Month: January 2025

Not content to The Department of Justice’s (DOJ) Office of the Inspector General (OIG) revealed this week that three senior DOJ officials violated internal policies and engaged in misconduct by leaking non-public investigative details to the media “days before an election.”

The OIG, led by Michael Horowitz since 2012, conducted the investigation following a complaint alleging politically motivated disclosures related to ongoing DOJ matters.

“The OIG investigation found that three then Senior DOJ Officials violated DOJ’s Confidentiality and Media Contacts Policy by leaking to select reporters, days before an election, non-public DOJ investigative information regarding ongoing DOJ investigative matters, resulting in the publication of two news articles that included the non-public DOJ investigative information,” the OIG stated in a brief investigative summary.

The summary further noted that one of the officials compounded the misconduct by using a DOJ social media account to share links to the resulting news articles, a violation of both the Confidentiality and Media Contacts Policy and the DOJ’s Social Media Policy.

Of course, in typical Horowitz fashion – we have no clue who leaked what to whom…

The investigation faced limitations as the three implicated officials were no longer employed by the DOJ at the time of the probe, and either declined or failed to respond to interview requests. The OIG does not have the authority to compel testimony from former employees.

Horowitz’s office confirmed that the findings have been referred to the Office of the Deputy Attorney General and the Professional Misconduct Review Unit for appropriate action. Additionally, the report has been shared with the U.S. Office of Special Counsel for further investigation into potential violations of the Hatch Act, which restricts political activities by federal employees.

Unspecified Investigation at the Heart of the Leak

The nature of the investigation leaked by the former officials remains unclear. However, similar concerns have been raised in other high-profile cases involving DOJ leaks. In September, Senator Chuck Grassley (R-IA) sent a letter to Attorney General Merrick Garland and FBI Director Christopher Wray, as well as Horowitz, accusing the DOJ and FBI of leaking information about a now-closed investigation into President-elect Donald Trump.

The investigation in question involved allegations that Egyptian President Abdel Fatah El-Sisi attempted to bolster Trump’s 2016 campaign with $10 million in cash. Initially handled by Special Counsel Robert Mueller’s team, the probe was closed in June 2020 due to insufficient evidence, but details of the case were reported by The Washington Post in August 2024. The newspaper’s reporting cited “people familiar with the case” and “thousands of pages of government records, including sealed court filings.”

Broader Pattern of DOJ Leaks and Misconduct

Leaks have been a recurring issue within the DOJ. Trump, while campaigning for the 2024 GOP presidential nomination, accused Special Counsel Jack Smith of having “illegally leaked” information about the classified documents investigation against him. This included allegations that Smith leaked an audio recording of Trump discussing a classified document related to Iran, which was later included in a now-dismissed indictment.

During Trump’s first term, leaks about the FBI’s investigation into alleged collusion between Russia and his 2016 campaign led to scathing reports by the OIG and subsequent investigations by Mueller and Special Counsel John Durham. Notably, former FBI Director James Comey was referred for prosecution in 2019 for leaking internal memos to the media, though the DOJ ultimately declined to press charges.

Authored by Nikolai Wenzel via the American Institute for Economic Research (AIER)

In a recent Wall Street Journal op-ed, Elon Musk and Vivek Ramaswamy laid out their vision for the new “Department of Government Efficiency” (DOGE) they will head within the Trump White House. They don’t yet have details (part of the plan involves identifying personnel, and then inefficiencies). But the vision has a three-part approach: ”regulatory recissions, administrative reductions, and cost savings.”

With politicians it’s often hard to know what is solid conviction and what is bluster for future bargaining. With Donald Trump, it’s always hard to know. He wants to renew the 2017 tax cuts, which lowered income and corporate taxes until 2025… but he also wants to tax imports at 10 percent to 20 percent (and 60 percent for China), which is the equivalent of a consumption tax on an American economy that is hungry for imported goods. Mr. Trump wants to cut red tape and federal spending… but he also wants to increase spending on defense and mass deportations.

Amidst all this, Messrs. Musk and Ramaswamy have bruited the lofty goal of a 30 percent cut in federal spending.

The federal budget was $6.2 trillion for FY23 (which I use here for accounting simplicity, rather than FY24). This represents almost 23 percent of GDP, to which we can add 13 percent spent by states and local governments. To this, we can also add the 10 percent of GDP in annual compliance cost with federal regulations, as estimated by the Competitive Enterprise Institute. This total means that, for every dollar of economic activity, fully 46 cents are controlled, directly or indirectly, by politicians and bureaucrats. And only 54 cents of each economic dollar are in the hands of American consumers, families, and entrepreneurs. As of November 2024, the national debt is at 120 percent+ of GDP, and interest on the debt is the fourth biggest budget item (at $659 billion/year, or about 11 percent of federal spending). Clearly, America has a fiscal problem.

