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By EconMatters
Every Game involves learning the rules of the game in order to be successful, the financial markets are the ultimate 4 dimensional futuristic chess game. There are different levels operating within the financial markets, the Game within the Game if you will. The Power Players at the top of the Food Chain run the show all things being equal.
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Submitted by Tom Engelhardt via TomDispatch.com,
There are the news stories that genuinely surprise you, and then there are the ones that you could write in your sleep before they happen. Let me concoct an example for you:
“Top American and European military leaders are weighing options to step up the fight against the Islamic State in the Mideast, including possibly sending more U.S. forces into Iraq, Syria, and Libya, just as Washington confirmed the second American combat casualty in Iraq in as many months.”
Oh wait, that was actually the lead sentence in a May 3rd Washington Times piece by Carlo Muñoz. Honestly, though, it could have been written anytime in the last few months by just about anyone paying any attention whatsoever, and it surely will prove reusable in the months to come (with casualty figures altered, of course). The sad truth is that across the Greater Middle East and expanding parts of Africa, a similar set of lines could be written ahead of time about the use of Special Operations forces, drones, advisers, whatever, as could the sorry results of making such moves in [add the name of your country of choice here].
Put another way, in a Washington that seems incapable of doing anything but worshiping at the temple of the U.S. military, global policymaking has become a remarkably mindless military-first process of repetition. It’s as if, as problems built up in your life, you looked in the closet marked “solutions” and the only thing you could ever see was one hulking, over-armed soldier, whom you obsessively let loose, causing yet more damage.
In Iraq and Syria, it’s been mission creep all the way. The B-52s barely made it to the battle zone for the first time and were almost instantaneously in the air, attacking Islamic State militants. U.S. firebases are built ever closer to the front lines. The number of special ops forces continues to edge up. American weapons flow in (ending up in god knows whose hands). American trainers and advisers follow in ever increasing numbers, and those numbers are repeatedly fiddled with to deemphasize how many of them are actually there. The private contractors begin to arrive in numbers never to be counted. The local forces being trained or retrained have their usual problems in battle. American troops and advisers who were never, never going to be “in combat” or “boots on the ground” themselves now have their boots distinctly on the ground in combat situations. The first American casualties are dribbling in. Meanwhile, conditions in tottering Iraq and the former nation of Syria grow ever murkier, more chaotic, and less amenable by the week to any solution American officials might care for.
And the response to all this in present-day Washington?
You know perfectly well what the sole imaginable response can be: sending in yet more weapons, boots, air power, special ops types, trainers, advisers, private contractors, drones, and funds to increasingly chaotic conflict zones across significant swaths of the planet. Above all, there can be no serious thought, discussion, or debate about how such a militarized approach to our world might have contributed to, and continues to contribute to, the very problems it was meant to solve. Not in our nation’s capital, anyway.
The only questions to be argued about are how much, how many, how often, and how destructively. In other words, the only “antiwar” position imaginable in Washington, where accusations of weakness or wimpishness are a dime a dozen and considered lethal to a political career, is how much less of more we can afford, militarily speaking, or how much more of somewhat less we can settle for when it comes to militarized death and destruction. Never, of course, is a genuine version of less or a none-at-all option really on that “table” where, it’s said, all policy options are kept.
Think of this as Washington’s military addiction in action. We’ve been watching it for almost 15 years without drawing any of the obvious conclusions. And lest you imagine that “addiction” is just a figure of speech, it isn’t. Washington’s attachment — financial, tactical, and strategic — to the U.S. military and its supposed solutions to more or less all problems in what used to be called “foreign policy” should by now be categorized as addictive. Otherwise, how can you explain the last decade and a half in which no military action from Afghanistan to Iraq, Yemen to Libya worked out half-well in the long run (or even, often enough, in the short run), and yet the U.S. military remains the option of first, not last, resort in just about any imaginable situation? All this in a vast region in which failed states are piling up, nations are disintegrating, terror insurgencies are spreading, humongous population upheavals are becoming the norm, and there are refugee flows of a sort not seen since significant parts of the planet were destroyed during World War II.
Either we’re talking addictive behavior or failure is the new success.
Keep in mind, for instance, that the president who came into office swearing he would end a disastrous war and occupation in Iraq is now overseeing a new war in an even wider region that includes Iraq, a country that is no longer quite a country, and Syria, a country that is now officially kaput. Meanwhile, in the other war he inherited, Barack Obama almost immediately launched a military-backed “surge” of U.S. forces, the only real argument being over whether 40,000 (or even as many as 80,000) new U.S. troops would be sent into Afghanistan or, as the “antiwar” president finally decided, a mere 30,000 (which made him an absolute wimp to his opponents). That was 2009. Part of that surge involved an announcement that the withdrawal of American combat forces would begin in 2011. Seven years later, that withdrawal has once again been halted in favor of what the military has taken to privately calling a “generational approach” — that is, U.S. forces remaining in Afghanistan into at least the 2020s.
The military term “withdrawal” may, however, still be appropriate even if the troops are staying in place. After all, as with addicts of any sort, the military ones in Washington can’t go cold turkey without experiencing painful symptoms of withdrawal. In American political culture, these manifest themselves in charges of “weakness” when it comes to “national security” that could prove devastating in the next election. That’s why those running for office compete with one another in over-the-top descriptions of what they will do to enemies and terrorists (from acts of torture to carpet-bombing) and in even more over-the-top promises of “rebuilding” or “strengthening” what’s already the largest, most expensive military on the planet, a force better funded at present than those of at least the next seven nations combined.
