Tag: news

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

On July 25, these superdelegates will cast votes at the Democratic National Convention for whomever they want, regardless of primary and caucus outcomes. Democrats like to describe superdelegates as mostly elected officials and prominent party members, including President Obama and former Presidents Bill Clinton and Jimmy Carter.

 

But this group, which consists of 21 governors, 40 senators and 193 representatives, only makes up about a third of the superdelegates. Many of the remaining 463 convention delegates are establishment insiders who get their status after years of donations and service to the party. Dozens of the 437 delegates in the DNC member category are registered federal and state lobbyists, according to an ABC News analysis.

 

In fact, when you remove elected officials from the superdelegate pool, at least one in seven of the rest are former or current lobbyists registered on the federal and state level, according to lobbying disclosure records.

 

– From the ABC News article: The Reason Why Dozens of Lobbyists Will Be Democratic Presidential Delegates

When it comes to presidential primaries, there isn’t a whole lot of “democracy” in the Democratic Party.

Last year, The New York Times published an article examining the American attitude toward the question of money in politics. This is what it found:

Americans of both parties fundamentally reject the regime of untrammeled money in elections made possible by the Supreme Court’s Citizens United ruling and other court decisions and now favor a sweeping overhaul of how political campaigns are financed, according to a New York Times/CBS News poll.

 

The findings reveal deep support among Republicans and Democrats alike for new measures to restrict the influence of wealthy givers, including limiting the amount of money that can be spent by “super PACs” and forcing more public disclosure on organizations now permitted to intervene in elections without disclosing the names of their donors.

As evidence of just how lopsided opinion is on the subject, see the following graphic:

You might think the supposedly “liberal” Democratic Party would take this sort of thing to heart, but you’d be wrong. Not only is the super delegate system intentionally undemocratic, but a remarkable 9% of superdelegates are actually lobbyists.

You just can’t make this stuff up.

From ABC News:

Hillary Clinton holds a substantial edge among a particular and little-noticed kind of delegate to the Democratic National Convention: Superdelegates.

 

On July 25, these superdelegates will cast votes at the Democratic National Convention for whomever they want, regardless of primary and caucus outcomes. Democrats like to describe superdelegates as mostly elected officials and prominent party members, including President Obama and former Presidents Bill Clinton and Jimmy Carter.

 

But this group, which consists of 21 governors, 40 senators and 193 representatives, only makes up about a third of the superdelegates. Many of the remaining 463 convention delegates are establishment insiders who get their status after years of donations and service to the party. Dozens of the 437 delegates in the DNC member category are registered federal and state lobbyists, according to an ABC News analysis.

 

In fact, when you remove elected officials from the superdelegate pool, at least one in seven of the rest are former or current lobbyists registered on the federal and state level, according to lobbying disclosure records.

 

That’s at least 67 lobbyists who will attend the convention as superdelegates. A majority of them have already committed to supporting Hillary Clinton for the nomination.

Of course they have.

Superdelegates are unique to the Democratic nominating process. Of the 4,763 delegates who will attend the Democratic National Convention in Philadelphia, 717 will be superdelegates — almost a third of the total required to win the nomination.

Meanwhile, former presidential candidate and current Democratic Party superdelegate, Howard Dean, shared his personal thoughts on democracy via Twitter the other day.

@D_Born @BernieSanders Super delegates don't "represent people" I'm not elected by anyone. I'll do what I think is right for the country

— Howard Dean (@GovHowardDean) March 5, 2016

Any questions?

via Zero Hedge http://ift.tt/1QLhWd9 Tyler Durden

The economy of the United States was destroyed almost overnight.

As VisualCapitalist's Jeff Desjardins notes, more than 5,000 banks collapsed, and there were 12 million people out of work in America as factories, banks, and other shops closed.

Many reasons have been supplied by the different economic camps for the cause of the Great Depression, which we reviewed in the first part of this series.

Regardless of the causes, the combination of deflationary pressures and a collapsing economy created one of the most desperate and miserable eras of American history. The resulting aftermath was so bad, that almost every future Central Bank policy would be designed primarily to combat such deflation.

 

 

 

The Deflationary Spiral

After the stock crash, money and consumer confidence was hard to find. Instead of spending money on new things, people hoarded their cash.

Fewer dollars spent meant more drops in demand and prices, which led to defaults, bankruptcies, and layoffs.

As a result of this spiral, the prices for many food items in the U.S. fell by nearly 50% from their pre-WW1 levels.

The price of butter went from pre-crisis levels of $0.21 to $0.13 per pound in 1932. Wool had a drop from $0.24 to $0.10 per pound, and most other goods followed the same price trajectory.

The Effects

Here’s how “real value” is affected in a deflationary environment:

Money
Real value increases: cash is king and gains in real value.

