock exchanges is a roundabout way of capital controls that could impact US inward portfolio flows and the US dollar. All other $USD weakening tools haven’t worked. Trump now looking to bring out the heavy artillery…”

Only it now turns out that wasn’t exactly the case.

To be sure, despite the official denial, Bloomberg is sticking with its story and notes late on Saturday that administration officials “for weeks had been examining their options, and Treasury has been participating in inter-agency meetings chaired by Larry Kudlow.”

Still, the push largely comes from Trump’s more hawkish aides, like White House trade adviser Peter Navarro, and outside advisers like Steve Bannon. The NEC and Treasury are wary of the market reaction and are working to ensure that any plan would be executed in a way that doesn’t spook investors, the people added.

As so often happens, Bloomberg’s initial report of the proposed Chinese listing block appears to have been another miscommunication-cum-trial balloon launched by the more hawkish elements around Trump, pressing for escalation in the trade war; however following the market drop, the more moderate elements were forced to walk it back.

Indeed, as Bloomberg reports – one day after its original report – people close to the administration on Friday expressed annoyance at the discussions being publicized, contending that the White House hasn’t decided on a course of action. They said the discussions were examining a wide range of options and were therefore not yet ready for public consumption.

Some advocates of a crackdown on financial flows within the administration- who argue that any U.S. investment in Chinese companies, whether they’re listed in the U.S. or China, exposes investors to potential fraud as a result of poor Chinese corporate governance standards – said they saw the fact the discussions were being leaked as an effort by doves inside the White House to kill the effort by stirring up opposition. Well, either an effort by the doves, or by Bloomberg itself, which in recent days has unleashed a a full court press against Trump in his impeachment proceedings.

Meanwhile, according to the follow up report, while President Trump has given the green light for the review, exact mechanisms or a timeline had not been worked out.

In short – chaos, which is quickly refuted once its initial adverse market impact is observed… and for the second week in a row. As a reminder, last Friday, stocks tumbled following news that a Chinese delegation had canceled a trip to Montana and Nebraska, which initially had a cooling effect on trade deal “optimism”, only for the report to be rejected and helping stocks spike on Monday.

And so, for the second week in a row, the official denial of the Friday tape bomb will now again result in a sharp spike in futures when they resume trading late on Sunday.

One of the loudest narratives heading into the fall by the mainstream financial press is that a healthy consumer is propping up the US economy. Consumer spending at retailers, bars, and restaurants have slowed but nothing to warn about yet. Powered by record-high credit card spending, Americans are nearing the point of maximum leverage, which could be an ominous sign that good times are nearing an end.

The Trump administration, continuing to promote “the greatest economy ever” narrative to tens of millions of Americans ahead of a downturn is probably one of the most irresponsible things that a government can do. Artifical optimism has allowed consumers to rack up more debt than 2008, and it’s a ticking time bomb that could shock millions since they haven’t planned for a recession.

Consumer stress is starting to appear via new default data from S&P Dow Jones Indices and Experian. Their Consumer Credit Default Indices measure the changes in consumer credit defaults and show that the composite rate rose 7bps to 0.92% in August, the highest of the year. The auto loan default rate moved higher by 9bps to 0.98%, and the first mortgage default rate increased 7bps to 0.69%.

The report said Chicago and Dallas were some of the major metropolitan areas that showed MoM increases in default rates from July to August. Each was up 10bps to 1.05% and 0.93% respectively. The default rate for New York rose 5bps to 0.94%, while the rate for Los Angeles rose 3bps to 0.77 %. Miami was the only major city where default rates edged lower in late summer.

S&P/Experian Consumer Credit Default Indices are summarized in the table below. Auto loans and first mortgages were the drivers’ late summer in pushing up the overall composite on an MoM and YoY basis.

Experian tracks the default rates of the consumer in four key loan categories: auto, bankcard, first mortgage lien, and second mortgage lien. Experian’s database includes leading banks and mortgage companies and covers $11 trillion in outstanding loans sourced from 11,500 lenders.

And on a post World War II basis, the US economy has experienced 12 recessions, one every 6.1 years on average. After a decade from the financial crisis, the economy entered its fourth mini-cycle downturn in late 2018, seen in declining growth rates in inflation, manufacturing, and employment.

For a mid-cycle cut, the Federal Reserve needed to embark on a cut cycle last September. The failure to cut, and waiting at least 10 months (cut cycle started in July) — is called a policy error, will likely result in a recession within the next several years.

Consumer confidence remains near two-decade highs, the unemployment level is at a 50-year low, and it’s time the consumer prepares for the next downturn.

S&P/Experian consumer default data rising to the highest point of the year shows us the narrative of a robust consumer could be shortlived — as the weakness in inflation, manufacturing, and employment will start to weigh more on the economy, contributing to a further rise in consumer stress.