Such promises, the bigger the better, are now a necessity if you happen to be a Republican candidate for president. The Democrats have a lesser but similar set of options available, which is why even Bernie Sanders only calls for holding the Pentagon budget at its present staggering level or for the most modest of cuts, not for reducing it significantly. And even when, for instance, the urge to rein in military expenses did sweep Washington as part of an overall urge to cut back government expenses, it only resulted in a half-secret slush fund or “war budget” that kept the goodies flowing in.
These should all be taken as symptoms of Washington’s military addiction and of what happens when the slightest signs of withdrawal set in. The U.S. military is visibly the drug of choice in the American political arena and, as is only appropriate for the force that has, since 2002, funded, armed, and propped up the planet’s largest supplier of opium, once you’re hooked, there’s no shaking it.
Recently, in the New York Times Magazine, journalist Mark Landler offered a political portrait entitled “How Hillary Clinton Became a Hawk.” He laid out just how the senator and later secretary of state remade herself as, essentially, a military groupie, fawning over commanders or former commanders ranging from then-General David Petraeus to Fox analyst and retired general Jack Keane; how, that is, she became a figure, even on the present political landscape, notable for her “appetite for military engagement abroad” (and as a consequence, well-defended against Republican charges of “weakness”).
There’s no reason, however, to pin the war-lover or “last true hawk” label on her alone, not in present-day Washington. After all, just about everyone there wants a piece of the action. During their primary season debates, for instance, a number of the Republican candidates spoke repeatedly about building up the U.S. Sixth Fleet in the Mediterranean, while making that already growing force sound like a set of decrepit barges.
To offer another example, no presidential candidate these days could afford to reject the White House-run drone assassination program. To be assassin-in-chief is now considered as much a part of the presidential job description as commander-in-chief, even though the drone program, like so many other militarized foreign policy operations these days, shows little sign of reining in terrorism despite the number of “bad guys” and terror “leaders” it kills (along with significant numbers of civilian bystanders). To take Bernie Sanders as an example — because he’s as close to an antiwar candidate as you’ll find in the present election season — he recently put something like his stamp of approval on the White House drone assassination project and the “kill list” that goes with it.
Mind you, there is simply no compelling evidence that the usual military solutions have worked or are likely to work in any imaginable sense in the present conflicts across the Greater Middle East and Africa. They have clearly, in fact, played a major role in the creation of the present disaster, and yet there is no place at all in our political system for genuinely antiwar figures (as there was in the Vietnam era, when a massive antiwar movement created space for such politics). Antiwar opinions and activities have now been driven to the peripheries of the political system along with a word like, say, “peace,” which you will be hard-pressed to find, even rhetorically, in the language of “wartime” Washington.
If a history were to be written of how the U.S. military became Washington’s drug of choice, it would undoubtedly have to begin in the Cold War era. It was, however, in the prolonged moment of triumphalism that followed the Soviet Union’s implosion in 1991 that the military gained its present position of unquestioned dominance.
In those days, people were still speculating about whether the country would reap a “peace dividend” from the end of the Cold War. If there was ever a moment when the diversion of money from the U.S. military and the national security state to domestic concerns might have seemed like a no-brainer, that was it. After all, except for a couple of rickety “rogue states” like North Korea or Saddam Hussein's Iraq, where exactly were this country’s enemies to be found? And why should such a muscle-bound military continue to gobble up tax dollars at such a staggering rate in a reasonably peaceable world?
In the decade or so that followed, however, Washington’s dreams turned out to run in a very different direction — toward a “war dividend” at a moment when the U.S. had, by more or less universal agreement, become the planet’s “sole superpower.” The crew who entered the White House with George W. Bush in a deeply contested election in 2000 had already been mainlining the military drug for years. To them, this seemed a planet ripe for the taking. When 9/11 hit, it loosed their dreams of conquest and control, and their faith in a military that they believed to be unstoppable. Of course, given the previous century of successful anti-imperial and national independence movements, anyone should have known that, no matter the armaments at hand, resistance was an inescapable reality on Planet Earth.
Thanks to such predictable resistance, the drug-induced imperial dreamscape of the Busheviks would prove a fantasy of the first order, even if, in that post-9/11 moment, it passed for bedrock (neo)realism. If you remember, the U.S. was to “take the gloves off” and release a military machine so beyond compare that nothing would be capable of standing in its path. So the dream went, so the drug spoke. Don’t forget that the greatest military blunder (and crime) of this century, the invasion of Iraq, wasn’t supposed to be the end of something, but merely its beginning. With Iraq in hand and garrisoned, Washington was to take down Iran and sweep up what Russian property from the Cold War era still remained in the Middle East. (Think: Syria.)
A decade and a half later, those dreams have been shattered, and yet the drug still courses through the bloodstream, the military bands play on, and the march to… well, who knows where… continues. In a way, of course, we do know where (to the extent that we humans, with our limited sense of the future, can know anything). In a way, we’ve already been shown a spectacle of what “victory” might look like once the Greater Middle East is finally “liberated” from the Islamic State.
The descriptions of one widely hailed victory over that brutal crew in Iraq — the liberation of the city of Ramadi by a U.S.-trained elite Iraqi counterterrorism force backed by artillery and American air power — are devastating. Aided and abetted by Islamic State militants igniting or demolishing whole neighborhoods of that city, the look of Ramadi retaken should give us a grim sense of where the region is heading. Here’s how the Associated Press recently described the scene, four months after the city fell:
“This is what victory looks like…: in the once thriving Haji Ziad Square, not a single structure still stands. Turning in every direction yields a picture of devastation. A building that housed a pool hall and ice cream shops — reduced to rubble. A row of money changers and motorcycle repair garages — obliterated, a giant bomb crater in its place. The square’s Haji Ziad Restaurant, beloved for years by Ramadi residents for its grilled meats — flattened. The restaurant was so popular its owner built a larger, fancier branch across the street three years ago. That, too, is now a pile of concrete and twisted iron rods.
