Tag: news

Submitted by Mac Slavo via SHTFPlan.com,

Territorial disputes are a delicate thing… and potentially deadly as well.

That’s why the U.S. is backing up its positions with an ever-increasing presence of warships  in the South China Sea.

China is very touchy about these territories, and unwilling to give up what they perceive as their waters, even as a UN tribunal just denied their claims and strengthened the U.S. hand.

Indeed, the entire situation is combustible and very dangerous.

As James Holbrooks of the Underground Reporter noted:

In a congressional hearing on Wednesday, former Director of National Intelligence and retired Navy admiral Dennis Blair told the panel that the United States should be prepared to use military force to oppose Chinese aggression in the South China Sea.

 

“I think we need to have some specific lines and then encourage China to compromise on some of its objectives,” Blair, who headed the U.S. Pacific Command while in the Navy, said at the hearing.

 

The admiral’s recommendation came the day after a United Nations tribunal invalidated China’s claim of territorial rights to nearly all of the waters in the South China Sea.

 

The U.S., citing the territorial dispute and security concerns raised by its allies in the region, have for months been sending warships into the South China Sea as a check against Chinese hostility.

 

Beijing, acutely aware of the military buildup off its coast, has publicly warned the U.S. it’s more than ready to defend against provocations. “China hopes disputes can be resolved by talks… but it must be prepared for any military confrontation.”

It seems that the situation is being deliberately stoked into conflict, and that tensions are programmed to reach a boiling over point. If true, there is no indication of where the point of no return would be.

The U.S. has the excuse of protecting its ally, and former territory, the Philippines, and thus has a pretext to play policeman in the region.

But in turn, that is only a thinly-veiled ruse to amplify the military pressure, and let bloated speech and menacing saber-rattling episodes set the tone for ‘diplomacy’ with the Red Dragon.

Now, there is not only an escalation, but an acknowledgement on both sides of the Pacific that things are headed towards war – and it is being openly discussed in those stark terms:

“If our security is being threatened, of course we have the right to demarcate a zone,” Vice Foreign Minister Liu Zhenmin said Wednesday at a briefing in Beijing. “We hope that other countries will not take this opportunity to threaten China and work with China to protect the peace and stability of the South China Sea, and not let it become the origin of a war.”

 

And war, it appears, is becoming increasingly likely by the day — with other countries in Southeast Asia beginning to take sides.

 

[…]

 

So, with the U.S. demanding compromise from a China who refuses to bow down — and forcing local powers to choose sides in the process — it seems the stage is being set for a potential military conflict in the South China Sea that could engulf the entire region.

Are we really to expect a looming world war from China, who has played the parts of villain, ally, trade partner and rival all at the same time?

No one can say, but there is plenty of worry that war could really happen. Even billionaire George Soros warned that the potential danger of WWIII breaking out with China was ‘not an exaggeration’:

The US government has little to gain and much to lose by treating the relationship with China as a zero-sum game. In other words it has little bargaining power. It could, of course, obstruct China’s progress, but that would be very dangerous. President Xi Jinping has taken personal responsibility for the economy and national security. If his market-oriented reforms fail, he may foster some external conflicts to keep the country united and maintain himself in power. This could lead China to align itself with Russia not only financially but also politically and militarily. In that case, should the external conflict escalate into a military confrontation with an ally of the United States such as Japan, it is not an exaggeration to say that we would be on the threshold of a third world war.

And yet, President Obama and numerous other U.S. officials have been deliberately stoking the tension and adding fuel to the fire with provocation in the disputed waters.

As Michael Snyder wrote several months ago:

Barack Obama sent a guided missile destroyer into disputed waters in the South China Sea to see if the Chinese would start shooting at it. Yes, this is what he actually did. Fortunately for us, the Chinese backed down and did not follow through on their threats to take military action. Instead, the Chinese have chosen to respond with very angry words. The Chinese ambassador to the United States, Cui Tiankai, says that what Obama did was “a very serious provocation, politically and militarily.” And as you will see below, a state-run newspaper stated that China “is not frightened to fight a war with the US in the region”. So why in the world would Obama provoke the Chinese like this? Yes, the Chinese claims in the South China Sea are questionable. But there are other ways to resolve things like this.

