Category: zerohedge

Every year, the world’s richest and most powerful business executives, bankers, media heads and politicians sit down in some luxurious and heavily guarded venue, and discuss how to shape the world in a way that maximizes profits for all involved, while perpetuating a status quo that has been highly beneficial for a select few, even if it means the ongoing destruction of the middle class. We are talking, of course, about the annual, and always secretive, Bilderberg meeting.

And, as the Guardian notes, “you know Bilderberg’s about to begin when you start seeing the guns.”

Workers erect a barricade outside the Taschenbergpalais hotel in Dresden

The Taschenbergpalais hotel in Dresden – the venue of “Bilderberg 2016” which starts tomorrow and continues until June 12 – is filling up with pistol-packing plainclothes security as the last guests are ushered out. The frowning gunslingers head up and down the corridors with their hotel maps, trying door handles and checking the lay of the land while, down in the hotel lobby, corporate goons gather in muttering huddles.

A glimpse at what is about to unfold: according to the local newspaper DNN, at least 400 police officers will be surrounding the venue for the three days of the talks. There’s already a ring of concrete blocks around the entrance. Is that not enough? What are they expecting? The charge of the light brigade? The hotel is being trussed up tighter than Reid Hoffman’s trousers. No one gets in or out without the right lanyard. As Ed Balls remembers only too well, from that awkward business in Copenhagen. Inside the security cordon, the final nervy tweaks are being made by conference staff. They’ve got to make sure Henry Kissinger’s curtains don’t let any light in. A single ray could be fatal.

Year after year, a sizeable number of extremely rich and powerful workaholics seem to think it’s worth strapping on their Bilderberg lanyard. But why? What’s getting the head of Google, two prime ministers, a vice-president of the European commission and the chairman of HSBC together in the same hotel basement for the same three days in June?  On its official website, Bilderberg attempts an answer. It describes itself as “a forum for informal discussions” that are “designed to foster dialogue between Europe and North America”. Dialogue which is designed to foster dialogue. Talk for talk’s sake.

Of course, as Charlie Skelton notes, that’s nonsense. And yet Bilderberg insists “there is no desired outcome”. That’s like a Club 18-30 rep saying there’s no desired outcome of his tequila groin-slurping contest. Someone’s getting something out of the event. Even if that something is chlamydia.

Taschenbergpalais hotel in Dresden

What is really discussed is how to take the existing trends in the world, some favorable, some undesired, and mold them in such a way as to create even more wealth for the world’s 0.01%, while perpetutating the existing system, one which even the IMF agrees is no longer working.

This time, as Paul Joseph Watson infers, the secretive Bilderberg Group whose Steering Committee Advisory Group consists of one David Rockefeller, will discuss how to prevent Donald Trump from becoming president, the possibility of mass riots as a result of wealth inequality, the migrant crisis, as well as the United Kingdom’s vote on leaving the European Union.

As noted above, the official list of “key topics” to be discussed is both broad quite vague and includes:

1. Current events
2. China
3. Europe: migration, growth, reform, vision, unity
4. Middle East
5. Russia
6. US political landscape, economy: growth, debt, reform
7. Cyber security
8. Geo-politics of energy and commodity prices
9. Precariat and middle class
10. Technological innovation

That’s just for public consumption. After all, who needs massive concrete blocks and 400 police officers for protection to discuss “technological innovation” – better yet, just open up the session to the press and public.

Of course, that won’t happen, because the real agenda must remain under wraps. However one can infer from the agenda and some of the names on the participant list what the group will be discussing in more detail. As PJW writes, the attendance of anti-Trump Senator Lindsey Graham is an obvious sign that Donald Trump will be a prominent topic of discussion at this year’s Bilderberg meeting, with the likely focus on how to prevent Trump from defeating Bilderberg’s chosen candidate, Hillary Clinton, who has already raked in tens of millions in fees from “speaking” before numerous participants at the meeting that begins tomorrow.

In 2015, the Bilderberg elite was confident that Clinton could shake off her GOP challengers, but Trump’s self-funded campaign and his public opposition to globalism and internationalist trade deals like NAFTA has shocked the Bilderberg elitists. As a result, it will now have to spend much more time dealing with the damage control.

Brexit will be another major topic. With the British referendum vote to leave the EU taking place in just two weeks, and with David Cameron getting concerned, a vote to secede threatens the future of the European Union federal superstate that was the brainchild of Bilderberg in the first place.

The inclusion of “precariat and middle class” on the list also means that the powerful lobby group will be ruminating on how they can exploit and manage the inevitability of more riots and civil unrest in the west – and increasingly, the east with an emphasis on China whose government is terrified about the prospect of rising social unrest – a topic that elitists were also concerned about at the 2015 Davos Economic Summit. “Precariat” describes those who are struggling to survive in today’s economy and who have no long term wage security. Studies have shown that wealth inequality increases the likelihood of mass social disorder. Furthermore, as the Fed itself admitted recently, it is the Fed, by way of manipulating markets higher, that has been an instrumental catalyst behind record wealth inequality.

The flooding of Europe with third world migrants, a process which has driven European voters into the arms of nationalist parties that typically oppose Bilderberg’s wider agenda, will also be a key topic of discussion, as per bullet point 3.

As Watson observes, aone interesting name that pops up on this year’s list is that of Richard Engel, NBC News’ chief foreign correspondent.  “Normally, a semi-secret meeting of over 100 of the most powerful people on the planet would be a monumental news scoop, but don’t expect Engel to utter a word.” After all, real journalists are not allowed anywhere on the premises; Engel likely has to sign an NDA.

Indeed, Bilderberg operates under Chatham House Rules, which means that none of the participants are able to reveal any comments made during the conference. As the Guardian floridly puts it, “after the politicians drag their drained and bloodless bodies back to their respective parliaments, they don’t say a word about what happened. They act like abuse victims. “It’s just our little secret,” murmurs Kissinger as he pops the politicians back in their limos. “Chatham House rules. You remember? Yes, of course you do. Now off you go.” And he nimbly licks a heart shape on to the car window with his black tongue before it speeds off.”

Although it was reported in the German media that German Chancellor Angela Merkel would attend this year’s conference, her name does not appear on the list. However, it is a common practice for Bilderberg to omit names from the official list if the individual’s attendance is politically sensitive.

* * *

So what do the politicians and public officials get from the deal? For the more ruthless, it’s a chance to line up future employment. As the Guardian reminds us of the then head of MI6, Sir John Sawers, networking with the chairman of BP on a Copenhagen patio in 2014. A year later he was sitting on the oil firm’s board of directors.

For those who don’t use the event as a glorified LinkedIn mixed for billionaires, the motive is far simpler: make even more money. In this regard the Guardian’s amusing conclusion is spot on:

Tony Blair admitted he found the 1993 conference “useful”. And I’m sure it was. It’s useful to know in what direction in the world is being led by the people that own it, so you can trot along in the right direction. And if you learn to play the game, to fit in with the in crowd, then maybe, like Blair, you can end up with a cushy job with US investment bank JP Morgan.

Ultimately, what is decided will never see the light of day, or rather it won’t over the next 4 days. Instead it will emerge as official policy, fiscal but mostly monetary as central bankers live to serve the Bilderberg elite, laws, regulations, and social norms. And if history is any indicator, it will only make the current global situation even worse.