“The destruction extends to nearly every part of Ramadi, once home to 1 million people and now virtually empty.”
Keep in mind that, with oil prices still deeply depressed, Iraq essentially has no money to rebuild Ramadi or anyplace else. Now imagine, as such “victories” multiply, versions of similar devastation spreading across the region.
In other words, one likely end result of the thoroughly militarized process that began with the invasion of Iraq (if not of Afghanistan) is already visible: a region shattered and in ruins, filled with uprooted and impoverished people. In such circumstances, it may not even matter if the Islamic State is defeated. Just imagine what Mosul, Iraq’s second largest city and still in the Islamic State's hands, will be like if, someday, the long-promised offensive to liberate it is ever truly launched. Now, try to imagine that movement itself destroyed, with its “capital,” Raqqa, turned into another set of ruins, and remind me: What exactly is likely to emerge from such a future nightmare? Nothing, I suspect, that is likely to cheer up anyone in Washington.
And what should be done about all this? You already know Washington’s solution — more of the same — and breaking such a cycle of addiction is difficult even under the best of circumstances. Unfortunately, at the moment there is no force, no movement on the American scene that could open up space for such a possibility. No matter who is elected president, you already know more or less what American “policy” is going to be.
But don’t bother to blame the politicians and national security nabobs in Washington for this. They’re addicts. They can’t help themselves. What they need is rehab. Instead, they continue to run our world. Be suitably scared for the ruins still to come.
via http://ift.tt/1TJekFt Tyler Durden
Over the past few months, we have covered the unfolding saga (here and here) of the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, all the way through Kenneth Feinberg’s rejection of the proposal to cut benefits on behalf of the Treasury.
When the proposal was rejected, we said that the final resolution will be in the form of an inevitable taxpayer-funded bailout
If the Treasury won’t allow any pension cuts, and the government created safety net won’t be there to keep the benefits flowing, how will the cash continue to flow to members? With the precedent now set by the Treasury that no cuts will be allowed, the answer will likely come in the form of a massive bailout.
As it turns out, that is precisely what fund director Thomas Nyhan believes as well. Nyhan said the rejection means the CSPF likely won’t be able to offer another proposed fix without getting funding from Congress, either directly or through the Pension Benefit Guaranty Corp.
However with the PBGC also on its way to insolvency, and unable to shoulder the additional burden in world of zero and negative rates, that leaves us with… drum roll please… the US taxpayers, aka Congress, footing the bill.
“There are only two solutions. Either the plan receives more money or has to have fewer benefits. I’m hopeful that come probably 2017, we can actually all get to work on something that can provide a solution. If there is no legislation at any time, we’re going to end up going to insolvency.” Nyhan said.
The full-court press is now on, as now everyone involved is calling on congress to step in. Visitors to CSPF’s website this morning were greeed with a banner directing to a rescue plan website.
Before you could enter the rescue site a pop-up message is shown, simply saying that since congress effectively shut down the proposal, they can now stand up and pass legislation to bail the fund out.
“Central States strongly urges these members to act now to pass legislation that protects the pension benefits of the over 400,000 participants of Central States Pension Fund”
With the Treasury denying the possibility of pension cuts, the ball is now in Congress’ court to initiate a bailout.
When it does, because it will, the flood gates will be open for the rest of the insolvent funds to come knocking with their hands out, and we can formally welcome the arrival of helicopter money – whether Yellen wants it or not – in the United States.
What follows is Tom Nyhan testifying before congress back in 2013, laying it out in very plain terms that without funding, or significant benefit cuts, the game is over.
“Unless the fund substantially reduces its liabilities, or receives a large influx of assets, it’s projected become insolvent within ten or fifteen years, and at this point our options are very limited.”
Nobody listened, and now – in this bold new age of pension fund crushing zero and negative interest rates – it is game over.
via http://ift.tt/27innaN Tyler Durden
Submitted by Eugen von Bohm-Bawek via Bawerk.net,
Another month, another OPEC meeting beckons for 2nd June. But unlike typical meetings on the Danube (let alone dust filled haze of Doha), the producer group might just have a new King in town. It comes in the form of Russia; the number one global producer that’s not even technically a member of the cartel. Confused? Don’t be. The argument is quite simple.
Unlike Doha where the outgoing Saudi Oil Minister, Ali Naimi was lining up a Saudi led deal to leave Iran outside the tent as the odd man out refusing to join the 17 country ‘freeze’, this time round, it’s very likely Russia will come back to the table with exactly the same deal, but one they’ve directly brokered with Iran, where the Islamic Republic is conveniently claiming they’ve already hit the magic 4mb/d production targets to bring a ‘freeze agreement’ back into play. Rest assured, if Russia and Iran are on the same page, everyone else will ‘sign on the line’ given their current fiscal difficulties where every petro-dollar counts for self-preservation purposes. That potentially leaves Saudi Arabia outside the ‘freezing tent’ as the latest renegade of the petro-state world – or worse still for Riyadh – signing up to a retro-engineered Russo-Iranian deal, where Saudi Arabia has conceded strategic leadership of the producer.
No matter how much Saudi screams and shouts their previous intransigence brought Iran to the table, this is no longer their deal to sell. If Putin goes in for the kill in Vienna, strategic control of the producer group has effectively passed to Moscow, at least on an interim basis. On all fronts, this is entirely up to the Kremlin how they want to spin things. Not only does a Russo-Iranian deal make sense for a ‘resurgent’ Moscow playing the OPEC ‘King’; giving Iran a geopolitical leg up to become the number one ‘cartel princeling’ makes sense for broader Russian geo-strategic interests. Iran remains the most vital co-ordinate on Mr. Putin’s post-Soviet map.
