Month: May 2021

It’s the end of an era for Israeli politics as embattled prime minister Benjamin Netanyahu, the country’s longest serving leader, is facing a shocking ouster after the head of a small hard-line party on Sunday said he would try to form a unity government with Prime Minister Benjamin Netanyahu’s opponents, effectively ending Bibi’s 12-year rule.

In a nationwide address, Yamina party leader and Netanyahu’s former defense minister, Naftali Bennett said he had decided to join forces with the country’s opposition leader, Yair Lapid in a “unity government” whose “unified” goal has long been removing Netanyahu from office. The pair have until Wednesday to complete a deal in which they are expected to each serve two years as prime minister in a rotation deal.

“It’s my intention to do my utmost in order to form a national unity government along with my friend Yair Lapid, so that, God willing, together we can save the country from a tailspin and return Israel to its course,” Bennett said adding that “we could go to fifth elections, sixth elections, until our home falls upon us, or we could stop the madness and take responsibility.”

This coalition will have one week to finalize deals and then will face a vote in the Knesset. Lapid will inform President Reuven Rivlin of his ability to form a new government with his partners on Monday, according to reports.

A unity government would end the cycle of deadlock that has plunged the country into four inconclusive elections over the past two years. It also would end, at least for the time being, the record-setting tenure of Netanyahu, the most dominant figure in Israeli politics over the past three decades.

In his own televised statement, Netanyahu accused Bennett of betraying the Israeli right wing. He urged nationalist politicians who have joined the coalition talks not to establish what he called a “leftist government.”

“A government like this is a danger to the security of Israel, and is also a danger to the future of the state,” he said.  Netanyahu also took to twitter where he blasted his rivals and the coalition deal as the “scam of the century,” adding that recent conflicts with Hamas prove that Israel can not function with a “left-wing government.”`

“We just got out of a war, from a military operation, and it was clear, amid the battle, that it’s not possible to fight with Hamas from a left-wing government,” he said, proposing that they form a functioning “right-wing government for Israel” instead, although there is zero chance of that happening.

אין אדם אחד בארץ שהיה מצביע לנפתלי בנט אם היה יודע מה הוא הולך לעשות. זו הונאת המאה!

במקום להקים ממשלת שמאל מסוכנת, מיד עם סיום המנדט של לפיד אפשר להקים ממשלת ימין טובה לישראל.

צפו בדבריי הערב. pic.twitter.com/o8qLSWxToG

— Benjamin Netanyahu (@netanyahu) May 30, 2021

Bennett, a former Netanyahu aide turned rival, said he was taking the dramatic step to prevent yet another election. While sharing Netanyahu’s nationalist ideology, Bennett said there was no feasible way for the hard-line right wing to form a governing majority in parliament.

“A government like this will succeed only if we work together as a group,” he said, adding that everyone “will need to postpone fulfilling all their dreams. We will focus on what can be done, instead of fighting all day on what’s impossible.”

Each of the past four elections was seen as a referendum on Netanyahu — who has become a polarizing figure as he stands trial on corruption charges — with each ending in deadlock.

For Netanyahu the motive to remain Prime Minister is simpler: avoiding prison, and he is desperate to stay in power while he is on trial. He has used his office as a stage to rally support and lash out against police, prosecutors and the media. According to the AP, if his opponents fail to form a government and new elections are triggered, it would give him another chance at seeing the election of a parliament that is in favor of granting him immunity from prosecution. But if they succeed, he would find himself in the much weaker position of opposition leader and potentially find himself facing unrest in his Likud party, not to mention prison time.

In order to form a government, a party leader must secure the support of a 61-seat majority in parliament. Because no single party controls a majority on its own, coalitions are usually built with smaller partners. As leader of the largest party, Netanyahu was given the first opportunity by the country’s figurehead president to form a coalition. But he was unable to secure a majority with his traditional religious and nationalist allies.

Netanyahu even attempted to court a small Islamist Arab party but was thwarted by a small ultranationalist party with a racist anti-Arab agenda. Although Arabs make up some 20% of Israel’s population, an Arab party has never before sat in an Israeli coalition government.
After Netanyahu’s failure to form a government, Lapid was then given four weeks to cobble together a coalition. He has until Wednesday to complete the task.

