Things That Make You Go Hmmm… Like The Perfect ‘Kondratieff Winter’ Storm Ahead

The following chart-heavy presentation from Grant Williams is among his best as he wends his way methodically from the 19th century to the present day (and into the future) examining “The Consequences of the Economic Peace.” From Keynes to Kondratieff and from Napoleon to Nixon, Williams looks at the ramifications of several decades of easy credit and attempts to draw parallels with a time in history when the world looked remarkably similar to how it does now (as he notes “that last time didn’t end so well, I’m afraid.”) The real day of reckoning (Williams notes rather ominously), when the unconscionable level of debt that has been built up during the fiat money era finally topples over under its own weight like the giant wave in The Perfect Storm, lies ahead of us.

 

Authored by Grant Williams via Mauldin Economics,

In 1920, a year AFTER the Treaty of Versailles, a Russian economist called Nikolai Kondratieff founded something he named The Institute of Conjuncture, at which he and a team of fellow economists studied, yes, conjuncture — or business cycles, with a particular focus on the long waves they identified within those cycles.

Over the years since Kondratieff first laid out his theory on long-wave cycles, a tremendous debate has ensued as to the usefulness of such long-term prognostication; but there is one very good reason why I (and many others) believe there to be a significant advantage gained through the study of long-wave cycles…

  • (Wikipedia): Long-wave theory is not accepted by most academic economists.

Kondratieff, being a Russian, of course took the long view.

He took Schumpeter’s four stages (expansion, crisis, recession, and recovery) and equated them to the four seasons in a year. Once he had identified what he felt to be the length of each “Spring,” “Summer,” “Autumn,” and “Winter,” Kondratieff had his “Wave;” and, as it turned out, that Wave ran for approximately 53 years.

In 1925, when he published his book The Major Economic Cycles, using existing data, Kondratieff overlaid his wave on world history and projected it forward — meaning that everything for the 89 years that followed was conjecture on his part…

How’d he do? Well, as it turns out, surprisingly well. Kondratieff nailed far too many major turns to have his work simply dismissed, and his most recent turn into Winter occurred in 2000 or, for those of you who measure the passing of time by such things, precisely at the bursting of the tech bubble.

The blue shaded area shows how far into the current Kondratieff downwave we are and — far more importantly — how much farther we have to go before things are supposed to turn around.

But what do the inner workings of a Kondratieff Winter look like? And are we in the middle of one, as a nearly 90-year-old forecast would have us believe?

Like Schumpeter’s cycles, the four seasons in a Kondratieff Wave are broken down and characterised by the phenomena usually seen during each specific phase of the full cycle.

I won’t go through all four seasons now, as we don’t have time, but rather we’ll focus on the longest phase — Winter — as it’s the one we find ourselves mired in.

And as Grant Williams goes on to describe, Kondratieff is still doing particularly well to this day…

Read the full presentation below (or via HTML here)

TTMYGH – The Consequences of the Economic Peace




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“Dr. Bitcoin Venezuela” Wages ‘Economic War’ Against Maduro’s Currency Controls

“Even though bitcoin is volatile, it’s still safer than the national currency,” said one young ‘tech-savvy’ Venezuelan, who as Reuters reports, is looking to bypass President Maduro’s dysfunctional economic controls. “I’m teaching people to use bitcoin to bypass the exchange controls,” said Gerardo Mogollon, a business professor who styles himself as “Dr. Bitcoin Venezuela,” speaks at conferences and appears in online videos to urge Venezuelans to adopt the crypto-currency.

Even small dollar transactions are out of the question for most Venezuelans since capital controls mean acquiring hard currency now means either requesting it from the state, which struggles to satisfy demand, or tapping a shadowy black market.

While bitcoin prices have fallen this year, Venezuela’s own Bolivar has also plunged against the US dollar (and a black market dollar costs 16 times more than the government rate) and so two Venezuelan-born brothers are launching ‘SurBitcoin’ exchange this week to match local buyers and sellers, explaining “In Venezuela, we have a gold fever: a bitcoin fever!”

 


As Reuters reports, Venezuela offers a glimpse of just how powerful a virtual, unregulated, non-government-controlled currency can be (despite the high volatility)…

The price of a bitcoin price has dropped 70 percent to under $350 from a peak last November, illustrating one risk of the digital currency. But Venezuela’s own bolivar currency has dropped nearly 60 percent versus the dollar on the black market here in the last year.

 

And a black market dollar costs 16 times more bolivars than the strongest Venezuelan government rate.

 

Source: Dolarparalelo.org

 

“Even though bitcoin is volatile, it’s still safer than the national currency,” said Kevin Charles, 22, who has just completed an economics degree in neighboring Colombia. Many convert the bitcoin immediately into dollars, in any case.

##And this is spreading… with no official commentary on bitcoin from Maduro on the ‘economic war’ being waged against his government…

Due to currency controls introduced by late president Hugo Chavez a decade ago, acquiring hard currency now means either requesting it from the state, which struggles to satisfy demand, or tapping a shadowy black market.

 

Even small dollar transactions are out of the question for most Venezuelans.

And so the local market for bitcoins is gathering pace in Venezuela…

Tech-savvy Venezuelans looking to bypass dysfunctional economic controls are turning to the bitcoin virtual currency to obtain dollars, make Internet purchases — and launch a little subversion.

