Last week, the Office for National Statistics released the inflation results for the British economy. Even though most analysts weren’t expecting any huge differences, the numbers (updated until February) paint a completely different picture. In February, the inflation rate increased rather sharply. On a month-on-month basis, the CPI increased by 0.7% (whereas January was a month with deflation). The current YoY inflation rate based on the CPI is 2.3%.
‘No big deal’, you might think. But in this case it is.
Just one year ago, in February 2016, the annual inflation rate was just 0.3%. This means the inflation rate has almost EIGHTFOLDED in the past year, with a very clear acceleration since October.
Not only does the ONS release an update on the CPI numbers, it also releases a RPI update. That’s the Retail Price Index, which basically measures the cost increase of goods and services. And in February, this index revealed some shocking numbers.
In just one month, the retail prices of a basket of normal goods and services became 1.1% more expensive. When compared to the results of the previous year, the retail inflation rate is in excess of 3%. That’s right, life has become more than 3% more expensive for the average UK citizen!
And this proves how fast and quiet inflation can come back in our lives. Forget about deflation, the only way is up. That’s why the Federal Reserve is hiking the interest rates, and it’s why the ECB has been hinting at a higher benchmark rate as well.
But this might actually cause a huge problem in Great Britain. Not only is the inflation increasing – and will the Bank of England undoubtedly have to increase its interest rates again, the total debt in the United Kingdom is increasing. Fast.
In fact, several politicians and officials have been ringing the alarm bell, as the savings ratio in the United Kingdom hasn’t been this low since the Global Financial Crisis, and in its latest update, the Office of Budget Responsibility (OBR) has confirmed the savings ratio in the UK has now turned negative.
Source: Bank of England
Indeed, the British citizens are spending more than they are earning. This means it won’t be just the government debt level which will increase, but the total amount of household debt will increase as well. The average British household has almost 13,000 GBP in debt (on top of the mortgage) and the Office for National Statistics confirmed the total unsecured debt has increased to almost 350 billion pounds.
This also means the ratio of unsecured debt as a percentage of the average household income has increased to almost 30%, which is once again the highest ratio since the global financial crisis.
Even if you would exclude student debt (although there’s no good reason to do so), the total amount of unsecured debt would be close to 200B GBP, of which 1/3rd is credit card debt. Meanwhile, the total market share of ultra-long mortgages (30 years or longer) is increasing as well.
Source: Bank of England
That’s a very worrisome situation; the gross and net debt position of the households is increasing whilst the savings ratio continues to drop. And that’s a deathly combination which can’t end well.
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One person was killed and 14 injured after gunfire erupted inside a packed nightclub in Cincinnati, Ohio, just after 1 am on Sunday morning, with the shooter said to still be at large.
Update: Cameo Night Club 15 gun shot victims, 1 deceased. Homicide unit and all available resources are being utilized. Next update after 11
The motive was unclear, but Cincinnati Assistant Police Chief Paul Neudigate said on Twitter that “there are no indications this incident is terrorism related.” The shooting took place around 1 a.m. when hundreds of people were inside the Cameo Nightlife club, which the Cincinnati Police Department said has had “multiple problems” in the past.
The University of Cincinnati Medical Center admitted eight people injured in the shooting, one of them in critical condition, a spokeswoman told NBC News. A representative of the hospital could not be reached immediately for comment.
Cameo Nightlife’s Facebook page says it features “College Friday’s” for students 18 and older and “Saturday’s 21+ grown and sexy night.” The club, a large single-story structure, is a 7-mile (11 km) drive from downtown Cincinnati near the southeast corner of the city, the heart of the second largest metropolitan area in Ohio with more than 2 million residents.
All victims have been transported from the scene, more victims are arriving at local hospitals and fire stations, unknown total number http://pic.twitter.com/p66nOzalHs
“At this point it’s unclear exactly what instigated the shooting,” Captain Kimberly Williams said at a televised briefing. “Just a lot of chaos when the shots went off.”
The shooting comes less than a year after a gunman opened fire at a gay nightclub in Orlando, Florida, killing 49 people. It was the deadliest mass shooting in U.S. history.
Police initially said they believed at least two shooters were involved in Cincinnati, but later Neudigate said in a Twitter message that there was only one reported gunman, though police were still trying to determine if there were others.
Hours after the shooting, the suspect was still at large, and police did not have a good description, in part because witnesses were reluctant to cooperate, Williams told WCPO.
“We are in the middle of a very horrific situation that occurred at the nightclub with multiple victims,” Neudigate told NBC News. “It’s going to be a long night for our homicide units to investigate this incident, but right now things are stable.”
Several of the victims in Cincinnati had life-threatening injuries, WLWT-TV reported on its website, quoting Neudigate, who said hundreds of people were in the nightclub at the time of shooting.
Having failed to "rebalance" the oil market in the first six months following the implementation of the Vienna production cut agreement, with crude inventories in the US hitting all time highs in the interim…
… OPEC and non-OPEC oil producers found themselves in the unpleasant position of scrambling for solutions at this weekend's Kuwait meeting – in which Saudi Arabia was conspicuously missing – where just two things were discussed: deal compliance, which OPEC paradoxically claims is more than satisfactory despite the relentless climb in inventories, and whether to extend the production cuts by another six month.
And as the Kuwait meeting in which OPEC and rival N-OPEC producing countries met to review progress with their pact to cut supplies drew to a close, a joint committee of ministers from OPEC and non-OPEC oil producers recommended extending by six months the global deal to reduce oil output by 1.8 million barrels, a draft press release from their meeting on Sunday showed.
The oil ministerial committee "expressed its satisfaction with the progress made toward full conformity with the voluntary production adjustments and encouraged all participating countries to press on toward 100 percent conformity," said the draft, seen by Reuters.
