Tuesday, April 30, 2019

Humpty Dumpty Has Had a Great Fall -

While the crazed and corrupt people who comprise the Democratic Party and US print and TV media continue to insist that Russiagate is real, a very real threat is emerging in Russia, China, North Korea, and Iran. The threat arises from the fact that Washington has taught each country to have no trust in America’s veracity. The governments of the four countries have learned that everything Washington says is a lie.
Moreover, the countries have learned that Washington does not accept their sovereignty and objects to their existence. Each of the four countries has experienced sanctions designed to overthrow their governments or cause them to submit to Washington’s will.
Russia long ago saw through Washington’s disingenuous claim that the missile ring that Washington has arrayed around Russia is defensive and directed against (non-existent) Iranian missiles. Putin has said many times that the “defensive” missiles can easily and quickly be converted into nuclear armed offensive missiles that leave Russia no response time. I have always been amazed at the utter stupidity of the Polish and Romanian governments for accepting these American missiles. No doubt the Polish and Romanian officials were paid handsome bribes, but money is no good to a dead person. You can bet your life that the Russians are not going to permit such operable weapons to be on Russian borders during a time of high tensions that exists today between the West and Russia.
Not content with this reckless provocation of Russia, the dumbshits that comprise the US government have announced a program to put weapons in space that can neutralize Russia and China’s nuclear deterrent. This reckless and irresponsible plan did not go unnoticed in Russia. Lieutenant General Viktor Poznikhir, Deputy Chief of the Russian General Staff Operative Command, declared last week that Washington’s “on-start interception” program reveals that Washington is preparing a preemptive nuclear attack on Russia and China. You can bet your life that Russia and China are not going to sit there and wait for Washington’s attack, expecially as Russia has coming into deployment hypersonic missiles incapable of interception by any known or deployed means.
What Washington and its corrupt European vassals are doing is preparing the grave for the Western world, a good riddance as far as the rest of the world is concerned.
In the US self-interested political propaganda has succeeded in crowding out all attention to real issues, such as mass displacement of jobs by robotics, global warming whatever the cause, and the rising risk of nuclear war. When the rest of the world looks at the West, it sees an insane asylum in which the two greatest threats to American national security are said to be Venezuela and a Russian agent in the Oval Office.
It is impossible for anyone to take a country this silly seriously. Consequently, American power is collapsing, to everyone else’s relief. Even Washington’s well paid puppets in Germany, Britain, and France are showing signs of independence that have not been seen since the days of Charles DeGaulle.
The Russians, Chinese, Iranians, and North Koreans know that they are dealing with fools, and they are not going to take any chances. They know that no agreement with America means anything and that Washington speaks only with a forked tongue.
Washington is going to be increasingly frustrated abroad as willingness to cooperate with the insane asylum vanishes. The consequence will be increasing tyranny at home.

On the American Ideology and its Proponents and Beneficiaries - By Hans-Hermann Hoppe (America Uber Alles = NeoBabelism? - CL)