Lapid already faced a difficult challenge, given the broad range of parties in the anti-Netanyahu bloc that have little in common. They include dovish left-wing parties, a pair of right-wing nationalist parties, including Bennett’s Yamina, and most likely the Islamist United Arab List.

Lapid’s task was made even more difficult after war broke out with Hamas militants in the Gaza Strip on May 10. His coalition talks were put on hold  during the 11 days of fighting. But with Wednesday’s deadline looming, negotiations have kicked into high gear. Lapid has reached coalition deals with three other parties so far. If he finalizes a deal with Bennett, the remaining partners are expected to quickly fall into place.

Silicon Valley elites are obsessed with immortality. They’re pouring investments into biohacking technologies on their quest for living forever. We don’t want to spoil their fun, but sometimes we have to, as a new study suggests the upper limit of human mortality is 150 years old. 

Researchers of Gero, a Singapore-based biotech company in collaboration with Roswell Park Comprehensive Cancer Center in Buffalo, New York, published new research in the journal of Nature portfolio, showing results between aging and the loss of the ability to recover from stresses. They gathered iPhone and medical data from volunteers in the US and UK to calculate the maximum age of humans. 

Using artificial intelligence, researchers analyzed the health data of the volunteers. The study found two crucial data points for human lifespan — biological age and resilience. The former is connected with stress, lifestyle, and chronic diseases and the latter are related to how fast a person reverts to normal conditions following stressor response.

Heather Whitson, director of the Duke University Center for the Study of Aging, who was not involved in the study, told Scientific American that the researchers “asked the question of ‘What’s the longest life that a human complex system could live if everything else went really well, and it’s in a stress-free environment?'”

In doing so, the researchers were able to establish the “pace of aging,” which found human bodies aren’t immortal but have an “absolute limit” of 120 to 150 years old. 

“Aging in humans exhibits universal features common to complex systems operating on the brink of disintegration. This work is a demonstration of how concepts borrowed from physical sciences can be used in biology to probe different aspects of senescence and frailty to produce strong interventions against aging,” said Peter Fedichev, co-founder and CEO of Gero.

“This work, in my opinion, is a conceptual breakthrough because it determines and separates the roles of fundamental factors in human longevity – the aging, defined as progressive loss of resilience, and age-related diseases, as “executors of death” following the loss of resilience. It explains why even most effective prevention and treatment of age-related diseases could only improve the average but not the maximal lifespan unless true antiaging therapies have been developed,” said prof. Andrei Gudkov, PhD, Sr. Vice President and Chair of Department of Cell Stress Biology at Roswell Park Comprehensive Cancer Center. 

David Sinclair, Harvard Medical School professor of genetics, commented on the study by saying it “shows that recovery rate is an important signature of aging that can guide the development of drugs to slow the process and extend healthspan.” 

… and possibly the quest for immortality has been shattered by this new research as elites resort to biobacking in their quest to live forever. 

Authored by Diane Diamond, op-ed via The Epoch Times,

Last June, eight guys in Brooklyn put their heads together, according to the U.S. Department of Justice, and came up with a scheme to steal strangers’ identities and take what didn’t belong to them.

Just a couple months before that—in the earliest days of the COVID-19 scare—Congress passed a $2.2 trillion bill called the Coronavirus Aid, Relief and Economic Security Act. The money was supposed to go to the millions of isolated Americans who had their paychecks interrupted during the pandemic.

The mooks in Brooklyn had other plans.

This gang of eight, ranging in age from 18 to 25, submitted some $2 million worth of fake unemployment claims for CARES Act assistance. And they got away with it for nearly a year, according to the feds. Several of these criminals stupidly posted online photos of themselves flashing stacks of money. Others were caught on ATM cameras withdrawing their free cash. Busted!

The more Uncle Sam giveth, the more criminals taketh away.

And it wasn’t just the Brooklyn gang. Besides extra money for bigger unemployment checks, Congress allocated nearly $350 billion for Small Business Administration loans to be doled out by vendors at some 3,800 financial institutions.

Now we find out that just one of those lenders, an online firm called Kabbage, OK’d more than $7 million to go to fake companies, mostly nonexistent farms. Speed in disbursement was the name of the game, and apparently, vetting applications was lax. Many entities seeking loans from Kabbage seemed fishy. Farms and cattle ranches on a New Jersey sandbar? An orange grove in Minnesota? A potato field in ritzy Palm Beach, Florida? All were phony-baloney.