 

Most Americans assume that an actual shooting war between the United States and China is not even within the realm of possibility, but many of our leaders see things very differently. For instance, just check out what CIA Deputy Director Michael Morell thinks…

 

The current posturing in the area has led to heightened tensions between the world’s preeminent military powers, and in May Former CIA Deputy Director Michael Morell told CNN that the confrontation indicates there is “absolutely” a risk of the U.S. and China going to war sometime in the future.

Not long ago, the U.S. also demonstrated ballistic missiles – armed with nuclear warheads – over the coast of California in an apparent demonstration towards China regarding the readiness and seriousness of their clash.

Though it isn’t on the front burner right now amid other sensational headlines, keep an eye to the fact that World War III is slowly being brewed on the back burner. Someday, it could ignite into a full blown nightmare. Stay vigilant. Hope for peace, prepare for war.

via http://ift.tt/29OhPyc Tyler Durden

Just over a month ago, Deutsche Bank’s chief economist David Folkerts-Landau, unleashed an epic rant against the ECB, warning of social unrest and another great depression unless the ECB changes its ways. Some thought that DB was genuinely concerned about central planning, and was urging the ECB to stop all intervention altogether, but that naive read was quickly stomped out just one week ago when it emerged that the Deutsche Bank economist was merely acting out of purely selfish reasons when he called for a €150 billion bailout of Europe’s banks, with the unspoken demand that Deutsche Bank should be on the very top.

Finally, any doubt was squashed this weekend, when DB’s macro strategist Alan Ruskin issued a positively glowing review of Helicopter Money, barely stopping short of demanding it be unleashed immediately. To wit:

Because Helicopter money is less directed at using currency weakness as a core transmission mechanism than QE or particularly negative rates, Helicopter money should be more, rather than less acceptable to an international community worried about currency wars

What was less emphasized is that unlike NIRP, “helicopter money”, if it works, pushes the long end of the yield curve higher ahead (after all the endgame is soaring, if not hyper, inflation), something the global banking sector cripped by trillions in debt,desperately needs, and thus is precisely what Deutsce Bank needs, whose stock continues to trade just barely off all time lows.

As such, any delusions that DB was raging against failed monetary policy in general can be forgotten. All DB wanted was monetary policy that benefits, drumroll, Deutsche Bank… as the following amusing DB table “ranking” various monetary approaches shows. Needless to say, DB really likes helicopter money.

So, for those who care, here is Deutsche Bank’s evelator pitch for why helicopter money should be next:

• We have evolved to the point where familiarity with QE breeds acceptance, while unfamiliar ‘helicopter money’ policy, unfairly breeds contempt.
• Compared with the scale of QE liquidity dropped into financial institutions, piling up in the form of excess reserves, the exante and expost calibration of Helicopter money can be considered almost surgical.  Helicopter money legacy issues are miniscule compared with the QE overhang of liquidity in the system, and a costly and bloated Central bank balance sheet, which is so difficult to reverse.
• QE forces a substitution into riskier assets, which is another way of saying it inflates and distorts the price of risky and less risky assets, with implications for all balance sheets, and inter-temporal economic decisions. Helicopter money is less likely to distort every asset price in the economy, when compared with deliberate financial repressive policies like QE and negative rates.
• One of the big criticisms of helicopter money is that it is open to political abuse and that the coordination of fiscal and monetary policy, threatens Central Bank independence. This is less of a worry if there is a clear institutional framework whereby the Central Bank has the final say on whether to participate in any helicopter scheme or not, and they can ‘right size’ the stimulus.
• If one has to be cautious about Helicopter money it is less about whether it can be successful, and more about how in these times of excessive demand management, any effective tool is apt to be used to the point of abuse.
• Helicopter policy that successfully supports growth (with contemporaneous rightward shifts of the IS and LM curve) inclusive of favorable multiplier effects, will likely temporarily drive nominal interest rates higher, and the question for real interest rates (that with nominal rates is a key FX driver) is whether inflation expectations rise more rapidly than nominal rates.
• Carefully calibrated and contained Helicopter actions, by an independent and historically credible Central Bank (not an oxymoron), would likely have a contained impact on inflation expectations. This is especially true, if Helicopter money is pursued in emergency deflationary circumstances. As such, any initial kneejerk selling of a currency when a G10 country pursues a measured Helicopter solution that is befitting of its large disinflationary output gap, is likely to be a medium-term buy the currency dip opportunity.
• Because Helicopter money is less directed at using currency weakness as a core transmission mechanism than QE or particularly negative rates, Helicopter money should be more, rather than less acceptable to an international community worried about currency wars.