The December accord, aimed at supporting the oil market, has lifted crude LCOc1 to more than $50 a barrel. But the price gain has encouraged U.S. shale oil producers, which are not part of the pact, to boost output.
In its statement, the committee said that “certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have led to a further increase in crude oil stocks. At the same time, the liquidation of positions by financial players in the market was also observed.” In other words, the committee blamed everything, including "evil selling speculators" except non-compliance with the deal, of course as that would crush what little credibility OPEC had.
Oil inventories are high because of low U.S. demand and higher supply, and the market should re-balance in the second half of the year, OPEC Secretary-General Mohammad Barkindo told reporters in Kuwait. Inventories in countries in the Organisation for Economic Co-operation and Development are currently 282 million barrels higher than their five-year average, he said at the meeting on Sunday.
It also left on a positive note: "However, the end of the refinery maintenance season and noticeable slowdown in U.S. stock build as well as the reduction in floating storage will support the positive efforts undertaken to achieve stability in the market," it said.
"Oddly", there was no mention of US shale production, which has soared in recent months, happy to grab market share from OPEC which has allegedly cut production by nearly 2 million barrels daily, and whose output continues to ramp higher in line with the resurgence in US oil rigs.
Before the meeting, Iraqi Oil Minister Jabar Ali al-Luaibi told reporters there were some encouraging elements that suggested the oil market was improving, and that if all OPEC members agreed measures to help price stability, Iraq would support such steps. "Any decisions taken unanimously by members of OPEC … Iraq will be part of the decision and will not be deviating from this," Luaibi said quoted by Reuters.
Iraq's oil production is running at 4.312 million bpd this month, Luaibi said, adding that his country had cut its oil exports by 187,000 bpd so far and would reach 210,000 bpd in a few days. Compliance with the supply-cut deal was 94 percent in February among OPEC and non-OPEC oil producers combined, Russian Energy Minister Alexander Novak said.
Russia is committed to cuts of 300,000 bpd by the end of April, Novak said, adding that a deal extension could be discussed on Sunday. "For today, obviously, this is within the sphere of our questions," Novak said and added that he expects global oil stockpiles to decrease in the second quarter of this year. "The dynamics are positive here, I believe," Novak said, adding that inventories in the United States and other industrialized countries had risen by less than in the past.
OPEC’s compliance rate was 106% in February, and non-OPEC nations, including Russia, have reached compliance of 64 percent, Kuwait’s Almarzooq said Sunday. The combined compliance rate of both was 94 percent, he said.
Kuwaiti Oil Minister Essam al-Marzouq said the oil market may return to balance by the third quarter of this year if producers comply fully with their production targets.
"More has to be done. We need to see conformity across the board. We assured ourselves and the world that we would reach our adjustment to 100 percent conformity," Marzouq said.
This is how Goldman explained the dramatic change in the global oil cost curve over the past three years:
Shale’s short time to market and ongoing productivity improvements have provided an efficient answer to the industry’s decade-long search for incremental hydrocarbon resources in technically challenging, high cost areas and has kicked off a competition amongst oil producing countries to offer attractive enough contracts and tax terms to attract incremental capital. This is instigating a structural deflationary change in the oil cost curve, as shown in Exhibit 2. This shift has driven low cost OPEC producers to respond by focusing on market share, ramping up production where possible, using their own domestic resources or incentivizing higher activity from the international oil companies through more attractive contract structures and tax regimes. In the rest of the world, projects and countries have to compete for capital, trying to drive costs down to become competitive through deflation, FX and potentially lower tax rates.
The implications of this curve shift are major, all of which are very adverse to the Saudis, who have been relegated from the post of long-term price setter to inventory manager, and thus the loss of leverage. Here are some further thoughts from Goldman:
OPEC role: from price setter to inventory manager In the New Oil Order, we believe OPEC’s role has structurally changed from long-term price setter to inventory manager. In the past, large-scale developments required seven years+ from FID to peak production, giving OPEC long-term control over oil prices. US shale oil currently offers large-scale development opportunities with 6-9 months to peak production. This short-cycle opportunity has structurally changed the cost dynamics, eliminating the need for high cost frontier developments and instigating a competition for capital amongst oil producing countries that is lowering and flattening the cost curve through improved contract terms and taxes.
OPEC’s November decision had unintended consequences: OPEC’s decision to cut production was rational and fit into the inventory management role. Inventory builds led to an extreme contango in the Brent forward curve, with 2-year fwd Brent trading at a US$5.5/bl (11%) premium to spot. As OPEC countries sell spot, but US E&Ps sell 30%+ of their production forward, this was giving the E&Ps a competitive advantage. Within one month of the OPEC announcement, the contango declined to US$1.1/bl (2%), achieving the cartel’s purpose. However, the unintended consequence was to underwrite shale activity through the credit market.
Stability and credit fuel overconfidence and strong activity: A period of stability (1% Brent Coefficient of Variation ytd vs. 6% 3-year average) has allowed E&Ps to hedge (35% of 2017 oil production vs. 21% in November) and access the credit market, with high yield reopen after a 10- month closure (largest issuance in 4Q16 since 3Q14). Successful cost repositioning and abundant funding are boosting a short-cycle revival, with c.85% of oil companies under our coverage increasing capex in 2017.
Finally, with Saudi Arabia absent, the Kuwait meeting was largely moot. Khalid Al-Falih, the Saudi energy minister said in a Bloomberg Television interview on March 17 that the deal will be maintained if oil stockpiles are still above their five-year average.
In summary: It’s too early to decide on an extension of the output cuts, and OPEC will take up the issue in May, Barkindo said at Sunday’s meeting, during which ministers will monitor compliance with the targeted reductions.
