Month: May 2024

Authored by Craig Murray

The collective shrug with which the Western media and political class noted the attempted assassination of Slovakian Prime Minister Robert Fico has been telling.

Can you imagine the outrage and emotion that would have been expressed by Western powers if not Fico but a pro-Ukraine, anti-Russian leader within the EU had been attacked? The new orders for weapons that would have been presented to the arms manufacturers, the troops that would have been deployed, the sabers that would have been rattled?

Instead we have the media telling us that Fico opposed sending arms to Ukraine and opposed threatening Russia. We are told he did not accept the mainstream narrative on Covid vaccinations. The media do not quite say he deserved to be shot, but they come very, very close.

Fellow EU leaders followed correct form in making statements of shock and disgust at the attack on Fico, but they were formal and perfunctory. The “not actually one of us” message was very clear.

There are now an ordered set of neoliberal beliefs to which anybody in a Western nation participating in public affairs must subscribe, or they are beyond the pale. Not to subscribe to all of these beliefs makes you a “populist”, a “conspiracy theorist”, a “Putin puppet” or a “useful idiot”.

These are some of the “key beliefs”:

No. 1) Wealth is only created by a small number of ultra-wealthy capitalists on whom the employment of everybody else ultimately depends.
No. 2) The laws governing financial structures must therefore tend to concentrate wealth to these individuals, so that they may deploy it as they choose.
No. 3) State-created currency must only be concentrated in and distributed to private financial institutions.
No. 4) Public spending is always less efficient than private spending.
No. 5) Russia, China and Iran pose an existential threat to the West. That comprises both an economic threat and a physical, military threat.
No. 6) Colonialism was a boon to the world, bringing economic development, trade and education to people of inferior cultures.
No. 7) Islam is a threat to Western values and to world development.
No. 8) Israel is a necessary project for spreading Western values to the uncivilized Middle East.
No. 9) Security necessitates devoting very substantial resources to arms production and the waging of continual war.
No. 10) Nothing must threaten the military and arms industry interest. No battle against corruption or crime can override the need for the security military industrial complex to be completely unchallenged and internally supreme.

Dependent Orthodoxies

Listen to this Sky News report on the shooting of Robert Fico.

Not only do they come close to justifying it because he opposes aid to Ukraine, but they also casually imply that he’s being paid by the Kremlin.

This casual accusation is so prevalent in the West, and toxic. https://t.co/dccTYXKcGt

— Glenn Greenwald (@ggreenwald) May 15, 2024

Within this architecture of belief, other orthodoxies hang dependent, such as the correct way to respond to a complex pandemic, or support for NATO and impunity for the security services. (Support for Israel is probably better portrayed as a dependent point, but with the subject of Gaza so prominent at the moment I have figuratively moved it into the main structure.)

Any deviation on any point of belief is a challenge to the entire system, and thus must be eradicated. You will note there is no room whatsoever, within this architecture of thought, for values like freedom of speech or freedom of assembly. They simply do not fit. Nor is it possible within this architecture to incorporate actual democracy, which would give people a choice of what to believe.

Read the rest at Consortium News…

Authored by Thaddeus McCotter via American Greatness,

It is Memorial Day weekend. A time for us to commemorate and reflect upon the ultimate sacrifices given by our fallen citizen-soldiers and the enduring grief of their families and loved ones, which were and are selflessly borne in the defense of their fellow Americans and our free republic.

This spirit of self-sacrifice is rarely evidenced by far too many of the elected officials who will publicly eulogize these same fallen patriots and extend condolences to their families and loved ones. While exhorting others to emulate the example of those who made the ultimate sacrifice, these disingenuous politicians refuse to risk an ounce of political capital—not by opposing public sentiment—but by supporting it in the defense of our national security. Why? Because they fear alienating major corporations and their own party leaders.

While currently occurring primarily in “Blue States,” abetting communist Chinese subnational incursions into our states has been a bipartisan disgrace—and this is despite the bipartisan warnings of the military, intelligence, and law enforcement communities.

The complicit politicians’ reasoning is as follows: using taxpayer money to subsidize CCP-linked businesses locating in states will provide jobs and boost the economy of not only the local populace but also the profits of these companies’ American corporate partners. In sum, having failed to implement the necessary fiscal and free market policies to produce domestic economic growth, these politicians have latched onto these Chinese-linked companies as an electoral lifeline. Apparently, these politicians think the public believes a job is a job and will not care about the use of their tax dollars to import CCP-linked companies into our backyard.

To wit: my home state of Michigan, which during World War II was rightly lauded with the name “The Arsenal of Democracy.” The “greatest generation” of Michiganians not only fought in foreign fields, they toiled in machine shops’ and factories’ floors to produce the armaments needed not only for our forces but for our allies as well. One shining example of American industrial and military might was the Ford Motor Company’s Willow Run Facility (Air Force Plant 31).

As the Detroit Historical Society records, Willow Run was built in 1941 with $200,000,000 investment by the federal government. At its wartime peak,

…Willow Run was able to achieve remarkable production rates. At its peak in 1944, it produced a B-24 [bomber aircraft] every hour. By 1945, it was able to produce 70 percent of its B-24s in two nine-hour shifts, with pilots and crew members sleeping on 1,300 cots as they waited for the B-24s to roll off the assembly line. The Ford Motor Company eventually produced half of their 18,000 total B-24s at Willow Run.

