Tag: finance

By Chris at http://ift.tt/12YmHT5

It was back in the early 1800’s that the Brits left the sodden, miserable shores of their murky island, grabbed their trumpets, tucked their trousers into the socks, and began conquering the world with the cunning use of flags.

 

Like all good conquerors, they had a backup plan in the event flags didn’t work – guns, which – as it turned out – work bloody well.

From about 1815 to 1915, our tea-drinking friends were so successful in this endeavour that the soggy little island in the North Atlantic had turned nearly a quarter of the globe red at its peak.

They were, of course, not the first to embark on empire building.

Ahead of them is a long list: the Babur Empire, lasting from the 17th to 18th century and spanning Europe and Asia. Then there was the “Golden Horde”… the Mongols, who at the height of their reign, incorporated over a quarter of the worlds land mass.

Let’s not forget Pax Romana. The empire lasted 500 years and at its height extended into Africa, Europe, and the Middle East and bullied about a quarter of the world’s population. All impressive in its own right.

The structure was a familiar one. Tried and tested. The state provides security (military) to ensure stability and enforcement of legal contracts. And while this cost a lot of money, in return the vassal states pay taxes to the empire.

As long as the taxes exceeded the costs of keeping the restless natives in check things were golden. As we know this math didn’t last forever for any of the empires, including the Brits, who (under increasing costs and decreasing revenues) lost their shiny empire, put away their flags, trudged back to the pub to talk about the weather, and became plumbers.

During their conquering reign, however, they gifted large swathes of the rest of the world common law principles (used to this day) and lessons in how to be frightfully polite (not used to this day). In return, the rest of the world gifted them actual cuisine which is why today we don’t starve when visiting the soggy island. Without it, I assure you, the place would be completely empty of visitors.

What is fascinating is that the collapse of the British empire ushered in modern nation states as we know them today.

In 1960 the Prime Minister of Great Britain, Harold Macmillan, delivered a famous speech known as the “Wind of Change” where he discussed this:

“One of the constant facts of political life in Europe has been the emergence of independent nations… Especially since the end of war, the processes which gave birth to the nation-states of Europe have been repeated all over the world… 

 

  Fifteen years ago this movement spread through Asia. Many countries there, of different races and civilization, pressed their claim to an independent national life. To-day the same thing is happening in Africa…

 

 In different places it may take different forms, but it is happening everywhere. The wind of change is blowing through the continent… Whether we like it or not, this growth of national consciousness is a political fact. We must all accept it as a fact.”

You may have noticed that all of the power structures mentioned above were centralised structures. Top down – like a pyramid, with the wealth accumulating at the top.

Even the emergence of individual nation states were and are really just “mini me’s” of an empire structure, which is to say centralised. This all made perfect sense in the industrial age where commandeering and controlling costly infrastructure was critical. Things such as railroads, canals, mines. Today, we live in a different world, which I’ll come to in a bit, but first…

Drawing Parallels With Today

Just as each empire has finally succumbed to the gravity of unprofitable ventures, today we have much of the developed world labouring under similar problems.

Europe, the poster child for socialism, has a structure whereby member states in the EU contribute to a centralised bureaucracy and receive a number of benefits in return. The problem is the math doesn’t work.

Across the ditch, our American friends have much the same issues. A top down structure, centralised… and ever increasingly so.

Today, however, the gravity forces at work are due to a setup where those in power will actually cause the demise of this structure. Let me show you how.

Today, the costs and losses of the empire (I’m using the term loosely here to include the nation states of the world but in particular the US and EU) are socialised. Like an insurance policy, the costs are distributed across society. The rewards are, however, privatised. They don’t accrue to the state… and this is very different from how the Romans or Genghis Khan ran things.

Lobby groups and big business push for policies and privileges that will benefit their chosen industry and/or business.

In turn, the state tilts the playing field in their favour. This comes at a cost, and that cost is a cost to the state, not the industry being favoured.

When enough of this happens… like now, for instance, then the finances get all wonky. What’s ironic is that the revolving door between Wall Street and the White House is parasitic on the state, which in turn is a parasite on the citizenry.

Parasites can be fed and maintained up until the point where they kill the host. The Cheneys, Gores, Bushes, and Clintons of this world don’t siphon funds directly from the treasury like our friend Mugabe and his ilk. They just do the same thing via companies and charities. It provides a cloak to true intentions… but the results are the same. A math problem which reaches breaking point.

This is a problem not just for the US and Europe. It’s a problem for the nation state structure, which is more buggered than an alter boy in the Vatican.

This is because the centralised structure of not only running a country but doing business at every level is being destroyed.

The vast majority of real wealth in the world today involves intellectual property, and in the information age… which is where we find ourselves living in today, this matters a great deal to centralised structures.

Consider that, for the first time in history, individual companies are worth more than the most modern large governments of the world. It is a consequence of an ongoing unstoppable trend towards decentralisation, and it promises to bring us an entirely different empire that will follow the existing one.

While it’s easy enough to see that the empire won’t last… what replaces it will, I believe, look distinctly different to yet another centralised nation state. This I’ll deal with in some other article, but one thing I’m confident in is that the distribution of wealth isn’t likely to change. Pareto’s principle is well defined and consistent. What changes are those at the top and those at the bottom. For today’s article, let’s ask the question of what… or how this empire succumbs.

Will the catalyst be the massive bond bubble breaking? And yes, boys and girls… it is a bubble.  

US 10-year, German Bund 10-year, UK Gilt 10-year

The philosopher Nietzsche noted: “In individuals, insanity is rare; but in groups, it is the rule.”

Or will it be some military fiasco?

Qatar, North Korea, Russia, South China Sea, Syria escalating and drawing in more participants.

Or something else?

Question

Cast your vote here and also see what others think awaits us

– Chris

“A great civilization is not conquered from without until it has destroyed itself from within.” — Ariel Durant

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via http://ift.tt/2uMrpMS Capitalist Exploits

Authored by Jason Ditz via TheAntiMedia.org,

CIA Director Mike Pompeo remains inconsolably hostile toward whistleblower organization WikiLeaks, insisting they are a “non-state hostile intelligence service” and are plotting to “take down America any way they can and find any willing partner to achieve that end.”