Some more details:

Compare the graphic moniker ‘helicopter money’ with the liquidity creation known as “QE’. ‘Helicopter money’ evokes pictures of a 100 trillion Zimbabwean dollar note that once bought two loaves of bread. ‘QE’ in contrast is an austere word, well-suited to the economics of Scrabble, depicting familiar unorthodox policies, and surely something infinitely more responsible? Wrong. In our opinion, QE represents poorly calibrated liquidity dropped into financial institutions, piling up in the form of excess reserves, while the calibration of Helicopter money can be almost surgical in comparison.

 

 

One of the biggest differences between QE and ‘Helicopter money’ is that QE is not overtly coordinated with fiscal stimulus – even if it may have a covert fiscal objective. Japan QE is a good example of this, buying close to 16% of GDP per annum in QE related assets. The BOJ has accumulated assets of more than 50% of GDP which largely covers the total expansion in General Government debt over this period. A possible conversion of Central Bank holdings of debt to zero coupon perpetuals is one example of the market discourse on how monetary policy QE can ultimately help debt management. Securing fiscal sustainability through public sector debt ‘write-offs’, is a job for which QE is better equipped than helicopter money, where the fears on the latter are centered on ‘inflating debt’ away.

 

* * *

 

Helicopter policies are not advocated in ‘a normal world’. They are however almost inevitable in the next recession, if this is indeed a world of where secular stagnation with unusually low equilibrium real interest rates are prevalent. The good news is that these policies have been given ‘a bad rap’. You may have heard the joke about the helicopter money dropped on country A where recipients saved it, country B that spent it, and country C where the citizens simply returned the money to the police. The point being that the impact of helicopter money cannot be perfectly calibrated, but it is almost surgical when compared with the scatter shot impact of the unorthodox policies currently pursued.

 

We have evolved to the point where familiarity with QE breeds acceptance, while unfamiliar helicopter money unfairly breeds contempt. If one has to be cautious about Helicopter money it is less about whether it can be successful, and more about how in times of desperate/excessive demand management an effective policy tool is apt to be used to the point of abuse

But most of all whether it can bail out Deutsche Bank. Thanks Alan, we get it.

* * *

Finally, here is One River’s CIO, Eric Peters, with an anecdote why Helicopter Money – and its associated big inflation – is coming, but why a major crisis will be needed first.

Anecdote: “Has Brexit created the political Lehman moment?” asked the CIO on the outskirts of the Eurozone. We were discussing whether Britain’s populist revolt is the catalyst for a global fiscal stimulus, or if this latest risk-asset rally in anticipation of more stimulus is another bounce to fade.

 

“Has Brexit absolved markets of the need to fall sharply?” he continued. You see, the way this usually works is that economic weakness provokes a deep market decline that sparks public panic. Protest. And under the cover of crisis, policy makers ease aggressively, reform.

 

So in normal circumstances, at 1,700 in the S&P 500 you’d expect stimulus. And at 2,150 you’d expect nothing. But we no longer live in normal circumstances.

 

“For fiscal stimulus to be big enough, it must come from Japan and Europe, China too.” A 10trln Yen stimulus seems pretty well discounted. Yamamoto has pushed for a 3-year 30trln Yen package. Satoshi Fujii has pushed for 37trln Yen. “Will they pull out the bazooka? That’s hard without the explicit use of helicopter money, which remains off limits for now. But they’ll do enough to make this work.”

 

Of course, Europe is another story. Germany must let their southern neighbors cheat on deficits and bank recapitalizations. “Spanish election showed if you let them cheat and growth surprises positively then extremists don’t do so well. Europe can only survive as an inflation zone. Will it be formally tolerated? Probably not. Will governments cheat anyway with ECB support?” Probably.

 

“So Japan will be the flag bearer of fiscal stimulus.”
Which will be sufficient to breath some inflationary spirit into the
system. “But this is all febrile and can get over-turned by the
slightest change in wind direction,” he said, tentative.

 

“This will be the little inflation before the big helicopter-driven inflation.”

 

But that will first require a crisis.

We agree, and look forward to just what this massive crisis is that unleashes the final episode of monetary lunacy.

via http://ift.tt/29HVxeH Tyler Durden

Authored by Paul Craig Roberts,

Today is the second anniversary of the downing of Malaysia Airlines Flight 17, and we still do not know the explanation.