Yet, over time, even as the threats to America ebbed and flowed, morphed and intensified, Willow Run ebbed in the minds of policymakers and the public. In 1953, Willow Run changed hands by lease and, ultimately, by deed from Ford to General Motors; and by 2010, Willow Run plant became a casualty of GM’s bankruptcy proceeding:

Most of the plant was demolished in 2014 but a 175,000 foot portion was offered to the Yankee Air Museum, housed in a hangar until a 2004 fire. After successful fundraising, the Museum reopened in 2017 in the historic building.

“The American Center for Mobility claimed the remainder of the massive site and in 2018 opened a proving ground and research facility for self-driving cars, the only one in Michigan and one of ten in the U.S., as designated by the U.S. Dept. of Transportation.

What is of note to the present discussion is this: back in 1941, the U.S. government expended taxpayer dollars to an American corporation to provide employment in making armaments for the defense of our nation.

Today, state governments are expending taxpayer dollars to CCP-linked companies that use the mantra of “jobs” to deflect from the potential to undermine our national security. All this for a talking point how “[Politician Name] Created [X Number of] Jobs.” (Sadly, the economic mendacity of this message remains lost upon far too many of our citizenry.)

And the offending politicians show no signs of slowing in their feckless endangering of our national security. As the Daily Caller’s Nick Pope reports:

Michigan Democrats shot down an effort to significantly expand the vetting process for China-tied companies seeking to cash in on state incentives earlier in May.

Republican lawmakers in both chambers of the state’s legislature pushed budget amendments that would have prohibited the use of state funds to subsidize corporations originating from adversarial countries like China, but neither amendment made it into the budgets that passed on May 9 and May 15. House and Senate Democrats leveraged their control of each chamber to shoot down both amendments.

The reason for the partisan divide is the support of the democratic administration of Governor Gretchen Whitmer for “Gotion, a company looking to build a subsidized facility in the Grand Rapids area… The state announced in October 2022 that it would be providing Gotion with incentives worth $715 million to attract its $2.4 billion factory to Michigan.”

This is despite the fact that Gotion

…is tied to China and the Chinese Communist Party (CCP) via its parent company, Gotion High-Tech. The Daily Caller News Foundation has reported extensively on the company’s links to China and the CCP, which include Gotion High-Tech’s employment of more than 900 CCP members as of 2022 and the fact that a visiting delegation of CCP officials set up a talent recruitment work station at Gotion’s California headquarters in 2017.

This is not a one-off by the wholly Democrat-controlled Michigan legislature, who, according to state Senator Jonathan Lindsey (R-17):

Governor Whitmer and the Democrats in Michigan are so married to this idea of taking Michigan taxpayer dollars and giving them to these corporations with ties to China, they refuse to budge. Last year they voted against preventing tax dollars from supporting child slave labor in China. This year they voted against reviews and limitations on those dollars flowing toward our global adversaries. What they’re doing is absolutely wrong for the people of Michigan.

As Michigan Senate minority leader Aric Nesbitt (R-20) further points out, “It’s shocking to watch the Democrat majority in Michigan hand over hundreds of millions in tax dollars from struggling Michigan families to multinational corporations that pledge allegiance to the Chinese Communist Party in their corporate documents.”

Yet, what of the Ford Motor Company, the quintessentially American corporation that was a major artery pumping munitions and materiel through the heart of the Arsenal of Democracy and into our military and allies’ hands? Like the Willow Run plant, Ford has another project seeking public subsidies. Unlike the Willow Run plant, however:

…Ford’s licensing deal with CATL, a Chinese battery manufacturer, has also drawn scrutiny. Ford planned to open a facility in [Michigan] – with the help of state incentives in excess of $1.5 billion – where it would manufacture batteries using CATL’s technology and know-how, but the company has since scaled down its planned factory, according to CNBC.

Perhaps it is an elected official and Navy veteran, State Representative Andrew Beeler (R-64), who, being well versed in the self-sacrifice made by our men and women in uniform and their families, so well expressed his consternation and concerns:

I didn’t spend years in the Navy pushing back against the Chinese Communist Party in the South China Sea only to come to the Michigan Legislature and give them government handouts… But House Democrats voted to let hostile foreign powers keep spreading influence and gathering intelligence on Michigan taxpayers’ dime.

Given the bipartisan opposition to spending taxpayer money to subsidize CCP-linked companies, one might be tempted to chalk this up to a case of imbecilic political hacks cutting off their nose to spite their face and hoping no one notices. Granted, it would not be the first time. Yet this is far worse. These useful elected idiots are spending taxpayer dollars to buy the CCP the razor that barbaric regime will use to cut our throat. That this is happening in Michigan could well constitute a final—suicidal—indignity to the arsenal of Democracy.

That this is happening at all constitutes an unconscionable affront to the citizen-soldiers who gave their last full measure of devotion for us.