* *  *

Below is a full list of this year’s participants:

CHAIRMAN

• Castries, Henri de (FRA), Chairman and CEO, AXA Group

• Aboutaleb, Ahmed (NLD), Mayor, City of Rotterdam
• Achleitner, Paul M. (DEU), Chairman of the Supervisory Board, Deutsche Bank AG
• Agius, Marcus (GBR), Chairman, PA Consulting Group
• Ahrenkiel, Thomas (DNK), Permanent Secretary, Ministry of Defence
• Albuquerque, Maria Luís (PRT), Former Minister of Finance; MP, Social Democratic Party
• Alierta, César (ESP), Executive Chairman and CEO, Telefónica
• Altman, Roger C. (USA), Executive Chairman, Evercore
• Altman, Sam (USA), President, Y Combinator
• Andersson, Magdalena (SWE), Minister of Finance
• Applebaum, Anne (USA), Columnist Washington Post; Director of the Transitions Forum, Legatum Institute
• Apunen, Matti (FIN), Director, Finnish Business and Policy Forum EVA
• Aydin-Düzgit, Senem (TUR), Associate Professor and Jean Monnet Chair, Istanbul Bilgi University
• Barbizet, Patricia (FRA), CEO, Artemis
• Barroso, José M. Durão (PRT), Former President of the European Commission
• Baverez, Nicolas (FRA), Partner, Gibson, Dunn & Crutcher
• Bengio, Yoshua (CAN), Professor in Computer Science and Operations Research, University of Montreal
• Benko, René (AUT), Founder and Chairman of the Advisory Board, SIGNA Holding GmbH
• Bernabè, Franco (ITA), Chairman, CartaSi S.p.A.
• Beurden, Ben van (NLD), CEO, Royal Dutch Shell plc
• Blanchard, Olivier (FRA), Fred Bergsten Senior Fellow, Peterson Institute
• Botín, Ana P. (ESP), Executive Chairman, Banco Santander
• Brandtzæg, Svein Richard (NOR), President and CEO, Norsk Hydro ASA
• Breedlove, Philip M. (INT), Former Supreme Allied Commander Europe
• Brende, Børge (NOR), Minister of Foreign Affairs
• Burns, William J. (USA), President, Carnegie Endowment for International Peace
• Cebrián, Juan Luis (ESP), Executive Chairman, PRISA and El País
• Charpentier, Emmanuelle (FRA), Director, Max Planck Institute for Infection Biology
• Coeuré, Benoît (INT), Member of the Executive Board, European Central Bank
• Costamagna, Claudio (ITA), Chairman, Cassa Depositi e Prestiti S.p.A.
• Cote, David M. (USA), Chairman and CEO, Honeywell
• Cryan, John (DEU), CEO, Deutsche Bank AG
• Dassù, Marta (ITA), Senior Director, European Affairs, Aspen Institute
• Dijksma, Sharon A.M. (NLD), Minister for the Environment
• Döpfner, Mathias (DEU), CEO, Axel Springer SE
• Dyvig, Christian (DNK), Chairman, Kompan
• Ebeling, Thomas (DEU), CEO, ProSiebenSat.1
• Elkann, John (ITA), Chairman and CEO, EXOR; Chairman, Fiat Chrysler Automobiles
• Enders, Thomas (DEU), CEO, Airbus Group
• Engel, Richard (USA), Chief Foreign Correspondent, NBC News
• Fabius, Laurent (FRA), President, Constitutional Council
• Federspiel, Ulrik (DNK), Group Executive, Haldor Topsøe A/S
• Ferguson, Jr., Roger W. (USA), President and CEO, TIAA
• Ferguson, Niall (USA), Professor of History, Harvard University
• Flint, Douglas J. (GBR), Group Chairman, HSBC Holdings plc
• Garicano, Luis (ESP), Professor of Economics, LSE; Senior Advisor to Ciudadanos
• Georgieva, Kristalina (INT), Vice President, European Commission
• Gernelle, Etienne (FRA), Editorial Director, Le Point
• Gomes da Silva, Carlos (PRT), Vice Chairman and CEO, Galp Energia
• Goodman, Helen (GBR), MP, Labour Party
• Goulard, Sylvie (INT), Member of the European Parliament
• Graham, Lindsey (USA), Senator
• Grillo, Ulrich (DEU), Chairman, Grillo-Werke AG; President, Bundesverband der Deutschen Industrie
• Gruber, Lilli (ITA), Editor-in-Chief and Anchor “Otto e mezzo”, La7 TV
• Hadfield, Chris (CAN), Colonel, Astronaut
• Halberstadt, Victor (NLD), Professor of Economics, Leiden University
• Harding, Dido (GBR), CEO, TalkTalk Telecom Group plc
• Hassabis, Demis (GBR), Co-Founder and CEO, DeepMind
• Hobson, Mellody (USA), President, Ariel Investment, LLC
• Hoffman, Reid (USA), Co-Founder and Executive Chairman, LinkedIn
• Höttges, Timotheus (DEU), CEO, Deutsche Telekom AG
• Jacobs, Kenneth M. (USA), Chairman and CEO, Lazard
• Jäkel, Julia (DEU), CEO, Gruner + Jahr
• Johnson, James A. (USA), Chairman, Johnson Capital Partners
• Jonsson, Conni (SWE), Founder and Chairman, EQT
• Jordan, Jr., Vernon E. (USA), Senior Managing Director, Lazard Frères & Co. LLC
• Kaeser, Joe (DEU), President and CEO, Siemens AG
• Karp, Alex (USA), CEO, Palantir Technologies
• Kengeter, Carsten (DEU), CEO, Deutsche Börse AG
• Kerr, John (GBR), Deputy Chairman, Scottish Power
• Kherbache, Yasmine (BEL), MP, Flemish Parliament
• Kissinger, Henry A. (USA), Chairman, Kissinger Associates, Inc.
• Kleinfeld, Klaus (USA), Chairman and CEO, Alcoa
• Kravis, Henry R. (USA), Co-Chairman and Co-CEO, Kohlberg Kravis Roberts & Co.
• Kravis, Marie-Josée (USA), Senior Fellow, Hudson Institute
• Kudelski, André (CHE), Chairman and CEO, Kudelski Group
• Lagarde, Christine (INT), Managing Director, International Monetary Fund
• Levin, Richard (USA), CEO, Coursera
• Leyen, Ursula von der (DEU), Minister of Defence
• Leysen, Thomas (BEL), Chairman, KBC Group
• Logothetis, George (GRC), Chairman and CEO, Libra Group
• Maizière, Thomas de (DEU), Minister of the Interior, Federal Ministry of the Interior
• Makan, Divesh (USA), CEO, ICONIQ Capital
• Malcomson, Scott (USA), Author; President, Monere Ltd.
• Markwalder, Christa (CHE), President of the National Council and the Federal Assembly
• McArdle, Megan (USA), Columnist, Bloomberg View
• Michel, Charles (BEL), Prime Minister
• Micklethwait, John (USA), Editor-in-Chief, Bloomberg LP
• Minton Beddoes, Zanny (GBR), Editor-in-Chief, The Economist
• Mitsotakis, Kyriakos (GRC), President, New Democracy Party
• Morneau, Bill (CAN), Minister of Finance
• Mundie, Craig J. (USA), Principal, Mundie & Associates
• Murray, Charles A. (USA), W.H. Brady Scholar, American Enterprise Institute
• Netherlands, H.M. the King of the (NLD)
• Noonan, Michael (IRL), Minister for Finance
• Noonan, Peggy (USA), Author, Columnist, The Wall Street Journal
• O’Leary, Michael (IRL), CEO, Ryanair Plc
• Ollongren, Kajsa (NLD), Deputy Mayor of Amsterdam
• Özel, Soli (TUR), Professor, Kadir Has University
• Papalexopoulos, Dimitri (GRC), CEO, Titan Cement Co.
• Petraeus, David H. (USA), Chairman, KKR Global Institute
• Philippe, Edouard (FRA), Mayor of Le Havre
• Pind, Søren (DNK), Minister of Justice
• Ratti, Carlo (ITA), Director, MIT Senseable City Lab
• Reisman, Heather M. (CAN), Chair and CEO, Indigo Books & Music Inc.
• Rutte, Mark (NLD), Prime Minister
• Sawers, John (GBR), Chairman and Partner, Macro Advisory Partners
• Schäuble, Wolfgang (DEU), Minister of Finance
• Schieder, Andreas (AUT), Chairman, Social Democratic Group
• Schmidt, Eric E. (USA), Executive Chairman, Alphabet Inc.
• Scholten, Rudolf (AUT), CEO, Oesterreichische Kontrollbank AG
• Schwab, Klaus (INT), Executive Chairman, World Economic Forum
• Sikorski, Radoslaw (POL), Senior Fellow, Harvard University; Former Minister of Foreign Affairs
• Simsek, Mehmet (TUR), Deputy Prime Minister
• Sinn, Hans-Werner (DEU), Professor for Economics and Public Finance, Ludwig Maximilian University of Munich
• Skogen Lund, Kristin (NOR), Director General, The Confederation of Norwegian Enterprise
• Standing, Guy (GBR), Co-President, BIEN; Research Professor, University of London
• Svanberg, Carl-Henric (SWE), Chairman, BP plc and AB Volvo
• Thiel, Peter A. (USA), President, Thiel Capital
• Tillich, Stanislaw (DEU), Minister-President of Saxony
• Vetterli, Martin (CHE), President, NSF
• Wahlroos, Björn (FIN), Chairman, Sampo Group, Nordea Bank, UPM-Kymmene Corporation
• Wallenberg, Jacob (SWE), Chairman, Investor AB
• Weder di Mauro, Beatrice (CHE), Professor of Economics, University of Mainz
• Wolf, Martin H. (GBR), Chief Economics Commentator, Financial Times

