Seven years after Colorado legalized marijuana, the state legislature has finally authorized options for people who want to use it somewhere other than private residences. A law that takes effect on Wednesday will allow cannabis consumption in specially licensed pot shops, restaurants, and other businesses, including mobile “marijuana hospitality establishments” such as tour buses. The law addresses a predicament that has long puzzled out-of-state visitors who stop by dispensaries in cities such as Denver and Pueblo, only to discover that there are virtually no places where they can legally consume the marijuana they have just legally bought.
That gap will not be filled immediately, since businesses that want to create cannabis consumption spaces have to obtain both state and local permission. The Colorado Department of Revenue’s Marijuana Enforcement Division has posted a license application form, along with the relevant regulations, which take effect on January 1. But cities need not allow on-site consumption at all. Assuming that local governments go along, Coloradans should eventually see something like Dutch-style “coffeeshops” where customers can enjoy marijuana with food and beverages in a social setting.
Restaurants that serve alcohol are not eligible for the new licenses, and tobacco use will not be allowed either, although the law amends the Colorado Clean Indoor Air Act to allow pot smoking in licensed locations. Licensees have to make sure that cannabis consumption is not visible to passers-by, prevent employees from partaking, and destroy any unused products that customers leave behind. Outdoor consumption areas are allowed, provided they are surrounded by “a sight-obscuring wall, fence, hedge, or other opaque or translucent barrier,” such that marijuana “is not visible from a public place without the use of optical aids, such as telescopes or binoculars, or aircraft.”
Denver, where marijuana retailing is concentrated, already has a program, created by a 2016 ballot initiative, that notionally allows “cannabis consumption establishments,” which may not sell marijuana but may allow customers to use marijuana they bring with them. The licensing process has been slow and arduous, however, and currently there is only one such business in the entire city: The Coffee Joint, which is next door to a dispensary. Before the new state law can have any impact in Denver, the city will have to write rules expanding what is currently allowed.
It sounds like that will not happen anytime soon, if ever. “Denver has not officially determined whether our city will opt in or opt out of the hospitality law,” spokesman Eric Escudero says by email. “Our focus right now is taking steps to address social equity, so more people disproportionally impacted by the war on drugs are positively impacted by cannabis legalization.” He says the city has commissioned a study of that issue, which should be completed in January or February.
“If Denver decides to go forward by creating new licenses for hospitality,” Escudero says, “we believe it is vital to have improvements in our licensing process so equity applicants have an improved opportunity for greater participation in the cannabis industry,” assuming “the study shows there is a lack of participation by people disproportionally impacted by the war on drugs….Our goal is to get it right and not accelerate the process based on when a state law goes into effect.”
The state’s allowance for “mobile premises” that could be licensed as marijuana hospitality establishments would explicitly legalize the weed-friendly tour buses that Denver entrepreneurs thought offered a way around the city’s strict consumption rules. Last year Denver started cracking down on those operations. Because of such policies, Colorado has fallen behind Alaska, California, and Nevada in providing cannabis consumption options, even though it was the first state to allow recreational sales.
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Oh sure, the days of watching Jim Cramer mash buttons on his console with his sleeves rolled up to his armpits are pretty much over.
And nobody really day trades anymore, except for masochists. And, despite a 10,000-point rise in the Dow since the election, nobody seems all that happy.
But the stock market is still the opiate of the masses.
I know this because anytime I go on Twitter, the financial pundits are tweeting about stocks. They usually don’t tweet about bonds or commodities or FX. I follow one or two oddballs that tweet about volatility.
But it’s usually wall-to-wall stocks. Mostly Farmers’ Almanac stuff about how “9 of the last 11 Decembers have been positive,” and “60% of the time it works every time.” Not a lot of value added. So I spend less time on Twitter.
But I will say that the ratio of stock market tweets to tweets about other asset classes is about 10 to 1. And most of the non-stock market tweets are from a coterie of macro doom guys. That is another genre altogether.
And even though people aren’t whipping and driving stocks, they’re whipping and driving index funds. The obsession with the stock market is still there; it’s just morphed into something entirely different. Vanguard, by the way, is now showing television commercials. I take this as a sign.
People are still enthralled by the stock market. Index funds might not be as exciting as dot-com stocks to talk about at cocktail parties. But people still go home and feel a thrill up their legs when they log into their Vanguard accounts and see a big fat number.
There are virtually no bond market tweets, aside from me doing a sack dance every once in a while. Which is interesting, because the rally in bonds has been just as historic and unprecedented as the rally in stocks, and perhaps more so—but nobody is interested. Not only is nobody interested, everyone hates it. Every time bonds sell off ten basis points, the internet erupts in cheers.
Interest rates will stop going down when a full-fledged bond mania develops. It might take a while.
Just in the past few weeks, we’ve had a blowout payroll number, a Boris Johnson victory in the UK, and a bunch of other bond-torching news. And the bond market has steadfastly refused to sell off. Not a lot to hang onto, if you’re a bond bear.
Sure, a lot of things could pop the bubble if you think it’s a bubble. Inflation fears could do it, lots more Treasury supply, etc. And the flows just keep on coming. High-yield spreads have dropped to historic lows.
Popular Delusions
If people are this unhappy when all financial assets are shooting off into space, what will happen when we actually get a bear market?
I think about this all the time.
Investors believe that financial markets are supposed to behave a certain way. They believe they’re supposed to reliably produce 8 percent returns every year. Or more, in the case of 2019. When they don’t, people get a bit indignant.
Two salient points:
People think the stock market returns 8 percent a year, because it has historically returned 8 percent a year
People think that past performance does not indicate future results
They hold these two conflicting ideas in their heads simultaneously. It’s a feat of mental gymnastics that I cannot replicate. The fact is we don’t know what the stock market will return in the future. It could return 4 percent, or 0 percent, or -4 percent, or 16 percent. We just have no idea.