Washington and its European vassal politicians and media instantly politicized the event: The Russians did it. End of story. After 15 months of heavy anti-Russian propaganda had imprinted the message on peoples’ minds, the Dutch Safety Board issued its inconclusive report.

By then, it was irrelevant what the report said. Everyone already knew that “the Russians did it.”

I remember when pre-trial media accusations resulted in dismissed cases. Anyone declared guilty prior to presentation of evidence and conviction was considered to have been convicted in advance and unable to receive a fair trail. Such cases were dismissed by judges.

Washington’s story never made any sense. Neither Russia nor the separatists in the Donetsk region had any reason to shoot down a Malaysian airliner. In contrast Washington had enormous incentives as Washington’s propaganda machine could place the blame on Russia and use the incident to compel European governments to accept Washington’s sanctions placed on Russia.

It worked for Washington. Washington successfully used the incident to wreck Europe’s political and economic relationships with Russia.

Four months into the anti-Russian propaganda campaign, a website called Bellingcat, claiming to be an open source site for citizen journalists, but which could be a MI-5, MI-6, or CIA front, issued a report that the Buk missile was fired by a Russian unit, the 53rd Buk Brigade, based in the Russian city of Kursk. This allegation exposed the propaganda for what it is.

Whereas it is possible that separatists unfamiliar with the Buk weapon system could accidentally shoot down a civilian airliner, it is not possible for a Russian military unit to make such a mistake.

Moreover, it is unclear why separatists or the Ukrainian government would have any reason to use Buk missiles in their conflict. The separatists have no air force. The Ukrainians attack the separatists at ground level with ground attack aircraft and helicopters, not with high altitude bombing. The Buk missile is a high altitude missile. The only way the separatists could have acquired Buk missiles is by overrunning and capturing Ukrainian positions that for unfathomed reasons had deployed Buk missiles.

It seems to me that if a Buk missile was present in the conflict area, it was moved there for a reason unrelated to the conflict.

A European air traffic controller said that MH-17 and the airliner carrying Russian President Vladimir Putin were initially on the same course. Possibly Washington and its vassal in Kiev thought MH-17 was Putin’s plane and destroyed the Malaysian flight by mistake.

In order to avoid the consequences of such a provocation, the Russian government would deny that Putin’s plane was on a similar course.

Even the Western presstitute media reports that separatists found the Malaysian airliner’s recorders, or black boxes, and turned them over to the investigation and that the recorders had not been tampered with. If the separatists were responsible for the attack, why would they hand over evidence against themselves?

Why does Kiev refuse to release the communications between Ukrainian air traffic control and MH-17? Why was a civilian airliner routed over a combat zone? The Dutch report does not answer these questions. Washington prevented all answers that conflict with its propaganda.

Only Washington, whose presstitutes can be relied on to control the explanations for Washington, and Washington’s vassal in Kiev had anything to gain from downing the airliner. Whether intentional or an accident, the downing of MH-17 was used to blacken Russia and to convince the EU to go along with Washington’s economic sanctions and military moves against Russia.

As the Romans always asked: “Who benefits?” The answer to that question tells you who did it.

via http://ift.tt/29HSumP Tyler Durden

Three months ago, when Italy’s renewed bank troubles were reemerging again, and the country unveiled its first, and certainly not last,  “bad bank” in the shape of the “Atlas” (or Atlante) bailout fund, we – as well as everyone else – mocked it for one obvious reason – at only €5 billion it was far too small to make an impact, as we explained in “Size Matters: Analysts Mock Italy’s Tiny “Atlas” Bailout Fund Meant To Support €360BN In Bad Debt.”

In late June, following the Brexit vote when the Italian bank undercapitalization and the nation’s massive bad debt problem was once again exposed, it became all too obvious just how undercapitalized Italy truly is when in one attempt after another, Italy’s Prime Minister Matteo Renzi begged Europe to allow him to implement a €50 billion bailout (not a bail-in) of Italy’s banks contrary to the new BRRD regulations.

While so far Renzi had been repeatedly shut down by either Merkel, or Schauble, or Dijselbloem (even as both Deutsche Bank and the ECB have shown an eagerness to rescue Italy), overnight a white knight may have emerged for Italy, because as the Telegraph revealed that JPMorgan has been appointed by the Italian government to work on plans to set up a bank to buy troubled loans from the country’s lenders at approximately 20% of face value.