* * *

Finally, for those who are skeptical about the massive power and reach of the relatively small Bilderberg group, here is a recent graph which shows the members’ connections to virtually every important and relevant organization, company and political entity in the world.

via http://ift.tt/1XF8xIz Tyler Durden

Submitted by Ingrid Carlqvist via The Gatestone Institute,

It should not be a mystery whether Islam is compatible with democracy or not. All you have to do is look at the Islamic sources or call any imam and pretend to be impressed that Islam does not separate religion and politics.

Yet, when Gatestone Institute called Swedish politicians at all levels to ask if Islam and democracy were compatible, they gave assurances that there were no problems whatsoever with Islam's capacity for democracy — or they hung up.

The two most common answers given were:

1. Islam is definitely compatible with democracy!
2. I cannot discuss this matter right now.

The question cuts through all parties; apparently no one dares to face the facts. So far, throughout history, and now in the world's 57 Muslim countries in the Organization of Islamic Cooperation (OIC), nowhere has Islam been compatible with democracy, freedom of speech, human rights and legal certainty. These Muslim states have not signed the UN's Declaration of Human Rights, a document Swedish politicians seem to cherish. Instead, those countries have joined the Cairo Declaration, which stipulates that sharia is the only foundation for human rights. In short, human rights are all well and good so long as they do not conflict with sharia — if they do, sharia wins. In practice, this means that in the Islamic world, there are, in the Western sense, no human rights.

Then why do Swedish politicians believe they will be able to democratize Islam? Do they know something the rest of the world does not? Or, as the alternative is so terrifying, are they just pretending?

In 1985, Sweden was still a homogenous country. There was no doubt that Sweden belonged to the Swedes. We were proud of the country that our forefathers created, and the welfare state given to us by the Social Democrats. Women in veils and men in Middle Eastern clothes did not walk the streets, and Islam was still considered exotic. It was, as the analyst Ronie Berggren recently put it, "Arabian nights, or [the children's book] Tam Sventon with his manservant, Mr. Omar, and the flying carpet. Olof Palme was still alive and Sweden thought itself a safe and functioning nation."

But in 1985, the Swedish History Museum published an anthology, "Islam: religion, culture, society," in which a diplomat, Dag Sebastian Ahlander, expressed concerns:

"Islamic immigration to Sweden can also lead to new conflicts within Swedish society. The Swedish perception is that there is freedom of religion in Sweden, but that perception is built on a private view of religion. To a Muslim, a large part of the rules regarding everyday activities is based on Islam; co-education of boys and girls, sex education, the view on the status of women, the demand that the slaughter of animals should be performed according to certain rituals, the demand that Friday should be a public holiday — all of these things are potential sources of conflict to Muslim immigrants in Swedish society, and they are all ultimately founded on religion."

Sadly, the anthology fell into oblivion. All at once, while the Swedes were busy tending their gardens or repainting their summer houses, and feeling safe in the knowledge that our politicians surely were not lying to us, Islam was everywhere. The problems sketched out by Dag Sebastian Ahlander are now affecting all of us — but still the politicians refuse to address the most basic question.

In calls to politicians, Gatestone also encountered an incantation: Islam is democratic because it has to be democratic, because what will happen to Sweden otherwise?

Many politicians are, evidently, frightened to death to talk about Islam. They seem to do everything in their power to avoid giving an answer. They claim they are the wrong person to talk to; they hang up the phone — anything to skirt a discussion.

The reason may well be that no matter what they say, everyone knows what happens to anyone who criticizes Islam — first, you get labeled an "Islamophobe racist," then, like the artist Lars Vilks, you might get a fatwa of death on your head.

Not one of the politicians or officials was able to name a single Muslim-majority country that has a decent democracy with legal certainty and freedom of speech. Not one could see any danger coming from an increasing Islamization of Sweden. Typical answers were:

"Yes, Islam is definitely compatible with democracy. At least, that is my interpretation." — Beatrice Ask, Conservative (Moderaterna), former Minister of Justice.

 

"Of course if you read the words in the Quran, and the movements and schools that are leading around the world, then Islam is difficult to merge with the Swedish version of democracy. But I try to avoid talking categorically about Islam as a whole. Many people have Islam as their personal faith." — Paula Bieler, Sweden Democrats.

 

"I have nothing against that. People can believe what they want in a democracy." — Nooshi Dadgostar, Left Party (Vänsterpartiet).

 

"Islam as a religion is compatible with democracy, why wouldn't it be? I don't think there is any religion not compatible with democracy. As long as you don't use religion to hurt each other, Christianity, Islam and Judaism are all democratic in their basic perspective." — Jamal Mouneimne, Social Democrats (Socialdemokraterna).

 

"[Mehmet] Kaplan is a practicing Muslim in a democratically elected government, so of course both he and I believe Islam is compatible with democracy. He is also an anti-racist, a feminist and he stands up for human rights." — Mikaela Kotschack, Green Party (Miljöpartiet), Press Secretary for the recently resigned Mehmet Kaplan.

 

"I cannot answer that I'm afraid. This calls for a longer discussion, you cannot just answer yes or no to that question. … No, the question does not make me nervous, but it demands knowledge and a longer discussion." — Larry Söder, Christian Democrats (Kristdemokraterna).

The civil servants, who are supposed to give the politicians more insight into current political issues, seem no more knowledgeable than the politicians. Deputy Assistant Göran Ternbo, the Government Offices' expert on democracy and human rights, was also asked if Islam is compatible with democracy:

"Eh, ah … that's a controversial issue, it is. I don't know. You cannot be that categorical answering one way or the other. Why are you asking these questions? It feels … where are you going with this?"

 

Gatestone: We just want to know what the government's view on Islam is. Are you aware of the Islamic agenda?

 

Ternbo: "We have freedom of religion in Sweden."

 

Gatestone: Can you say that Islam fits into democratic Sweden?

 

Ternbo: "Yes, if they follow our laws."

 

Gatestone: But many say they want sharia?

 

Ternbo: "I have never heard that."

 

Gatestone: Can you mention one democratic Muslim country?

 

Ternbo: "I do not understand where this is going. If you want to discuss Islam, I advise you to contact the Ministry for Foreign Affairs, they have experts on Islam."

 

Gatestone: But the politicians are filling the country with Islam right now, how does that affect Sweden's future?

