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Authored by Charles Hugh-Smith via OfTwoMinds blog,

The only possible output of a system lacking any discipline is self-destruction.

Whatever is free is squandered. When water is free, it's freely wasted. When electricity is free, there's no motivation to use it wisely.

The same principle holds true for money. If money is free, or nearly free, there is no motivation to invest it wisely, or consider the opportunity costs of spending it versus investing it or preserving it as savings.

Money that can be borrowed for next to nothing is essentially "free" because the costs of interest are negligible. Money that can be borrowed in virtually unlimited quantities is also "free," as whatever funds are squandered or lost to malinvestment can be easily replaced with more borrowed money.

Nothing enduringly productive can be built without discipline and a steady focus on the bottom line of production costs, revenues, overhead expenses and opportunity costs, i.e. what else could have been done with this capital and labor?

These dynamics are scale-invariant, meaning they apply to individuals and households as well as to companies, institutions and nation-states.

Thus we see the same poor results in trust-funders whose income is "free" (pouring in monthly whether the individual was productive or not) and national governments that can simply borrow another trillion dollars (or $10 trillion, hey why not?) when they've squandered all the tax revenues.

We intuitively grasp the necessity of discipline to corral impulses and desires that are self-destructive in the longer term. Eating chocolate cake and ice cream might appeal to our immediate cravings, but longer term the consequences of unbridled consumption of this kind of sweets are dire.

We also grasp the role discipline plays in learning difficult subjects/tasks and in accomplishing long-term, often arduous projects.

If there is any commonality to genius, it is a prodigious work ethic based on a highly disciplined schedule of daily productive effort.

All of which leads us to ask: what precisely have we accomplished by borrowing and blowing $9 trillion in additional national debt over the past eight years? With interest rates near-zero and the credit line of the nation essentially unlimited–recall that the central bank created $3.5 trillion of money out of thin air and used much of it to buy federal bonds–there was no need for any difficult choices or trade-offs–that is, discipline.

The trillions could be borrowed from future taxpayers painlessly, and squandered on propping up unaffordable entitlements and programs that were each immune to discipline.

So a pharmaceutical company raises the cost of a pinworm medication from $3 to $600. When money can be borrowed in endless quantities for "free," there's no need to ask if this predatory piracy is justified or necessary for the good of the nation; just borrow another trillion to pay for Medicare and Medicaid costs that are largely skims, scams, fraud or unproductive paper-shuffling.

As long as the money spigot is "free," there's no need to ask why the F-35 fighter aircraft is four times as costly as the aircraft it replaces.

As long as the money is "free," why should any politico risk telling a National Security agency such as the CIA "no more money for your agency until you can account for the tens of billions you're spending on gosh knows what."

Lowering interest rates to near-zero has reduced the need for fiscal-political discipline to near-zero. Politicos of all stripes are only too willing to borrow trillions from future generations–why not borrow and blow the money now to assure my re-election, and let future taxpayers figure out what to do about the crushing burden of debt we're leaving them?

High interest rates were basically the only mechanism of discipline imposed on short-term, free-spending politicos. Once the cost of interest was reduced to signal noise, politicos were freed of the burdens of discipline: of having to reckon the burdens of future interest, of opportunity costs, of trade-offs and the difference between productive investments and cronyist pork-barrel spending on marginal (but highly profitable) "infrastructure."

How disciplined will your gambling be in the casino when all your losses are covered by future taxpayers? Why hold back from risky gambles when any losses will be paid by others? Go head and gamble wildly–any lucky wins will be yours to keep, and all the losses will be covered by nameless others.

This is how "free money" leads to disastrous decisions. With the need for discipline eliminated, there's no motivation not to gamble wildly, fund every special interest group's demand, and grease the palms of every insider, every crony and every oligarch.

This is how a great nation will self-destruct. The only possible output of a system lacking any discipline is self-destruction.

*  *  *

If you found value in this content, please join Charles in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

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Several months ago, after Einchenwald performed miserably during a Tucker Carlson debate, a troll on Twitter sent him a strobe tweet, which then actually caused Kurt to have a fucking seizure.

At the time I thought it was hilarious, not because having seizures or causing them is funny, but because in order to activate the deadly strobe tweet that was sent to Kurt, he had to have clicked on the image to activate it. In other words, stupid Kurt gave himself a seizure.

But now the fun is over and the twitter prankster is likely going to prison, alongside another 40 people who thought it was funny to tweet strobe causing images to people who are prone to getting them. Trolls BTFO.

