Globalization and Poverty: New at Reason

Despite rhetoric to the contrary, things are actually getting better, in the U.S. and around the world.

Marian Tupy writes:

Remember the good life during the 1970s? If you do, your experience is not likely to have been a typical one. In fact, the economic liberalization and globalization that started in the late 1970s and accelerated in the 1980s, has led to a massive and historically unprecedented decline in global poverty. Contrary to much of the public perception, liberalization and globalization have not led to an increase in U.S. poverty rates, which continue to fluctuate within a comparatively narrow and, by historical standards, low, band.

Let us look at the global picture first. In 1981, the year Ronald Reagan became America’s 40th President, 44.3 percent of the world lived in extreme poverty (i.e., less than $1.90 per person per day). Last year, it was 9.6 percent. That’s a decline of 78 percent. In East Asia, a region of the world that includes China, 80.6 percent of people lived in extreme poverty. Today, 4.1 percent do—a 95 percent reduction. Even in sub-Saharan Africa, a relatively under-performing region, the share of the population living on less than $1.9 per day dropped by 38 percent.

View this article.

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‘Trader Tantrump’ Sparks Biggest Ever Emerging Market Bond Outflows As Dollar Soars

The Emerging Market Bond Bloodbath has left a painful trail as investors pulled a record $546 million from the largest EM Bond ETF last week. As the US Dollar surges on the intermingled themes of Trumponomics' inflation and higher rates, EM and Asian FX rates are collapsing to Lehman crisis lows as the rest of the world suffers despite US equity gains.

US Equities are the only winners…

After having bounced a little through the summer, Asian (and EM) FX has collapsed to new cycle lows relative to the US Dollar since Donald Trump's win at the election…

 

This implicit tightening of financial conditions world-wide

 

Sparked the largest exodus from EM bonds ever…

 

Coming just a fe short months after a record inflow to EM debt funds ($4.9bn)…

Leaving the largest EM Bond ETF 'stable' at a critical support level…

 

But it seems fear is back in EM land…so as a reminder, Goldman summarizes in a heat map, the EM nations with greatest potential for the upcoming Fed hike to cause a major disruption.

The darkest shaded regions indicate the largest risks.

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“Obama Set Up The Next President For A Major Recession”… And A Giant Crash Is Coming

As SHTFPlan.com's Mac Slavo points out…

The past many months have carried a lot of noise about the coming crash, about a tipping point that may be fast approaching. The economics are simply giving way, and they can’t hold the illusion forever. Now that Donald Trump will be calling the shots, the money powers can usher in collapse if they wish, and have ready their scapegoat. It won’t just be Trump the man or the president, but the people who elected him, who backed Brexit and who gave up on their system. The people who let loose the chaos that now consumes us.

 

Their rage, their anger and their desperation is brewing unrest. The ascent of populism in the political arena has put the establishment in retreat, and revealed, at last, a most dangerous atmosphere, from which collapse can properly precipitate … one in which all regulatory steadiness on the part of the system has been thrown off balance and out of whack by popular revolt. By the time the hammer falls, and the markets fall to the ground, the people rioting in the streets and losing their civility when ATMs stop working and store shelves go empty – these people will become the face of the disaster. The banks have been planning the next rise and fall for sometime; the next phase is all digital, and tightly monitored and controlled.

We Are Being Set Up For Higher Interest Rates, A Major Recession And A Giant Stock Market Crash

via Michael Snyder's Economic Collapse blog,

Since Donald Trump’s victory on election night we have seen the worst bond crash in 15 years.  Global bond investors have seen trillions of dollars of wealth wiped out since November 8th, and analysts are warning of another tough week ahead.  The general consensus in the investing community is that a Trump administration will mean much higher inflation, and as a result investors are already starting to demand higher interest rates.  Unfortunately for all of us, history has shown that higher interest rates always cause an economic slowdown.  And this makes perfect sense, because economic activity naturally slows down when it becomes more expensive to borrow money.  The Obama administration had already set up the next president for a major recession anyway, but now this bond crash threatens to bring it on sooner rather than later.