Now, the problem is that people have done all this actuarial science around the 8 percent number to plan for retirement. There is a good chance that we might not hit that 8 percent number for a bunch of reasons, not the least of which is politics. If Bernie Sanders is elected president, I assure you we’ll be off to a pretty poor start.
It may turn out that actual returns are lower, and people may find they should have saved a lot more. That is almost always the case—people’s realized returns are lower than theoretical returns because they can’t help but engage in market timing.
To fix this, try the 35/65 portfolio. But the 35/65 portfolio doesn’t protect you against situations where stocks and bonds both decline.
In that case, try the 20/20/20/20/20 portfolio:
20% stocks
20% bonds
20% commodities
20% real estate
20% cash
Someday, I’ll get around to figuring out historical returns on that.
* * *
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Trump, Obama Tie For Most Admired Man In 2019: Gallup
President Trump and former President Obama are tied this year as the most admired man, with each garnering votes from 18% of U.S. adults sampled, according to a Gallup poll published on Monday.
For Obama – who just bought an $11.75 million mansion on Martha’s Vineyard with wife Michelle, it’s his 12th time on the list. Michelle, meanwhile, was the most admired woman for the second year in a row.
For Trump, this is his highest score in three years.
Each year since 1948, Gallup has asked Americans to name, in an open-ended fashion, which man and woman living anywhere in the world they admire most. This year’s results are based on a Dec. 2-15 poll.
Americans’ choice for most admired man this year is sharply divided along party lines: 41% of Democrats name Obama, while 45% of Republicans choose Trump. Relatively few Democrats choose Trump and relatively few Republicans pick Obama, while independents’ choices are divided about equally between the two men. –Gallup
Of note, incumbent presidents have won ‘most admired man’ in 58 of the last 72 Gallup polls, and have typically not been the choice because of political unpopularity.
Trump is more popular now than he was in the past two years, with a 45% job approval rating, among his best as president. Coincident with the rise in his job approval rating, the 18% of Americans currently naming Trump as the most admired man is also up, from 13% in 2018 and 14% in 2017. Increased mentions of Trump as the most admired man have come almost exclusively among his fellow Republicans — 32% of Republicans named Trump in 2018 and 35% did so in 2017.
Obama’s 18% mentions among U.S. adults as the most admired man are in line with his 2018 (19%) and 2017 (17%) figures, all of which are high for a former president. Dwight Eisenhower is the only other former president who received double-digit mentions at any point after leaving office.
Following Obama and Trump, there were no other men who received more than 2% of responses. The remainder include: Jimmy Carter, businessman Elon Musk, philanthropist and Microsoft founder Bill Gates, Pope Francis, Vermont Sen. Bernie Sanders, California Rep. Adam Schiff, the Dalai Lama, and investor Warren Buffett.
11% of Americans named a friend or relative as their most admired man, while 18% named some other living man, and 25% chose not to name anyone.
Michelle Obama, meanwhile, is the sixth former first lady to win most admired woman – the others being Eleanor Roosevelt, Jacqueline Kennedy, Mamie Eisenhower, Betty Ford and Hillary Clinton.
Current first lady Melania Trump finished second this year, mentioned by 5%, with former talk show host Oprah Winfrey, Clinton and teen climate change activist Greta Thunberg named by 3% of U.S. adults each. The remainder of the top 10 for women includes Britain’s Queen Elizabeth II, House Speaker Nancy Pelosi, Supreme Court Justice Ruth Bader Ginsburg, Massachusetts Sen. Elizabeth Warren, German Chancellor Angela Merkel and former U.S. Ambassador to the United Nations Nikki Haley.
Queen Elizabeth finished in the top 10 for the 51st time, more than any other woman. Winfrey (32 times) and Clinton (28) have also made regular appearances in the top 10. The Rev. Billy Graham has the most top 10 finishes for either gender: a total of 61 between 1955 and 2017 before his death last year.
The Southern Poverty Law Center has remained completely silent about the domestic terror attack against Hasidic Jews, presumably because it was carried out by a non-white person.
Grafton E. Thomas entered a a rabbi’s home and stabbed five people as they celebrated Hanukkah in an Orthodox Jewish community in New York City on Saturday night.
Gov. Andrew Cuomo quickly announced that the stabbings were an act of domestic terrorism “spurred by hate.”
Another attack earlier this month on a kosher grocery store in New Jersey was carried out by assailants motivated by black supremacist ideology.
Despite the SPLC constantly fanning the flames of hysteria over domestic extremism, the organization has not commented on Saturday’s attack.
Nothing from the SPLC about last night’s domestic terrorist attack against Hasidic Jews. pic.twitter.com/n9gJXc6R0H
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Ousted Nissan Chief Ghosn Arrives In Lebanon After Fleeing Japanese House Arrest
Just over 13 months after his arrest in Japan, The FT reports that former Nissan-Renault Chairman Carlos Ghosn is no longer under house arrest in Japan and has arrived in his parents’ native Lebanon, according to a source close to the Nissan-Renault chairman’s family and a professional associate.
Local media reported that, according to an associate of Mr Ghosn, he arrived in a private jet at Beirut’s Rafic al-Hariri international airport late on Sunday.
For now, it is unclear whether the former carmaker’s chairman has escaped house arrest in Japan or whether a deal has been struck for his release.
Dow Jones also reported Ghosn arrived in Lebanon, said he plans to hold a press conference in the coming days.
The big question for the year 2020 is simple: can America get its mind right?
