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Submitted by Charles Hugh-SMith via OfTwoMinds blog,

In this war of the rising and fading elites, there is no common ground or incentive to compromise.

Historian Michael Grant identified profound political disunity in the ruling elite as a key cause of the dissolution of the Roman Empire. Grant described this dynamic in his excellent account The Fall of the Roman Empire.

The chapter titles of the book illuminate the complex causes of profound political disunity in the ruling elite:

The Gulfs Between the Classes: a.k.a. soaring income/wealth inequality: check.

The Credibility Gap: The Mainstream Media lauds itself and a self-serving, failing elite: check.

The Partnerships That Failed: the SillyCon Valley tech titans were supposed to "save" the neoliberal elite by managing social media the way the MSM managed broadcast propaganda/"news": check.

The Groups That Opted Out: nobody "important" noticed those who opted out of the neoliberal Kool-Aid: check.

The Undermining of Effort: if I don't get my way, I'll block yours. There is no common ground left.

Is there any doubt about the profound political disunity in America's ruling elite? I have addressed this many times over the past seven years, most recently a year ago in Profound Political Disunity Is Now Pitting Rising Elites Against Fading Elites (November 24, 2015).

Historian Peter Turchin explores the dynamic of social disintegration in his new book Ages of Discord. The cycle of social disintegration and integration is essentially universal to complex societies–a reality I recently discussed in Ungovernable Nation, Ungovernable Economy (October 11, 2016)

USA 2017-2020: An Ungovernable Nation? (October 10, 2016)

The globalist, neoliberal, neoconservative consensus in the Ruling Elite has splintered, a reality I have described as a splintering of the Deep State, the unelected government that continues on regardless of which party or elected politico is currently in office.

I explored this years ago in Is the Deep State Fracturing into Disunity? (March 14, 2014) and more recently in Could the Deep State Be Sabotaging Hillary? (August 8, 2016), Why the Deep State Is Dumping Hillary (September 26, 2016) and These Blast Points on Hillary's Campaign… Only The Deep State Is So Precise (October 31, 2016).

What few in the pundit class see is that significant segments of the Deep State view the neo-con neoliberal strategy as an irredeemable failure. But the camp of neoliberals and globalists will not concede defeat and relinquish their hubris-soaked power without a fight.

Indeed, it is clear that this fading sector of the Deep State is now throwing everything in its power at Trump, his appointees, and anyone who dares question the fake-progressive neoliberal neocon narrative.

The neoliberal Deep State's mouthpiece Foreign Affairs is darkly equating populism (i.e. Trump, Le Pen, et al.) with nascent fascism, the favorite fearmongering slander (along with racism) of the fading, discredited neoliberals.

Slander and managed news–and the slandering of any dissenting narratives as "fake news", the ultimate irony of a regime that depends on propaganda and collusion for its survival— these are the weapons of a cornered, enraged beast that has lost the narrative battle but which refuses to cede its power or pay-to-play wealth.

In this war of the rising and fading elites, there is no common ground or incentive to compromise. Either the rising Elite's agenda and narrative are completely destroyed and the globalist neoliberals remain ascendant, or the rising Elite's narratives and agenda survive the furious onslaught of paid protesters, fake news protesting fake news, and the brainwashed supporters of the Neofeudal, Neo-Colonial pillaging machine known as (in the perfection of doublespeak) "progressive neoliberalism."

The sad truth is a system of pay-to-play global racketeering that has enriched the top .1% at the expense of the bottom 95% for decades cannot be "progressive" unless the word has been turned on its head. The hubris of the neoliberal "progressives" knows no bounds, and they still cannot quite believe the debt-serfs rebelled against the neoliberals' benign impoverishment of everyone outside their protected cliques.

The fading elite will render the nation ungovernable rather than concede its power, wealth and global influence. This is the inevitable result of profound political disunity, which arises when The Ruling Elite Has Lost the Consent of the Governed (October 20, 2016).

I recently discussed ungovernability and the loss of the consent of the governed with Max Keiser and Stacy Herbert: (from 12:50)

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In what can only be described as a pattern, Theresa May softened her stance on BREXIT today, in her strongest rhetoric to date — clearly shilling for the British business lobby who’d rather be caught dead in a gay brothel than have to endure the pangs of BREXIT.

Source: Reuters

Asked about business calls for a transitional deal, she said: “We want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK.”

“I am conscious that there will be issues that need to be looked at … that people don’t want a cliff edge, they want to know with some certainty how things are going to go forward, that will be part of the work that we do in terms of the negotiation.”

Her spokeswoman later said: “There are a whole range of issues that are being worked through as we prepare for the negotiations, with a focus of looking at how we get the best deal for the UK.”

As such, the pound is ripping to the upside, now higher by a little more than 1.2%.