For those that are not familiar with the bond market, when yields go up bond prices go down.  And when bond prices go down, that is bad news for economic growth.

So we generally don’t want yields to go up.

Unfortunately, yields have been absolutely soaring over the past couple of weeks, and the yield on 10 year Treasury notes has now jumped “one full percentage point since July”

The 10-year Treasury yield jumped to 2.36% in late trading on Friday, the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!

 

The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads – including Yellen’s “relatively soon” – have pushed the odds of a rate hike to 98%.

As I noted the other day, so many things in our financial system are tied to yields on U.S. Treasury notes.  Just look at what is happening to mortgages.  As Wolf Richter has noted, the average rate on 30 year mortgages is shooting into the stratosphere…

The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That’s up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month “on a short list of 4 worst months in more than a decade.”

If mortgage rates continue to shoot higher, there will be another housing crash.

Rates on auto loans, credit cards and student loans will also be affected.  Throughout our economic system it will become much more costly to borrow money, and that will inevitably slow the overall economy down.

Why bond investors are so on edge these days is because of statements such as this one from Steve Bannon

In a nascent administration that seems, at best, random in its beliefs, Bannon can seem to be not just a focused voice, but almost a messianic one:

 

“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”

Steve Bannon is going to be one of the most influential voices in the new Trump administration, and he is absolutely determined to get this “trillion dollar infrastructure plan” through Congress.

And that is going to mean a lot more borrowing and a lot more spending for a government that is already on pace to add 2.4 trillion dollars to the national debt this fiscal year.

Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down.  It is being projected that we will see a sixth straight decline in year-over-year earnings for the S&P 500, and industrial production has now contracted for 14 months in a row.

The truth is that the economy has been barely treading water for quite some time now, and it isn’t going to take much to push us over the edge.  The following comes from Lance Roberts

With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American’s, there is not a lot of wiggle room for policy mistakes.

 

Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later.

Yes, the stock market soared immediately following Trump’s election, but it wasn’t because economic conditions actually improved.

If you look at history, a stock market crash almost always follows a major bond crash.  So if bond prices keep declining rapidly that is going to be a very ominous sign for stock traders.

And history has also shown us that no bull market can survive a major recession.  If the economy suffers a major downturn early in the Trump administration, it is inevitable that stock prices will follow.

The waning days of the Obama administration have set us up perfectly for higher interest rates, a major recession and a giant stock market crash.

Of course any problems that occur after January 20th, 2017 will be blamed on Trump, but the truth is that Obama will be far more responsible for what happens than Trump will be.

Right now so many people have been lulled into a sense of complacency because Donald Trump won the election.

That is an enormous mistake.

A shaking has already begun in the financial world, and this shaking could easily become an avalanche.

Now is not a time to party.  Rather, it is time to batten down the hatches and to prepare for very rough seas ahead.

All of the things that so many experts warned were coming may have been delayed slightly, but without a doubt they are still on the way.

So get prepared while you still can, because time is running out.

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FX Markets Signal Brexit-Like Disruption As Italy Referendum Looms

FX traders are pricing in as big a potential disruption event for Italy’s referendum as they did (correctly) for the Brexit vote. So-called ‘currency-vigilantes’ are buying EURUSD protection across the Dec 4th date of the vote in size as Italian bond spreads (over Bunds) push to 30-month highs.

Anticipated euro-dollar price swings for the period of the Italian vote surged. Two-week implied volatility climbed to 12.5 percent, approaching the highest since the aftermath of the Brexit vote in June… and the premium for that protection across the referendum date is now at its highest since Brexit…

 

As Bloomberg reports, selling the euro before Italy’s vote “makes a lot of sense given the potential for more expansionary fiscal and tighter monetary policy in the U.S., coupled with the increased focus on political risk and the increased likelihood of more policy from the ECB,” said James Athey, a money manager in London at Aberdeen Asset Management Plc, which oversees more than $400 billion.

