Is India The Next Pakistan? “It Keeps Getting Worse Ever Faster”

Authored by Jayant Bhandari via Acting-Man.com,

India’s Rapid Degradation

This is Part XI of a series of articles (the most recent of which is linked here) in which I have provided regular updates on what started as the demonetization of 86% of India’s currency. The story of demonetization and the ensuing developments were merely a vehicle for me to explore Indian institutions, culture and society.

 

The Modimobile is making the rounds amid a flower shower. [PT]

 

Tribal cultures face an inherent contradiction. They create poison from within to grow more collectivist, controlling and tyrannical — members of the populace looks for nannies, and they readily find sociopaths to exploit that need. Their lack of organizational skills, their inability to engage in economic calculation and their irrationality lead to massive internal stresses and the ultimate devolution of such an unnatural society.

India finds itself in a situation where it is grasping for more totalitarianism to solve the problems that totalitarianism created. The demonetization exercise was an assertion of India’s underlying tribal and collectivist culture.

 

Demonetization Pain Continues

Cashless ATMs continue to be the new normal in India. In a recent conversation, economist Professor Madhusudan Raj mentioned that as many as 70% of the ATMs in his city are still not operational. The situation in villages and small towns is much worse. Banks are often clogged with people.

Eventually most people who must have cash will get it, but businesses need easy access to large amounts of their own cash without incurring transaction costs. They continue to face horrendous problems, which are translating into closures, retrenchment of staff, and bankruptcies. The tax authorities are getting increasingly rapacious. According to Professor Madhusudan Raj:

“The tax department is busy conducting raids on old widowers, small traders and merchants like chicken-shops, shoe-shops, small restaurants, gas stations etc.; pretty much anyone who deposited more than half a million rupee in banks during the demonetization process. The department is forcing small traders to declare income under Modi’s PMGKY (Prime Minister poverty alleviation) scheme, but leaves big corrupt business tycoons untouched.”

Draconian regulations on the use of cash are increasing. Businesses are in fear of the State. Freedom of speech is rapidly receding, not only because of fear of the government, but also because Indians are becoming increasingly fanatic.

Any new cash continues to find its way to the financially powerful, leaving small businessmen and the informal sector reeling in economic trauma. The normal rhythm of the economy has been destroyed. People continue to delay discretionary purchases. The market continues to be slow.

Businesses are failing and the poorest are finding employment very difficult to come by. Food prices are still much cheaper than normal, as a result of the economic struggles of poor people. Farmers are facing huge financial pressure in turn.

It is a vicious cycle in which people who at first lacked access to their own money because of the demonetization now face a situation in which they simply don’t have any work and hence no cash.

 

From the Hindu newspaper: Only three out of forty-five ATMs in the IT-hub city of Hyderabad were functioning on 13 March 2017. Businesses are starving for cash.

 

As is the case with an irrational tribal society, many members of India’s middle class are utterly lacking in empathy for those who are suffering. Slowly but surely, universal principles assert themselves though, and economic harm is flowing toward them. Alas, they still fail to recognize the chain of causality.

 

The slow poison of demonetization and populist scams schemes at work: US-listed IT-major Cognizant is expected to slash more than 10,000 jobs. It has around 260,000 employees and around 75 percent of its workforce is based in India. The situation of other IT companies in India is similar. A huge wave of young, mostly unskilled, untrained and uneducated people – about 12 million –  join India’s workforce every year, but have little prospects of finding a job.

 

Without Reason, the Only Stable Institution is a Tribe

It has been 70 years since the British left India. In these years, Indians have systemically destroyed what the British left behind by asserting their tribal, superstitious and irrational culture.

It was believed that the separation of legislature, judiciary and executive which the British had created would stay. What was forgotten was that such institutions had evolved in Europe because of the tool of reason. Indians imported all the fruits of western civilization — technology, music, movies, Kim Kardashian, etc. — but completely failed to adopt the European concept of reason.

Without reason, India had to drift back to its tribalism. Today, Indian institutions are hollow shells of what was bequeathed by Britain. The executive, the judiciary and the legislature are indistinguishable from each other. One would find it almost impossible to come across even an educated Indian able to properly explain the difference between these three branches of government.

As Professor  Madhusudan Raj notes:

“There is a big cold war going on between the Supreme Court and the Modi government, which is trying to take full control of the courts. Modi’s parliament can now dismiss the appointment of Supreme Court judges in the name of ‘national security’.”

When the British left India, virtually all leaders had been selected and nudged into their positions by them. India was a democracy only in name. Children of these leaders and later on their children had political power.

Jawaharlal Nehru was India’s first Prime Minister. Then it was his daughter’s turn, Indira Gandhi. And then it was the turn of her son Rajiv Gandhi. And then Rajiv’s wife, Sonia Gandhi took over (she ruled using a puppet, Manmohan Singh).

The last vestiges of whatever class Indian politics might have had ended along with the end of Sonia Gandhi’s rule three years ago, and the subsequent inauguration of Narendra Modi.  Now raw tribalism is in full force in India.

It is not only India that is affected.  European institutions have failed and mutated into entities catering to underlying tribalism in nearly every country in Africa, the Middle East, South Asia and most of Latin America. The nation state, a European institution, is too unnatural for these societies.

India seemed like an exception to the international media. This is because the smartest people of India moved to the US and Indian lobbies leveraged this fact to make India look good – despite the fact that India’s per capita GDP of $1,718 is worse than that of most well-recognized banana republics.

There has indeed been one good thing about India though: freedom of speech survived among a minority. This happened not because of any inherent goodness, but because India is an extremely diverse place, perhaps the most unnatural country.

The infighting and stresses it generated have failed to given Indians a collective identity. This cirfcumstance allowed a minority to speak its mind. Alas, even that is now coming to an end. Hindu nationalism, a.k.a. Hindutava, is rapidly weaving Indians into a tribal collective.

 

But the Media and the World Bank are in Awe

The international media and the World Bank, find inspiration in what is happening in India. India has recently released a GDP growth figure of 7%. India’s new identity card scheme, Aadhaar, is believed to be a massive success, so much so that the World Bank is urging the world to copy it.

The Indian stock market has risen nicely over the last few weeks. So has the Indian rupee. Moreover, Narendra Modi’s party has just celebrated massive victories in recently held provincial elections. What is not to like about India?

 

“The Aadhaar system is the most sophisticated identification program in the world,” says World Bank economist Paul Romer [100 crore = 1 billion] – click to enlarge.

 

In my last update, I explained why the 7% growth figure is a mere paper figure not reflected by reality on the ground. India’s economy very likely suffered huge negative growth last quarter. An increase in revenues was only experienced by politicians and bureaucrats, who collected larger bribes than ever. The common man no longer has the courage to haggle over bribes these days. He pays whatever he is asked to pay.

Ironically, Modi gave the common man and particularly so-called educated people in India huge hopes, and not unlike people in North Korea, they are increasingly nationalistic and proud.  93% of the population have indeed signed up for the Aadhaar ID. It is not compulsory to have one, but the Indian government has made it impossible not to have one. People who don’t have these cards are simply opening themselves up to getting exploited in new ways.