If the answer is no, we may not have much chance of continuing as a peaceful, functioning country. The era of the long emergency, as I call it, is of a piece with Strauss and Howe’s figurative winter in their Fourth Turning view of history playing out in generational cycles analogous to seasons of the year. Whatever you call it, the current disposition of things has had a harsh effect on our collective psychology. It has made an unusually large cohort of Americans functionally insane, believing in demons, hobgoblins, and phantoms, subscribing to theories that, in previous eras, children would laugh at, while contesting obvious realities and provoking grave political hazard.
The madness is distributed over many realms of American life, with the common denominator of a thinking class fallen into disordered thinking. The disorder is led by the information media and higher education with their crypto-Gnostic agendas for transforming human nature to heal the world (in theory). It includes a grab-bag of delusions and deliberate mind-fucks ranging from the morbid obsession with Russian interference in our affairs, to the crusade against free speech on campus, to the worship of sexual perversity (e.g. the Transsexual Reading Hour), to the campaigns against whiteness and maleness, to the incursions of woke-ness in the corporate workplace, to the cynical machinations of economists, bankers, and politicians in manipulating financial appearances, to the effort to divorce reality from truth as a general proposition.
These diseases of mind and culture are synergized by an aroused political ethos that says the ends justify the means, so that bad faith and knowing dishonesty become the main tools of political endeavor. Hence, a venerable institution such as The New York Times can turn from its mission of strictly pursuing news and be enlisted as the public relations service for rogue government agencies seeking to overthrow a president under false pretenses. The overall effect is of a march into a new totalitarianism, garnished with epic mendacity and malevolence. Since when in the USA was it okay for political “radicals” to team up with government surveillance jocks to persecute their political enemies?
This naturally leads to the question: what drove the American thinking class insane? I maintain that it comes from the massive anxiety generated by the long emergency we’ve entered — the free-floating fear that we’ve run out the clock on our current way of life, that the systems we depend on for our high standard of living have entered the failure zone; specifically, the fears over our energy supply, dwindling natural resources, broken resource supply lines, runaway debt, population overshoot, the collapsing middle-class, the closing of horizons and prospects for young people, the stolen autonomy of people crushed by out-of-scale organizations (government, WalMart, ConAgra), the corrosion of relations between men and women (and of family life especially), the frequent mass murders in schools, churches, and public places, the destruction of ecosystems and species, the uncertainty about climate change, and the pervasive, entropic ugliness of the suburban human habitat that drives so much social dysfunction. You get it? There’s a lot to worry about, much of it quite existential. The more strenuously we fail to confront and engage with these problems, the crazier we get.
Much of the “social justice” discontent arises from the obvious and grotesque income inequality of our time accompanied by the loss of meaningful work and the social roles that go with that. But quite a bit of extra tension comes from the shame and disappointment over the failure of the long civil rights campaign to correct the racial inequalities in American life — everything from attempts at school integration to affirmative action (by any name) to “multiculturalism” to the latest innovations in “diversity and inclusion.” In short, too many black Americans are still failing to thrive in this land despite fifty years of expensive government programs and educational experiments galore, and there are few explanations left to account for that failure, which includes black-led cities in ruin and high rates of black violent crime. This quandary harrows the thinking class and drive them ever deeper into their crypto-Gnostic fantasies about changing human nature to heal the world. The net result is that race relations are worse and more fraught than they were in 1950. And the outcome is so embarrassing that the thinking class avoids facing it at all costs (despite bad faith calls for “an honest conversation about race” that is, in actuality, unwelcome).
Our country is caught in a matrix of self-destructive rackets and the common denominator is the immersive dishonesty we have given ourselves permission to practice. In ethics and daily conduct, we’re nothing like the country that came out of World War Two. Our national maxim these days is anything goes and nothing matters. That’s a poor platform for navigating through life on earth. After a decades-long clamor for “hope and change,” that’s one big thing we don’t talk about changing, and apparently have no hope for changing. America has got to get its mind right about lying to itself.
This is a forecast, after all, and I’m going to try to be as concise as possible on the particulars, which we’ll now turn to. Forecasts, you understand, are like jazz, an improvisational connecting of dots at a certain moment in time… or throwing spaghetti at the wall to see if anything sticks.
Election 2020
There’s an excellent chance that the Democratic Party will be in such disarray by summertime, that it may break apart into a radical-Wokester faction and a rump “moderate” faction. That would make the election somewhat like the 1860 contest on the eve of the first Civil War. The current crop of leading candidates — Biden, Sanders, Warren, Buttigieg — all look to me like horses that ain’t gonna finish. Michael Bloomberg could end up leader of the rump moderates, propelled by his inexhaustible bank account, but I doubt his appeal to the racial minorities and the new millennial voters Democrats depend on. I’m not sure he’s left with much else.
I’m convinced that Joe Biden is in still in the contest solely to avoid investigation. He’s already obviously not wholly sound of mind, and he’s not even in the White House yet. Think of how Bob Mueller looked testifying in congress six months ago, and imagine Uncle Joe in the White House Situation Room. The record of grift from Uncle Joe’s Veep days is vibrantly nauseating, and embarrassingly on-the-record in video and in bank statements. Similarly, for Elizabeth Warren: there are too many video recordings of her lying about herself. She’d never overcome an opponent’s political ad campaign replaying them daily. I’m sorry, but despite the crypto-Gnostic wish by many Thinking Class-niks to make the marginal seem normal, I doubt the voters want to see Mayor Pete in the White House with a “First Husband.” Bernie Sanders has a shot of leading a radical faction this time — if he can overcome the hacks in the DNC — and only a dim shot at winning the general election. This overview leaves a pretty big crack in the door for Hillary Clinton to ride into a hung convention in Milwaukee on a paper mache white horse and try to “rescue” the party. I believe she’d be laughed out of the hall, making for a humiliating final scene in her accursed career.