Memorial Day 2024… honoring the men and women who bravely fought and died while serving in the US military. Across the country, many Americans will visit cemeteries and hold memorials for the fallen, and participate in patriotic parades. 

Years down the road, or even by the middle of this century, will future historians and populations look back on this moment with a sense of regret, loathing, and disgust? 

Will future generations of Americans one day be honoring the fallen of a World War 3 nuclear-armed confrontation with Russia? At this moment, Washington planners keep marching the nation (and the world) toward the abyss, seen in public messaging like the following…

When we hold the @NATO Washington Summit in July, we’ll take tangible steps to increase NATO’s role in building a capable Ukrainian force, supporting its ongoing reforms, better integrating Ukraine into the Alliance. pic.twitter.com/dxYxnAbWlP

— Department of State (@StateDept) May 19, 2024

What will the children and grandchildren of this current generation say when they look back and reflect on this moment?

Will there be tens of thousands, or hundreds of thousands more fallen to memorialize on Memorial Day 2050?

Let us hope and pray this is not the case.

By Peter Tchir of Academy Securities

Today we will just highlight a few things:

• Thanks to all my colleagues and everyone who has served, and I want to spend an extra moment to honor those who made the ultimate sacrifice.
• If you missed this month’s Around the World, it is an important read as it outlines Academy’s take on:
  • Israel commencing operations in Rafah.
  • Russian forces advancing on Kharkiv.
  • Xi meets with Putin in China.
  • U.S. force reduction in the Sahel.
• While we cover the Xi and Putin meeting in the Around the World, I think there is also a case to be made that we are entering a new “phase” in the war in Ukraine. One where Russia will attempt to use social media to convince everyone that “peace” should be achieved, and where Russia is able to hold on to much of the land it occupies in Eastern Ukraine. It seems to be more than a coincidence that Putin appears to be publicly amenable to this sort of outcome after the meeting with Xi. It would also not be surprising given the information learned by observing how much social media seems to be able to shape political outcomes in the U.S. (the war in Gaza as a prime example). Could we be at the early stages of where we see the sort of deal we have been expecting for some time?
  • Our base case is that both sides will ultimately get forced into settling for some agreement that satisfies both countries, while not being particularly appealing to either country. Basically, Ukraine will cede some land and receive some of Russia’s frozen dollar reserves as payment, enabling them to pay some debts and embark on the reconstruction of their country.
  • Any such deal will be good for Europe as the rebuilding efforts will create demand for labor and equipment, but it will also be inflationary (at least initially). Globally, there would be some excitement as one of the Geopolitical Risks is taken off the table, but ultimately, not much will change as new global orders have already taken shape and will continue to do so, regardless of the outcome with Russia and Ukraine.
• Overall, Geopolitical Risks remain topical. In our first Geopolitical Risk Perception vs Reality, we discussed the difficulty of incorporating geopolitical risk into “actionable” strategies. We focused on Cyber, Trade War, Commodities, the Middle East, Russia, and “wildcard” risks. We continue to see the markets underestimating the risk on the trade war and commodity front, while other risks seem to be perceived reasonably accurately relative to our view of the actual risk. If anything, Russia may have drifted into the “green” (potential positive surprise) from what we considered a neutral risk.
• On the markets front, a few things seem to pop up again and again in discussions:
  • How are markets so strong with all of the Geopolitical Risks? We have tried to address that in the Risk vs Perception piece, and also in Hedging the Unhedgeable. There is no easy answer to this one, though I think the market has done a reasonable job and I’d look to own commodities and companies that would benefit from reconstruction in Ukraine or an effort to extract AND process more commodities “domestically” (either in the U.S. or with countries that we are very comfortable with politically and geographically – i.e. better control and access to those countries).
  • Last week we suggested that the market was Too Narrowly Focused on inflation and the minutiae of Fed policy. After a week of conversations, I don’t think that is the case. The market participants I speak with all seem to have coalesced around a reasonable view on the Fed:
    • We will get a cut or two this year, and a few more next year. No one seems to care much about whether it is 0, 1, 2, or 3 this year.
    • No one is really worried about the possibility of a hike, and people are consigned to the view that if we get a hike, it will only be because the economy remains incredibly strong, so it won’t be a big deal.
    • No one, in their main analysis and positioning discussions, is watching the tape nervously as economic data comes out.
    • Yet, the markets seem to respond to each headline as meaningful. Since I find it so difficult to identify people who care that much about any given headline, I can only assume that it is the “machines” that care. That algos and quant models are driving the show. Not sure whether that is good or bad, but it goes a long way to explaining the difference in what I see and hear versus what is actually happening in and around economic data. I do have to admit that the Citi Economic Surprise Index bounced last week and is less negative, which helps to explain why the 10-year ended the week near the high end of our range of 4.3% to 4.5%.
  • More and more notes about complacency and low volumes. I saw somewhere that SPY, a large S&P 500 ETF, had its 2nd lowest volume day in a year (only higher than the early close during Thanksgiving and one of the lowest full day volumes in years). VIX dropped back to 12. Anemic volumes may be helping push markets higher, but they are giving little confidence to investors, leading me to wonder how much the “machines” are in charge.
  • AI remains the big story. Having said that, I’m not sure how many people had NVDA up roughly 10% with the Nasdaq 100 down on Thursday. That certainly wasn’t a scenario I thought was plausible, yet It happened. Once again, it makes me wonder about market participation and liquidity.