It is worth visiting banks when so-called pensions — paltry sums of a few dollars — are coming due for the old and infirm. They grovel and sit for hours outside bank branches, consistently humiliated by everyone, from guards to managers. In this electronic age their pension often goes missing. Then they must run from pillar to post to get what they have been promised.

India’s GDP per capita is $1,718, making it poorer than Africa. You can enforce a perfect tax regime or a perfect ID system (neither of which is actually possible) on such a chaotic society, but you have to have productivity to make use of increased taxes and a better ID system. Indians are mostly unskilled, uneducated, and untrained, in short, largely unfit for the modern economy.

Any rational ruler would have focused on creating competence among Indians, without which any hopes connected to increased taxation will fail. Moreover, the situation can easily become a major humanitarian crisis in the coming age of robots.

Many people will lose their ID cards soon — as perhaps more than 80% of Indians do not live in proper housing. They lack safe storage to preserve such cards. Moreover, only about 10% to 15% of the population are “benefiting” (by getting subsidized food, gas, etc.) from the cards. Could it be that most of these beneficiaries are members of the middle class?

 

Sensex index, daily. If you wonder why stock markets are not considered good yardsticks of economic performance, ponder the IBC General Index in Caracas for a moment, in local currency terms the best performing stock market in the world over the past 15 years. It is actually close to a record high, similar to the Sensex.  Venezuela’s economy is doing so well, that hungry people are hunting for rats in the streets of Caracas. [PT] – click to enlarge.

 

India’s stock market has gone up nicely over the last quarter. The stock market is not necessarily a yardstick measuring the performance of the economy. In fact, it often goes up when long-term returns from economic activity are expected to fall. The Indian government has forced Indians to move their money from the informal sector to the formal, in order to help their corporate cronies and increase tax collection.

Alas, India’s growth is generated by its informal sector. Modi has seriously harmed this sector through the demonetization exercise. Eventually, the formal sector, which has been sitting comfortably while it was subsidized by the informal sector, will suffer as well. Twelve million people who join the workforce every year face a horrendous future in a country where failing to find a job is routine.  Indian demographics are a massive liability. And crime is increasing.

 

It Keeps Getting Worse Ever Faster

I would not have written any more updates on the demonetization crisis, for a lot has already been said. But recently Modi’s party won elections in the province of Uttar Pradesh (UP).  UP is the most populous province of India with 200 million inhabitants, and it has historically decided who comes to power in the federal government. It has per capita GDP of $730, fairly close to that of Afghanistan.

Professor Madhusudan Raj asserts that Modi’s BJP won primarily due to the anti-incumbency vote. If anti-incumbency stays in fashion, Modi might be in trouble in two years time when the next federal elections come. What might he do to avoid the inevitable? In caste- and class-ridden, backward and illiterate UP, demagogy is much more important than economic growth plans.

 

Would you buy a used car from this Yogi brother? Neither would we. [PT]

 

Modi has appointed Yogi Adityanath as the Chief Minister (CM) of UP. Adityanath has “given up worldly affairs” to be a “sanyasi”. What distinguishes Adityanath is his extreme hatred towards Muslims. He has exhorted Hindu men to convert 100 Muslim girls to Hinduism for each Hindu who converts to Islam.

He wants to make India a pure Hindu nation. Several years ago he started a religious association, Hindu Yuva Vahini, an organization mainly playing host to a criminally-minded unemployed rabble.

 


Yogi Adityanath asks for unity among Hindus and a religious war

 


Yogi Adityanath suggests killing 100 Muslims for each Hindu killed [a really nice guy – PT]

 

With the appointment of Yogi Adityanath as the CM of UP, talk about development is off the table. The issue is now how to make India a non-secular, Hindu nation.

 

Conclusion – Maybe Give that Wall a Chance…

India’s rapid descent continues. It is hard to dispute that India is well on its way to be the next Pakistan. Or perhaps India is already worse in some ways:

 

As difficult as it may be to believe – Pakistan’s adult citizens are actually wealthier than their Indian brethren – and the gap is widening [PT] – click to enlarge.

 

One of the largest illegal migrant groups in the US is from India. In this modern era, India’s crisis will not stay limited to India. As is the case with those from other eastern religions and societies, once they arrive, Indians vote to mirror what they left behind in their home country, often unknowingly — as the virus of totalitarianism is deeply ingrained in the culture of irrationality.

A wall might not be the answer, but Trump isn’t all that wrong.

 

Another Modimobile  – #MIGA? [PT]

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Caught On Video: Mass Panic Strikes Bellagio As Robbers In Pig Masks Open Fire Inside Rolex Store

Mass panic struck the Bellagio early this morning as three pig-masked, armed robbers decided to try to knock off the Rolex store just as a bunch of drunk guests were stumbling home from their night of general debauchery.  Luckily, the dulled senses of these plastered guests allowed them the courage to film the whole scene rather than duck for cover so we’re able to present the whole dumbed-down version of an Ocean’s Eleven remake in real time.

According to media reports, at least three people entered the Rolex store inside the Bellagio in the wee hours of Saturday morning.  The robbers apparently used sledgehammers to break through the glass entrance of the store.  While initial reports indicated that shots were fired, police subsequently confirmed those reports to be false.

The whole scene was captured on video here:

 

Meanwhile, rather than hide, Kira decided to snap some pics of the robbery for Twitter and even took the time to include all the relevant hashtags…well done, Kira.

And this was the scene outside as police swarmed the casino:

 

Per the USA Today, the incident happened shortly before 3 AM Vegas time.

The incident happened shortly before 3 a.m. local time, and witnesses told police the men smashed the store’s windows to get inside, the Las Vegas Sun reported.

 

Las Vegas police confirmed a robbery occurred, saying three people were involved and one was taken into custody.

Bellagio

 

Meanwhile, unlike Kira, JillyJill at least decided to duck under a table before live-tweeting the robbery…way to play it safe, JillyJill.

JillyJill

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EU Celebrates 60th Birthday As European Leaders Scramble To Hold “Fraying” Union Together

Today in Rome, the EU celebrates its 60th anniversary. Leaders hailed the visionary “war generation” of leaders from old foes France and Germany who signed the Treaty of Rome in the same room on March 25, 1957, along with Italy, Belgium, Luxembourg and the Netherlands; some offered personal memories of their own generation’s debts to the expanding European Union.

The celebration comes at a strange time: just four days earlier, UK Prime Minister Theresa May, absent from the ceremony in the Italian capital, delivered an unprecedented blow to the bloc’s growth by filing Britain’s formal exit papers, an event which underscores the biggest problem facing the EU: as Reuters puts it, it is “fraying”, as former Greek finmin Varoufakis said yesterday, it is “disintegrating.” The truth is somewhere inbetween.

Another irony not lost on cynical observers: today’s celebrations take place in the one European country which boasts the greatest number of EU skeptics.