One other possibility is that a figure currently off the game-board somehow flies in to lead the Democratic Party, but it’s impossible to state who that black swan character might be. That could also be something like a “smoke-filled room” scenario of a nominating convention, like the one that picked Warren Harding a hundred years before: the party poohbahs get together and just ram their decision down the delegates throats. I’d assign a 20 percent chance to that outcome.
Whatever you think of his style, manner, and policies, Donald Trump has one outstanding quality: resilience. As David Collum has remarked, Mr. Trump is anti-fragile (in the Nassim Taleb sense). The more he is antagonized, the stronger he seems to get. His weak spot is his ownership of the economy and the financial markets that are supposed to serve it. His destiny, which I described in blogs three years ago, is to be the guy left holding the bag when things economic start cracking up — a situation I’ll describe in its own category below. The odds are not so good that the status quo of an ever-rising stock market will hold up until next November. And if it goes south in a hard way, that will certainly work against his reelection. It could also be the one thing that would permit the Democratic Party to stay glued together — but implies that a shake-up in markets and banks would have to happen by early summer, before the conventions.
Meanwhile, the attempts at impeachment have a peevish Lilliputian flavor. Keeping it up —bringing a threatened second or third bill of impeachment with extra charges — will only reinforce Mr. Trump’s anti-fragility. Second to the economic issues is the question whether the firm of Barr & Durham will manage to pin some criminal responsibility on the people who undertook the RussiaGate coup against Mr. Trump — a ghastly mis-use of government power now celebrated by Democrats, who, you might recall, used to be against police states. A series of perp walks by the likes of Brennan, Comey, Clapper, and others could finally burst the bubble of credulity that the Mueller face-plant and the damning Horowitz report failed to achieve among the True Believers of Rachel Maddow. Of course, this matter has even greater significance for correcting the meta-problem of America chronically lying to itself. RussiaGate and its spinoffs was such a gargantuan edifice of malicious dishonesty that it must be deconstructed in the courts, or the mental health of the nation may not recover. It is the key to ending the regime of anything goes and nothing matters. Bottom line: if the markets or the value of the dollar don’t crash, Mr. Trump will be reelected.
However, I expect that his rivals will resort to Lawfare tactics to tie up the election process in a paralyzing tangle of litigation that would impede or deny a peaceful resolution of the outcome. These tactics may provoke the president to declare some extraordinary measures to overcome this climactic act of “Resistance” — perhaps a period of martial law while the results are re-tabulated. Yes, it could get that extreme.
Economy and Its Accessories
The shale oil “miracle” was a financial stunt using debt to provide the illusion that the nation’s energy supply was safe and assured long-term. It’s been an impressive stunt, for sure, with production nearing 13 million barrels-a-day now, but it is foundering on its Ponzi business model — the producers just can’t make money at it, and they’ve spent ten years proving that it’s a foolish play for investors. The result will be dwindling investment in an endeavor that requires constant re-investment. Which means that 2020 is the year that shale oil de-miracle-izes and production falls. The bankruptcies have only just begun.
The economy is really just a function of energy inputs, and these must be inputs that make economic sense — that don’t cost more than whatever they return. All our banking and finance arrangements depend on that. If energy inputs decline, or the cost in energy exceeds the value of net energy you get, then debts of every kind can no longer be repaid and the whole system implodes. From there the question is whether collapse is slow or fast. My guess is that it may start slowly and then accelerate rapidly to critical — and the process has already begun.
As a result of this energy dynamic, we’re seeing a generalized contraction in economic activity and growth worldwide, expressed in standards of living that will fall going forward. The effects in America are already obvious and discouraging: the struggling middle-class, people living paycheck-to-paycheck, people unable to buy cars or pay to fix them. The hope was that America might reindustrialize (some version of MAGA) while the “emerging” economies kept producing stuff as the “engines” of the global economy: China, India, Korea, Brazil, Mexico and others. These places saw standards of living rise dramatically the past thirty years. Reversing that trend will be a trauma. These emerging economies are topping off and heading down because of the same basic energy dynamics which affect the whole world: running out of affordable energy, oil especially. The likely result will be political instability within China, and the rest — already manifest — and some of that disorder may be projected outward at economic rivals.
Europe has experienced plenty of blowback from its contracting standard-of-living as expressed in the Yellow Vest disruptions in France, the Brexit nervous breakdown, the gathering power of nationalist political movements in many nations, and the ongoing refugee crisis (largely economic refugees from failing third world places). The European banks, led by the sickest of them all, Deutsche Bank, suffer from a crushing burden of bad derivative obligations that are liable to sink them in 2020, and then there will be a scramble for survival in Euroland, with the recent refugees caught in the middle. I think we will see the first attempts to expel them as financial chaos spreads, violence erupts, and nationalism rises.
The “solution” to the quandary of contraction since 2008 has been for central banks to “create” mountains of fresh “money” to provide the illusion that debts can be repaid (and fresh loans generated) when reality clearly refutes that. All that money “printing” has only deformed banking relations and the behavior of markets — the most obvious symptoms being asset inflation (stocks, bonds, real estate), the quashing of price discovery (the chief function of markets), and zero interest rates (which makes the operations of banking insane).
The bankers will continue to do “whatever it takes” to try to keep the game going, but they’ve run out of actual mojo to get it done. Interest rates can barely go any lower. The amount of money “printing” needed to sustain the illusion of a functioning, rational system grows ever larger. In the six weeks just before-and-after Christmas, the Federal Reserve is expected to pump $500 billion into the banks to stabilize asset prices. How long can they keep doing that?
Eventually, either asset prices fall (perhaps crash), or the increasingly desperate measures needed to prop them up will degrade the value of money itself. The catch is, that might not happen everywhere at once. For instance, China’s banking system, like Europe’s, is ripe for a convulsion, which would send money fleeing for perceived safety (while it can) into America’s markets, temporarily pumping up the Dow, the S & P, and US Treasury bonds even while other big nations crash. But US banks have the same disease and those birds of disorder will eventually roost here, too.