Assets (stocks, real estate)
Real value decreases as prices fall.

Debt
Debtors owe more in real terms

Interest Rates
Real interest rates (nominal rates minus inflation) can rise as inflation is negative, causing unwanted tightening.

From Bad to Worse

The Great Depression lasted from 1929 to 1939, which was unprecedented in length for modern history.
To this day, economists disagree on why the Depression lasted so long. Here’s some of their explanations:

The New Deal was not enough

Looking back on The Great Depression, John Maynard Keynes believed that monetary policy could only go so far.
The Central Bank could not ultimately push banks to lend, and therefore demand had to be created through fiscal policy. Keynes advocated massive deficit spending to offset markets’ failure to recover.

Keynesians such as Paul Krugman believe that Franklin D. Roosevelt’s economic policies through The New Deal were too cautious.

“You can’t push on a string.” – Keynes

The New Deal made things worse

Some economists believe the New Deal had a negative net effect on the recovery.

The National Recovery Administration (NRA) is a primary subject of this criticism. Established in 1933, the goal of the NRA was to lift wages. To do this, it got industry leaders to meet and establish minimum prices and wages for workers.

Cole and Ohanian claim that this essentially created cartels that destroyed economic competition. They calculate that this, along with the aftermath of these policies, accounted for 60% of the weak recovery.

Lastly, one other charge leveled at Roosevelt by his critics is that the sprawling policies from the New Deal ultimately created uncertainty for business leaders, leading to less investment. This lengthened the recovery.

“[The] abandonment of [Roosevelt’s] policies coincided with the strong economic recovery of the 1940s.” – Cole and Ohanian

The Federal Reserve didn’t do enough

Milton Friedman claimed that the Federal Reserve made the wrong policy decision, which extended the length of the Depression.

Between 1929 and 1933, the monetary supply dipped 27%, which decreased aggregate demand and then prices. The Fed’s failure was in not realizing what was happening and not taking corrective action.

“The contraction is…a tragic testimonial to the importance of monetary forces…[D]ifferent and feasible actions by the monetary authorities could have prevented the decline in the stock of money… [This] would have reduced the contraction’s severity and almost as certainly its duration.” – Milton Friedman (and co-author Anna Schwartz)

The Federal Reserve shouldn’t have done anything

Austrian economists believe that the Fed and government both made policy choices that slowed the recovery.
For starters, most agree with Friedman that the Fed’s policy choices at the start of the Depression led to deflation.

They also point to the premature tightening that occurred in 1936 and 1937 as a policy failure. During those two years, the Fed not only hiked interest rates, but it also doubled bank-reserve requirements. These policies coincided with Roosevelt’s tax hikes, and a recession occurred within the Depression from 1937 to 1938.

Critics of these policies say that this delayed the recovery by years.

“I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression.” – Friedrich Hayek

Personal Stories from The Great Depression

“One evening when we went down to check on the bank, there were hundreds of people out front yelling and crying and fighting and beating on the locked doors and windows. They had fires built in the street to keep warm and there were people milling around all over the downtown.” – Vane Scott, Ohio

“A friend I worked with said in the Depression he rode the rails and stopped to eat vegetables out of a garden. The owner said he would shoot him if he didn’t stop. My friend said ‘go ahead,’ as he was that hungry. ” – James Randolph, Ohio

“When neighbors couldn’t get a loan from the bank, they’d come to Dad. He sold farm machinery. He never put his money in a bank. He stored it in a strongbox in the fruit cellar, under the apples. He’d loan the neighbors what they needed and they paid him back when they could. If there was a month—especially the winter months—when they couldn’t pay, they’d slaughter a cow or a pig and give him a portion. In the summer it was vegetables: corn, peas, whatever they had growing.” – Gladys Hoffman, New York

“I thought the Depression was going to go on forever. For six or seven years, it didn’t look as though things were getting better. The people in Washington DC said they were, but ask the man on the road? He was hungry and his clothes were ragged and he didn’t have a job. He didn’t think things were picking up.” – Arvel “Sunshine” Pearson, Arkansas

Conclusion

After the 1937-38 Recession, the United States economy began to recover.

The focus of the American public would eventually shift away from the Great Depression, as events in Europe unfolded after Germany’s invasion of Poland in 1939.

via Zero Hedge http://ift.tt/1UX5M2w Tyler Durden

Authored by Pepe Escobar, originally posted at SputnikNews.com,

Imagine one of the most admired global political leaders in modern history taken from his apartment at 6 am by armed Brazilian Federal Police agents and forced into an unmarked car to the Sao Paulo airport to be interrogated for almost four hours in connection with a billion dollar corruption scandal involving the giant state oil company Petrobras.

This is the stuff Hollywood is made of. And that was exactly the logic behind the elaborate production.    