Hostility to WikiLeaks has been a mainstay in the US government, as every administration faces the prospect of their covert misdeeds becoming a matter of public record, to their general embarrassment albeit rarely to the end of any meaningful reform.

President Trump had a positive attitude toward WikiLeaks during last year’s campaign, declaring “I love WikiLeaks.”

Pompeo insists he doesn’t feel the same way, and that US intelligence agencies need to find ways to fight the organization.

“I don’t love WikiLeaks,” Mr. Pompeo said Thursday.

Pompeo argued that the US needs to use the Espionage Act much more in going after leakers who aren’t actually foreign spies, though he stopped short of openly endorsing Espionage prosecutions against journalists for reporting on the leaks.

“You said that we have to recognize that we can no longer let Assange and his colleagues the latitude to use free speech values against us,” New York Times columnist Bret Stephens asked Mr. Pompeo.

 

“What does that in your mind imply, legislatively or operationally? Should we be enforcing the Espionage Act much more?”

 

“Yes,” Mr. Pompeo responded without hesitation.

When asked if publishers and journalists should be prosecuted for using state secrets, Mr. Pompeo answered:

“There’s an old aphorism that says that the law is entitled to every man’s evidence, and I’ll leave it at that.”

Mr. Assange did not respond privately to requests for comment Thursday but reacted to Mr. Pompeo’s latest claim in a series of tweets.

“What sort of America can be ‘taken down’ by the truth?” he tweeted.

via http://ift.tt/2uUqIC1 Tyler Durden

In a news story that sounds like something from Mad Max, a group of Florida teenagers who filmed themselves laughing and cracking jokes while a disabled man drowned, and then left the scene without telling anybody, will face criminal charges after all – but there’s a catch.

The teenagers, each between the ages of 14 and 16, will be charged with not reporting a death, a misdemeanor offense under Florida law. Authorities initially said there didn’t appear to be grounds to prosecute the teens, who were caught on camera mocking 32-year-old Jamel Dunn as he drowned in Cocoa, Florida, according to the New York Post.

The callous crime, which is vaguely reminiscent of the infamous Kitty Genovese slaying in New York City, is indicative of a trend tht has been bothering older Americans since the first signs began emerging in the early 90s. The contemporary breakdown in communal responsibility, fostered by smartphones and digitization of daily life, where violent videos inure children to death and violence. The boys can be heard in the video discussing Dunn’s impending death. One of the boys teased another about being scared to see a dead body, the boy replies “I ain’t scared to see no dead person.”

The disturbing footage, recorded by one of the boys, shows Dunn, who is disabled, struggling and screaming for help in the pondIn response, the boys urge him to get out of the water – “Get out the water you’re going to die!”  Another boy shouts. “We’re not finna help you!”

The recommended charges will be given to the Florida State Attorney’s Office, which will determine whether to prosecute the teens, according to Cocoa Police Chief Mike Cantaloupe.

Even if the boys are charged, misdemeanors typically carry sentences of less than a year, leaving the boys free of criminal records, unless they commit more crimes as adults Cocoa Police Department spokesperson Yvonne Martinez said the teens, ages 14 to 16, had The department didn’t disclose the number of teens involved, or their names.

“He started to struggle and scream for help and they just laughed,” Martinez said. “They didn’t call the police. They just laughed the whole time. He was just screaming … for someone to help him.” The teenagers didn’t stop joking about Dunn when he failed to surface in the water.

“Oh, he just died,” said one as the others laughed.

The teens left the Cocoa park without notifying anyone about Dunn’s death. Three days later, his body was discovered in the pond.

“We are deeply saddened and shocked at both the manner in which Mr. Dunn lost his life and the actions of the witnesses to this tragedy,” State Attorney Phil Archer said in a statememt, according to NBC News.

Dunn’s sister Simone McIntosh started a GoFundMe campaign to raise money for his funeral and to help his two daughters.t Dunn’s death. Three days later, his body was discovered in the pond.

via http://ift.tt/2uKWUr8 Tyler Durden

Authored by Nomi Prins via The Daily Reckoning,

I’ve just wrapped up a long trip to Japan. And I’ve taken away one lesson from all of my conversations, speeches and research: The rise of nationalism in the U.S. will cause massive shifts in global trade alliances.

One of the main beneficiaries will be Japan. Now, Japan might not be on your radar, day-to-day, but it’s about to play a very important role in the world of Donald Trump.

Here’s what I mean…

During President Trump’s campaign, he often discussed making “better” trade deals for the United States with its partners.

Indeed, one of his first executive orders as President on January 23, 2017 involved removing the U.S. from the Trans Pacific Partnership Trade Agreement, or TPP. That agreement originally involved 12 countries including the U.S.

Now, TPP is left with 11: Japan, Mexico, Australia, Brunei, Canada, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. The TPP’s member countries account for 40 percent of global GDP, 20 percent of global trade, and 11.3 percent of the world’s population. It will still likely go ahead without the U.S., which will put America at a trading disadvantage.

However, this offers Japan good news for future trade and projects. Japan is well positioned to benefit both from existing alliances with the U.S. and growing ones in the rest of the world, particularly with China and the EU.

Another key agreement, called the RCEP, also excludes the U.S. but includes Japan. It represents 16 countries that account for almost half the world’s population, contribute 24% percent of global GDP and over a quarter of world exports.

The countries are Japan, Australia, Brunei, Cambodia, China, India, Indonesia, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand and Vietnam. The economic and population growth rates of the RCEP countries far outpaces that of the U.S. and EU.

This trend of non-U.S. trade alliances is more pronounced than ever for three reasons:

First, because of the United Kingdom vote for Brexit last summer, which cast into flux the future trade and capital flows between the U.K. and its trading partners.

 

The second reason is the Trump doctrine of bilateral rather than multi-lateral trade agreements. Taking the U.S. out of critical multilateral contention during an intense period of international re-alignment means more economic opportunity for other budding alliances as well as a long-term power shift.  This would benefit Japan.