No doubt that will put a wry smile Mr. Naimi’s face given the Kingdom had its chance to remain the OPEC lynchpin in Doha, but opted to bump off the old man for internal power grabs instead. But we still need to be very careful to strip out what remain two totally separate debates here around OPEC political theatrics on the one hand vs. any actual market impact any so called freeze would have on the other. Unsurprisingly, we expect exactly the same Doha bluff to come through in Vienna, in what’s essentially a ‘license to pump’ agreement all round.
Kuwait will claim it can do 3.2mb/d; Iraq will keep pitching 4.8mb/d;
Venezuela will ‘hold firm’ at 2.6mb/d. All numbers grounded in political fantasies, not physical realities.
Most importantly, Iran’s probably not quite back at 4mb/d, which ironically reinforces why a June freeze agreement remains absolutely ‘no regrets’ for the Islamic Republic to game. Claim 4mb/d targets are hit; keep making incremental gains over the next few months; but do so scoring lots of diplomatic points against Saudi Arabia along the way.
To cap things off, Russia will obviously pitch its tent towards 11.5mb/d given Moscow’s currently ramming through tax tweaks to keep production at 11.2mb/d.
Everyone gets to pump. Nobody has to ‘formally’ cheat. The price doesn’t really go anywhere, beyond a short term Viennese waltz. But most of all, it leaves Saudi Arabia with a major petro-diplomacy decision to make: Either accept it’s no longer calling the OPEC shots when it comes to producer ‘co-operation’ or completely bulk at Russo-Iranian overtures, and put their head back in the volumetric sands to ramp as far and fast as they can. OPEC gets left in its wake.
Unfortunately for the Kingdom, that’s the real rub here: It’s far from clear Riyadh still holds the volumes based crown either in OPEC. For all the noise coming out of the Kingdom they can do 11.5mb/d, 12mb/d, 12.5mb/d or even ‘20mb/d’ if they ‘wanted to’, the acid test will come over the summer months when domestic demand will be through the roof. Unless everyone sees ‘total’ Saudi production going well above 11mb/d to maintain its stakes in the volumes game, the working assumption the Kingdom can always pump at will simply isn’t credible. If the ‘King’s dead so be it, but Riyadh should know better than anyone else, there’s also someone willing to take your place. Odds on Russia will wear that regal crown, at least for short term political posturing. While Iran can assume its logical role as the new Crown Prince.
via http://ift.tt/1TJ9nN2 Tyler Durden
The monotonous drone from The Eccles Building continues to pontificate that bond bulls are fools but stock buyers are the smart ones for the miracle hockey-stick of Keynesian dreams is just around the corner and rate-hikes right along with it. Three decades of factual dismissal of this bullshit propaganda are of course proving that line of reasoning simply false and while Rosengren, Bullard, et al. bloviate that 'investors' should be selling bonds, it is shockingly ironic that their bond-buying nemesis is Mrs. Watanabe in the land of failed Keynesian policy piling into Treasuries at a record pace since The BoJ went NIRP.
As UBS Rate strategists detail, since the BoJ launched its negative interest rate policy, Japanese investors have been significant net buyers of foreign assets, mainly DM government bonds. Weekly flow data suggests that this trend has continued beyond the turn of the Japanese fiscal year, albeit at a slightly slower pace (since April, Japan net purchases of overseas bonds amount to ¥2tn vs. ¥4.3tn in Mar-16 and ¥3.1tn in Feb-16). Today’s data of overseas purchases by destination for March highlights which markets have benefitted so far.
DM: Record appetite for US Treasuries in March; dwarfed other markets
Treasuries normally make up most of Japanese investors' foreign bond purchases. This was certainly true in March, with the ¥4.8tn of net purchases of USTs (largest since at least 2005) accounting for 87% of the overall net flow
And that Fed-frustrating bid for bonds is not about to stop…
Investment plans point to continued strong demand; should weigh on yields
Our take on Japanese life insurers’ and asset managers’ investment plans for FY16-17 is that a vast majority plans to boost their foreign bond holdings further, often at the expense of JGBs.
While most still seem to favour FX-hedging overseas bonds, some look to also up unhedged purchases. However, others appear sceptical of the prospects for a yen turnaround, and will only consider altering hedging ratios if they grow more confident that the JPY will weaken. We remain of the view that liquid and highly rated markets offering an attractive FX-hedged yield pickup vs. JGBs, like USTs and OATs, should be key beneficiaries.
So the next time Eric Rosengren says that the bond market is way too pessimistic about growth or how awesome The Fed is – tell him to blame his Keynesian frontrunning fools in Japan for "reaching for yield" into USTs and dumping JGBs – if Eric really wants to saee what happens to his bond market, maybe try NIRP – just as Yellen said was on the table tonight.
via http://ift.tt/24U3BDP Tyler Durden
A shockingly frank new book from an anonymous Democratic congressman turns yet another set of conspiracy theories into consirpacy facts as he spills the beans on the ugly reality behind the scenes in Washington. While little will surprise any regular readers, the selected quotes offered by "The Confessions Of Congressman X" book cover sheet read like they were ripped from the script of House of Cards… and yet are oh so believable…
A devastating inside look at the dark side of Congress as revealed by one of its own! No wonder Congressman X wants to remain anonymous for fear of retribution. His admissions are deeply disturbing…
"Most of my colleagues are dishonest career politicians who revel in the power and special-interest money that's lavished upon them."
"My main job is to keep my job, to get reelected. It takes precedence over everything."
"Fundraising is so time consuming I seldom read any bills I vote on. Like many of my colleagues, I don't know how the legislation will be implemented, or what it'll cost."
The book also takes shots at voters as disconnected idiots who let Congress abuse its power through sheer incompetence…
"Voters are incredibly ignorant and know little about our form of government and how it works."