Lula is the ultimate political animal — on a Bill Clinton level. He had already telegraphed he was waiting for such a gambit, as the Car Wash machine had already arrested dozens of people suspected of embezzling contracts between their companies and Petrobras — to the tune of over $2 billion — to pay for politicians of the Workers' Party (PT), of which Lula was leader.  

Lula's name surfaced via the proverbial rascal turned informer, eager to strike a plea bargain. The working hypothesis — there is no smoking gun — is that Lula, when he led Brazil between 2003 and 2010, personally benefited from the corruption scheme with Petrobras at the center, obtaining favors for himself, the PT and the government. Meanwhile, inefficient President Dilma Rousseff is herself under attack engineered via a plea bargain by the former government leader in the Senate.

Lula was questioned in connection to money laundering, corruption and suspected dissimulation of assets. The Hollywood blitz was cleared by federal judge Sergio Moro — who always insists he's been inspired by the Italian judge Antonio di Pietro and the notorious 1990s Mani Pulite ("Clean Hands") investigation.   

And here, inevitably, the plot thickens.

Round up the usual media suspects

Moro and the Car Wash prosecutors justified the Hollywood blitz insisting Lula refused to be interrogated. Lula and the PT vehemently insist otherwise. 

And yet Car Wash investigators had consistently leaked to mainstream media words to the effect, "We can't just bite Lula. When we get to him, we will swallow him." This would imply, at a minimum, a politicization of justice, the Federal Police and the Public Ministry. And would also imply that the Hollywood blitz may have been supported by a smoking gun. As perception is reality in the frenetic non-stop news cycle, the "news" — instantly global — was that Lula was arrested because he's corrupt.  

Yet it gets curioser and curioser when we learn that judge Moro wrote an article in an obscure magazine way back in 2004 (in Portuguese only, titled Considerations about Mani Pulite, CEJ magazine, issue number 26, July/September 2004), where he clearly extols "authoritarian subversion of juridical order to reach specific targets " and using the media to intoxicate the political atmosphere. 

All of this serving a very specific agenda, of course. In Italy, right-wingers saw the whole Mani Pulite saga as a nasty judicial over-reach; the left, on the other hand, was ecstatic. The Italian Communist Party (PCI) emerged with clean hands. In Brazil, the target is the left — while the right, at least for the moment, seems to be composed of hymn-singing angels.    

The pampered, cocaine-snorting loser candidate of the 2014 Brazilian presidential election, Aecio Neves, for instance, was singled out for corruption by three different accusers — and it all went nowhere, without further investigation. Same with another dodgy scheme involving former president Fernando Henrique Cardoso — the notoriously vainglorious former developmentalist turned neoliberal enforcer.

What Car Wash has already forcefully imprinted across Brazil is the perception that corruption only pays when the accused is a progressive nationalist. As for Washington consensus vassals, they are always angels — mercifully immune from prosecution.

That's happening because Moro and his team are masterfully playing to the hilt Moro's self-described use of the media to intoxicate the political atmosphere — with public opinion serially manipulated even before someone is formally charged with any crime. And yet Moro and his prosecutors' sources are largely farcical, artful dodgers cum serial liars. Why trust their word? Because there are no smoking guns, something even Moro admits.

And that leads us towards the nasty scenario of a made in Brazil media-judicial-police complex possibly hijacking one of the healthiest  democracies in the world. And that is supported by a stark fact: the right-wing Brazilian opposition's entire "project" boils down to ruining the economy of the 7^th largest global economic power to justify the destruction of Lula as a presidential candidate in 2018.

Elite Plundering Rules

None of the above can be understood by a global audience without some acquaintance with classic Braziliana. Local legend rules that Brazil is not for beginners. Indeed; this is an astonishingly complex society — which essentially descended from a Garden of Eden (before the Portuguese "discovered" it in 1500) to slavery (which still permeates all social relations) to a crucial event in 1808: the arrival of Dom John VI of Portugal (and Emperor of Brazil for life), fleeing Napoleon's invasion, and carrying with him 20,000 people who masterminded the "modern" Brazilian state. "Modern" is an euphemism; history shows the descendants of these 20,000 actually have been raping the country blind for the past 208 years. And few have ever been held accountable. 

Traditional Brazilian elites compose one of the most noxious arrogant-ignorant-prejudiced mixes on the planet. "Justice" — and police enforcement — are only used as a weapon when the polls do not favor their agenda. 

Brazilian mainstream media owners are an intrinsic part of these elites. Much like the US concentration model, only four families control the media landscape, foremost among them the Marinho family's Globo media empire. I have experienced, from the inside, in detail, how they operate.