The gross notional size of Italy’s Bad Bank #2 would be €50 billion, or 10 times greater than the “Atlas” iteration, unveiled just three months earlier. However, the actual taxpayer money at risk would be “only” €10 billion. As part of JPM’s plan, the government would acquire some of the bad loans at a price of 20 cents in the euro. The state-backed entity would then work through the loans to either sell them onto other investors, hold them to maturity if there is a chance of borrowers paying them back, or offer debt relief if the customers are in such poor financial shape they cannot repay the loans, the Telegraph adds.

Even with far less net taxpayer funds at risk, there is still a risk it will not be implemented, in part because other ideas are also under discussion, but also because the Italian government is currently at loggerheads with the EU over the scheme.

As we have documented over the past month, European rules as per the BRRD mandate that private investors such as shareholders and bondholders have to pay up before the taxpayer does, in an effort to avoid a repeat of the bailouts of the financial crisis. However, demanding that it is different from Cyprus and Greece, where bail-ins slammed local banking sector, Italy’s government does not want to inflict harm on the households across the country who invest their savings into those bonds, over fears of a self-fulfilling bank run in Europe’s third largest economy.

It hopes that this scheme to split the cost of recapitalisation between the government and the banks will show some thought has been given to the new rules, even if it does not fully comply.

So far there have been no comments from the Eurozone finmins, and certainly not from Germany, on whether this bailout scheme is more agreeable than previous proposals. We expect nothing formal to emerge until the latest EU stress test is published at the end of this month, showing the poor state of Italy’s five biggest banks’ capital positions.

via http://ift.tt/2a8IJmD Tyler Durden

Submitted by Adam Taggart via PeakProsperity.com,

Grant Williams, veteran portfolio and strategy advisor, as well as proprietor of the economic blog Things That Make You Go Hmmm returns to the podcast this week to discuss his great concern about the liquidity risk underlying financial markets long-addicted to central bank rescue stimulus.

Through life, behavior is reinforced by consequences. And since 2008, everything possible has been done to avoid the consequences.

 

So it’s no great surprise to me to that investors are back here again so soon, because what should have happened in '08-09 was not allowed to run its course. Given the speed with which trillions of dollars of printed money brought things back to where they were before, people did not really feel the consequences. At the time people lost jobs and that’s real — that problem is still working itself out — but in the markets, investors were basically back-stopped by governments and central banks and so they did not feel those consequences. It's like the kid falling out of the tree and getting caught: well, he's going to climb the tree again. If he had fallen out and broken his leg, he'd think twice about doing it again.

 

And so a band-aid was put over the first problem without really addressing the cause of it: too much debt in the world. So what have we done? We've gone and added another $60-70 trillion dollars of debt onto the amount that caused the problems in 2008. Everything that has been done has been intended to stave off an outbreak of reality. Unfortunately, history is replete with examples that there's really not much you can do to stop natural, cyclical forces. You may be able to suspend them for a time — which is what they've done — but ultimately, they end up expressing themselves in ways and places that are far more dangerous than they were to begin with.

 

Look, we've got a bunch of people now who are essentially paid to believe central banks. Guys who invest assets, whether it be in mutual funds or pension funds. They've been forced into equity markets these days because they've been willing to accept capital gain as a substitute for income in the bond markets for the last few years. That's coming to an end. We've reached negative rates now. You can argue that we could go further negative, but realistically the upside for rates is unlimited, whereas the downside has a limit on it. They've nearly reached that lower limit and so capital managers have been forced to move into the equity market where there's some semblance of a return.

 

The danger to me has become one of liquidity. In a rising market, I will always find you an offer. If you want to buy shares in a rising market, there are always some for sale. I don't know what the price may be, maybe it's a little bit higher as people get greedy, but there's always stuff for sale. What people have forgotten since 2008 — which was such a sharp wakeup call — is: in really full markets, there are sometimes no bids. Every flash crash that we've seen in the last five or six years has been a preview of what's going to happen when confidence goes, because people will move to the exits. Everything that's been done — again we come back to these rules that put in place to deflect the last crisis: Dodd-Frank, Basel III, banks being forced not to mark-to-market anymore — we will see all the unintended consequences of these actions come out when people want to hit a bid and there's not a bid there. It could get ugly.

