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- Whenever we see an inverted yield curve, a recession almost always follows, and that is why many analysts are deeply concerned that the yield curve is currently the flattest that it has been in about a decade. In other words, according to one of the most reliable indicators that we have, we are closer to another recession than we have been at any point since the last financial crisis. And when you combine this with all of the other indicators that are screaming that a new crisis is on the horizon, avery troubling picture emerges. Hopefully this will turn out to be a false alarm, but it is looking more and more like big economic trouble is coming in 2018.
- The professionals on Wall Street take the yield curve very, very seriously, and the fact that it has gotten so flat has many of them extremely concerned. The following comes from Business Insider…
In the past, including before the Great Recession of 2007-2009, an inverted yield curve, where long-term interest rates fall below their short-term counterparts, has been a reliable predictor of recessions. The bond market is not there yet, but a sharp recent flattening of the yield curve has many in the markets watchful and concerned.
The US yield curve is now at its flattest in about 10 years — in other words, since around the time a major credit crunch of was gaining steam. The gap between two-year note yields and their 10-year counterparts has shrunk to just 0.63 percentage point, the narrowest since November 2007.
- If the yield curve continues to get even flatter, it will spark widespread selling on Wall Street, and if it actually inverts that will set off total panic.
- And with each passing day, even more of the “experts” are warning of imminent market trouble. For example, just consider what Art Cashin told CNBC the other day…
Investors may want to take cover soon.
Art Cashin, UBS’ director of floor operations at the New York Stock Exchange, says a “split personality” is manifesting itself in the stock market, and it could hit Wall Street where it hurts at any moment.
“We’ve been setting record new highs, and often the breadth has been negative. We’ve had more declines than advances,” Cashin said Thursday on CNBC’s “Futures Now.”
- When the financial markets finally do crash, it won’t exactly be a surprise.
- In fact, we are way, way overdue for financial disaster.
- Since the last financial crisis, we have been on the greatest debt binge in human history. U.S. government debt has gone from $10 trillion to $20 trillion, corporate debt has doubled, and U.S. consumer debt has now risen to nearly $13 trillion.
- Debt brings consumption from the future into the present, and so it increases short-term economic activity at the expense of long-term financial health.
- But we simply cannot continue to grow debt much, much faster than the overall economy is growing. I have never talked to anyone that believes that our debt binge is sustainable, and I doubt that I ever will.
- The only reason why we have even gotten this far is because interest rates have been pushed to historically low levels. If the average rate of interest on U.S. government debt even returned to the long-term average, we would be paying more than a trillion dollars a year in interest on the national debt and the game would be over. Unprecedented intervention by the Federal Reserve and other global central banks has pushed interest rates way below the real rate of inflation, and that has bought us extra time.
- But now the Federal Reserve and other global central banks are reversing course in unison, and global financial markets are already starting to decline.
- The only way we can keep putting off the next financial crisis is if we continue our unprecedented debt binge and if global central banks continue to artificially prop up the financial markets.
- Of course more debt and more central bank manipulation would just make the eventual financial disaster even worse, but that is what we are faced with at this point.
- Most people simply don’t understand the gravity of the situation. Nothing was ever fixed after the last financial crisis. Instead, we went on the greatest debt binge that humanity has ever seen, and central banks started creating trillions of dollars out of thin air and recklessly injected that hot money into the financial system.
- So now we are in the terminal phase of the largest financial bubble in human history, and there is no easy way out.
- We basically have two choices. We can have a horrific financial crisis now, or we can have one a little bit later.
- Usually the choice is “later”, and that is why our leaders have been piling on the debt and global central banks have been recklessly creating money.
- But it is inevitable that our bad choices will catch up with us eventually, and when that happens the pain that we are going to experience is going to be absolutely off the charts.
- It’s a wake-up call for a lot of people who will say ‘Look, the stuff I own is actually very risky‘…” warns Ray Jian, who oversees about $6 billion at Pioneer Investment Management Ltd. in London. “People have been ignoring risks in places like Lebanon for a long time,”and the official default of Venezuela this week has emerging-market money managers are looking to identify countries that might run into trouble down the road.
- While Bloomberg reports that while none are nearly as badly off as Venezuela – where a combination of low oil prices, economic mismanagement and U.S. sanctions did the country in – traders are scouting for credit risk, from Lebanon, where Prime Minister Saad Hariri’s sudden resignation has once again thrust the nation into a Saudi-Iran proxy war, to Ecuador, where recently elected President Lenin Moreno continues to expand the debt load in a country with a history as a serial defaulter.