Translated from German by Ohad Osterreicher[1]
“We paint the world to ourselves as we like – until everything breaks down and no longer holds.”
We live in the age of the American Empire. It can be that this empire will someday crumble. In the foreseeable future, however, it is here to stay, not on account of its military strength but first and foremost because of its ideological power. For the American empire has achieved something truly remarkable: the internalization of its core belief system as an intellectual taboo into the minds of most people.
Granted, all states rest upon aggressive violence, and the USA is no exception. The United States as well do not hesitate to annihilate everyone who opposes their legislative despotism. Though the USA had thus far employed little actual violence to have its orders submissively followed because the overwhelming majority of the population and especially of the opinion-forming intellectuals have accepted the system of values and convictions which makes up the American empire.
According to the official, USA approved belief system, we are all equally intelligent and reasonable people, who are confronted with the same “harsh reality” and are bound to the same facts and truths. Of course, it is true, that even in the age of the American empire, in the USA, people do not live in the best of all worlds. There are many more problems to be solved. Though with the American system of a democratic state, humanity has found the perfect institutional framework which makes the next step in the direction of a perfect world possible; and if only would the American system of democracy takeover worldwide, would the way to perfection be clear, smooth and free.
The single legitimate form of government is democracy. All other forms of government are worse, and any government is better than none. Democratic states like the USA are of the people, by the people and for the people. In democracies no one rules over the other; instead, the people rule over themselves and are thus free. Taxes in democratic states are therefore contributions and payments for governmentally provided services; accordingly, tax avoiders are thieves, who take without paying. To provide shelter for fleeing thieves is thus an act of aggression against the people, from whom they are trying to escape.
Though there are still other forms of governments around the world. There are monarchies, dictatorships, theocracies, and there are feudal landowners, tribes, and warlords. And for this reason, democratic states often must necessarily deal with non-democratic states. Eventually, all states must be converted to the American ideal, because only democracy allows for a peaceful and continual change for the better.
Democratic states like the USA and its European allies are inherently peaceful and do not wage war against each other. If they must fight any wars all at, then these are preventive wars of defense and liberation against aggressive and undemocratic states, that is, just wars. All countries and territories that are presently in war with or occupied by American troops or its European allies – Afghanistan, Pakistan, Iraq, Libyan, Syrian, Sudan, Somalia and Yemen – were therefore guilty of aggression and their war waging and occupation on behalf of the democratic West were an act of self-defense and liberation. However, there is still much to be done. Especially Russia and China still pose a huge threat and must be liberated, in order to make the world finally safe.
Private property, markets, and profits are useful institutions, but a democratic state must ensure that with the appropriate legislation, private property and profits are acquired and used in a socially responsible manner and that markets function efficiently. Moreover, markets and profit-seeking entrepreneurs cannot produce public goods and are thus incapable of satisfying any social needs. And they cannot take care of the truly needy. Only the state can take care of social needs and the less fortunate. The state alone can, through the finance of public goods and aid to the poor, increase the public welfare, and diminish poverty and the number of the needy, if completely not eliminate.
Especially the state has to put the private vice of greed of the pursuit of profit under control. Greed and the pursuit of profit were the leading causes of the most recent large financial crisis. Reckless financiers generated an irrational exuberance among the public, which ultimately had to crash into reality. The market was wrecked, and only the state stood ready to save the day. Only the state, through appropriate regulation and supervision of the banking industry and financial markets, can prevent such a thing from happening again. Banks and companies went bankrupt, yet the state and its central banks held ground and protected the money and jobs of the workers.
Advised by the leading and best-paid economists in the world, states and especially the USA have discovered the causes of economic crises and realized that in order to get out of an economic mess, the people must simultaneously consume more as well as invest more. Every cent under the mattress is a cent withheld from consumption and investment, which in turn impairs future consumption and investment expenditure. In a recession, spending must first of all and under all circumstances be increased; and when the people do not spend enough of their own money, the state has to do it instead. Prudently, states have this option, for their central banks can produce any necessary liquidity. If billions of Dollars or Euros are not enough, then trillions will do; and if trillions do not meet the goal, then surely quadrillions will. Only massive state expenditure can prevent an otherwise unavoidable economic meltdown. In particular, unemployment is the result of low consumption: people who do not have enough money to buy consumer goods; this problem must be remedied by providing them with higher wages or higher unemployment benefits.
When the last financial crisis is finally overcome, the democratic state can and must devote itself once more to the really urgent remaining problems of humanity: the battle against inequality, the elimination of all unjust discrimination, and the control of the global environment and the global climate in particular.