“For FX, politics is the new economics,” HSBC Holdings Plc analysts including David Bloom wrote in a note last week. “QE has constrained the bond market, distorted equity prices and narrowed yield differentials. This means FX is uniquely placed to reflect political developments.”

Trump’s election has boosted speculation that Italians will reject the reforms on which Renzi has staked his political future. Deutsche Bank AG economists say there’s a 60 percent chance the vote will fail, while political risk-advisory firm Eurasia Group changed its call this month, and now assigns a 55 percent probability to a “no” vote.

“Markets are anticipating two risks at the moment: reflation and populism in Europe,” said Marc Chandler, head of currency strategy at Brown Brothers Harriman & Co. in New York. “If one thinks that the Italian referendum is going to be lost, and it’s not priced in, selling the euro — which is also being weighed down by other factors — seems the path of least resistance compared with a rate position.”

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Brickbat: It’s a Grand Old Flag

flagThe superintendent of the Lincoln, Nebraska, school system has apologized after administrators told students not to fly the American flag on their vehicles. The students had flown the flags from holders they’d made in class in a joint program with Southeast Community College. Someone took the flag off a truck parked at the college and laid it in the bed of another truck. Administrators said they were afraid allowing the students to fly the flags might lead to a confrontation or property damage.

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Prohibition And The Socialist Ideal

Submitted by Tho Bishop via The Mises Institute,

Under the capitalistic system the ultimate bosses are the consumers. The sovereign is not the state, it is the people. And the proof that they are the sovereign is borne out by the fact that they have the right to be foolish. This is the privilege of the sovereign. He has the right to make mistakes, no one can prevent him from making them, but of course he has to pay for his mistakes. If we say the consumer is supreme or that the consumer is sovereign, we do not say that the consumer is free from faults, that the consumer is a man who always knows what would be best for him. The consumers very often buy things or consume things they ought not to buy or ought not to consume.

But the notion that a capitalist form of government can prevent people from hurting themselves by controlling their consumption is false. The idea of government as a paternal authority, as a guardian for everybody, is the idea of those who favor socialism. In the United States some years ago, the government tried what was called “a noble experiment.” This noble experiment was a law making it illegal to buy or sell intoxicating beverages. It is certainly true that many people drink too much brandy and whiskey, and that they may hurt themselves by doing so. Some authorities in the United States are even opposed to smoking. Certainly there are many people who smoke too much and who smoke in spite of the fact that it would be better for them not to smoke. This raises a question which goes far beyond economic discussion: it shows what freedom really means.

Granted, that it is good to keep people from hurting themselves by drinking or smoking too much. But once you have admitted this, other people will say: Is the body everything? Is not the mind of man much more important? Is not the mind of man the real human endowment, the real human quality? If you give the government the right to determine the consumption of the human body, to determine whether one should smoke or not smoke, drink or not drink, there is no good reply you can give to people who say: “More important than the body is the mind and the soul, and man hurts himself much more by reading bad books, by listening to bad music and looking at bad movies. Therefore it is the duty of the government to prevent people from committing these faults.”

And, as you know, for many hundreds of years governments and authorities believed that this really was their duty. Nor did this happen in far distant ages only; not long ago, there was a government in Germany that considered it a governmental duty to distinguish between good and bad paintings—which of course meant good and bad from the point of view of a man who, in his youth, had failed the entrance examination at the Academy of Art in Vienna; good and bad from the point of view of a picture-postcard painter, Adolf Hitler. And it became illegal for people to utter other views about art and paintings than his, the Supreme Führer’s.

Once you begin to admit that it is the duty of the government to control your consumption of alcohol, what can you reply to those who say the control of books and ideas is much more important?

Freedom really means the freedom to make mistakes. This we have to realize. We may be highly critical with regard to the way in which our fellow citizens are spending their money and living their lives. We may believe that what they are doing is absolutely foolish and bad, but in a free society, there are many ways for people to air their opinions on how their fellow citizens should change their ways of life. They can write books; they can write articles; they can make speeches; they can even preach at street comers if they want—and they do this in many countries. But they must not try to police other people in order to prevent them from doing certain things simply because they themselves do not want these other people to have the freedom to do it.

