Month: October 2024

In hugely surprising remarks given on American television this week, Lebanese Foreign Minister Abdallah Bou Habib has stated that Hezbollah Secretary-General Hassan Nasrallah issued his agreement to a US and French-proposed 21-day ceasefire with Israel just before Israel killed him by targeting a secretive meeting in south Beirut last Friday.

Habib revealed the agreement in a PBS interview. He told PBS/CNN host Christiane Amanpour that “They told us that Mr. Netanyahu agreed on this, and so we also got the agreement of Hezbollah on that. And, you know what happened since then.” 

Lebanese Foreign Minister Abdallah Bou Habib says Hezbollah leader Hassan Nasrallah agreed to a ceasefire right before Israel killed him pic.twitter.com/gclEwi9TEK

— Dave DeCamp (@DecampDave) October 2, 2024

An incredulous-looking Amanpour asked: “are you saying that Hassan Nasrallah had agreed to a ceasefire just moments before he was assassinated?” 

“He agreed, he agreed–yes, yes. We agreed completely.” 

The top Lebanese diplomat then followed with:

“The Lebanese House Speaker, Mr Nabih Berri, consulted with Hezbollah and we informed the Americans and the French about the agreement. They told us that [Israeli Prime Minister Benjamin] Netanyahu also agreed to the statement issued by both presidents.”

This is all in reference to a Sept.25th joint statement by the US, France, the European Union, Saudi Arabia and other nations urging an immediate 21-day ceasefire during which a more permanent diplomatic solution would be worked out. CNN writes of the interview:

White House senior adviser Amos Hochstein was then set to go to Lebanon to negotiate the ceasefire, Habib continued.

“They told us that Mr. Netanyahu agreed on this and so we also got the agreement of Hezbollah on that and you know what happened since then,” the foreign minister added.

If the Lebanese government account is true, this would have huge implications. However, no specific further evidence that Nasrallah agreed to ceasefire has yet emerged. Reuters’ top foreign correspondent, Idrees Ali, has called the revelation “Pretty stunning.”

Further reporting from CNN could point to the accuracy of FM Habib’s statements:

A Western source familiar with the negotiations also said Hezbollah had agreed to the temporary truce shortly before the US released the proposal last week. The source didn’t say whether the decision had come directly from Nasrallah, but said that for the movement to agree, they would have needed his approval. A second source familiar with the talks agreed that the US was aware that Hezbollah was agreeing to the ceasefire.

But on an official level, the White House is denying all of this. State Department spokesman Matthew Miller didn’t rule it out entirely, but said that the Hezbollah chief agreeing to a deal is “not something we have heard before. If true, [it] was never communicated to us.”

“I can’t speak to whether he ever agreed to it and told somebody inside Lebanon. Obviously, that could be something that happened that we wouldn’t be aware of. I can tell you that, if that’s true, it was never communicated to us in any way shape or form,” Miller said in a Thursday press briefing.

Critics of Israel have accused PM Netanyahu of deliberately sabotaging efforts at peace in his drive to decimate Hamas, Hezbollah, and ultimately to weaken archnemesis Iran – all while prolonging his power and rule at home.

Authored by William Luther via The American Institute for Economic Research,

When it comes to designing digital currencies that protect the identity and transactions data of their users, developers have made a lot of progress in a relatively short period of time. It is technically feasible to design a retail central bank digital currency — or, CBDC — that promotes financial privacy. But one must also consider what is politically feasible. Unfortunately, there is little prospect that the United States government would actually adopt a privacy-protecting CBDC.

If adopted, a CBDC will eventually – if not initially – be used to surveil the transactions of Americans.

The government is already using existing technologies to surveil its citizens. There’s no reason to think the government would give up its ability to monitor transactions with the introduction of a CBDC. Indeed, it seems much more likely that the government would seize the opportunity to expand its capabilities. Therefore, it is absolutely crucial to maintain a private banking system firewall between the government and our transactions data.

Let’s start with the status quo.

The government has essentially deputized the private banking system to monitor customer transactions. Banks keep records on customer transactions, which the government can access by subpoena. The government also requires banks to report suspicious activity and currency transactions in excess of $10,000.

As Nick Anthony at Cato has shown, the real (inflation-adjusted) reporting thresholds have gradually declined over time. When the Bank Secrecy Act rules were rolled out in 1972, banks were required to report currency transactions worth $10,000 or more. If that reporting threshold had been indexed to inflation, it would be around $74,000 today. Since it wasn’t indexed to inflation, banks must file many more reports today on transactions worth much less than those that would have triggered a reporting requirement in the past.

Other thresholds are even lower. For example, money-service businesses must obtain and record information for transactions worth just $3,000.

The government vigorously defends its ability to monitor transactions. It prosecutes those making transactions just below reporting thresholds —a separate crime called structuring. It seizes cash and collectibles, which make it more difficult to monitor transactions, even in cases where there is no evidence of criminal activity. And it undermines new financial privacy-protecting technologies.