The SBA’s inspector general now estimates that close to 100,000 loans went to businesses that were ineligible or got more cash than they should have. By late March 2021, the DOJ had brought criminal fraud charges against 474 people who sought to rake in a collective $570 million.

It’s great that the feds caught up with these cheaters, but there must have been a better way to administer this program from the get-go, right? Simply relying on after-the-fact prosecution is like trying to chase the horse after it bolts through the open barn door.

An acquaintance tells me he was expecting a small relief payment on a debit card but it never arrived. His wife called to trace it, but the automated system required her to punch in the number on the card—which, again, they never received. A typical government Catch-22. They ultimately gave up and are still wondering who got their $318 debit card.

The point is there has been so much money flowing out of the U.S. Treasury over the last year that the task of keeping track of all of it seems futile.

Trillions of dollars in aid have already been approved by Congress; trillions more are under consideration.

This isn’t monopoly money, folks. And according to The Wall Street Journal, billions of dollars already pumped into the U.S. economy are still sitting there. Between the CARES Act and the companion American Rescue Plan Act, more than $32 billion earmarked just for pandemic-ravaged hospitals remains unspent. They can’t spend their money fast enough to make the June 30 deadline, so hospitals are seeking an extension.

The Rescue Plan also allocated a windfall $350 billion for states to help spur a post-pandemic recovery. Some states will be swimming in surplus dough, but who in Washington will be checking to see if the lengthy spending rules for that money are actually being followed? Let’s hope the supervision is better than what occurred with the Kabbage loans.

It’s time to remember the reported words of notorious criminal Willie Sutton. When asked why he robbed banks, he is said to have answered, “Because that’s where the money is!”

Whether Sutton actually uttered those words is in dispute, but this is a certainty: The criminal element will flock to wherever there is an abundance of cash and lax oversight. Today, money is being printed and is flowing out of the U.S. Treasury at a ferocious pace. Calculating criminals are making plans.

When the U.S. government isn’t diligent, taxpayers lose. It is abundantly clear that conscientious oversight is not being practiced. I say, no more money bills until that changes.

Rising wealth in China and the number of millionaires and the middle class is set to increase through the midpoint of this decade as the country grows more affluent and smarter. 

HSBC Holdings Plc’s new report “The rising wealth of China; Millionaires and the middle class lead the way” predicts a world where millionaires in the country are set to double in the next five years, and the middle class will increase by nearly half. 

From an asset manager’s point of view, China could be the next hot spot for new clients mainly because the report shows 2 million high-net-worth individuals (HNWIs), those with the equivalent of at least $1.55 million in investable assets, are set to more than double to at least 5 million by 2025. 

The bank also estimated the middle-class number (currently at 340 million) would increase by more than 45% to over 500 million in the period. 

“The middle class is expanding rapidly too, and the urban homeownership rate is the highest in the world, a remarkable 96%.1 We estimate that total household wealth will grow by more than 50% in the next five years, putting China on a very sound financial footing,” HSBC said.” 

For asset managers overseeing their client’s portfolios, the goal is to grow business, and China could be the best region to do so in the period. 

“An expanding middle class will underpin medium to long-term economic growth, and stronger consumer spending boosts domestic demand, business confidence, and capital expenditure,” wrote HSBC chief economist Qu Hongbin. 

Hongbin said, “A rising middle class will also increase imports of goods and services, and attract foreign companies to invest in China.” 

An increasing middle class is the backbone of the country that will help it avoid the “middle-income trap,” and the government will also support a new order to transition the economy to more of a consumption-led one. “It’s not an exaggeration to say that the middle class can be the backbone of China’s dual circulation strategy,” they said.

HSBC’s report examines the structure of the three parts of the country’s wealth, the asset portfolios of households, the government, and the external sector and how they’re all changing. Here are the reports top findings: 

• China’s household wealth is set to grow by around 8.5% annually in the next five years, with household investable assets topping RMB300trn in 2025, equivalent to 300% of China’s GDP in 2020.
• HNWIs have investable assets of around RMB70trn (USD10.8trn) – that’s approaching the combined market cap of the Shanghai and Shenzhen stock exchanges at the end of 2020 (RMB79trn). Based on our conservative forecasts, this number will increase by 60% to RMB111trn by 2025.
• The middle class already numbers 340m people – bigger than the population of the U.S. – and is on track to grow over 45% by 2025 to more than 500m. A USD20 increase in daily spending by the newly made middle class would increase consumption by cUSD1.1trn per year, surpassing all but seven countries in terms of total middle class expenditure in 2020 (Kharas and Dooley, 2020).