- 1. Lebanon:
- One of the world’s most indebted countries, Lebanon may hit a debt-to-gross domestic product ratio of 152 percent this year, according to International Monetary Fund forecasts. That’s coming at a time when political tension is rising. Hariri’s abrupt resignation, announced from Riyadh on Nov. 4, triggered about $800 million of withdrawals from the country as investors speculated that the nation would be in the crosshairs of a regional feud between the Saudis and Iranians. While the central bank says the worst may be over, credit-default swaps have hit a nine-year high.
- 2. Ecuador:
- After a borrowing spree, the Andean nation’s external debt obligations over the next 12 months ballooned to a nine-year high relative to the size of its GDP. Ecuador probably has the highest default risk after Venezuela, according to Robert Koenigsberger, the chief investment officer of Gramercy Funds Management. The country will be vulnerable “when the liquidity environment changes and they can no longer go to the market to get $2.5 billion to plug the hole,” he said. Finance Minister Carlos de la Torre told Bloomberg in an email on Thursday that there is “no default risk” for any of Ecuador’s debt commitments and the nation’s indebtedness is nowhere near “critical” levels.
- 3. Ukraine:
- While the Eastern European nation’s credit-default swaps have declined from their 2015 highs, persistent economic struggles are giving traders reason for caution. GDP expansion has slowed for three consecutive quarters and the World Bank warns that the economy is at risk of falling into a low-growth trap. Ukraine’s parliament approved next year’s budget on Tuesday as it eyes a $17.5 billion international bailout.
- 4. Egypt:
- Egypt’s credit-default swaps are hovering near the highest since September. The cost for protection surged in June as regional tensions heated up amid a push by the Saudis to isolate Qatar. While Egypt has been able to boost foreign-currency reserves and is on course to repay $14 billion in principal and interest in 2018, its foreign debt has climbed to $79 billion from $55.8 billion a year earlier.
- 5. Pakistan:
- Pakistan’s credit-default swaps surged in late October and linger near their highest level since June. South Asia’s second-largest economy faces challenges as it struggles with dwindling foreign reserves, rising debt payments and a ballooning current account deficit. Pakistan is mulling a potential $2 billion debt sale later this year. Speaking at the Bloomberg Pakistan Economic Forum last week, central bank Deputy Governor Jameel Ahmad played down concerns over the country’s widening twin deficits.
- 6. Bahrain:
- Bahrain’s spread rose dramatically in late October to the highest since January after it was said to ask Gulf allies for aid. The nation is seeking to replenish international reserves and avert a currency devaluation as oil prices batter the six Gulf Cooperation Council oil producers. Although its neighbors are likely to help, Bahrain could still be left with the highest budget deficit in the region, according to the IMF.
- 7. Turkey:
- Despite high yields, investors are still reluctant to buy Turkish bonds. The nation has been caught up in a blur of political crises, driving spreads on credit-default swaps to their highest level since May. Turkey was the only holdover on S&P Global Ratings’s latest “Fragile Five” list of countries most vulnerable to normalization in global monetary conditions.
11.17.17 – The Next Italian Bank Threatens to Topple
- In a speech that did little to calm investors’ nerves, Italy’s finance minister said yesterday that he was “strangely optimistic” about Italy’s economic outlook. Senior eurocrats in Brussels are far from convinced. “Italy’s accounts are not improving,” blasted European Commission Vice-President Jyrki Katainen at a press conference yesterday.
- The financial situation in Italy, according to Katainen, is due to get worse with Italy’s deficit in 2018 now predicted to be €3.5 billion more than previously stated by Paolo Gentiloni’s administration in the spring. “The only thing I can say in my name is that all Italians should know what the real economic situation in Italy is,” he said.
- That real economic situation includes the fragile health of the nation’s banking system which continues to teeter on the edge despite the controversial rescue last summer of Monte dei Paschi di Siena (MPS) and the resolution of the Popolare di Vicenza and Veneto Banca, which left over 40,000 businesses in Italy’s wealthy Veneto region starved of credit.
- It’s pretty clear that investor concerns about the health of Italy’s toxic debt-laden banking system have not been put to rest. Today’s developments will hardly have helped steady nerves after mid-sized lender Carige, with assets of €26 billion, scuttled a capital increase demanded by European authorities when it failed to get the backing of a banking consortium led by Credit Suisse, Deutsche Bank, and Barclays to underwrite the deal.
- In a statement, Carige said it had called a board meeting on Thursday morning to discuss “the next steps.” The shares of Genoa-based Carige, which had already lost roughly half its value over the past year, were suspended on Milan’s stock exchange. They closed on Wednesday at €0.17 a piece. The board had fixed a price of €0.10 euro per share for a capital hike of €560 million demanded by regulators.