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Struggling Euro Zone Nations Increasingly Forced To Turn To Hedge Funds For Debt Funding

With pensions around the world increasingly reallocated funds to equity markets in a desparate effort to close funding gaps amid recklessly low central banking rates, and traditional banks tapped out by regulatory restrictions on their balance sheets, struggling Euro Zone countries are increasingly being forced to turn to hedge funds to fill their debt issuances.  As Reuters points out, struggling nations like Spain, Italy, Belgium and France have seen a 3x increase in debt issuance allocations to hedge funds.

With banks playing a less active part in the sovereign debt market because of pressures on their balance sheets, several countries have turned to hedge funds to sell their targeted amount of bonds, according to data, officials and bankers.

 

Spain, Italy, Belgium and France have sought to lock in record-low borrowing rates this year with 50-year bond issues for 3-5 billion euros ($3.2-$5.3 billion). Each of them reported a historically high allocation of 13-17 percent to hedge funds.

 

By contrast, just three years ago, Spain, Italy and Belgium were selling only 4-7 percent of their syndicated bond sales to that community of investors, according to data from IFR, a Thomson Reuters company. There is no comparable data for France, which does not routinely record hedge funds’ allocation.

 

“Hedge funds have grown in importance,” said Damien Carde, head of public-sector syndication for RBS, which handles bond issues for several euro zone countries. “If you need to bring a large syndication to the market it is always a plus to have that community on board.”

Euro Zone

 

And while hedge fund money is great so long as it’s helping to fill out primary issuance order books, the long-term volatility impacts on secondary trading could be disastrous for a region that has narrowly survived several debt crises since 2007.

He warned, however, that the tag of “fast money” still applied to hedge funds. “They have a very active investment approach, they will invest when they anticipate to make a decent short-term return. But as soon as the prospect of earnings disappears, they will leave.”

 

“Certainly any asset class where there is fast money being brought in that might bring added volatility and displacement of prices that aren’t real, that is unwelcome,” said Darren Ruane, head of fixed interest at Investec Wealth & Investment.

 

“Hedge funds could engage in yield-curve trades, say anticipating higher yields at the short end and either higher or lower yields at the long end, depending on their view of whether long-term inflation can be controlled,” he added. “When that unwinds that is really unhelpful.”

Of course, the risk of bond market volatility is exacerbated by the rising populist tide around the world that has already resulted in BREXIT and the election of Donald Trump in the United States.  As the Wall Street Journal points out, as Italians are set to go to the polls on December 4th to vote on their own referendum the negative consequences of bond market volatility are already starting to surface there.

A populist revolt that propelled Donald Trump and the Brexit vote is sweeping the developed world and threatens to unseat established leaders in an Italian referendum next month, and Dutch, French and German elections in 2017.

 

Any such political shocks, compounded by rising bond market volatility, could potentially trigger a sell-off – a risk that stirs painful memories of the region’s debt crisis in 2010-2012 when a bond rout led to several countries unable to pay their debts and raised fears the euro zone could unravel.

Italy

 

Perhaps Europeans would be wise to review Aesop’s Fables?

Euro

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THAAD Is Coming To China’s Doorstep (But Beijing Has A Plan To Push Back)

Submitted by Nan Li via Strategic-Culture.org,

After months of negotiation, the United States and South Korea announced on July 8 their decision to deploy the Terminal High-Altitude Area Defense (THAAD) missile defense system in South Korea. During a press briefing, China’s Defense Ministry spokesman Yang Yujun said that Beijing is “firmly opposed to the proposed THAAD deployment… and will take necessary measures to maintain national strategic security as well as regional equilibrium”.

Why Is China Opposed to THAAD Deployment?