China is growing more prosperous, and simultaneously it’s recovering faster from the virus pandemic than any other country. The middle class is becoming more financially sophisticated and has a broader range of investment opportunities.

A larger middle class with higher income levels will increase demand for quality goods, supporting the transition to a consumption-led economy throughout this decade. 

Perhaps the Centre for Economics and Business Research (CEBR), a UK-based consultancy group, is correct: China is set to overtake the U.S. by 2028 that could usher in the dollar’s demise. 

JPMorgan’s latest “Long-Term Capital Market Assumptions” report highlights an extended period of U.S. “exceptionalism” – in growth, interest rates and equity market performance – may be coming to an end. “As a result, we expect the dollar to weaken in most crosses over this cycle, with notable falls coming against EUR, JPY, and CNY.”

Americans must wake up to the uncomfortable fact that China is ahead of schedule at displacing the West as the world’s greatest economic superpower. 

Authored by Eva Fu via The Epoch Times,

More than 200 House Republicans are putting pressure on their Democrat counterparts to get down to the COVID-19 origins and hold the Chinese regime accountable for the pandemic coverup.

“We request that you instruct the appropriate Democrat committee chairs to immediately join Republican calls to hold the Chinese Communist Party (CCP) accountable for its role in causing the global COVID-19 pandemic,” stated a May 28 letter to Speaker Nancy Pelosi (D-Calif.).

The effort was led by House Minority Leader Kevin McCarthy (R-Calif), Minority Whip Reps. Steve Scalise (R-La.), and Rep. Elise Stefanik, the chair of the House Republican Conference and joined by 209 House Republicans.

Security personnel keep watch outside the Wuhan Institute of Virology during the visit by the World Health Organization (WHO) team tasked with investigating the origins of the coronavirus disease (COVID-19), in Wuhan, Hubei province, China, on Feb. 3, 2021. (Thomas Peter/Reuters)

The lawmakers said Pelosi had “falsely claimed” that “questions about the CCP’s liability” were a “diversion” – likely referring to Pelosi’s remarks from last May describing then-President Donald Trump’s blame on China as an “interesting diversion.”

“There is mounting evidence the pandemic started in a Chinese lab, and the CCP covered it up. If that is the case, the CCP is responsible for the deaths of almost 600,000 Americans and millions more worldwide,” they stated in the letter.

“[E]very American family that lost someone deserves answers about the origin of this terrible virus,” they continued, adding that “House Democrats’ ongoing refusal to allocate investigative resources to get those answers is an affront to them.”

“China can’t get away with this. Americans deserve answers,” Scalise wrote in a May 28 tweet.

The Epoch Times has reached out to Pelosi’s office for comments.

The lawmakers cited a growing pile of evidence that the virus may have escaped from a Wuhan lab, an idea that many media outlets and scientists had initially dismissed as a conspiracy theory.

A State Department fact sheet, released during the final days of the Trump administration, suggested researchers with the Wuhan Institute of Virology (WIV), located in the vicinity of the seafood market initially thought to be the outbreak’s origin, fell ill with COVID-19 like symptoms in autumn 2019. Recently, an undisclosed intelligence report also surfaced saying three WIV staff were sick enough to seek hospital care that November.

The P4 laboratory of Wuhan Institute of Virology is seen behind a fence during the visit by the World Health Organization (WHO) team tasked with investigating the origins of the coronavirus disease (COVID-19), in Wuhan, Hubei province, China, on Feb. 3, 2021. (Thomas Peter/Reuters)

Dr. Anthony Fauci, President Joe Biden’s chief medical adviser, recently backed a deeper virus probe and said that a lab leak possibility “certainly exists,” reversing comments he made in May 2020.

U.S. Health and Human Services Secretary Xavier Becerra, while not mentioning China or Wuhan directly, has called for the World Health Organization (WHO) to launch a “transparent, science-based” phase 2 COVID origins study “to fully assess the source of the virus and the early days of the outbreak.”