 

Ternbo: "My job is to deal with completely different issues, so I cannot answer that. Right now, I'm working on the Nordic Sami Convention."

 

Gatestone: You work with human rights, have the Muslim countries accepted the UN Declaration on Human Rights?

 

Ternbo: "Yes, they've accepted a number of declarations, including the Cairo Declaration."

 

Gatestone: Does the Cairo Declaration view human rights the same way we do?

 

Ternbo: "I don't want to continue this discussion, it feels like an interrogation. We have freedom of religion in Sweden."

 

Gatestone: Is it possible to use Swedish democracy to abolish democracy?

 

Ternbo: "This is going too far. I have a meeting now. Goodbye."

The Swedes are highly secularized. They have never asked to be invaded by fierce religious rules. However, the huge immigration of asylum seekers, mainly from Muslim-majority countries, has turned everything the Swedes take for granted upside down — such as the idea that people mind their religious business in private, and that you can trust what other people tell you.

Can you trust what Muslim politicians are saying? In the Nordic culture, telling the truth is a virtue. The Aesir clan of the gods in Norse mythology listed nine noble virtues: courage, love of the truth, honorable living, fidelity, discipline, hospitality, confidence, diligence and endurance. In Islam, however, love of the truth does not seem to be a prominent virtue — in some circumstances, not only is lying allowed, it is compulsory to lie if it benefits Islam.

The question of whether Islam and democracy are compatible is probably the most important one that Sweden has faced in modern times. If Islam is not compatible with democracy, while the number of Muslims in Sweden grows week by week, then Sweden as a democratic country may soon be but a memory.

With their goodhearted eagerness to be inclusive, to defend freedom of religion, and not to discriminate against any group, Swedish politicians are easy prey for Islamists with an anti-democratic agenda.

Islam has its own system of justice, built on divine law (sharia); a ban on any and all criticism of Islam, and laws regulating virtually everything in everyone's life. Moreover, there seems to be no interest on the part of the newcomers in abandoning these traditions in favor of the traditions of the West.

The fact that all political parties apart from the Sweden Democrats (who are critical of immigration) have Muslim representatives might lead people to think that if there are Muslims working within our democratic system, they must be democrats.

Yet Swedish imams make no secret that in Islam, politics and religion are branches on the same tree. If you phone an imam, and say you are a Swede who has grown tired of the Swedish Church's compliance on political issues, and that you have thought about converting to Islam, you might hear, as imam Ali at the Islamic Cultural Center in Lund, said, "No, you cannot take politics out of Islam, it is a part of our religion. Islam is a complete system, which people need."

Of course, if you are critical of Islam mixing politics and religion, you will not get answers like that — the imams evidently know that such answers are not popular in Sweden — anyway, not yet.

Anyone who thinks that these candid imams might be mistaken can study the official pronouncements on the subject. In fatwa number 07166, for instance, entitled, "Ruling on democracy and elections and participating in that system," Sheik Muhammad Saalih al-Munajjid, one of the most respected scholars in Sunni Islam, writes:

"Praise be to Allaah. Firstly: Democracy is a man-made system, meaning rule by the people for the people. Thus it is contrary to Islam, because rule is for Allaah, the Most High, the Almighty, and it is not permissible to give legislative rights to any human being, no matter who he is."

His fatwa number 98134, "Concept of democracy in Islam," states:

"Democracy is a system that is contrary to Islam, because it gives the power of legislation to the people or to those who represent them (such as members of Parliament). Based on that, in democracy legislative authority is given to someone other than Allah, may He be exalted; rather it is given to the people and their deputies, and what matters is not their consensus but the majority. Thus what the majority agree upon becomes laws that are binding on the nation, even if it is contrary to common sense, religious teaching or reason. In these systems legislation has been promulgated allowing abortion, same-sex marriage and usurious interest (riba); the rulings of sharee'ah have been abolished; and fornication/adultery and the drinking of alcohol are permitted. In fact this system is at war with Islam and its followers."

In fatwa number 111898, he answers a question on whether it is permissible to participate in non-Muslim, democratic elections:

"The Muslim participants should intend thereby to serve the interests of the Muslims and ward off evil and harm from them. The Muslim participants should think it most likely that their participation will have positive effects that will benefit the Muslims in that country, such as supporting their position, conveying their requests to the decision makers and those who are in charge of the country, and protecting their religious and worldly interests. The Muslim's participation in these elections should not lead to him neglecting his religious duties."

In fatwa number 178354, the Sheik is asked, "What is the ruling on one who reviles the Muslims and praises the kuffaar [infidels], and even wishes to be one of them?" He replies:

"Allah, may He be exalted, has instructed His believing slaves to love one another and to take one other as friends, and He has instructed them to hate His enemies and regard them with enmity for the sake of Allah. He has stated that friendship can only be among the believers and enmity is to be between them and the kaafirs; disavowing them is one of the basic principles of their faith and is part of perfecting their religious commitment. There are very many verses, hadeeths and comments of the early generation to that effect."

That Islam combines religion and politics, with a view to using politics to advance the religion, and further these views, which are clearly stated, appears a totally foreign concept to Swedish politicians. Perhaps this is the reason that a Turkish-born Muslim, Mehmet Kaplan, could become Minister for Housing and Urban Development, all the while rubbing shoulders with the Islamists of Turkish groups Milli Görüs and the neo-fascists of the Grey Wolves — he was convinced no one would ever question him or his agenda, as questioning him about such alliances would be considered "Islamophobic."

When pictures of him consorting with these groups were leaked to the media, a video clip also emerged in which Kaplan compared Israel's actions with the Palestinians to Nazi Germany's treatment of the Jews. That remark, in 2016, crossed the line for what an Islamist may say and do in Sweden. In Sweden, it is incredibly important not to question the Holocaust. Disapproval may possibly have come as a surprise to many, who perceive Sweden's Israel policy under Minister for Foreign Affairs Margot Wallström as extremely critical of Israel. Wallström and the government's criticism of Israel stems mainly from a view of Israel as the stronger party in the conflict between the Israelis and Palestinians, and from not recognizing that the Muslims and Arabs in the larger conflict perpetually threaten genocide against Israel and the Jews.

Mehmet Kaplan's remark forced him to resign. Alas, anyone thinking that the Kaplan affair would lead to a discussion of the role of Islam in Swedish politics, is mistaken. Nothing in the public debate so far suggests that Swedish politicians will seriously start looking into a possible underlying agenda among Muslim politicians, such as that they might in fact be working to spread Islam in Sweden, as Sheik Muhammad Saalih al-Munajjid encourages. Such fatwas can be found in his IslamQA.info, one of the world's most popular websites on Islam.

Mehmet Kaplan, a Turkish-born Muslim, became Sweden's Minister for Housing and Urban Development, all the while rubbing shoulders with the Islamists of Turkish groups Milli Görüs and the neo-fascists of the Grey Wolves — he was convinced no one would ever question him or his agenda, for fear that doing so would be considered "Islamophobic." Kaplan was only forced to resign in April after revelations that he compared Israel's treatment of Palestinians to Nazi Germany's treatment of Jews. (Image source: Wikimedia Commons/Jan Ainali)

Mehmet Kaplan had only just resigned, when, within the Green Party, the next scandal broke. Yasri Khan, chairman of Swedish Muslims for Peace and Justice (Svenska muslimer för fred och rättvisa), was also a would-be member of the Green Party executive committee. In a news report on Sweden's TV4, viewers watched in amazement as Khan refused to shake the female reporter's hand. Was a man who did this really a good representative for the "feminist" Green Party?

When the Green Party's spokesman, Gustav Fridolin, tried to explain Khan's actions and why he had been recommended for the party's executive, he only made matters worse. On a morning television show, Fridolin said that he "did not understand that women could feel so offended by someone refusing to shake hands." The same evening, Fridolin apologized for the apology.