In principle, all people are equal. Differences are only apparent, shallow and meaningless: some people are white, some brown, some black, some are big, others are small; some are fat and others thin; some are male, and some are female; some speak English and others Polish or Chinese as mother tongue. These are accidental human traits. It is a coincidence that some people possess these and some do not. But accidental traits like these have no influence whatsoever on and do not correlate with mental properties like motivation, time preference or intellectual abilities, and they do not contribute to the explanation of economic and social success, especially of income and wealth. Mental and psychic properties have no physical, biological or ethical basis and are limitlessly malleable. In this regard is everyone, except for a few pathological individual cases, equal to the other, and every nation has made in the course of history a contribution to civilization of equal value or would have done so, if only it would have gotten the same chance. Seemingly obvious differences are solely the result of different external circumstances and education. All differences in income and achievements between Whites, Asians, and Blacks, women and men, Latins, Anglos-Saxons and Thais as well as Christians, Hindus, Protestants, and Moslems would disappear, if only equality of opportunity would be established. If instead it will be discovered, that all these different accidental groups are unequally represented in and distributed across different levels of income, wealth, or professional status, some are richer and more successful than others, then this demonstrates unjust discrimination; and such discrimination must be counterbalanced through appropriate, targeted affirmative action on behalf of the state, in which the discriminators have to compensate the unjustly discriminated.
And the studies of the leading and best paid social scientists have clearly shown, who, above all, are the discriminators. The people in question are first and foremost white heterosexual males and the institution of the traditional, patriarchal organized family. It is, therefore, most notably this group of people and this institution which must compensate all other groups and apologize to all other forms of social organization.
But this would not do. The reparations to all disadvantaged, to all victims of inequality and discrimination, require likewise strong governmental support of multiculturalism. The highly developed and white male dominated countries of the Western world have obtained their wealth at the expense of the inhabitants of all other regions of the world and are caught in a disastrous and prejudiced particularism and nationalism. This situation lends itself to be overcome through the promotion and systematic incentivization of immigration of people from different, foreign countries and cultural environments, in order to ensure that the foreign immigrants could finally unleash their full human potential and simultaneously replace the Western parochialism with an authentic cultural diversity.
And with the victory over the disastrous particularism and nationalism through a systematic policy of multiculturalism is one finally able to turn to the crucial stride toward a solution to the undoubtedly biggest global, borderless and world-encompassing problem of climate change. Divergent particularistic and nationalistic interests have thus far lead to the fact that the production and the consumption of non-renewable energy sources were left mostly unregulated and worldwide uncoordinated. And that is why, as the leading and best-paid climate researchers have undoubtedly proven, is the whole globe threatened by unimaginable catastrophes: floods, strong and sudden rising sea levels and the emergence of fatal ecological disequilibria and instabilities. Only through a worldwide, concentrated action by all states, and ultimately the establishment of a supranational world government under the leadership of the USA and an enforced systematic regulation of any production and consumption activities, can this life-threatening danger be avoided. “The common good comes before the individual good” – this is above all, what the problem of climate change shows, and it is on the states and especially on the USA to permanently implement this principle.
Now, I tell you no secret when I admit that I hold this for a massive pile of rubbish, for complete nonsense and a highly dangerous one at that – but I also do not belong to the leading and best-paid economics and social scientists, and of climate research, I understand nothing at all! Except that I know, for example, that a global climate warming is no global problem, but one that affects people in different places of the globe entirely differently, a curse for one is a boon for the other, and insofar downright forbids a global solution.
Question: who are we to thank for this nonsense, whom does it benefit, and how is it that we are fed daily with it by the official media?
Here I want to hint at the answer only very briefly. It has two parts. One has to do with the institution of a state, and especially of a democratic state, with its occupants and representatives. And the other has to do with the intellectuals.
The state is a monopoly of legislation and law enforcement. In all conflicts, including those which it or its representatives are involved in, the state or people appointed by the state decide who is right or wrong. The predictable result is: the state is always right, in everything that does. Whether robbed, plundered, killed, lied to and threatened in the name of the state – or summarized in single sentence: when force is exerted on other people and violence is used against other persons – everything can and everything will be painted by it and its agents as just and assigned with another, deceptive and attractive name. This makes the institution of the state naturally attractive for all people who would like to rob, plunder, kill, lie, defraud other people, that is, use violence against others. Above all, it is these kinds of people who therefore try to infiltrate and take over the institution of the state. And if, as under democratic conditions, the entrance in and the occupation of the state stands free and open for everyone, that is, when it becomes a downright competition for votes between power thirsty crooks, then it is to expect, that the persons who will get to the top of the state are those who possess the greatest talent of rhetorically covering up their own predatory, treacherous and murderous intentions and selling these as good deeds to the voting masses. In short: The best demagogues, the best pied pipers, and corrupters get to the top.
Though when one looks at these democratically elected politicians and members of parliament, whom day by day impose their obvious megalomaniac will though law or decree on millions of people– can one only marvel. Because these people are as a rule not some kind of formidable, impressive alpha males or females, but an epitome of mediocracy or merely a collection of losers, idiots and failures, who have never in their entire life produced a product or rendered a service which someone would have voluntarily bought with his own money.