“To hold the CCP accountable,” the lawmakers said they need “access to the full range of tools available to congressional investigators, including subpoenas for documents and the power to compel key witnesses to give testimony.”

“To date, Democrat committee chairs throughout the House are refusing to allocate those resources for questioning about the origin of the COVID-19 virus,” the letter stated.

They also pointed to Beijing’s consistent refusal to share raw data and WIV lab records, which they said fit into the CCP’s pattern of deception that includes expelling journalists to COVID-19 disinformation and silencing of whistleblowers.

While the WHO-led mission in Wuhan ruled the lab accident theory as “extremely unlikely,” experts and world leaders alike have criticized the findings for lacking independence. Foreign experts on the panel requested original data and samples but were only supplied a summary from their Chinese counterparts.

On Tuesday, a Chinese representative told the WHO’s assembly that the “China part” of the origin-tracing “has been completed,” and suggested investigators look elsewhere.

Pressure to find out how the pandemic began has nonetheless continued to mount despite the Chinese denial.

Biden, in a rare statement on Wednesday, said he has ordered an intelligence inquiry regarding the virus’ origins and expected a report within 90 days. The U.S. Intelligence has “‘coalesced around two likely scenarios’ but has not reached a definitive conclusion on this question,” he said.

The Senate on Friday passed a bipartisan resolution calling for the WHO to act with “extreme urgency” and “get to the bottom” of the pandemic origin.

The House Republican lawmakers, in their letter, said the Congress should take virus hunt effort into their own hands.

“It is clear that WHO failed to produce the final word on the origins of the COVID-19 pandemic and the CCP’s liability. That task falls to us in Congress,” the lawmakers wrote in the letter.

A recent report by the United Nations Security Council found that a Turkish-made autonomous drone may have “hunted down and remotely engaged” enemy soldiers loyal to the Libyan General Khalifa Haftar. This bombshell report could be one of the first recorded instances where a terminator-style AI drone engaged and destroyed human targets on its own initiative. 

“Logistics convoys and retreating Haftar Affiliated Forces (HAF) were subsequently hunted down and remotely engaged by the unmanned combat aerial vehicles or the lethal autonomous weapons systems such as the STM Kargu-2 and other loitering munitions,” the UN report reveals. 

“The lethal autonomous weapons systems were programmed to attack targets without requiring data connectivity between the operator and the munition: in effect, a true “fire, forget and find” capability,” the report went on to say.

An image from the report provides a detailed infographic of the STM Kargu-2, calling it a loitering munition (also known as a suicide drone or kamikaze drone). This drone is outfitted with an explosive charge and uses AI and sensors to target enemy forces in a kamikaze attack. 

It’s unclear in the report if any soldiers were killed in the attack, but one would assume the loitering munition completed its mission. 

Zachary Kallenborn, a research affiliate with the Unconventional Weapons and Technology Division of the National Consortium for the Study of Terrorism and Responses to Terrorism, said, “the Kargu-2 signifies something perhaps even more globally significant: a new chapter in autonomous weapons, one in which they are used to fight and kill human beings based on artificial intelligence.” 

Kallenborn published a report last year for the US Air Force that argues a large-scale adversarial drone swarm attack could be classified as a “weapon of mass destruction” (WMD), a term commonly used to describe chemical, biological, or radioactive weapon capable of causing widespread death and destruction.

He is not the only one warning about killer AI robots. A group of the world’s leading AI researchers and humanitarian organizations are warning about the day when lethal autonomous weapons systems. 

Future of Life Institute released this video several years ago titled: “Slaughterbots.”

Futuristic robots that conduct war without human intervention have already been deployed to modern battlefields. The warnings are too late as the Pentagon takes aim with AI bots taking the kill shot. 

Authored by Mike Shedlock via MishTalk.com,

The gold commitment of traders report is bullish. Let’s start with a primer of what the COT report shows.

What is the COT Report?

COT reports show the positioning of commodity futures. There is a COT report for every commodity (gold, silver, lean hogs, live cattle, sugar, corn, the S&P 500, US Treasuries, etc.).

The reports are released every Friday but reflect futures positions as of the previous Tuesday.

In the futures world, the net position is always zero. For every long there is a short.

The Commodity Futures Trading Commission CTFC produces two sets of reports described below.

Legacy Reports

The legacy reports show large specs, small specs, and commercials. 