Meanwhile, fellow leaders hailed 60 years of peace and prosperity and pledged to deepen a unity damage – perhaps irreparably – by regional and global crises.

The farce of “unity” on display was underscored by the days of wrangling about the wording of a 1,000-word Rome Declaration, As Reuters adds, May’s impending Brexit confirmation and tens of thousands of protesters gathering beyond the tight police cordon around the Campidoglio palace offered a more sober reminder of the challenges of holding the 27 nations to a common course.

“We have stopped in our tracks and this has caused a crisis of rejection by public opinion,” said their host, Italian Prime Minister Paolo Gentiloni, noting Britons’ repudiation of the EU. He said the failure to push the project forward during a decade of economic slump had fueled a re-emergence of “blinkered nationalism”.

While Rome tries to offer a fresh start, with Gentiloni saying “The Union is starting up again … and has a vision for the next 10 years” others, however, are wary of such enthusiasm for giving up more national sovereignty – and also of others in the Union moving faster with integration. Poland’s nationalist government has led protests against a “multispeed Europe”, which it fears would consign the poor ex-communist east to second-class status.

* * *

Many members of the establishment refuse to accept the new, far more troubling reality, chief among them Jean-Claude Juncker, the EU chief executive, who recalled how his father in Luxembourg was forced into the German army in World War Two; Donald Tusk, the summit chair born in Gdansk a month after the Treaty was signed, remembered growing up in the ruins of war and yearning for freedom behind the Iron Curtain. “That really was a two-speed Europe,” he said in a pointed dig at his domestic foes now ruling in Warsaw, who have tried to block a push by the western powers to deepen their integration.

German Chancellor Angela Merkel, the bloc’s dominant leader who faces a re-election test in September, stressed the Union must also address the complaints of generations for whom war is fading into history. “We will in the future have to concern ourselves above all with the issue of jobs,” she told reporters.


Malta’s PM Joseph Muscat, European Council President Donald Tusk, German
Chancellor Angela Merkel and Italy’s Prime Minister Paolo Gentiloni pose for a
picture outside the city hall ‘Campidoglio.’

Still, while doing their best projection of an optimistic facade, the participants in today’s Rome festivities are worried. Fearing that the departure of its second-biggest economy and major global power could prompt the unraveling of the bloc, many leaders argue that only forward motion can revive popular support for the EU by generating economic and security benefits. 

“Today we renew our vows and reaffirm our commitment to an undivided and indivisible Union,” Juncker said, urging the bloc not to get bogged down in details that alienated voters. Tusk, too, warned against the impression the EU was about petty regulations: “Why should we lose our trust in the purpose of unity today? Is it only because it has become our reality? Or because we have become bored or tired of it?” he asked.

Merkel, whose bid for another Chancellorship is risk from the suddenly resurgent SPD under its new head Martin Schulz, said leaders wanted to respond to people’s concerns, about the economy, welfare, migration and defense with “a protective Europe” that offered assurances on their wellbeing.

All 27 national leaders, along with the heads of Brussels institutions, signed a declaration which concluded: “We have united for the better. Europe is our common future.” They promised to listen to citizens.


Spain PM Mariano Rajoy prepares to sign document

But, as Reuters sarcastically writes, “locked away behind rings of armed police, the leaders may hear little of what thousands of protesters have to say on Saturday.”


Greece’s former Finance Minister Yanis Varoufakis (C) takes part in a pro-EU demonstration.

Addressing right-wing supporters of the Fratelli d’Italia movement, its leader Giorgia Meloni denounced a “great EU deception”.

“The real enemies of Europe,” she said, “Are the bankers, usurers and technocrats.” The Union, she added, must be replaced by a new alliance of “free and sovereign countries”.

But for Maximilien De-Wyse, 26, from the northern French city of Lille, that was the wrong answer. Taking part in a pro-EU march in Rome, he recalled his Polish immigrant grandparents and said: “It is only united that we can save peace.”

Meanwhile, the leaders are hopeful that putting their names on a piece of paper endorsing a vision for a union which has succeeded alienated million of its constituents, will somehow reset years of bad decisions and flawed poicy. It won’t.

European Parliament President Antonio Tajani holds up a document signed by EU leaders.

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Hayes: “A Lot Of What I Know Even The DOJ Is In The Dark”

An exclusive excerpt from the hot new financial and legal thriller “The Spider Network” by David Enrich

The small ski resort town, nestled in the mountains outside the city of Karuizawa, was a popular destination for day trips for Japanese families. Bustling during the day, it was mostly quiet this Saturday night. Clouds cloaked the moon.

A chartered bus pulled up outside a bar, its windows aglow. A light snow was falling. Out into the peaceful evening stumbled dozens of rowdy bankers, some toting tall cans of Asahi and Kirin. Most of them were drunk. They quickly took over the small bar.

The drinkers were employees of the American bank Citigroup, one of the world’s largest and most troubled financial institutions. A year earlier, at the beginning of 2009, American taxpayers had finished pumping a staggering $45 billion into Citigroup to bail out the collapsing behemoth. Now the transfused recipient was treating dozens of its investment banking employees to a weekend getaway. The bankers were housed nearby in a sprawling luxury hotel, each employee’s room designed in Japan’s typical spare style.

These festivities weren’t so spartan. The point was to foster camaraderie, and that was happening in spades. The party had begun on the hundred-mile ride on the bullet train out from Tokyo. After a day of hitting the slopes, Citigroup ferried the bankers to a bowling alley, where they drank and bowled and drank some more. Their bus had then deposited the intoxicated crew at this bar, before leaving the partiers behind to fend for themselves.

One of the fiesta’s ringleaders was a wiry, curly-haired American named Chris Cecere. You wouldn’t know it from his behavior now, but he was one of the sharpest people in Tokyo’s cutthroat financial markets. A foul-mouthed veteran of the doomed Wall Street firm Lehman Brothers, Cecere had only worked in Japan for a year or so, but he had quickly assembled a team of rock-star traders. His mandate was to push the already risk-hungry Citigroup into brave new financial frontiers.

That wasn’t all Cecere was pushing. This snowy night, he was practically pouring shots down the throat of his subordinate, a disheveled British thirty-year-old named Tom Hayes. Slim and nearly six feet tall, Hayes was a brilliant mathematician, one of the most prolific, aggressive traders in Tokyo, if not the world. As with Cecere, he didn’t look or act the part. Bespoke suits and expensive shoes were found nowhere in his wardrobe. Specks of dandruff dusted his shoulders. He was far happier with a glass of orange juice or a mug of hot chocolate than a pint of beer, a preference that once earned him the nickname “Tommy Chocolate.”