BREXIT means BREXIT, until it doesn’t.

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One of the biggest open questions troubling Wall Street traders (and everyone else) in addition to which of his close allies (and in the case of Mitt Romney, not so close) will the president-elect pick to staff the most important political posts in the new administration, is what are the details of his economic plan, especially as it involves the Fed, Trade, and the future of US national debt.

An answer came courtesy of one of Trump’s key economic advisors, David Malpass, who has been tasked with overseeing the transition for the Treasury Department and economic policy. Last month, Malpass addressed a group of economists and reporters in Washington, laying out the core Trump vision ahead of his election. 

While some of the core tenets may have changed, the focus likely remains the same. Courtesy of the WSJ, here are excerpts of his remarks on a range of economic policy subjects facing the incoming Trump administration:

On renegotiating the North American Free Trade Agreement:

I was there at the beginning of Nafta. The idea of Nafta was, it was supposed to be…a very clear, free-market orientation that would allow both sides of the border to do what they do best in the classical sense of more commerce.

But as it was negotiated, year after year, special interests descended upon it. And it got thicker and thicker and thicker. This was 1989, 1990 and into 1991. It’s up to 1,200 pages and then [President George H.W.] Bush left, [President Bill] Clinton came in and added the environmental chapter and the labor chapter.

It became this monstrously large, managed trade process that doesn’t work at all for small businesses in the U.S….

There are too many parts of it that are not working. There is supposed to be regular annual review between the parties of Nafta to see where it’s not working well and to have kind of a constant process of renewal. That’s been dropped away. And so that’s something that needs to be looked at.

On the federal debt limit:

Think how odd it is to the public that here, Washington, D.C., keeps suspending the debt limit. We have a $20 trillion debt and Washington’s response to that is to suspend [the debt limit] because they can’t meet it, because it keeps going up. So it will, remember, be reinstated in March.

There will be a temptation in Washington to simply suspend it again, which is a nonworkable solution for the American public, because in the end, they’re going to have to pay that national debt.

Instead, what I would like to see everyone agree [is] that the current debt-limit law is simply a failure. It doesn’t limit debt. It doesn’t even limit spending, because the spending occurs and then the debt has been accumulated. And then members of Congress are asked whether they approve debt that has already been spent.

So we have to recognize that this has been a complete failure of a law. We ought to have a way to rewrite the law so that it at least attempts to control spending before it becomes debt, rather than after it becomes debt.

On the Federal Reserve:

Trump has talked about the politicization of the Fed. A way for people to think about this is the Fed is an independent agency within the U.S. government. That we want.

But the results of the Fed’s policies have been highly disappointing. For years, in 2010, 2011, 2012, the Fed would start the year with an optimistic forecast that, due to the stimulus it was providing, the economy was going to grow 4%. Then as the year went on, they’d be lowering their forecast to 3%, and then to 2%….We’re now at 1.4% despite the Fed thinking that it has pedal to the metal in terms of stimulus.

That’s a grievance that needs to be brought from the American people to Washington to say, ‘This system that you’re running simply does not work.’

And so that was the context of wondering about the political inclination of the Fed….Governors are approved by the Senate. They have political leanings. So there’s a problem in thinking about, Are we getting the best policy?

We need monetary integrity. We need to have a situation where the U.S. dollar is a trustworthy currency. I would like to see the world’s most trustworthy currency. We don’t have that in the current system.

On infrastructure spending:

We all agree we need more infrastructure. We have to find a system where the private sector wants to finance a lot more infrastructure.

There was an article in The Wall Street Journal showing around the world $50 trillion in cash. Most of the cash is now either negative—I don’t know the numbers anymore because they keep going up—but $12 trillion in negative-interest-rate yielding bonds.

All I have to do is show you an infrastructure project that returns zero, meaning—so for 30 years, you’re going to have a bridge. And it’s going to break even. And that’s good enough to beat the hurdle rate that the market is choosing right now.

So it seems clear to me that what’s broken in the system is not the sources of financing for infrastructure, but the obstacles to actually getting it built. So that means property rights. That means permits. That means the choice of project. That means the interstate cooperation.

In New York state, we have this giant problem where the infrastructure is jointly owned between the state, New Jersey and the city of New York. So imagine trying to get those three actors to agree on a tunnel under the Hudson River or whatever project you want to do.

On debt management by the U.S. Treasury:

Right now, the U.S. issues a certain amount of longer-maturity debt. So every treasurer in the country in the corporate sector is trying to lengthen the maturity of their debt given the low yields that are available. So we just saw Saudi Arabia do a gigantic bond deal at a 3.5% interest rate for a 10-year security. And it was presented, rightly, that that will help stabilize their finances.