 

“Bitcoin is a way of rebelling against the system,” said one bitcoin trader, Caracas-based software developer John Villar, 32, who discovered the usefulness of bitcoin when he wanted to buy a $10 cellphone battery on Amazon.

 

Unable to pay for it in dollars, he bought bitcoin off a friend using local currency. He then used the bitcoin to purchase an Amazon gift certificate, with which he bought the battery.

 

Gerardo Mogollon, a business professor who styles himself as ‘Dr. Bitcoin Venezuela,’ speaks at conferences and appears in online videos to urge Venezuelans to adopt the currency.

 

“I’m teaching people to use bitcoin to bypass the exchange controls,” said Mogollon, a 42-year-old professor at the University of Tachira’s graduate business school.

Currently, bitcoin trading in Venezuela is between enthusiasts who use internet forums and social media to make ad hoc deals.

Venezuela-born brothers Kevin and Victor Charles, now based in New York, are this week hoping to open the “SurBitcoin” exchange, which will match bitcoin buyers and sellers online.

 

It is the first bitcoin exchange in the socialist-run country, which already has at least several hundred bitcoin enthusiasts.

 

“In Venezuela, we have a gold fever: a bitcoin fever!”

*  *  *

We suspect this capital-control-bypassing use of virtual currencies will only grow.




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18 Sobering Facts About The Unprecedented Student Loan Debt Crisis In The US

Submitted by Michael Snyder of The End of The American Dream blog,

The student loan debt bubble in America is spiraling out of control, and it is financially crippling an entire generation of young Americans.  At this point, the grand total of student loan debt in the United States has reached a staggering 1.2 trillion dollars, and an all-time record high 40 million Americans are currently paying off student loan debts.  Just when our young people should be planning on buying homes and starting families, they find themselves financially paralyzed by oppressive levels of debt.  What makes all of this even worse is that only some of our college graduates are able to get the “good jobs” that we promised them.  So with limited job prospects and suffocating levels of debt, this generation of young Americans is increasingly putting off major life commitments such as buying a home and getting married.  As a society, we really need to rethink how we are “educating” our young people, because what we are doing now is clearly not working.  The following are 18 sobering facts about the unprecedented student loan debt crisis in the United States…

#1 According to the Wall Street Journal, the class of 2014 is “the most indebted ever“…

As college graduates in the Class of 2014 prepare to shift their tassels and accept their diplomas, they leave school with one discouraging distinction: They’re the most indebted class ever.

 

The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago.

#2 In 1994, less than half of all college graduates left school with student loan debt.  Today, it is over 70 percent.

#3 Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures.

#4 At this point, student loan debt has hit a grand total of 1.2 trillion dollars in the United States.  That number has grown by about 84 percent just since 2008.

#5 According to the Pew Research Center, nearly four out of every ten U.S. households that are led by someone under the age of 40 is paying off student loan debt right now.

#6 The median net worth of young households that have student loan debt is 20 percent lower than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education.

#7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt.

#8 In 2008, approximately 29 million Americans were paying off student loan debts.  Today, that number has ballooned to 40 million.

#9 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined

The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.

#10 According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.

#11 Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013.

#12 Debt for law school students has risen dramatically over the past decade or so

J.D.s certainly don’t come cheap. It’s almost unheard of to attend law school without taking out significant loans. What’s more, the average debt load is mounting: in 2001-2002, JDs borrowed on average $46,500 at public law schools and $70,000 at private law schools; by 2011, those numbers rose to $75,700 and $125,000, respectively.

#13 Last year it was being reported that 34.9 percent of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments.

#14 One survey found that 27 percent of those with student loan debt moved back in with their parents after college.

#15 Another survey found that 70 percent of all college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

#16 Student loan debt is causing many young Americans to delay getting married.  The following is from a recent NBC News article

While there is no specific data on student debt-related delays to marriage, a recent study by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men.

#17 Many Americans are not even using most of their student loan money to pay for college.  Instead, many are using much of that money to pay bills or stock the fridge

Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

 

 

Tommie Matherne, a 32-year-old married father of five in Billings, Mont., has been going to school since 2010, when he realized the $10 an hour he was making as a mall security guard wasn’t covering his family’s expenses. He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.

 

We’ve been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don’t have to worry about food,” says Mr. Matherne, who owes $51,600 in federal loans.

 

Some students end up going deeper into debt. Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh’s online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable.

 

“Obviously, it’s better not to use it that way if you can help it, because you’re just going to owe that much more later,” says Ms. Merritt, a former bookkeeper.

#18 Only 28 percent of Americans know that the U.S. government can garnish wages and withhold tax refunds if student loan debts are not repaid.

It should come as no surprise that the delinquency rate on student loan debt in this country is far higher than the delinquency rate on mortgages, auto loans and credit card debt.

This is a financial bubble that gets worse with each passing year, and if we continue on our current course it is going to end very, very badly.




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America Really Needs One Of These

Perhaps, in the interests of keeping its population satisfied that government is busy and working hard for the nation’s good, India has unveiled a real-time dashboard to monitor how many government workers are in attendance at any moment…

click image for fully real-time-updating version…

 

One question – if India can do this, why can’t America?




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The Schizophrenia Tormenting Our Society & Economy

Submitted by Charles Hugh Smith via Peak Prosperity blog,

What can popular television programs tell us about the zeitgeist (spirit of the age) of our culture and economy?