Before we examine possible budget cuts, let us see where that whopping $6,200,000,000,000 is going. First, we must distinguish between mandatory spending and discretionary spending. Mandatory spending has been set in motion by Congress, without the need for annual negotiation or reauthorization. Discretionary spending must be legislated, in political jockeying between the Congress and the President.

Mandatory Spending (71.7 percent of total federal budget). AIER

Discretionary Spending (28.3 percent of total federal budget). AIER

I propose three options for budget cuts, from the bold (and probably politically impossible) to the marginal.

1. The Constitution

I hate having to repeat it, over and over again… But the American people and the political class seem to have forgotten that the U.S. Constitution is different. Most other constitutions of the world are documents of assumed powers: governments are allowed to do anything, except that which is prohibited by the constitution. The U.S. Constitution, however, is one of limited and enumerated powers: it may not do anything, except that which is authorized by the constitution. Article 1, section 8 grants a bit over a dozen legislative powers to Congress (beyond the military and international powers authorized to the President in Article 2, and the judiciary powers in Article 3).

According to Article 1, section 8, the Congress has power over the following, only:

• taxes and import duties

• borrowing

• regulation of commerce among the states and internationally

• establish uniform laws of immigration and bankruptcy

• coin money, fix standards of weights and measures, and grant patents

• punish counterfeiting and piracy

• establish post offices and postal roads

• to constitute tribunals inferior to the Supreme Court

• declare war, and maintain and regulate armed forces

• to control the District of Columbia and other federal properties

Lest there be any doubt about enumeration and limitation, the 10th amendment reads as follows: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or the people.”

It should be obvious, then, that the vast majority of federal expenditures are not authorized by the Constitution; as such, they are prohibited and unconstitutional. Only a small percentage of actual federal spending is authorized by the Constitution: defense, operating and retirement expenses for federal employees, support to veterans, international relations and justice (for a total of $1.46 trillion). If we squint very hard at the Constitution, we could conceivably see transportation ($115 billion), health ($100 billion), and the environment ($48 billion)… if we suppose generously that such expenditures are authorized under the commerce clause, as functions that cannot be handled by the individual states. Even then, we find ourselves at $1.72 trillion, or 27.7 percent of the current budget.

This would represent savings of $4.48 trillion, or 72.3 percent of the budget that could be returned from the unconstitutional hands of politicians and bureaucrats, back to American families, consumers, and entrepreneurs. Unfortunately, the President lacks the authority to veto mandatory spending, and merely enjoys veto power over discretionary spending bills. And, for all his talk of reducing red tape, Mr. Trump has yet to show a libertarian or constitutional soul. It is thus unlikely that we will end up with a North American version of a chainsaw-wielding Javier Milei of Argentina.

2. Big-Ticket Items

A return to constitutional constraints would be lovely. But it is not in the realm of the politically possible. The second option would be to start with the low-hanging fruit of Social Security and Medicare. Social Security was born in 1935, as part of FDR’s New Deal, and Medicare came to be in 1965, as part of LBJ’s Great Society. Neither of these programs is means-tested (technically, the Social Security formula is redistributive, but participation in both programs is mandatory for all Americans).

Social Security might have been necessary in 1935 (I am skeptical, as I have read David Beito’s book, “From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890–1967.” Civil Society was doing a fine job of providing welfare, before the New Dealers decided everything had to be nationalized). But financial markets have evolved drastically since 1935. Americans now have easy, low-cost, and convenient access to mutual funds, and especially index funds that track the market without investor savvy.  The federal government could easily get rid of the low-yield, pay-as-you-go Social Security pension scheme, and replace it with a high-yield, portable, individually funded retirement plan. The Chilean plan of mandatory 10 percent contributions to a private fund would be a simple start. Likewise, insurance markets (especially if they are deregulated, unsubsidized, and fixed) can take care of the majority of American retirees.

Simply stated, most Americans don’t need Social Security and Medicare. These two big-ticket items eat about one third of the federal budget. They are unconstitutional. And they are unnecessary. Again, as a student of David Beito, Alexis de Tocqueville, Henry Hazlitt, Marvin Olasky, economics, and history, I have learned the superiority of private charity over government welfare. But, as a temporary solution, Social Security and Medicare could easily be privatized, with a portion replaced by means-test programs, with a much smaller cost. Currently, about 20 percent of Americans receive federal welfare or Medicaid. Setting aside details, we can easily imagine privatizing pensions and healthcare for the other 80 percent, with an 80 percent cut in Social Security ($1 trillion in savings) and Medicare ($671 in savings), for a total of $1.67 trillion in savings. This would still not be constitutionally authorized, but it would represent almost one third of the federal budget. As a bonus, a privately funded retirement plan would represent a surge in investment, and thus of economic activity and tax revenue; the lower expenses would mean the national debt would not increase as much, and pressure on interest payments would be relieved. The true savings would thus exceed one third.