As we spend time with friends and family at barbeques this weekend, these are the thoughts/questions we are facing as we start the week, and for many, there are no obvious answers. Maybe we continue to grind higher on stocks, setting new records (most barely above the prior record or where we were months ago), or maybe something shakes things up (likely a trade related or geopolitical event, that can be tied directly to the earnings prospects of companies).

Rashida Tlaib, a Congresswoman from Detroit and a member of the Democratic Socialists of America, spoke over the weekend at the “People’s Conference for Palestine,” linked to the Popular Front for the Liberation of Palestine (PFLP).

This group, an Arab nationalist movement with Marxist-Leninist ideology, is designated as a Foreign Terrorist Organization by the US. It has public-facing arms, such as Samidoun, working on behalf of the group, and active cells in many countries in Europe and North America. 

During the Saturday speech, Tlaib referred to members of the audience as the “squad” and demanded President Biden establish a “red line” on Israel’s counteroffensive in Gaza. She criticized the president for “attacking the authority” of the International Criminal Court, which issued an arrest warrant for Israeli Prime Minister Benjamin Netanyahu last week over war crimes and crimes against humanity in Israel’s mission to eliminate Hamas in Gaza. 

Among the speakers was Wisam Rafeedie, an activist linked to PFLP. The US State Department has designated the PFLP as a terrorist organization. 

According to the Director of National Intelligence, PFLP is a terrorist group based in the Gaza Strip and the West Bank. It unites Arab nationalism with Marxist-Leninist ideology. It promotes the destruction of “Israel as integral to the struggle to remove Western capitalism from the Middle East and ultimately establish a Communist Palestinian state with Jerusalem as its capital,” the DNI writes on its website. 

DNI provides more valuable insight into the terror organization: 

The PFLP fostered links and carried out attacks with leftist militant groups across the world during the 1970s and was actively involved in the Second Intifada from 2000 to 2005, during which the group carried out suicide operations and launched multiple joint operations with other Palestinian terrorist groups. The PFLP’s operational tempo has since declined, with only two attacks in the last five years, most recently in 2019 that killed an Israeli teen and injured multiple others.

“I don’t need to tell you that you’re on the right side,” Tlaib said in her speech in Detroit, adding, “I don’t need to. But I’ll be damned if I wait ten years before they apologize to all of you for doing what was right at this moment.”

A Sitting-Member of Congress, Rashida Tlaib was a Speaker yesterday at the “People’s Conference for Palestine” which was Funded and Supported by the Popular Front for the Liberation of Palestine, a Communist-Terrorist Group which is Headquartered in the Syrian Capital of… pic.twitter.com/K5QP0FebvI

— OSINTdefender (@sentdefender) May 26, 2024

A recent statement by Israel’s Ministry of Defense specifies, “Samidoun organization was designated as a terrorist organization as it is part of the PFLP.” 

“Representatives of the organization are active in many countries in Europe and North America, led by Khaled Barakat, who is part of the leadership of PFLP abroad. Barkat is involved with establishing militant cells and motivating terrorist activity in Judea & Samaria and abroad,” MoD said. 

Barakat is married to leftist radical Charlotte Kates, the coordinator of Samidoun and a Rutgers University School of Law graduate. 

According to NGO Monitor, PFLP and Samidoun “had a strong presence at encampments, demonstrations, and riots on American college campuses. Students have been documented carrying PFLP posters, flying the PFLP flag, hosting PFLP-linked speakers, and reading PFLP publications.” 

The degrees of separation between PFLP and Samidoun are only a few steps, and now it should become increasingly apparent a terrorist group has been directly/indirectly fueling the chaos across America’s elite colleges and universities. Yet, the Biden administration could care less, and the FBI is nowhere to be found publicly.  

As for Tlaib speaking at the PFLP-linked event in Detroit, we’ll refrain from adding our commentary. Instead, here are some reactions from X users:

Rashida Tlaib should be removed from Congress.

— Gunther Eagleman™ (@GuntherEagleman) May 26, 2024

When did this become okay?

— TaraBull (@TaraBull808) May 26, 2024

There’s even a PFLP member speaking to the conference today at 1pm ESThttps://t.co/PuH8dPSWDb

— Eitan Fischberger (@EFischberger) May 26, 2024

The same popular front who hijacked planes? https://t.co/CwkhRnswAK

— Harry Theocharous (@TheocharousH) May 26, 2024

Yeah…she needs to go. An enemy of the U.S. has no place in the halls of Congress.

— James Lasher (@TheJamesLasher) May 26, 2024

Rep Tlaib should be removed from all House of Representatives committees and censured. Tlaib believes she say or do whatever she wishes, supporting a designated terrorist organization, Speakers Johnson should take action.

— Jeff Wright (@1991Wolfpack) May 26, 2024

Where is the FBI?