Hayes found social situations uncomfortable to the point of painful—this one included. Before departing for the ski weekend, he had grumbled to his fiancée that he didn’t want to go. She told him he didn’t have a choice. Hayes’s life revolved around work, and Citigroup was his new family. He had only started there a couple of months earlier, and it was important that he make a good impression on his colleagues. So far, he was off to a promising start in that regard. His new bosses bathed him in praise, introducing him around Citigroup’s global organization as their newest trophy asset. Only hours before they showed up at the bar, a top Citigroup executive, Brian Mccappin, had described Hayes as “a star” who represented the future of the firm’s enormous business in Tokyo. Mccappin proclaimed that their division would further shift its trading approach to take advantage of their new hire’s extraordinary talent. Hayes was certainly being paid like a star. After years of feeling like he was getting stiffed by six-figure payouts at his former employer, the Swiss bank UBS, he had pocketed a roughly $3 million cash signing bonus when he joined Citigroup.

Mccappin, the CEO of Citigroup’s investment bank in Japan, came along to the bar that night, along with Cecere and Hayes. A native of the gritty English city of Birmingham, Mccappin was tall, with a chubby, dimpled face. A talented singer at thirteen, he and a friend had formed a band called Deadline that sometimes performed at a pub frequented by workers, including Mccappin’s father, emptying out of a nearby Rolls-Royce plant. After Deadline split, some of its members went on, years later, to form Ocean Colour Scene, which briefly rose to fame touring with Oasis. By then Mccappin had moved on to other things, but that didn’t stop him from occasionally claiming that he’d been a founding member of the infinitely more familiar band.

At the time Hayes arrived at Citigroup, the main outlet for Mccappin’s stymied musical ambitions was karaoke, and he was a frequent and enthusiastic practitioner. As Mccappin belted out tunes this night, Hayes grudgingly accepted shot after shot of Jägermeister from Cecere. He struggled to swallow the sweet herbal concoction, fighting an increasingly powerful gag reflex. But he kept throwing the shots back, unwilling or unable to withstand Cecere’s schoolboy pressure. Hayes didn’t want to disappoint his boss. The earlier part of the day had been easier: Hayes was an expert skier, who embraced risk as eagerly on a black-diamond trail as he did on a frenzied trading floor, and he thrived in the deep powder of the Karuizawa resort. Now, though, beads of sweat started tingling on his scalp. The room began to spin. Hayes staggered to the bathroom and vomited. Then he rejoined the party.

Tom Hayes in July 2013
Tom Hayes in July 2013 Photo: Euan Cherry

****

Three years later, in January 2013, I was sitting on a sofa in my cramped apartment in London’s Clerkenwell neighborhood. Centuries earlier, the area had been the stomping ground of knights who were about to embark on crusades to the Holy Land. In a nod to that history, the narrow alleyway that my wife and I shared with a Belgian beer hall was named Jerusalem Passage. The neighborhood had been repopulated by trendy design studios, sushi bars, and art galleries.

It was just after 8 p.m. when my iPhone buzzed with a text message from a number I didn’t recognize. “I’ll meet you tomorrow but I need to be certain I can trust you,” the text read. “This goes much much higher than me and a lot of what I know even the DOJ is in the dark.”

The message was from a terrified, and very sober, Tom Hayes.

* * *

This piece was excerpted from David Enrich’s new book, “The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History.”

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Trump Tweets “Don’t Worry, ObamaCare Will Explode” As WSJ Lashes Out At “ObamaCare Republicans”

Doubling down on his 'presidential' message last night, President Trump just told the American people "don't worry" about the healthcare bill…

And also from his POTUS account…

But, The Wall Street Journal is less optimistic, and in an overnight opinion piece, it lashes out at Friday's GOP fiasco and names the "ObamaCare Republicans" who were behind the stinging last minute failure to repeal Obamacare.

* * *

The ObamaCare Republicans: The GOP right blows up its best chance to reform government.

House Republicans pulled their health-care bill shortly before a vote on Friday, and for once the media dirge is right about a GOP defeat. This is a major blow to the Trump Presidency, the GOP majority in Congress, and especially to the cause of reforming and limiting government.

The damage is all the more acute because it was self-inflicted. President Trump was right to say on Friday that Democrats provided no help, but Democrats were never going to vote to repeal President Obama’s most important legislation. And that’s no excuse. Republicans have campaigned for more than seven years on repealing and replacing ObamaCare, and they finally have a President ready to sign it. In the clutch they choked.

Speaker Paul Ryan and Mr. Trump worked together and to their credit to broker a compromise between the GOP’s moderate and conservative wings. Their bill worked off the reality that the U.S. health system has changed under ObamaCare and thus an orderly transition is necessary to get to a free-market system without throwing millions off insurance. The GOP also is a center-right coalition with competing views and priorities. The bill had flaws but was the largest entitlement reform and spending reduction in recent decades.

That wasn’t good enough for the 29-or-so members of the House Freedom Caucus who sabotaged this fragile legislative balance. When one of their demands was met, they dug in and made another until they exceeded what the rest of the GOP conference could concede. You can’t have a good-faith negotiation when one party doesn’t know how to say yes—or won’t.

The Washington chorus now claims Mr. Ryan made a mistake by leading with health care, and perhaps in retrospect he did. But he was responding to demands for immediate repeal by the same conservatives who later abandoned him. They wanted a repeal-only vote that had no chance of passing, which is why Mr. Ryan and Senate Republicans worked on the compromise of repeal and replace.

The critics assailed the bill as “ObamaCare Lite,” but the result of their rule-or-ruin strategy will now be the ObamaCare status quo, and Mark Meadows (North Carolina), Jim Jordan (Ohio), Louie Gohmert (Texas) and the rest own all of its problems. Please spare everyone your future grievances about rising health spending or an ever-larger government.

The grand prize for cynicism goes to Senator Rand Paul, who campaigned against the bill while offering an alternative that hasn’t a prayer of passing. “I applaud House conservatives for keeping their word to the American people and standing up against ObamaCare Lite,” said Dr. Paul. “I look forward to passing full repeal of ObamaCare in the very near future.”

There will be no such repeal in this Congress, and probably not in any other. Republicans run the government and that means they are responsible for what happens in health care. Messrs. Trump and Ryan are right that the ObamaCare markets are imploding, and prices will rise and choices will shrink again next year on present trends. Republicans can try to blame Democrats, but they’re in charge.

Health and Human Services Secretary Tom Price can use regulation to improve insurance markets at the margin, but the bill would have given him more reform tools. The Trump Administration is inevitably invested in improving ObamaCare instead of standing up a replacement, and the voters harmed by rising premiums and declining choices may punish Republicans in the 2018 midterms.

This failure also reveals the unfortunate skills gap between Democrats and modern Republicans in practical legislative politics. Democrats have their Bernie Sanders faction, which claimed to “oppose” ObamaCare in 2009-10 for lacking a government-run public insurance option. But the far left voted for the bill anyway because they concluded, rightly, that a new entitlement was a great leap toward single-payer national health care.

An ideal free health-care market is never going to happen in one sweeping bill. The American political system is designed to make change slow and difficult, thank goodness. Republicans have to build their vision piece by piece, carefully gauging how to sustain their policy gains politically—the same way Democrats expanded the welfare and entitlement state over the last century.