 

Finally, there is the ongoing West to East shift of power and influence. Since the Federal Reserve and its cohorts at the ECB and BOJ embarked upon quantitative easing, or asset buying to bolster the markets, debt to GDP levels in those areas jumped as well. Respectively, they are 90.1 percent for the ECB, 104.3 percent for the U.S., and 250.4 percent for Japan).

Pushback, particularly from China’s central bank, the People’s Bank of China, has resulted in the yuan’s inclusion into the IMF’s special drawing right, or SDR. This is a way of securing currency flows and challenging the world’s main reserve currency, the U.S. dollar.

Japan stands ready to benefit from both its existing relationship with the U.S. and its involvement with China, the EU and other regional agreements.

All that said, the U.S. and Japan still represent about 30 percent of global GDP. With so much in flux worldwide and in Asia, their combined strength and diplomatic ties could prove more fruitful for both countries if translated quickly to real infrastructure building and development projects. These could create long-term demand for knowledge, supplies and jobs.

New Infrastructure Projects for Japan

The last time I was in Tokyo was a week after the U.S. election when I addressed the Tokyo stock exchange. There was much interest from the Japanese as to what the Trump presidency would mean for Japan, particularly in the areas of defense and trade.

Six months into Trump’s administration, that interest remains acute. In February, President Trump addressed military and defense, saying he is committed to “the security of Japan and all areas under its administrative control.”

This was a victory for Abe, who came to Washington to develop a sense of trust with Trump and a solidification of the post-WWII U.S.-Japan alliance.

A White House statement confirmed policy continuity, noting, “Amid an increasingly difficult security environment in the Asia-Pacific region, the United States will strengthen its presence in the region, and Japan will assume larger roles and responsibilities in the alliance.”

From the standpoint of joint infrastructure projects, there are other, nearer term synergies that are also attractive investment opportunities.

Since the beginning of the Trump administration, there have been two official visits between President Trump and Prime Minister Abe. Trump has not been to Japan as President yet but it’s rumored that he has a trip planned for November.

Meanwhile, the two leaders just met at the G20 summit in Hamburg, Germany. Before that meeting, Japan and the EU signed a historic, free trade agreement that will greatly increase trade and coordination between the two regions.

This is yet another sign about how eager Japan is to take a bigger position on the world stage. As the U.S. adopts a more nationalist tone to trade, major trading partners like Japan are looking for more regional capacity building. By diversifying international agreements, Japan could solidify its security while re-establishing itself as a reemerging Asian powerhouse.

Japan is also eager to get more involved in major infrastructure projects around the world. Just last week, the Japanese government set a new goal for Japan Inc., a network of corporate allegiances supporting construction, labor, and jobs. The goal is to export 30 trillion yen ($268 billion) worth of infrastructure packages by 2020.

According to its just-released draft plans, Japan Inc. will seek involvement in infrastructure projects over multiple phases, spanning development through post-completion, providing on-the-ground ongoing operational, maintenance, personnel training and consulting services.

Japan Inc. plans are multinational. The group, or its participating companies, could target India to get involved in the development of bullet trains and the Association of Southeast Asian Nations for high-speed rail systems and non-public transportation projects.

Japan Emerges in High-Speed Competition

Japan, Inc. also launched a competitive move against China for a high-speed train from Malaysia to Thailand. This is a 350-kilometer link project, worth about $14 billion. Winning that, or a portion of that contract, could prove a boon for Japanese construction and engineering companies.

The winning company would be responsible for the design and construction of the railway systems, including tracks, power, signaling and telecommunications. The train will have a maximum operating speed of 320 kilometers per hour and cut travel time between the capitals to 90 minutes, compared with nearly five hours by car.

But there’s more. Japan, Inc. is also angling for the U.S. maglev train project. The initial leg is estimated at $10 billion to build — the Japan Bank of International Cooperation has offered to pay half of the cost.

Reuters (CNBC) reported on Feb. 3 that Tokyo had proposed an investment package for Trump that could generate 700,000 U.S. jobs and help create a $450 billion market. The proposal was in line with Abe’s strategy of promoting Japanese high-tech exports and expertise overseas.

Reuters sources also noted that Japan was proposing to invest 17 trillion yen (US$150 billion) in public and private funds in the U.S. over the next decade.

Japan’s main regional competitor, China, has also been gaining momentum on regional and international projects. Japan has missed some bids there, but it has the opportunity to use its unique favored-nation position with the U.S., and as a major partner in the ASEAN and RCEP agreements, to be well-placed to pick up fresh, lucrative contracts.

Topping that all off, Japan’s new free trade agreement with the EU will be the third largest in the world. It’s expected to benefit both powers immediately by removing tariffs for a number of products, including electronics, sake and tea from Japan.

If the Trump administration makes good on its promise to build cooperation with the Japanese, collaborating on infrastructure projects would only further Japan’s position in the region.

via http://ift.tt/2uU7fS7 Tyler Durden

A Tennessee judge is gaining national media attention for his unique incentive offered to inmates upon sentencing: convicts can undergo a free taxpayer funded sterilization procedure and get a 30 day reduction in jail time. Dozens have already taken advantage of the program since Judge Sam Benningfield of White County signed a standing order in May which offers vasectomies for men and a less permanent birth control implant, called Nexplanon, for women. Currently, 38 male and 32 female inmates are signed up for the program which the county district attorney is now seeking to get shut down.

Judge Benningfield described the arrangement's purpose as "breaking a vicious cycle of repeat offenders who constantly come into his courtroom on drug related charges, subsequently can’t afford child support and have trouble finding jobs." The Tennessee Department of Health has reportedly given its approval for the local county program, which is now receiving fierce push back at the local and national levels, prompting a statement from the ACLU, which called an environment of coerced or legally pressured contraception and sterilization "unconstitutional" as a violation of basic individual rights.

White County District Attorney Bryant Dunaway has instructed his staff of prosecutors not to enter into any agreement related to Benningfield's program, and told local Channel 5 News that, "It’s comprehensible that an 18-year-old gets this done, it can’t get reversed and then that impacts the rest of their life." Local news presented the judge as innovative and benevolent, merely looking out for the community's interests, yet the endeavor is really nothing new. It actually hearkens back to a dirty little secret of the Progressive Era in America which rarely makes it into school textbooks: states once forced mass sterilization upon tens of thousands of citizens deemed "unfit" to produce families in a nation wide Eugenics movement that Hitler himself learned from.