Authored by JP Koning via The American Institute for Economic Research,

Last week, France’s Minister of the Economy Bruno Le Maire declared that “we cannot authorize the development of Libra on European soil.” Several months earlier, Maxine Waters, chairwoman of the U.S. House Financial Services Committee, asked for a “moratorium on any movement forward on Libra.”

If you didn’t know what Libra was, you might be forgiven for guessing that it is some sort of dangerous super-missile or highly volatile chemical agent. What is this dangerous device? It is a payments network. And, with it, Le Maire has said, “our monetary sovereignty is at stake.”

Let’s investigate how Libra might (or might not) threaten France’s “monetary sovereignty.” Libra isn’t just a local Parisian bank that wants to serve French citizens. The group that is building the network — the Libra Association — is headed by global giant Facebook. Libra is striving to connect the entire world via a unique global payments layer. But not a single member of the Libra Association is a regulated bank. Glance through a list of members and you’ll spot the likes of MasterCard, Stripe, eBay, and Uber. Remembering Uber’s “break first” approach to expansion, Le Maire no doubt worries that a horde of Silicon valley interlopers is preparing to trample over French money and payments laws.

However, Libra wouldn’t be the first non-bank global payments network. PayPal, a financial-technology company based in Silicon Valley, has been providing a global payments layer for almost two decades now, one to which many French citizens are connected. With a PayPal wallet, you can pay (or be paid by) almost anyone in the world who also has a PayPal wallet. All that PayPal does is switch two numbers in its database. A Libra wallet will allow people to do the same thing.

There is no inherent reason that a global payments system run by technology companies must elide national regulations. If PayPal manages to serve a global community while complying with the rules of all the countries in which it operates, can’t Libra do the same?

One of the complications is that unlike PayPal, Libra will be implemented using blockchain technology. With PayPal, all transactions are presented directly to PayPal servers to verify. But with Libra’s blockchain, users will announce transactions to a dispersed network of validators for processing. These validators will be Libra Association members. There are certain advantages to this sort of setup, including resiliency. The network exists everywhere, so a natural disaster won’t impair it.

However, critics worry that this technology isn’t mature enough to serve as the basis of a financial network. It could have bugs, or be hacked. That’s probably true. But excluding Libra, and not PayPal, on this basis doesn’t seem fair. New technologies have to start somewhere.

Libra’s blockchain nature may have other, more threatening implications for France’s monetary sovereignty. According to Libra’s white paper, payments that go across the Libra blockchain will remain pseudonymous, as in the case of bitcoin. With bitcoin, there is no connection between the tokens being transferred and the identity of the transferee. Users aren’t quite anonymous, since every transaction can be seen. But they needn’t submit their real identities to use the bitcoin network.

In addition to adopting bitcoin-style pseudonymity, the Libra network intends to be “open access.” Anyone with an internet connection can own the tokens.

But pseudonymity and open access go against standard international anti–money laundering agreements, to which France is a signatory. All payments providers are obligated to get personal information from users and pass this information along with the payment itself. In bitcoin’s case, these rules are difficult to enforce. No one really owns the bitcoin network, and the job of validating bitcoin transactions (known as mining) can be done anonymously. Presumably Le Maire is afraid that Libra’s intention to adopt bitcoin’s anarchic approach to making payments will encroach on French monetary sovereignty.

To satisfy Le Maire, Libra will have to show that it is not trying to be bitcoin. This means that the Libra blockchain will have to stop supporting pseudonymity and re-link users’ personal information to the Libras they transfer. This also means that Libra won’t be able to provide open access.

It will be easy for folks like Le Maire to get their way. Whereas bitcoin validators can stay anonymous and avoid prosecution, the members of the Libra Network are all well-known firms that can be punished for evading money laundering rules.

But the alterations that regulators require Libra to make will likely do harm to the network’s founding principles. In a well-written op-ed, Timothy Lee suggests these changes would

raise the barrier to entry for new Libra-based financial services. That would be significant because lowering barriers to entry — both for wallets and for users in under-banked parts of the world — is one of the Libra project’s stated goals.

Another one of Libra’s odd quirks is that it won’t use national currency units like the euro. Instead, it will use its own artificial unit of account, the Libra, which is defined as a cocktail of other national currencies (50% USD, EUR 18%, JPY 14%, GBP 11%, SGD??!! 7%…. ZERO Yuan). It could be that Le Maire is worried that if both euros and Libras begin to circulate on French soil, Libras will flush euros out.

But simultaneous usage of several currencies hardly seems to be a threat to French monetary sovereignty. Along with other European centers, Paris has long played host to the massive Eurodollar market. These are basically U.S. dollar deposits held at European banks. Yet the presence of a huge pile of dollars hasn’t threatened the euro.