The Green Party may be the easiest party in which Islamists can act as entryists. The party appears particularly fond of physical diversity and seems willing to accept just about anybody who appears to be not an ethnic Swede. Possibly the Green Party never counted on the Swedish people, including their own constituents, having a completely different view of religion, politics, gender equality and handshakes.

After these scandals, the scholar Lars Nicander of the Swedish Defense University warned in Aftonbladet that the Green Party might have been infiltrated by Islamists:

"I see a resemblance with how the Soviet Union acted during the Cold War, when it tried to infiltrate various democratic parties, and these methods are similar to what we see today, when people close to the Muslim Brotherhood, an Islamist party, apparently have gotten a strong foothold within the Green Party."

A few days later, the Social Democratic politician Nalin Pekgul, a Kurdish Muslim, told the public-service Sveriges Television that she believes the Green Party is rife with Islamists: "The Green Party has for a long time become an arena for many Islamists to involve themselves in. That is the party where they have been strongest and most successful."

She also said that while other parties have been exposed to Islamists, the Green Party has been affected the most:

"The Islamists in the Green Party are members of the party executive, they are in City Halls around the country, in the District Councils, and they have friends in the Government Offices who push their issues and make sure their organizations get lots of money."

The key issue is what, if any, lesson Swedish politicians have learned from the Islamist revelations this spring. If Sweden is to survive as a secular democracy, then all politicians need to understand what Islam actually is. The fact that there are democratic Muslims does not mean that Islam itself is compatible with democracy. Individual Muslims may make a distinction between politics and religion, but this does not mean that Islam accepts this division. The question is where the democratic Muslims will be when Islam has gained even more influence in Sweden: Will they stand up for Swedish democracy if that means openly going against the tenets of Islam?

In 2009, the year before the Sweden Democrats party entered parliament, party leader Jimmie Åkesson published an opinion piece, headlined "The Muslims are our greatest foreign threat," in the newspaper Aftonbladet:

"This is the reason today's multicultural Swedish power elite is so totally blind to the dangers of Islam and Islamization. The presumption is that Muslims want nothing more than to adapt to a Western way of life and Western values, and that Islam is essentially the same as Christianity, the only difference being that Muslims have another name for God. Thus, the presumption is also that Islam can be tamed, the same way secular forces have tamed European Christianity and relegated it to the private sphere."

Åkesson further wrote that Islam has affected the Swedish society to a much higher degree than Swedish society has affected Islam. He listed several areas where Islam has made an impact. People who have made fun of Islam are forced to live under constant police protection; Muslim terrorist organizations are growing stronger; Muslim representatives are demanding sharia laws; taxpayer money is being spent on circumcising baby boys; public swimming pools separate men and women; demands for halal meat at supermarkets while schools should no longer serve pork, and so on.

Not even the Sweden Democrats seem to have focused on Islam's demands for political influence. Party leader Jimmie Åkesson asked what things will look like in another few decades, when the Muslim population has increased several times over, and cities such as Malmö most likely have a Muslim majority. He concluded the article with a promise:

"The multicultural societal elites may see this future as a colorful, interesting change for a Sweden and a Europe one usually denies has ever been 'Swedish' or 'European'. As a Sweden Democrat, I see this as our greatest foreign threat since World War II, and I promise to do everything in my power to reverse this trend when we go to the polls next year."

Åkesson's article ignited a firestorm. Members of the "establishment" swore they had never read anything so vile, and the article was reported to the Chancellor of Justice as suspected "hate speech." However, the Chancellor at the time, Göran Lambertz, did not open an investigation into the case. He noted that the law allows for "criticism of ethnic groups or circumstances pertaining to those groups."

"There is no doubt whatsoever that this does not cross the line for criminal behavior. You are allowed to say a lot of things that can be considered offensive and annoying and in many ways unpopular. That goes with freedom of speech."

Seven years have passed. The Muslim population of Sweden is approaching one million (out of 9.8 million inhabitants), but even the Sweden Democrats do not mention a threat from Islam.

But whether the politicians' unwillingness to discuss a threat stems from ignorance or fear, to answer a question by hanging up the phone is simply not good enough. It is the politicians who have filled the country with Islam, and the Swedish people have a right to know the result. Above all, they have a right to demand that the politicians know the consequences of their decisions for the Swedes, who are secular and who love their democracy.

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David Stockman, former director of the Office of Management and Budget, discusses what’s at stake for the United States in the battle for the White House between Donald Trump and Hilary Clinton… "we just can't handle four more years of Hillbama… Obamacare is a ticking timebomb.. and foreign policy is a disaster… at least Trump knows we are bankrupt and can't afford to be the policeman of the world… Trump is a flawed candidate from a style perspective but Trump's virtue is he is not schooled in 20 years of Washington delusions… We need a disruptor!"

 

Stockman unleashed… (warning – this is not a 'safe space')

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Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Two months ago, there was a referendum in Holland about an association agreement between the EU and Ukraine. A relatively new Dutch law states that with an X amount of signatures a referendum can be ‘forced’ by anyone. Before, during and -especially- after the vote, its importance was -and is actively being- pooh-poohed by both the Dutch government and the EU. That in itself paints the issue better than anything else. Both the call and the subsequent support for the referendum stem from resistance against exactly that attitude.

 

The Dutch voted No to the EU/Ukraine agreement. It was with a turnout not much above the validity threshold, but a large majority of those who did vote agreed they want no part of the deal. This puts Dutch PM Rutte in an awkward position, he can’t be seen ignoring the population. Well, at least not openly. The EU can’t validate the agreement, and with Holland still holding the chair of the Union until July 1, a meeting on the topic has been pushed forward until the last weekend of June. With Rutte still in charge, but only just, and with the June 23 UK Brexit vote decided.

 

Brussels is frantically looking for a way to push through the agreement despite the Dutch vote, and likely some sort of bland compromise will be presented, which Rutte’s spin doctors will put into words that he can -with a straight face- claim honor the vote while at the same time executing what that same vote specifically spoke out against.

 

The EU will claim that since 27 other nations did ‘ratify’ the agreement, the 67% of the 32% of Dutch voters who bothered to show up should not be able to block it. As they conveniently fail to mention that nobody in the other 27 countries had a chance to vote on the issue. Just imagine a Brexit-like vote in all 28 EU nations on June 23. Brussels knows very well what that would mean. There’s nothing it finds scarier than people having an active say in their lives.

All this is a mere introduction for what is a ‘western world wide’ trend that hardly anybody is able to interpret correctly. It what seems to many to be a sudden development, votes like the Dutch one are ‘events’ where people vote down incumbents and elites. But these are not political occurrences, or at least politics doesn’t explain them.

In the US, there’s Trump and Bernie Sanders. In Britain, the Brexit referendum shows a people that are inclined not to vote FOR something, but AGAINST current political powers. In Italy, a Five-Star candidate is set to become mayor of Rome, something two Podemos affiliated -former- activists have already achieved in Barcelona and Madrid.

All across Europe, ‘traditional’ parties are at record lows in the polls. As is evident when it comes to Brexit, but what when you look closer is a common theme, anything incumbents say can and will be used against them. (A major part of this is that the ’propaganda power’ of traditional media is fast coming undone.)

The collapse of the system doesn’t mean people swing to the right, as is often claimed, though that is one option. It means people swing outside of the established channels, and whoever can credibly claim to be on that outside has a shot at sympathy, votes, power, be they left or right. Whatever else it is they may have in common, first and foremost they’re anti-establishment.

*  *  *

To understand the reason all this is happening, we must turn our heads and face economics. Or rather, the collapse of the economy. Especially in the western world – the formerly rich world-, there is no such thing as separate political and economic systems anymore (if there ever were). There is more truth in Hazel Henderson’s quote than we should like: “economics [..] has always been nothing more than politics in disguise”.