"It's far easier than you think to manipulate a nation of naive, self-absorbed sheep who crave instant gratification."
And, as The Daily Mail so elqouently notes, the take-away message is one of resigned depression about how Congress sacrifices America's future on the altar of its collective ego…
"We spend money we don't have and blithely mortgage the future with a wink and a nod. Screw the next generation."
"It's about getting credit now, lookin' good for the upcoming election."
Simply put, it's everything that is enraging Americans about their government's dysfunction and why Trump is getting so much attention.
via http://ift.tt/1T9JHK7 Tyler Durden
Submitted by Bob Livingston via Personal Liberty Digest blog (h/t Brandon Smith at Alt-Market.com),
The American economic system, and in fact the world’s economic system is failing, and that failure is being attributed by many on the left (and some on the right) as a failure of capitalism.
This false notion has given rise to Bernie Sanders and his preaching of social democracy. How has this happened?
Every writer and every commentator and every politician in America refers to the U.S. as a democracy of free enterprise capitalism with individual privacy and property rights. This is a big laugh to any sober person.
The system and its paid politicians still repeat high-sounding terms like “freedom of the individual” and “free enterprise,” which sedates the madding crowd. The terms “private” and “freedom” no longer mean what they once meant. They are cruel deceptions that fool the mind yearning for human freedom.
The fact is that in America we have massive regulation and regimentation. This is necessary, we are told, because it is “in the public interest.” It all spews forth out of “democracy” as if a Biblical word and a holy sanction. Terms like “public interest” and “common good” are code words that mean police state and reduced liberty.
We live in a fiction of freedom perpetuated with semantic corruption that has evolved us into economic fascism. Language and words that support a free society have been turned inside out.
With this propaganda reverse, opposition has been neutralized. True words, true meanings of patriotism and freedom have become the farce and illusion that cover fascism.
So Sanders has attracted the millennials in droves based on the lie that capitalism is immoral but his brand of socialism is moral because it guarantees “equality.” These millennials tweet or blog their discontent with the present system on their Iphones and Androids and computers created by capitalists who got rich and then became crony capitalist socialists or fascists.
But Sanders doesn’t distinguish between monopoly or crony capitalism and true free-market capitalism. Free market capitalism hasn’t existed in the U.S., or much of anywhere else for that matter, in more than 100 years. So capitalism hasn’t failed and isn’t failing.
There is a silent marriage between big government and big business. It exists around the world. It’s called fascism, or was in Italy, though we have the same thing.
All governments are fronts for monopoly capitalism, and monopoly capitalism has many names: fascism, socialism, communism and democracy. Big business has and will promote every ideology and philosophy known to man to disguise its madness for profits. But one equals the other. They are all immoral systems that use the power of government to exist and to suppress human freedom.
The only moral system is laissez-faire capitalism; the system in which transactions between private parties are free from government interference. It was American free market capitalism that fueled the growth of the U.S. economic engine beginning in the 1800s and raised the standard of living around the globe, before monopoly capitalism began to exert greater and greater control over the U.S. economic system beginning in the mid-1800s and accelerated after the creation of the Federal Reserve in 1913.
Sadly, it’s not just the progressive left and ignorant millennials that oppose free market capitalism. In any discussion forum where laissez-faire capitalism is discussed, “conservatives” are quick to make the disclaimer that “we must have some regulation” or, “we can’t have unfettered capitalism.” In truth, most so-called conservatives are really closet socialists. This is a testament to the powerful propaganda we are subjected to.
In 1993, C. Bradley Thompson, then assistant professor of political science at Ashland University, described the immorality of socialism and the morality of capitalism as well as anyone I’ve read. This should be shared with anyone you know – particularly young people who are victims of the public (non)education system — who has bought the lie that capitalism is a failed system and has embraced conventional wisdom and Sanders’ false paradigm:
Throughout history there have been two basic forms of social organization: collectivism and individualism. In the twentieth-century collectivism has taken many forms: socialism, fascism, Nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.
The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.
It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.
The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.
Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.
The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Benito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: “Common good comes before private good.” Fascism, said Mussolini, is “a life in which the individual, through the sacrifice of his own private interests… realizes that completely spiritual existence in which his value as a man lies.”
Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.
Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.
Capitalism is the only moral system because it requires human beings to deal with one another as traders — that is, as free moral agents trading and selling goods and services on the basis of mutual consent.
Capitalism is the only just system because the sole criterion that determines the value of a thing exchanged is the free, voluntary, universal judgment of the consumer. Coercion and fraud are anathema to the free-market system.
It is both moral and just because the degree to which man rises or falls in society is determined by the degree to which he uses his mind. Capitalism is the only social system that rewards merit, ability and achievement, regardless of one’s birth or station in life.
Yes, there are winners and losers in capitalism. The winners are those who are honest, industrious, thoughtful, prudent, frugal, responsible, disciplined, and efficient. The losers are those who are shiftless, lazy, imprudent, extravagant, negligent, impractical, and inefficient.
Capitalism is the only social system that rewards virtue and punishes vice. This applies to both the business executive and the carpenter, the lawyer and the factory worker.
But how does the entrepreneurial mind work? Have you ever wondered about the mental processes of the men and women who invented penicillin, the internal combustion engine, the airplane, the radio, the electric light, canned food, air conditioning, washing machines, dishwashers, computers, etc.?
What are the characteristics of the entrepreneur? The entrepreneur is that man or woman with unlimited drive, initiative, insight, energy, daring creativity, optimism and ingenuity. The entrepreneur is the man who sees in every field a potential garden, in every seed an apple. Wealth starts with ideas in people’s heads.
The entrepreneur is therefore above all else a man of the mind. The entrepreneur is the man who is constantly thinking of new ways to improve the material or spiritual lives of the greatest number of people.