Chinese analysts are particularly concerned about THAAD’s X-band radar. Even though it would be configured as a fire-control radar with a detection range of 600 km, it perhaps could be reconfigured as an early-warning radar, which allows a detection range exceeding 2,000 km. Such a range suggests that China’s missile activities on land and at sea in northern and eastern China may be mostly exposed. The radar allegedly can see the critical processes where warheads and decoys are released during China’s strategic missile tests. In times of war, it can undermine the reliability of China’s strategic deterrent because in comparison with Alaska-based radars, it is believed to be capable of acquiring more than ten minutes of early warning time against China’s strategic ballistic missiles. It can also differentiate real warheads from decoys. If integrated into the U.S. national missile defense network, this radar allegedly can increase the odds of success in intercepting Chinese missiles even at their “boost phase,” reducing further the reliability of China’s already small strategic deterrent and tilting the strategic balance in favor of the United States.

Moreover, Chinese analysts believe that the Korean Peninsula has historically been a nearby sphere critical to China’s security. They worry that by deploying THAAD, South Korea could share data with the United States and Japan on air traffic control, air defense, and early warning. This may help to integrate South Korea-based systems with U.S. and Japanese sensors and sea-based Aegis systems, with the goal of forming a trilateral strategic alliance to contain China at China’s door steps. Chinese analysts believe that North Korean nuclear tests were only an excuse used by the United States to deploy THAAD, the real U.S. intention being to drive a wedge between South Korea and China at a time when China-South Korea relations were improving substantially, as reflected in the countries’ booming bilateral trade and Park Geun-hye’s attendance at the Victory Day Parade in Beijing in September 2015. THAAD deployment would bring the United States and South Korea closer at the expense of China’s security. This could help the United States to stabilize U.S.-South Korea relations and prevent the possible loss of the U.S. military foothold on the Korean Peninsula.

Furthermore, Chinese analysts believe that THAAD deployment in South Korea may encourage Japan to import THAAD to compensate for the range deficiencies of its PAC-3 missile defense systems. They also believe that South Korea’s decision would not only harm South Korea-China relations, but also harm South Korea itself by removing its “strategic flexibility” in balancing among major powers and in handling North-South relations. By directly challenging China’s strategic security interests, some argue, South Korea has also set a bad example for China’s neighbors to follow if no substantial cost is incurred to South Korea. Finally, Chinese analysts claim that THAAD deployment would not deter North Korea from developing nuclear weapons, but instead may drive it to develop more and better nuclear weapons and missiles.

What Countermeasures Might China Take?

Chinese analysts have proposed a wide range of countermeasures to retaliate against the THAAD deployment. They argue that it is time to integrate technologies into Chinese medium-range ballistic missiles that can reinforce their penetration capabilities (????), such as those that can enhance mid-course or terminal maneuverability of warheads to dodge intercepting missiles. These technologies and measures also include integrating decoys to mislead the intercepting missiles, hardening warheads, and building more missiles. They also propose electronic countermeasures to jam THAAD radar. Some believe that China’s flight-tested DF-ZF supersonic missile delivery vehicle, which allegedly can reach the speed of Mach 10, can “turn all missile defense systems obsolete in one night.” Some also argue that in times of war, China should “at the first moment” launch strikes to destroy THAAD. To elude South Korea-based THAAD, Chinese analysts propose to deploy China’s strategic nuclear submarines to the Pacific Ocean for routine patrol. Being highly mobile and more concealed than China’s land-based nuclear deterrent, these submarines can enhance the survivability of China’s sea-based nuclear force, thus enhancing the credibility of China’s second strike nuclear capabilities.

Chinese analysts argue that to restore regional “strategic balance,” China should cooperate with Russia in developing strategic offensive weapons, particularly in developing “penetration” technologies that can defeat missile defense. Other proposed countermeasures include concealment and redeployment of China’s strategic capabilities to reduce their exposure to the THAAD radar, and accelerated development of China’s own missile defense systems.

A Moderate View?