Also, the method of distributing fresh central bank money-from-thin-air will likely change going forward. The public will surely revolt at another bankster bailout. Instead, the folks-in-charge will turn to “Peoples’ QE,” otherwise known as “helicopter money” (as in dropping cash from choppers), or Modern Monetary Theory (MMT — print money until the cows come home), featuring “Guaranteed Basic Income.” The tensions in the contraction trap we’re in are such that disequilibrium in the debt markets can only play out in a hard default or a softer attempt to inflate currencies. Inflation could keep stock markets afloat and allow continued debt repayment (“servicing”) in currencies of declining value — a process that is never really manageable in history, always gets out-of-hand, and leads quickly to political mayhem. Remember, there are two ways of going broke: having no money, and having plenty of money that is worthless.
The elements of this financial psychodrama will meld into the US election politics of 2020 as the Left turns to increasingly promises of “free” money and “free” services (medicine, education) to panicked voters who can no longer afford the American Dream standard-of-living. Tremors emanating from the seized-up Repo markets (Repo = repurchase of collateral for overnight loans) the past three months suggest that some major US banks and insurance companies have entered their own zones of criticality. I’m doubtful that any ploy can fend off major financial instability before the end of 2020, but if the US does become a refuge for money from elsewhere in the world, that could stave off the arrival of crisis until summer.
The idea that a roaring stock market signifies a “great” economy is especially fallacious with all the ongoing market interventions and manipulations of the past decade. All it really signifies is how swindles, frauds, and rackets have taken the place of the industrial production of yesteryear, and that’s not a very sound basis for an economy. I don’t think there are any real prospects of getting back to the industrial might of yore. We’ll surely have to make things in the times ahead, and produce our bread by some means, but it’ll be a very different model of production, at a much more modest scale. When standards-of-living fall, they’ll eventually land somewhere. We just don’t know where that landing place is yet.
Relations with Other Lands
The RussiaGate hysteria worked effectively the past three years to obstruct the chance for repairing relations between our countries. That and the earlier idiotic 2014 intervention in Ukraine under Mr. Obama, which prompted Russia’s annexation of Crimea and fighting in the Donbass. All of that was unnecessary and was carried off just because we were determined to cram Ukraine into NATO — or, at least, not let it join the Russia-centric Customs Union. In the process, we left Ukraine badly damaged. Can we please stop creating more damage? They have always been Russia’s stepchild and always will be. Can we get our American mind right on that?
I suspect Mr. Trump would still like to rectify the situation, especially our relations with Russia. We have some outstanding interests in common, starting with a wish to discourage Islamic maniacs from blowing things up and cutting people’s heads off. How about we try cooperating to manage that problem? Russia is not our economic rival. Vast as its land-mass is, Russia’s economy is not much bigger than the economy of Texas. They possess a very potent nuclear arsenal, with new hypersonic delivery systems that were probably developed to temper our paranoid narratives about them since 2016. War is not an option.
There’s a fair chance in 2020 that Mr. Trump may find an opening to reduce tensions between the US and Russia, even if he is being repeatedly impeached and the S & P index falls by half. Ukraine itself may be a hopeless basket case, its destiny: to become a quasi-medieval agricultural backwater. Anyway, it’s really none of our business, any more than the occupation of Afghanistan was, or the intervention in Iraq was, or Vietnam before that. For starters, though, can we just agree that going to war with Russia is not a good idea and stop militating for it? Liberals used to blame the Military-Industrial Complex for thumping the war drum. Now they’re doing it.
Further temptations to intervene in foreign lands will only accelerate the bankruptcy of the USA and drive a quicker, more dramatic journey down to a much lower standard-of-living. Anyway, with all the other elements of the long emergency proceeding, the trend in 2020 will be for nations to be preoccupied with their own business, and if it doesn’t work out at a national level it might lead to more breakaway regions attempting self-government. Catalan is still burbling away, Italy still has a north/south problem, Scotland still has a mind to dissociate from the UK. Contraction, or de-growth, or declining prosperity — however you want to say it — goes hand-in-hand with a smaller scale of management. Bigness itself is going out.
It’s worth considering this, though: I remember the USA being a pretty sane nation. If things can get this bad in America, with all these political hallucinations, don’t you think they can get bad in other places, too? China is entering a traumatic squeeze with the end of its thirty-year growth spurt. What if China gets as crazy as we are? What if the USA goes from being Number One customer to Demon Ghost Dragon from the Underworld in their scheme of things? (Anybody remember the cultural revolution of the 1960s? That was communist Wokesterism on methedrine.) When the going gets tough in China, the government cracks down. And when that doesn’t work, China historically cracks up into some kind of civil war. The action in Hong Kong this past year may be a preview of coming attractions for Beijing or Shanghai. For 2020, I predict turmoil in China as banks fail, companies go under, and factories shut down — but falling short of an uprising against the Xi Jinping regime. It will make China appear very crazy. We will have to tread carefully around them. Please, no naval hijinks in the Straits of Taiwan….
I pretty much covered Europe in the Economics section. The main warning for Europe 2020 is that the international rules-based liberal order of the West was made possible in a post-war world by decades of rising energy inputs and rising prosperity. As that reverses, the assumptions behind that order will cease to hold it together. The formation of a new set of operating principles will probably entail a period of disorder, perhaps long in duration.
Israel and Iran seem to be cruisin’ for a bruising,’ which probably won’t work out so well for Iran. Something will happen in 2020 between them and the US will manage to stay out of it. A fast, sharp conflict could set the stage for the Iranian people to finally throw off the yoke of their mullahs. This may be accompanied by a widespread anti-jihad movement (an Islamic peace movement) across the Middle East and North Africa — a recognition that Jihad is working only to destabilize one country after another and make their lives worse. Israel will restart talks with its antagonists in Gaza and the West Bank. The talks will be arduous but promising and little will be resolved through 2020.