And faced with these tragic figures, who grandiosely claim to be “our” highest representatives, the question then arises, whether such light-calibrated people are even in the position of conceiving by themselves the entire nonsense which they tell us every day, and furthermore, whether they have what it takes to come up with the diverse justifications and rationalizations for this nonsense which they everywhere feed us.
There one surely has a considerable doubt! And that leads me directly to the second part of my answer to the question of the originators and beneficiaries of the above described “politically correct” view of the world and the nature of things: the intellectuals, or put more precisely, those intellectuals who occupy themselves with social, economic and philosophical question and problems, and their connection to the state and its leaders.
As in the case of the politicians, so is there in the case of the intellectuals hardly a person who through her intellectual work, her writings and speeches, for these are what she produces, that could secure a comfortable livelihood and income. The market demand for such products is low and is furthermore subject to large deviations. Only a small number of intellectuals would succeed in making a profession out of their writings and speeches. The vast majority of actual or alleged intellectuals would be advised to conduct their scientific interests as a mere inner vocation and to earn their livelihood elsewhere, by the practice of a normal civilian profession. But this naturally contradicts the feeling of self-esteem of an intellectual, and all those who view themselves as such. The intellectuals are convinced of the importance and value of their work like no other group and are accordingly resentful when the alleged appropriate high social recognition fails to materialize.
What is then left for them instead? They are usually not suitable for politics, for they are typically too honest and wonkish, too shy, awkward, introverted and particularly antisocial. And for this reason, they mostly lack the desire for power, which is precisely what makes a politician.
But the intellectuals are naturally smart enough to know that even if they are not made to be politicians, they nevertheless need the politicians to get the money required for a comfortable living. And they obviously also know what they must offer as a service in return so to get the biggest possible cut of their pillage: namely well-sounding justifications for continually expanding the powers of the state, and “bold” visions and programs with noble, well-intentioned goals, for example, that of “equality of all people” which cannot ever be achieved, no one can ever achieve, but precisely because of this one never has to give up on, but can repetitively revive and ceaselessly renew.
And so it comes to an unholy alliance: that of the early, monarchical times between church and crown, and that of today, in the American age, between democratic politicians and intellectuals. The result? Never before were there so many politicians and above all so many alleged intellectuals as well who live and indulge in luxuries at the expanse of an ever-decreasing number of productive persons. And never before, in order to stay among the intellectuals, have the numerous and large universities, as the publicly funded and supported citadels of intellectual power and influence and the breeding ground of future politicians and intellectuals, produced so much horrific intellectual nonsense and contributed to the misleading of the public as in our times.
In light of this fact, what can one do? I am afraid that not much – except to repetitively and openly call out the whole hoax. This means that for one thing, to recognize and describe the politicians for what they really are: a band of liars, crooks, robbers, murderers, and associates to murder; and treat them accordingly with contempt, scorn, and ridicule. But also their intellectual masterminds and assistants, without whom the politicians could never carry out their evil work, must be targeted, and as the first step toward a return to normalcy and sound human understanding, to common sense, it is imperative to push for the financial draining of the universities. Not only should all centers for Blacks, Latins, women, gender, and Queer-studies, and everything else that there is of this then unheard of exotica, be closed, but also the social science departments altogether, starting with political science and history, through sociology and up to economics and social and economic statistics (whose statistics also serve the goals of uncovering ever new “inequalities” and to call for redistribution or reeducation!) And likewise should the profession of the academic literary studies and criticism and, as much as it hurt me to say, the profession of the academic philosophers as well be thinned out. And the people who believe, that they know how one controls the climate, one should issue them a certificate of illness and send them for treatment in a psychiatric clinic.
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This does not mean that one should have anything in principle against the work of political scientists, sociologists, economists, statisticians, literary critics, philosophers or climate scientists, or wish that they should cease to exist. Without a doubt, there will be people who genuinely occupy themselves with questions and problems of all disciplines. And that is good and necessary. But surely would the number of such scientists be much smaller. But quantity is not the same as quality, and the reduction in the number of tax-funded social scientists of all kinds is by no means tantamount to an intellectual descent. Completely the opposite. Freed from the intellectual pollution which is currently produced by the universities, appear once more the possibility of a rise of a class of new and better intellectuals, characterized by firm stance and authentic understanding of reality.
Yet all of this lies, if it is even possible to arrive at, in the far future. But thank god one need not wait for it any longer. For in the niches of the present madhouse, totally apart from today’s universities and schools and the ongoing charade, there is, in any case in Vienna, around Vienna, and all around Vienna in the German-speaking region, still – or even better: once more – a place in which though one cannot earn any professional credentials or governmental certificates, but in which man can acquire real education and learn and practice critical thought and argumentation: Rahim’s Scholarium.
[1] Ohad Osterreicher is studying undergraduate economics at the University of Bayreuth, Germany.
Reprinted with the author’s permission.
Hans-Hermann Hoppe [send him mail] is distinguished fellow at the Mises Institute and founder and president of the Property and Freedom Society. His books include Democracy: The God That Failed and The Myth of National Defense. Visit his website.
Copyright © 2019 Hans-Hermann Hoppe