 

This is not a time for panic, but it is absolutely a time for a great deal of caution. You need to understand A) Why you're still invested in markets and B) What your plan is to get out of them if you suffer a shock. Because if a shock comes and we get a move down like we did in January/February, and it's one that coincides with a whole-scale or widespread loss of confidence in central banks, they're not going to be able to turn this thing around. People need to have a plan at that point.

Click the play button below to listen to Chris' interview with Grant Williams (58m:38s). And after listening to the podcast, be sure to watch Grant's new video Crazy which does an excellent job laying out the unsustainable state of the "long rescue" the world's central banks have been engineers.

via http://ift.tt/29O93jA Tyler Durden

Just hours after the latest deadly police shooting in the US claimed another 3 lives, and moments after the president of the Cleveland Police Patrolmen’s Association, Steve Loomis, accused Obama of having blood on his hands, wondering “how the hell did we ever become the bad guys in this country? I cannot imagine how we got here. It’s the irresponsible reporting of the media”, Obama is about to do what he does best: deliver another statement.

via http://ift.tt/29T6Rrs Tyler Durden

When it comes to reactions in response to Obama’s increasingly more frequent, politicized speeches on the topic of police shootings, one expects republicans to express disgust and to accuse Obama of race baiting and hate-mongering: indeed, it barely registers. But when members of the very police force whose supreme commander resides in the White House accuse the same “commander” of having “blood on his hands” for his pandering rhetoric, suddenly visions of a countrywide police mutiny start to emerge.

In fact, such visions may be warranted right now, because following this morning’s latest police shooting in Baton Rouge, that killed three officers and injured at least three others, Cleveland Detective Steve Loomis who was invited on Fox to describe the unfolding situation, unleashed on none other than the president. As The Hill reports, Loomis – who is also president of the Cleveland Police Patrolmen’s Association – didn’t hold back from assigning blame during his interview with anchor Harris Faulkner.

“It’s absolutely insane that we have a president of the United States and a governor of Minnesota making the statements they made less than one day after the police-involved shootings,” said an emotional Loomis.

“And those police-involved shootings, make no mistake, are what absolutely have triggered this rash of senseless murders of law enforcement officers across this country. It’s reprehensible. And the president of the United States has blood on his hands that will not be able to come washed off.”

Since there has been a barage of breaking, deadly news in the past two weeks, readers may be forgiven if they have forgotten the subject of Loomis’ anger: the detective was referring to statements made by President Obama and Minnesota Gov. Mark Dayton, a Democrat, one day after the shooting of Philando Castile in Falcon Heights, Minn., by a police officer during a traffic stop.

“When incidents like this occur, there’s a big chunk of our citizenry that feels as if, because of the color of their skin, they are not being treated the same, and that hurts, and that should trouble all of us,” Obama said in a statement the following day. “This is not just a black issue, not just a Hispanic issue. This is an American issue that we all should care about.” Dayton’s comments caused an even bigger stir after he asked: “Would this have happened if the driver were white, if the passengers were white? I don’t think it would have.”

The same week, at a protest against police violence in Dallas, five officers were shot and killed by a lone gunman who was reportedly targeting white police officers.  Loomis cast blame against the media, celebrities and athletes later in the interview with Faulkner. 

“How the hell did we ever become the bad guys in this country?” he asked of police officers. “I cannot imagine how we got here. It’s the irresponsible reporting of the media. “And the irresponsible statements of people that are credible like the president of the United States,” added Loomis, who also pointed a finger at celebrities and athletes for “pushing a false narrative” against police officers. 

More to the point, and ahead of this week’s main event, the Republican convention in Cleveland, Ohio which begins on Monday, Loomis implored Ohio Gov. John Kasich to ban the open carrying of guns in Cuyahoga County this week. That, however, won’t happen, as moments ago Kasich said he won’t restrict guns around the Republican National Convention, saying idea is legally impossible.

We hope that that particular decision doesn’t result in the worst bloodshed yet. It will be close: as Reuters reported on Friday, police in Cleveland say they aim to avoid mass arrests at the protests planned for next week’s Republican National Convention, but preparations by the city’s courts to process up to 1,000 people a day. In short, while not publicized, local authorities were preparing for the worst case scenario, and that was before today’s latest dramatic turn of events.

via http://ift.tt/29EZBRd Tyler Durden

The last few weeks have seen Hillary Clinton's lead over Donald Trump reduced notably from over 8pts to below 3pts as her poll numbers tumbled post-Comey. While variance (discussed here) across the polls remains yuuge, Clinton remains the clear winner among African-Americans and younger Americans while Trump leads among whites and men; but as one pollster noted with regard the unfavorables, "Let me summarize the poll into four little words: 'They hate them both'."