And what are the social and political conditions which encourage or inhibit the entrepreneurial mind? The free-enterprise system is not possible without the sanctity of private property, the freedom of contract, free trade and the rule of law.
But the one thing that the entrepreneur values over all others is freedom — the freedom to experiment, invent and produce. The one thing that the entrepreneur dreads is government intervention. Government taxation and regulation are the means by which social planners punish and restrict the man or woman of ideas.
Welfare, regulations, taxes, tariffs, minimum-wage laws are all immoral because they use the coercive power of the state to organize human choice and action; they’re immoral because they inhibit or deny the freedom to choose how we live our lives; they’re immoral because they deny our right to live as autonomous moral agents; and they’re immoral because they deny our essential humanity. If you think this is hyperbole, stop paying your taxes for a year or two and see what happens.
The requirements for success in a free society demand that ordinary citizens order their lives in accordance with certain virtues — namely, rationality, independence, industriousness, prudence, frugality, etc. In a free capitalist society individuals must choose for themselves how they will order their lives and the values they will pursue. Under socialism, most of life’s decisions are made for you.
Both socialism and capitalism have incentive programs. Under socialism there are built-in incentives to shirk responsibility. There is no reason to work harder than anyone else because the rewards are shared and therefore minimal to the hard-working individual; indeed, the incentive is to work less than others because the immediate loss is shared and therefore minimal to the slacker.
Under capitalism, the incentive is to work harder because each producer will receive the total value of his production — the rewards are not shared. Simply put: socialism rewards sloth and penalizes hard work while capitalism rewards hard work and penalizes sloth.
According to socialist doctrine, there is a limited amount of wealth in the world that must be divided equally between all citizens. One person’s gain under such a system is another’s loss.
According to the capitalist teaching, wealth has an unlimited growth potential and the fruits of one’s labor should be retained in whole by the producer. But unlike socialism, one person’s gain is everybody’s gain in the capitalist system. Wealth is distributed unequally but the ship of wealth rises for everyone.
Sadly, America is no longer a capitalist nation. We live under what is more properly called a mixed economy — that is, an economic system that permits private property, but only at the discretion of government planners. A little bit of capitalism and a little bit of socialism.
When government redistributes wealth through taxation, when it attempts to control and regulate business production and trade, who are the winners and losers? Under this kind of economy the winners and losers are reversed: the winners are those who scream the loudest for a handout and the losers are those quiet citizens who work hard and pay their taxes.
As a consequence of our sixty-year experiment with a mixed economy and the welfare state, America has created two new classes of citizens. The first is a debased class of dependents whose means of survival is contingent upon the forced expropriation of wealth from working citizens by a professional class of government social planners. The forgotten man and woman in all of this is the quiet, hardworking, law-abiding, taxpaying citizen who minds his or her own business but is forced to work for the government and their serfs.
The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.
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After issuing a record $1 trillion in combined bank and shadow loans in the first quarter which just like during the financial crisis provided a short-term boost to global growth (while sending China’s debt/GDP to all time highs)…
… China’s dramatic debt issuance binge is about to hit a brick wall.
According to MarketNews, Chinese bank loan growth is expected to slow sharply in April compared with March as the pillar of bank lending, mortgage loans, slowed as the property market cooled. Citing bank officials, the news service said that robust first-quarter lending almost depleted their resources, making it difficult to find good targets to lend to, which also hurt loan growth.
It also means that suddenly the credit impulse that drove both Chinese and global growth for the past two months is about to evaporate.
How big is the drop? Sources familiar with the loan number told MNI that combined new loans in April by the Big Four state-owned banks were more than halved from March’s level. As a reminder, the Big Four banks lent out CNY402 billion in March, according to the People’s Bank of China.
While there is no preview of how bit (or small) the combined TSF number will be, it is safe to assume it will be a far smaller total than the CNY2.34 trillion in total social financing that flooded the Chinese economy in March.
The slowdown mainly came from moderating mortgage growth, which has been the key driving force behind loan growth so far this year. In the city of Shanghai, mortgage loans hit a record high of CNY36.1 billion in March, beating the previous record of CNY34.6 billion set in January, according to PBOC data.
The PBOC said the country’s total outstanding mortgage loan was up 25.5% y/y at the end of March, much faster than the 14.7% of average outstanding loan growth.
But that mortgage strength in the first quarter failed to continue into April as property sales growth slowed sharply on government tightening measures. According to Essence Securities, new residential house sales in tier one cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, fell 21.2% on month in April and only edged up 0.5% from a year ago, including a 38.6% m/m and 30.8% y/y plunge in the city of Shenzhen, which leads the current round of property rebound.
But if April was bad, May was a disaster: “it appears the situation is even worse into May. Shenzhen saw house sales in the first week of May plummet another 49% when compared with the previous week, dragging year-to-date sales into a 1% drop in terms of floor space.”
The reason is that after Beijing saw that housing bubble it had created, it rushed to cool it, and in the process unleashed the “rebar” and other commodity bubble that hit Chinese markets in mid-April, and which has since burst in what may have been the fastest boom-to-bust cycle yet for China.
With property sales growth decelerating further into May and Beijing’s renewed efforts to push for deleveraging, officials warned bank loans are unlikely to pick up in the following months.
“Strong Q1 loan growth probably has used up banks reserve of good clients, namely property and local government financing vehicles, which have high returns and low default risk. So from now on, banks will get more selective and focus on risk prevention,” said an official running a wealth management product business, the main channel for banks’ off-balance lending, at a Chinese second tier bank.
Back in January, when Chinese banks lent out a record amount of loans, the joke in the market was that some banks had finished half their year’s work in just a month. That joke may seem sour now to bank officials. At the end, the only ones laughing will be those who are betting that China’s soaring non-performling loans – of which China has created at least several hundred billion already in 2016 – will come crashing down on China’s financial system forcing a major devaluation, but until then we get to watch how China’s Q1 credit bang becomes a whimper.