So a lot of developed countries are issuing huge amounts of long-term debt right now because the market wants the debt and because that will benefit the taxpayer for the long run. Remember the trade-off.  That means in the very short run your interest costs go up a little bit because you’re lengthening the maturity. Now every corporate treasurer makes that trade-off and says, ‘I’d rather have the stability of the long-term debt.’

So here’s the problem: The Fed has been buying up a large percentage of the long-duration debt. So every time a bond comes due at the Fed, they roll it into a long-maturity purchase-back. So they’re buying back the debt that should be in the private sector.

So one thing Treasury should be doing, to Trump’s point, we should be refinancing the debt into longer maturity. That means as debt comes due, issue longer maturity. And that would protect the taxpayer and be the logical thing to do.…

So shouldn’t the U.S. government be doing that and why aren’t we? Well, because it makes our budget deficit look good for one year, but the cost of that is for 30 years you’re missing the opportunity to lock in these low rates.

On the Dodd-Frank financial-regulatory law:

So Dodd-Frank hasn’t worked. Lots of luminaries including Alan Greenspan have pointed out that it’s just an unworkable concept of a law, and so how do you begin to get back to a system that works for average Americans….[House Financial Services Committee Chairman] Jeb Hensarling has a comprehensive bill on various segments of that problem and those are well-received in the campaign.

On carbon pricing to address climate change:

That is not a market-based way to have more energy benefits for the nation from the huge resources that are here.

On a housing-finance overhaul:

The current housing-finance system is very government-centered. Fannie and Freddie are doing a giant percentage of the conventional mortgages. There hasn’t been much ability to regrow private-label mortgages, and so that’s a system that’s much too Washington-centric.

Now whether that gives you a path in Washington—there’s how many plans on what to do with Fannie and Freddie, probably two dozen, right? I think the direction of the administration would be to change housing finance and improve it so that it works better for average Americans.

If you look at the skewing of the average mortgages that are being given now, rich people are doing a lot better on their mortgages than average people within the current regulatory structure.

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Submitted by Tsvetana Paraskova via OilPrice.com,

As much as up to 50 percent of the production of oil majors could be hit by carbon costs in the next ten years if legislators that currently price carbon extend the policy to the upstream sector, Wood Mackenzie said in a new report on how oil majors would respond to the global energy transition and rising pressure for low-carbon energy.

Wood Mackenzie has identified three main risks that the majors would be facing with the global drive to switch from fossil fuels to low-carbon energy: the growth in the renewables industry, intensified carbon policy, and growing low-carbon competition.

The energy consultancy predicts that demand for coal and oil could peak well ahead of 2035, while natural gas and zero-carbon fuels would meet at least 60 percent of the rise in the world’s energy demand until 2035.

“As carbon policy intensifies, the oil and gas Majors will face more regulatory burden and are likely to face increasing costs. Green financing could also mean higher cost of capital for more carbon-intensive oil assets such as oil sands, as investors shift to alternative fuels and lower-carbon technologies,” according to Paul McConnell, research director of global trends for Wood Mackenzie.

All majors have factored in a price on carbon in their long-term strategies, but the question is, how much risk have the companies accounted for in their forecasts, McConnell noted. Timeline, geography and prices vary enormously, with a price on carbon of between US$6 to US$80 a ton, he added.

Big Oil is facing pressure to diversify, but diversification into renewables would be challenging, Wood Mackenzie reckons. However, the oil and gas groups’ biggest risk would be not to do anything, “and be left exposed to investors making their own minds up,” the consultancy said.

“Global carbon risks could depress oil prices for the long term with slowing demand and an increase in costs, making it crucial for the Majors to push break-evens down further,” McConnell noted.

Earlier this month, Wood Mackenzie suggested that oil majors would have to hack off some US$370 billion from their total costs this year and next, which would result in a production decline of around 3 percent this year and 4 percent next year.

via http://ift.tt/2gv4kb4 Tyler Durden

The War on Cash is not over… it is about to intensify.

The Trump Presidency has distracted from the next major move to be implemented by Financial Elite.

That move is a cash ban.

Cash, particularly physical cash (as in bills and coins) is a huge problem for insolvent banks.

Indeed, it is the ONLY problem they have yet to address.

If you’re a large bank and you’re overleveraged due to excessive assets to capital ratios (particularly assets that are at risk of losing value or default) there are three key issues you need to control.

1)   You need to be able to value your assets however you please.

2)   You need access to liquidity without lowering you asset to capital ratios.

3)   You need to be able to stop bank runs or capital flights.

The Central Banks have already fixed #1 and #2 by suspending “mark to market” accounting standards and implementing QE, respectively. And thanks to rehypothecation, banks can sell assets to Central Banks via QE and still use those same assets as collateral on their derivatives trades.

That leaves #3: capital flights.