Consider the government’s response to cryptocurrencies, some of which offer a high degree of financial privacy. The Financial Crimes Enforcement Network requires cryptocurrency exchanges to register as money-service businesses and comply with Know Your Customer requirements. If transactions can ultimately be traced through the blockchain to these on- and off-ramps, then the financial privacy that cryptocurrencies offer is largely eroded.

Consider the government’s response to cryptocurrency mixing services, which make it more difficult to trace one’s transactions back to an exchange where his or her identity may be discovered. The Office of Foreign Asset Control has added the wallet addresses of mixing services to the Specially Designated Nationals and Blocked Persons list, effectively making it illegal for Americans to employ those mixing services.

Why would a government work so hard to ensure it can monitor transactions just to turn around and issue a financial privacy-protecting CBDC? Again: it seems much more likely that the government would issue a CBDC that bolsters its ability to monitor transactions.

The ostensibly private messaging service ANOM serves as a useful comparison. ANOM was not private. Unbeknownst to its users, ANOM was actually the centerpiece of the Federal Bureau of Investigation’s Operation Trojan Shield. Messages sent using the ANOM app were not only delivered to recipients, but also to the FBI’s database.

The FBI maintains that it did not technically violate the fourth amendment by using a backdoor in the messaging app to snoop on US citizens, because it transferred the data to Lithuania, where foreigners would snoop on US citizens and then tip off the FBI when illegal activity was suspected. Think about that. The FBI developed the ability to spy on US citizens, promoted the use of the enabling technology, and then handed the data collected by this technology over to foreign nationals in order to circumvent the Constitutional constraints designed to safeguard US citizens from such activities. These efforts not only undermined the due process afforded to criminals — though that would be bad enough. It also facilitated the snooping on perfectly lawful messages. Some of these messages involved intimate details shared between romantic partners. Others involved protected conversations between attorneys and their clients.

If the government will build a backdoor into a messaging app — and has been caught trying to bribe engineers to install others — then one should expect it will build a backdoor into a payments app, as well.

Americans do not have much financial privacy today. We would have even less financial privacy if not for the private banking system firewall between the government and our transactions data. This firewall isn’t perfect. But it is better than nothing. 

To see how such a firewall promotes financial privacy, consider the Internal Revenue System’s efforts to access the customer data of Coinbase in 2016. At the time, Coinbase was boasting that it had 5.9 million customers — many more than had reported crypto holdings to the IRS. Citing this discrepancy, the IRS secured a John Doe summons.

In 2017, I described the summons as follows:

Basically, the IRS wants any and all information that Coinbase has so that it can sift through that information for the slightest hint of misreporting. It has requested account registration information for all Coinbase account holders, including confirmed devices and payment methods; any agreements or instructions that grant third party access or control for any account; records of all payments processed by Coinbase for merchants; and all correspondence between Coinbase and its users regarding accounts.

Needless to say, the scope of the summons was very broad.

Recognizing the duty — and, perhaps more importantly, the profit motive — it had to protect its customers, Coinbase appealed. Eventually, the courts decided that Coinbase would have to hand over some customer data on around 13,000 high-transacting users.

Kraken has also resisted an overly broad summons to hand over customer data to the IRS, to similar effect.

I hold the old-fashioned view that, in a liberal democracy, the government should have to demonstrate probable cause before acquiring the authority and ability to sift through one’s financial records. The degree of financial privacy afforded by the current system certainly falls short of that standard. Nonetheless, it affords much more financial privacy than one could reasonably hope for if the government held the data, as would likely be the case with a CBDC.

Financial privacy is very important for a free society. What we do reveals much more about who we are than what we say. And what we do often requires making payments. In order to exercise our freedoms, we must be able to selectively share the details of our lives with others — and withhold such details from those who would otherwise use them to harm us.

We should take steps to bolster financial privacy in the United States. The introduction of a retail CBDC would be a step in the wrong direction.

When it comes to investing, each generation has their own mix of strategies, and younger generations like to try a bit of everything.

This graphic, via Visual Capitalist’s Kayla Zhu, visualizes the breakdown of how each generation uses each of the following types of investing strategies:

• Buy and hold: Investors purchase stocks or assets and keep them long-term, regardless of short-term market fluctuations

• Growth investing: Investing in companies expected to grow at an above-average rate, even if their stock prices are higher

• Fractional shares investing: Purchasing a portion of a full share, allowing investors to invest in expensive stocks with smaller amounts of money

• Short-term trading: Buying and selling assets quickly, typically within days or weeks, to capitalize on short-term market movements

• Direct indexing: A method where investors buy and own individual stocks of an index directly rather than through a mutual fund or ETF, allowing for greater customization and tax efficiency

• Socially responsible investing: Investing in companies that meet specific ethical, environmental, or social criteria

• Robo-advisor investing: An automated investment service that uses algorithms to manage and optimize an investor’s portfolio, typically with low fees

• Thematic investing: A strategy centered on investing in companies tied to specific trends or themes, such as clean energy or technological innovation

The data is based on a Charles Schwab Modern Wealth survey of 1,000 U.S. adults, and is updated as of March 2024.