But much of the current conservative establishment profits from fanning resentments, not governing. Legislative compromises don’t help Heritage Action raise money for its perpetual outrage machine. An earlier generation of leaders at Heritage understood that the goal of winning elections was to achieve something. The current leaders seem happy with failure.

Heritage was joined in opposition by the Club for Growth and the Koch brothers’ political machinery, also on grounds that the bill was imperfect. But good luck finding any comparable chance to shrink government. This demonstration of GOP dysfunction will make Members even more skittish about taking other difficult votes, including tax reform.

Mr. Trump said Friday he wants to move forward on cutting taxes, and Ways and Means Chairman Kevin Brady wants to do the same. We wish them luck and support the effort. But health reform is about a single industry. Tax reform implicates every industry and its denizens are the definition of the Washington swamp. Success on health care would have produced momentum and confidence that Republicans could fulfill their promises. Now Democrats and the swamp rats smell blood.

Perhaps Mr. Trump and the GOP can recover from this debacle, but as an opening act to a new Presidency the collapse of his first legislative campaign is ominous. In business Mr. Trump liked to “get even.” He’s got some scores to settle with the Freedom Caucus.

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Russia Readies Back-Up System For Potential “Split With International Banking System”

Authored by Mac Slavo via SHTFplan.com,

The grand order of things could be undergoing some major overhauls.

To put it more bluntly, a war to reset the global financial order is about to be unleashed.

Preparations inside Russia are being made in case the ultimate banking sanctions are placed on them, cutting off commerce inside the all-encompassing Worldwide Interbank Financial Telecomm SWIFT system – which runs credit, debt, and banking card transactions across a real time global network.

As it would be doled out by the banking elites, the price for misbehavior at the Kremlin could be ostracization from this global commerce vehicle.

But that isn’t the end of the story… Putin is readying his people to divorce from the international banking system altogether, and start over with a nationalistic platform, backed by thousands of tons of gold, and growing alliances with Europe, China and the BRICS nations, the Middle East and several emerging powers.

A major attempt to bring Russia under heel could result in the greatest schism the global system of finance has ever seen. Then what?

via Russia Insider:

Russia has successfully developed and implemented an alternative should it be excluded from international banking systems, according to a recent report.

 

As far as western sanctions go, by far Russia’s largest vulnerability is in its banking sector, which for better or for worse is tied to the hip with international banking.

 

If Russia wishes to maintain the status quo, there’s not much that can be done about this dependency. But shortly after sanctions were announced in 2014, Moscow set out to prepare for the worst-case scenario: being cut off from the Worldwide Interbank Financial Telecommunication (SWIFT) system.

 

In layman’s terms, SWIFT allows for fast and (allegedly) secure international financial transfers. In fifty years when you are able to use your Bank of America debit card on the Moon (for a low fee of 2,000 moon rubles), it will be because of SWIFT or a system similar to it.

 

There are two issues surrounding SWIFT “cut-off” for Russia: 1. Is it likely to happen? and 2. Is Russia prepared for it?

 

…cutting Russia from SWIFT would be a disaster.

 

According to Nowotny:

 

Such a move “we would see as very problematic because it could perhaps undermine confidence in this system,” the governor of Austria’s central bank told reporters… Of course, this hasn’t stopped Europe and Washington from threatening to pull the SWIFT plug.

While it isn’t clear if this is going to happen, threats have been made since the beginning of the issues with Crimea and Ukraine.

And as a result, Putin has overseen the creation of a survival plan from which it could grow stronger. As RT reports:

“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative,” Nabiullina said at a meeting with President Vladimir Putin on Wednesday.

 

She also added that 90 percent of ATMs in Russia are ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

 

Izvestia daily reported that as of January 2016, 330 Russian banks had been connected to the SWIFT alternative, the system for transfer of financial messages (SPFS).

 

[…]

 

The central bank’s website says the system was established “as an alternative channel for interbank cooperation with the aim of ensuring the guaranteed and uninterrupted provision of services for the transmission of electronic messages on financial transactions.”

Will there be economic wars, or outright World War III? Nobody knows for sure, but things could get very tense very quickly. Already, loose allegations are flying at an unprecedented rate. Somebody wants to egg this thing on.

Russia under Putin has seen a significant challenge to a world order that has, for some time, been ultimately controlled by the central banking elite.

The Rothschild presence in Russia has been challenged; Soros-front NGOs have been kicked out, and it seems that only all out war will ever settle these power plays for the dominance or death of the U.S. petrodollar, which is ultimately controlled by the same few hands that steer and control the central banks of nearly all the world’s nations. Only by stealth and monotony have these activities remained in the shadows.

Indeed, the only countries left on the map which have not yielded to yoke of the central bank are the countries that are most at threat of being drawn into war:

–Syria

– Iran

– North Korea

– Cuba

With that list so close to complete, a reversal could be a real blow to global order, and to maintaining orderly deposits.

If Russia moves to drop their central bank, or if they are locked out of the global SWIFT system, it will mean a thudding silence, an unprecedented reversal in the concentration of power.

Russia has prepared to create its own SWIFT-style system as a back up system, that while it is not yet up and running, could one day rival the primary system, and which could provide a meaningful alternative for dissenters and tax evaders alike.

But be aware that behind the scenes, even with this massive and explosive changes in the works, those who control the finances are well aware of the shifts that are taking place, and are in position to reassert their leverage over humanity through new systems, and new centers of power.

Curiously, it cannot be denied that Russia has been a player in the international framework that has been erected. They have been equal partners in covert research and experimentation, and for all the animosity with the U.S., it has also played a willing dance partner for much of what has been going on during the past century.

Vladimir Putin has delicately and masterfully navigated these boundaries, yet he too is woven into the larger fabric. Like George H.W. Bush and the CIA, Putin is a product of the KGB, and remains permanently tied to it.

A monetary power this total does not lose power overnight – and they are not above jumping ship. Only a truly decentralized, private currencies based on mutually beneficial terms for individuals and communities could dissipate that power, and that will not come as easily.

Is the tide turning?

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“Troubled” London Attacker Visited Saudi Arabia 3 Times, Told Friend “I Want Some F**king Blood”

Khalid Masood (also known as Adrian Russell Ajao and Adrian Elms), the terrorist behind the deadly Westminster attack this week, sought professional help for anger issues and told friends he dreamed of killing someone, according to reports.

Sky News reports that the Saudi embassy in London has confirmed Masood was in the country three times. In a statement, the embassy said he had a work visa and taught English there from November 2005 to November 2006 and again from April 2008 to April 2009. He then returned for six days in March 2015. Masood was not tracked by Saudi security services and didn’t have a criminal record there, it added.

Masood, who at 52 is considerably older than most extremists who carry out bloodshed in the West, had an arrest record dating to 1983. The violence came later, first in 2000 when he slashed a man across the face in a pub parking lot in a racially charged argument after drinking four pints, according to a newspaper account.