It’s an interesting question, as all mass media both responds to and shapes our interpretations and explanations of changing times. It’s also an important question, as mass media trends crystallize and express new ways of understanding our era.

Those who shape our interpretation of events also shape our responses.  This of course is the goal of propaganda: Shape the interpretation, and the response predictably follows.

As a corporate enterprise, mass media’s goal is to make money—the more the better—and that requires finding entertainment products that attract and engage large audiences.  The products that change popular culture are typically new enough to fulfill our innate attraction to novelty—but this isn’t enough. The product must express an interpretation of our time that was nascent but that had not yet found expression.

We can understand this complex process of crystallizing and giving expression to new contexts as one facet of the politics of experience.

The Politics of Experience

It is not coincidental that the phrase politics of experience was coined by a psychiatrist, R.D. Laing, for the phrase unpacks the way our internalized interpretation of experience can be shaped to create uniform beliefs about our society and economy that then lead to norms of behavior that support the political/economic status quo.

Here’s how Laing described the social ramifications in Chapter Four of his 1967 book, The Politics of Experience:

“All those people who seek to control the behavior of large numbers of other people work on the experiences of those other people. Once people can be induced to experience a situation in a similar way, they can be expected to behave in similar ways. Induce people all to want the same thing, hate the same things, feel the same threat, then their behavior is already captive – you have acquired your consumers or your cannon-fodder.”

For Laing, the politics of experience is not just about influencing social behavior – it has an individual, inner consequence as well:

“Our behavior is a function of our experience. We act according to the way we see things. If our experience is destroyed, our behavior will be destructive. If our experience is destroyed, we have lost our own selves.”

How the media shapes our interpretation affects not just our beliefs and responses, but our perceptions of self and our role in society. If the media’s interpretation no longer aligns with our experience, the conflict can generate self-destructive behaviors.

In other words, mass media interpretations can create a social schizophrenia that can lead to self-destructive attitudes and behaviors.

Social Analysis of TV

By its very nature as a mass shared experience, popular entertainment is fertile ground for social analysis.

Here’s a common example: what does a child learn about conflict resolution if he’s seen a thousand TV programs in which the “hero” is compelled to kill the “bad guy” in a showdown? What does that pattern suggest, not just about the structure of drama, but about the society that creates that drama?

Analyzing entertainment has been popular in America since the 1950s, if not earlier.  The film noir of the 1950s, for example, was widely deemed to express the angst of the Cold War era.  Others held that the rising prosperity of the 1950s enabled the populace to explore its darker demons–something the hardships and anxieties of the Depression did not encourage.

Many believe the Depression gave rise to screwball comedies and light-hearted entertainment featuring the casually wealthy precisely because these were escapist antidotes to the grinding realities of the era.

Even television shows that were denigrated as superficial in their own time (for example, Bewitched in the 1960s) can be seen as politically inert but subconsciously potent expressions of profound social changes: the "witch" in Bewitched is a powerful young female who is constantly implored by her conventional husband to conform to all the bland niceties of a suburban housewife, but she finds ways to rebel against these strictures.

Laing saw the potential conflict between what we experience and how we’re told to interpret that experience not just in social terms but in psychiatric terms: such splits open a gulf that can lead to a form of schizophrenia.

Diagnosing Our Disease with TV

What can we make of the popular TV series of the present era? What do they say, beneath the surface, about American society?

I contend that popular TV expresses three key aspects of U.S. society and economy that are at odds with the core idealized values espoused in civic classes and the media. The three idealized values are:

1.  America is a meritocracy—selections, admissions, etc., are based on the candidates’ merits

2.  Anyone can get ahead if they get an education and work hard

3.  America is the wealthiest nation on earth in terms of opportunity, fairness and capital

TV expresses three aspects that confound these idealized values:

1.  Life is a game in which the winner takes all

2.  The opportunity to “get ahead” via conventional means — getting educated, working hard, etc. — is a joke; only those who skirt conventions and the law get rich

3.  Life is a tortuous endurance course where those in charge demand the cruel and the impossible

Winner-Take-All Talent Shows

Let’s start with the genre that has been a dominant force in American TV since the 2000s: the winner-take-all talent show (reality and game shows).

The long-running Survivor series, for example, was a winner-take-all contest of physical prowess and political guile, while the many programs staging singing/dancing contests (American Idol, etc.) put entertainment skills to the competitive test.  A wide range of other entries stage competitions in cooking, entrepreneurship, losing weight, negotiating obstacle courses, and so on.

What interpretations of our experience do these highly competitive winner-take-all reality shows promote?

We could start with the fact that the stars (other than the hosts/judges) are apparently ordinary "every man/woman" Americans, i.e. people not unlike us.  Watching them, it is not too much of a stretch to imagine ourselves on stage, in the kitchen, etc., trying to impress the judges with our talents. It’s easy to identify with the contestants.

These shows enable us to vicariously experience the fantasy that we, too, could be on national TV and could win the accolades of the judges and fans and be the winner who takes it all.

This natural empathy with the temporarily famous with whom we can vicariously share the thrill of victory and the agony of defeat is clearly tapping a deep cultural desire to taste celebrity and the implied financial rewards of winning in an increasing winner-take-all society/economy.