Authored by John Weeks via The Libertarian Institute,

Modern nation states have developed an impressive symbolic innovation to memorialize their war dead, the tomb of the unknown soldier:

“No more arresting emblems of the modern culture of nationalism exist than cenotaphs and tombs of Unknown Soldiers. The public ceremonial reverence accorded these monuments precisely because they are either deliberately empty or no one knows who lies inside them, has no true precedents in earlier times…The ancient Greeks had cenotaphs, but for specific, known individuals whose bodies, for one reason or another, could not be retrieved for regular burial.” [Emphasis added]

According to Arlington National Cemetery, which has hosted “The Tomb of the Unknown Soldier” since 1921, its creation addressed a longstanding problem:

“Through the ages, one of the consequences of warfare has been large numbers of unidentified dead.”

Another consequence of warfare is that combat veterans return home. They present a similar problem, one that is addressed through our symbolic representations of warfare.

The living experience themselves as obligated to the dead, but also responsible to safeguard themselves against death’s pollution. The French sociologist Robert Hertz (who died in combat during World War I) described “primitive” societies:

“The period which follows death is particularly dangerous in this respect; that is why the corpse must be exorcised and be forearmed against demons. This preoccupation inspires, at least partly, the ablutions and various rites connected with the body immediately after death: such as, for instance, the custom of closing the eyes and other orifices of the body with coins or beads; it also imposes on the survivors the duty of keeping the deceased company during this dreaded period.”

Our enlightened society is no longer characterized by widespread, professed belief in demons. But we continue to act as if we believed in such entities, especially concerning the dead. Coins placed on eyes is no longer the standard, but eye caps are routinely inserted to keep them closed. Regardless of whether one is a theist, deist, atheist or whatever else you’ve got, no one wants dead eyes “looking” at them.

The modern funeral industry has created an intricate series of rituals for the “dreaded period” between death and burial. Fun fact, modern embalming has its roots in the American Civil War. The next time someone tells you war is great because it leads to innovation, think of a field of corpses and the rise of embalming chemistry.

This responsibility and revulsion is true both within the family and within our nation, which masquerades as a Great Family with its Founding Fathers, daughters of liberty, bands of brothers, Uncle Sam and president as Great Father. Unknown war dead must be cared for and kept from polluting us somehow. The tomb of the unknown soldier fills this need. And in a nation with millions of people, even the identified war dead are unknown to most members of the national community.

Hertz said:

“The ideas and practices occasioned by death can be classified under three headings, according to whether they concern the body of the deceased, his soul, or the survivors.”

The Tomb of the Unknown Soldier assures survivors that the bodies of the war dead have been appropriately “exorcised and forearmed against demons,” their souls have been secured passage to a glorious afterlife and the living have avoided the pollution they can cause.

But what of our returning combat veterans? If war is hell, then these are men and women who have been to hell and back. Like Odysseus in The Odyssey and Aeneas in The Aeneid, they descended to the Underworld, gained powerful knowledge and then returned to the world of the living.

Their bodies survived the war, but their souls have been damaged or even killed. Their souls need healing or resurrection. At the same time, they are a threat to the civilian psyche. Our society does a terrible job of healing and resurrecting our soldiers’ souls, as evidenced by the fact that four times as many combat soldiers and veterans of the Global War On Terrorism have committed suicide as have been killed in combat. But our society does a great job at protecting the civilian psyche.

How many Americans realize that during World War II the U.S. Army raped its way across Europe? Spielberg didn’t put that in Saving Private Ryan, did he? There’s a lot that wasn’t put in that movie. There’s no torture, no suicide, and no soldiers murdering commanding officers. In one scene, the American GIs actually allow a Nazi prisoner to go free. I personally know of a World War II veteran who walked out of the theater after that absurd fantasy appeared on the screen.

There are also no Soviets in the film, even though the Soviet Union killed most of the Nazis.

Saving Private Ryan is representative of American portrayals of war. Despite its reputation for realism, it is extraordinarily detached from the experiences of our soldiers. And that’s because it isn’t for them. It’s for the civilians who never descend to the Underworld. Our culture encourages us to believe that our military is awesomely destructive. But it also encourages us not to dwell too much on all the actual death being dealt out. And certainly not to realize it rapes and tortures. That’s what the enemy does!

That veteran who stormed out of Saving Private Ryan liked to say, “There are no autopsies in war.” We can extend that to say there are no autopsies of the souls of the soldiers who return from war. We prefer their souls embalmed, made up, and buried quickly. A war veteran’s daily immersion in our culture is like going to his own funeral and hearing a priest eulogize someone completely alien to him.

On Memorial Day, let’s do our veterans the honor of recognizing that while we value their service and can romanticize their heroics, we are only capable of celebrating their return. When it comes to confronting where they’re returning from, we really cannot handle the truth.

By Michael Every of Rabobank

History, Humility, and Wishful Thinking

The UK election and the “I will protect you, but forgot my umbrella” Tory campaign have both been shaken up by its pledge to bring back conscription for 18-year-olds. This is seen as a desperate gamble and sad joke by many commentators, and even ex-military leaders say it’s silly to enroll unskilled, unwilling young adults when the armed forces need more equipment of all sorts, which the recent 2.5% of GDP defense spending pledge falls very far short of. Yet the joke must also be on those laughing when the global backdrop is so very serious.