Unfortunately, all retirees, rich and poor, have their snout in the federal trough—this was the political genius, and the fiscal disaster, of universal programs (rather than targeted means-tested programs). Social Security and Medicare costs are politically dangerous, and Mr. Trump has already promised he would not touch the two biggest federal expenditures.

3. Marginal Cuts

Without pushing constitutional respect or cutting the low-hanging fruit of big and outdated universal programs, the federal government could still save at the margin.

As mentioned above, the Competitive Enterprise Institute has calculated that 10 percent of GDP is spent each year on compliance with federal regulations. A Mercatus Center study estimates that, if regulations had stayed steady at the 1949 level, the American economy would be a whopping 3.5 times stronger (imagine, if you will, a GDP of $95 trillion instead of $27 trillion). What is more, regulation is regressive (it has a disparate impact on the poorest). Without attacking the budget directly, DOGE could take a serious ax to federal regulation, to great effect.

Finally, the Cato Institute has proposed a collection of small cuts that would amount to a serious $1 trillion to $2 trillion in savings (or 16 percent to 32 percent of the current budget).

It would be ideal, of course, to return to the constitution—for reasons of rule of law, as much as for fiscal prudence. More local responsibility, more market competition, less bureaucratic waste, more reliance on an efficient and human civil society over a wasteful and anonymous federal machine to help the poor—these would all be positive developments that would restore America’s fiscal health while actually tackling poverty. In the meantime, a 30 percent budget cut is within grasp—and it would represent a return to federal spending, not in some distant past… but as recently as 2001.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Moscow is fuming after at the start of this week several Russian state media outlets were blocked for EU-based users of the messaging app Telegram. Starting Sunday the channels of RIA Novosti, Rossiya 1, Channel One, NTV, Izvestia and Rossiyskaya Gazeta were inaccessible in the European Union.

Kremlin officials slammed the “act of censorship” – with Foreign Ministry spokeswoman Maria Zakharova describing “the systematic cleansing of all undesirable sources of information from the information space” as ongoing in the West.

She further condemned the “constant campaign of repression against Russian media in nearly all European Union countries,” adding that “these attacks and similar ones against our media will not go unanswered.”

“We reserve the right to respond in the same manner,” she said, but without specifying what form the retaliation will take. The EU had already since the Ukraine war’s start cracked down on the major Russian state television international networks.

More recently the EU moved against RIA Novosti, Izvestia and Rossiyskaya Gazeta, accusing the outlets of spreading propaganda on behalf of the Kremlin.

It remains unclear the degree to which Telegram and EU authorities are acting in coordination on this:

The messaging app Telegram has blocked access to channels belonging to major Russian state-owned news outlets across much of Europe, including Poland, Belgium, France, the Netherlands, Greece, Italy, and Latvia.

When users based in the affected European countries attempt to access these channels, they see a notice saying the content is unavailable because it “violated local laws.”

Neither Telegram nor European officials have publicly acknowledged the restrictions but Russian media outlets including RIA Novosti, Izvestia, NTV, Rossiya 1, and Rossiyskaya Gazeta all confirmed they had been blocked. 

Late last summer Telegram CEO Pavel Durov was indicted in France for allegedly allowing criminal activity on the app. France’s arrest of him at a Paris airport when his private jet arrived was highly unusual, given they went straight after the CEO and founder.

He has since vowed to cooperate on cracking down on criminal activity on the app, and be more responsive in providing data to law enforcement authorities.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Defense’s appeals court has turned down the Pentagon’s attempt to rescind the plea deals for the alleged mastermind of the Sept. 11, 2001, attacks and several alleged accomplices, paving the way for the men to avoid the death penalty.

U.S. Secretary of Defense Lloyd Austin did not have the authority to rescind the deals, a panel of judges on the U.S. Court of Military Commission Review said in the Dec. 30 ruling.

Even if Austin did have the authority, he waited too long to act as lawyers for the alleged attackers had already started meeting requirements in their pretrial plea agreements, the panel said.

The Pentagon had announced on July 31 that Susan Escallier, the official whom Austin appointed to lead the military court that is handling the 9/11 trials, signed off on the agreements with Khalid Shaikh (Sheikh) Mohammad, Walid Muhammad Salih Mubarak Bin ‘Attash, and Mustafa Ahmed Adam al Hawsawi. Mohammed is accused of masterminding the 9/11 attacks, which resulted in the deaths of nearly 3,000 in the United States, with help from the two others.