A former friend has described how Masood put a knife against his throat in 2000 and said: “I want some blood, I want some f****** blood. I want to kill someone.” Lee Lawrence, 47, told The Daily Telegraph:

“After he calmed down a bit he was saying ‘What have I done? What am I doing? I am going for help, I just want blood or I want to kill someone’.

 

“He said he was having help, some kind of anger management.”

Details of Masood’s lengthy criminal history have continued to emerge since Wednesday’s terrorist attack, and as Sky notes, fears are also growing he may have been groomed for extremism during his time in prison, with a childhood friend claiming the killer turned to Islam and changed his name to Khalid Masood after serving a jail term for assaulting someone with a knife.

Masood’s sudden religious conversion will add to concerns that criminals are being brought under the influence of hardened jihadists behind bars, something which the Government admitted was a “growing problem” last year.

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Christian Malanga: New Government Could Free the Congo and Provide Vast Opportunity for Investors

Via The Daily Bell

When he ran as an opposition candidate for parliament in 2011, Christian Malanga, President of the United Congolese Party, was arrested just days before the election, and held prisoner for almost two weeks. Why?

Because I was preaching what was right, rule of law, reforming government, and bringing change to the Congo. It was the principles I believed in, and what I said, that the people are starving. I was trying to empower the women and young men, the youth, and the authority did not like that, they want people to be kept in the dark.

The government of the Democratic Republic of the Congo tortured him. They beat him, and they tortured those close to him as well. He could hear his secretary scream as agents of the state raped her.

“Everyone that is supposed to help is watching you get tortured,” Christian Malanga told me, over a phone interview earlier this week. “I had no control over the situation. In front of me is a local judge sitting there, and a guy from the Secret Service, the Congo’s version of the Secret Service, and the head of police.”

But the Carter Center saved his life, and got him freed. When Christian was released from jail, the government offered him a position as President of the Youth Affairs. He declined. It would have gone against his principles to have been so obviously bought off, he said. It was only an effort to silence him.

Instead Malanga left the Congo and began putting together a group to take on the corruption, rape, and oppression inside the Democratic Republic of the Congo.

Today, he is attempting to form a government in exile, to oust the current President Kabila, who refused to leave office when his term was up.

“The Congo is the rape capital of the world. Government forces use rape to destroy families, and bring villages under control.”

Malanga sent me a short video which sums up the problems facing the Congo.

 

For too long, it’s government has been supported by foreign leaders, including U.S. officials, who prop up a dictatorial regime, and allow genocide to pour over the border from Rwanda.

At least six, possibly ten million, people have been killed in the Congo since 1996. Government backed rebel groups rape, murder, and pillage the abundant natural resources found in the Congo, from diamonds to cobalt, copper and 64% of the world’s coltan, needed for electronics.

It is basically the same story from when King Leopold of Belgium destroyed the Congo in the late 19th and early 20th century. He made the people into slaves, and forced them to harvest rubber.

Now, countries funded by the U.S. are looting the resources from the Congo, taking advantage of a power vacuum in a lawless country where those in charge are the worst offenders of rights.

How Will Christian Malanga Save the Congo?

Christian Malanga talks of revolution, but this is no coup he has planned. A coup takes over a government, Malanga tells me, and there is no legitimate government inside the Congo to take over. The President has postponed elections in an attempt to stay in power.

Constitutionally [Kabila] is no longer president, the seat is empty. The parliament ended, so none of those people have legitimate power, they are holding power by force. In the Constitution of the Congo it says the people have the right to stand up, it gives the right to hold the President accountable for high treason.

I must admit, I was ignorant to the severity of the situation in the Congo. I knew that Christian Malanga was running for President of the Congo. But when I asked about the election, Malanga told me, “There will be no election… if I went back I would be arrested, you would not hear from me again, I would be dead, tortured and killed.”

christian_malanga_official_ucp_photo

So how does a man run for President when there won’t be an election, and he would be killed for stepping foot in his homeland?

Right now Malanga is in Brussels, talking with business and government leaders, putting together a group of investors, with insight from human rights organizations to take back the Congo.

I look at this as a business plan, or as a blueprint; how can we have clean water, how can we have electricity. The Congo has hydroelectric that can produce enough electricity for all Africa and eastern Europe, we have that much.

There is technology, for computers, for cell phones, the materials are coming from the Congo! But it’s badly managed. With great minds, we can do something and have nothing to lose. We need to craft something that can be profitable for the people, and our outside investors.

Throughout the interview, Christian Malanga always brought the conversation back to the women of the Congo, and their extreme mistreatment at the hands of the government and government backed rebel groups.

In a country where rape is used as a tool of power, Malanga says it is of utmost important to turn that completely around and put women in positions of power. They need to be the ones making decisions and calling the shots when the new government is formed, he says.

The value of a nation is found in how they treat their women. Our mother brings us to earth carried nine months in her belly; she goes through the pains of childbirth, and she raises us. But when it comes to decision making, we don’t involve them. But when you look in villages they are the ones who farm, who run the machinery, who hold together the economy.

If it goes the way we want it to go, we will have over two million women outside in the streets. We need to give them a voice. We want an operation that takes place with well trained friends, to extract the bad guys, and arrest them. In order for that to happen we are putting together a government in exile, and from that we will move it inside, because we want to see justice. We want justice done for all the people who have perpetrated crime against women.

Using America as an Example

Christian Malanga is 34 years old, and lived in the United States as a political refugee from 1998 until 2006.

It was his time spent in the United States which gave him an appreciation for the freedom Americans enjoy. He says no other country has provided the same opportunities for so many from every culture.

Oprah Winfrey, she wouldn’t be Oprah if she was in Africa, she wouldn’t be Oprah if she was in China, she wouldn’t be Oprah is she was in Russia. But she became Oprah because she was in America with an American system.

Economic freedom is especially important to Malanga who ran several small businesses during his time in the United States. He believes the lack of economic freedom in the Congo is why the country is so rich in resources but so poor in practice.

A lot [of my love for freedom] came from Founding Fathers, free thinkers who really changed things. Coming in as a political refugee and still having choice, still being able to be successful.

America has a universal culture; there are people from all walks of the Earth, every tribe and region and culture and nationality is found in USA. It is a melting pot, with all living under one law… There is a way of life where refugees can adapt and understand laws… how can such a large country be so peaceful while the small ones kill each other?

In 2006 Malanga returned to the Congo and joined the military, achieving the rank of Captain, with hundreds of men under his command. He said as a military officer, he tried to raise the morale of the troops by sharing the principles of freedom he learned in America.

malanga_battle_uniform

Christian felt like a stranger in his own country, with such a different philosophy from the ideas of the Congolese army; basically giving badges and guns to criminals. The troops needed rule of law, because the military amounted to thugs in high ranks giving orders. Instead he focused the troops attention on the need to liberate the people; a lesson he says was learned from George Washington standing up to free the American people from England.

After he ran for parliament in 2011, being imprisoned and tortured for weeks, he fled the country once again, and has ever since been working to return triumphantly to the Democratic Republic of the Congo to free a people he says have been robbed of their culture, and their ancestry.