Stop thinking about Friday’s US PCE deflator data for a moment and look at the bigger picture. The main Bloomberg headline today is the G7 warning China over its trade practices. They want “balanced and reciprocal collaboration,” and will “consider taking steps to ensure a level playing field.” The US is already going to let tariff exclusions on hundreds of Chinese items expire, and the EU may be leaning towards a high tariff on Chinese EVs. Elsewhere, China is asking South Korea to maintain stable supply chains, as it moves closer to the US, and even Brazil, Chile, and Mexico have recently raised tariffs on Chinese steel.

In short, global trade war looms, and as Bastiat noted, “If goods don’t cross borders, soldiers will.” The problematic inverse is that even Adam Smith implied if some goods cross borders, soldiers don’t need to, and others won’t be able to when needed.

It’s not just trade war to fear. China just finished a huge military exercise that clearly rehearsed a blockade of Taiwan and says it will no longer accept US congressional delegations to Taipei: one including the CEO of Nvidia just opted to visit anyway. Tens of thousands of Taiwanese are on the streets protesting a “parliamentary coup” led by the pro-China KMT party and its ally aimed at weakening the new president, further stirring the national-security pot.

Russia apparently wants a ceasefire in Ukraine, which would allow it to keep all it has already taken. Of course it does: those are the most attractive terms available for anyone in that position. However, a further escalation in fighting still seems more likely. Indeed, NATO chief Stoltenberg now backs allowing Ukraine to use Western weapons to hit Russian forces inside Russia’s pre-2014 territory, which will only deepen the perception in Moscow that it is at war with the West and not just Ukraine. Russian responses obviously could range from the military within Ukraine, where fears of the potential use of tactical nuclear weapons may again re-emerge following recent military drills with them, but likely in the grey zone of sabotage and economic warfare wherever they can hurt most – which for the EU is lots of places.

The US just lifted its ban on arms sales to Saudi Arabia. The Israel-Hamas war continues despite the recent rulings of the International Criminal Court and the International Court of Justice, the latter giving a more nuanced legal opinion than many initially read into it. Israel’s fight with Hezbollah in Lebanon continues to escalate in tandem. Related Houthi attacks just claimed their first (unsuccessful) strike on a ship in the Med: others will follow, maybe closing off another major international waterway; and when do the Houthis share that military technology with forces in East and West Africa who want to block Western shipping going that alternative route rather than via Suez? Freight rates already spiking again, with warnings this can get worse. Relatedly, Russia just struck a Red-Sea-port-for-guns deal with Sudan, meaning they now have belt of influence and boots on the ground right across the Sahel.

If you have time today, read ‘Confronting Another Axis? History, Humility, and Wishful Thinking’ by Peter Zelikow. It’s the most detailed historical argument yet showing what I flagged in 2018 as a key risk markets were ignoring – that the US would see a coordinated pushback from China, Russia, Iran, and North Korea, which it would be ill-placed to resist with its current economic structure. The author says, “a serious possibility of worldwide warfare may be only in the 20–30% range. But that assessment is not reassuring.” Indeed, it isn’t!

While he agrees US defense supply chains will be rebuilt –transforming it, global trade, and markets– the next 1-3 years will prove exceptionally perilous as this all happens. He specifically warns, “The US does not have the strategic initiative in the present conflict. It is reacting to choices made by others, which its analysts may not anticipate and understand… I believe the anti-American partnership has probably decided to double down. They are probably preparing in earnest for a period of major confrontation.”

Yet markets are wishing for large rate cuts. The only way this makes sense is the geopolitical argument of keeping debt servicing costs low enough to expand military production: but today that implies locking in higher inflation too. Hence my view that we will need a hybrid tight-and-loose fiscal-and-monetary policy, as was the case prior to our roll-out of neoliberal global financialisation in the 1980s.

Those in the real economy cannot be as blithe as markets: the physical economy is changing. We can see that in the global trade war that looms, and the policies being offered in the UK and the US.

And if the politics and the physical economy must change more, logically so must central bank architecture: it’s impossible it remains the same against that kind of backdrop. Coincidentally, an Australian senator recently lashed out at the RBA in a manner applicable to all Western central banks now:

“The RBA is clueless as to how monetary policy works. In 1985, Paul Keating lifted government capital controls. This meant that private banks were no longer restricted as to how much money they could borrow from offshore banks and what they used it for.

The private banks had $8bn in foreign debt in 1985. By 2008 they had $800bn in foreign debt. This lifted house prices from 4 times average earnings to around 12 times average earnings. Banks now lend 70% to households and only 30% to business… The 1937 Banking Royal Commission recommended that the central bank should control the volume of credit in the system as opposed to private banks.

In 1992, the RBA was made independent, and APRA was split off in the late 1990s. It’s a sad reflection on just how little monetary policy is understood that RBA officials had no idea as to what I was talking about when I asked why they don’t establish an infrastructure bank.

It beggars belief that the RBA could print $300bn to pay people to stay at home and get brainwashed by State Premiers but not actually set about funding Australia’s infrastructure, which would actually solve our productivity crises, which is what is driving inflation.”