Here are some fast facts about Eugenics in America and the Progressive Era:

Archival Eugenical Sterilization Map of the United States, 1935

• The Progressive economists of the late 19th and early 20th centuries saw science as a means of social management and control. Eugenics (meaning "well-born") involved societal and scientific intervention to bring about the "fittest" population (as in the Darwinian concept "survival of the fittest") through various means, including forced sterilization, abortions, euthanasia, and discriminatory marriage laws.
• Compulsory sterilization programs were established in over 30 states at the height of the Eugenics movement (1920's through mid-20th c.) which resulted in over 60,000 sterilizations of often perfectly healthy people. State and mental health boards would evaluate individuals and declare them "feeble-minded", mentally deficient, or merely capable of passing on bad genes. Prison inmates were often targeted, even petty offenders, as criminality was seen as an inheritable trait. Sometimes unsuspecting people would enter a hospital for simple Appendicitis but wouldn't figure out they'd been sterilized during their hospital stay until years or decades later.
• Notable cases include Carrie Buck, a completely normal teenager, who after being raped at the age of 17 was committed to the "Virginia Colony for Epileptics and Feeble-Minded" where she was sterilized against her will. Supreme Court Justice Oliver Wendell Holmes Jr. concluded of Carrie's case that, "the principle that sustains compulsory vaccination is broad enough to cover cutting the Fallopian tubes…. Three generations of imbeciles are enough." California's Charlie Follett was sterilized as a child for merely being born to alcoholic parents. California accounted for about one-third of all compulsory sterilizations nation wide, and the state refused to ever compensate Follet, even denying his request for a simple burial plot after he died impoverished in 2012.
• Planned Parenthood was a product of the Eugenics movement. The abortion provider's founder, Margaret Sanger, was among the most prominent eugenicists of the early 20th century, penning popular articles with titles like "The Eugenic Value of Birth Control Propaganda" which argued that this "new weapon of civilization and freedom" could solve "race problems" and result in "racial regeneration." Racial segregationists tended to see Eugenics as a method of ensuring "racial purity" – indeed what was known was "positive Eugenics" involved laws which sought to prevent inter-racial marriage.
• Major corporate titans of the day, including the Rockefeller Foundation, the Carnegie Institution, and the Harriman railroad conglomerate were major funders of Eugenics research labs and committees.

Archival photo: Eugenicists used Anthropometry to measure "superior" physical traits.

• The "American Breeder's Association" was America's first eugenic organization (established in 1906), and as the name suggests, viewed humans as cattle: "strong" and "fit" qualities of human variation were studied in order to promote "good breeding" in humans. Eugenicists used Anthropometry – the measuring and study of human proportions – to establish what superior humans looked like.
• Sound familiar? Hitler was a great admirer of progressive America's Eugenics policies and the Third Reich was directly inspired of American eugenic institutions. Hitler wrote in Mein Kamph: "The demand that defective people be prevented from propagating equally defective offspring is a demand of clearest reason and, if systematically executed, represents the most humane act of mankind. It will spare millions of unfortunates undeserved sufferings, and consequently will lead to a rising improvement of health as a whole." Admiration went the other way too – in 1937 the American Eugenics Society issued official statements of praise for Nazi scientists as they attempted to "cleanse" the gene pool.

Tennessee Judge Benningfield's current program is sure to restart a conversation over Eugenics. While it's not currently to the point that inmates are "forced" into this arrangement, the catch-22 of "more jail time or get snipped" certainly could take us down a very dark and familiar path, a path that today's progressives and advocates of centralized state social planning would like us to ignore and forget.

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Authored by Mac Slavo via SHTFplan.com,

It could be argued that there’s never been a time in history, where so many Americans thought that we were on the brink of another major war. If you pay attention to the constant news stream of stories regarding Syria, North Korea, or Russia, you’d be hard pressed to deny it. In fact, a recent poll found that 76% of Americans are worried that another war will break out in the next 4 years, and 80% were afraid that we could be embroiled in a conflict with North Korea in the near future.

There’s no doubt that Americans are fraught with fear over the thought that a new war is on the horizon, especially if that war could lead to another global conflict. But most Americans forget that the world doesn’t revolve around them. They worry a lot about their nation engaging in another world war, but they forget that there are several powerful nations that could spark a global conflagration without America’s input.

Among them are China and India, who have been engaged in a border dispute for decades. That dispute has flared up once again, as China hurls threats of war with India.

The ruling Communist Party of China has issued a stern warning to neighboring India, with which it is engaged in a bitter border dispute that has recently seen Chinese live-fire drills and media speculation of extensive Indian military casualties denied by both sides.

 

After accusing Indian troops of crossing over the disputed Sikkim border last month, Chinese Communist Party outlet Global Times published a commentary Tuesday urging restraint by both belligerents, but warning that China was prepared to engage India in a battle for the contested land. The piece chalked up the conflict to a greater competition for economic and political dominance between the two leading Asian powers and said that Beijing would amass troops and armaments at the border in anticipation for what could turn into an all-out war.

This isn’t the first time that these two nations have been at each other’s throats over their borders. In 1962 their armies clashed, leading to defeat of the Indian army, and thousands of casualties on both sides. Based on the rhetoric coming out of Beijing’s state sponsored media, it appears that China is more than willing replicate that conflict.

“China doesn’t recognize the land under the actual control of India is Indian territory. Bilateral border negotiations are still ongoing, but the atmosphere for negotiations has been poisoned by India,” Global Times’ op-ed read.

 

“China doesn’t advocate and tries hard to avoid a military clash with India, but China doesn’t fear going to war to safeguard sovereignty either, and will make itself ready for a long-term confrontation.”

Of course, if war did break out again between China and India, there would be one significant differences from the Sino-Indian war of 1962. This time around, both nations would have hundreds of nuclear weapons. And it’s possible that Pakistan, another nuclear armed nation that India has fought border disputes with in the past, could also be swept into the conflict. It should go without saying that billions of lives are at stake every time these nations hurl threats of war at each other.