• Large specs are hedge funds, pension plans, and individuals trading in sizes deemed to matter. (Top Green Line) 

• Commercials (Top Red Line) consist of three groups. Producers who sell the the gold they produce, merchants who use gold (e.g. jewelry makers), and market maker hedgers who take the other side of trade. The producers are  net short and the merchants are net long. 

• Small specs are small traders. (Top Blue Line) 

Disaggregated Reports

Starting September 4, 2009, the CTFC produced a second set of reports called the disaggregated reports. 

• Commercials – Producers and Merchant/Processor/Users (Bottom Red Line)

• Swap Dealers (Bottom Green Line), the commercial hedger market makers

• Managed Money (Bottom Blue Line), in general represents the large specs.

• Other Reportables (Bottom Orange Line), in general represents the   the small specs.

Market Makers Have No Say in the Matter

The commercial market makers have no say in what they do.

Q: How So?

A: By definition there is a short for every long. Speculators place their bets, producers sell what they produce, merchants buy gold and take delivery. The market makers net the entire position to zero. They have no say.

I have not heard it phrased that way but that is the mathematical truism. 

Curiously, many gold bulls blame the market makers for being short and suppressing price although they have no say in what they do. 

You frequently hear statements such as “The market makers increased their shorts and will get blown out of the water if the price rises.”

They will not get blown out of the water because they are hedged, and they had no say in being short. 

It’s more accurate to state speculator long accumulation or liquidation as the driving force. 

What About Manipulation?

Theoretically, the commercial hedger market makers do not care which way the market goes because they are hedged. If they were not hedged, they would have blown up long ago. 

Gold rose from $250 to $2000 with the hedgers short nearly the entire way.

However, the commercial hedgers can and do manipulate the market when their hedges get out of whack or they see an opportunity for a quick gain. 

They have admitted to manipulation and have been fined for that manipulation. 

Cot Report Bullish or Bearish? 

1. In general, when the speculators are building their positions, the price of the commodity is rising. 
2. In general, when speculators are unwinding their positions the price of the commodity is falling. 

The lead chart shows the last two years with a couple of arrows that spotlight the generalities. 

But generalities can get you in trouble as the lead chart also shows. Here is a 20-year look. 

Gold Commitment of Traders 20 Years 

Notes On Generalities

• Don’t count on generalities. 

• The green arrows show periods of long liquidations in which the price of gold rose anyway. These are very bullish setups.

• The red arrows show periods when gold fell where long liquidation did not take place. 

• The blue boxes show wipeouts where speculators threw in the towel. That’s when commercial hedgers are likely to be net long. In general, those are excellent time to buy with the least risk. Yet, one must be patient as the red arrows show. 

Current Setup is Bullish

Q: How so?
A: Speculator position is building, but nowhere near extreme and the price is rising. 

Take another look at the lead chart.

Managed money started unwinding contracts (long liquidation) in February 2020 yet the price of gold, albeit with one dip, exploded higher. 

That was a very bullish setup.

Current speculator positioning is nowhere near extreme. Their position is building and the price is rising. 

This is a bullish setup. Those who expecting another washout (blue box) and waited for it missed much of the move.

Gold vs the Dollar

In related generalities, we hear things like “The dollar is rising and that is bad for gold“.

On a day to day basis the conventional wisdom is generally true. Long-term and even intermediate-term such statements are laughable.

Charts of gold vs the dollar highlight the silliness of conventional wisdom.

For discussion, please see Nonsense from the WSJ on Gold vs the Dollar

In the above post I also discuss conventional wisdom on jewelry demand and the real driver for the price of gold. 

The US dollar may be poised for a rally, but don’t presume gold is destined to sink in response. 

The rocky road between Tesla and the Chinese Communist Party looks like it is continuing.

The automaker is facing “further fallout” in China as some local governments are reviewing Tesla vehicle ownership among their staff, citing the vehicles posing potential security risks, according to Bloomberg. 

Government bodies have been asked to check and report on employees who own Teslas in Zhejiang and Guangxi. Employees are being “forbidden” from driving into certain official areas, due to supposed security risks, the report notes. 

Other official Chinese bodies are following suit. The China Meteorological Administration, for example, has already told its employees not to buy Tesla EVs and, if they have already, to transfer ownership of the vehicles. The Propaganda Department of the Chinese Communist Party (yes, this is actually what it is called) is also “checking whether any employees or their family own Teslas.”