“In exchange for the removal of the death penalty as a possible punishment, these three accused have agreed to plead guilty to all of the charged offenses, including the murder of the 2,976 people listed in the charge sheet,” a letter from military prosecutors to the families of victims of the attack said.

Austin said on Aug. 2 that given the case’s significance, he would be in charge of it. He withdrew Escallier’s authority and the pretrial agreements.

U.S. Air Force Col. Matthew McCall, a judge, ruled in November that Austin lacked the authority to withdraw the agreements. Even if he had the authority, it was too late to act, according to McCall.

“If an accused begins performance of the terms of a PTA [pretrial agreement], the convening authority loses the right to withdraw from the deal,” the military judge wrote at the time.

The Pentagon appealed the ruling, leading to Monday’s decision.

The panel of judges said that Austin could replace Escallier as the convening authority for the case, even without taking all of her responsibilities. However, they said that the intervention in the current case “is without precedent” and that based on a ruling in a different case, Austin cannot order the withdrawal of the deals for Mohammad, Attash, and Hawsawi.

Escallier could withdraw the agreements, but only until the men started to meet the requirements, according to the panel.

Austin can withdraw Escallier’s authority to approve future agreements in the case, the judges said, in a partial victory for the military.

Planning to save more money is once again top of mind for many Americans making resolutions for 2025.

As Statista’;s Anna Fleck shows in the chart below, data from a recent survey by Statista shows that one in five U.S. adults are committing to the financial goal.

You will find more infographics at Statista

Vows to eat healthier, exercise more and lose weight were the next most commonly cited resolutions this year, picked by between 15-19 percent of respondents.

Four in ten U.S. respondents said that they do not plan on making any resolutions for next year.

Authored by Lawrence McDonald via The Bear Traps Report,

The Legendary “W” Games

Over the last 250 years of American political gamesmanship, both parties have played year-end games into the arms of a new incoming administration. In early 2000, the incoming George Walker Bush team discovered that every keyboard in the White House and other administrative offices was missing the “W” key.

The outgoing Clinton staff had removed all the “W” keys to annoy the new administration after an extremely contentious election.

The damage was small, estimated at $15,000.

But the bigger message here was that when the party that runs the White House changes, the outgoing administration will leave some proverbial “time bombs” for their successors.

While the damaged keyboards were more like a bad joke, what Biden is doing to Trump now is serious business. The outgoing administration has opened the spigots table max to get every penny out the door while they can under the existing budget.

It’s almost like they are looting the Treasury before they leave town.

Biden is Opening the Floodgates with Spending

Spending for 2025 is expected to exceed $2Tr by the time Biden leaves DC on January 20th. This is over 30% of the annual budget, and Trump will have to cut spending for the rest of the year to stay within the limits of the allocated budget. This could mean a notable slowdown in GDP growth in the first quarters of 2025.

Bonds have taken Notice

Ever since the Fed cut rates in September, U.S. 10-year bond yields are about 1% higher, and mortgage rates are following in lockstep. Hedge funds are selling short, betting on lower bond prices into colossal incoming bond sales from the U.S. Treasury. This is a highly unusual activity and has the fingerprints of the bond vigilantes everywhere; a revolt is in the works.

Lunatics – as Usual – on Capitol Hill 

Congress, in its usual fashion, has failed to agree on the next budget, so the government is currently operating under a “continuing resolution” (CR). This continuing resolution means the government is allowed to spend the same amount of money they spent last year, which is $6.75TR. The government’s fiscal year started on October 1st, and Biden is on a run rate to spend almost $2TR by the end of December and a deficit that may exceed $800bl (+60% y/y). So, when Trump comes in on January 20th, he has three quarters left of the government’s fiscal year, but by then, Biden has spent more than 30% of the total allocated budget. This forces Trump to cut spending right off the bat. We estimate spending could drop by $500bl quarter over quarter, or 25% from Q4 to Q1. This is an estimate, and the timing of spending can change. But the fact is that Biden is emptying the coffers before Trump gets in. Every week, more money and weapons are sent to Ukraine, more subsidies are given to semiconductor makers to build plants in the US, and more government employees are hired.

US Yields Surge While Others Languish

Since September, US Yields have surged over 20% on Biden’s sugar high, while Canadian and German yields are down since then, Chinese yields have collapsed, and UK yields are only modestly above the September level.

Government Job Growth Twice the Rate of the Private Sector

Private sector job growth has lagged government job growth significantly in the last year as the government keeps hiring people.

Why is this so Bad?