"Without Disinformation, NATO Would Crumble" - By Manlio Dinucci (Disinformation = LIES = To serve the god of this world?)

Q: What is the result of the Symposium in Florence?
Michel Chossudovsky: The event was a great success, with the participation of speakers from the United States, Europe and Russia. We presented the history of NATO. We identified and carefully documented its crimes against humanity. And at the end of the Symposium, we presented the “Declaration of Florence,” a way of exiting the war system.
Q: In your introduction, you affirmed that the Atlantic Alliance is not a true alliance…
Michel Chossudovsky: On the contrary, under the appearance of a multinational military alliance, it is the Pentagon which dominates the decision-making mechanisms of NATO. The USA controls the command structures of NATO, which are incorporated with those of the United States. The Supreme Allied Commander in Europe (SACEUR) is always a US General nominated by Washington. The Secretary General, currently Jens Stoltenberg, is essentially a bureaucrat who handles public relations. He has no decision-making role.
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Q: Another theme you raised was that of the US military bases in Italy and other European countries, including in the East, despite the fact that the Warsaw Pact has not existed since 1991, and despite the promise made to Gorbachev that no extension of NATO towards the East would ever occur. What is the purpose of these bases?
Michel Chossudovsky: NATO’s tacit objective – an important theme in our debate in Florence – is to implement, under a different denomination, the de facto “military occupation” of Western Europe. The United States not only continue to “occupy” the ex-members of the Second World War “Axis countries” (Italy, Germany), but have used the badge of NATO to set up US military bases in all of Western Europe, and, thereafter, in Eastern Europe in the wake of the Cold War, and in the Balkans in the wake of the NATO war against Yugoslavia (Serbia-Montenegro).
Q: What has changed in terms of the possible use of nuclear weapons?
Michel Chossudovsky: Immediately after the Cold War, a new nuclear doctrine was formulated, focused on the preventive use of nuclear weapons, in other words, on a nuclear first strike as a means of self-defence. Within the framework of USA-NATO interventions, presented as peace-keeping measures, a new generation of “low power” and “non-usable” nuclear weapons was created, described as “inoffensive for civilians”. US political leaders consider them to be “bombs for pacification.” The Cold War agreements, which established certain safety measures, have now been abandoned. The concept of “Mutually Assured Destruction,” relative to the use of nuclear weapons, has been replaced by the doctrine of preventive nuclear war.
Q: NATO was “obsolete” at the beginning of the Trump presidency, but now it has been rebooted by the White House. What relation is there between the arms race and the economic crisis?
Michel Chossudovsky: War and globalisation go hand in hand. Militarisation relies on the imposition of macro-economic restructuration in the target countries. It imposes military spending in order to support the war economy to the detriment of civil economy. It leads to economic destabilisation and the loss of the power of national institutions. An example – recently President Trump proposed huge budget cuts in the health and teaching sectors, and in social infrastructures, although he has asked for a massive increase in the budget of the Pentagon. At the beginning of his administration, President Trump confirmed the increase of expenditure in the military nuclear programme, launched by Obama, from 1,000 to 1,200 billions of dollars, claiming that this would serve to make the world safer. All over the European Union, the increase in military spending, coupled with austerity measures, is leading to the demise of what used to be called “the Welfare State.” Now, under US pressure, NATO is engaged in increasing military spending, and Secretary General Jens Stoltenberg declares that this is the correct decision to “guarantee the safety of our population.” The military interventions are coupled with concomitant acts of economic sabotage and financial manipulation. The final objective is the conquest of both human and material resources and of political institutions. The acts of war support a process of total economic conquest. The hegemonic project of the United States is to transform countries and international sovereign institutions into territories which are open for their penetration. One of their instruments is the imposition of heavy penalties on debt-ridden countries. The imposition of lethal macro-economic reforms serves to impoverish vast sectors of the world population.
Q: What is now, and what will become the role of the medias?
Michel Chossudovsky: Without the disinformation broadcast, in general, by almost all the medias, the military programme of the USA-NATO would collapse like a house of cards. The imminent dangers of a new war with the most modern weapons and the atomic peril are not the sort of news that makes the headlines. War is presented as an act of pacification. War criminals are depicted as pacifiers. War becomes peace. Reality is reversed. When lies become truth, there is no going back.
The articles on Voltaire Network may be freely reproduced provided the source is cited, their integrity is respected and they are not used for commercial purposes (license CC BY-NC-ND).