India and Pakistan cooled their jets during the economic topping off period of the past ten years, avoiding a major war, including a nuclear exchange. That could change tragically in 2020 as global prosperity reverses and all the other long emergency pressures pile on these two, struggling, way-overpopulated countries. The damage would be awesome, perhaps terrifying enough to persuade people in other lands to just take the economic losses and do their best to downscale rationally.
Japan’s drift toward the eventual fate of neo-medievalism speeds up in 2020 as financial infection spreads from China’s failing banks. Emperor Naruhito issues a royal memorandum acknowledging that Japan’s dependence on imported oil must end and they will embrace de-growth hoping to return to an Edo-level of pre-industrial civilization. This will be an even more positive example to other nations to start making similar plans. Of course, it will provoke bitter political opposition. The best ideas always do.
Latin America is coming off more than a decade of relative peace, except for Venezuela, which lately just whirls around the drain without any fanfare. Argentina underperforms in grand style, but can’t seem get to a critical threshold of collapse. What’s her secret? Lately a revolution (possibly CIA-backed) overthrew President Evo Morales of Bolivia, supposedly to allow the US access to its lithium resources. More dramatic action erupts up in Mexico in 2020 where civil war breaks out. The US dispatches regular army troops as refuges try to flee north in epic numbers. We create a designated “safe zone” fifty miles below the border to contain the human flood. Mr. Trump is vilified for setting up humanitarian refugee camps there. But throughout the year he refuses an outright military intervention between the warring factions.
Culture War, Wokesterism, and the Battle for Hearts and Minds
One might suppose that the crypto-Gnostic Wokesters had carried their lunacy far enough in 2019 with the Tranny Reading Hours, the firings of distinguished faculty who insist that biological reality means two sexes, and much much more. It was also the year of The New York Times’s “1619 Project,” a pseudo grad-school-style attempt to rewrite US history as entirely inspired by racism. And then there’s Greta growling “How dare you” at the world with that spittly grimace of pubescent moral superiority. Who of right mind in this land is not sick of this fucking nonsense?
By 2020 Wokesterism has shot its wad and the Wokesters are banished to a windowless room in the sub-basement of America’s soul where they can shout at the walls, point their fingers, grimace spittlingly, and issue anathemas that no one will listen to. And when they’re out of gas, they can kick back and read the only book in the room: Mercy, by Andrea Dworkin.
And then, one fine spring morning, after everyone else has given up on it, Donald Trump, social media troll-of-trolls, the Golden Golem of Greatness himself, rises in his pajamas and tweets that, at long, long last, he has finally got “woke,” changed his name to Donatella, and declared his personal pronoun to be “you’all.”
All right, that’s probably expecting too much, but personally I believe the Wokester act is on the run. Even some true believers are looking worn out from their exertions. Anyway, these incidents of public madness always burn out. A curious feature will be an utter lack of remorse when it’s all over. Instead, we’ll get amnesia, and then it’s off to the next phase of history.
There you have the Forecast 2020. We all know it’s an exercise in futility, but it’s one of those unavoidable rituals of human existence. Good luck to all! You may be interested in my forthcoming book, out in March, which is a deep-dive update of where we’re at and a series of portraits of interesting people leading alt-lifestyles in these uncertain times.
With an unprecedented advertising spending binge, billionaire presidential wannabees Michael Bloomberg and Tom Steyer have launched themselves all the way to….the middle tier of the Democratic primary field.
The two candidates have spent a combined $200 million on television ads—with Bloomberg accounting for about $120 million of that total since he jumped into the race less than a month ago. No other candidate in the field has spent more than $18 million on ads so far, Politico reports. Bloomberg spent more than that in the first week after entering the race in late November.
Despite the advertising blitz, Bloomberg and Steyer are almost certainly wasting their money chasing political power. While it is foolish to rule out any electoral outcome in a world where Donald Trump is president, voters have responded to both Democratic billionaires with a resounding meh, and there seems to be little reason to think that will change next year, no matter how much money the two candidates pour into the race.
There are two lessons here. First, Bloomberg and Steyer seem to be on an inadvertent crusade to prove that progressive fears about the influence of money in politics are largely unfounded.
Secondly, the two billionaire candidates are providing a real-world lesson about opportunity costs by setting fire to their huge campaign war chests. They’ve got the means to change the world, but getting involved in politics isn’t the best way to do it.
Bloomberg has been spending close to $30 million per week on TV ads since jumping into the race in late November, but all that cash hasn’t done much to move the needle. He’s now running a distant fifth in the Real Clear Politics (RCP) polling average with about 5 percent, well behind more thrifty candidates. He’s unlikely to qualify for the next debate, scheduled for January 14 in Iowa, because Democratic National Committee rules require candidates to qualify via polling (Bloomberg has done enough on that metric) and by accumulating at least 225,000 individual donors.
In some ways, Bloomberg’s self-financed, ad-heavy campaign may not care about debates. Indeed, he might be better off saturating the airwaves without having to face any of his challengers in the flesh, where he’d likely be subjected to criticism over his wealth, his record of supporting “stop-and-frisk” policing in New York City, and more. In ads, no one else gets to speak.
Steyer has done marginally better—he’s qualified for the past three debates, but seems unlikely to make next month’s contest in Iowa. He’s polling below 1.5 percent in the RCP average, and doesn’t have great numbers in any of the early primary states—not even in his home state of California.