Any continued major hiccups in Tesla’s relationship with China could be devastating for the automaker, who relies on the world’s largest auto market to help it redline production to meet Wall Street’s increasingly optimistic expectations. 

Recall, we noted in mid May that Teslas had been banned from some Chinese government compounds due to concerns about their cameras. 

Staff at some Chinese government officers were told not to park their Tesla cars inside of government compounds “because of security concerns over cameras installed on the vehicles,” Reuters reported in May.

“At least two government agencies” in Beijing and Shanghai have been told the same, according to the same report. It’s unclear how many employees and vehicles this had a direct impact on. 

Despite the fact that cameras and sensors are found in many vehicles, the restriction “only applies to Tesla cars”, the report noted. 

This isn’t the first time China has cited security concerns as a reason to ban Tesla vehicles. Back in March, China banned Tesla vehicles from military bases over similar concerns about the vehicles’ cameras. The ban was due to “concerns about sensitive data being collected by cameras built into the vehicles.”

Recall, before making somewhat of an about face on their recent attitude on Tesla (after Musk’s odd rebuke of bitcoin), Chinese state media had been anything but friendly to the U.S. auto manufacturer. 

We have been documenting the ongoing spat between Tesla and the CCP over the last few months, apparently (at least publicly) catalyzed by a protestor at the Shanghai Auto Show alleging faulty breaks on Tesla vehicles. This led to intense shaming by Chinese media, who called Tesla’s handling of the situation a “blunder” and suggested it could “inflict serious damage” on Tesla with the Chinese market. 

Authored by Charles Hugh Smith via OfTwoMinds blog,

That the era of stability has ended and a new era of increasingly chaotic volatility has begun is not on anyone’s radar as a possibility.

The standard debate about the future of the economy is: which will we get, high inflation or a deflationary collapse of defaults and asset bubbles popping?

The debate goes round and round in widening circles of complexity as analysts delve into every nuance of the debate.

A recent conversation with my friend A.T. raised a third possibility few seem to consider: increasingly chaotic volatility will be the new normal, as wild swings between inflation and deflation will increase in amplitude and ferocity as the system destabilizes.

Increasingly chaotic volatility is a classic sign of a system that has lost equilibrium and is attempting to regain its dynamic stability by going into overdrive.

The amplitude and violence of these fluctuations increase as each attempt to restore stability fails.

This loss of stability is not what people expect. The experience of the past 60 years has been that any hiccup in financial stability–a recession or market crash–is temporary, as the system responds with monetary and fiscal stimulus which quickly restores the system’s stability.

That the era of stability has ended and a new era of increasingly chaotic volatility has begun is not on anyone’s radar as a possibility.

Human physiology offers a useful analogy: blood glucose homeostasis, which is the system of insulin production and sensitivity that maintains the dynamic stability of glucose in our bloodstream for use as energy.

Insulin is produced as needed after a meal to regulate the level of glucose within the ideal bandwidth of homeostasis, i.e. the range of dynamic stability that optimizes insulin production and glucose levels. (3.5 to 5.5 mmol/L or 70 to 130 mg/dL)

In metabolic disorders, the body’s sensitivity to insulin declines, and in response the body increases the production of insulin to compensate for the decline in sensitivity.

As the disease progresses, sensitivity drops further, forcing the production of insulin into overdrive. Eventually this overdrive degrades the body’s ability to produce insulin and the regulatory system managing glucose levels crashes.

In the economic analogy, the system is responding to the decline of surpluses and efficiencies by pumping ever larger sums of new money into the system as quantitative easing (financial stimulus) and fiscal stimulus (more federal spending funded by borrowing).

Lower interest rates are intended to stimulate more private borrowing, another form of stimulus.

The initial massive dose of financial insulin has created enormous asset bubbles and a frenzied rush to restock inventories depleted during the pandemic.

The conventional media is echoing the Federal Reserve and other authorities who claim the resulting spike of inflation is temporary and will soon fade. Other analysts fear the scarcities are not transitory, as they reflect depletion of real-world resources that cannot be overcome by injecting more insulin (money) into the system.

Meanwhile, other analysts are looking at the skyrocketing leverage in the system, where million-dollar speculative bets are leveraged into billion-dollar bets that cascade into crashes and defaults when the bets go bad.