When will you fuckers realize that the social media ghettos are nothing more than honey pots? I strongly advise that you start hanging out more on sites like Zerohedge, who don’t give a shit about strobe causing GIFs, in favor of ‘send a tweet, go to prison’ Twitter.

Content originally generated at iBankCoin.com

 

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Arriving in Washington for her first face-to-face meeting with President Trump, after months of preparation and one postponement due to snow, Obama's old friend German Chancellor Angela Merkel will likely discuss trade and immigration, though officials said there were few concrete goals.

Last month she met Vice President Mike Pence in Munich, where he was delivering the first major foreign policy address of the Trump administration, and laid the groundwork for Friday's meeting.

As CNN notes, aides said they expected Merkel to appeal to Trump's sense of businesslike efficiency in an attempt to win over the new US leader. She's used a workmanlike attitude and droll wit to make inroads with two previous presidents. With George W. Bush, Merkel was able to cooperate on key economic issues, despite Bush's deep unpopularity in Germany. With Obama, she forged a bond so deep and obvious it was parodied on "Saturday Night Live."

Remember, we already know what the Germans think of Trump…

After the awkward non-handshake, the press conference could take uncomfortable to a whole new level given Trump's comments during the campaign, criticizing her decision to allow hundreds of thousands of refugees to enter Germany. That decision was also unpopular in Germany, and Merkel has since said she'll devote funds to sending refugees who weren't granted asylum back to their home countries…

"I like her, but I think it was a mistake. And people make mistakes, but I think it was a very big mistake,"

Live Feed (due to start at 1320ET):

We know someone will be watching closely…

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For the 9th straight week (and 35th of the last 37 weeks), the US oil rig count rose this week (surging by 14 to 631 – highest since September 2015).

The rig count continues to track the lagged WTI price

 

US Crude production has accelerated at a faster pace than the lagged rig count…

 

And that is pushing OPEC to the breaking point:

• *OPEC COMMITTEE SAID TO SEE COMPLIANCE WITH CUTS OF 106% IN FEB
• *JOINT OPEC, NON-OPEC COMPLIANCE SEEN AT 94% IN FEB.: DELEGATES
• *CUTS COMPLIANCE BY NON-OPEC ALONE SEEN AT 64% IN FEB.: DELEGATE

Who's the sucker at that table?

As OilPrice.com's Michael McDonald points out, the trend in the United States of accelerating oil production does not seem to be slowing down. Recent reports show that oil production from U.S. shale producers will increase in April, according to the Energy Information Administration. High market prices are currently being supported by OPEC cutbacks, and these higher profits are funding the growth of American drilling.

The release from the EIA predicts that net oil production will increase by 109,000 barrels per day in April. The seven major oil and gas basins that were included in the report will then have an output over nearly 5 million barrels per day collectively.

The monthly projections from the EIA have been climbing month after month since December. That month, 11 large oil exporting countries joined the supply cuts established by OPEC to control what they believed was an oversupplied market for crude oil.

In the United States, the main benefactors have been drillers at the Permian Basin, in Western Texas and southern New Mexico. The basin has been producing high volume since the end of 2016. The EIA expects the Permian drillers to see a gain of 70,000 barrels per day next month in their projections.

However, the Permian Basin is not the only United States site trying to capitalize on high prices. Drillers in southeast Texas, the Eagle Ford region, have also been ramping up production. Those drillers will amount for an increase 28,000 barrels per day in the EIA’s overall growth projections. Prior growth expectations for Eagle Ford producers was half on that number, at an increase of 14,000 barrels per day; the growth is not only steady, but is accelerating.

The EIA report for next month also shows a decline at several U.S. drilling sites. Take, for instance, the Niobrara region of Colorado and the Bakken Shale production in North Dakota. Both will experience declines of 11,000 barrels per day, and 10,000 barrels per day respectively.

The supply increases by the U.S. have capped any gains to be seen for OPEC nations from their cutbacks. This has been keeping crude futures within a tight range. On Monday, March 13th, U.S. crude ended at $48.40, a price that hasn’t been seen since before OPEC announced their cutbacks in December 2016.

These recent developments have led analysts to believe OPEC’s cutback policy is fated to end in the near future. It is clear that the United States has a sustainable means to regulate prices in the global oil market. Furthermore, the dynamics of U.S. outputs indicate that the country will not have any desire to participate in the cutbacks; U.S. law prohibits any such price controls. The United States will continue to threaten any gains to be had by OPEC.  