We believe that this spending deluge by Biden on his way out is partially to blame for the surge in bond yields in Q4. Some may say it’s because of Trump and his promised tax cuts, but the Republican House majority is so slim that it’s unclear how much of a fiscal stimulus Trump is actually able to get through Congress. Also, the incoming Senate majority leader Thune (R, SD) has said he will only get one bill through reconciliation in FY 2025 and another one in FY2026. His priority is on immigration and energy legislation, so a fiscal spending bill might not come until late 2025 or early 2026 if anything. But if yields are being pushed up by all this spending in Q4, then what will happen if spending falls back in early 2025? And what will happen to GDP growth? A $500bl drop in government spending from Q4 to Q1 is the equivalent of 1.7ppt of growth. So, if Q4 nominal growth comes in at 5.7% annualized, this could drop to 4% in Q1 if government spending slows down accordingly.

Treasury’s Reliance on Short-Term Debt Exploded in Recent Years

Election Rigging? We are witnessing a Covid era like spending in 2024 without a pandemic. The Treasury Department has come to rely on short-term bills to fund the government. But with $36Tr of debt, the Treasury has to issue bills almost every day to keep funding the government and to refund maturing debt.

Interest Payments on the Federal Debt Load

• 2026: $2.1T?

• 2025: $1.5T?

• 2024: $910B

• 2023: $658B

• 2022: $475B

• 2021: $352B

• 2020: $224B

*CBO data, Bloomberg. The average weighted coupon on the U.S. debt load is about 2.7% vs. over 4.5% for 10-year U.S. Treasuries. As bonds mature, they get refinanced at much higher yields.

$10Tr of Debt Refinancing Next Year

In 2024 Treasury faced around $10Tr of maturing debt. To refinance this debt, it issued a whopping $26Tr of bills and bonds. More than 84% of that paper was short-term bills with a maturity of 6 months or less. Treasury keeps re-issuing bills with a maturity of 4 to 8 weeks or 3,4 to 6 months, which are the most popular maturities in a continuing, ever-increasing roll down of the debt, day after day, month after month.

Apple Long-Term Bonds and Interest Rates

ALERT – By issuing nearly a colossal load of extremely short-term bills, Janet Yellen succeeded in suppressing bond volatility in an election year and, in our view, strategically placing that bond market volatility into 2025 after the election. You can “why” see above, she wanted LESS long-term paper in circulation markets in the election year. Now, in 2025 – this paper has to be rolled over and termed out into longer-dated bonds. The USA is behaving like a financially trapped emerging market country. Living on the “front-end” of the yield curve is a VERY dangerous game.  The Apple AAPL 2.55% bonds due 2060 are trading down at 57 cents on the dollar. If long-term bond yields go to 6%, take a guess where this bond will trade. Near 47 cents on the dollar? Now think of the trillions of USD loans issued in 2017-2021 on bank balance (commercial real estate, mortgages, corporate debt outstanding). Losses are in the trillions of dollars with higher incoming interest rates. 

Interest Rates UP – Bond Prices DOWN

Never, ever forget that 6% today is equivalent to the destructive capacity of 10% twenty years ago. Interest rates up, mean bond prices down. A 1% move in interest rates higher today is an entirely different, far more lethal equation.

Incoming Stress Points

In 2025 the U.S. Treasury faces $9.6Tr of maturities in their so-called publicly held debt. In Q1 alone — the government faces $5.58Tr of maturities (bonds coming due, redemption), but 86% of those are short-term bills that the Treasury department rolls over into new 4-week, 8-week, 3,4, or 6-month bills, among others. 

As a result, almost daily bill auctions are coming to a theater near you, as the Treasury Department mindlessly keeps pushing new paper into the market to pay back the colossal amount of maturing debt.

Is There Any Reason to Buy Treasuries?

The new Treasury department under Scott Bessent may reduce bill issuance a bit and increase coupon paying issuance, just to alleviate some of the pressure on the bills market and extend the duration of outstanding US debt. Now that the big slush fund that bought all these bills, the so-called Reverse Repo Facility (RRP), is close to being depleted, it will be harder to sell all that short-term paper. In addition, Goldman Sachs expects that the Federal Reserve will stop the run-off of treasuries from its balance sheet by the end of January and begin buying treasuries again with the proceeds of the maturing MBS on its balance sheet. As such, the Fed becomes a modest buyer of treasuries next year, which allows the Treasury to increase coupon issuance without disrupting the long end.

One big bullish catalyst for treasuries would be a regulatory change to exempt treasuries from the Supplemental Leverage Ratio (SLR). It is unclear if and when this would be implemented, although Bessent was hinting at regulatory relief for banks to boost banks’ treasury holdings. Exempting treasuries allows banks to hold more Treasuries on their balance sheets without needing to hold additional capital against them, freeing up the capacity for banks to participate more actively in the Treasury market. Its unclear how much treasury demand that would create, but in 2021, when the temporary SLR exemption was reinstated after COVID, prime dealers reduced their Treasury holdings from $250bl to $125bl in 2 months. A change in the SLR ratio may come but is going to take months before the rules are changed. A phase-out of QT for treasuries would be a more immediate, albeit more modest, relief for the bond market. According to this timeline, the Fed will end up buying $100bl of treasuries in 2025, a big change from the $500bl of treasury sales in 2024.