Brazil is corrupt to the core — from the comprador elites down to a great deal of the crass "new" elites, which include the PT. The greed and incompetence displayed by an array of PT stalwarts is appalling — a reflection of the lack of quality cadres. Corruption and traffic of influence involving Petrobras, construction companies and politicians is undeniable, even if it pales compared to Goldman Sachs shenanigans or Big Oil and/or Koch Brothers/Sheldon Adelson-style buying/bribing of US politicians. 

If this was a no-holds-barred crusade against corruption — which the Car Wash prosecutors insist it is — the right-wing opposition/vassals of the old elites should have been equally exposed in mainstream media. But then the elite-controlled media would simply ignore the prosecutors. And there would be nothing remotely on the scale of the Hollywood blitz, with Lula — pictured as a lowly delinquent — humiliated in front of the whole planet.

Car Wash prosecutors are right; perception is reality. But what if it backfires?

No consumption, no investment, no credit

Brazil couldn't be in a gloomier situation. GDP was down 3.8% last year; probably will be down 3.5% this year. The industrial sector was down 6.2% last year, and the mining sector down 6.6% in the last quarter. The nation is on the way to its worst recession since…1901.

There was no Plan B by the — incompetent — Rousseff administration for the Chinese slowdown in buying Brazil's mineral/agricultural wealth and the overall global slump in commodity prices. 

The Central Bank still keeps its benchmark interest rate at a whopping 14.25%. A disastrous Rousseff neoliberal "fiscal adjustment" actually increased the economic crisis. Today Rousseff "governs" — that's a figure of speech — for the banking cartel and the rentiers of Brazilian public debt. Over $120 billion of the government's budget evaporates to pay interest on the public debt.

Inflation is up — now in double-digit territory. Unemployment is at 7.6% — still not bad as many a player across the EU — but rising.

The usual suspects of course are gloating, spinning non-stop how Brazil has become "toxic" for global investors.

Yes, it's bleak. There's no consumption. No investment. No credit. The only way out would be to unlock the political crisis. Maggots in the opposition racket though have a one-track obsession; the impeachment of President Rousseff. Shades of good ol' regime change; for these Wall Street/Empire of Chaos vassals, an economic crisis, fueled by a political crisis, must by all means bring down the elected government of a key BRICS player.

And then, suddenly, out of left field, surges…Lula. The move against him by the Car Wash investigation may yet backfire — badly. He's already on campaign mode for 2018 — although he's not an official candidate, yet. Never underestimate a political animal of his stature.

Brazil is not on the ropes. If reelected, and assuming he could purge the PT from a legion of crooks, Lula could push for a new dynamic. Before the crisis, Brazilian capital was going global — via Petrobras, Embraer, the BNDES (the bank model that inspired the BRICS bank), the construction companies. At the same time, there might be benefits in breaking, at least partially, this oligarchic cartel that control all infrastructure construction in Brazil; think of Chinese companies building the high-speed rail, dams and ports the country badly lacks.

Judge Moro himself has theorized that corruption festers because the Brazilian economy is too closed to the outside world, as India's was until recently. But there's a stark difference between opening up some sectors of the Brazilian economy and let foreign interests tied to the comprador elites plunder the nation's wealth.

So once again, we must go back to the recurrent theme in all major global conflicts. 

It's the oil, stupid

For the Empire of Chaos, Brazil has been a major headache since Lula was first elected, in 2002 (for an appraisal of complex US-Brazil relations, check the indispensable work of Moniz Bandeira).

A top priority of the Empire of Chaos is to prevent the emergence of regional powers fueled by abundant natural resources, from oil to strategic minerals. Brazil amply fits the bill. Washington of course feels entitled to "defend" these resources. Thus the need to quash not only regional integration associations such as Mercosur and Unasur but most of all the global reach of the BRICS.

Petrobras used to be a very efficient state company that then doubled as the single operator of the largest oil reserves discovered in the 21^st century so far; the pre-salt deposits. Before it became the target of a massive speculative, judicial and media attack, Petrobras used to account for 10% of investment and 18% of Brazilian GDP.

Petrobras found the pre-salt deposits based on its own research and technological innovation applied to exploring oil in deep waters — with no foreign input whatsoever. The beauty is there's no risk; if you drill in this pre-salt layer, you're bound to find oil. No company on the planet would hand this over to the competition.

And yet a notorious right-wing opposition maggot promised Chevron in 2014 to hand over the exploitation of pre-salt mostly to Big Oil. The right-wing opposition is busy altering the juridical regime of pre-salt; it's already been approved in the Senate. And Rousseff is meekly going for it. Couple it to the fact that Rousseff's government did absolutely nothing to buy back Petrobras stock — whose vertiginous fall was deftly engineered by the usual suspects.

The meticulous dismantling of Petrobras, Big Oil eventually profiting from the pre-salt deposits, keeping in check Brazil's global power projection, all this plays beautifully to the interests of the Empire of Chaos. Geopolitically, this goes way beyond the Hollywood blitz and the Car Wash investigation.