Just include national security in with ‘infrastructure’, and you are where I’ve said we would be: which is a long, long way from thinking that US personal consumption expenditure is the most important global metric to be focusing on.

Of course, financial markets will Keep Calm and Carry On: because they are in denial; 20-25% is ‘not worth trading’ as a tail risk; they have no idea how to translate into their specific assets; if they take the WW3 view, they might as well just ‘Buy All the Things’ anyway; and, as Zelikow puts it, “It is really hard, cognitively and institutionally hard, to hold open a doorway to the emptiness of what we don’t know and adapt to changing circumstances.”

Authored by Naveen Athrappully via The Epoch Times,

Friday set a new record for the most airline passengers screened by U.S. Transportation Security Administration (TSA) officials in a single day, according to the agency.

“On Friday, May 24, 2,951,163 individuals were screened at checkpoints nationwide, surpassing the previous record on Nov. 26, 2023. We recommend arriving early,” the TSA said in a May 25 post on the social media platform X.

On Nov. 26 last year, the TSA screened a slightly lower figure of 2.90 million travelers. The third-highest screened day was on May 23, when officers screened 2.89 million people.

The record numbers come days after the TSA said it was prepared for the “highest passenger volumes the agency has seen at airport security checkpoints nationwide during this summer’s travel season,” according to a May 16 press release. The summer travel season begins on the Memorial Day weekend and runs through Labor Day.

The agency forecasted that May 24 would be the busiest travel day of the Memorial weekend, anticipating almost three million passengers.

For the week of May 23-29, the TSA expects to screen over 18 million passengers and crew, which would be a 6.4 percent increase in checkpoint volume compared to the same period last year.

TSA Administrator David Pekoske said the agency was coordinating with airport, airline, and travel partners and was “more than ready” to handle the expected high travel volumes.

“We are also continuing to deploy state-of-the-art checkpoint technology that increases security effectiveness, efficiency and enhances the passenger experience and our retention and recruitment numbers are the highest they’ve ever been.”

Airlines for America (A4A), an association of airline companies, also predicts a “record-setting” summer season for air travel this year.

In a May 14 press release, A4A forecasts that U.S. airlines will carry 271 million passengers worldwide this summer season between June 1 and Aug. 31, a 6.3 percent increase from last summer. If the prediction comes true, it’ll eclipse the previous record set last year when 255 million individuals went airborne.

To accommodate higher demand, U.S. carriers will be offering more flights this summer. Airlines have planned more than 26,000 scheduled flights per day for the season, up by over 1,400 from 2023.

“Our carriers have adjusted their schedules to adapt to current realities of our National Airspace System (NAS), helping to alleviate some of those pressure points and making for a smooth summer travel season,” A4A’s senior vice president of communications, Rebecca Spicer, said.

Profitability of Airlines

The higher U.S. airline passenger numbers come as the industry attempts to consistently match pre-pandemic operating revenue levels.

Between 2013 and 2019, operating revenues netted more than $200 billion every single year. Revenues in 2018 came in at $240 billion, which increased to $248 billion in 2019.

In 2020, following worldwide restrictions and lockdowns, revenues crashed to $131 billion, then rose to $194 billion in 2021, and netted nearly $280 billion in 2022. However, revenues fell to $223 billion in 2023.

The International Air Transport Association (IATA) is expecting the global airline industry’s net profits to hit $25.7 billion in 2024, a slight improvement from 2023’s $23.3 billion. This points to a 2.7 percent net profit margin rate for the year.

Willie Walsh, the IATA’s director general, pointed out that the $25.7 billion net profit in 2024 is a “tribute to aviation’s resilience” given the major losses the industry suffered in recent years.

However, industry profits “must be put into proper perspective,” he said. “A net profit margin of 2.7 percent is far below what investors in almost any other industry would accept … On average, airlines will retain just $5.45 for every passenger carried. That’s about enough to buy a basic ‘grande latte’ at a London Starbucks.”

Even though operating profits in 2024 are expected to jump by 21.1 percent, net profit margins are only projected to rise by 10 percent, which the IATA blames mostly on increased interest rates.

New Screening Protocols

Meanwhile, the TSA announced that airline passengers could expect to encounter some new checkpoint technologies this year.

For instance, the agency is using the second generation Credential Authentication Technology (CAT-2). Like its earlier version CAT, the updated CAT-2 will confirm the authenticity of a passenger’s identity with their photo ID as well as flight details and pre-screening status.

However, the updated version comes with new camera features, with passengers potentially having to agree to have a photo of them taken in real time for identity verification. This is done to ensure that “the person standing at the checkpoint is the same person pictured on their ID,” the agency said.

The TSA highlighted that photos taken will not be stored or saved after a positive ID match has been made. However, the agency said it may retain the image for conducting tests to evaluate tech effectiveness.

“Passengers who do not want their photo taken may ask the Transportation Security Officer (TSO) for a manual ID check without penalty and losing their place in line.”

Multiple airports have also installed Computed Tomography (CT) units, which the agency claims will “significantly improve” scanning and threat detection of carry-on bags. CT units generate a 3D image of passengers’ bags, thus reducing the need to physically search their contents.