The Fed has been Politicized

We have been very critical of Yellen’s term at the Treasury, but upon some further reflection, we think it’s really the case that Yellen’s only real issue was acting in the short-term interests of her boss and her party as opposed to thinking longer-term about how the government finances itself on a sustainable basis.

Her decision to fund the government with T-bills over duration securities and violate long-standing Treasury Department “norms” was incredibly short-sighted, but as someone who works for the President, ORDERS to follow.

Many have been super critical of her for these decisions because she should know what they would lead to and how really what she (and Powell together) has done is favor asset owners and the wealthy over everyone else in America, exacerbating wealth inequality to precarious levels in this country while still not bringing inflation back down to target. So ultimately, her decisions got her team knocked out of office anyway.

Looking forward, though, the issue is that there is no one in the government who is really thinking about and acting on behalf of the longer-term interests of the country when it comes to how much debt we are raising and how we are financing the government. The myopia about these decisions to get the existing political party in control through the next election is incredibly concerning.

The Fed has said this is not their lane; however, they are elected to 14-year terms and are supposed to be above politics. There are things they could have done to offset the politicization of the Treasury. They chose not to, they continue to protect asset holders and the Treasury market, decisions that really just make them become political as well. They could have better neutralized Treasury’s political decisions through more active QT, actually selling securities instead of just rolling them off, not adding to their duration holdings such that the weighted average maturity (WAM) of their positions is longer than Treasury’s own WAM. Powell’s Fed needs to be getting way more criticism than they are currently about these decisions which have made it harder to bring inflation down for the average American.

So if the Treasury is not going to think long term and the Fed is not going to either (the Fed actually is complicit because they don’t allow any real treasury market dysfunction to exist, which would be the way to deal with these long term issues by having the market / bond vigilantes do their thing), then who will? This is a problem, the bond market is starting to figure it out, term premiums are starting to normalize and the new administration will have to make some big decisions early on in their term.

Maybe @elonmusk and @DOGE can look into this as well. Someone has to!

*  *  *

Pick up Larry’s new best-selling book — “When Markets Speak“ – On Amazon today.  

With everyone on edge after the New Orleans ‘terrorist attack‘ on Bourbon Street early this morning, reports flooded X moments ago of a ‘boom’ and/or a ‘vehicle fire’ in Las Vegas. 

BREAKING: Witnesses heard “boom” video smoke rising near Trump Tower in Las Vegas.
pic.twitter.com/Fk3TtxnMlN

— Breaking911 (@Breaking911) January 1, 2025

It turns out the ‘boom’ was caused by a Tesla Cybertruck ablaze in front of the Trump Hotel in Las Vegas, possibly due to a lithium battery fire.

Cybertruck blew up in front of Trump hotel in Las Vegas. Those are our luggage by the door and that’s where we were when it happened. pic.twitter.com/KaVZXfGLNK

— ayackle (@kaaaassuu) January 1, 2025

What are the odds?

An era came to a close in Europe on the first day of 2025.

Russian gas exports via Soviet-era pipelines running through Ukraine came to a halt on New Year’s Day, marking the end of five decades of Moscow’s dominance over Europe’s energy markets, as well as cheap gas that kept Germany’s economy humming.

The gas had kept flowing despite nearly three years of war, but Russia’s gas firm Gazprom said it had stopped at 0500 GMT after Ukraine refused to renew a transit agreement as we previously noted.

According to Reuters, the widely expected stoppage is unlikely to impact prices for consumers in the European Union – unlike in 2022, when falling supplies from Russia sent prices to record highs, worsened a cost-of-living crisis and hit the bloc’s competitiveness – however, that is a rather naive statement since European nat gas prices have been rising all year and closed 2024 more than doubling from their February lows. They will only keep rising now.

The last few European buyers of Russian gas via Ukraine, such as Slovakia and Austria, had already arranged alternative (and far more expensive) supply, while Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea. But Transdniestria, a breakaway pro-Russian region of Ukraine’s neighbor Moldova also reliant on the transit flows, cut off heating and hot water supplies to households early on Wednesday. Local energy company Tirasteploenergo urged residents to dress warmly, hang blankets or thick curtains over windows and balcony doors, and use electric heaters.

The European Commission said the EU had prepared for the cut-off.

Russia and the former Soviet Union spent half a century building up a major share of the European gas market, which at its peak stood at around 35%.

But the EU has slashed its dependence on Russian energy since the start of the war in Ukraine by buying more piped gas from Norway and LNG from Qatar and the United States.