* * *
For those curious, here is the full blast of Bloomberg overnight headlines covering the Kuwait meeting
KUWAIT OIL MINISTER OPEC COMPLIANCE IN FEB BETTER THAN JAN KUWAIT: WE ARE ASKING COUNTRIES TO INCREASE COMPLIANCE KUWAIT: WE SHOULD SEE MARKET REBALANCE END OF YEAR KUWAIT: WE SHOULD SEE OIL STOCKS DRAWDOWN IN 3Q KUWAIT OIL MINISTER: INDUSTRY NEEDS TO ADDRESS CHALLENGES KUWAIT: SAUDI ARABIA, ANGOLA EXCEEDED COMMITMENTS TO CUT OUTPUT KUWAIT: OIL MARKET WILL BE IN BALANCE IN 3Q IF COMPLIANCE 100% KUWAIT: OIL COMMITEE REPORTS HIGH LEVEL OF CONFORMITY KUWAIT: OPEC IS STUDYING EXTENSION OF CUTS DEAL FOR SIX MONTHS KUWAIT MINISTER: OPEC, NON-OPEC COMPLIANCE WITH CUTS IS AT 94% KUWAIT: COMMITTEE CALLS FOR OPEC TO MAKE RECOMMENDATION ON CUTS
RUSSIA'S ENERGY MINISTER: MINISTERS DISCUSS EXTENDING CUTS DEAL RUSSIA’S NOVAK: OPEC/NON OPEC COMPLIANCE 94% AS OF END OF FEB RUSSIA’S NOVAK: OPEC, NON-OPEC DISCUSS EXTENDING OIL-CUTS DEAL RUSSIA: OPEC, NON-OPEC COOPERATING AT `VERY HIGH LEVEL’
IRAQ TO SUPPORT EXTENDING OIL CUTS IF OTHERS IN OPEC AGREE IRAQ PRODUCED 4.312M B/D OF OIL IN MARCH: MINISTER IRAQ’S MARCH OIL EXPORTS IN AGREED RANGE: MINISTER IRAQ CUT OIL OUTPUT BY 187M B/D UNDER OPEC DEAL: LUAIBI IRAQ TO CUT 210K B/D OF OIL OUTPUT IN FEW DAYS: LUAIBI
OPEC CHIEF SEES MARKET REBALANCE IN SECOND HALF OF 2017 OPEC: PRODUCERS REACHED HIGH LEVEL OF COMPLIANCE WITH CUTS OPEC HOPES FOR HIGHER LEVEL OF COMPLIANCE WITH OUTPUT CUTS OPEC CHIEF: TOO EARLY TO DECIDE ON EXTENSION OF OIL CUTS DEAL OPEC CHIEF: OIL MARKET OPTIMISM IMPROVED ON OUTPUT CUTS OPEC: OIL STOCKS ARE HIGH ON LOW U.S. DEMAND, RISING SUPPLY OPEC: OIL STOCKS TO DECREASE IN SECOND HALF OF THIS YEAR
OMAN OIL MINISTER SAYS MAKES SENSE TO EXTEND OUTPUT CUTS 6 MOS OMAN SUPPORTS OIL OUTPUT CUTS UNTIL END OF YEAR: MINISTER
VENEZUELA OIL MIN: WE ARE READY TO BACK EXTENDING OUPTUT CUTS
OPEC, NON-OPEC COMMITTEE SAID TO RECOMMEND OIL-CUTS EXTENSION BARKINDO: OPEC TO DECIDE ON EXTENSION OF OIL CUTS DEAL IN MAY
Fox News host Judge Jeanine Pirro, whose show President Trump urged his followers on Twitter to watch earlier in the day, opened her program at 9pm on Saturday by calling for Speaker Paul Ryan’s resignation.
“Ryan needs to step down as Speaker of the House. The reason, he failed to deliver the votes on his healthcare bill, the one trumpeted to repeal and replace ObamaCare, the one that he had 7 years to work on; the one he hid under lock and key in the basement of Congress; the one that had to be pulled to prevent the embarrassment of not having enough votes to pass.” Pirro said in her opening statement.
“Speaker Ryan, you come in with all your swagger and experience and sell them a bill of goods which ends up a complete and total failure and you allow our president, in his first 100 days, to come out of the box like that, based on what?” Pirro said.
What made Pirro’s fiery comments about Ryan especially notable is that they came hours after Trump tweeted to encourage his followers to watch “Justice with Judge Jeanine.”
While Trump has urged people to watch TV shows in the past, typically it was when the president himself was appearing on them. However in a twist, Pirro suggested that she had not coordinated her statement with Trump in advance.
“I have not spoken with the president about any of this,” Pirro said of her call for Ryan to step down on her show, where president’s counter-terrorism adviser Sebastian Gorka also appeared on Saturday evening.
On Friday Trump told Ryan to pull the Republican healthcare bill, upon learning there were not enough votes in support among House Republicans. The move marked Trump’s first legislative defeat as president and followed seven years of rhetoric from Republicans who campaigned on a pledge to repeal and replace former President Barack Obama’s signature healthcare law.
In the initial round of fingerpointing, Trump blamed Democrats for not backing the GOP healthcare bill, warning that Obamacare would “explode” on its own, and signaled that he would move on to other priorities such as tax reform. On Saturday, the NYT reported that the blame among Trump’s closest circles had fallen on Reince Priebus and Health and Human Services Secretary Tom Price, while Ryan was spared Trump’s anger. Trump and White House press secretary Sean Spicer also indicated that they appreciated Ryan’s effort to get the bill passed, amid criticism from some Trump allies over the failed effort.
Following the Pirro statement, the blame now appears to have shifted back to Ryan, as Bloomberg originally reported on Friday.