- The proposed cash call is over four times the bank’s current market value. What’s more, Carige has already gone through a capital expansion worth €800 million in 2014 and another one worth €850 million just a year later. Just as happened with MPS last year, investors appear to have finally cottoned on to the fact that pouring money into a bank saddled with huge amounts of suspect assets and non-performing loans in a country gripped by a systemic banking crisis is unlikely to pay off.
- Now, just months after Italy’s government bent EU bank resolution rules out of all recognition to bail out MPS, it seems that another resolution could be in the offing.
- “Given current market conditions, we do not rule out Banca Carige will be put under resolution,” Milan broker Akros said. There are, it seems, other options such as the postponement of its expansion, the sale of the group, or the segregation of a ‘bad bank’ with the support of the Italian Government.
- The prospect of another bank resolution triggered a panicked sell-off of other mid-sized banking shares. Rival Creval, which has just announced plans to raise €700 million — or 4.4 times its market value — via a share issue, closed down 19%. MPS saw its shares extend a seven-day losing streak after tumbling 4.1% today. In the last five days alone the stock is down over 20%.
- If there is another bank resolution or taxpayer-funded bailout, there’s a huge risk that what little confidence remains in Italy’s banking system could crumble, especially given the sheer scale of the rot. As we reported in Marchthis year, almost all of Italy’s largest banking groups, with the exception of Unicredit, Intesa Sao Paolo and the investment bank Mediobanca, have Texas Ratios well in excess of 100%, meaning that the total value of their non-performing loans is greater than their tangible book value plus reserves. Banks tend to fail when the ratio surpasses 100%. In Italy there are 114 of them. Of them, 24 have ratios of over 200%.
- Granted, many of the banks in question are small local or regional savings banks with tens or hundreds of millions of euros in assets. But the list also includes much bigger fish such as Banco Popolare (€120 billion in assets; TR: 217%), UBI Banca (€117 billion in assets; TR: 117%), Banca Nazionale del Lavoro (€77 billion in assets; TR: 113%) and of course, Carige (€26 billion in assets; TR: 165%).
- As long as banks like these continue to languish in their current zombified state, they will continue to drag down the two bigger banks. And if either Unicredit or Intesa begin to wobble, the bets are off. By Don Quijones.
- Wishful thinking may not be enough.
- Needless but highly profitable forced-upgrades are the bread and butter of the tech industry.
- One of the enduring mysteries in conventional economics (along with why wages for the bottom 95% have stagnated) is the recent decline in productivity gains (see chart). Since gains in productivity are the ultimate source of higher wages, these issues are related. Simply put, advances in productivity are core to widespread prosperity.
- But that’s only half the problem–productivity gains have flowed to the top of the income-wealth pyramid as financialization and cartels have replaced real-world wealth creation as the source of wealth-income.
- Longtime correspondent Zeus Y. recently identified one cause of declining productivity and the narrowing of financial gains in the top: the quasi-cartels that dominate our economy profit by introducing and maintaining inefficiencies, not eliminating them. This runs counter to the accepted wisdom in classical free-market capitalism that generating efficiencies increases profits.
- Here is Zeus’s explanation of this perverse dynamic:
- “With Big Data and Big Profit dominating the products, services, and platforms of everything from iOS operating updates to delivery of healthcare, let’s make the plain-as-day argument: PROFIT and EXTRACTION MEANS PRODUCING INEFFICIENCIES, NOT ELIMINATING THEM.
- They make their money by creating inefficiencies, bottlenecks, and gatekeepings that they can profit from. Every middleman function they can stick in their system is a potential profit source for them.
- This was especially apparent to me in all the bugs I have experienced with Apple upgrades on my phone. I have to take the time to fix their screw-ups, which are designed to aggregate my data and usage to profit them. You see this with the manipulation of Facebook, creating a very black and white world that motivates and manipulates people to a froth with filters and algorithms that reinforce their biases.
- This is not free and democratic access, but inefficient and narrow manipulation, cutting down on alternatives, possibilities, and better ways to think and do. What would a more efficient and democratic system look like, one where access, freedom, and, yes, real efficiencies (especially democratic and community efficiencies) would predominate?”
- Thank you, Zeus. As Marx observed 150 years ago, the most profitable arrangement is monopoly, or failing that, a cartel that controls a specific market. Thus it is no surprise that Google, Facebook and Amazon are attempting to become quasi-monopolies in their respective spaces, just as Standard Oil gained a near-monopoly on the oil market in the early 20th century.