Buy and Hold Investing Most Popular Across Generations

Americans of all generations mostly rely on the buy and hold strategy, with boomers relying on this strategy the most (60%) and Gen X relying on it the least (48%).

Across the board, younger generations tend to adopt a wider range of investing strategies than older generations. Specifically, Gen Z and Millennials tend to use newer investing strategies more often, including fractional shares investing (48% for both) and short-term trading (52% for both).

Both younger generations also use technology-driven strategies like robo-advisor investing much more than the older two generations.

Robo-advisors are online investing platforms that use algorithms to create and manage investment portfolios, like Betterment and Wealthsimple.

Younger generations are also increasingly turning to social media to inform their financial choices.

According to the Charles Schwab survey, 72% of Gen Z respondents considered financial advice from social media, compared to 57% of Millennials, 38% of Gen X, and only 19% of Boomers.

Gen Zs are also starting to invest earlier. On average, Gen Zs started investing at 19 years old, compared to 25 for Millennials, 32 for Gen X, and 35 for Boomers, according to Charles Schwab.

Investing earlier allows investors more time to grow their wealth, as compounding interest can significantly increase returns over the long term.

To learn more about Americans’ investing patterns, check out this graphic that visualizes shows the percentage of financial assets allocated to corporate equities among U.S. households and non-profits.

Authored by Michael Clements via The Epoch Times (emphasis ours),

CALGARY, Canada—On May 1, 2020, the Canadian government outlawed 1,500 types of semiautomatic rifles and announced a firearms buyback program to take possession of the newly banned guns.

The action was the federal government’s response to a mass shooting in Nova Scotia in which 22 people were killed over April 18–19, 2020.

The killer, dressed as a Royal Canadian Mounted Police officer and driving a car rigged to look like a patrol car, used an AR-style rifle smuggled into Canada from the United States.

Four years later, as Prime Minister Justin Trudeau’s Liberal Party struggles to keep control in Parliament, both sides of the debate anticipate the possible end of the program even before the first gun has been surrendered.

One gun control activist has criticized the buyback program as too weak.

Nathalie Provost is the spokesperson for PolyRemembers, a group formed after the Dec. 6, 1989, mass shooting at the Polytechnique engineering school in Montreal that killed 14.

Provost, a survivor of that crime, did not respond to The Epoch Times’ request for comment.

In a Sept. 11 statement, she called on the government to eliminate exemptions to the ban, accelerate completion of the buyback, and close loopholes in the law.

“Even the mandatory buyback program … will lose all of its meaning if current [gun] owners … can simply take the money from the buyback to purchase [guns] that remain legal or new models introduced … by manufacturers seeking to increase their sales and profits,” Provost wrote.

Under the program, certain automatic and semiautomatic rifles, so-called assault weapons, were banned.

Rifles such as the AR-15, AK-47, and similar types can no longer be bought, sold, imported, or even transported in Canada. The plan calls for owners of the now-illegal guns to sell them to the federal government.

The government established a two-year amnesty period during which owners must securely store their prohibited firearms until the logistics of the buyback program are worked out.

In 2022, the amnesty period was extended to October 2025.

James Bachynsky, president of the Calgary Shooting Center since 2011, said the Nova Scotia shooting was simply used as an excuse for the Liberal Party to institute a ban it wanted all along.

Bachynsky said the ban would not have prevented the killings in Nova Scotia.

He pointed out that the killer had violated several laws before he fired his first shot. From smuggling guns into the country to impersonating a police officer, the shooter could have been charged with a crime without ever putting his finger on a trigger, he said.

“The government wanted to be seen to be doing something. They introduced this [Order in Council], banned all these guns, and then the investigation determined that all [the killer’s] guns had been smuggled in over the U.S. [border] anyway,” Bachynsky told The Epoch Times.

Brian Kent agrees. He owns Proline Shooters II in Calgary and has been in the firearms business for 42 years. He said restricting legal gun ownership is the easiest way for the government to give the impression that it is doing something.

Kent says he believes the “government wants to do away with all firearms,” and people who own guns legally are “low hanging fruit and … easy to pick on.”

During a Sept. 19 meeting, Dominic LeBlanc, Minister for Public Safety, Democratic Institutions, and Intergovernmental Affairs, denied these claims when questioned by Conservative Sen. Yonah Martin.

“This program in no way targets sports persons, or indigenous persons or persons who hunt for sustenance or who practice a sport; this is designed to get military weapons off the streets,” LeBlanc said.

But Kent is not convinced.

He said officials use terms such as “assault weapons,” “military weapons,” and “weapons of war” to alarm and confuse their constituents. The difference between the banned guns and legal guns is a matter of form rather than function, he said.

“There’s no difference between a [prohibited] AR-15 system and a [legal] Remington 742 semiautomatic rifle. There’s no difference in the function,” Kent told The Epoch Times. “The AR-15 looks dangerous and military and ‘oh my goodness, we’re going to all die.’ There’s no actual functioning difference between the two firearms.”

Bachynsky said that as a firearms dealer, he keeps track of changes in the gun laws. He said the buyback program is confusing. According to Bachynsky, the changes could catch some gun owners unaware.