Saudi Arabia has been the leader in the cutbacks thus far, compensating for Russia’s hesitation with withholding supply. Historically, the kingdom has refused to participate in such cuts. However, under the tutelage of new oil minister Khalid al-Falih, they have exceeded their cuts far beyond the original OPEC deal. However, without total compliance, markets will remain unstable – regardless of how much the Saudis holdback.

These factors combined have led analysts to believe the OPEC deal will be forced to end, if only to end the profitability to U.S. growth and production.

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Authored by Raul Ilargi Meijer via The Automatic Earth blog,

The Dutch elections on Wednesday have provided a whole bunch of Orwellian narratives. PM Mark Rutte’s right wing VVD party, actually the ‘business’ -or should we say ‘rent-seekers’ in 2017- party, who lost some 20% of the seats they had obtained in the previous parliamentary election in November 2012, down from 41 to 33 seats, is declared the big winner. While Geert Wilders’ very right wing party, PVV, won 25% more seats -it went from 16 to 20- and is the big loser.

Moreover, Rutte’s coalition partner, labor PvdA, gave up 29 out of 38 seats to end up with just 9. That’s a loss of over 75%. Together, the coalition partners went from 79 seats in the 2012 election to 42 in 2017. That’s an almost 50% less. Not that it could prevent Rutte from proudly declaring: “We want to stick to the course we have – safe and stable and prosperous..” Makes you wonder who the ‘we’ are that he’s talking about.

That course he wants to stick to had a finance minister named Dijsselbloem, and his party just lost by over 75%. So he won’t be back. But perhaps the EU can pull another ‘Tusk’, and leave him in place in Brussels as chairman of the Eurogroup no matter what voters in his own country think of him. Still, declaring your intention to ‘stick to the course’ when your coalition has just been sawed in half, it’s quite something.

The only reasons Rutte’s VVD ended up being the biggest party all have to do with Wilders. The anxiety over the election all had to do with polls. Wilders is a one man party and a a one trick pony. If he would leave, his party would dissolve. And his sole ‘message’ is that Islam is bad and should vanish from first Holland and then Europe. He doesn’t really have any other political program points. Ok, there’s Brussels. Doesn’t like that either.

Perhaps that’s why he largely shunned the pre-election debates. Problem with that is, these things attract a lot of TV viewers, crucial free air-time. All in all, since he’s his own worst enemy in many respects, it’s not that much of a surprise that Wilders’ support collapsed, and that’s just if we were to take Dutch pollsters more serious than their counterparts in the US and UK.

Talking of which, according to Rutte, those are the countries where ‘the wrong kind of populism’ has won and delivered Trump and Brexit. And of course there are lots of people who agree with that. What either they, or Rutte himself, would label ‘the right kind of populism’ is unclear. Maybe Rutte himself is the right kind of populist?

The row with Turkey over the weekend must have helped Rutte quite a bit. Not only were his actions in the row met with approval by a large majority of the Dutch population, including just about all other party leaders, the Dutch also got to think about what WIlders would do in such a situation. And there can be no doubt that Rutte is seen as much more of a statesman than Wilders.

Not that the row is over. After Turkey announced yesterday it would return 40 Dutch cows (?!) , today Turkish Foreign Minister Cavusoglu said Europe’s politicians are “taking Europe toward an abyss”, and: “Soon religious wars will break out in Europe. That’s the way it’s going.” There can be no doubt that a shouting war like this with Wilders as one of the participants would take on a whole different shape, and a different choice of words.

What Rutte’s going to do next is form a new coalition, this time not with the left but with the center-right, and no-one will be able to tell the difference. If Dutch, and European, and global, politics have one main problem, it’s that. Left is right and right is left and winners are losers. If a guy like Dijsselbloem can squeeze Greek society dry in his capacity as Eurogroup head, while he runs as a leftist candidate in his own country, and loses hugely, anything goes.

All those who think they can see in the Dutch experience, a sign that Marine Le Pen’s chances in France’s presidential elections in April and May have dropped a lot, would appear to be delusional. Judging from reactions in the financial markets, many seem to be. But Le Pen is much less of a fringe figure than Wilders is, and she certainly wouldn’t shun a debate. It’s true that her Front National is a one-woman operation, bit she has a much clearer political program than Wilders does.