Could the financial/political marginalization of the average citizen and the widening gulf between the typical household and those at the top of the fame/wealth pyramid have something to do with this fascination for winner-take-all competitions on the public stage?

Since there have been game shows on TV for decades, it could be argued that this proliferation of winner-take-all contests is nothing new. But this fails to account for the difference between a game show in which the correct answer is a fact and the subjective votes of judges, other players and the audience that count in winner-take-all contests.

I would argue that this recent explosion of competitions (“modern gladiator,” anyone?) is an expression of deeply held shared cultural values: we accept that ours is a highly competitive society, and that it is becoming even more so as the top "winners" skim the vast majority of the winnings (media visibility, wealth, adulation, social status. etc.), leaving a few morsels for the top 5% and nothing but crumbs for the bottom 95%.

But these TV programs also project the fantasy that our fight-to-the-figurative-death society is still a meritocracy — the best guy/gal wins, as judged by "experts" (or celebrities claiming expertise; the judges' expertise is structured to be unassailable, just like all the other "experts" in our society).

But if we can't win it all on merit, there is an alternative way to win: display superior political guile or greater popularity with the audience. (Interestingly, this echoes the coliseum audiences of the late Roman era, who also had some sway over who lived to fight another day on the choreographed battlefield below.)

Perhaps this helps explain our collective obsession with celebrity and the many measures of popularity available to everyone now — Instagram, Facebook likes, Twitter followers (for sale in lots of 10,000), Klout scores, and so on.

In other words, as success in the real world grows increasingly distant, vicariously competing and "winning it all" becomes very compelling. Rather than deal with the vast injustices of our system, we cling to the idealized norm that meritocracy matters, even as "winning" in real life is increasingly a game of cronyism, guile, gaming the system, misrepresenting the truth, etc. 

And so we thrill to these play-acting displays of meritocracy in action, as it confirms our cultural value system that that despite the predations of Wall Street and Washington, merit still counts.

And when all else fails, we have a fallback source of identity and "winning" — our popularity. And if we don't have enough of our own, then we can share vicariously in the popularity of TV show winners and celebrities who have reached the pinnacle.

This is the core message of an interesting and erudite half-hour talk on celebrity given by Games of Thrones actor Jack Gleeson (via correspondent Yoni F.)

"During a recent visit to the Oxford Union, Gleeson took the opportunity to dismantle the ‘religious hysteria’ of celebrity worship with an appropriately epic rant, breaking down the economic, psychological, and sociological catalysts for public reverence of celebrities and their negative impact on society as a whole."

Gleeson draws upon a number of intellectual sources (Weber, Baudrillard, et al.) in his discussion of the contemporary culture of celebrity, and concludes that celebrity fills the void left when development of an authentic self is stunted. 

The parallel with Laing’s “lost self” is striking.

In effect, when the opportunities for developing an authentic self have been reduced to popularity, public visibility and the status that flows from these forms of recognition, then the worship of celebrity and the aching desire for a moment in the spotlight become rational substitutes for a True Self.

As these wispy contingencies can never form an authentic selfhood, even those who do "win" the competition for celebrity are ultimately dissatisfied and disillusioned.

My conclusion:  the popularity of competitive winner-take-all TV programs reflects the paucity of opportunities for selfhood and the substitution of celebrity worship for the difficult task of forging an independent identity in a society that marginalizes all but the top players.

If this isn’t a form of cultural schizophrenia, then what exactly is it? The claim that this is all just good clean fun is absurd, as is the claim that it’s perfectly healthy to sacrifice one’s identity in a competition for recognition that 99.9% of us are sure to lose.

In Part 2: Desperately Seeking Substance, we examine a darker reflection of this widening divide between a handful of “winners” and everyone else. Modern culture's pursuit of celebrity, winner-take-all excess, and superficiality is resulting in a national case of social depression. A good argument can be made that we need to take stock of the rationale for our current values, as they don't appear to be serving our interests that well.

Click here to access Part 2 of this report (free executive summary; enrollment required for full access)




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Want To Score High On The SAT? Pick Rich Parents

While money (reportedly) can’t buy love, it appears, according to The WSJ, that it can buy brains.On average, based on calculations from FairTest, students in 2014 in every income bracket outscored students in a lower bracket on every section of the test. Rather stunningly, students from the wealthiest families outscored those from the poorest by just shy of 400 points. As WSJ’s Josh Zumbrun so poetically notes, perhaps SAT should more appropriately stand for Student Affluence Test.

 

 

As The Wall Street Journal explains, students from the wealthiest families outscored those from the poorest by just shy of 400 points.

Given the widespread use of the SAT in college admissions, the implications are obvious: Not only are the wealthiest families best equipped to pay for college, their kids on average are more likely to post the sort of scores that make admissions easy.

 

Thus the SAT is just another area in American life where economic inequality results in much more than just disparate incomes. And making matters worse, some employers continue to ask for test scores years after graduation.

 

 

It’s tempting to believe the disparity in results arises because wealthy parents can easily afford SAT prep courses to help students game the test by learning its tricks. But some research suggests test prep has a fairly limited effect on scores. One study found that testing boosts math scores by 14-15 points and reading scores by 6-8 points.

Yet the gaps between rich and poor students are far larger than what could be produced by test prep alone. If the disparity were merely caused by test prep, that would perhaps be comforting, because an obvious solution would be: Provide everyone with test prep.