What we have is a politico-economic system, with the former media establishment clinging to (or inside?!) its body like some sort of embedded parasite. A diseased triumvirate.

With the economy in irreversible collapse, the politico part of the Siamese twin/triplet can no longer hold. That is what is happening. That is why all traditional political parties are either already out or soon will be. Because they, more than anything else, stand for the economic system that people see crumbling before their eyes. They represent that system, they are it, they can’t survive without it.

Of course the triumvirate tries as hard as it can to keep the illusion alive that sometime soon growth will return, but in reality this is not just another recession in some cycle of recessions. Or, at the very minimum this is a very long term cycle, Kondratieff style, . And even that sounds optimistic. The system is broken, irreparably. A new system will have to appear, eventually. But…

‘Associations’ like the EU, and perhaps even the US, with all the supranational and global entities they have given birth to, NATO, IMF, World Bank, you name them, depend for their existence on an economy that grows. The entire drive towards globalization does, as do any and all drives toward centralization. But the economy has collapsed. So all this will of necessity go into reverse, even if there are very powerful forces that will resist such a development.

*  *  *

Despite what the media try to tell you, as do the close to 100% manipulated economic data emanating from various -tightly controlled- sources, the economy is not growing, and it hasn’t for years; the only thing that grows is debt. And you can’t borrow growth.

You can argue in fascinating philosophical debates about when this started, arguments can be made for Nixon’s 1971 abolishment of the -last vestiges of- the gold standard anywhere up to Clinton’s 1998 repeal of Glass-Steagall, or anything in between -or even after.

It doesn’t matter much anymore, the specifics are already gathering dust as research material for historians. The single best thing to do for all of us not in positions of politico/economic power is to recognize the irreversible collapse of the system. Since we all grew up in it and have never known anything else, that is hard enough in itself. But we don’t have all that much time to lose anymore.

The whole shebang is broke. This can easily be displayed in a US nominal debt vs nominal GDP graph:

 

That’s really all you need to know. That’s what broke the shebang. It is easy. And even if a bit more of the ‘surplus’ debt had been allowed to go towards the common man, it wouldn’t have made much difference. We’ve replaced growth with debt, because that is the only way to keep the -illusion of- the politico-economic system going, and thereby the only way for the incumbent powers to cling on to that power.

And that is where the danger lies. It’s not just that the vast majority of westerners will become much poorer than they are now, they will be forced to face powers-that-be that face the threat of seeing their powers -both political and economic- slip sliding away and themselves heading towards some sort of Marie-Antoinette model.

The elites-that-be are not going to take that lying down. They will cling to their statuses for -literally- dear life. That right there is the biggest threat we all face (including them). It would be wise to recognize all these things for what they really are, not for what all these people try to make you believe they are. Dead seriously: playtime is over. The elites-that-be are ready and willing to ritually sacrifice you and your children. Because it’s the only way they can cling on to their positions. And their own very lives.

It may take a long time still for people to understand the above, but it’s also possible that markets crash tomorrow morning and bring the facades of Jericho down with them. Waiting for that to happen is not your best option.

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At this point it is just funny really…

What do bonds know?

 

It seems the doves are winning – because the economy is dismal…

Or is the world now betting on the next round of QE? Buying bonds, buying stocks, buying gold, and selling USDollars?

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In the long run, as someone once said, we are all dead, but in the meantime, as BofAML's Michael Hartnett provides a stunning tour de force of the last 5000 years illustrates long-run trends in the return, volatility, valuation & ownership of financial assets, interest rates & bond yields, economic growth, inflation & debt…

The Longest Pictures reveals the astonishing history investors are living through today: lowest interest rates in 5000 years; lowest UK base rate since 1705; a negative Japanese bond yield for the 1st time since 1870; all-time highs in corporate bond returns; slowest Chinese nominal growth in over 20 years; US stocks at 60-year highs vs Europe; bank stocks at 75-year relative lows; largest losses from commodities since 1933.

On Dec 16th the Fed raised rates for the 1st time in almost a decade, ending the longest run of unchanged policy since Fed founded in 1913. The Longest Pictures illustrates how unprecedented monetary stimulus in recent years has failed to deliver recovery, how the global “War on Deflation” has been retarded by excess Debt, aging Demographics, technological Disruption, and why the current Fed hiking cycle could be “one & done”.

Electorates are increasingly voting for policies to address wage deflation, immigration & inequality. The great investment question of our time: will coming “War on Inequality” (via taxation, protectionism, helicopter money) mark secular inflection point for inflation & bond yields (last one was 1981)? Regime change required first, but secular contrarians would be long “inflation assets” (commodities, TIPS, EAFE/EM, banks, value, cash, active) & short “deflation assets” (bonds, IG, US, consumer, growth, “yield”, passive).

The Longest Picture…

…interest rates are at their lowest level in 5000 years.

Why?
1. Policy: unprecedented central bank policies of QE, ZIRP & NIRP
2. Macro: failure of monetary policy to engender sustained economic recovery
3. Risk: deflation risk from excess Debt & Deleveraging, technological Disruption, and aging Demographics.

Since the Global Financial Crisis the “War on Deflation” has been fought exclusively with monetary policy…

…654 rate cuts since Lehman bankruptcy
…$12.3tn of purchases of financial assets by global central banks
…central bank balance sheets expanding to $23.4tn (i.e. >GDP of US+Japan)
…$9.9tn of global bonds are currently yielding less than zero.

Yet global economic growth remains anemic by historic standards. And 8 years after the “War on Deflation” was launched, inflation rates are extremely low…

US CPI = 1.1%
Eurozone CPI = -0.2%
Japan CPI = -0.3%
China CPI = 2.3%
 

Debt & Deleveraging thwart the War on Deflation.

Debt levels remain high, as high as they have ever been in peacetime for the US government. Banks continue to deleverage.

Savings thus encouraged, borrowing discouraged, and “animal spirits” of household & corporate sectors repressed.

Note that even the highly profitable US corporate sector currently has record cash on balance sheet of $1.7tn (equal to the GDP of Texas or Brazil).

 

Disruption thwarts the War on Deflation. Tech disruption is deflationary.

The “Amazonification” of the retail industry exerts downward pressure on prices.

The acceleration of robots & AI (the number of global robots is forecast to rise from 1 million in 2010 to 2.5 million in 2020) exerts downward pressure on wage expectations.

The increase in life expectancy via biotech & genomics puts upward pressure on saving for a longer retirement and higher health care costs.

 

Demographics thwarts the War on Deflation.

In the next 10 days 112,000 people will reach retirement age in the US, Europe & Japan). A world of zero rates is making saving for retirement extremely tough.

And by 2020 (Chart) the world will experience “peak youth”…for the first time in human history with the number of persons aged 65+ expected to outnumber children under-5 by the end of this decade.

Today’s “deflationary expansion” means the greatest bull market in bonds rages on.

From an all-time peak of 15.8% in Sep’80, the US 10-year Treasury yield fell to 1.45% in 2012, the lowest since 1945.

In the past 4 years bond yields have remained stubbornly low in the US…

…while government bond yields in Japan, Eurozone & Switzerland have, in the past year, all fallen into negative territory for the first time ever.

The cocktail of QE, ZIRP & NIRP has been a potent one for Wall Street & the price of financial assets in the past 8 years…

…especially intoxicating for financial assets that offer “yield”, “quality” & “growth”, scarce assets in a world of low economic growth & interest rates…

…returns from US Investment Grade bonds hit an all-time high in recent weeks…

…and on April 28th, 2016, the bull market in US stocks became the 2nd longest of all-time.

The chart shows how the 10-year rolling return from stocks in Feb’09 fell to its lowest level since Aug’39 during the GFC, a good reminder that investors should always buy “humiliation”.