The list of prohibited rifles has grown from 1,500 to almost 2,000 over the past four years. This means that rifles that were legal when the list was written in 2020 may no longer be allowed.

“But if you own any kind of semiautomatic rifle now, or even a hunting rifle, you need to check [the restricted firearms list] regularly to see whether it’s become prohibited,” Bachynsky told The Epoch Times.

The program is divided into two phases. In the first phase, gun stores will sell to the government any stock they haven’t been able to export or sell before the amnesty period ends. In the second phase, individual owners will sell their prohibited guns to the government.

In each case the price will be determined by a government estimate, not the amount the store or owner paid.

As of Sept. 25, the Public Safety Canada website had no details on how or when either phase would begin.

“More information on the methods affected firearms businesses can use to turn in their inventory and how they can participate in the program will be provided at a later date,” the Public Safety Canada website reads.

In December 2023, the government enacted Bill C-21, which codified the plan’s prohibition on the sale or transfer of handguns.

Current handgun owners can transport their handguns to shoot on approved firing ranges. But they cannot sell or give them to anyone. When current handgun owners die, their guns must be handed over to the government.

The Liberal Party has been able to advance its agenda through an agreement with the New Democratic Party (NDP). However, on Sept. 4, the NDP backed out of the agreement.

Read the rest here…

At least nine people have been killed in overnight Israeli attacks on Beirut, which involved a series of rare airstrikes directly on the city center, not far from parliament building and the prime minister’s office, as well as a United Nations headquarters. More strikes also rocked the southern suburb of Dayhiheh, which has been frequently hit.

The central Beirut attack targeted a building in the district of Bashoura. The Associated Press and others noticed that residents and emergency aid workers panicked also due to a strange smell filled the air in the central city area in the immediate aftermath of the bombing.

Al Jazeera reports that “Residents reported a sulfur-like smell following the attack, and Lebanon’s state-run National News Agency accused Israel of using phosphorus bombs, without providing evidence.” Israel’s military did not comment on the claims.

Among the dead were seven members of Hezbollah’s civil defense unit, the group confirmed. A prior Wednesday strike had also targeted a residence of Hezbollah member of parliament, Amin Shari. Local reports say he was not there at the time, and survived.

In ongoing fierce fighting in the south, Hezbollah claims to have mounted more attacks against invading Israeli ground forces. This comes following a bad day for the IDF on Wednesday, given it confirmed eight Israeli troop deaths, most of these during a fierce multi-pronged ambush.

Below are the latest claims of battlefield successes by Hezbollah on Thursday:

• Hezbollah claimed to have detonated two explosive devices at dawn “when an enemy Israeli infantry force attempted to infiltrate towards the village of Maroun al-Ras” in southern Lebanon.
• Fighters attacked Israeli soldiers with an Iranian-made Falaq missile east of the Sasa settlement in northern Israel, and a different group of soldiers with a rocket salvo west of the same settlement, it said.
• Another attack came in the Shomera settlement of northern Israel against Israeli troops with a Falaq missile. Hezbollah also claimed two separate rocket salvos against Israeli forces – one in the Betzet settlement and another in the Avivim village in Upper Galilee.

In what regional sources are reporting as a major on-ground development, Hezbollah said detonated a large bomb as IDF troops entered the village of Maroun al-Ras in southern Lebanon, resulting in deaths and casualties.

Military rescue helicopters were later observed arriving in the area to recover and tend to the wounded, unverified reports say.

Hezbollah rocket attacks on Galilee in northern Israel on Thursday:

⚡️The moment Hezb-Allah missiles fell on terrorists positions in a settlement in the Galilee this morning pic.twitter.com/deypFR4qs2

— War Monitor (@WarMonitors) October 3, 2024

In total Hezbollah has said it has launched six different attacks on Israeli ground forces in the south by mid-afternoon. The Israeli military has meanwhile said its forces have killed some 60 Hezbollah operatives over the past day, with aerial forces also having struck over 200 targets.

At least two Lebanese national army soldiers have been reported killed at this point. News wires are also reporting that “For the first time since the war began, the Lebanese army responded to Israeli fire after a soldier was killed in an Israeli strike on an army center in Bint Jbeil, southern Lebanon.”

As of Thursday afternoon, the IDF has ordered an additional 25 villages and towns in southern Lebanon to be evacuated, as the fighting expands. Israel is looking to push Hezbollah forces dozens of miles north into Lebanon, in order to create a permanent buffer zone.

Authored by Jill McLaughlin via The Epoch Times,

Food products sold in California will no longer have a “sell by” stamp after July 1, 2026, after Gov. Gavin Newsom approved the nation’s first law governing food labeling.

When it goes into effect, Assembly Bill 660 will require the use of two standard terms for food products that choose to use a date label—“best if used by” to indicate the quality date of food, or “use by” to indicate the safety of food.

Newsom said in a statement he also believed the new law, which he signed on Sept. 28, would better inform consumers and “significantly reduce food waste.”

Stamping food with quality or time limits is not required as part of the law. The federal government also doesn’t require foods to be issued a “use by” date on anything except baby formula.