As NBC News reports, on the eve of the GOP convention, Hillary Clinton maintains a five-point national lead over Donald Trump even after a period of negative news for the presumptive Democratic nominee, according to a new NBC News/Wall Street Journal poll.

Clinton leads the presumptive GOP nominee 46 percent to 41 percent in a poll that finds both candidates facing sizable disadvantages and challenges ahead of the party conventions.

 

Clinton has the advantage among African Americans (84 to 7 percent), voters ages 18-29 (55 to 32 percent) and women (52 to 37 percent). The margin among Latinos will be released later on Sunday.

 

Trump, meanwhile, is ahead among whites (50 to 37 percent) and men (46 to 39 percent), and the two candidates are tied among independents (36 percent each).

 

In a four-way ballot test – including Libertarian nominee Gary Johnson and the Green Party's Jill Stein – Clinton gets 41 percent, Trump 35 percent, Johnson 11 percent, and Stein 6 percent.

But variance across the polls remains considerable… (not the volatility post-Comey)

Though overall, as RealClearPolitics reports, Trump is narrowing Hillary's lead as her poll numbers tumble…

But, both candidates remain fervently disliked b y 'the other side'…

Trump heads into the Republican convention with a 27 percent positive/60 percent negative score (-33) – remaining the most unpopular presumptive presidential nominee in the history of the NBC/WSJ poll.

 

But he's followed closely by Clinton's 34 percent positive/56 percent negative score (-22).

 

"Let me summarize the poll into four little words: 'They hate them both,'" says Democratic pollster Fred Yang of Hart Research Associates.

Which merely confirms what Liberty Blitzkrieg's Mike Krieger previously noted – "People just want to kill the status quo," and mainstream media-ites just don't understand (or don't want to)…

We are living in an era of justified general disgust. While this disgust manifests itself in all sorts of unproductive ways, the root cause is completely and entirely justified. People see so-called “elites” as the cause of their suffering and they are correct in that assessment. When I say elites, I refer to people who are in charge of crafting our public policy (politicians), those who bribe them (oligarchs) and the pundits who defend them (the mainstream media).

 

These three groups comprise much, but certainly not all, of what many of us refer to as the “status quo.” These crony capitalists, corrupt legislators and their media gatekeepers have been absolutely instrumental in creating the wretched, lawless and disintegrating socio-economic fabric that anyone with an open mind can clearly see around us. As such, it comes as no surprise to me that Trump has now taken the lead in two swing states, and is tied in a third. Actually, that’s not entirely true, I am pretty surprised about Florida.

 

…

 

All indications are that both Gary Johnson and Jill Stein will be on the ballot in a majority of states, so what does this mean for the general election? I’ll let you come to your own conclusions.

 

What really surprised me today is the continued cluelessness of even the somewhat enlightened, celebrated thinkers out there. In this case, I’m referring to Robert Reich, who I applaud for having done some very good work which I have specifically highlighted on these pages. As such, I was stunned to see the following tweet from him earlier today (my response included).

 

How is it possible? Are we watching the same race?
Hillary Clinton is the nominee. That's how it's possible. https://t.co/7gfZdnnU22

— Michael Krieger (@LibertyBlitz) July 13, 2016

 

Robert Reich gets it more than most, yet still harbors an enormous blindspot. How is that? First, I think that most of his conversations in everyday life are with people from deep within the “status quo.” As such, he’s having discussions within an echo chamber of incompetent and corrupt people. The ones who aren’t incompetent or corrupt are simply in a state of complete denial as to the reality around them.

 

Here’s the thing Robert. The American public is far more pissed off than even you’d like to admit. Part of the reason you refuse to admit it is that this reality is truly terrifying. You’d have to acknowledge that people are so upset, they so want to blow up the status quo, that they’d even vote for the buffoon Trump to do it. While I’m not 100% sure we’re there yet, we’re much closer than most people care to admit.

via http://ift.tt/29GomZR Tyler Durden

Submitted by Eugen von Bohm Bawerk via Bawerk.net,

Status quo, as our generation know it, established in 1945 has plodded along ever since. It is true that it have had near death experiences several times, especially in August 1971 when the world almost lost faith in the global reserve currency and in 2008 when the fractional reserve Ponzi nearly consumed itself. While the recent Brexit vote seem to be just another near death experience we believe it says something more fundamental about the world.