- Corporations no longer seek a coercive old-style monopoly that violates anti-trust laws; today they eliminate competition by scaling up to dominate a sector. I covered this in Are Facebook and Google the New Colonial Powers?(September 18, 2017).
- Once a corporation achieves dominance, it can impose profitable inefficiencies (for example, healthcare and higher education), force customers to perform labor that was once done by companies as part of their service (self-checkout, endless software updates), and profit from customer data with little fear of blowback: now that you need us, we can extract maximum profit from you without fear of regulation or competition.
- Once customers are dependent (or addicted, in the case of opioids, mobile telephony, Facebook, etc.), then corporations can impose all sorts of burdens on their customers and demand annual ransom, a.k.a. software licensing and/or update fees.
- Consider Microsoft’s dominance in operating systems and Office. Microsoft can sell buggy, insecure software, and require constant purchases of “upgraded” software that has lower functionality than the product it replaces.
- The same dynamic is in play with Apple and Android OS in the mobile space. I was recently forced to upgrade my perfectly functional iPhone 4 because some apps only work now in the latest iOS. Meanwhile, Windows 10 is demanding I upgrade my BIOS so my laptop can accept the latest Win10 update. Needless to say, Microsoft offers zero assistance beyond the nag-box.
- Needless but highly profitable forced-upgrades are the bread and butter of the tech industry. If we actually valued efficiency and productivity, our system would encourage durability, efficiency and reducing waste. Alas, all three of these worthy traits drastically reduce profits, so instead our maximizing profits by any means available system incentivizes planned obsolescence, inefficiencies controlled by cartels and endless waste of goods, services, customer time and resources.
- The immense profitability of inefficiencies controlled by monopolies, quasi-monopolies and cartels is a key reason productivity has faltered and gains flow only to the top. There are other models for distributing software and services, for example, open-source software. There are other models of ownership, for example community ownership of resources and enterprises. But given the financial and political dominance of cartels, these options have been neutered or marginalized.
- In this scenario, time is running out for Saudi Arabia’s free-spending royalty and state– and for all the other free-spending oil exporters.
- The discovery of new oil fields has fallen far below global consumption.While there are numerous dynamics at work in the turmoil roiling Saudi Arabia and by extension, the Mideast, one way to cut to the chase is to follow the oil, follow the money. Correspondent B.D. recently posited a factor that has been largely overlooked in the geopolitical / fate-of-the-petrodollar discussions:
- Perhaps the core dynamic is a technical one of diminished oil production. Here is Bart’s commentary:
- “I think the Saudis may be quickly running out of profitable oil to produce/export.
- I think they tried to over-produce for a while to damage the competition… and they now have production issues resulting from that. (As has happened in the past)
- I think they may have recently slipped over the event horizon for being the world’s swing producer of ‘cheap-ish and abundant’ oil. That has huge ramifications for the global markets ability to quickly respond to supply/demand fluctuations.
- I suspect they’re no longer cutting production voluntarily … they are now in the grip of a technically driven decline in output. (Why else begin selling off ARAMCO now?)
- I doubt that many national economies can handle $70+ oil for very long… price will be limited by the ability of the consumers to pay. What I assume should happen is relentless severe volatility in the absence of a big swing producer that can open up or shut in production with comparative ease.”
- Thank you, B.D. Let’s start with what’s well-established about Saudi oil production:
- 1. The days of sticking a straw in the sand and oil gushing out are long gone. Oil production now depends on costly technologies such as pressurizing the wells with seawater, CO2, etc.
- 2. The soaring population of Saudi Arabia is dramatically increasing domestic consumption of the Kingdom’s oil, reducing the amount of oil available for export.
- 3. The industry is skeptical of official Saudi estimates of proven reserves and production capacity.
- Let’s sketch a conjectural scenario which explains the extraordinary purges and power plays underway in Saudi Arabia:
- 1. As B.D. posited, Saudi production is already flat-out, and there is no million-barrel-per-day slack that can be brought online to depress global prices, crushing competitors and maintaining control of crude prices. In other words, the Saudis no longer have the technical / production capability needed to control global oil pricing– a power that they’ve enjoyed since 1973.
- 2. Saudi production is declining due to technical/real-world factors (depletion of super-major fields, etc.) that cannot be overcome at a financial cost that make sense at $50/barrel oil.
- 3. The possibility of a global recession unfolding in 2018 is rising. In a global recession, oil demand will fall, crushing the marginal pricing power of exporters.
- 4. The Saudi royal family and the Kingdom’s vast state welfare system is no longer sustainable should oil fall into the $30-$35/barrel range due to a collapse of global demand.