Pirro insisted in her first segment that the failure was on Ryan and not on Trump. “Folks, I want to be clear. This is not on President Trump,” she said. “No one expected a businessman to completely understand the nuances, the complicated ins and outs of Washington and its legislative process. How would he know on what individuals he could rely?”
“Ryan has hurt you going forward, and he’s got to go,” Pirro said.
In the April issue of Reason magazine, Noah Berlatsky reviews The Death of Expertise: The Campaign Against Established Knowledge and Why It Matters, by Tom Nichols. He finds the book wanting:
Believe the experts! Experts are not perfect, but they are more likely than non-experts to be right. Experts know what they do not know, and are therefore more cautious and better able to self-correct. Sometimes, in small ways, non-experts may outperform experts. But in general, America and the world need more respect for expertise.
That is the thesis of Tom Nichols’ The Death of Expertise: The Campaign Against Established Knowledge and Why It Matters. It is also, as it turns out, a critique of the book itself. Nichols, a professor at the U.S. Naval War College, is an expert on Russia and national security; he is not, however, an expert on expertise. His discussion of democracy is not backed up by credentials in political science. His hand wringing about kids today is not grounded in a scholarly background in education policy or the history of student activism. He is a generalist dilettante writing a polemic against generalist dilettantes. As such, the best support for his argument is his own failure to prove it.
James Shea, Deputy Assistant Secretary of Emerging Threats at NATO – now that’s a lovely title – recently gave a talk at a private club in London on the Islamic State/Daesh. Shea, as many will remember, made his name as NATO’s spokesman during the NATO war on Yugoslavia in 1999.
After his talk Shea engaged in a debate with a source I very much treasure. The source later gave me the lowdown.
According to Saudi intelligence, Daesh was invented by the US government – in Camp Bacca, near the Kuwait border, as many will remember — to essentially finish off the Shiite-majority Nouri al-Maliki government in Baghdad.
It didn’t happen this way, of course. Then, years later, in the summer of 2014, Daesh routed the Iraqi Army on its way to conquer Mosul. The Iraqi Army fled. Daesh operatives then annexed ultra-modern weapons that took US instructors from six to twelve months to train the Iraqis in and…surprise! Daesh incorporated the weapons in their arsenals in 24 hours.
In the end, Shea frankly admitted to the source that Gen David Petraeus, conductor of the much-lauded 2007 surge, had trained these Sunnis now part of Daesh in Anbar province in Iraq.
Saudi intelligence still maintains that these Iraqi Sunnis were not US-trained – as Shea confirmed – because the Shiites in power in Baghdad didn’t allow it. Not true. The fact is the Daesh core – most of them former commanders and soldiers in Saddam Hussein’s army — is indeed a US-trained militia.
True to form, at the end of the debate, Shea went on to blame Russia for absolutely everything that’s happening today – including Daesh terror.
Mr. Sykes and Monsieur Picot, you’re dead
Now let’s go back to the proclamation of the Daesh Caliphate in June 29, 2014. That was choreographed as a symbolic abolition of the Sykes-Picot border that split the Middle East a century ago. At the same time, abandoning the option of a military push to take Baghdad, Daesh chose to regionalize and internationalize the fight, creating their own transnational state and denouncing regional states as “impostors”. All that coupled with the amp up of any chaos strategy capable of horrifying Western public opinion.
For large swathes of a Sunni Arab audience, this was powerful stuff. Daesh was proclaiming themselves, in a warped manner, as the sole real heir of the different Arab Springs; the only totally autonomous regional movement, depending exclusively on its own local base, made up of numerous Bedouin tribes.
But how did we get here?
Let’s go back once again – now to Iraq in the 1990s, during the Clinton era. The strategic logic at the time spelled out an instrumentalization of UN resolutions — with Washington de facto controlling Iraq’s oil, manipulating the price as a means of pressure over trade competitors much more dependent on Iraqi oil such as China, Japan and selected European nations.
9/11 turned this state of affairs upside down – leading to the 2003 neocon ideological stupidity and subsequent amateurism managing an occupation in total ignorance of history and the ultra-complex dynamics between the Iraqi state and society. Saddam Hussein was the de facto last avatar of a political arrangement invented by imperial Britain in 1920. With the invasion and occupation, the Iraq state collapsed. And the Cheney regime had no clue what to do with it.
There was no Sunni alternative. So Plan B, under major pressure by Shiites and Kurds, was to give voice to the majority. The problem is political parties ended up being religious and ethnic parties. The partition of power, Lebanese-style — Shiites, Sunnis and Kurds – turned out to be a dysfunctional nightmare.
Between 2005 and 2008, this American attempt to rebuild the Iraqi state yielded a horrendous confessional civil war between Sunnis and Shiites. The Sunnis lost. And that largely explains the subsequent success of Daesh in creating a “Sunniland”.
The US occupation-Arab Spring love affair
Now let’s turn to the Syrian version of the Arab Spring in February/March 2011. Initial protests against Assad’s iron rule were peaceful – multi-communitarian and multi-confessional. But soon anti-Alawite rancor started to radicalize a significant part of the Sunni majority.
As historian Pierre-Jean Luizard, a specialist in Iraq, Syria and Lebanon at the French CNRS reminds us, Syria was the favorite land of Hanbalism – a most conservative branch of Sunni Islam that highly influenced the emergence of Wahhabism in the Arabian Peninsula. That implies a virulent anti-Shiism. Thus the emergence among the Syrian armed opposition of multiple Salafi-jihadi groups, most of all Jabhat al-Nusra – a.k.a. al-Qaeda in Syria.