It's no coincidence that three major BRICS nations are simultaneously under attack — on myriad levels: Russia, China and Brazil. The concerted strategy by the Masters of the Universe who dictate the rules in the Wall Street/Beltway axis is to undermine by all means the BRICS's collective effort to produce a viable alternative to the global economic/financial system, which for the moment is subjected to casino capitalism. It's unlikely Lula, by himself, will be able to stop them. 

 

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

Given China's new focus on a basket of currencies, rather than pegging to the dollar alone, today's record-breaking reversal in EUR has sparked a yuuge 300 pips rally in Offshore Yuan (from 6.5270 to 6.4940) pushing to its strongest level since mid-December. At the same time, Gold is accelerating as China opens, pushing up to $1288 – new 13-month highs. Most critical is we are within $5 of Goldman Sachs "short gold" stop at $1291…

Yuan surges to 3-month highs…

 

As Gold spikes to fresh 13-month highs…

Goldman went short gold on 2/15 at around $1205…

We also maintain our bearish view on gold that has rallied along with the other commodities. Our short gold recommendation (which we opened with a 17% upside, in line with our $1000/toz 12-m forecast) is currently at a c.5% loss, with a stop loss at 7%.

 

This gold rally was driven by a lack of conviction in divergence in US growth as a weak US dollar has been highly correlated with a higher gold price.

 

We believe this realignment view of weak global growth is not supported by the US data, which will likely reinforce higher US yields, a stronger US dollar and the return of divergence, particularly should strong US consumer growth dissolve market fears regarding US growth. This in turn will likely put downward pressure on gold prices towards our near-term target of $1100/toz

Tonight we are getting very close to Goldman's stop-loss…

 

Leaving Goldman clients pensive…

via Zero Hedge http://ift.tt/1Tyvr28 Tyler Durden

Judging by the progression of the previous 11 GOP debates, tonight's slugfest will involve actual measurement of genitalia, a Hulk-Hogan-esque chair-slamming, and excessive use of four-letter words. As "handy" Trump, "little" Marco, "lyin'" Ted, and "quiet" Kasich step up to the podiums (podia?), the chairman of the Republican Party has declared that he wants tonight's Republican presidential debate to be "more of a G-rated" event than recent showdowns. Good luck with that.

And then there were four…

As AP reports, Republican National Committee Chairman Reince Priebus, the take-no-sides chief fundraiser for the party, has been saying all week that he wants the whatever-it-takes "tone" of past debates to improve on Thursday's debate stage.

On Wednesday, he described on CNN just how, saying he'd like to see "more of a G-rated debate" than "some of the things that have been said in the past."

 

He said the RNC has spoken to the campaigns and to the sponsors about taking steps to "reduce the temperature" on the debate stage and in the audience.

And before it starts, here's where we stand…

 

Live Feed (via CNN): no embed, click link for access (no login required)

 

Alternative Live Feed:

 

And finally, because no debate is complete without some side-games, here is ABC's freshly updated  GOP Debate Bingo Card…

 

As a reminder, this is how it all started…

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

Submitted by Nick Giambruno via InternationalMan.com,

They met in secret to plan a devastating attack…

Two powerful men, colluding at a palace in the Middle East.

In September 2014, U.S. Secretary of State John Kerry flew to Saudi Arabia. He was there to meet with King Abdullah, the country’s ruler and one of the richest men in the world.

Informed observers say Kerry and Abdullah drew up a plan at this meeting to destroy their common enemies: Russia and Iran.

To carry out the attack, they wouldn’t use fighter jets, tanks and ground troops. They would use a much more powerful weapon…

Oil.

Oil is the world’s most traded commodity. Saudi Arabia is the world’s largest oil exporter. It has arguably more control over the price of oil than any other country does.

Insiders say Saudi Arabia agreed to flood the oil market at this secret meeting. The purpose was to drive down the price of oil. This would hurt Russia’s and Iran’s economies. They both depend heavily on oil sales.

They wanted to hurt Russia for supporting their regional foe, Syrian President Bashar al-Assad. They wanted to hurt Iran for the same reason. Iran is the Saudis’ fierce geopolitical rival in the region.

Their strategy has had some success.

As you can see in the chart below, the price of oil has plummeted over 70% since John Kerry’s secret meeting with King Abdullah in September 2014.

There’s so much conflict in the Middle East—but oil prices are falling.

And despite China’s economic slowdown…it still imported more oil in 2015 than in 2014. China is the world’s number two oil consumer behind the U.S.

Turmoil plus demand says oil should be going up, not down. But the mystery is explained by the Saudis’ oil war and their strategy of flooding the market to bankrupt competitors.

Saudi Arabia’s Other Target

The Saudis have also declared war on the U.S. shale oil industry.