While a majority calls for sanctions, there also exists a minority view based on a more nuanced and moderate interpretation of the THAAD deployment. On the effectiveness of THAAD to intercept short-range missiles, this view agrees that a launched North Korean Scud missile targeting Seoul may fly lower than 40 km because of the short range. This missile cannot be intercepted by THAAD because such low altitudes do not match the interception altitudes of THAAD, even though it can be intercepted by South Korea’s Patriot PAC-2/3 interceptors. But if a Scud missile is fired to hit a South Korean target 300 km away, it would reach the maximum height of 80 km and then descend to 40 km in slightly more than a minute, which matches the interception altitudes of THAAD. For this school of thought, a major challenge for South Korea is how to acquire sufficient defenses against North Korean missiles, while at the same time not undermining China’s strategic security. The best option, according to these analysts, is for South Korea to replace the current AN/TPY-2 radar with the Israeli Green Pine radar, which has an effective search range of 500 km. Such a range can provide South Korea sufficient protection against North Korean missiles, while posing no threat to China’s strategic missiles.

A Critique

China’s security analysts have offered great insights into why China is opposed to THAAD deployment in South Korea, and what countermeasures China might take to “maintain national strategic security as well as regional equilibrium.” However, a few important issues may require closer scrutiny in order to gain a balanced understanding of THAAD deployment in South Korea.

As pointed out by Chinese analysts, it is probably true that the interception altitudes of THAAD match the “terminal phase” of longer-range Chinese ballistic missiles, or those with ranges exceeding 3,500 km, including China’s ICBMs. Of note, however, is that these Chinese missiles are not intended for targets in East Asia. If launched, they are unlikely to have their “descending” or “terminal phase” in this region. So they are less likely to be intercepted by South Korea-based THAAD.

South Korea-based THAAD is more likely intended to intercept China’s medium-range ballistic missiles, or those with ranges between 1,000 and 3,500 km, including China’s DF-21 and DF-26 missiles. This is because these missiles may aim at military targets in the Asia-Pacific region, including U.S. military bases in Japan and on Guam, and its aircraft carrier strike groups deployed in this region. But because North Korea is also developing and deploying medium-range ballistic missiles, it is reasonable to assume that THAAD is intended to intercept both North Korean and Chinese medium-range ballistic missiles.

As mentioned earlier by some Chinese analysts, THAAD can be effective in intercepting a North Korean short-range ballistic missile attempting to hit a South Korean target 300 km away, because its “terminal phase” matches the interception altitudes of THAAD. It is also known that the North Korean ballistic missile arsenal consists mainly of hundreds of modified Scud missiles with ranges between 300 and 700 km. Because these missiles can hit any South Korean target beyond the Seoul area (which is protected by Patriot PAC2/3 interceptors), the primary objective for deploying THAAD in South Korea is in all likelihood for defending against short-range ballistic missiles from North Korea.

Chinese analysts believe that the X-band radar can gain more than ten minutes of early warning time compared to Alaska-based radars against Chinese strategic missiles flying toward the United States, which undermines the reliability of China’s already small strategic deterrent. Assuming this radar can easily be converted to an early-warning radar, however, whatever extra time it can contribute to early warning against Chinese missiles may become less significant for two reasons. One is that the two Japan-based X-band radars can also see the flight paths of Chinese missiles early and provide somewhat similar extra early warning time. The other is that the U.S. ballistic missile early-warning systems based on constellations of satellites, either deployed or under development such as the Space-Based Infrared System, may also be capable of provide early warning time sufficient to marginalize the contribution of the South Korea-based X-band radar.

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When It Comes To Fake News, The U.S. Government Is The Biggest Culprit

Submitted by John Whitehead via The Rutherford Institute,

We Americans are the ultimate innocents. We are forever desperate to believe that this time the government is telling us the truth.”—Former New York Times reporter Sydney Schanberg

Let’s talk about fake news stories, shall we?

There’s the garden variety fake news that is not really “news” so much as it is titillating, tabloid-worthy material peddled by anyone with a Twitter account, a Facebook page and an active imagination. These stories run the gamut from the ridiculous and the obviously click-baity to the satirical and politically manipulative.