Meanwhile, Assad fine-tuned a message to the West and his own Sunni bourgeoisie oscillating between allegiance and dissidence; it’s me, or chaos. Chaos ensued, anyway; horrendous structural violence, all-around institutional decrepitude, total territorial fragmentation.
So it’s fair to argue that both US occupation and the Syrian Arab Spring ended up producing the same result. With some differences; in Iraq, Daesh enjoys the (silent) support of a majority of Sunni Arabs. In Syria, Sunnis are divided; Daesh may rule the desert — Bedouin culture, but it’s Jabhat al-Nusra that captured significant Sunni support in big urban centers such as Aleppo. In Iraq, the borders between the three large communities – Sunni, Shiite, Kurd – are more or less frozen. In Syria, it’s a never-ending jigsaw puzzle.
What happens next is a mystery. The de facto independence of Iraq Kurdistan may solidify. The Baghdad government may increasingly represent only Shiites. Yet it’s hard to see Daesh consolidating its control of Sunni Iraq – not with the ongoing Battle of Mosul.
Blowback rules the wilderness of mirrors
It’s easy to dismiss Daesh as the apex of barbarian cultural idiosyncrasies. Even wallowing in gruesomeness, Daesh has been able to project a universalist dimension beyond its Sunni Arab Middle Eastern base. It’s like the clash of civilizations playing in a wilderness of mirrors. Daesh amplifies the clash not between East and West, or the Arab world and the Atlanticist hegemon, but mostly between a certain (warped) conception of Islam and assorted infidels. Daesh “welcomes” everyone, even Catholic Europeans while persecuting Arab infidels and bad Muslims.
It’s no wonder the Caliphate — a concrete utopia on the ground – finds an echo among young lone wolves living in the West. Because Daesh insists on the colonial Franco-British – and then neocolonial American — history of Muslims being trampled upon by a dominating, infidel West, they manage to channel a diffuse sentiment of injustice among the young.
Everyone – US, France, Britain, Russia, Iran — is now at war with Daesh (Turkey only half-heartedly, as well as the House of Saud and the GCC petrodollar gang; for them this not a priority.)
But this is a war without a serious political long-term perspective. No one is discussing the place for Sunni Arabs in an Iraq dominated by the Shiite majority; how to put the Syrian state back together; or whether private donors to Daesh from Kuwait, Qatar, Saudi Arabia and the Emirates will simply disappear.
The encirclement of Raqqa and the re-conquest of Mosul will mean absolutely nothing if the causes of Daesh’s initial success are not addressed. It starts with the West’s mission civilisatrice as the cover story for unbounded colonial domination, and it straddles the methodical, inexorable, slow motion American destruction of Iraq. Blowback will continue to reign over the wilderness of mirrors; an attack near the British Parliament by a knife-carrying lone wolf “soldier answering “its call” killing four people mirrored by US jets bombing a school near Raqqa killing thirty-three civilians.
Petraeus may have trained them in the deserts of Al-Anbar. But most of all that rough beast, slouching towards Camp Bacca to be born, bore the touch of a Western mind.
Trump’s really big supporters openly grieved that the explosion of his emphatically promised Obamacare replacement bodes poorly for all of Trump’s plans. Fox’s Sean Hannity and Lou Dobb’s regaled the Republican party for failing to take the reins and lead now that the party finally has the chance to prove it can do what it has promised. Hannity stated that numerous high authorities told him this marks the end of any Obamacare repeal for 2017.
This first attempt by Trump and his party to see if they can accomplish anything together was by everyone’s account (except Trump’s) a dismal failure. Even Paul Ryan, who drafted the plan that Trump endorsed, admitted the enormity of failure quite honestly. The least I can say for him (not being one who likes him in the slightest) is that he owned it.
Ryan picked up the argument leveled against Republicans by Democrats when they were running congress, which said that it is easy to be an opposition party and simply stand against everything, but quite a different matter to be creative and actually govern. Democrats long argued that Republicans really have no plan to replace Obamacare that could possibly succeed — that they were all talk — and Republicans just proved them right. Since Republicans kept Democrats completely out of the discussion, it’s fair to say Republicans failed entirely on their own.
Ryan failed embarrassingly, and I question whether his leadership will survive this failure, except for the fact that the faction most responsible for the failure (outside of Ryan himself) is the one that would likely seek his blood if Ryan had succeeded. Nevertheless, they cannot stand him and would probably join any other faction that now wants to bring him down.
Trump failed bigly, too, because the truth is that he swore over and over to his supporters that he would get a “great” replacement through congress as one of his first orders of business. Granted he did not say he would succeed right away, but only that he would make it his first order of business. It is, however, now questionable that he will ever get a replacement through, much less a great one. He has three more years to try again, but a total failure within your own party to get your first order of business done, especially when it is something the entire Republican party has said it will do over and over for years and when you are in your honeymoon period, is no small failure.
Ryan has manned up to that. The party needs to also. Trump blamed it on Democrats, but that actually is deplorable, because Trump knew every time he made the promise that he didn’t have a ghost of a chance at getting Democrat support, given how much he attacked them over the plan. How could he not know that unless he is delusional? The last group in the world that would help him repeal Obamacare would be Democrats. So, if the repeal’s failure is their fault, give that they were never even included in the discussion, the failure to realize the obvious — that they would never support him — was his own.
Republicans could learn from this and do better, but it remains to be seen whether they are able and willing to learn. That requires humility, which is always scarce in congress. In the meantime, the failure to deliver Trump’s big promise of “immediate Obamacare repeal” is a death knell to the Trump Rally, and the clock is ticking against all of Trump’s plans.