In the 1990s, the U.S. imported close to 25% of its oil from Saudi Arabia. Today—because of high U.S. shale oil production—we import only 5%.

By keeping the market saturated with oil, the Saudis are driving down the price. They hope to drive it down low enough and long enough to bankrupt the shale industry…since shale oil costs more than Saudi oil to produce.

This would knock out a major competitor and let the Saudis regain lost market share.

But economic warfare doesn’t always go according to plan. I think the Saudis made a colossal mistake…

Impaled on Their Own Sword

I think the Saudis have overplayed their hand…big time.

Oil makes up 90% of Saudi government revenue. So the price drop has been very painful. They’re bleeding through their reserves.

The market is putting more pressure on their currency peg than at any time in its history.

For over 30 years, Saudi Arabia has pegged its currency at 3.75 riyals per U.S. dollar. To maintain this, it needs a large stash of U.S. dollars. With its historically large reserves, this has never been a problem.

But now, the Saudi budget is under serious pressure. The government is only staying afloat by draining its foreign exchange reserves. This threatens Saudi Arabia’s ability to support its currency peg.

If the currency peg breaks—which is exactly what the current market expects—the riyal would be devalued. This would increase the cost of living for Saudis across the board.

It would also increase social unrest.

The Saudis are also losing billions underwriting foolhardy wars in Yemen and Syria.

The Saudis thought they could support armed Syrian rebels and topple the Assad government in a matter of months. They figured Assad would fall just as easily as Gadhafi did in Libya in 2011. It was a gross miscalculation.

There’s also the Saudi war in Yemen, Saudi Arabia’s southern neighbor.

The Saudis launched the war in March 2015. They wanted to reinstate a Saudi-friendly government. The Saudis thought the intervention would last a few months, then they’d declare “mission accomplished” and go home. That’s not what happened.

The political and economic stars are aligning against the Saudis. It’s their most vulnerable moment since the kingdom was founded in 1932.

Crisis Investing 101

The Saudis are having some success. In the past year, at least 67 U.S. oil companies have filed for bankruptcy. Analysts estimate as many as 150 could follow. The shale oil industry is in “survival mode.”

And the crisis in the oil market could spread. That’s because many banks made big loans to these distressed shale oil companies. A wave of bankruptcies means those loans could go bad, which would be a huge threat to those banks.

It has the potential to trigger another meltdown in the financial system. The warning signs are there.

I wouldn’t own any bank that has big exposure to risky shale plays…nor keep my life savings there.

The Saudis have damaged the U.S. shale oil industry. And they’ll continue to cause more damage. But they won’t bankrupt every producer.

The shale industry has more staying power than Saudi Arabia. Some producers now say they’re profitable with $40 oil. And their pace of innovation will drive that even lower. The industry will survive.

All the Saudis have done is create an existential crisis for themselves.

If the Saudis don’t stop flooding the market—and there are no signs they will—they won’t be shooting themselves in the foot… but in the head. Saudi Arabia will either collapse or surrender—and stop flooding the market.

Either way, oil will eventually go a lot higher.

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

Back in the summer of 2014, roughly a year and a half before the second bubble of profitless, “story”, aka “tech”, companies had burst, we wrote in dismay, that “the true indicator of just how bubbly the second coming of the dot com era has become comes courtesy of none other than Jessica Alba’s, yes the actress, own startup: a company launched in 2012 and which makes “non-toxic” diapers (as opposed to toxic diapers?), called the Honest Co., has raised $70 million at a valuation just shy of $1 billion in preparation for an IPO.”

What was the company’s business model? Simple: one part Amazon monthly subscription purchase, and one part promise that its products are clean and don’t contain what it says are harsh chemicals found in many mainstream products; apparently that is a critical deciding factor for today’s largely unemployed Millennial generation:

“since launching in 2012 with its non-toxic diapers and other natural baby products, the California-based startup has grown quickly by blending its environmentally sensitive products with a social mission. Annual revenue is tracking to hit north of $150 million in 2014, or three times the revenue of 2013. Roughly 80% of Honest revenue is from customers who subscribe to a monthly service delivering diapers and other consumable products on a recurring basis.”

All this happened at a time when frauds such as Theranos were being valued in the billions, so in retrospect the “Honest Company’s” idiotic valuation may be explainable.

What isn’t as easily explained is that since we profiled Alba’s “Honest Company“, its valuation has grown by another 70%, and according to the WSJ it is now $1.7 billion with total funding raised more than $200 million “thanks to its marketing of cleaning supplies, diapers and other consumer products that it says are safer and more ecologically friendly than other brands.”