Environmental organizations that sponsored the new law say banning the “sell by” stamp will keep more food out of the garbage bin, cutting down on methane produced at landfills.

The groups also hope the new law will cut down on confusion by requiring manufacturers to use the same phrases for date labels on all products.

California is the first state in the nation to pass the regulations, which were written by Assemblywoman Jacqui Irwin, a Thousand Oaks Democrat.

“Having to wonder whether our food is still good is an issue that we all have struggled with,” Irwin said in a statement.

“Today’s signing of AB660 is a monumental step to keep money in the pockets of consumers while helping the environment and the planet.”

With the new law in California, dates may be voluntarily applied to meat, poultry, and egg products, provided that the dates are truthful and not misleading.

Irwin said some of the phrases currently used, such as “expires on,” “best before,” and “sell by,” can be unclear to average consumers. Some consumers may think the dates are equal to expiration dates, she explained in a legislative assessment of the bill.

Owner Ray Martinez at La Playa Market in Inglewood, Calif., on Nov. 1, 2012. Food producers in the state will no longer stamp a “sell by” date on food after July 1, 2027. AP Photo/Damian Dovarganes

The confusion leads to food being wasted, strained grocery budgets, and increasing emissions of methane—a type of greenhouse gas—from rotting food, according to Irwin.

Food packagers can continue to label products with a “sell by” date only if it is coded in a format that is not easily readable by consumers and does not use the phrase “sell by,” according to a legislative analysis.

The law also allows food to be donated after the “best if used by” date has passed.

Californians Against Waste, a nonprofit environmental advocacy organization, co-sponsored the bill with the Natural Resources Defense Council, a national coalition of 3 million environmental activists.

Food products with labels printed with “sell by” and “used by” dates are seen in a file photo. Environmental groups sponsoring California’s new law banning “sell by” dates say it will cut down on food waste. Joyce Kuo/The Epoch Times

Inconsistent use of phrases like “sell by” and “expires on” can make it “impossible” for consumers who don’t want to throw away good food, according to Erica Parker, a policy associate with Californians Against Waste.

“The result is a staggering amount of food waste—Californians throw away 6 million tons of food waste each year—and confusion over date labels is a leading cause,” Parker said in a statement Sept. 30.

Victoria Rome, the California lobbyist for the Natural Resources Defense Council, said the bill’s signing will cut down on confusion.

“Standardizing food date labels is a common-sense solution that will keep more money in people’s pockets and food on families’ plates, while reducing climate warming emissions,” Rome said in a statement after the signing.

The Natural Resources Defense Council said California’s food waste accounts for 41 percent of the state’s methane emissions.

The group also said the U.S. wastes 40 percent of the food it produces. That’s about 20 pounds of food per person every month, according to the council’s 2012 study. The group also reported 16 percent of U.S. methane emissions was caused by organic matter dumped in landfills.

The council also believes 80 percent of the fresh water Americans use is for food production, and 10 percent of energy in the country is used to produce and distribute food.

California passed a similar law in 2017 which directed the state to promote the voluntary adoption of the “best if used by” and “use by” terms, but implementation of the standard terms fell short, according to the sponsors.

The new measure mandates the use of the terms across all products sold in California.

Authored by Charles Hugh Smith via OfTwoMinds blog,

The system has reached the limits of its adaptability. Everything else is entertainment.

A great many people have immense faith in political solutions to looming crises: if only we elect new leaders, if only we replace current policies with new policies, everything would be fixed and the crises will all dissipate.

There are powerful reasons for this faith and equally powerful reasons why political solutions fail in crisis. Our faith in politics is nurtured by recency bias in eras of relatively low-level volatility: when the system is humming along, decade after decade, the incremental adaptations of politics are enough to resolve whatever spots of bother arise.

There are three key points here. One is that politics is by its nature incremental, and there are profound reasons for this aversion to radical reforms. All organisms are well-served by the innate conservatism of natural selection: if it isn’t broken, don’t fix it. If the current set of instructions–genetic, epigenetic, social, cultural, economic, political–is working, then it makes sense to conserve what works and be cautious about adapting new instructions.

Natural selection tinkers with experiments when selective pressure is applied to a species, and this is an incremental process: if random mutations in an individual offer some meaningful advantage in changing conditions, over time that improvement spreads through the species.

Experiments that fail to offer advantages are eliminated by, well, death. Not exactly warm and fuzzy, but when push comes to shove, Nature doesn’t fool around.

This is why humans experience financial losses so sharply and forget the euphoria of winning. In the big picture, gains are nice and we enjoy the dopamine hit, but losses can be catastrophic, and so we’re wired to be risk averse as a key survival trait.

In the political realm, this plays out as favoring incremental policy adjustments over radical–and therefore difficult to risk-assess–course changes. Enthusiasm to really tackle the crisis head-on is tempered by fears that some unforeseen consequence could emerge from the untested policy that triggers losses or instability that cannot be reversed.