(It doesn’t guarantee that the stock market will immediately crash, though it easily could; but its rally days are over. My prediction last year was that the rally would end as soon as Trump and congress had to actually work together. That is when investors would be forced to grasp reality and see that nothing Trump has promised is anywhere near as likely to come to pass as they believe. That is when I expected they will start to let go of their Tumphoria. Candidate promises are easily made. Legislation is not, and congress has never been more divided. Neither has that congressional subset called Republicans.
A house divided against itself
Here is how it all came down.
The proposed American Health Care Act (AHCA) died because the House Republican Conference (the official name for the entire Republican caucus in the House of Representatives) is divided into factions that aligned in three groups. When the center group — the largest group of Republicans who solidly backed Paul Ryan’s bill — tried to move further right to appease the most conservative group, it lost votes from the group that is furthest left (more centrist with respect to American politics overall). There are nowhere near enough votes in the center group of Republicans to beat Democratic opposition, and compromise toward one faction lost the other; so no House majority could be built.
It is hard to say exactly who was in each group because no vote was taken to put members on record, but this appears to be generally how things fell apart:
1) By far the largest group would have consisted of the house’s largest conservative faction (172 members), known as the Republican Study Committee, probably joined by members of the House Republican Conference who do not identify with any particular faction. I’m talking here about the group that solidly supported President Trump and Speaker of the House Paul Ryan on the AHCA as originally drafted.
The Republican Study Committee — formed in 1973 to keep an eye on the party’s moderate leadership during the Nixon-Ford years — is the House’s oldest active faction. It has allied itself over the years with the National Rifle Association, the Heritage Foundation, Focus on the Family, the religious right, Concerned Women for America, the conservative magazine National Review. One might now categorize it as representing the center of the House Republican Conference (though the truest middle consists people who don’t belong to any faction).
This caucus, as the House Republican Conference’s mainstay faction, has included such Republican luminaries as Vice President Dan Quayle, former Vice President Dick Cheney, Majority Leader Eric Cantor, former House Majority Leader Tom DeLay, and current Vice President Mike Pence. House Speaker John Boehner was not a member of the group.
2) The smallest, rewest, and most conservative faction of the House Republican Conference, called the “Freedom Caucus,” was established in 2015 to battle then Speaker John Boehner, particularly to fight his approval of Obamacare (the Affordable Care Act). These members of congress can be seen as the present rabble rousers because this is the faction that was willing to shut down the government in the original fight against Obamacare. Naturally, this group remains set toward making sure Obamacare is completely repealed and is willing to shut down government again, including apparently the leader of the House and the President just to make sure Obamacare is fully repealed. Not compromising on abolishing Obamacare was more important to them than whether or not Trump succeeds by getting off to a strong start.
The Freedom Caucus is tough enough that it forced John Boehner to remove his butt from the speaker’s cushion, which led to his exiting congress altogether, so Paul Ryan knows full well they could accomplish that again. This battle-hardened caucus embraces the tea party folks, but it is not the Tea Party Caucus, which is now nearly inactive because the official Tea Party Caucus was largely rejected by citizens in the tea party movement (including members of congress, such as Marco Rubio, who were elected by those citizens). It was rejected because the tea party movement saw the Tea Party Caucus as a Republican attempt to hijack a grass-roots movement. By nature, those who identify themselves as part of the tea party movement do not want to see their movement institutionalized or co-opted by the establishment.
The Freedom Caucus currently has thirty-one members. The group that initially opposed the ACHA certainly included this faction and likely some of the Republicans’ more libertarian faction, formed by Representative Ron Paul, called the Liberty Caucus. These two factions overlap in membership. Michelle Bachman, for example, was a founder of the Tea Party Caucus (now largely subsumed by the Freedom Caucus) and a member of the Liberty Caucus.
3) A larger faction of the House Republican Conference consists of about fifty people, who are the left-most Republicans in the House of Representatives (meaning only that they are moderates since no one in the Republican party is a leftist). This group was established in 1994 as the “Tuesday Group” when Republicans took control of the House under the more conservative leadership of Newt Gingrich. Gingrich rallied Republicans around his Contract with America. The Tuesday Group formed to resist Gingrich’s more conservative positioning of the Republican party.
The actual battle went like this: Unquestionably, those aligned with the Freedom Caucus felt the original AHCA bill, as proposed by Paul Ryan, did not go far enough in repealing Obamacare. Therefore, the group of Republicans who were with Trump and Ryan modified the bill to strip out more of Obamacare by taking down some of its Medicaid provisions and other benefits in order go gain some of the more conservative votes. That resulted in those aligned with the Tuesday Group (the most moderate Republicans) feeling the bill now went further right than they could tolerate. As a result, the Republicans lost some moderate votes when they compromised to pick up more conservative votes, and they never gained all of the conservative votes. So, they could not find a majority that could agree on any bill, and they had already thumbed their noses at Democrats completely, so they certainly wouldn’t get any help there.
Why Trump faces big-league troubles in enacting any of his stimulus plans
As Lincoln said in quoting Jesus Christ, “A house divided against itself cannot stand.” (Lincoln was talking about government. Jesus was talking about the devil. Beg me to describe the difference.)
One major accusation Democrats made against Republicans when Republicans ran an opposition government against Obama was that it is easy to simply be against everything. It is quite another job to govern — to have a clear vision, a good vision that will actually do something for America, and then to unite behind it. Anybody can oppose things without an idea in his or her head as to what will actually work to do some good.
Now that he’s been knocked around by his own party, Paul Ryan co-opted the argument as his own: (See his comments at the start and then at the 6:30 time maker and especially 8:12 marker.)
And this is exactly why Trump is going to have a hard time getting his legislation passed. Republicans could somewhat unite in opposing anything Democrats came up with because even enemies are known to unite around a common foe. However, the formation of the Freedom Caucus and its overthrow of John Boehner proves even that kind of unity is never complete and hard to achieve. Coming up with great ideas, which Trump entrusted to Ryan, and then uniting around something you can support, though not fully, is harder still.