GF Securities said in a note to clients that they only expect about CNY600 billion new loans in April and that total social financing is also expected to fall sharply as a result of a drop in corporate bond issuance.
The slower loan growth, if confirmed, provides another piece of evidence, after disappointing trade numbers and purchasing managers indexes, both government and private, that Chinese economic growth slowed again in April after a temporary rebound in March.
As even MNI cautions, the upbeat economic indicators for March were in large part a result of weak bases of comparison in the same month last year, rather than a broad-based improvement in the economy. The recovery has been driven by the property market and the knock-on effects on steel output and construction activity. If markets were too pessimistic about the Chinese economy at the beginning of the year, they may have become overly optimistic based on March data and the stabilization in Q1 GDP.
The next logical question is how long until the massive credit impulse finally fades to which none other than Goldman provides the answer:
“we find a statistically significant response to the credit impulse, with a credit impulse of 5% of GDP boosting annualized real GDP growth by nearly 1.5% the following quarter”
The following quarter, in this case is Q2, which is now halfway over. What happens next is not just a tapering in the impulse but an actual reversal in the benefit from the credit surge. That will kick in some time around late June, early July just in time for the big summer swoon. Recall China devalued for the first time last August – chances are very good that it will do the same again this year.
* * *
Putting it all together, China finds itself between a rock and a hard place – should it unleash another massive credit impulse, it will find itself scrambling to contain the NPL fallout; should it taper the credit growth, it will see its economy suddenly swoon lower, resulting in even more currency devaluation and even more capital outflows (and even higher Vancouver real estate prices).
* * *
As for the conclusion, we will give the stage to Axiom’s Gordon Johnson who lays it out as follows:
CHINA MACRO: IS THE TIME TO RE-SHORT COMMODITY STOCKS “UPON US”?: Futures Trading Plunge + Fall in Chinese FX Reserves + Spike in Hong Kong Imports = Trouble
Point 1 – Avg. Daily Futures Trading Values Are Plummeting. In our note published 4/29, titled “MACRO: IS EVERYONE WRONG ON THE “CAUSATION” OF THE COMMODITY BUBBLE?”, we presaged that excessive speculation in the commodities futures markets by Chinese banks’ special interest vehicles (“SIVs”), via wealth management products (“WMPs”), was imminently coming to an abrupt end. The evidence? Simply put, as shown here, here, and here, after seeing futures trading volumes across virtually every commodity in China increase exponentially over a very short period of time, the Chinese government stepped in two weeks ago and began raising margin requirements, shortening trading hours, and increasing transaction costs for commodity futures trading. Consequently, given the average holding period for futures contracts including rebar and iron ore was less than 3 hours in April, we argue that the Chinese banks responsible for perpetuating this bubble – given the sheer size, we feel those purporting that “retail” investors are driving this are misinformed – are transacting in the overnight market. As such, as we warned prior, with Chinese government policy now staunchly against the ability to profit from speculative trading in the commodities futures market (link), we believe the collapse that has defined a number of commodity metals will intensify over the coming days/weeks .
Point 2 – China’s FX Reserves Fell, Again, in April. China’s foreign exchange (“FX”) reserves rose just 22bps m/m in April, after rising 32bps m/m in Mar. Yet, when adjusting for currency, using Chinese Foreign Exchange Trade System Units (“CFETS”), China’s FX reserves in April fell for the 6th consecutive month.
Point 3 – Chinese Imports from Hong Kong “Take Flight”. Imports from Hong Kong – a channel used by foreign subsidiaries in China to get capital out of the country by over-invoicing [or, for all intents and purposes, the creation of fake trade invoices] their China-based holding companies – swelled a record 203.5% in April. Stated differently, when taken in conjunction with the 6th consecutive fall in China’s currency adjusted FX reserves in April, we believe a “mountainous” amount of capital continues to be pulled out of China.
Conclusion. We believe the benefit of a record $1 trillion in new credit creation in China’s economy in C1Q16 has run its course. Thus, with policy in China now re-focused on supply-side reform, vs. investment expansion, we see the commodity stocks as shorts again.
So for all those who thought China had been fixed and is no longer a macro concern, we have bad news: the bull – or in this case bear – in the proverbial China store is about to make another grand, if not so dignified, entrance.
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Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Rep. Brad Sherman (D-Calif.) is criticizing the Obama administration as having tried to strong-arm a former senator who is pushing to declassify 28 pages of the 9/11 report dealing with Saudi Arabia.
He recounted how Rep. Gwen Graham (D-Fla.) and her father, former Senate Intelligence Committee Chairman Bob Graham (D-Fla.), were detained by the FBI in 2011 at Dulles International Airport outside Washington. The message from the agents, according to the Grahams, was to quit pushing for declassification of the 28 pages.
The FBI “took a former senator, a former governor, grabbed him in an airport, hustled him into a room with armed force to try to intimidate him into taking different positions on issues of public policy and important national policy, and the fact that he wasn’t intimidated because he was calm doesn’t show that they weren’t trying to intimidate him,” Sherman said in an interview with The Hill’s Molly K. Hooper.
– From last week’s post: Disturbing Claim – FBI Interrogated Former Senator for Wanting “28 Pages” Declassified
Critics of my repeated focus on highlighting the Saudi role in 9/11 claim that anything revealed in the “28 pages” will be marginal at best, leaving many of the most important questions surrounding the attacks shrouded in secrecy. I agree. What I disagree with is the conclusion that aggressively pursuing a declassification of the 28 pages is therefore meaningless.