And she doesn’t have an opponent like Rutte, who’s become a formidable presence domestically, as anyone would be who can be PM for many years and not be put out by the curb. The man who should be Le Pen’s main adversary is not; Hollande is out by that curb and doesn’t even dare run again. His Socialist party has become a joke. The next strongest opponent should be François Fillon, but he’s all but gone now he’s been placed under formal investigation.

That leaves only Emmanual Macron, an independent without a party and without a program. In France, you can be elected president in such a situation, but your hand are tied in all sorts of ways, because you need parliament to vote for things.

..the nuances of the French political system put Macron in a spot of bother. The president derives their power from the support of a majority in the lower house of parliament, the National Assembly. Macron was a minister for the Socialist Party government but quit in 2016 to form his own political movement. Now he doesn’t even have a party, let alone a majority. Although the constitution of the French Fifth Republic, created by Charles De Gaulle in 1958, extended presidential powers, it did not enable the president to run the country.

 

There are only a few presidential powers that do not need the prime minister’s authorisation. The president can appoint a prime minister, dissolve the National Assembly, authorise a referendum and become a “temporary dictator” in exceptional circumstances imperilling the nation. They can also appoint three judges to the Constitutional Council and refer any law to this body. While all important tasks, this does not, by any stretch of the imagination, amount to running a country. The president can’t suggest laws, pass them through parliament and then implement them without the prime minister.

 

The role of a president is best defined as a “referee”. Presidential powers give the ability to oversee operations and act when the smooth running of institutions is impeded. So a president is able to step in if a grave situation arises or to unlock a standoff between the prime minister and parliament, such as by announcing a referendum on a disputed issue or by dismissing the National Assembly.

 

So, why does everyone see the president as the key figure? In a nutshell, it’s because the constitution has never been truly applied. There lies the devilish beauty of French politics. A country known since the 1789 revolution for its inability to foster strong majorities in parliament has succeeded, from 1962, in providing solid majorities.

Perhaps those who believe that what happened in Holland is also likely to happen in France are swayed by the notion that both are part of the EU. But they are very different countries and cultures, and different political systems. And Le Pen is no Wilders. She doesn’t say crazy things anymore, she’s cleansed the public image of her party by getting rid of her father, and she keeps any remaining extremists out of view.

There is still plenty suspicion in France about her, and about her party, but there are also a lot of people who agree with a lot of what she says. The perhaps most noteworthy statement she’s made recently is that she would step down if she loses the referendum about membership of the EU she intends to launch if elected president. That should keep Brussels on their toes. Marine means what she says. And a lot of French people may get to like her for that. In a political landscape in which the competition keeps shooting itself in the foot.

Another thing about Le Pen is that her political program contains quite a few bits and bolts that could be labeled leftist; a 35-hour work week, retirement at 60, lower energy prices. It’s just that she wants to reserve these things for the French. Foreigners, especially, Muslims, are not invited. And she is very much opposed to neo-liberalism and globalization:

They’ve made an ideology out of it. An economic globalism which rejects all limits, all regulation of globalization, and which consequently weakens the immune defences of the nation state, dispossessing it of its constituent elements: borders, national currency, the authority of its laws and management of the economy, thus enabling another globalism to be born and to grow: Islamist fundamentalism..

Le Pen’s popularity does not come from an overwhelming innate racism in France -though such a thing certainly exists-. It comes instead from the formidable failure that the country’s immigration policy has been for many decades. At the outskirts of major cities ghetto’s have been allowed to form in which those that come from former French colonies, especially in Africa, feel trapped with no way out. The French tend to feel superior to all other people, and the political system has let the situation slip completely out of hand.

Now France, and Europe is general, will have to deal with this mess. So far, the main European reaction is to turn Greece into a prison camp for a new wave of refugees and migrants. That can of course only make things worse. And it doesn’t solve any of the existing problems. Which makes the rise of Marine Le Pen inevitable.

And Wilders too; he’s the no. 2 party in Holland, because his party won 33% more seats than in 2012 to go from 15 to 20. That 33% gain, versus Rutte’s 20% loss, makes Wilders a loser in the eyes of many ‘relieved’ observers.

Winners are losers, and as is evident in Le Pen’s social policies for the French, in European coalition governments that contain Labor and right wing parties, and in the course of the Democratic party in the US, left is definitely the same as right.

Orwell always wins. Next problem: the actual left are not represented by anyone anymore.