The TSA has so far deployed 2,050 CAT units at 223 airports, out of which 238 units are the updated CAT-2 versions. The agency has set up over 820 CT units at more than 240 airports.

After a nearly one-month delay, NASA and Boeing are moving forward with the CST-100 Starliner launch despite a helium leak. This crewed mission will mark the first time the spacecraft ferries astronauts to the International Space Station.

On Friday, NASA and Boeing officials told reporters that a problematic valve was replaced after the scrubbed May 6 launch attempt. Shortly after, engineers found a “small” helium leak with Starliner. 

NASA Associate Administrator Ken Bowersox said, “It’s taken a while for us to be ready to discuss” the helium leak problem. 

“It’s so complicated. There are so many things going on. We really just needed to work through it as a team,” Bowersox said.

NASA and Boeing say a defective seal caused the leak in one of the flanges of the spacecraft’s helium propulsion system. It was not immediately clear whether the seal was installed improperly or manufactured incorrectly.

Steve Stich, the manager of NASA’s Commercial Crew Program, explained the Starliner can still fly with the helium leak:

“Should we be wrong about something, we could handle up to four more leaks.

“And we could handle this particular leak if that leak rate were to grow, even up to 100 times in this one (propulsion module).”

Stich pointed out that NASA has “flown vehicles with small helium leaks” before, including “a couple of cases” from Elon Musk’s SpaceX’s rockets. 

Another review of the leak is slated for Wednesday. The rocket and capsule are set to be rolled out onto the launch pad at Cape Canaveral Space Force Station in Florida on Saturday. 

Via SchiffGold.com,

In the fight against inflation, is it the Fed or the Treasury that calls the shots? The answer is, it’s both.

The Fed raises interest rates to make loans less attractive and bring inflation down, but The Treasury has its own set of magic tricks to artificially “stimulate” or “tighten” the economy as well.

One of them is a Treasury buyback program, something that was just reincarnated for the first time in about two decades. This is where the Treasury repurchases its own outstanding securities from the open market to increase liquidity, stoke, demand, and bring down yields. 

If Treasury markets can’t be reigned in, the Fed expands its balance sheet by buying those Treasury securities to add liquidity and stability. These “open market operations” are usually the “money printing” that people are talking about happening at the Fed. “QE” refers more specifically to operations where the Fed is buying other assets beyond just Treasury securities, as occurred in the 2008 crisis and during COVID. But the Treasury buying back its own issued debt is, in essence, QE by another name.

When interpreting Treasury yield data, remember that this market is being heavily manipulated by Yellen – she’s conducting the Treasury versions of both Operation Twist and QE, w/ overreliance on short-term issuance and now buybacks; term premium is now virtually nonsensical: pic.twitter.com/RH8UixQOMK

— E.J. Antoni, Ph.D. (@RealEJAntoni) May 1, 2024

While this occurs outside the halls of the Federal Reserve itself, Treasury buybacks are merely a different way to print money from nothing. The US is running a deep, sustained fiscal deficit with no true debt ceiling — so the Treasury buys back its own securities by issuing new debt, which it creates out of thin air. With spending far exceeding revenue, higher interest rates plus more debt means that fiscal deficits accelerate. The short-term stimulative effect of this somewhat offsets the Fed’s tightened monetary policy but digs a deeper hole in the longer term.

One method the Treasury uses is to shorten the average duration of securities so that debts mature sooner. That means more short-term debt (like Treasury bills) versus long-term debt (like Treasury bonds). This encourages more capital flows into the banking sector and helps stave off instability. If it fails, the big banks still win: when smaller banks fail, they’re usually just absorbed by bigger ones where the profits are private but the losses are socialized. The “Too Big to Fail” club becomes even bigger and more powerful.

When the Treasury issues more short-term debt, it’s waging war on the Fed’s higher interest rate policy. Both the Treasury and Fed need to keep Treasury yields down, but tightened monetary policy encourages higher yields. If yields get too high, the bond market — and challenged industries like commercial real estate that rely on debt — are screwed. So while the Fed tightens, the Treasury must loosen. Yields have since gone down, but if inflationary pressures and other factors push them back past 5%, both the Fed and Treasury are trapped.

“Higher for longer” policy at the Fed is even more essential for holding back inflation as the Treasury injects liquidity into markets. If the Fed lowers rates now, the results of simultaneously expansionary monetary and fiscal policy will send consumer prices soaring.

So are the Fed and Treasury in opposition, or are they working together, one changing its policy to prevent a disaster caused by the policies of the other? The answer is complex, but the oversimplified version is that the two have locked the economy into a game of musical chairs where, eventually, the music is bound to stop.

The end result of the Treasury’s showdown with the Fed will still be out-of-control inflation. Both artificially contract and expand the money supply, and their policies have both created an inescapable trap. COVID QE is one big unexploded bomb that is sitting in the center of that trap. And even with the Fed holding off on interest rate cuts in the short term, the Treasury’s buybacks are QE by a different name. With too much inflationary pressure and not enough tools to stop it, the end result of all this fiscal and monetary tinkering will be a disaster for the dollar.