Moving Forward

I wanted to know what the time frame was for this new government to be installed. The way Christian was talking, it seemed like it would be some time before he was ready to go back into the Congo with enough outside support to oust the President, and allow for elections. I was surprised that he is ready for action.

“In 90 days we can accomplish anything, and we can come up with something right. 90 days is the minimum, five months is maximum. We can put a great team together; people with a vision.”

Malanga wants to run the Congo like a business, which opens up vast opportunities for investors in business as well as experimental government. Guided by the free market, Christian Malanga is willing to try anything that will work to bring the people out of poverty, and out of the dangers associated with dictatorial rule and hostile neighbor governments.

Our shareholders are the people, we are coming in as CEO, so how can we run this country right? I want to get the best economists, great ideas, new minds, not old minds, 21st century thinking; how can we change things in the country? And from there I want to get advice from the military side, who can say, ‘Christian this is how the military of the 21st century can look like to protect your people.’

If the melting pot of America is what made the country so great, Malanga intends to bring that diversity of ideas into forming a new government.

He is focused on using technology to augment fresh systems of government, and form a new type of society that is not only beneficial for the Congo, but a hallmark example for the rest of the world to follow.

malanga

Malanga is putting together a “surgical operation” to extract those in power, and hold them accountable for their crimes. He says that President Kabila is cut off from the world, has been told to step down by foreign nations, and has been sanctioned internationally.

It’s not too late to liberate people, lets go do this, because right now as we speak the power, the government is in the streets [oppressing people], so anyone who comes in with a great plan, we can have the support of the people…

We have the military on our back, we have the military, the government are not loved by anybody, nobody wants the government in place, everyone is looking for a leader.

Christian Malanga intends to be that leader, that will once and for all free the people of the Congo and usher in a new age of technological advance, modern economy, and prosperity that comes from freedom.

What he envisions for the Congo is what he loves so much about America; the diversity, the melting pot of cultures and ideas, and the free market to let the people prosper. He wants the Congo to be a place for vacation, a place for technology, clean energy, and a place for a new start for people from all over the world.

It is an open door for Western entrepreneurs, to Western investors that we open the doors to. Some people have ideas in development to see how we can transform the rape capital of the world into a little heaven, a mini paradise.

Malanga sees a thriving tourist industry from the snowy mountains to the tropical riverside jungles filled with exotic animals; he sees a fertile ground for emerging technologies, and he sees the Congo playing a key role in the future of environmentalism, hosting large swaths of rain forest important to the health of the worldwide ecosystem.

How can we bring the Congo into the world market for trade, how can we bring in housing? Right now it is a complete jungle, unbuilt, but if we bring together friends who see the future, the Congo can become a shining star in the hearts of Africa!

But it needs to be managed right, there’s not any book I can read that will tell me how to have a revolution or be president, everyday we improvise because there’s no guidance, there are no elders or ancestors who say this is how to do it. Right now we are creating our own path.

Our revolution is starting from outside; inside the people are ready, 90 million are ready and screaming for help, they are looking for a leader.

The Daily Bell will remain in constant contact with Christian Malanga, ready to break the news about his project. We will be exploring the details of the plan, so that if it looks promising, we can all become involved in helping to free the Congo. As opportunities arise for investors, you will be the first to know, and the first to have the chance to make a real difference.

This is an opportunity to form a new government unlike any other in existence. This could be a historical formation of an experimental government, the likes of which the world has not seen since the forming of America.

Join The Daily Bell email list to make sure you are on the front lines as new information emerges about this opportunity to invest in something that will make a true difference.

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Why This Market Needs To Crash (And Likely Will)

Authored by Chris Martenson via PeakProsperity.com,

Like an old vinyl record with a well-worn groove, the needle skipping merrily back to the same track over and over again, we repeat: Today's markets are dangerously overpriced.

Being market fundamentalists who don’t believe it’s possible to simply print prosperity out of thin air, we’ve been deeply skeptical of the financial markets ever since the central banks began their highly interventionist policies. Since 2009, they have unleashed over $12 Trillion in new money into the world, concentrating wealth into the hands of an elite few, while blowing asset price bubbles everywhere in the process (see our recent report The Mother Of All Financial Bubbles).

Our consistent view is that price bubbles always burst. Which is why we predict the world’s financial markets will implode spectacularly from today's heights — destroying jobs, dreams, hopes, economies and political careers alike.

When this happens, it will frighten the central bankers enough (or merely embarrass them enough, being the egotists that they are) that they will respond with even more aggressive money printing — and that will then cause the entire money system to blow up.  Ka-Poom!  First inwards in a compressed ball of deflation, then exploding outwards in a final hyperinflationary fireball (see our recent report When This All Blows Up…).

It really cannot end any other way.  Money is not wealth; it is merely a claim on wealth.  Debt is a claim on future money.  The only way to have faith in our current monetary policies is if one believes that we can always grow our debts at roughly twice the rate of GDP — forever.   That is, compound the claims at twice the rate of income year after year from here on out.

This would be like having your credit card balance rolled over every month as the balance grows at 10% each year, while your income advances at only 5% per year.  Eventually you simply have a math problem: your income becomes swamped by your debt service payment.  First you are insolvent, then bankruptcy eventually follows.

At the national level, the US is already insolvent, meaning liabilities exceed assets.  The US has been spending far above our means for decades and decades, amassing a tremendous amount of public and private debt (as well as entitlement promises) along the way. And, yes, even nations can go bankrupt.

But bankruptcy is a legal process, and it’s not possible for an entire economy to enter a legal process, so what do we mean when by talking of a looming bankruptcy? Simply put, all those the claims represented by all the debt and excess printed currency have to be destroyed, or reduced, to bring things back into balance. 

The Austrian economist Ludwig von Mises said it best: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Sadly, there’s been absolutely no demonstrated willingness on behalf of our national leadership for  “voluntary abandonment of further credit expansion”. In fact, it’s been the exact opposite.  With the Federal Reserve leading the way, the ‘plan’ has been the voluntary, increasingly desperate, attempt to expand credit even more aggressively than before.

To understand just how dangerous this has become, we need look no further than this chart:

ious

Our current debts and other national liabilities now total more than 1,000%(!) of the nation's annual income, a.k.a GDP.

US economic growth began slowing due to its accelerating ‘too much debt’ problem back around 2000. Instead of allowing natural market forces to clear out the excessive debts, the Federal Reserve chose to go into overdrive to ‘remedy’ the problem. It's remedy? Drive interest rates to 0% to reduce the service burden of those debts, and print trillions of fresh dollars that in turn can fund new borrowing.

Of course, no true ‘solution’ for having too much debt involves piling up even more of it.  That's like treating cancer with more cancer.  Or alcoholism with more alcohol. But such has been the twisted logic of our central bankers.