When the 1945 new world order came into existence, its architects built it on a shaky foundation based on statists Keynesian principles. It was clearly unsustainable from the get-go, but as long as living standards rose, no one seemed to notice or care. The global elite managed to resurrect a dying system in the 1970s by giving its people something for nothing. Debt accumulation collateralized by rising asset values became a substitute for productivity and wage increases. While people could no longer afford to pay for their health care, education, house or car through savings they kept on voting for the incumbents (no, there is no difference between center left and right) since friendly bankers were more than willing to make up the difference.

It is clear for all to see but the Ph.Ds. that frequent elitist policy circles that the massive misallocation and consumption of capital such a perverted system enables will eventually collapse on itself. Debt used to be productive, id est. self-liquidating, but now it is used for consumption backed by future income projections based on historical experience. However, one should not extrapolate future income streams from a historical regime when the new one is fundamentally different. The promised incomes obviously never materialized and the world reached peak debt. The credit Ponzi is dead.

Consider the following chart that depicts decennial change in average real earnings for the UK worker. It shows an unprecedented development. Not since the 1860s have the UK worker experienced falling real earnings over a ten-year period.  Such dramatic change obviously does something to the so-called social contract people have been tricked into. People no longer believe in a brighter future and there is nothing more detrimental to a human being than that. No longer vested in the status quo, people opt for radical change, hence; Brexit, Trump, Le Pen, Lega Nord, 5MS. Old rules does not apply anymore.

Over the next couple of years, we will experience a torrent of sea change, a lot of it unpleasant, but it will come nonetheless. In the social contract, immigration is OK when jobs are plentiful and people’s houses are worth more every year. Not so much when they are unemployed and without a house or even prospects of ever owning one. Corruption in the higher echelons of society is grudgingly accepted when the elite allegedly runs a system where incomes and productivity constantly moves upwards, but will not be tolerated as blue collar jobs are moved offshore.

Productively invested capital and high savings are the indispensable ingredients in rising labour productivity. Consume your seed corn and productivity growth falls or even turns negative. Falling earnings on a level unmatched through history goes hand in hand with the weakest productivity growth in 100 years. Bottom line, the west is in a structural downturn, caused by decades of economic mismanagement and there is nothing our money masters can do to rectify it; they will only make the problem worse by postponing the inevitable.

It is also interesting to note that the Brexiters do not even get to enjoy rising house prices anymore. Those are reserved for the highly paid remainers in the capital where the peak debt cycle has not yet struck.

So what does this mean for the UK specifically? Few have lived as high on the hog as the brits have. Their current account deficit at 6 per cent of GDP is reminiscent of countries heading into depressions. In the mid-1970s, the IMF had to bail them out and in the early 1990s, the infamous ERM regime collapsed as Soros made his billion. The pound got a pounding on the Brexit vote, but it was destined to fall anyways. The adjustment needed to correct this imbalance is not over and we should all expect a far weaker pound in the months and years ahead. Brexit only triggered what was already baked into the cake in the first place.

It is no secret that short-term portfolio investments fund a large part of Brits excesses. These are mere claims on UK future production or assets. The immediate withdrawal form UK real estate funds, which has since been gated, is the dying canary signalling what will come; the current account deficit will no longer be funded by complacent foreigners. The pound will collapse thus forcing the long overdue correction the UK economy desperately need for long-term sustainable prosperity.

When it does GDP follows suit as it have one ever since the UK became a fully financialized economy. From the 1990s whenever the current account deficit went through three per cent of GDP, growth collapsed shortly after as the economy went through necessary adjustments. Today’s gap is at record level and it is thus logical that the coming adjustment will be even more gut wrenching that it has ever been.

The British middle class are fed-up with the status quo and they no longer feel vested in its future. They are willing to opt for change no matter what the elite tell them, and change they will get. As the pound crashes, current account deficits are balanced and asset prices adjust accordingly the UK economy is up for a rough ride.

Bonus charts:

• While income stagnated for the middle class, the top earners managed to boost their earnings fuelling resentment

• As peak debt struck the public tried to leverage the collective balance sheet with dire consequences for the longer term

via http://ift.tt/2a8v7I2 Tyler Durden