Americans often worry about various geopolitical hotspots that could drag our nation into a world war. But they shouldn’t forget that there are plenty of places where another global war could start without our country ever lifting a finger. The whole planet is a powder keg.

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

College graduates and other young Americans are increasingly clustering in urban centers like New York City, Chicago and Boston. And now, American companies are starting to follow them. Companies looking to appeal to, and be near, young professionals versed in the world of e-commerce, software analytics, digital engineering, marketing and finance are flocking to cities. But in many cases, they’re leaving their former suburban homes to face significant financial difficulties, according to the Washington Post.

Earlier this summer, health-insurer Aetna said it would move its executives, plus most of technology-focused employees to New York City from Hartford, Conn., the city where the company was founded, and where it prospered for more than 150 years. GE said last year it would leave its Fairfield, Conn., campus for a new global headquarters in Boston. Marriott International is moving from an emptying Maryland office park into the center of Bethesda.

Meanwhile, Caterpillar is moving many of its executives and non-manufacturing employees to Deerfield, Ill. from Peoria, Ill., the manufacturing hub that CAT has long called home. And McDonald’s is leaving its longtime home in Oak Brook, Ill. for a new corporate campus in Chicago.

“Visitors to the McDonald’s wooded corporate campus enter on a driveway named for the late chief executive Ray Kroc, then turn onto Ronald Lane before reaching Hamburger University, where more than 80,000 people have been trained as fast-food managers.

 

Surrounded by quiet neighborhoods and easy highway connections, this 86-acre suburban compound adorned with walking paths and duck ponds was for four decades considered the ideal place to attract top executives as the company rose to global dominance.

 

Now its leafy environs are considered a liability. Locked in a battle with companies of all stripes to woo top tech workers and young professionals, McDonald’s executives announced last year that they were putting the property up for sale and moving to the West Loop of Chicago where “L” trains arrive every few minutes and construction cranes dot the skyline.”

The migration to urban centers, according to WaPo, threatens the prosperity outlying suburbs have long enjoyed, bringing a dose of pain felt by rural communities and exacerbating stark gaps in earnings and wealth that Donald Trump capitalized on in winning the presidency.

Many of these itinerant companies aren’t really moving – or at least not entirely. Some, like Caterpillar, are only moving executives, along with workers involved in technology and marketing work, while other employees remain behind.

“Machinery giant Caterpillar said this year that it was moving its headquarters from Peoria to Deerfield, which is closer to Chicago. It said it would keep about 12,000 manufacturing, engineering and research jobs in its original home town. But top-paying office jobs — the type that Caterpillar’s higher-ups enjoy — are being lost, and the company is canceling plans for a 3,200-person headquarters aimed at revitalizing Peoria’s downtown.”

Big corporate moves can be seriously disruptive for a cohort of smaller enterprises that feed on their proximity to big companies, from restaurants and janitorial operations to other subcontractors who located nearby. Plus, the cancellation of the new headquarters was a serious blow. Not to mention the rollback in public investment.

“It was really hard. I mean, you know that $800 million headquarters translated into hundreds and hundreds of good construction jobs over a number of years,” Peoria Mayor Jim Ardis (R) said.

For the village of Oak Brook, being the home of McDonald’s has always been a point of pride. Over the year’s the town’s brand has become closely intertwined with the company’s. But as McDonald’s came under pressure to update its offerings for the Internet age, it opened an office in San Francisco and a year later moved additional digital operations to downtown Chicago, strategically near tech incubators as well as digital outposts of companies that included Yelp and eBay. That precipitated the much larger move it is now planning to make.

“The village of Oak Brook and McDonald’s sort of grew up together. So, when the news came, it was a jolt from the blue — we were really not expecting it,” said Gopal G. Lalmalani, a cardiologist who also serves as the village president.

Lalmalani is no stranger to the desire of young professionals to live in cities: His adult daughters, a lawyer and an actress, live in Chicago. When McDonald’s arrived in Oak Brook, in 1971, many Americans were migrating in the opposite direction, away from the city. In the years since, the tiny village’s identity became closely linked with the fast-food chain as McDonald’s forged a brand that spread across postwar suburbia one Happy Meal at a time.

“It was fun to be traveling and tell someone you’re from Oak Brook and have them say, ‘Well, I never heard of that,’ and then tell them, ‘Yes, you have. Look at the back of the ketchup package from McDonald’s,’ ” said former village president Karen Bushy. Her son held his wedding reception at the hotel on campus, sometimes called McLodge.

 

The village showed its gratitude — there is no property tax — and McDonald’s reciprocated with donations such as $100,000 annually for the Fourth of July fireworks display and with an outsize status for a town of fewer than 8,000 people.”

Robert Gibbs, the former White House press secretary who is now a McDonald’s executive vice president, said the company had decided that it needed to be closer not just to workers who build e-commerce tools but also to the customers who use them.

“The decision is really grounded in getting closer to our customers,” Gibbs said.

Some in Oak Brook have begun to invent conspiracy theories about why McDonald’s is moving, including one theory that the company is trying to shake off its lifetime employees in Oak Brook in favor of hiring cheaper and younger urban workers.

“The site of the new headquarters, being built in place of the studio where Oprah Winfrey’s show was filmed, is in Fulton Market, a bustling neighborhood filled with new apartments and some of the city’s most highly rated new restaurants.

 

Bushy and others in Oak Brook wondered aloud if part of the reasoning for the relocation was to effectively get rid of the employees who have built lives around commuting to Oak Brook and may not follow the company downtown. Gibbs said that was not the intention.

 

‘Our assumption is not that some amount [of our staff] will not come. Some may not. In some ways that’s probably some personal decision. I think we’ve got a workforce that’s actually quite excited with the move,’ he said.”

Despite Chicago’s rapidly rising murder rate and one would think its reputation as an indebted, crime-ridden metropolis would repel companies looking for a new location for their headquarters. But crime and violence rarely penetrate Chicago’s tony neighborhoods like the Loop, where most corporate office space is located.