Monday, April 29, 2019

oftwominds-Charles Hugh Smith: This Is the End of the Cycle

Both new households and new businesses are in secular decline. Goosing the stock market and GDP doesn't change this reality.
Everyone wants every cycle of expansion to last forever, but alas every cycle ends. The growth cycle that began in 2009 is finally coming to an end. The signs are everywhere, notwithstanding the torrid 3.2% GDP growth for the first quarter of 2019 (which as others have noted, is less than meets the eye.)
Gross Domestic Product (GDP) is the standard measure of expansion, but it is an imperfect metric. GDP can still notch gains while the majority of the economy is stagnating and assets are losing value.
Better guides to expansion than GDP are sales volumes, prices, profits, wage increases and sustained rises in new enterprises and households. All of these measures of expansion are stagnant, indicating that monetary and fiscal stimulus are no longer moving the needle.
Corporate profits are higher as a result of accounting gimmicks, not soaring sales or expanding gross profit margins. Stocks are being pushed higher by the old trick of lowering earnings estimates so that corporations can "beat by penny."
In many once-hot real estate markets, sales are slowing while prices continued edging higher but at much slower rates than in the past. This is classic late-cycle activity: sales are declining as the pool of buyers has been drained while price increases have become marginal.
Global sales of pricey mobile phones and vehicles have slowed, indicating the exhaustion of the cycle is global. Again, this is classic late-cycle activity: trends that powered the narrative of "strong growth everywhere" are fading, despite attempts to hype some blip as a sign that strong growth is about to start up again.
New households and enterprises drive expansion. New households buy homes, furniture, home improvements, appliances and so on, while new businesses buy equipment, hire workers and sign on professional services such as accounting, insurance, etc.
Both new households and new businesses are in secular decline. Goosing the stock market and GDP doesn't change this reality.
Prices are reaching unaffordable levels across the board: homes and rents in big cities are unaffordable, fine dining is unaffordable, property taxes are unaffordable, construction is unaffordable, autos and trucks are mostly unaffordable, fast food is increasingly unaffordable, college tuition is beyond-unaffordable, healthcare and healthcare insurance are insanely unaffordable-- the list includes the vast majority of the costs of living. (Cheap TVs are getting a bit cheaper. Yea for low inflation!)
Rising prices are also classic late-cycle signs. To make a buck, everyone has to raise prices and cut what they can, and rising prices impacts sales.
As for the stock market: a blow-off top based on the misplaced confidence that strong growth is starting up again is also classic late-cycle action. The first doubts triggered the decline from October to December, and the sharp rebound this year once the Federal Reserve signaled "we'll do whatever it takes" is very typical of the late-cycle topping process: price sags as doubts emerge about the aging expansion, then notches a nominal new high to assuage everyone that the long-in-tooth Bull is starting another multi-year expansion.
Those being paid to hype "the Bull market and the expansion will never end" narrative are experts at turning late-cycle blips into evidence that the cycle has plenty of room to run, but the more prudent observers are looking at the preponderance of evidence.