And so a vicious circle develops…

But if the phenomenon arises from a confluence of factors, that makes it all the harder to remove income gaps from standardized tests. Family wealth allows parents to locate in neighborhoods with better schools (or spring for private schools). Parents who are themselves college educated tend to make more money, and since today’s high school seniors were born in the mid-1990s, many of the wealthiest and best-educated parents themselves came of age when the tests were of crucial importance. When the SAT is crucial to college, college is crucial to income, and income is crucial to SAT scores, a mutually reinforcing cycle develops.

*  *  *
Conclusion: Once again it is crucial to your realization of The American Dream that you pick your parents wisely.

*  *  *
We’re going to need some more government intervention to ‘fix’ this…




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Leon Panetta Says Brace For 30 Year War With ISIS

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

"I vividly recall how, in the wake of Osama bin Laden’s killing, Obama partisans triumphantly declared that this would finally usher in the winding down of the War on Terror. On one superficial level, that view was understandable: it made sense if one assumes that the U.S. has been waging this war for its stated reasons and that it hopes to vanquish The Enemy and end the war.

 

But that is not, and never was, the purpose of the War on Terror. It was designed from the start to be endless.”

 

– Glenn Greenwald, in his latest piece for the Intercept

Leon Panetta is pretty much the epitome of a status quo insider. Someone, who due to his influence and mainstream veneer of respectability, is capable of inflicting an almost inconceivable amount of damage to freedom and prosperity in America. In fact, you could say that Mr. Panetta is as responsible as almost anyone else for the banana republic laughing stock that this nation has been transformed into over the past several decades. Why? Because he served in top positions for several of America’s Presidents over that time.

He started out working for Richard Nixon, before switching parties and serving nine terms as a Democratic Congressman from California. He then served the Clinton Administration, including as Chief of Staff. Most recently, he was head of the Department of Defense and the CIA under Obama. This is an extremely political animal.

His ties run deepest with the Clintons, and while he criticizes Obama heavily in his new book, he excitedly proclaims that Hilary Clinton would be “great president,” and that “one thing about the Clintons is, they want to get it done.”

I’m sure they do, but get what done exactly. In the case of of Bill Clinton, it was dismantling Glass Steagall, and fully turning over the entire U.S. economy and public policy to financial oligarchs.

Think I am exaggerating? In a recent USA Today interview, we can clearly see exactly what “getting it done” would mean during a Hilary Clinton Presidency: Endless War.

USA Today reports that:

“I think we’re looking at kind of a 30-year war,” he says, one that will have to extend beyond Islamic State to include emerging threats in Nigeria, Somalia, Yemen, Libya and elsewhere.

 

In the book’s final chapter, however, he writes that Obama’s “most conspicuous weakness” is “a frustrating reticence to engage his opponents and rally support for his cause.” Too often, he “relies on the logic of a law professor rather than the passion of a leader.” On occasion, he “avoids the battle, complains, and misses opportunities.”

Yeah, well Hitler was a pretty passionate leader.

Screen Shot 2014-10-07 at 12.15.08 PM

Back to USA Today…

Panetta also argues that there is time for Obama to change tactics and recover — and that it is imperative he do so.

 

He makes a similar observation about Hillary Clinton, saying she would be a “great” president. “One thing about the Clintons is, they want to get it done,” he says, in words that draw an implicit contrast with Obama. “When it comes to being president of the United States, it’s one thing to talk a good game. It’s another thing to deliver, to make things happen.”

 

“He may have found himself again with regards to this ISIS crisis. I hope that’s the case. And if he’s willing to roll up his sleeves and engage with Congress in taking on some of these other issues, as I said I think he can establish a very strong legacy as president. I think these next 2 1/2 years will tell us an awful lot about what history has to say about the Obama administration.”

Think about that deeply for a moment. He thinks Obama may have “found himself again with regards to this ISIS crisis.” This is quite telling, since what has characterized Obama’s ISIS policy, is him launching an illegal war that makes George W. Bush look like a constitutional scholar. According to Panetta, that decision characterizes Obama “finding himself.” Naturally, what appeals to Panetta most about Hilary Clinton is her bloodlust for more war. Glenn Greenwald chimes in:

Leon Panetta, the long-time Democratic Party operative who served as Obama’s Defense Secretary and CIA Director, said this week of Obama’s new bombing campaign: “I think we’re looking at kind of a 30-year war.” Only in America are new 30-year wars spoken of so casually, the way other countries speak of weather changes. He added that the war “will have to extend beyond Islamic State to include emerging threats in Nigeria, Somalia, Yemen, Libya and elsewhere.” And elsewhere: not just a new decades-long war with no temporal limits, but no geographic ones either. He criticized Obama – who has bombed 7 predominantly Muslim countries plus the Muslim minority in the Phillipines (almost double the number of countries Bush bombed) – for being insufficiently militaristic, despite the fact that Obama officials themselves have already instructed the public to think of The New War “in terms of years.”

 

Then we have Hillary Clinton (whom Panetta gushed would make a “great” president). At an event in Ottawa yesterday, she proclaimed that the fight against these “militants” will “be a long-term struggle” that should entail an “information war” as “well as an air war.” The new war, she said, is “essential” and the U.S. shies away from fighting it “at our peril.” Like Panetta (and most establishment Republicans), Clinton made clear in her book that virtually all of her disagreements with Obama’s foreign policy were the by-product of her view of Obama as insufficiently hawkish, militaristic and confrontational.