Anyone with an ounce of sense and access to the Internet should be able to ferret out the truth and lies in these stories with some basic research. That these stories flourish is largely owing to the general gullibility, laziness and media illiteracy of the general public, which through its learned compliance rarely questions, challenges or confronts.

Then there’s the more devious kind of news stories circulated by one of the biggest propagators of fake news: the U.S. government.

In the midst of the media’s sudden headline-blaring apoplexy over fake news, you won’t hear much about the government’s role in producing, planting and peddling propaganda-driven fake news—often with the help of the corporate news media—because that’s not how the game works.

Why?

Because the powers-that-be don’t want us skeptical of the government’s message or its corporate accomplices in the mainstream media. They don’t want us to be more discerning when it comes to what information we digest online. They just want us to be leery of independent or alternative news sources while trusting them—and their corporate colleagues—to vet the news for us.

Indeed, the New York Times has suggested that Facebook and Google appoint themselves the arbiters of truth on the internet in order to screen out what is blatantly false, spam or click-baity.

Not only would this establish a dangerous precedent for all-out censorship by corporate entities known for colluding with the government but it’s also a slick sleight-of-hand maneuver that diverts attention from what we should really be talking about: the fact that the government has grown dangerously out-of-control, all the while the so-called mainstream news media, which is supposed to act as a bulwark against government propaganda, has instead become the mouthpiece of the world’s largest corporation—the U.S. government.

As veteran journalist Carl Bernstein, who along with Bob Woodward blew the lid off the Watergate scandal, reported in his expansive 1977 Rolling Stone piece, “The CIA and the Media”:

“More than 400 American journalists … in the past twenty?five years have secretly carried out assignments for the Central Intelligence AgencyThere was cooperation, accommodation and overlap. Journalists provided a full range of clandestine services… Reporters shared their notebooks with the CIA. Editors shared their staffs. Some of the journalists were Pulitzer Prize winners, distinguished reporters… In many instances, CIA documents show, journalists were engaged to perform tasks for the CIA with the consent of the managements of America’s leading news organizations.”

Bernstein is referring to Operation Mockingbird, a CIA campaign started in the 1950s to plant intelligence reports among reporters at more than 25 major newspapers and wire agencies, who would then regurgitate them for a public oblivious to the fact that they were being fed government propaganda.

In some instances, as Bernstein shows, members of the media also served as extensions of the surveillance state, with reporters actually carrying out assignments for the CIA.

Executives with CBS, the New York Times and Time magazine also worked closely with the CIA to vet the news. Bernstein writes: “Other organizations which cooperated with the CIA include the American Broadcasting Company, the National Broadcasting Company, the Associated Press, United Press International, Reuters, Hearst Newspapers, Scripps?Howard, Newsweek magazine, the Mutual Broadcasting System, the Miami Herald and the old Saturday Evening Post and New York Herald?Tribune.”

For example, in August 1964, the nation’s leading newspapers—including the Washington Post and New York Times—echoed Lyndon Johnson’s claim that North Vietnam had launched a second round of attacks against American destroyers in the Gulf of Tonkin. No such attacks had taken place, and yet the damage was done. As Jeff Cohen and Norman Solomon report for Fairness and Accuracy in Reporting, “By reporting official claims as absolute truths, American journalism opened the floodgates for the bloody Vietnam War.”

Fast forward to the early post-9/11 years when, despite a lack of any credible data supporting the existence of weapons of mass destruction, the mainstream media jumped on the bandwagon to sound the war drums against Iraq. As Los Angeles Times columnist Robin Abcarian put it, “our government … used its immense bully pulpit to steamroll the watchdogs… Many were gulled by access to administration insiders, or susceptible to the drumbeat of the government’s coordinated rhetoric.”

John Walcott, Washington bureau chief for Knight-Ridder, one of the only news agencies to challenge the government’s rationale for invading Iraq, suggests that the reason for the media’s easy acceptance is that “too many journalists, including some very famous ones, have surrendered their independence in order to become part of the ruling class. Journalism is, as the motto goes, speaking truth to power, not wielding it.”