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Few recall what transpired one month ago when Japan’s PM Abe met with Donald Trump, but everyone remembers the infamous handshake:

Ini yg viral kmren.

Tangan Abe meletakkan lbh brada di atas dn cenderung membalikkann tgnnya dibanding trump, serta menolak stand handshake http://pic.twitter.com/WJ2eNZbKGz

— Me (@Adityawise) February 12, 2017

 

Today, as previewed, Trump is meeting with his European nemesis, the green-wearing German Chancellor Angela Merkel, and will hold a press conference at 1:20pm, although what most really wanted to know is whether Trump would unleash the infamous “handshake” yet again.

This is what happened next according to CNBC’s Steve Kopac:

“Can we get a handshake?” the press asks

Merkel looks at Trump

“Do You Want A Handshake?”

Trump grins

At that moment the press is ushered out without any handshake.

“Can we get a handshake?”

*Merkel looks at Trump*

*Trump grins*

*Press is ushered out without any handshake* http://pic.twitter.com/dKxu5C5X9Y

— Steve Kopack (@SteveKopack) March 17, 2017

 

And that is all you need to know about the current state of US-German relations; you can ever drink right through the press conference.

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With nearly 64 thousand followers, the name Randall Rye will likely be familiar to those who follow finance Twitter:

Having built up the substantial following since joining August 2011, the famous Randalph “Randy” Rye unexpectedly stopped tweeting just after the new year, with his last tweet hitting on January 5.

6.8668 Yuan fix vs 6.9307 just yesterday

— Randy Rye (@R_Rye) January 6, 2017

Why the sudden silence?

It appears that’s about the time the 26-year-old Randall found out the authorities had figured out that instead of running a legitimate trading operation as he had represented to people gullible enough to give him their money, something called Faster Than Light Trading LLC, he was – allegedly  – merely the latest fraud, stealing and using up to $1.5 million in cash for his own personal expenses and engaging in the latest criminal Ponzi scheme.

Instead of using the money to trade, Randy “misappropriated the investors’ funds for his own personal expenses, such as air and hotel travel costs, including vacations to St. Lucia and Bali, tickets to sporting events, including the World Series and the Masters golf tournament, and on other luxury items and large cash withdrawals.“

And, according to a DOJ indictment released last night, Randy won’t be tweeting again under this account, because last month Randy was arrested and remains in federal custody. “At the time of the arrest, law enforcement searched his home and office, seizing his business records and several expensive watches.”

In retrospect, Randy was a far more convincing twitterer than trader. The allegations behind his misconduct were disclosed in the full complaint filed by the US Attorney’s Office for the Northern District of Illinois.

* * *

Chicago Trader Indicted on Fraud Charges for Allegedly Misappropriating at Least $1.5 Million in Client Funds

CHICAGO — A Chicago trader defrauded more than a dozen clients out of at least $1.5 million by pocketing their money instead of investing it, according to an indictment returned in federal court in Chicago.

RANDALL RYE, the owner of Faster Than Light Trading LLC, told investors that they would earn substantial profits from his proprietary trading program. Rye claimed that he would invest their money in options and futures contracts using a computer algorithm. In reality, Rye misappropriated the investors’ funds for his own personal expenses, such as air and hotel travel costs, including vacations to St. Lucia and Bali, tickets to sporting events, including the World Series and the Masters golf tournament, and on other luxury items and large cash withdrawals, according to the indictment.

As a result of the scheme, Rye fraudulently misappropriated at least $1.5 million from at least 15 investors, the indictment states.

The indictment was returned Wednesday in federal court in Chicago. It charges Rye, 26, of Chicago, with six counts of wire fraud. Arraignment is scheduled for March 21, 2017, at 1:15 p.m., before U.S. Magistrate Judge Michael T. Mason in Chicago.

According to the indictment, Rye falsely represented to investors that their money was generating substantial returns from his purported algorithmic trading program. Rye sent his investors numerous false account statements that appeared to be from established financial services companies, stating that all of the investors’ principal and profits were invested and profitable, the indictment states. However, Rye knew when he prepared the bogus statements that the documents were false and that investors’ funds were not actually maintained at the financial services companies.

Rye also used newer investors’ funds to make Ponzi-type payments to earlier investors.

Rye was arrested last month and he remains in federal custody. At the time of the arrest, law enforcement searched his home and office, seizing his business records and several expensive watches.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Each count of wire fraud carries a maximum penalty of 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

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