 

At this point, it is literally inconceivable to imagine the U.S. not at war. It would be shocking if that happened in our lifetime. U.S. officials are now all but openly saying this. “Endless War” is not dramatic rhetorical license but a precise description of America’s foreign policy.

 

Just yesterday, Bloomberg reported: “Led by Lockheed Martin Group (LTM), the biggest U.S. defense companies are trading at record prices as shareholders reap rewards from escalating military conflicts around the world.” Particularly exciting is that “investors see rising sales for makers of missiles, drones and other weapons as the U.S. hits Islamic State fighters in Syria and Iraq”; moreover, “the U.S. also is the biggest foreign military supplier to Israel, which waged a 50-day offensive against the Hamas Islamic movement in the Gaza Strip.” ISIS is using U.S.-made ammunition and weapons, which means U.S. weapons companies get to supply all sides of The New Endless War; can you blame investors for being so giddy?

 

I vividly recall how, in the wake of Osama bin Laden’s killing, Obama partisans triumphantly declared that this would finally usher in the winding down of the War on Terror. On one superficial level, that view was understandable: it made sense if one assumes that the U.S. has been waging this war for its stated reasons and that it hopes to vanquish The Enemy and end the war.

 

But that is not, and never was, the purpose of the War on Terror. It was designed from the start to be endless. Both Bush and Obama officials have explicitly said that the war will last at least a generation. The nature of the “war,” and the theories that have accompanied it, is that it has no discernible enemy and no identifiable limits. More significantly, this “war” fuels itself, provides its own inexhaustible purpose, as it is precisely the policies justified in the name of Stopping Terrorism that actually ensure its spread (note how Panetta said the new U.S. war would have to include Libya, presumably to fight against those empowered by the last U.S. war there just 3 years ago).

As I outlined in my post, The American Public: A Tough Soldier or a Chicken Hawk Cowering in a Cubicle? Some Thoughts on ISIS Intervention, as long as the citizenry remains in a fetal position praying for the return of a middle-class lifestyle that is not coming back without concerted effort and struggle, it will continue to be slaughtered like sheep and milked like cows.




via Zero Hedge http://ift.tt/1v3FgsF Tyler Durden

Finally, Here Come The Banks: “Ebola Is A Tail-Risk That Can No Longer Be Ignored”

Barclays' FX Research team explains why Ebola can no longer be ignored…

 

 

1. Is Ebola a significant market risk?

Before the current Ebola outbreak began in December, the disease was already notorious and fear inspiring despite having afflicted only 2,345 people in the 37 years since its discovery, nearly all of whom were in remote villages in Central Africa and 1,546 of whom died. Yet, as long as sporadic outbreaks remained contained and confined, it had little impact on the global economy or markets. The current outbreak in West Africa may be changing that.

The West African Ebola outbreak that began in Guinea is notably different from prior outbreaks in ways that significantly increase its chances of having a broader impact. In particular, Ebola’s likelihood of spreading to larger, more integrated economies has increased. It remains a tail risk, but has jumped in probability to one that can no longer be ignored.

There are several important differences between this Ebola outbreak and previous episodes.

First is its size: confirmed cases and mortalities – 4,087 and 2,071, respectively – already are greater than all prior outbreaks combined and growing at an uncontrolled pace. Including probable and suspected cases increases those numbers to 7,470 and 3,431, respectively (Figure 1), and both the US Centers for Disease Control (CDC) and the World Health Organization (WHO) believe these numbers are underestimated, perhaps by a factor of 2.5.

 

Second, the current outbreak is more urban than prior outbreaks, with Freetown, Sierra Leone and Monrovia, Liberia being among the hardest hit areas.

Third, and perhaps most importantly, the current outbreak is on the edge of a vast, densely populated area of 334 million people that is an ideal breeding ground for disease (Figure 3). As Robert Kaplan described it 20 years ago when its population was about half as large, “the Lome-Abidjan coastal corridor – indeed, the entire stretch of coast from Abidjan eastward to Lagos – is one burgeoning megalopolis that by any rational economic and geographical standard should constitute a single sovereignty, rather than the five (the Ivory Coast, Ghana, Togo, Benin, and Nigeria) into which it is currently divided.” Somewhat presciently, Kaplan noted this densely populated, impoverished, crime-ridden area was a perfect Petri dish for pestilence.

Figure 2 presents statistics on some of the socio-economic and health factors that make the region particularly susceptible to disease. The region’s young population – median age is 18.3 years – suffers the worst of poverty’s fellow travellers, including low literacy rates, poor access to clean water and to improved sanitation, and few health professionals and facilities. Illiteracy and residual warlordism from recent civil wars were key contributors to the rapid spread of Ebola in Sierra Leone and Liberia as health workers had difficulty educating a distrustful population on prevention, and in cases have been attacked on rumors they brought the disease. Making matters worse, Ebola has disproportionately stricken healthcare workers, reducing already low ratios to the general population.