Given how Bloomberg and Steyer have struggled to gain traction despite their willingness to set fire to their respective campaign war chests, it’s a bit ironic to hear some of their Democratic primary opponents repeatedly bemoaning the influence of money in politics. Sen. Elizabeth Warren (D–Mass.) and South Bend, Indiana, Mayor Pete Buttigieg got into a kerfluffle at the last debate over whose campaign was more corrupted by the influence of deep-pocketed donors, and the consensus view in the Democratic primary field is that Congress ought to overturn the Supreme Court’s 2010 Citizens United decision, in which the court ruled that campaign contribution limits for political action committees (PACs) placed unconstitutional limitations on free speech.
Yes, it’s certainly true that money can buy access and influence in the political process. But when it comes to campaigns, money is only as good as the results it can produce. Joe Biden has well-documentedfundraising issues, but continues to be the Democrats’ perceived front-runner. Bloomberg is spending more each week than Buttigieg has spent since his campaign launched, but “Mayor Pete” is the odds-on favorite to win the first primary contest in Iowa.
In short, the idea that “billionaires can buy elections,” as Sen. Bernie Sanders (I–Vt.) has put it, is being debunked right before our eyes. Again.
And if they can’t buy the election, couldn’t these guys do more by not running for president?
Take Steyer, for example. His entire campaign is built around a single issue. “I’m the only one on this stage who said climate is my number-one priority,” Steyer said at the last debate. He says that climate change is America’s biggest challenge, but “also our greatest opportunity to create millions of good-paying union jobs across the country.”
But you don’t need to be president to create jobs—not even union ones. You do need capital, and Steyer clearly has plenty of that.
Indeed, elsewhere during the same debate, Steyer bragged about his history of financing exactly the types of things he says he wants to do as president. “I’ve been working on this for more than a decade. I’ve taken on oil companies and beaten them on environmental laws. I’ve pushed clean energy across this country. I’ve prevented pipelines and I’ve prevented fossil fuel plants,” he said.
As president, Steyer would certainly have more power to block pipeline projects and stop power plants from being built. But solving climate change will require more than reducing Americans’ access to energy. It will require big ideas and innovative thinking: carbon capture, improved batteries, drought-resistant crops, cheaper desalination, more energy-efficient cooling methods, and better construction practices, among other things. Those ideas and products will almost certainly be developed in the private sector by individuals trying to make a buck.
Unlike most of us, Steyer is in a position to identify and support the companies most likely to make a real difference in reducing the effects of climate change or helping people to cope with them. Instead, he’s dropped $83 million (and counting) in order to get his plaid tie into a few primary debates that few voters watched and even fewer will remember.
Bloomberg’s pet causes are more varied, and libertarians are probably happy to see him blowing his money on an election instead of putting it towards another gun control effort. But the same questions about opportunity cost exist with his candidacy. Could a $100 million campaign to inform Americans about healthy eating do as much good as the Big Gulp ban President Bloomberg would likely try to sign? Probably, and it wouldn’t require him running roughshod over the Constitution.
Bloomberg, Steyer, and everyone else has the right to spend their money however they choose, of course, and all those advertising dollars are at least supporting local and national television stations and helping to indirectly employ producers, anchors, and reporters. Maybe some of those resources will be used to report on Bloomberg, since his own media organization is prohibited from doing so.
It’s also worth noting that the post-Citizens United world that Democrats who actually stand a chance of being elected president want to build would be a place where self-funding billionaire candidates would enjoy a relatively easier path to electoral success. By trying to reduce everyone else’s ability to speak, Democrats would let the future Bloombergs and Steyers dominate the airwaves even more than they do now. And those guys could use all the help they can get, it seems.
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McDermott Plunges On Report Bankruptcy Filing Could Come “Within Weeks”
It’s been a bad year for McDermott shareholders and it’s about to get even worse.
The Houston-based engineering and construction giant, which has struggled this year after it reported losses on some big liquefied natural gas construction projects, and which saw its stock crushed from $10 to as low as $1 amid speculation it may restructure…
… saw its stock plunge as much as 50% on Monday afternoon before being halted, after the WSJ reported it was in talks with its lenders “to file for bankruptcy within weeks.”
According to the report, a group of lenders led by HPS Investment Partners and value investing icon Baupost, are in talks to provide a DIP loan of around $2 billion to keep the company’s operations running during bankruptcy.
The DIP loan will allow McDermott the ability to provide letters of credit, which are crucial for the construction company to continue financing projects while operating under Chapter 11 protection. Most of McDermott’s letters of credit expire within a year and need to be renewed for the company to continue its work on projects. McDermott would also will need to obtain an exit loan with the ability to provide letters of credit to emerge from bankruptcy as a viable business.
As part of the company’s proposed restructuring plan, McDermott will continue to pursue a sale process for its Lummus Technology unit in bankruptcy, the people said. The company has said it received unsolicited bids for the business, which was valued at $2.5 billion.
McDermott stock initially plunged earlier this year when it disclosed it was being investigated over disclosures about projected losses surrounding a Louisiana liquefied natural gas project. The facility, known as Cameron LNG, is being built as a joint venture between McDermott and Japan’s Chiyoda Corp.
However, as part of the year-end euphoria, the company’s loans, which dropped as low as 47 cents on the dollar in November, managed to recover some ground with prices up to more than 59 cents on the dollar on Dec. 27, according to IHS Markit even as MDR stock traded down as far as 60 cents a share, losing more than 90% of its value in the past year.
As the WSJ notes, in October, McDermott’s lenders agreed to make a $1.7 billion loan to the company in several tranches if the company met certain conditions. In early December, the company’s lenders released the second tranche—a $350 million portion of the loan.
Ahead of what now appears to be an imminent bankcuprtcy, McDermott, which has a total of some $4.3 billion in debt on its books, entered a forbearance agreement with a group of bondholders that expires on Jan. 15. It now appears that the company plans on filing for bankruptcy around that date, and has secured a DIP loan to continue operation even as it files for creditor protection.