But what Alba herself will have a very difficult time explaining is why, just like in the case of Theranos, her company it not only grossly misnamed, but may also be another fraud, because according to a just released WSJ expose, “one of the primary ingredients Honest tells consumers to avoid is a cleaning agent called sodium lauryl sulfate, or SLS, which can be found in everyday household items from Colgate toothpaste to Tide detergent and Honest says can irritate skin. The company lists SLS first in the “Honestly free of” label of verboten ingredients it puts on bottles of its laundry detergent, one of Honest’s first and most popular products. But two independent lab tests commissioned by The Wall Street Journal determined Honest’s liquid laundry detergent contains SLS.“

“Our findings support that there is a significant amount of sodium lauryl sulfate” in Honest’s detergent, said Barbara Pavan, a chemist at one of the labs, Impact Analytical. Another lab, Chemir, a division of EAG Inc., said its test for SLS found about the same concentration as Tide, which is made by P&G. “It was not a trace amount,” said Matthew Hynes, a chemist at Chemir who conducted the test.

In Alba’s 2013 book, “The Honest Life” she lists SLS as a “toxin” that consumers should avoid. She started Santa Monica, Calif.-based Honest in 2011 after she said she had an allergic reaction to a popular brand of laundry detergent. According to the WSJ, she has no problem actually including it in her product, comparble to the Theranos’ bezzle, in which its blood test was not only inaccurate, but had been superceded by products by its biggest competitors.

And just like Theranos, “Honest” disputes the labs’ findings and says its own testing found no SLS in its products.

“We do not make our products with sodium lauryl sulfate,” said Kevin Ewell, the company’s research and development manager.

And just as the WSJ exposed Theranos, now it has set its sight on the one company that years ago couldn’t pass the smell test, and now stinks like a rotting venture capital corpse.

The blame game begins:

Honest said its manufacturing partners and suppliers have provided assurances that its products don’t contain SLS beyond possible trace amounts. Honest provided the Journal with a document it said was from its detergent manufacturer, Earth Friendly Products LLC, that stated there was zero “SLS content” in the product. Earth Friendly in turn said the document came from its own chemical supplier, a company called Trichromatic West Inc., which it relied on to test and certify that there was no SLS.

 

Trichromatic told the Journal the certificate wasn’t based on any testing and there was a “misunderstanding” with the detergent maker. It said the “SLS content” was listed as zero because it didn’t add any SLS to the material it provided to Earth Friendly and “there would be no reason to test specifically for SLS.” It said the product in question “was fairly and honestly represented” to its customer.

 

Honest said it didn’t deal directly with Trichromatic and declined to comment further on the certificate. Earth Friendly reiterated that it relied on Trichromatic to test the ingredient.

 

Honest also disagreed with the methods used by the Journal’s labs, and said the labs tested against a sample of SLS that isn’t the type used in consumer products. Both Chemir and Impact Analytical said they stand by their test results, used the most precise method for quantifying SLS in a consumer laundry detergent and followed standard scientific guidelines.

Then there is the question of what “Honest” uses instead of SLS: the WSJ reports that Honest supposedly prefers an alternative called sodium coco sulfate, or SCS, which the company says is less irritating and a different compound from SLS. “We have evidence that our laundry detergent contains SCS, not SLS, and any contention to the contrary is wrong.” The problem is that SCS contains SLS, which means fundamentally the fraud at the Honest company, one which it uses to pray on naive and impressionable young moths, is one of cheap marketing alternatives.

Rival Seventh Generation lists SLS as an ingredient in its laundry detergent, including a variety made for sensitive skin, and lists sodium coco sulfate as an ingredient in its hand wash. It says both cleaning agents have the potential to irritate skin but are safe when products are formulated properly. “In all practicality they act and behave as the same chemical in consumer products,” said Tim Fowler, Seventh Generation’s senior vice president of research and development.

Not for Alba, who preys on the wallets of the uninformed with false advertising.

Then there is the real-time alteration of the company’s public materials during the WSJ’s investigation into the company:

During the Journal’s reporting, Honest made changes to wording on its website, including revising the description of its “Honestly Free Guarantee.” It used to say its products are “Honestly free of” dozens of ingredients, including SLS. Now it says the products are “Honestly made without” those ingredients. Honest also removed claims that other companies use “risky” or “toxic” ingredients that it doesn’t use.

 

When asked about the website changes, Honest co-founder and Chief Product Officer Christopher Gavigan said they were to help clarify, educate and accurately represent the company’s position. He said in a December meeting that Honest was also changing its product labels to match its website and had no plans to reformulate its detergent.

 

Alba, who is Honest’s chief creative officer in addition to co-founder, declined to be interviewed for the WSJ article. Just like Elizabeth Holmes, when the WSJ demolished the skyhigh valuation of Theranos. Her attorney Bert Fields said, “Jessica Alba and the folks at Honest truly believe that their detergent is free of non-trace SLS and have been assured of that by their suppliers.”