“The European gas infrastructure is flexible enough to provide gas of non-Russian origin,” a spokesperson for the Commission said. “It has been reinforced with significant new LNG (liquefied natural gas) import capacities since 2022.”

The biggest beneficiary of said LNG imports is, of course, the US which has seen its LNG exports to Europe soar since the Ukraine war and since the US blew up the Nordstream pipeline, making (expensive) US sourced LNG one of the few realistic alternatives for Europe. In other words, Europe has gone from relying entirely on cheap Russian gas to relying entirely on expensive US LNG.

Ukraine, which refused to extend the transit deal under pressure from the vegetable in the White House (whose son was recently pardoned for any crimes starting around the time Hunter Biden was appointed to the board of Ukraine’s energy giant Burisma), said Europe had already made the decision to abandon Russian gas.

Combined pipeline routes from Russia delivered a record high 201 billion cubic metres (bcm) of gas to Europe in 2018. The number however ground to a halt after the Ukraine war; the Nord Stream route across the Baltic Sea to Germany was blown up by the US in 2022 and the Yamal-Europe pipeline via Belarus has also shut. Russia shipped about 15 bcm of gas via Ukraine in 2023, down from 65 bcm when the last five-year contract began in 2020.

“We stopped the transit of Russian gas. This is a historic event. Russia is losing its markets, it will suffer financial losses,” Ukraine’s Energy Minister German Galushchenko said in a statement.

While Ukraine’s propaganda is understandable – Russia long ago found alternative end markets – nobody will suffer as much as Germany.

As Bloomberg’s Stephen Stapczynski wrote, “Cheap Russian gas was the backbone of some European economies for essentially half a century. That’s now ending. And Europe is set to face higher-for-longer gas prices.” One needs only to look at the ongoing collapse of Germany’s economy to observe this in real time.

And some more context from the Bloomberg analyst who writes that Russia provided half of Germany’s gas in 2021. It’s now zero, and so “due in part to the loss of Russian energy and other factors, Germany’s economy is 5% smaller than it would have been if the pre-pandemic growth trend had been maintained.”

Ukraine, of course, is also a loser: the country that has become a deep state testing bed for World War 3, will lose up to $1 billion a year in transit fees from Russia. To help offset the impact, it will quadruple gas transmission tariffs for domestic consumers from Wednesday, which could cost the country’s industry more than 1.6 billion hryvnias ($38.2 million) a year.

The company halted supply to Austria’s OMV in mid-November over a contractual dispute but in recent weeks Russian gas has been reaching Austria via Slovakia at a rate of around 200 gigawatt hours (GWh) per day. For Jan. 1, only about 7 GWh per day is expected to flow from Slovakia to Austria, Austrian energy regulator E-Control said.

Slovakia’s main gas buyer SPP said it would supply its customers mainly via pipelines from Germany and also Hungary, but would face additional transit costs.

Authored by Michael Snyder via TheMostImportantNews.com,

The U.S. government is currently constructing the most colossal monument in the history of the world.  It is a monument of debt, and we will forever be remembered as the nation that piled up far more debt than anyone else ever did.  For decades, this generation has been recklessly spending the money of future generations of Americans.  Most people seem to think that we are totally getting away with this swindle, but the truth is that the party is almost over.  Our national debt has already surpassed the 36 trillion dollar mark, and according to usdebtclock.org at our current rate of spending our national debt will surpass the 51 trillion dollar mark four years from now.

We are a spoiled, bloated, greedy nation that has run up a debt so big that words simply do not do it justice.

We have got to stop spending so much money, but we just can’t help ourselves.

In January, Donald Trump will be faced with some very difficult decisions regarding our debt as soon as he is inaugurated…

It’s going to be an urgent issue for Trump as soon as he takes office. The federal government will resume the cap on its borrowing authority on Jan. 1, as the U.S. sits on a national debt of more than $36 trillion, though the Treasury Department can buy time for a number of months with so-called extraordinary measures. The fiscal time bomb illustrates the struggle Trump and Republican leaders face heading into 2025, as they consider whether to court Democrats who will want concessions or their own conservatives who are known for rigidly sticking to their demands to cut funding.

If Trump decides that it is time to cut spending, that will make our short-term economic problems even worse.

But if he decides to keep spending money at current levels that would be suicidal.

Most Americans have no idea how difficult it is to spend a trillion dollars.

If you spend one dollar every single second, you could spend a million dollars in just twelve days.

If you spend one dollar every single second, you could spend a billion dollars in 32 years.

But at that same rate, it would  take you more than 31,000 years to spend a trillion dollars.

Let me give you another illustration.

If you were alive 2000 years ago and you started spending one million dollars every single day when Christ was born, you still would not have spent one trillion dollars by now.