“Chicago’s arrival as a magnet for corporations belies statistics that would normally give corporate movers pause. High homicide rates and concerns about the police department have eroded Emanuel’s popularity locally, but those issues seem confined to other parts of the city as young professionals crowd into the Loop, Chicago’s lively central business district.

 

Chicago has been ranked the No. 1 city in the United States for corporate investment for the past four years by Site Selection Magazine, a real estate trade publication.

 

Emanuel said crime is not something executives scouting new offices routinely express concerns about. Rather, he touts data points such as 140,000 — the number of new graduates local colleges produce every year.

 

“Corporations tell me the number one concern that they have — workforce,” he said."

Chicago Mayor Rahm Emanuel said the old model, where executives chose locations near where they wanted to live has been upturned by the growing influence of technology in nearly every industry. Years ago, IT operations were an afterthought. Now, people with such expertise are driving top-level corporate decisions, and many of them prefer to live in cities.

“It used to be the IT division was in a back office somewhere,” Emanuel said. “The IT division and software, computer and data mining, et cetera, is now next to the CEO. Otherwise, that company is gone.”
 

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Authored by Jim Carey via GeopoliticsAlert.com,

Earlier this week notorious war hawk US Senator John McCain (R-Az) was diagnosed with brain cancer. While the liberal and conservative establishments are sending their regards, Geopolitics Alert instead compiled a list of reasons why we don’t care about McCain.

The list is of course a history of all the instances McCain has called for US-led intervention around the world. There’s obviously a long history here, so Geopolitics Alert has compiled the largest examples from Europe to Asia. We’ll start with the obvious wars first.

Afghanistan and Iraq

Obviously every US senator (besides California’s Barbara Lee) voted to give president George W. Bush the power to invade Afghanistan following the events of September 11th. However, McCain wasn’t happy with just moving to invade Afghanistan. No, he had other targets on his mind as early as the day after the towers fell.

Despite McCain’s claim in 2014 that “the Iraq war probably wouldn’t have happened” if he had won the 2000 Republican primary and then general election, this assertion seems ridiculous. On September 12th 2001, McCain appeared on MSNBC presenting a long list of countries he felt were providing a “safe harbor” to groups like al Qaeda. This list of course included Iraq and several other countries that appear later on this list.

Syria

Another country on that 2001 list (of course) was Syria. Now, the Bush regime may have never gotten a chance to continue toppling Mideast countries (thanks to the failure in Iraq and the exposure of that war being sold on lies). But McCain seemingly never lost sight of his hatred for Bashar Al-Assad.

Shortly after the Arab Spring “broke out” in Syria, McCain – and his constant partner in war crimes Sen. Lindsey Graham – quickly found communication channels with the “Syrian opposition.” Just a few short months after the US endorsed protests in Syria (even having their ambassador attend), McCain and Graham began calling for arms to start flowing to the Free Syrian Army and other “rebel” groups.

Libya

McCain’s plans for Syria never quite worked the way he wanted but he probably should’ve know they would never yield a positive result. If McCain didn’t want to look at Iraq to prove that point, he had another more recent example he could’ve used: the NATO intervention in Libya.

It was less than a year before McCain wanted to arm Syrian takfiris that he had supported with the bombing and no fly zones in Libya. McCain even wanted tougher actions against the country. Which has now become an anarchic Wild West that’s home to all sorts of horrors from the Islamic State to a new slave trade.

West and Central Africa

McCain is also a champion of the “war on terror” in other parts of Africa. While McCain hasn’t directly supported terrorists in some countries in Africa, he still has called for more US intervention across the continent.

This list includes countries dealing with Islamic insurgencies, such as Mali. McCain has also called for plans like “deploying Special Forces” to rescue girls kidnapped by Boko Haram in Nigeria and intervention in Sudan, where McCain and his wife have invested money for some time. 

Iran

Another country on the list of hated nations originally put forth by Bush undersecretary of defense Paul Wolfowitz, and also another long time target of McCain, is of course Iran.

Although McCain has always said “he prays” there will never be at war with Iran, the man constantly calls for it and even jokes about bombing the country when he feels the mood is right. The truth of the matter is, McCain’s positions towards Iran are so hostile that even flagship neoconservative institutions like the Cato Institute think he is too hawkish.

Bosnia and Kosovo

But McCain isn’t satisfied with just backing salafi jihadists in the traditional Middle East and North African theaters. He’s also backed violent radicals across the fringes of Europe. This trend really started in the mid 1990’s when McCain was a vocal supporter of then president Bill Clinton’s war in Bosnia.

Many of the Muslims traveling to Bosnia joining the mujahideen there have joined groups like IS in recent years. And IS flags can occasionally be seen in the Sunni areas of Bosnia now. McCain was still backing potential takfiri movements, recently accusing Russia of interfering in local affairs, and calling for more US intervention in the country.

McCain made similar decisions when he advocated US intervention in Kosovo in the late 90’s. In the Kosovo conflict, McCain backed the Kosovo Liberation Army: a genocidal jihadist organization with ties to Al Qaeda under Osama Bin Laden.

Ukraine

Don’t be fooled into thinking that McCain only supports jihadists in Eastern Europe though! He also backs the overt Nazis acting as death squads for Kiev in the ongoing Ukrainian conflict.

This of course started in 2014, but McCain has continued to pledge support for Kiev’s crimes in the Donbass region to this day. This is all par for the course in McCain’s larger theme of challenging Russia– the country he believes controls the separatists in eastern Ukraine.

Russia

The story of McCain’s hatred of Russia spans back to the Cold War. We won’t get into McCain’s fear of communism that’s evolved into just general Russophobia. But we will say he didn’t have many excuses to focus on making threats towards Moscow for a good 15-20 year stretch.

This changed in 2008, with the war in South Ossetia between Georgia and Russia. During this conflict McCain was the loudest voice saying the US “should immediately call a meeting of the North Atlantic Council to assess Georgia’s security and review measures NATO can take to contribute to stabilizing this very dangerous situation.”

This same situation repeated in Ukraine in 2014 but McCain’s worst comments came this year. As soon as the US Intelligence Community’s accused Russia of interference in the 2016 US elections– and without any evidence– McCain was first to say the event was an “act of war.”