The global “deflationary expansion” has been very positive for US assets relative to RoW…

…US is the Great Disruptor, US population aging less quickly that in Europe, Japan & China, and US potential real GDP growth still close to 2%…

…US stocks are close to all-time price relative highs vs EAFE index (Chart) and already at 60-year highs vs European stocks.
 
And yet the bull market has waned in the past 18 months, there has been no “normalization” of growth, rates & asset allocation, no “Great Rotation”, and bonds & stocks have been trapped in a Twilight Zone of volatile trading ranges…

Driven by:
1. Policy: fears of Fed hikes as well as Quantitative Failure in Japan & Europe
2. Profit recession: driven by China & oil
3. Valuation: as an era of excess returns ended with the era of max liquidity & max profits.

Bank stocks (the chart shows the relative performance of US banks close to a 75-year low) are indicative of world stuck in a minimum growth, minimum rate backdrop.

(Indeed, the chart of relative bank performance could easily be mistaken for a chart of interest rates).

The collapse in the rolling return from commodities to the lowest level since 1939 similarly indicative of asset class that has been a “deflation loser”.

Commodities, banks, value stocks, TIPS, cash… are today’s humiliated asset classes, the new secular contrarian “longs”.

But the secular case for these “deflation losers” requires a catalyst (it was QE for stocks in 2009).

On Dec 16th last year Fed hiked rates for 1st time in a decade, ending longest run of unchanged policy since Fed founded in 1913.

The chart shows Fed tightening cycles end with “events”. Recent history (Japan, Sweden, Euro area, New Zealand, Australia, Norway, Iceland) shows how monetary tightening attempts have been quickly punished, aborted & reversed in a deflationary backdrop.

Note asset prices respond very well to "one & done" Fed hiking cycles (there have been 7 since 1926).

But The Longest Pictures shows that monetary policy has failed to deliver the knockout blow to Deflation.

Wall Street has boomed; but Main Street has not (wages continue to fall as % GDP).

Unsurprisingly electorates are increasingly voting for policies to address wage deflation, unemployment, immigration and inequality.

Income inequality is clearly unlikely to be solved via a further sustained rise in asset prices.

Investors must thus start to discount a “War on Inequality” via:

1. Regressive Taxation: tax rates, most particularly for the highest tax brackets, are likely to increase in coming years.
2. Trade Protectionism: tariffs, as well as restrictions on the flow on labor & capital across borders.
3. Helicopter Money: to finance fiscal stimulus (infrastructure spend, tax cuts/reform, higher minimum wages).

The great question for investors coming years: will the coming “War on Inequality” mark a historic inflection point for inflation and bond yields? (Last great inflection point was 1981).

Some policies (helicopters) more likely to induce inflation expectations than others (protectionism & regressive taxation).

Regime change required first, but the secular contrarian positioning for the War on Inequality should be long “inflation assets” (commodities, TIPS, EAFE/EM, banks, value, active, cash) & short “deflation assets” (bonds, IG, US, consumer, growth, “yield”, and passive managers).

 

 

Source: BofAML

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Authored by Bill Bonner of Bonner & Partners (annotated by Acting-Man's Pater Tenebrarum),

From Subject to Citizen

On June 5th, the Swiss cast their votes and registered their opinions: “No,” they said. We left off yesterday wondering why something for nothing never works. Not as monetary policy. Not as welfare or foreign aid. Not in commerce. Not never, no how. But something for nothing is what people most want.

 

The future Switzerland just managed to dodge… for now

 

The Swiss voted against awarding all citizens a “universal basic income” of about $30,000 a year, regardless of whether they have work or not. But the idea is unlikely to go away.

Two-thirds of British voters say they are in favor of the idea. And Canada’s Ontario province is set to try something similar. If you’ve been following these Diary entries, you know how and why we have a welfare state.

It’s not because our leaders are more thoughtful and caring than those in the past. Instead, the French and American Revolutions showed the relative greater value of “citizens” over “subjects.”

When people thought they were in charge of a government, rather than merely subject to it, they no longer found it absurd to ask not what the government could do for them, but what they could do for it! The elite, who control the government, had a quick response: You can pay higher taxes!

And you can get yourself blown up in one of our self-serving foreign wars. Instead of being dragooned to serve in the king’s army, in other words, citizens enlisted, willingly.

And because their money was now used for only projects that benefited them – as selected by their elected representatives – they’d pay more for them. At least, that was the theory.

 

Finally free! Sort of…

Yes, the voters are a nuisance. Still, it pays to let the masses think they are in charge; you can get more out of them that way.

 

Birth of the Welfare State

But the new 19th-century citizen now had a rifle as well as a ballot. And if he could take down George III or Louis XVI, he could bring down any government. So, it was that, roughly a century after Louis’ head rolled, Germany’s first chancellor, Otto von Bismarck, figured out how to keep the new citizen docile: Give him something for nothing. Give him a pension!

Through a series of acts in the 1880s, Bismarck’s Germany put in place the world’s first social welfare state – including health insurance and a public pension program. If people depended on the feds for their retirement financing, they would go along with almost anything the feds got up to.

 

Bismarck, his stern Teutonic gaze fixed on some point in the distance… he invented the welfare state because he figured it was the best way to maintain the political system and keep the German emperor and elites in power.

 

This was the origin of what we know as the welfare state – whereby the government collects money from the people and then returns a substantial portion of it to them. Some get jobs. Some get healthcare benefits. Almost all get pensions.

Today, most governments operate on some version of Bismarck’s model – taking money from citizens, but also providing “public” benefits to them. The model worked beautifully for 100 years. Politicians, bidding for votes, continually sweetened the deal. Both “liberal” and “conservative,” they realized that they had to promise the voters more and more “benefits” to get elected.

Real conservatism (favoring small, limited government) practically disappeared, as the bidding heated up. Politicians promised voters unemployment compensation, medical care, drugs, subsidized housing, and other handouts. But the more something-for-nothing they were promised, the more they wanted.

 

“Advance Auctions”

Fortunately, populations and economies were growing fast. The young worked… and were promised benefits – drugs and pensions – that they could enjoy when they got older. As long as populations were growing and economies were expanding, the only problem was deciding who should get what.

That’s why elections were so important. They were “advance auctions of stolen goods,” as Baltimore newspaperman H.L. Mencken famously put it. But they were auctions of goods that hadn’t even been created – let alone stolen.

 

H.L. Mencken, who has left us with a treasure trove of trenchant and humorous political analysis (a sense of humor is a sine qua non if one doesn’t want to fall into deep depression over the reality of politics). Unfortunately, the likes of him don’t come around very often….

 

And now, giving older people something for nothing is running into a problem: There isn’t so much to give anymore, and there are a lot more people with their eyes on it. Public pension systems – such as Social Security in the U.S. – had relatively few beneficiaries before World War II. Now they are swamped by them.

The math no longer works. Instead of getting more out of the welfare state than they paid in, citizens now expect to get less. Maybe a lot less. Not only are there more old people, but also the feds have damaged the economy that supports them. How?

 

Dumb, pettifogging regulations, special privileges and payoffs, licensing, subsidies. Everybody’s got an angle!

 

Snake in the Woods

“Bill, I’d like to take away your trees,” said Tommy in this Tidewater drawl. Tommy, as we recently reported, has been working with his bulldozer on our farm in Southern Maryland.

“But it’s not like it used to be. Now, you need a permit to take a p***, let alone cut down trees. The forester [probably a recent graduate of the University of Vermont] comes out, and he tells you which trees you kin cut. I’m not kiddin’.”

So, now we have to get in touch with the county government – the state government – and for all we know, it will soon be a federal case, too. Work will slow. Inevitably, there will be fees to pay.

 And you thought it was your tree, to do with as you like? Time for you to understand: All your trees are belong to us!

And why? Why should someone else tell us which trees to cut? How is the world a better place as a result? Most likely, it won’t be. It will just be less efficient. Productivity is now going backward – and if that continues, the welfare state is doomed.