The only path that history has shown works involves fiscal austerity and reducing debt.  Or, as von Mises put it, "a voluntary abandonment of the credit expansion".  But, that requires real political courage and a willingness from society to endure actual ‘pain’ in the form of living below its means to make up for the prior periods of living too lavishly. Don't expect that to happen anytime soon? Nether do we… 

Returning to the chart above, it’s sufficient to know that no country, ever, in all of history, has ever dug out from such a mountain of excess claims.  Never.  Not once.

The only possible way we're avoiding crisis is if the economy suddenly returns to extremely rapid economic growth for an extremely long time.  And that’s if AND ONLY IF during such a period of rapid growth, we use that windfall to pay down the debts and other associated IOU’s — rather than as an excuse to once again look the other way because, hey, everything's awesome now!

At any rate, what we can divine from all of this is that there’s been zero effort towards ‘voluntary abandonment’ of the credit cycle. And there's been every effort made towards extending it farther. We're simply climbing ever higher up an extension ladder from which we will someday fall.  We passed the ‘moderately painful’ height a long time ago; now we're up at the ‘quite possibly lethal’ altitude.

But make no mistake, pushing us further up this credit ladder is exactly what 0% interest rates were meant to do.  The openly-stated intent of the central banks in treading into the never-before-tried ZIRP and NIRP waters was to spark more borrowing (and spending). 

The fact that savers and pension plans have been utterly decimated by these low (even negative rates in some parts of the world) is not even a passing concern to the Federal Reserve.  Their only goal has been to get credit expanding again as fast as possible.  Ditto for the European Central Bank, The Bank of England, and the Bank of Japan, as well as The People’s Bank of China.

All of them have the same plan: Expand!

But this ‘plan’ does not pencil out.  It fails basic math both here in the short term, as evidenced by more than a decade of sub-par GDP growth, but especially later over the long term. Why?  Because there’s no such thing as perpetual exponential expansion of anything. Even the universe itself is expected to one day stop expanding and eventually implode in a "big crunch".

Regrettably, though, that’s the ‘plan’ of every major central bank around the world right now.

Because it's mathematically guaranteed to fail, our only job as private individuals is to understand the situation accurately and to then take actions that are in alignment with the reality of living within such a broken system.  If we can’t stop the lunatics, at least we can foresee the consequences of their actions and begin to unhitch ourselves as best as possible from their nutty trajectory.

Just how reality-detached are these bankers?

As Adam Taggart recently wrote:

Janet Yellen just poured more gasoline on the anti-bank fire smoldering in my heart…

Speaking today at the 10th Biennial Federal Reserve System Community Development Research Conference in Washington, D.C, she delivered a short speech titled "Strong Foundations: The Economic Futures of Kids and Communities". In it, she focuses on the difficulties of growing up poor and is clearly trying to present herself as an advocate for raising families out of poverty.

 

Really, Janet? Really???

 

What about the record-low interest rates you've presided over?

 

The ones that have destroyed all incentive to save?

 

The ones that have starved American households of savings income, especially for those on a fixed income?

 

The ones that have created asset bubbles everywhere, making it nearly impossible for young families to buy a house and sending the cost of rent and other living expenses skyrocketing?

 

The ones that have made it tremendously cheap for companies to borrow and invest in automation, gutting future demand for unskilled/low-skilled workers?

 

The ones that have led to the greatest wealth disparity in our country's history?

 

This is a classic example of the shameless pathological hypocrisy/evil of those running our monetary and financial systems. It's akin to a bloody-handed serial killer lecturing to his dying victims "You know, someone should really do something about the murder rate in this town")

Janet has a strong tradition of “blaming the victim” which she did a few years ago by lecturing poor and working class Americans that their own lack of advancement had nothing to do with Federal Reserve policies that literally hand money to big banks and wealthy insiders. Instead, she saw the root causes as shoddy early childhood education, a lack of entrepreneurship, and not having had wealthy parents who passed down a reasonable inheritance.  I kid you not, she really said all that back in 2014. 

Maddening?  You bet.  But only if you're of the mind that Janet Yellen cares about connecting the consequences of her actions to real people and their increasingly poor outcomes.  Once you understand that Janet, et al., are psychologically unable to cross the chasm between their personal views of themselves and the consequences of their actions, it’s much less surprising. And much more sad and pathetic.

But also very human.  All throughout history, oppressors and genocidal maniacs have always deployed elaborate psychological defenses to protect their fragile egos from the sort of crushing destruction that would result from a clear-eyed view of themselves and their actions.  It’s hard to transition from one's self-inflated view of being a virtuous superhero to admitting you're actually the source of untold misery and heartbreak.

At Peak Prosperity, we hold out hope, dim though it may be, that the bankers and their bought-and-paid-for-politicians will be held accountable for the lives they are ruining, as well as the immoral and criminal acts they've committed in the process.  Without accountability, nothing ever changes. You only get a repeat of the same bad behavior that got you into trouble in the first place.

That right there, in a nutshell, describes the systemic abuse by the banking elite that began under Greenspan when he bailed out Wall Street in 1998 (during the LTCM debacle). This was followed closely by the repeal of Glass-Steagall under Clinton in 1999.  Since then, it has been an orgy of exploitation. And after a brief pause during the Great Recession (during which the banks paid themselves record bonuses while receiving taxpayer bailouts), it got worse than ever.

Conclusion (To Part 1)

All of the efforts to extend today's sky-high asset prices are drawing to a close. And the ending will be ugly. As prices correct, dazed investors will lose $trillions of market value, likely quite swiftly. 

But how was it ever supposed to end any differently?  The entire premise of what the Federal Reserve has been attempting to do is completely preposterous.  They have ignored (or just as alarming, have been ignorant of) the risks of everything from moral hazard, to historical precedent, to the role of incentives on human behavior, to common sense.

And just as happened in 2008, the accumulating instabilities within the system will reach a tipping point where they can no longer be suppressed. The deflation monster will escape from the box the central banks have been desperate to confine him within, and he will very quickly set about making up for lost time. A lot of wealth will get destroyed very quickly.

Strange as it may sound, it's our opinion that the sooner this happens, the better. Crash now while there’s still chance of picking up the pieces afterwards and making something useful from them. The longer we push off the inevitable correction, the more destructive it will be and the more difficult it will be to recover from.

Why risk taking the overdrafts to such extreme levels that the future is ruined for generations? Or ends in the sort of global warfare that can result from economically-wounded nations lashing out instead of holding themselves to proper account? 

The boomer generation in charge has a lot to answer for in this story; from their inability to lead boldly, to their selfish pushing-off of the repercussions of their own poor decisions onto future generations

More simply put: We not only need a market crash, but deserve one.  

So, with that somber realization in mind, what to do? Well, for individuals like yourself, our strongest advice is to position yourself for crisis before crisis arrives.

In Part 2: Positioning Yourself For The Crash we detail out the steps a prudent individual should seriously consider taking now, while things are still relatively tranquil.

You want to make sure the bulk of your investment capital is positioned for safety, and you want to make your lifestyle as resilient as possible so that, no matter what jarring developments the future may bring, you and the ones you love are least impacted by them.

Click here to read the report (free executive summary, enrollment required for full access)

 

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