As the new opposition government, Democrats are solidly united against Trump, and the Republican party is too divided to create a large enough majority to overcome the Democrats. It has become increasingly divided since the tea-party movement began, so that will not easily change. It could change now that all Republicans should be able to see that, if they don’t unite around something, they will get nothing at all; but will it?
The Freedom Caucus has not exactly shown itself to be a group that is amendable to softening its positions toward the party’s center, and the Tuesday Group, which might soften toward the party’s center, will never go as far right on anything as the Freedom Caucus demands. That said, other issues may be less polarizing than Obamacare, given that the Freedom Caucus largely formed around the intention of defeating Obamacare during the Boehner years.
It took only took a matter of days for plan number one to fall embarrassingly flat on its face. That’s a bitter reality for both Trump and Ryan because promises to repeal and replace Obamacare or just abolish it entirely were the biggest and most frequent pledges heard from all Republicans. So, if they can’t get together on that …
Trump also blinked on his get-tough negotiations with his own party. He said he was going to force a vote so that Republicans who voted against this repeal and replacement of parts of Obamacare would be held accountable on election day. He reneged and backed Ryan’s desire to simply pull the vote so that no one is held accountable and no one can see by what margin it actually failed. (Perhaps the failure was bigger than we know.)
As a result, no one had to go on record as being the reason hope of an Obamacare repeal in 2017 failed. As Ryan announced in the video above, Obamacare now stands as the law of the land for the foreseeable future because Republicans could not find any plan around which they could form a congressional majority. (In other words, he will not approve another go at it in this session of congress because the votes are not there, nor is the hope of compromise; and any future party leader is going to be hesitant to take this battle on, seeing how Ryan got clobbered.)
Due to a small faction demanding everything, no Republican got anything they could take back to their voters. Even strong supporters of President Trump like Lou Hobbs and Sean Hannity see this as a massive failure of the Republican House to accomplish anything:
As Hannity said to all congressional Republicans in the video above just before the bill’s final hour,
It’s time for you to give the American people a bill that you have now promised them for almost eight years. I would argue tonight, Failure is not an option for the president of the United States and his first piece of legislation. If you don’t succeed, you will have nobody to blame but yourselves…. And here’s my message to you people in congress: For the love of God, after eight years, can you please do your job? Can you please find a way to work together? Can you please find a way to serve your country, not yourselves, not your re-election?
They just couldn’t do it. They could not succeed even in the slightest compromise even with the promise that this was only phase one and more of their wishes would come later. Republicans now have all the reins of power, and they still accomplished nothing!
What it all means for the Trump Rally
This total fiasco — which was huge, really huge — demonstrates why I’ve said all along that Trump’s road to getting his plans enacted through congress, even with Republicans in control of both houses, is far from being the likelihood that has been priced into the stock market by the Trump Rally.
While the AHCA defeat is not the end of the game for Trump’s plans, it shows exactly why I’ve said the Trump Rally is a clear case of irrational exuberance on the scale that precedes a major crash (said when writing about the stock market’s response to Trump’s stimulus plans back in December):
Is the stock market irrational in its exuberance for shifting so much just because of Trump’s pledges, which are far, far from becoming reality? I think so. I haven’t even talked about Democrat resistance to Trump’s plans, and he’s already got resistance from the Republican leader of the senate…. That doesn’t mean the market won’t keep going up. Who knows what the maximum height or duration of irrational exuberance is (because who knows how crazy people can get); but I am certain of this much: the higher the stock market rockets upward on such irrationality, the harder it falls into the chasm of ever-growing debt from which it has been constructed…. There is nothing you’re going to do that can stop the markets (in stocks and bonds) from having their hangover when the bubbly stuff is over and irrational exuberance suddenly looks like delirium. Our greatest economic crashes have always happened when least expected. (“Irrational Exuberance in US Stock Market Grasps at 20K for Dow“)
This past week proves the stock market was irrationally premature in rising to Trump’s stimulus talk. Trump has no possibility of any support from Democrats, who hate his guts on just about everything he stands for, and we have now seen proof that he has no majority support he can count on in his own party.
This is one major reason I have refused to join those who believe things will and are now turning around economically because of Trump’s election, even though it has probably cost me readers (given that my audience is largely anti-establishment). For Trump’s plans to become reality, he has to build consensus around a plan that can save the economy, and he is far from either consensus or a plan that can save the economy from its fundamental flaws. The best his plan would do — if he could get it enacted — is pump it higher for a little longer. You can accomplish a little bit in the US by executive decree, but not much. Maybe Republicans will now join around a tax plan, but time is not on their side.
So, my prediction remains that the economy, including the stock market, goes down this year for the numerous reasons I’ve given beyond the solitary reason that has just played out above. He hasn’t even started squaring off with the Democrat’s opposition. This one went down just from the opposition within his own party!
The noose is tightening Obamafags. While you occupy yourselves by injecting heroin into your scrawny arms at one of your Antifa meetups, AG Sessions is preparing the groundwork to end the legacy of King Obama — sending him barreling towards a scandal far greater than anything Nixon ever did — crushing and poleaxing any hopes of rejuvenating the broken status of the democratic party.
Here’s Tony Shaffer, former senior intelligence officer at the CIA, saying that the wiretapping scandal against Trump is ‘orders of magnitude’ worse than Watergate — alluding the Bob Woodward’s comments earlier this week as being ‘felony level’ crimes that might wreak havoc through the former Obama administration.
“This incidental, it’s accidental on purpose.’
The unmasking of Trump and his cohorts means they specifically targeted him and his team. The political appointees at the CIA, aka black hats, aren’t laughing anymore.