“Man…you got some snakes down in those woods,” said Tommy. “An’ I hate snakes. I bin operating a tractor [a bulldozer] all my life. Mor’n 60 years. An’ I neva had that happ’n before. I was down in the bottom…doin’ my work.

“An’ all of a sudden, I looked aroun’ n dere was a big black snake in de cab wif me. He was right behind me, hanging from the window and lookin’ over my shoulder. Well, you ain’t neva seen an 80-year-old man move as fast as I moved.”

“What happened to the snake?” we asked.

“Oh, I settled up wif ‘im.”

And now the welfare state no longer makes sense. If a person can get more from private insurance, private health care, and private education, why support the feds? In other words, the welfare state only really worked as long as people got something for nothing.

 

Nothing personal…

 

Nothing-for-something will not be attractive to the voters. But wait. Why not just rob Peter to pay Paul? Tax the few rich, and give the money to the many poor. Remember, it’s a majority rule system! Why won’t that work?

Oh, dear reader, you make us laugh sometimes. Have you forgotten? The voters don’t really control the system. Peter does.

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Heading into last month’s 10 Year auction, there was a surprising development: the 10Y paper was trading super special in repo as a result of pervasive shortages. This time, however, this did not happen and in fact after trading tight in repo, earlier today, 10Y actually had a positive sign suggesting perhaps some weakness going into today’s auction.

 

However, all fears were laid to rest moments ago when the Treasury announced the results of today’s 10Y reopening: printing at a high yield of 1.702%, this not only stopped through the 1.708% when issued, but was the lowest yield for a 10 Year auction since December 2012. Furthermore, the Bid to Cover, rebounded from last month’s 2.68 and printed at 2.70, above the six month average of 2.65.

But once again the biggest action was in the internals, where Indirects Took down a whopping 73.6%, higher than last month’s 73.5% and the highest on record. Directs were left with 7.2%, the lowest since last August, while Dealers ended up with only 19.2% of the issue.

We can conclude that the insatiable foreign appetite for US paper, especially at auction, continues, and will continue to do so as a result of rate differentials between trillions in NIRPing foreign bonds and US paper.

Finally, the bond market was quite happy with the result, and yields have dropped to new LODs after the announcement.

Judging by the action in both stocks and bonds, it would appear that the market is positioned not for rate hikes here but for more QE.

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With the auction looming, 10Y Treasury yields appear right at the ‘line in the sand’ with aggregate net positioning in Treasury futures near record shorts…

Across the entire Treasury futures complex – from 2Y to Ultras – net aggregate speculative positioning is about as short (in 10Y equivalents) as it has been since 2010…

 

Which could be a major problem given that 10Y Yields are testing 1.70% once again – the ‘red’ line in the quicksand of Fed credibility…

What happens next? By way of interest, with the S&P back near May 2015 highs, we note that 10Y yields are 60bps lower from the same date!!

 

h/t @Not_Jim_Cramer

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By Don Quijones, Spain & Mexico, editor at Wolf Street.

 Next Banking Scandal Explodes in Spain

The last five years have been a bumper period for banking scams and scandals in crisis-ridden Spain. From Bankia’s doomed IPO in 2012 to the “misselling” of complex preferentes shares to “unsophisticated” retail bank customers, including children and Alzheimers sufferers, all of the scandals have had one thing in common: the banks have consistently and ruthlessly sacrificed the welfare and wealth of customers, investors, and taxpayers on the altar of short-term survival.

Some commentators claim that the problem of banking instability in Spain has been put to rest in recent times, thanks chiefly to a robust, debt-fueled recovery, a tepid resurgence of the real estate sector and the transfer of the most toxic assets from banks’ balance sheets to the festering balance sheets of the nation’s bad bank, Sareb. They could not be more wrong.

Despite the untold billions of euros of public funds lavished on “cleaning up” their balance sheets and the roughly €240 billion of provisions booked against bad debt since December 2007, the banks are just as weak and disaster-prone as they were four years ago.

And now, it seems a new scandal is in the works. Last month Spain’s sixth largest financial institution, Banco Popular, announced that it was urgently seeking to raise €2.5 billion in capital in a desperate bid to shore up its finances. The news triggered a sell-off that wiped out 33% of the bank’s market capitalization in just two days, before investor nerves were steadied somewhat by revelations that the bank had found 10 global mega banks as underwriters for its €2.5 billion rights issue, including Goldman Sachs, Morgan Stanley, Santander, Deutsche Bank and HSBC.

But in recent days the stock has once again begun to crumble following allegations that Popular is also doing some creative selling of its own. The Spanish investment group Blackbird claims that the bank is offering customers dirt-cheap loans or refinancing deals, at an interest rate of just 2.5%, as long as they use some of the funds to purchase the bank’s new shares.

“Popular is offering loans to its customers on the condition that they subscribe to the rights issue… and then deposit the €1.25 per share in their bank accounts,” asserts Marc Ribes, co-founder of BlackBird.

If Blackbird’s allegations are well-founded — and so far there’s been no official denial — Popular is in the process of taking the dark art of banking misdeeds to a whole new level. In the preferentes scandal, Spanish banks effectively plundered billions of euros of their customers’ savings to keep their balance sheets in tact, at least for a little while longer. That was bad enough. But now it seems that the already heavily debt-laden, loss-leading Popular is creating new debt for broke customers so that they can participate in the bank’s rights issue.

Such behavior is not just unethical; it’s illegal. Banks cannot lend customers money to buy the banks’ own shares. At least not in Spain.

The allegations against Popular have reached such a level that Elvira Rodríguez, president of Spain’s National Securities Market Commission (CNMV), was yesterday asked to comment on them. She declared that the CNMV “will be monitoring and asking for information from” Banco Popular about its forthcoming capital expansion. This should, in an ideal world, be a source of relief to investors. But this is not an ideal world and there is no source of relief — at least not from financial regulators, whose role is to guard the foxes as they eat the hens while telling the hens not to worry about the foxes.

In the last five years Spanish banks have been able to bend or break just about every rule in the book with not so much as a slap on the wrist from Spain’s two biggest financial regulators, the CNMV and Banco de España, both of whom have been accused of a raft of oversight failures in Bankia’s IPO.

The chances of the same two regulators suddenly taking an interest in the misdeeds of one of Spain’s biggest financial institutions are paper-thin. As for Spain’s caretaker government, it’s not hard to fathom where its loyalties lie, particularly in light of the fact that the governing People’s Party just received a €1.2 million loan from Banco Popular so that it could post bail for three former treasurers accused of operating a multi-decade slush fund to channel corporate kickbacks to senior party officials.

Meanwhile, Spain’s fourth biggest party, the center-right Cuidadanos financed its last election campaign with a €4 million loan from (yes, you guessed it…) Banco Popular.

With 10 of the world’s biggest and most deviant banks preparing the ground for Popular’s capital expansion while Spain’s regulators and government look the other way, it’s hard to shake the feeling that a trap is being laid. If the last five years are any indication, the chosen prey will be (in order of appearance) gullible customers, retail shareholders, and Spain’s unconsulted taxpayers. Once again, the wealth of the country will be redistributed from middle-class taxpayers, investors, savers, and pensioners to the executives and creditors of financial institutions.

As a former Barcelona-based banker told me a couple of days ago, “the banking sector — once the foundation of the economic system — is a disgrace; it has lost all sense of purpose, apart from sucking dry what little marrow remains of the productive economy.” By Don Quijones, Raging Bull-Shit

Things have gotten so bad in the Eurozone that even the staunchest eurocrats are beginning to express doubts, even European Parliament Chief Martin Schulz who’d warned over a possible “implosion of the EU.” But now, the eurocrats are not just falling into despondency and despair, they’re beginning to turn on each other.

via http://ift.tt/1YeICGA Tyler Durden