At the end of the day, no matter how many tricks the Financial Elites employ via accounting gimmicks and QE programs, depositors can still choose to take their money out of the banks and transfer it to physical cash.

Hence the call for cash bans, particularly of large bills.

The Elites claim that they want to do away with $100 bills (or greater denominations) to stop money laundering or other illicit practices.

The reality is that banning large bills makes it much more difficult for depositors to move their money into cash. Taking out $20,000 or more in deposits when it’s broken down into $100 bills isn’t too difficult.

Taking out $20,000 in $20 bills or smaller denominations IS.

In effect, a cash ban is an attempt to stop bank runs. The process is starting with large denominations, but it will be spreading to even small bills. France, India, Spain, Uruguay, even Australia have begun implementing or preparing to implement similar schemes.

This is just the start. In the coming months the Fed will be announcing similar plans for a cash ban in the US.

Indeed, we've uncovered a secret document outlining how the Fed plans to incinerate savings.

We detail this paper and outline three investment strategies you can implement

right now to protect your capital from the Fed's sinister plan in our Special Report

Survive the Fed's War on Cash.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

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If there was anything the recent presidential campaign demonstrated vividly, it is that the US may be the most ideologically polarized and divided it has ever been in its history. And, according to a Gallup, this has now been officially confirmed: in a survey released overnight, a record 77% of Americans believe the US is divided on the most important values, while 21% believe it is united and in agreement. Over the past 20+ years, the public has tended to perceive the nation as being more divided than united, apart from two surveys conducted shortly after the 9/11 terrorist attacks.

The poll was conducted on Nov. 9-13, one day after the November 8 election and after a contentious presidential campaign involving the two of the least popular candidates in postwar U.S. history. It found that all major subgroups of Americans share the view that the nation is divided, though Republicans (68%) are less likely to believe this than independents (78%) and Democrats (83%). That is consistent with the findings in the past two polls, conducted after the 2004 and 2012 presidential elections, in which the winning party’s supporters were less likely to perceive the nation as divided.

According to Gallup, Americans are also split about evenly on whether Trump will do more to unite the country (45%) or do more to divide it (49%). These views largely follow party lines, with 88% of Republicans believing Trump will do more to unite the country and 81% of Democrats saying he will do more to divide it. Independents predict Trump will do more to divide (51%) than to unite the country (43%).

Gallup has asked the same question in the past on several prior occasions, including in November 2004 after George W. Bush was re-elected, in February 2008 during the presidential primaries, and in November 2012 after Barack Obama was re-elected. Americans are less optimistic about Trump bringing the country together than they were about Bush and Obama in those instances.

By 57% to 39%, Americans in 2004 thought Bush would do more to unite the country than to divide it. Americans responded similarly about Obama in November 2012, with 55% saying he would unite the country and 42% divide it. Americans were even more optimistic about Obama bringing the country together (66%) when he was campaigning in the Democratic presidential primaries in early 2008.

As with Trump, perceptions of whether Presidents Obama and Bush would unite the country largely fell along party lines. But independents were more inclined to see Obama and Bush as uniters than they are to see Trump this way.

So what, according to Gallup, are the impications?  As Trump prepares to take office, a record number of Americans perceive the nation as divided and less than half believe his actions will help unite the country. “Those perceptions may reflect his blunt speaking manner and sometimes divisive campaign rhetoric, though he did call for Americans to come together in his victory speech.”

Ironically, both Obama and Bush made unifying the country key goals of their campaigns and administrations, and Americans perceived each as likely to do more to bring the country together than drive it apart, and yet each wound up having job approval ratings among the most politically polarized in Gallup’s history: in other words they failed. That polarization may have resulted from the realities of partisan politics in Washington and the difficulty of bringing together a governing coalition that crosses party lines. It may also have resulted from the rise of new media as a forum for opinion leaders on the right and left to express their views and for Americans to seek out news coverage and commentary that fits their political predispositions.

Trump’s ability to unite the country is also handicapped by the limited goodwill he has from the opposition party. About one in 10 Democrats have a positive opinion of Trump, far less than the three in 10 Democrats who viewed Bush positively in 2000 and the roughly one in three Republicans rating Obama positively in 2008.

Then again, if Trump has proven one thing so far it is that everything that was “conventionally accepted” about him, also ended up being wrong. Perhaps this “most unpopular president ever” will also be the one to surprise the public and achieve what both of his predecessors failed to do. In the worst case, with expectations already at record low levels, at least he won’t disappoint.

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Three months after it last reached its record intraday high, S&P 500
cash index has reached it once again as the Trump Bump continues…

After an 8% surge off the Limit Down lows on election night

Record highs..

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You better not let us down again Janet…

Rate Hikes are now 100% priced in…

Because the economy is doing so well…

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