That is how large one trillion dollars is.

But the United States is not one trillion dollars in debt.

The United States is 36 trillion dollars in debt.

And as I discussed the other day, we will never pay that debt off.

A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times.  That amount of money would still not be enough to pay off one-third of the U.S. national debt.

But if you are determined to do something, the government wants you to know that you can help.

If you can believe it, the government is actually taking online donations that will be used to help pay off the national debt.

Or at least that is what they are claiming.

If you were able to donate one dollar every single second to help pay off the national debt, it would take you hundreds of thousands of years to come up with enough money to pay it off.

Are you starting to get the picture?

We are in so much trouble.

We could have lived within our means and left America in tremendous shape for the generations that follow us.

But that is not what we did.

Instead, we have saddled our children and grandchildren with the greatest mountain of debt in the history of the world.

What we have done to future generations of Americans is beyond criminal.  One day, if they get the chance, they will look back and curse this generation for what we have done to them.  We spent tens of trillions of dollars that belonged to them, and we have stuck them with the bill for our wild excesses.  We have taken the greatest economic machine that humanity has ever seen and we have driven it straight off a cliff.

And yet we are so proud of ourselves.

We think that we are so special and that we have all the answers.

Of course the truth is that we should be deeply ashamed of ourselves.  Over and over again we kept sending the same clowns back to Washington D.C. and they just kept on spending our money like they were playing a really twisted game of Monopoly.

So now we are going to pay the price.

All of us.

Apparently the Chinese wanted to see how much of a joke the U.S. Treasury has become, because they hacked into it a few weeks ago…

A state-sponsored actor in China hacked the U.S. Treasury Department, gaining access to the workstations of government employees and unclassified documents, the Biden administration said on Monday.

The announcement comes after revelations in recent months that China had penetrated deep into U.S. telecommunications systems, gaining access to the phone conversations and text messages of U.S. officials and others.

According to Reuters, this was a “major incident”…

The hackers compromised a third-party cybersecurity service provider and were able to access unclassified documents, the letter said, calling it a “major incident.”

According to the letter, hackers “gained access to a key used by the vendor to secure a cloud-based service used to remotely provide technical support for Treasury Departmental Offices (DO) end users. With access to the stolen key, the threat actor was able override the service’s security, remotely access certain Treasury DO user workstations, and access certain unclassified documents maintained by those users.”

Of course you don’t have to be a hacker to find out the big secret that the U.S. Treasury is trying to hide.

The big secret is that we are broke.

We are drowning in an ocean of red ink, and we can barely pay our bills.

Something has got to change, because if we stay on the path that we are currently on we will be 51 trillion dollars in debt four years from today.

*  *  *

Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Over the last year, the future strength of the global economy has been a mixed picture amid rising protectionism and geopolitical conflict.

In the U.S., growth was resilient – but higher prices, despite cooling inflation, continued to squeeze consumer wallets. European economies faced slower growth, with Germany facing a two-year downturn. In China, property market troubles weighed on consumer confidence and economic growth.

Given this backdrop, how confident are people around the world in the global economy looking ahead to 2025?

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows global economic sentiment by country, based on survey data from Ipsos that asked respondents whether they felt the global economy would be stronger or weaker in 2025 compared to 2024.

Rising Optimism for the Global Economy in 2025

Below, we show how consumers view the global economy across 33 different countries, drawn from a survey of 23,721 adults between October 25th and November 8th, 2024:

Overall, consumers are slightly more optimistic about the global economy going into 2025, with 51% agreeing it will be stronger than in 2024, on average.

This is a one percentage point increase from last year’s survey results which were an even 50/50 split.

Going into 2025, the most optimistic countries are in Asia, particularly emerging markets like Indonesia, Malaysia, and India that have benefited from shifting global supply chains and demographic factors. Moreover, Indonesia and India are forecast to see among the fastest real GDP growth across major economies over the next decade.

When it comes to China, 78% of consumers have optimistic views on the global economy while Japan and South Korea are the two countries in Asia with a notably pessimistic outlook for the global economy next year.

In South America, the most optimistic countries include Argentina, Peru, and Brazil. Under President Milei, Argentina has seen its first fiscal surplus in 12 years driven by sweeping budget cuts and reforms. As inflation has plummeted, global economic confidence has significantly improved among Argentinians since last year.

For U.S. consumers, expectations rose by nine percentage points from last year’s survey, resulting in an optimistic majority of 54%. While tariffs stand to add new price pressures, Trump’s proposed tax cuts could help support economic growth.

By contrast, European countries have the most pessimistic views on the global economy. Amid looming trade wars and sustained energy price shocks from the Russia-Ukraine war, seven of the 10 most pessimistic countries were found on the continent.