A fourth difference is an active debate over how contagious the virus is now and what its potential to become more contagious is. Researchers have established that Ebola’s genetic structure is subject to a rapid pace of mutation and have documented numerous genetic changes to the virus, Zaire ebolavirus, one of five documented strains of Ebola, both from previous outbreaks and since the current outbreak began. The implications of these changes for the virus’s behaviour and morbidity are not yet known and will require significant further study. Health officials and researchers are not in agreement about the virus’s current and potential means of transmission. The WHO and CDC maintain that Ebola can only be transmitted via direct contact of an infected, symptomatic person’s bodily fluids with open lesions or with mucus membranes. Yet, the Public Health Agency of Canada and the Federation of American Scientists warn that aerosolized transmission, though unconfirmed in human-to-human transmission, has been documented in non-human primates and pigs.

Adding to the debate over the contagiousness of the strain of Ebola behind the current West African outbreak is its rapid expansion and higher-than-usual rate of infection of health professionals. The current outbreak is between 6.8 and 12.4 times larger – confirmed versus suspected cases – than the next largest outbreak, the first one in (then) Zaire and Sudan in 1976. As noted above, this may reflect a slow initial response combined with cultural differences between West Africa and Central Africa. But the higher rate of infection among health professionals is more difficult to explain. Through late August, the latest date for which complete statistics were available, 120 healthcare professionals had died from Ebola, or roughly 8% of confirmed, probable and suspected cases. By comparison, in the 1976 outbreak, when Ebola was an unknown new pathogen, 11 healthcare workers died from the disease, 2% of total deaths. Among the health professionals killed by the disease were five of 58 authors of the genomic study of the current outbreak, cited above, including Sheik Humarr Khan, an expert on hemorrhagic fevers and director of the Lassa fever program for the Sierra Leone Ministry of Health and Sanitation.

A more robust domestic and international response may still turn the tide of Ebola. The spread of the West African outbreak to both Senegal and to Nigeria was quickly contained and no new cases have manifest. In the last month, global attention has increased and with it resources devoted to combating the disease’s spread. Indeed, there already are signs that its pace of expansion has slowed.

 

Figure 4 plots the rate of growth of new Ebola infections – confirmed; confirmed and probable; and confirmed, probable and speculated – at a monthly rate between WHO situation reports (the longer time series in Figure 1 is for combined confirmed, probable and suspected cases). All three measures have fallen sharply to just under 50% per month since the surge of the late summer, when the average rate of change at a monthly rate rose to over 100%. However, this only takes the rate of expansion back to its July level, and the late summer surge may have reflected improved accounting. Furthermore, the geographic distribution of new cases continues to expand within Guinea, Liberia and Sierra Leone, and is expanding towards Côte d’Ivoire.

A strong external response may reinforce the trend of slowing expansion and ultimately contain and extinguish the West African outbreak. If it does not and Ebola’s eastward expansion continues at even the reduced current pace into the more populous countries of West Africa, the mathematics of geometric progression implies terrifyingly large numbers of cases in the not-distant future. The path of cumulative Ebola cases is projected, in log scale, in Figure 5 under two growth rate assumptions: the average rate of growth of confirmed cases since end June (66% per month) and since end August (54%). Both paths are more conservative than the CDC’s projection of 550,000 cases by January – even more so relative to the CDC’s “worst-case scenario” of 1.4 million – because the CDC includes probable and suspected cases in their starting point. But even more conservative projections that start with only confirmed cases and use the slower September growth rate suggest that there could be 1 million cases by the first week of August, 2015. If growth averaged its June-September pace, there could be 1 million cases by the second week of June 2015.

 

Case numbers that large raise the probability that Ebola could become endemic – that is permanently resident – in the West African population of 334 million. Beyond the human tragedy that implies for West Africa, the prospect of endemicity increases the probability of Ebola having a greater impact on the global economy and financial markets. Afflicted countries’ relatively small weight in global GDP, trade and financial markets so far has limited Ebola’s effects on global markets despite an already larger-than-SARS death toll.10 But a sustained outbreak in a larger or more globally integrated economy likely would have a significant impact on global markets.

That endemicity of Ebola to West Africa, or even a larger outbreak, greatly increases the chances of the disease breaking out to other more economically integrated economies is evident in the fact that cases have already been confirmed in Dallas, Texas and Madrid, Spain despite an outbreak of only 7,000 people in three small countries without direct air traffic to either the United States or Spain. If the projections in Figure 5 are fulfilled – much less the worse estimates of the CDC – the likelihood of Ebola spreading to other economies would rise sharply. The economic and market effects of sustained global outbreaks is another source of uncertainty, undertaken in the next question.

2. What lessons does SARS hold for Ebola?

The 2003 SARS outbreak, primarily in East Asia, is a good starting point for analysis of the potential effects on economies and on global financial markets of an expansion of Ebola outside of West Africa. But one of the lessons from the SARS experience is that it may not be an appropriate analogue for a possible Ebola breakout from Africa.

Barclays re-examined some of the lessons of the SARS episode for Asian economies in Revisiting Asia’s SARS experience, 20 August 2014. Among the lessons: 1) supply disruptions were minimal because the disease did not afflict enough people to curtail labor supply meaningfully; 2) the primary impact was a panic-driven decline in demand, especially for local services and for tourism, but there was some short-lived effect on trade and investment as decisions were delayed due to uncertainty; 3) once the disease was controlled and panic subsided, activity rebounded rapidly.