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That Time the Dollar Tide Went Out... - Author: Tom Luongo

Welcome to the Dollar Rally to end all rallies. This week’s action in the U.S. dollar puts paid all of the moves by the Fed and the ECB over the past three months to forestall this from coming.
First it was January’s FOMC meeting where the Fed completely reversed course after a very unpopular December rate hike threw equity markets into a tailspin by Christmas.
Of course our Narcissist-in-Chief thought it was all about him and implored the Fed to stop raising rates. It was interfering with his ability to shake down the world at his sanctions and tariffs party.
But it wasn’t about him at all. It was about the Fed’s need to normalize rates into a coming global slowdown after a central-bank-induced, decade-long recovery of dubious merit.
They’d done their job of recapitalizing the banks, somewhat, and now it was time to start trying to address the massive pension system and municipal bond crisis that was on the horizon.
Or at least that’s what they thought.
Moreover, at some point the Fed had to show the markets something positive. That unwinding its balance sheet alongside significant shift in capital flows thanks to Trump’s tax cuts going into effect in 2019 was a signal to U.S. corporations to invest in something other than balance sheet manipulations themselves — buybacks, special dividends, etc.
Trump can talk a good game about the ‘greatest economy evahr!’ but reality is even today’s 3.2% GDP print is marred by one-off items like an anomalous contraction of the trade deficit and huge inventory builds as Zerohedge pointed out.
Let’s not forget how easy it is to get a big GDP print when you’re running the biggest deficits in history.
So what’s the real story. Well, as always, it’s the dollar, stupid, as I said yesterday over at Money & Markets. The dollar synthetic short thanks to that decade of cheap access to them has created a monster not only in emerging markets per normal, but also in developed markets as well.
Europe. Great Britain. Japan. China.
The problem now is that both the pound and euro have broken down out of their ranges and are threatening free fall. The euro broke support at $1.12 and looks for all the world that it is headed to the 2017 low of $1.034. The pound is fairing a bit better, trading just below $1.29 with the February low of $1.277 still in play. A weekly close below that and $1.198 comes into play.
This wasn’t supposed to happen with the European Union winning the Battle of Brexit by keeping the U.K. locked into its death spiral like a peregrine falcon hanging onto a wolverine and getting torn to shreds.
So while we’ve been focused on the Turkish lira, it is the euro and pound that are the worrying ones as Europe now seems to be losing the real war, the one for investor confidence.