Leverage is difficult to assess as much of it is in the shadow / off-balance-sheet banking system, where exotic financial instruments are buried deep in footnotes and even experts have trouble unraveling the complex bets embedded in CDOs and various multi-party swaps.

So we have all the necessary ingredient for both inflation and asset-debt deflation, and this is the backdrop for the binary debate of inflation or deflation.

But perhaps the future is not one or the other, but a rapidly destabilizing system that will become increasingly prone to semi-chaotic swings of ever greater amplitude as regulatory agencies (central banks and Treasuries) attempt to flood the system with enough insulin to restabilize debt / leverage / asset prices that are increasingly desensitized to conventional stimulus.

As each new flood of stimulus pushes debt, leverage and assets higher, it further desensitizes the system, setting the stage for yet another collapse of speculative leverage, which then prompts an even larger flood of monetary insulin, which then triggers an even more dramatic crash when then causes an even large dose of monetary insulin, and so on until the system crashes.

Eventually the monetary insulin has none of the desired effects, and the mechanisms for producing more insulin (money) break down as well.

In other words, both critical mechanisms break down: the economy no longer responds to new injections of stimulus and the issuance of money no longer functions as desired.

As the financial system loses stability, injecting more monetary insulin only pushes the system further into chaotic volatility.

For three generations, the Warren Buffett investment strategy worked wonderfully: just buy Coca-Cola etc. and never sell. We see this same mindset in the never sell crypto, diamond hands of the current speculative mania.

If the financial system loses stability, this buy-and-hold strategy will fail. The winners in increasingly chaotic volatility will be those who no longer see any value in the inflation-deflation debate and no longer expect one or the other–or a return to stability. It won’t be that simple or that easy.

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Get ready for $5 per gallon gasoline – especially if you live in California.

At least, that was the contention of a new WSJ op-ed that claims higher taxes and environmental regulations are both driving up the price of gas. 

Author Allysia Finley notes that the average cost at the pump in California is now $4.18 a gallon, pointing out that in 2017, Democrats in the state’s legislature raised a tax on each gallon by 20.8 cents over three years. 

California drivers are now paying an astonishing average of 63 cents a gallon in state and local taxes, compared an average of 36.8 cents elsewhere in the country. 

The reasoning for the price hike was to repair the state’s infrastructure, but instead the proceeds have been “directed toward projects aimed at reducing greenhouse gas emissions, such as bike lanes and mass transit,” the op-ed notes.

The California Air Resources Board is also responsible for imposing a tax through its cap and trade program, which has added about 14 cents per gallon to the state’s average gas price. 

CARB requires that retailers sell “a special extra-clean-burning gasoline blend” which raises the price about another 10 cents per gallon. The Board “assigns carbon-intensity scores to hundreds of fuels” and requires refiners to meet a low score to blend lower-carbon fuels. If they can’t meet the threshold, they are forced to buy carbon credits, which also drives up the price of fuel.

The board awards these credits to utilities when their customers charge EVs at home. Utilities then turn around and sell the credits to refiners. Gas powered vehicle drivers are subsidizing thousands in incentives to EV buyers, the op-ed notes:  

So Californians can get a $1,500 rebate from their local utility on top of $2,000 from the state and $7,500 from the feds for buying an electric vehicle. Sweet.

Yet drivers of gasoline-powered cars are subsidizing the utility rebates through higher fuel prices. As the state’s carbon-intensity benchmark has fallen, prices for regulatory credit prices have soared—from $17 on average in 2012 to $198 in the first quarter of this year. An analysis last fall by Stillwater Associates estimated that the program would add 24 cents a gallon to the price of gasoline this year and 63 cents by 2030.

Refiners, as a result of the rules in the state, are switching to producing renewable fuels, which are now “much more profitable” due to regulatory and tax credits. But the infrastructure conversion that refineries will have to undertake to produce this fuel – such as Marathon Petroleum recent planning to convert a refinery in California – will once again wind up in rising prices for California drivers. 

In fact, many refineries have simply closed due to the burdensome regulations. This means that when the remaining refineries experience outages, price spikes are more severe. 

“Californian drivers can soon look forward to paying more than $5 a gallon at the pump as the state’s green mandates ratchet up and gasoline refineries shut down or convert to renewable fuels,” the op-ed concludes.