With an unprecedented advertising spending binge, billionaire presidential wannabees Michael Bloomberg and Tom Steyer have launched themselves all the way to….the middle tier of the Democratic primary field.
The two candidates have spent a combined $200 million on television ads—with Bloomberg accounting for about $120 million of that total since he jumped into the race less than a month ago. No other candidate in the field has spent more than $18 million on ads so far, Politico reports. Bloomberg spent more than that in the first week after entering the race in late November.
Despite the advertising blitz, Bloomberg and Steyer are almost certainly wasting their money chasing political power. While it is foolish to rule out any electoral outcome in a world where Donald Trump is president, voters have responded to both Democratic billionaires with a resounding meh, and there seems to be little reason to think that will change next year, no matter how much money the two candidates pour into the race.
There are two lessons here. First, Bloomberg and Steyer seem to be on an inadvertent crusade to prove that progressive fears about the influence of money in politics are largely unfounded.
Secondly, the two billionaire candidates are providing a real-world lesson about opportunity costs by setting fire to their huge campaign war chests. They’ve got the means to change the world, but getting involved in politics isn’t the best way to do it.
Bloomberg has been spending close to $30 million per week on TV ads since jumping into the race in late November, but all that cash hasn’t done much to move the needle. He’s now running a distant fifth in the Real Clear Politics (RCP) polling average with about 5 percent, well behind more thrifty candidates. He’s unlikely to qualify for the next debate, scheduled for January 14 in Iowa, because Democratic National Committee rules require candidates to qualify via polling (Bloomberg has done enough on that metric) and by accumulating at least 225,000 individual donors.
In some ways, Bloomberg’s self-financed, ad-heavy campaign may not care about debates. Indeed, he might be better off saturating the airwaves without having to face any of his challengers in the flesh, where he’d likely be subjected to criticism over his wealth, his record of supporting “stop-and-frisk” policing in New York City, and more. In ads, no one else gets to speak.
Steyer has done marginally better—he’s qualified for the past three debates, but seems unlikely to make next month’s contest in Iowa. He’s polling below 1.5 percent in the RCP average, and doesn’t have great numbers in any of the early primary states—not even in his home state of California.
Given how Bloomberg and Steyer have struggled to gain traction despite their willingness to set fire to their respective campaign war chests, it’s a bit ironic to hear some of their Democratic primary opponents repeatedly bemoaning the influence of money in politics. Sen. Elizabeth Warren (D–Mass.) and South Bend, Indiana, Mayor Pete Buttigieg got into a kerfluffle at the last debate over whose campaign was more corrupted by the influence of deep-pocketed donors, and the consensus view in the Democratic primary field is that Congress ought to overturn the Supreme Court’s 2010 Citizens United decision, in which the court ruled that campaign contribution limits for political action committees (PACs) placed unconstitutional limitations on free speech.
Yes, it’s certainly true that money can buy access and influence in the political process. But when it comes to campaigns, money is only as good as the results it can produce. Joe Biden has well-documentedfundraising issues, but continues to be the Democrats’ perceived front-runner. Bloomberg is spending more each week than Buttigieg has spent since his campaign launched, but “Mayor Pete” is the odds-on favorite to win the first primary contest in Iowa.
In short, the idea that “billionaires can buy elections,” as Sen. Bernie Sanders (I–Vt.) has put it, is being debunked right before our eyes. Again.
And if they can’t buy the election, couldn’t these guys do more by not running for president?
Take Steyer, for example. His entire campaign is built around a single issue. “I’m the only one on this stage who said climate is my number-one priority,” Steyer said at the last debate. He says that climate change is America’s biggest challenge, but “also our greatest opportunity to create millions of good-paying union jobs across the country.”
But you don’t need to be president to create jobs—not even union ones. You do need capital, and Steyer clearly has plenty of that.
Indeed, elsewhere during the same debate, Steyer bragged about his history of financing exactly the types of things he says he wants to do as president. “I’ve been working on this for more than a decade. I’ve taken on oil companies and beaten them on environmental laws. I’ve pushed clean energy across this country. I’ve prevented pipelines and I’ve prevented fossil fuel plants,” he said.
As president, Steyer would certainly have more power to block pipeline projects and stop power plants from being built. But solving climate change will require more than reducing Americans’ access to energy. It will require big ideas and innovative thinking: carbon capture, improved batteries, drought-resistant crops, cheaper desalination, more energy-efficient cooling methods, and better construction practices, among other things. Those ideas and products will almost certainly be developed in the private sector by individuals trying to make a buck.
Unlike most of us, Steyer is in a position to identify and support the companies most likely to make a real difference in reducing the effects of climate change or helping people to cope with them. Instead, he’s dropped $83 million (and counting) in order to get his plaid tie into a few primary debates that few voters watched and even fewer will remember.
Bloomberg’s pet causes are more varied, and libertarians are probably happy to see him blowing his money on an election instead of putting it towards another gun control effort. But the same questions about opportunity cost exist with his candidacy. Could a $100 million campaign to inform Americans about healthy eating do as much good as the Big Gulp ban President Bloomberg would likely try to sign? Probably, and it wouldn’t require him running roughshod over the Constitution.
Bloomberg, Steyer, and everyone else has the right to spend their money however they choose, of course, and all those advertising dollars are at least supporting local and national television stations and helping to indirectly employ producers, anchors, and reporters. Maybe some of those resources will be used to report on Bloomberg, since his own media organization is prohibited from doing so.
It’s also worth noting that the post-Citizens United world that Democrats who actually stand a chance of being elected president want to build would be a place where self-funding billionaire candidates would enjoy a relatively easier path to electoral success. By trying to reduce everyone else’s ability to speak, Democrats would let the future Bloombergs and Steyers dominate the airwaves even more than they do now. And those guys could use all the help they can get, it seems.
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