If it was happening then, you can bet it’s still happening today, only it’s been reclassified, renamed and hidden behind layers of government secrecy, obfuscation and spin.

In its article, “How the American government is trying to control what you think,” the Washington Post points out “Government agencies historically have made a habit of crossing the blurry line between informing the public and propagandizing.”

Thus, whether you’re talking about the Cold War, the Vietnam War, the Gulf War, the government’s invasion of Iraq based upon absolute fabrications, or the government’s so-called war on terror, privacy and whistleblowers, it’s being driven by propaganda churned out by one corporate machine (the corporate-controlled government) and fed to the American people by way of yet another corporate machine (the corporate-controlled media).

“For the first time in human history, there is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it,” writes investigative journalist Nick Davies. “The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news.”

But wait.

If the mass media—aka the mainstream media or the corporate or establishment media—is merely repeating what is being fed to it, who are the masterminds within the government responsible for this propaganda?

Davies explains:

The Pentagon has now designated “information operations” as its fifth “core competency” alongside land, sea, air and special forces. Since October 2006, every brigade, division and corps in the US military has had its own "psyop" element producing output for local media. This military activity is linked to the State Department's campaign of "public diplomacy" which includes funding radio stations and news websites.

This use of propaganda disguised as journalism is what journalist John Pilger refers to as “invisible government… the true ruling power of our country.”

As I make clear in my book Battlefield America: The War on the American People, we no longer have a Fourth Estate.

Not when the “news” we receive is routinely manufactured, manipulated and made-to-order by government agents. Not when six corporations control 90% of the media in America. And not when, as Davies laments, “news organizations which might otherwise have exposed the truth were themselves part of the abuse, and so they kept silent, indulging in a comic parody of misreporting, hiding the emerging scandal from their readers like a Victorian nanny covering the children’s eyes from an accident in the street.”

So let’s have no more of this handwringing, heart-wrenching, morally offended talk about fake news by media outlets that have become propagandists for the false reality created by the American government.

After all, as Glenn Greenwald points out, “The term propaganda rings melodramatic and exaggerated, but a press that—whether from fear, careerism, or conviction—uncritically recites false government claims and reports them as fact, or treats elected officials with a reverence reserved for royalty, cannot be accurately described as engaged in any other function.”

So where does that leave us?

What should—or can—we do?

I’ll close with John Pilger’s words of warning and advice:

Real information, subversive information, remains the most potent power of all — and I believe that we must not fall into the trap of believing that the media speaks for the public. That wasn’t true in Stalinist Czechoslovakia and it isn’t true of the United States. In all the years I’ve been a journalist, I’ve never known public consciousness to have risen as fast as it’s rising today…yet this growing critical public awareness is all the more remarkable when you consider the sheer scale of indoctrination, the mythology of a superior way of life, and the current manufactured state of fear.

[The public] need[s] truth, and journalists ought to be agents of truth, not the courtiers of power. I believe a fifth estate is possible, the product of a people’s movement, that monitors, deconstructs, and counters the corporate media. In every university, in every media college, in every news room, teachers of journalism, journalists themselves need to ask themselves about the part they now play in the bloodshed in the name of a bogus objectivity. Such a movement within the media could herald a perestroika of a kind that we have never known. This is all possible. Silences can be broken… In the United States wonderfully free rebellious spirits populate the web… The best reporting … appears on the web … and citizen reporters.

The challenge for the rest of us is to lift this subjugated knowledge from out of the underground and take it to ordinary people. We need to make haste. Liberal Democracy is moving toward a form of corporate dictatorship. This is an historic shift, and the media must not be allowed to be its façade, but itself made into a popular, burning issue, and subjected to direct action. That great whistleblower Tom Paine warned that if the majority of the people were denied the truth and the ideas of truth, it was time to storm what he called the Bastille of words. That time is now.

via http://ift.tt/2gf9K7L Tyler Durden