Sadly that too is a lie.

As is the gratuitous false marketing of this post with photos of the “Honest” CEO. Spoiler alert: they too are not genuine and contain an abnormal dose of Photoshop.

via Zero Hedge http://ift.tt/1P2KRUl Tyler Durden

Remember that once-in-a-lifetime, "don't worry there's plenty of liquidity" flash-crash in japanese Government Bond futures on Tuesday night (Wednesday morning Japan time)… well it happened again…

JGB Futures to be halted any minute…

 

And so the market chaos even among the "safest" of securities, the result of central bank intervention, continues. Bloomberg's Richard Breslow summarized it best:

 

 

Even with QEs creating what look an awful lot like bubbles, it’s been fair to say, those distortions reflected the reaction function of how central bankers interpreted the state of play. Yield levels, let alone negative rates, and volatility are making these guideposts increasingly questionable.

 

If you look at the yield curves of much of the world, you’d be hard pressed not to conclude we are very much still experiencing a severe global recession. Central bankers may strongly disagree, yet Japanese 10-year JGBs haven’t seen 2% this century. German bunds have backed up to 21bps. Both are likely to increase QE. The U.S. is tightening (?) and 10- year yields are still down 42bps on the year

 

The Fed wants to raise rates but insists on re-investing the take on its massive portfolio. They act like fund managers protecting their AUM.

 

The Osaka Stock Exchange had to invoke circuit breakers today on the March JGB future for excessive volatility. Buying panic yesterday to front-run today’s QE buying led to panic selling today into BOJ bids 22 bps through Monday’s close. Oh, and did I mention, ahead of an auction tomorrow. The take-away is mayhem, not analysis.

And now we look forward to an even greater surge in volatility first ahead of the Fed and BOJ next week, who – just like everyone else – have no idea what is going on any more.

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

Submitted by Martin Armstrong via ArmstrongEconomics.com,

It’s not the hair.

Or the bad manners.

Or the “beautiful” wall he says he’ll build.

There’s a different, more subtle reason why the Republican establishment, donor class, political operatives, and the news media in general hate Donald Trump.

The reason can be found in a New York Times best selling business book, Stacking The Deck, by Wharton professor David Pottruck.

Pottruck, the Charles Schwab CEO who took the genial brokerage house online and into the big time, says that organizations hate change. Hate it with a PASSION!

That’s because when there’s a new way of doing things, a new way of solving problems, a new way of relating to everything, they feel threatened as a deep personal-loss.

Change renders meaningless the value of their hard-won experience and know-how. In politics, it may means family member lose their cushy jobs and perks.

Student loans of government employees get automatically paid off by government – TAX FREE.

Those in government have done things one way forever. Change is NOT FAIR to them

Everything they have done to line their pockets is threatened. The rules of the game may no longer apply.

So they dig in their heels and will do whatever it takes to resist change.

They resist perpetually until forced otherwise.

They subvert any process that would lead to change.Until they lose, it becomes open warfare against the people to sustain the establishment and its perks.

And so it is with Donald Trump. Like him or not, he has completely rewritten the rules of Presidential politics.

He bypasses the media, taking his message, raw and unfiltered, to the millions of people who follow him on Twitter.

The party establishment went from underestimating him and laughing at him to fearing him breaking out in night sweats.

They fear all power and their relevance will vanish into thing air.

Donors gave Jeb Bush $120 million and he came in dead last.

The money, like Jeb, is gone and it could not save their fiefdom.

Now wealthy donors have a choice. Oppose Trump and he wins and they are out in the cold. Understand there is a change in the wind and shift sides to the people.

How ironic.  It took a billionaire to neuter the billionaire donor class.

Most of the media hates Trump to the core and dislike the fact they are no longer able to play kingmaker losing their power fearing they will be irrelevant with the internet displacing them.

The political class have lost the power to rule behind the curtain from paid operatives and cronies who cannot transition to the new world where the old rules of campaigning don’t apply.

Trump has spent more on hats than he has on polls so the pollsters also have lost their importance.

Diplomats worldwide are running scared because Trump will renegotiate everything from a business standpoint that cannot be bought like Hillary & her foundation.

The handwringing, the dire predictions of doom, and the wailing and gnashing of teeth have little to do with Donald’s positions, but their loss of power.

They complain Trump is bringing in new voters who are not Republican. And this is bad?

The Trump threat isn’t to the Constitution, to America’s standing in the world, or even to Republican Congressional candidates, it is to the establishment.

If you think Trump’s supporters are angry about the way the government and the business world colluded, you are right. The establishment fails to appreciate the anger.

They’re just furious. Even if Trump fails to win, there will be more in the wings. He is inspiring a change and he doesn’t even understand how profound.

via Zero Hedge http://ift.tt/1RTI2td Tyler Durden