Or let’s return to the case of PayPal. Two French citizens, each with a PayPal account, can already transfer U.S. dollars, or British pounds, or Swiss francs, to one another between each other, on French soil. Libras won’t be that much different. 

Furthermore, Europe already has a history of allowing corporations to create alternate units of account. During the 1970s, banks devised private artificial currency units to help their customers cope with monetary turbulence. French bank Credit Lyonnais, for instance, created something called the International Financial Unit, a basket of 10 European and non-European currencies. Libra is nothing but a warmed-up version of Credit Lyonnais’ IFU. 

That being said, Le Maire’s worries about monetary sovereignty aren’t entirely without foundation. If French citizens begin to set prices in Libras rather than euros, the European Central Bank (ECB) will effectively cease to set French monetary policy. After all, monetary policy is about determining the rate at which the average level of consumer prices is changing. If French prices are expressed in Libras, then it is the Libra consortium that will be in control of France’s consumer price level, not the ECB.

But setting prices in Libras doesn’t seem likely. The euro is a stable currency. Habit keeps the usage of euro pricing locked into place, much like how French is cemented as France’s language. Even if Libra tokens were to co-circulate with euro banknotes and deposits as a form of making payments, we can expect prices to still be set in euros, with Libras passing at their going market rate. And so the ECB would continue to rule the monetary nest.

In sum, Le Maire probably has a legitimate worry about monetary sovereignty. But as conversations between Libra and governments around the world progress, Libra will likely fall in line with respect to anti–money laundering rules. Once that has been achieved, the project should be good to go. Usage of a new monetary unit isn’t much of an issue.

It’s important to separate the genuine worries about Libra from the hyperbole. Facebook is a controversial company these days. But French monetary sovereignty is unlikely to fall at the hands of Libra. Let’s not forget that the existing payments networks — the MasterCard and Visa networks as well as the international correspondent banking system — don’t always provide consumers with low prices. Any new competition will help consumers get cheaper and better payments options.

The last few weeks have seen a dramatic surge in US macro data surprises (to the upside), dramatically diverging from the rest of the world (and almost single-handedly improving the global data)…

Source: Bloomberg

This sudden surge, however, is not a total surprise as we have noted the seasonal patterns in US economic data previously.

So why does this pattern exist – and why is it particularly strong in recent weeks?

Simple – as OpenTheBooks.com details – it is a reflection of the Federal Government’s “Use-It-Or-Lose-It” Spending Spree…

In the final month of the fiscal year, federal agencies scramble to spend what’s left in their annual budget. Agencies worry spending less than their budget allows might prompt Congress to appropriate less money in the next fiscal year. To avoid this, federal agencies choose to embark on an annual shopping spree rather than admit they can operate on less.

This is the “use-it-or-lose-it” spending phenomenon, and it happens every year.

And that surge in spending coincides with this sudden ‘surprise’ burst to the upside.

Source: Bloomberg

For some context from last year:

• In the final week of the fiscal year, federal agencies signed nearly 10 percent of all fiscal year 2018 contracts.

• Between 2015 and 2018, federal spending during the final month of the fiscal year increased by 39 percent. From 2017 to 2018, September spending increased by 16 percent.

• Contract spending in September 2018 totaled nearly $97 billion. In the final seven days of fiscal year 2018, federal agencies spent $53.3 billion – more than they spent in the entire month of August 2018 ($47 billion).

• The federal government spent $544 billion on all fiscal year 2018 contracts, but nearly 18 percent of these contracts were purchased in the final month of the fiscal year.

And, we suspect, given the rapid surge in borrowing recently, that 2019 will be even more dramatic on the spending side (and thus the unprecedented spike in economic surprises)

Source: Bloomberg

All of which begs the question: is the only reason why the economy tends to pick up momentum dramatically as the summer ends just a function of a surge in government spending permeating the broader economy as agencies scramble to spend all the money they have before the end of the September 30 Fiscal Year End (just so they get allocated the same or greater budget in the coming fiscal year), which subsequently plunges or is outright halted as the case may be right now?

If so, it would explain so much, and certainly why year after year, the US economy seems to pick up in the mid-to-late Q3 period, only to dramatically fade away in the coming months, as government spending goes from a waterfall to a trickle.

It would also put the government’s role in generating transitory periodic spikes in economic output under a microscope, especially since it is so clearly staggered to recur every September as one after another government agency spends like a drunken sailor. And if that is the case, how long until the BLS or some other agency (upon reopening of course) is taken to task to normalize not only for hedonic indicators and climate-related seasonal factors, but also for what is now clearly an annual aberration of economic output trends?

Source: Bloomberg

Either way, within 72 hours, this artificial stimulus will be over, and we would not be surprised at all to see US data converge back to the weakness indicated elsewhere. Presumably that’s what the uber-doves are hoping for.