The second key point is everyone in a position of power or influence is committed to preserving the status quo that has rewarded them so well. Outsiders with no power or influence may be chomping at the bit to overthrow the stale, sclerotic, do-nothing status quo, but insiders are self-selected defenders of the status quo, as it has served their interests so well: they rose to wealth and power within this system, and no matter how great the crisis, all their energies are devoted to preserving the system that has served them so splendidly.

Self-service is neatly cloaked by a belief that since the system has served me so well, it serves everyone equally well, and so defenders of modest, incremental adjustments in policy naturally believe the system is the best possible and worthy of protecting, despite its flaws.

A third source of incrementalism is the lack of consensus and the self-serving divisions in the Power Elite. There are ideological differences which lead to disagreements over policy–welfare queens in Cadillacs, etc.–and there is the auction of favors where to get the vote / approval of a powerful politician, some utterly nonsensical, needlessly costly bauble must be tossed to them–for example, an outdated rocket engine must be manufactured in their district even though the cost is higher and the harm to the project is irreversible.

This is the infamous “making sausage” of political wheeling and dealing. Incremental change is all that’s possible when few of the participants are feeling any real pain that demands radical adaptations and the majority aren’t feeling they’re getting anything for supporting radical change. Rather, they’re risking their career on a longshot which might end up harming their constituency and position in the party / power structure.

This is why we see tepid, baby-step, and ultimately ineffective policy adjustments as empires crumble into crisis. Insiders are loathe to relinquish power or admit that the status quo is incapable of dealing with the crises threatening to overwhelm the empire, and so they agree to doing more of what’s failed as this is 1) the safe bet and 2) what all the squabbling power players can agree on.

In crisis, the safe bet is the losing bet, but insiders are blind to this reality, for in their blinkered, self-serving recency bias view, the system could not possibly be at risk, so their only concern is preserving their slice of the pie and making as few risky changes as possible.

Since radical reforms inevitably reduce somebody’s slice of the pie, they’re politically impossible. Never mind the risk of collapse, a reduction in my slice of the pie is completely unacceptable. As a result, collapse is the politically acceptable default.

The faith that “it will all work itself out if we leave it alone” is persuasive after decades of stability. That this faith is catastrophically misplaced will only become apparent after it’s too late.

I often refer to these excerpts, as they so succinctly capture the key dynamics is this delusional drift into disaster. The first is from Michael Grant, author of The Fall of the Roman Empire, who describes the clueless mindset of the ruling elite faced with novel crises that are beyond the reach of the usual bag of “safe” (and self-serving) policies:

“There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. His whole attitude is a complacent acceptance of things as they are, without a single new idea.

This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.

This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.”

The second excerpt is from Ray Huang’s 1587, A Year of No Significance: The Ming Dynasty in Decline, which describes how the status quo, wedded to past success, guided by self-interest and risk aversion, impervious to any real change in its power structure, is beyond the reach of any leader or reform because it has reached the limits of its adaptability and thus of its ability to deal with crises:

“The year 1587 may seem to be insignificant; nevertheless, it is evident by that time the limit for the Ming dynasty had already been reached. It no longer mattered whether the ruler was conscientious or irresponsible, whether his chief counselor was enterprising or conformist, whether the generals were resourceful or incompetent, whether the civil officials were honest or corrupt, or whether the leading thinkers were radicals or conservatives–in the end they all failed to reach fulfillment.”

In the late stage of crises unmet with anything but magical incantations (cough, The Fed) and reliance on past glories, the public’s assessment of crises forks off from the complacent hubris of the ruling elite, as evidenced by this survey, which found that the top 1%–unsurprisingly, given their lofty opinion of their god-like abilities–has supreme confidence in their matchless leadership and wisdom, while the general public has lost faith in the entire ruling elite.

source

Those reckoning that new leadership and new policies will avert the crises just ahead will be disappointed. The ship’s wheel is lashed tight by all the factors listed above: risk aversion, supreme confidence in either doing nothing or incremental adjustments, blindness to the novelty of the crises, reliance on past solutions, i.e. doing more of what’s failed, the dead hand of mummified ideologies, the shackles of self-interest, and last but not least, a hubristic confidence in the status quo and their own abilities to emerge victorious no matter what the crisis, even as the status quo has reached the limits of its adaptability.

All of which is to say: we’re on our own. One might as well rely on the magic of waving dead chickens while doing the humba-humba around the midnight campfire than rely on the magic of the Federal Reserve or some witches’ brew of policies that first and foremost satisfy the power players’ desires and delusions.

The system has reached the limits of its adaptability. Everything else is entertainment. Rome was eternal, and so were the Ming Empire and the Soviet Union. Everything is forever until radical adaptations become too difficult and painful to bear.

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On Wednesday, the Food and Drug Administration announced that the supply shortages of Eli Lilly’s popular weight-loss and diabetes drugs have been resolved. These drugs have been in short supply since the anti-obesity drug craze erupted several years ago. Now, an ample supply of GLP-1 drugs could signal that the ‘fat bubble’ in equity markets has popped. 

FDA said that Lilly’s Zepbound and Mounjaro multi-year shortage is over, adding that there are “legal restrictions on making copies of FDA-approved drugs” when there isn’t a shortage. 