Meanwhile, continue to bask in your Obamacare victory. I’m certain the people will appreciate it going forward — as it cascades and cracks asunder amidst financial failure in the near term.
Former House intel chair Pete Hoekstra tells Fox Business, who could have ordered the wiretapping of Trump campaign and authorized the unmasking of Americans' names in the intercepts.
"When I was chairman of the House Intelligence Committee, I was routinely involved in briefings as a member of the "Gang of Eight"—both parties' leaders in the House and Senate and on the intelligence committees. I cannot recall how many times I asked to see raw intelligence reporting and was refused because that stuff is just not made available to policy makers.
But according to Mr. Nunes, such information made its way to the Obama White House before Inauguration Day. Few if any people working in the White House would ever need to see raw intelligence. Like intelligence committee members, they are typically consumers of intelligence products, not raw intelligence.
The raw transcripts of masked persons – or unmasked persons, or U.S. persons who can be easily identified – making their way to the White House is very likely unprecedented. One can only imagine who, at that point, might be reading these reports. Valerie Jarrett? Susan Rice? Ben Rhodes? The president himself? We don't know, and the people who do aren't talking at the moment."
The point here, as The Washington Examinder writes, assuming again that Nunes spoke truthfully in his presser, is that this could potentially become a huge story. This despite the extremely negative reaction that Nunes got from journalists on Twitter.
If documents containing the unmasked names of Trump transition members were shared throughout the government, it would really be worrisome, as Nunes said it was. Intelligence agencies are generally supposed to avoid collecting information about Americans to the extent possible. Incidental collection happens, of course, because sometimes Americans talk to people under surveillance. But to share what is incidentally collected, on purpose, seems extraordinary, especially in this case, given Nunes' claims that the disclosures have little or no intelligence value, and that the information involved apparently has nothing to do with Russia or the Trump team's nefarious ties thereto.
Even if what Trump said in the first place about having his wires tapped is only about 5 percent true (which is to say, it is completely false, but vaguely based on something factual), the story that Nunes outlined has real potential to be a big thing that blows up in the face of at least a few Obama administration officials. Assuming, of course, that Nunes represented the facts accurately.
The haves and have nots of the next, gritty era of aftermath will be those who have the means to survive when the system has failed, and those who do not.
For the wealthy, and prepper minded elite, hidden fortified layers purchased for insurance will preserve most of the luxuries of life above ground, and in the cities, even as society crumbles and burns to the ground.
Others, without the means to purchase these luxuries, may have still set aside the necessary materials to live and thrive after a great collapse, where anything and everything from the electric grid, to the fuel supply to the food supply will fail.
There will be tens of millions of starving, angry and bewildered people who face endangerment and extinction, and there will be a few who succeed not only in planning ahead, but in laying low enough to avoid being noticed and picked off by looters, marauders and misguided authorities.
Finding the perfect location for your redoubt, and making your preps to get away if need be, amount to something of an art and a science. Nothing is guaranteed, everything has its advantages and disadvantaged, but just by doing anything at all, you’ll be way ahead of the masses.
If the plans of the elite are anything to consider, they have decked out their bunkers with mementos and reminders of normal life, and not only enough to supplies not to feel the pain of a crumbling infrastructure, but to be distracted by the illusion of normalcy even in times of ultimate crisis.
But ultimately, all successful redoubts invest in the means to provide for long-term survival and maximum self-sufficiency.
Most “shelters” include enough food for a year or more, and many have hydroponic gardens to supplement. The developers also work hard to create “well-rounded communities with a range of skills necessary for long-term survival, from doctors to teachers.” (During the 2016 elections, Vivos received a flurry of interest in its shelters from both liberals and conservatives and completely sold out of spaces in its community shelters.)
Many of the interiors are left as a blank slate so that each owner can create what they are looking for in terms of comfort and luxury- and it all comes at a cost. Base models can start at $25,000 and go up to almost $5 million dollars. Their footprints also vary from quaint to 5000 square feet.
It isn’t just happening in the United States, but all over the world. And while the fastest growing part of this sector clearly caters to the rich and well adjusted, many shelters are also being constructed to house millions of masses during emergencies – at least in places like China, Switzerland and Russia.
[…] The Oppidum, billed as “the largest billionaire bunker in the world.” This top-secret facility, once a joint project between the former Soviet Union and Czechoslovakia (now the Czech Republic and Slovakia), was built over 10 years beginning in 1984. The premiere apocalypse dwelling is a place that billionaires can live out the horrors of the apocalypse- be it zombie or other- in luxury with every amenity you could ever hope for.
[…] Retail firm Survival Condos offers refuge at a re-purposed missile silo in Kansas, United States. The luxury apartments here are stacked underground and protected by blast doors designed to withstand explosions. Retail firm Survival Condos offers refuge at a re-purposed missile silo in Kansas, United States. The luxury apartments here are stacked underground and protected by blast doors designed to withstand explosions.”
[…] Vivos Europa One, in Rothenstein, is one of Germany’s largest repurposing projects. The 76-acre former Soviet bunker is capable of withstanding a nuclear blast, a direct plane crash or biological attack. It is being transformed into 34 five-star apartments, starting at 2,500 sq ft, which aim to protect the super-rich from any forthcoming apocalypse.
Self-sustaining communities or networks of individuals can also plan around their budgets to make these concepts a reality. Many companies will customize and scale down projects to costs as low as $25,000… while basic home fortification and DIY applications can be done for much less money.
In the end, those who prepared when nothing happened are only out what they invested on the principle of having a viable back-up insurance plan.
But those who didn’t prepare for the worst when it did happen could very quickly lose everything they have, and many will perish during the next major crisis – which could be triggered at this point by almost anything.