North Korea

The Democratic People’s Republic of Korea (DRPK/North Korea) was also an early target of McCain’s making his September 12th wish list. More recently though, the restyled “Trump opponent” McCain was all-in on the new regime’s saber rattling. Calling on Trump to strike the nuclear armed country.

Bonus: China

China is kind of in its own class with McCain, who’s made strange vague threats towards the country in the past. Such as “the Arab spring is coming to China,” whatever that means. China may be a target on the periphery for McCain but he does still encourage antagonizing the country to this day. Calling for things like more “freedom of navigation drills” and other naval exercises in the South China Sea.

*  *  *

So, in summation, next time someone asks why you don’t care about John McCain’s clock running out, show them this article. McCain has encouraged the spread of death worldwide. The day he leaves congress will be a victory for the human race.

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Having staged a dramatic reversal at the end of 2016, when the world’s formerly most bearish hedge fund – it was net short over 100% in late 2016, which in turn led to a -24% return last year…

… rerisked, turning flat in just a few months, Horseman Global – now short developed markets and long emerging markets, and having lost 8.31% through the end of June – is once again dipping its toes in shorting stocks in general, and shale producers in particular. And, in Russell Clark’s latest letter, the Horseman CIO explains why.

From Horseman Capital Management’s July Monthly Newsleter

Your fund made 85bps net last month. Gains came from FX book and long book.

 

The big returns in fund management for me always come from finding some perceived wisdom, in which the market so completely believes that its fundamentals are never questioned. Theoretically this should not happen that often, but in my experience, it’s a constant feature of the market. Once you have built a business around an economic proposition you have no financial incentive to question it.

 

The Japan bubble was built on the view that Japanese corporate culture was inherently superior. The Asian financial crisis had its genesis in the view that Asian corporates borrowing in US dollars was risk free. The dot com bubble in the view that all tech stocks would prosper. The financial crisis was built on the view that US house prices could never see a nationwide fall. The European crisis was built on the assumption that all European government bonds were of equal value. And the recent commodity crash was built on the assumption that Chinese consumption and low interest rates made commodities safe.

 

Having grown up, and spent my entire investing career in periods of bubble inflation and deflation, I am constantly minded to look for where the market is deceiving itself, and then positioning the fund to benefit from the process of realisation. Many years ago, I could see that the commodity bubble was ending, and Chinese growth was peaking. This meant that commodities would be weaker and inflation lower, making a short commodities, long bond position very effective. It was a great strategy, but its effectiveness ended early last year.

 

The good news is that new market delusion is now apparent to me. When I moved long emerging markets, and short developed markets, the one commodity I could not give detailed bullish reasons for was oil. Unlike most other commodities, the oil industry, in the form of US shale drillers has continued to receive investment flows throughout the entire downturn.

 

I had shorted shale producers and the related MLP stocks before, and I knew there was something wrong with the industry, but I failed to find the trigger for the US shale industry to fail. And like most other investors I was continually swayed by the statements from the US shale drillers that they have managed to cut breakeven prices even further. However, I have taken a closer look at the data from EIA and from the company presentations. The rising decline rates of major US shale basins, and the increasing incidents of frac hits (also a cause of rising decline rates) have convinced me that US shale producers are not only losing competitiveness against other oil drillers, but they will find it hard to make money. If US rates continue to stay low, then it is possible that the high yield markets may continue to supply these drillers with capital, but I think that this is unlikely. More likely is that at some point debt investors start to worry that they will not get their capital back and cut lending to the industry. Even a small reduction in capital, would likely lead to a steep fall in US oil production. If new drilling stopped today, daily US oil production would fall by 350 thousand barrels a day over the 

next month (Source: EIA).

 

What I also find extraordinary, is that it seems to me shale drilling is a very unprofitable industry, and becoming more so. And yet, many businesses in the US have expended large amounts of capital on the basis that US oil will always be cheap and plentiful. I am thinking of pipelines, refineries, LNG exporters, chemical plants to name the most obvious. Even more amazing is that other oil sources have become more cost competitive but have been starved of resources. If US oil production declines, the rest of the world will struggle to increase output. An oil squeeze looks more likely to me. A broader commodity squeeze also looks likely to me.

In the latest letter’s sector allocation, Clark also added the following section providing a more detailed explanation why he has boosted his shale short to 15.5%:

We are negative on the US shale sector, during the month we increased the short exposure to oil exploration and MLPs to about 15.5%. Conventional oil wells typically produce in 3 stages: the start-up rising production stage lasts 2 to 3 years, it is followed by a plateau stage which lasts another 2-3 years and a long declining stage, during which production declines at rates of 1% to 10% per year. These wells generally produce over 15 to 30 years (Source: Planete energies).

 

In contrast, production from unconventional / shale wells peaks within a few months after it starts and decreases by about 75% after one year and by about 85% after two years (Source Permian basin, Goldman Sachs). This means that, in order to keep producing, shale producers need to constantly drill new wells.

 

Shale drilling is characterised by drilling horizontally into the layers of rock where hydrocarbons lie. Then hydraulic fracturing which consists of pumping a mixture of water, proppant (sand) and chemicals into the rock at high pressure, allows hydrocarbons to be extracted out to the head of the well.

 

 

Since 2016, as oil prices rallied, the number of rigs in the Permian basin, which is currently the most sought after drilling area in the US, rose from about 150 to almost 400. Furthermore, operations have moved into a high intensity phase as wells are drilled closer together, average lateral lengths increased over 80% from 2,687 ft in early 2012 to 4,875 ft in 2016 and the average volume of proppant per lateral foot more has than doubled (Source: Stratas Advisors).

 

Intensive drilling is causing a problem called ‘frac-hits’, which are cross-well interferences. These happen when fracking pressure is accidently transferred to adjacent wells that have less pressure integrity. As a result a failure of pressure control occurs, which reduces production flow. In the worst cases, pressure losses can result in a total loss of production that never returns. According to a senior reservoir engineer at CNOOC Nexen, frac-hits have now become a top concern, they can affect several wells on a pad along with those on nearby pads (Sources: Journal of Petroleum Technology).