FDA said Eli Lilly’s weight-loss drugs are no longer considered to be in shortage in the US,

The Fat bubble has officially popped

— zerohedge (@zerohedge) October 3, 2024

Shares of telehealth firm Hims & Hers Health plunged nearly 12% in premarket trading in New York. The company sells copycat weight-loss drugs. As noted above on X, “The Fat bubble has officially popped.” 

Lilly’s shares in premarket trading were flat to slightly higher, while Novo Nordisk, the maker of Wegovy, was half a percent higher in Denmark. 

Using Goldman’s index of companies with high exposure to GLP-1s, momentum has stalled throughout 2024 as companies at risk from GLP-1s’ success have been clawing back losses. 

Eli Lilly Executive Vice President Patrik Jonsson released a statement saying that Lilly has “invested significantly” to expand the manufacturing of GLP-1 drugs and bring new options to the market. WaPo quoted him as saying the reversal in the shortage reflects Lilly’s “commitment to providing a steady stream of genuine and safe medicines.” 

Lilly and its competitor, Novo Nordisk, which makes the diabetes drug Ozempic and weight loss magic drug Wegovy, have been locked in a vicious battle against the copycat GLP-1s market. Lawyers representing Lilly issued warnings in August to prescribers to cease selling the copycat drugs, WaPo noted. 

Bloomberg cited experts that estimate hundreds of thousands of Americans have used copycat versions of Lilly and Novo weight loss drugs, adding, “The makers of such compounded drugs are bringing in as much as $1 billion a year, according to investment bankers who work with the industry.” 

Scott Brunner, CEO of the trade group Alliance for Pharmacy Compounding, told WaPo that the FDA’s ending the shortage designation for those drugs could be difficult for consumers who have taken off-brand compounded tripeptides. 

“They are being cut off cold turkey, and their prescription is no longer fillable,” Brunner said, noting that pharmacies “must immediately cease preparing and dispensing compounded copies of Mounjaro and Zepbound.”

By Leslie Shaver of Multifamily Dive,

The more-than-$80 million Freddie Mac commercial mortgage-backed securities loan for the rental portion of the once-iconic Detroit property Riverfront Towers has gone 30 days delinquent, according to a report Morningstar Credit shared with Multifamily Dive. 

Image Capital is listed as the owner of the property, according to Yardi Matrix. Indianapolis-based AMP Residential manages the property. Neither firm replied to Multifamily Dive’s request for comment as of press time. 

The complex was once home to civil rights activist Rosa Parks and singer Aretha Franklin, according to the Detroit Free Press. Coleman A. Young, mayor of Detroit for 20 years, also lived at the property. 

The 10-year, $85.5 million loan at an interest rate of 4.43% was originated in June 2018, according to Yardi Matrix. It went onto Overland Park, Kansas-based servicer Midland’s watchlist in December 2023.

While the loan backing the towers remained current until September, it was below breakeven in 2023 and stayed that way through early 2024, according to Morningstar Credit. It had a debt service coverage ratio of just 0.82x as of March 2024, despite 89% occupancy. Morningstar lists the loan as being for $83.9 million.

Riverfront Towers consists of three buildings. Towers 200 and 300 were built in 1983, while Tower 100 was constructed in 1992, according to The Detroit News.

Tower 300 was converted to condominiums during the real estate frenzy of the mid-2000s, while Towers 100 and 200 remained rentals. However, those two buildings have faced many issues over the last 15 years. The company didn’t respond to a request for comment.

In its report, Morningstar Credit noted that the property had suffered a series of setbacks over the years. In 2020 and 2021, several units were offline because of water-casualty losses, and repairs were delayed because of COVID-19-related restrictions.

Rising insurance premiums and delays in evicting non-paying tenants were also issues, according to Morningstar Credit. While the servicer said that cash flow was down in 2023 because of bad debt from the evictions, those issues have “been minimal this year,” David Putro, head of commercial real estate analytics at Morningstar Credit, told Multifamily Dive.

In 2016, Riverfront Tower Holdings LLC sold two of the three Riverfront Towers to New York-based Image Capital and private investors for $79.5 million, according to The Detroit News.

Before that sale, other owners found themselves in trouble with the other government service enterprise. 

In 2011, Fannie Mae sued owners Montvale, N.J.-based Empirian at Riverfront LLC and Monsey, N.Y.-based Aintsar Riverfront LLC for $70 million for being in default of a $55 million mortgage on the property, according to MLive.com. 

By Michael Every of Rabobank

Let’s try to keep things in proportion

The IMF has put Australia “on notice”, the Fund arguing if the government keeps spending, rates will have to stay high. Who knew? The economics editor of the Australian Financial Review says, “The holding of [RBA] confidential meetings [with private parties like investment banks] can backfire when some people think that others are getting advantage access to the central bank’s thinking.” Who knew? And a Green Party Senator with a PhD in economics who used to work at the RBA states, “I’ve been under no illusion for 40 years that interest-rate setting by the Reserve Bank is a political exercise. To say that it’s above politics, and there’s some kind of completely independent machine that sets interest rates – that’s not true.” Again, who knew?! But let’s keep this in proportion – Australia is obviously unique, and what is true for the RBA doesn’t apply to any other central bank anywhere, ever. Honest.        