There are important differences between the SARS and West African Ebola outbreaks, however, both in current fact and in potential. SARS, an airborne respiratory virus, is more contagious than Ebola, but only about 1/8th as lethal. The greater lethality of Ebola, if its spread continues, may imply a supply effect for currently affected economies that was not present with SARS, especially in the dominant, labor-intensive agrarian sector. SARS afflicted several economies that were deeply integrated in the global economy, including Canada, China, Hong Kong, Singapore, Taiwan, and Vietnam; whereas Ebola is confined to much smaller, much less globally integrated economies. The SARS afflicted economies also benefitted from much better health statistics than do West African economies (see Figure 3). As noted in Question 1, this may explain Ebola’s rapid spread in the current outbreak.

The more interesting differences may be around potential. If Ebola continues to expand as explored in Question 1 and becomes endemic to West Africa, its then likely eruptions into the broader world also may be different from the SARS experience. First, while Ebola is not now as contagious as SARS, its greater mortality likely will inspire as much panic as SARS. But the difference with SARS would be that the persistence of a large human host reservoir would mean any panic may not fade as rapidly, particularly if it spawned sporadic mini outbreaks.

Second, the persistence of a large human host reservoir in West Africa would increase the probability that Ebola became epidemic or even endemic elsewhere in two ways: the continuous flare-ups of outbreaks would give the virus more chances to take hold elsewhere; and, as discussed in Question 1, a human host reservoir would give it greater opportunity to evolve into a more communicative, higher morbidity disease. SARS never became epidemic or endemic anywhere, and as such was not able to significantly affect the supply chain of the global economy. A sustained outbreak of a high mortality disease like Ebola in any large or important economy in the global supply chain would imply significantly larger impact than SARS caused.

3. What do you need to monitor and what could be Ebola’s effects?

As noted above, for Ebola to become a serious market risk, it needs to more acutely threaten demand or supply in larger or more economically integrated economies. Ebola’s threat to the global economy and markets would increase markedly if it either became endemic to West Africa or became more contagious and increased its rate of morbidity. But the response of larger, more economically integrated countries to any breakouts of the West African Ebola virus is likewise important.

What should investors monitor to assess the risks to markets from Ebola? In our view, three things:

1. A sustained pace of expansion within West Africa, or conversely containment and recession that eliminates the likelihood of endemicity;

 

2. Evidence of increased contagiousness among new cases, either due to new transmission vectors (like aerosol) or a longer period of asymptomatic contagion;

 

3. The success of countries outside of West Africa in containing the periodic cases that likely will escape the region, or already have in the case of Dallas, Texas.

Ebola’s expansion can be monitored in WHO situation reports on the West African Ebola outbreak: does the rate of infection continue to slow and remain restricted to Guinea, Liberia and Sierra Leone, or does it expand to new countries and sustain a rapid pace of expansion? Monitoring contagiousness is more difficult as it will be months before even preliminary analyses of the already documented changes in the Ebola genome are mapped to phenotypical outcomes (physical or chemical changes that determine the virus’s survival and means of replication). The sole case of Ebola in Dallas, Texas is simultaneously concerning and reassuring. There are already several well documented missteps in containment of the victims’ contacts, and yet the lack of further infections – so far – is reassuring that Ebola may be less dangerous in wealthier, healthier societies.

If Ebola becomes endemic and more contagious, its threat to the global economy and markets likely will be greater than SARS’ impact in 2003. Without endemicity in West Africa, mishandled outbreaks outside of Africa may have more temporary, SARS-like effects on local economies and markets. The greatest potential impact of Ebola is a combination of the two: endemicity and/or greater contagiousness combined with a mishandling of an outbreak outside of West Africa. That combination, for the reasons noted in Question 2, likely would have a significantly greater impact on the global economy, perhaps through both demand and supply channels, and as such on global financial markets.

Endemicity of Ebola in West Africa that spawned continuous periodic outbreaks elsewhere, or more destructively a sustained outbreak in a large or globally integrated economy, likely would lead to lower average growth with greater volatility, lowering risk free yields and increasing risk asset spreads. Those countries that best demonstrate their ability to avoid contagion, or best manage Ebola outbreaks when they occur, likely will see lower risk premia attached to their assets and higher equilibrium exchange rate values.

It must be emphasized again that endemicity of Ebola anywhere – including West Africa – remains a tail risk. But it is a tail risk that has left the fringes.




via Zero Hedge http://ift.tt/1qkf8Cb Tyler Durden

Lois Lerner’s Revenge: Anti-Obamacare Filmaker is Hit with IRS Audit

Screen Shot 2014-10-08 at 3.49.52 PMThere are many systemic reasons why America continues to circle the toilet bowl toward a full fledged oligarchic Banana Republic. I’ve spent the last couple of years highlighting many of them here on these pages. Nevertheless, all of them pale in comparison with the disappearance of the rule of law. When the rule of law ceases to apply to the rich and powerful, a society ends up suffocating within a culture of theft, an endless stream of cronyism and criminality.

At such a stage, politicians, Wall Street oligarchs, the military-industrial complex, police departments, government agencies, etc, all go hog wild with corruption. The IRS is a perfect example.

With the failure to hold Lois Lerner accountable for anything, the agency is now even more out of control than it was before. Recently, we heard about a plan to tax companies that provide free lunches to employees. Now it appears they are back to targeting people with whom they disagree politically.

The Daily Caller reports that:

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