 

A former engineer for Southwestern Energy said that frac-hits are very difficult to predict, the best way to respond is with trial and error and experimenting with well spacing and frac sizes to find the optimal combination.

 

In May Range Resources reported that it was forced to shut wells in order to minimise the impact of frac-hits. This month Abbraxas Petroleum said it will be shutting in several high-volume wells for about a month (Source: Upstream).

 

In the Permian basin new well production per rig continued to decline in June, from 617 barrels per day down to 602. In the meantime, legacy oil production, which is a function of the number of wells, depletion rates and production outages such as frac hits, is continuing to rise. (Source: EIA)

In light of the above growing short bet on shale, this is how Clark is positioned:

The analysis leads me to be potentially bearish on bonds, bearish on US shale drillers, but bullish on commodities. Over the month, we have added to US shale shorts, while also selling our US housebuilder longs. We continue to build our US consumer shorts, where the combination of higher oil prices and higher interest rates should devastate an industry already dealing with oversupply and the entry of Amazon into ever more areas. The combination of long mining and short shale drillers has the nice effect of reducing volatility, but ultimately offering high returns. The combination of portfolio changes has taken us back to a net short of over 40%. I find market action is supporting my thesis, and the research and analysis is compelling. Your fund remains short developed markets, long emerging markets.

While we will have more to say on this, Clark may be on to something: as the following chart from Goldman shows, the number of horizontal rigs funded by public junk bond issuance has not changed in the past 3 months. Is the funding market about to cool dramatically on US shale, and if so, just how high will oil surge?

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In the wake of their embarrassing electoral defeat in November, Congressional Democrats are turning against the wealthy tech benefactors who bankroll their campaigns. To wit, a group of 12 Democratic Congressman have signed a letter urging the Department of Justice and the Federal Trade Commission to conduct a more in-depth review of e-commerce giant Amazon.com Inc.'s plan to buy grocer Whole Foods Market Inc., according to Reuters.

Rumblings that Amazon is engaging in monopolistic business practices resurfaced last week when the top Democrat on the House antitrust subcommittee, David Civilline, voiced concerns about Amazon's $13.7 billion plan to buy Whole Foods Market and urged the House Judiciary Committee to hold a hearing to examine the deal's potential impact on consumers.

Making matters worse for the retailer, Reuters reported earlier this week that the FTC is investigating the company for allegedly misleading customers about its pricing discounts, citing a source close to the probe.

The letter is at least third troubling sign that lawmakers are turning against Amazon, even as President Donald Trump has promised to roll back regulations, presumably making it easier for megamergers like the AMZN-WFM tieup to proceed.

So far, it’s mostly Democrats who are urging the FTC to take “a closer look” at the deal. However, some suspect that Amazon founder Jeff Bezo’s ownership of the Washington Post – a media outlet that has published dozens of embarrassing stories insinuating that Trump and his compatriots colluded with Russia to help defeat Democrat Hillary Clinton – could hurt the company’s chances of successfully completing the merger, as its owner has earned the enmity of president Trump. Similar concerns have dogged CNN-owner Time Warner’s pending merger with telecoms giant AT&T.

In the letter, the group of Democratic lawmakers – which includes rumored presidential hopeful Cory Booker, the junior senator from New Jersey – worried that the merger could negatively impact low-income communities. By putting other grocers out of business, the Amazon-backed WFM could worsen the problem of “food deserts,” areas where residents may have limited access to fresh groceries.

"While we do not oppose the merger at this time, we are concerned about what this merger could mean for African-American communities across the country already suffering from a lack of affordable healthy food choices from grocers," the letter said on Thursday.

In the hopes of changing Whole Foods’ “whole paycheck” image, Amazon has lobbied Congress to be able to accept food stamps online, and is participating in a pilot program to “expand access” to fresh food in impoverished communities. You can read the letter in full below:

@MaxineWaters @CoryBooker among 12 MoCs w/ concerns re: @amazon-Whole Foods deal. Read their letter to DOJ/ FTC -> https://t.co/fYh6kK0Wq9 http://pic.twitter.com/XZEgH3lv7I

— Jessica A. Torres (@jessalttorres) July 21, 2017

Brian Huseman, Amazon's vice president of policy, in a letter to Fudge, tried to placate the angry Democrats by assuring them that Amazon intends to address their concerns.

"'We agree with you that access to food is an important issue for the country, and we share your goal of improving that access,' Huseman said in the letter.

 

'We deliver low-cost, healthy food to zip codes across the country that before Amazon had limited access to a large selection of high quality foods,' Huseman wrote to Fudge.

Huseman also disputed claims that Amazon is anti-competitive, pointing out that Wal-Mart has a larger market share, and added that the company doesn’t plan on laying off workers…despite widely touting its plans to rely on automation – including special sensors and artificial intelligence – to eliminate the need for cashiers in it brick-and-mortar grocers.

“Amazon has sought to dispute that it would monopolize the grocery industry. Wal-Mart Stores Inc currently controls the largest market share.

 

‘We also do not plan job reductions as part of the acquisition, which if approved would result in a company with a combined less than 3 percent of national grocery sales,’ Huseman wrote.”

The letter was released to the public by the United Food and Commercial Workers union, which praised the Democrats plans to fight back against a merger that will likely result (despite Huseman’s claims to the contrary) in a sharp reduction in its membership base.

“Political concerns about Amazon’s acquisition of Whole Foods are growing for good reason,” UFCW President Marc Perrone said on Friday. “Amazon’s monopolistic desire to control the retail market and replace good jobs with automation is not only a direct threat to the hard-working men and women at Whole Foods, it’s also a direct threat to our economy and consumers."

Amazon and Whole Foods hope to expand access to fresh food, said Brian Huseman, Amazon's vice president of policy, in a letter to Fudge, also on Thursday.

"We agree with you that access to food is an important issue for the country, and we share your goal of improving that access," Huseman said in the letter.

So far, any negative impact on Amazon’s shares has been minimal as the broader market remains in rally mode. On Friday, the Nasdaq fell after rising for nine straight days – stopping just shy of what would’ve been its longest winning streak in years.
 

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