In Macron/macro-land, France’s PM Barnier proposes €60bn of tax hikes and spending cuts which would only reduce its fiscal deficit to a 5% proportion of GDP if it passes; the constitution also says if the budget is pushed through without a vote, parliament gets a no confidence call on the new government, which it may not survive. Next door, some ask if there will be any German car manufacturers in China’s market in five years, others in the German market; yet German automakers are lobbying against EU tariffs on Chinese EVs expected to be approved tomorrow.

The European Commission proposes postponing EU Deforestation Regulation implementation to December 30, 2025 for large companies and June 30, 2026 for micro and small enterprises, inviting the European Parliament and Council to adopt this proposal by end-2024. This it “to allow a phasing-in period to ensure all stakeholders will be ready for effective implementation.” Agri commodity and pulp/paper markets are relieved, with prices easing. In short, at the margin it is pro portions.

Our ECB team now see an additional 25bps rate cut in October. Lagarde commented this week that, “the latest developments strengthen our confidence that inflation will return to target in a timely manner”. Barring the risk she’s trying to win back the “for-worst guidance” trophy from Powell (ahead of his 50bp cut), this is a clear signal the ECB is preparing to move despite core inflation remaining quite persistent – and the global backdrop looking proportionately worse.

The first US East Coast port strike since 1977 will have a global impact that builds daily. President Biden just sided with the union, as has Trump, so there is no political pressure for a resolution. The White House is calling for surcharges major shipping lines brought in on October 1 to be removed (e.g., MSC applies a $1,000 – $1,500 on all shipments from Europe to US East and Gulf coasts), but this won’t stop congestion and goods and container shortages ahead.

PM Ishiba and BOJ Governor Ueda implied Japan’s hiking cycle is over. USD/JPY zoomed past 147 again briefly and the Yen carry trade is back, throwing liquidity into global markets. That doesn’t have to mean anything for the real economy, but asset inflation is a spark near socio-political tinder damper than two years ago but still drier than at any other time in four decades.

The US backs a “proportionate” Israeli strike on Iran for its recent missile attack to avoid escalation. This is not Israel’s strategic doctrine, and it’s determined to cause Iran political and economic pain, implying nuclear or oil targets. The US wants military ones which won’t stop escalation and logically still end up with nuclear and oil, with a less propitious backdrop for Israel. Note Jerusalem ignored US prohibitions when acting against nuclear programs in Osirak in Iraq in 1981 and Deir-ez-Zor in Syria in 2007 and deliberately didn’t inform the White House of its recent attacks vs. Hamas and Hezbollah in advance. In other words, a US “Don’t” carries little weight in proportion to what it once did, and markets might want to bear that in mind.

Guess Iran wasn’t scared by Kamala saying “don’t.”

Who could’ve guessed? pic.twitter.com/HQobJsGApD

— John Hasson (@SonofHas) October 1, 2024

The G7 also says there will be more sanctions on Iran (which in recent years they wound back or refused to vigorously enforce). Do they expect Russia and China to comply, or are they going to impose secondary sanctions on them? That sounds like escalation too.  

You barter believe as countries de-dollarise in the face of sanctions threats that we won’t just compare USD/XXX, but apples to oranges. TASS reports chickpeas and lentils will be exchanged for tangerines and potatoes because the Russian and Pakistani parties “are experiencing certain difficulties in making mutual payments.” One will supply 15,000 tons of chickpeas and 10,000 tons of lentils, the other 15,000 tons of tangerines and 10,000 tons of potatoes. That’s a nice easy proportion for global trade, but somehow I don’t see it working all over. Sing along now: ‘All they are saying is give chickpeas a chance’. But how do you hedge? How do you store value? How do you do accounting? Moreover, those in either country expecting dollars to finance Eurodollar debts should check their pulses.

But back to oil: Saudi Arabia warned of it falling to as low as $50 if OPEC+ members keep flouting production curbs. Is this another structural bearish signal? But is it also a market against which an Israeli attack on Iranian oil could be devastating for the latter without meaning the same for global energy/the economy/the US election? Does that depend on if Iran acts on its recent implied threat to set aflame oil in [checks notes] its new BRICS-member ‘friends’ like Saudi Arabia and the UAE? It’s not all sunshine and roses and chickpeas and tangerines in that camp, it seems.

On camps, the US plans 300% tariffs on Chinese solar firms operating in Southeast Asia after a Commerce Department investigation found illegal trade practices. 300% is the new 200%, it seems. I can recall when a 30% tariff was seen as headline grabbing. I can also recall when I warned of bifurcating global supply chains it wasn’t headline grabbing.

With China out on holiday, Hong Kong stocks saw a down move, the Hang Seng -3.3% and its tech index -5.9% at time of writing. Is this just taking some profit off the table after the first big rally in ages (the latter is still up over 30% in a month), or is the market realizing it read China’s recent policy ‘bazooka’ out of all proportion to what the real economy benefits are?