There’s almost always a underlying reason behind my relentless pursuit of certain topics. One of the key purposes of this website is to chronicle the myriad examples of U.S. government lies, corruption and criminality on behalf of a handful of insiders at the expense of the citizenry. This is because I agree wholeheartedly with Thomas Jefferson when he wrote to Charles Yancey:
If a nation expects to be ignorant & free, in a state of civilization, it expects what never was & never will be. The functionaries of every government have propensities to command at will the liberty & property of their constituents. There is no safe deposit for these but with the people themselves; nor can they be safe with them without information. Where the press is free and every man able to read, all is safe.
The shadow government and its minions treat the general public as stupid malleable serfs, because for the most large part, they are. This unfortunate state of affairs has been achieved over the decades through absurd government propaganda slavishly peddled to the masses via mainstream media outlets. The internet has allowed tens of millions to wake up, but hundreds of millions are necessary in order to turn this thing around and bring forth an era of freedom, progress, creativity and spiritual renaissance. This will never happen until people start to question and confront the unimaginably maniacal status quo.
The reason I believe the “28 pages” are so important is because it unquestionably demonstrates that senior members of the U.S. government care more about the public perception of Saudi Arabia, and protecting its terrorist spawn, than cares about the public interest. Indeed, focus on these pages is already beginning to achieve just that.
As the Guardian reported earlier today:
A former Republican member of the 9/11 commission, breaking dramatically with the commission’s leaders, said Wednesday he believes there was clear evidence that Saudi government employees were part of a support network for the 9/11 hijackers and that the Obama administration should move quickly to declassify a long-secret congressional report on Saudi ties to the 2001 terrorist attack.
The comments by John F Lehman, an investment banker in New York who was Navy secretary in the Reagan administration, signal the first serious public split among the 10 commissioners since they issued a 2004 final report that was largely read as an exoneration of Saudi Arabia, which was home to 15 of the 19 hijackers on 9/11.
“There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government,” Lehman said in an interview, suggesting that the commission may have made a mistake by not stating that explicitly in its final report. “Our report should never have been read as an exoneration of Saudi Arabia.”
He was critical of a statement released late last month by the former chairman and vice-chairman of the commission, who urged the Obama administration to be cautious about releasing the full congressional report on the Saudis and 9/11 – “the 28 pages”, as they are widely known in Washington – because they contained “raw, unvetted” material that might smear innocent people.
The 9/11 commission chairman, former Republican governor Tom Kean of New Jersey, and vice-chairman, former Democratic congressman Lee Hamilton of Indiana, praised Saudi Arabia as, overall, “an ally of the United States in combatting terrorism” and said the commission’s investigation, which came after the congressional report was written, had identified only one Saudi government official – a former diplomat in the Saudi consulate in Los Angeles – as being “implicated in the 9/11 plot investigation”.
“Only one Saudi government official.” Can you believe this? Meanwhile, that official was merely deported from the U.S. without ever being charged with a crime. More proof that the Saudis and bankers have been granted their own separate “justice” system.
Meanwhile, it’s not even true…
In the interview Wednesday, Lehman said Kean and Hamilton’s statement that only one Saudi government employee was “implicated” in supporting the hijackers in California and elsewhere was “a game of semantics” and that the commission had been aware of at least five Saudi government officials who were strongly suspected of involvement in the terrorists’ support network.
The commissioner said the renewed public debate could force a spotlight on a mostly unknown chapter of the history of the 9/11 commission: behind closed doors, members of the panel’s staff fiercely protested the way the material about the Saudis was presented in the final report, saying it underplayed or ignored evidence that Saudi officials – especially at lower levels of the government – were part of an al-Qaida support network that had been tasked to assist the hijackers after they arrived in the US.
In fact, there were repeated showdowns, especially over the Saudis, between the staff and the commission’s hard-charging executive director, University of Virginia historian Philip Zelikow, who joined the Bush administration as a senior adviser to the secretary of state, Condoleezza Rice, after leaving the commission. The staff included experienced investigators from the FBI, the Department of Justice and the CIA, as well as the congressional staffer who was the principal author of the 28 pages.
Zelikow fired a staffer, who had repeatedly protested over limitations on the Saudi investigation, after she obtained a copy of the 28 pages outside of official channels. Other staffers described an angry scene late one night, near the end of the investigation, when two investigators who focused on the Saudi allegations were forced to rush back to the commission’s offices after midnight after learning to their astonishment that some of the most compelling evidence about a Saudi tie to 9/11 was being edited out of the report or was being pushed to tiny, barely readable footnotes and endnotes. The staff protests were mostly overruled.
However, the commission’s final report was still widely read as an exoneration, with a central finding by the commission that there was “no evidence that the Saudi government as an institution or senior Saudi officials individually” provided financial assistance to Osama bin Laden’s terrorist network. The statement was hailed by the Saudi government as effectively clearing Saudi officials of any tie to 9/11.
Zelikow, the commission’s executive director, told NBC News last month that the 28 pages “provide no further answers about the 9/11 attacks that are not already included in the 9/11 commission report”. Making them public “will only make the red herring glow redder”.
This from the guy who led the charge to intentionally whitewash the Saudi role and intentionally deceive the American public. Yet these people call Edward Snowden a traitor.
But Kean, Hamilton and Zelikow clearly do not speak for a number of the other commissioners, who have repeatedly suggested they are uncomfortable with the perception that the commission exonerated Saudi Arabia and who have joined in calling for public release of the 28 pages.
It’s impossible to read the above and not conclude that senior U.S. government officials were, and continue to be, more interested in protecting their Saudi “allies” than providing justice for the thousands of innocents killed on 9/11. It should make everyone infinitely more distrustful of our crooked government.
If that’s all the “28 pages” drama achieves, I’d call that a success.
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There’s no putting this back together again…
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