The dollar has broken out to the upside despite the best efforts of the Fed, Donald Trump, the ECB and every other philosopher king (and I use that term with as much derision as I can muster) the markets look to to provide guidance.
It’s not terribly complicated when you think about it. A decade of zero-bound and/or negative-bound interest rates have so thoroughly screwed up the market for dollars globally that any small shift in perceived dollar liquidity results in massive volatility.
See the chart below. It is the USDX (in Red) and the percentage of Reserves Absorbed by non-currency factors (in Black) published by the Fed weekly in its H.4.1 report. It says a lot even though the relationship presented should be fairly obvious. As the Fed has changed it’s monetary policy, the percentage of total bank reserves in the U.S. reserved and unavailable for lending has decreased.
As this percentage goes so does the U.S. Dollar Index. Note the extreme volatility known as 2013’s “Taper Tantrum” where the Fed began tapering off its bond purchases. The U.S. dollar took off like a shot once the balance sheet expansion ended.
And that trend not only hasn’t stopped but it is now accelerating during Powell’s Quantitative Tightening. Dollar liquidity is falling rapidly as bank reserves are increasingly becoming more illiquid; needed to cover collateral liabilities.
And to make matters worse currency in circulation has expanded 50% in the past seven years, in case you’re wondering where all the stagflation is coming from.
And It isn’t just a function of the math of a smaller balance sheet, if you’re wondering.
As the Fed let’s the balance sheet normalize the amount of dollars needed to maintain capital adequacy rises. The banks wouldn’t be hitting the reverse repo window or holding huge balances with the Treasury dept. if there wasn’t trouble. Most of the spikes in both of these charts in reserves absorbed (again in Black) coincided with quarterly closes.
In the two weeks prior to earnings the banks would go to the Fed and park a few hundred billion to dress up their balance sheets to report earnings and then drain it out. If you ever wondered why, for example, gold would get hammered in the last couple weeks of the quarter, especially Q1’s, this is why.
And this only scratches the surface of what’s happening as Jeff Snider consistently reminds us as the eurodollar system, the offshore dollar liquidity system, spasmed last May and hasn’t recovered.
Even China has a dollar problem now, apparently. I’m not completely convinced this ‘problem’ isn’t somewhat self-inflicted as China diversifies away from the dollar to assist strategic partners in their struggles against U.S. hybrid war tactics, but “tomato to-mah-to” at this point.
Most importantly this trend is starting to go parabolic and coincides with this week’s breakout of the USDX and the breakdown of the euro and British pound to new lows.
Is is any wonder that Powell is now looking to end QT and commence QE?
Trump and his torturer-in-chief John Bolton are only adding fuel to this fire with their insane foreign policy. Weaponizing the use of the dollar which forms the backbone of your empire will eventually cause that dollar to spike, as it is right now.
Trump, Bolton and Mnuchin feel now is the time to tighten pressure until ‘the pips squeak,’ as Bolton recently put it. But don’t worry, it won’t be his fault when a spiking U.S. dollar boomerangs back on an over-leveraged U.S. economy in ways they can’t conceive of.

Sunday, April 28, 2019

Vox Popoli: There will be war (And when it inevitably arrives - ALWAYS blame DaProphet! - CL)

As it happens, the German ultra-nationalists are correct. As various military officers have been predicting for years, there will be war in Europe due to the mass invasion of the continent, although the eventual demise of the reunified German state is far from certain:

German ultra-nationalists believe a civil war and an eventual demise of the state will come about, and are preparing for it by training to use firearms and explosives, a local security service has warned. Germany’s domestic intelligence agency, the BfV, sounded the alarm over the rise of the underground far-right, according to Die Welt. An intelligence report seen by the paper calls for increased surveillance of so-called “preppers” – a loose network of ultra-nationalists who prepare for apocalyptic scenarios.

Those people are collecting firearms and other supplies in preparation for “a civil war” or “a feared collapse of public order” in Germany, the BfV revealed. The preppers movement, which first emerged in the US, has long been rooted in survivalism – which sees far-right militias making stockpiles of food, ammunition and medicine that they would use in the event of a doomsday scenario.

Of course, there will also be war everywhere from America to Sri Lanka as well, because war always, Always, ALWAYS follows on the heels of the mass movement of peoples. It's a little ironic that the BfV is warning about the rise of the "underground far-right" when that is nothing more than a symptom caused by the importation of millions of foreigners against the wishes of the native population.

For the present, it would be going too far to say that the refugees, as well as those who are responsible for their plight back in their homelands, are actively waging war against the West. They lack the leadership and organization required for the effective, large-scale violence that war entails. However, it must be recognized that more than a few in their midst are not averse to using violence in order to achieve their aims. They have, after all, invaded numerous countries without regard for the will of the people of those countries, and their presence is no less likely to spark resistance than the armed invasions of the past. Since war, as Clausewitz teaches, has a built-in tendency to escalate, the resistance can be expected to graduate into all-out armed conflict over time. Especially, as seems likely, if the influx continues and all the valiant efforts at integration prove futile.
- Martin van Creveld, "War and Migration", There Will Be War Vol. X