- 5. The only way out is to grab the power now that will be needed to slash domestic welfare and domestic consumption of oil/gas, i.e. the power to overcome resistance within the royal family to severe reductions in royal/central state budgets.
- Geopolitically speaking, very few if any oil exporters are able to prosper and fund their regional/global ambitions if oil plummets to $35/barrel and stays there for years. Every oil exporter makes brave statements about being just fine with $25/barrel oil, but the reality is every major oil exporter is dependent on oil revenues of a scale that can only be generated at $50/barral and up.
- Meanwhile, U.S. producers have taken market share away from OPEC exporters, effectively reducing their influence over prices, as U.S. producers are to some degree the marginal swing producers.
- The costs of exploration and production changed around the turn of the 21st century. The cost of discovering, extracting, refining and transporting new oil have increased dramatically.
- All this suggests oil will have to become more costly for it to make financial sense to produce it. But as B.D. observed (and analyst Gail Tverberg has explained in great detail), oil-consuming economies will be pushed into stagnation/recession by significantly higher oil prices.
- Will China Bring an Energy-Debt Crisis? (Our Finite World, Gail Tverberg)
- In this scenario, time is running out for Saudi Arabia’s free-spending royalty and state– and for all the other free-spending oil exporters. As a global recession looms ever closer, every oil exporter edges closer to the event horizon of financial, social, and political disorder and upheaval. Venezuela is just the first domino that’s toppling. The Saudi leadership is trying to avoid being in the line of oil exporting dominoes that will fall in the 2018 global recession.
11.13.17 – This Is What A Pre-Crash Market Looks Like
- The only other times in our history when stock prices have been this high relative to earnings, a horrifying stock market crash has always followed. Will things be different for us this time? We shall see, but without a doubt this is what a pre-crash market looks like. This current bubble has been based on irrational euphoria that has been fueled by relentless central bank intervention, but now global central banks are removing the artificial life support in unison. Meanwhile, the real economy continues to stumble along very unevenly. This is the longest that the U.S. has ever gone without a year in which the economy grew by at least 3 percent, and many believe that the next recession is very close. Stock prices cannot stay completely disconnected from economic reality forever, and once the bubble bursts the pain is going to be unlike anything that we have ever seen before.
- If you think that these ridiculously absurd stock prices are sustainable, there is something that I would like for you to consider. The only times in our history when the cyclically-adjusted return on stocks has been lower, a nightmarish stock market crash happened soon thereafter…
The Nobel-Laureate, Robert Shiller, developed the cyclically-adjusted price/earnings ratio, the so-called CAPE, to assess whether stocks are likely to be over- or under-valued. It is possible to invert this measure to obtain a cyclically-adjusted earnings yield which allows one to measure prospective real returns. If one does this, the answer for the US is that the cyclically-adjusted return is now down to 3.4 percent. The only times it has been still lower were in 1929 and between 1997 and 2001, the two biggest stock market bubbles since 1880. We know now what happened then. Is it going to be different this time?
- Since the market bottomed out in early 2009, the S&P 500 has been on a historic run. If this rally had been based on a booming economy that would be one thing, but the truth is that the U.S. economy has not seen 3 percent yearly growth since the middle of the Bush administration. Instead, this insane bubble has been almost entirely fueled by central bank manipulation, and now that manipulation is being dramatically scaled back.
- And the guys on Wall Street know what is coming. For example, Joe Zidle says that this bull market is now in “the ninth inning”…
Joe Zidle, of Richard Bernstein Advisors, is arguing that the bull market has entered the bottom of the ninth inning.
“This is a late-cycle environment,” Zidle said on CNBC’s “Futures Now” recently.
“In innings terms, they’re not time dependent. An inning could be shorter or they could be longer. It just really depends,” the strategist said.
- This bubble has lasted for much longer than it ever should have, and everyone understands that a day of reckoning is coming.
- In fact, earlier today I came across an article on Zero Hedge that contained an absolutely remarkable quote from Eric Peters…
“We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform. “So we construct option trades that are binary bets.” Which pay X profit if stocks rally, and cost Y if markets fall. No more and no less.
“What you do not want is a portfolio whose losses multiply depending on the severity of a decline.” That’s what most people have today. “At the last stage of the cycle, you want lots of binary bets. Many small wins. Before the big loss.”
“Are we at the start or the end of the ‘Don’t know what I’m buying’ cycle?” asked the same CIO. “No one knows.” But we’re definitely within it.
“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out.
- In case you don’t remember, in 1987 we witnessed the largest one day percentage decline in U.S. stock market history.
- When it finally happens, millions upon millions of ordinary Americans will be completely shocked, but most insiders know that the other shoe is going to drop at some point.
- In particular, watch financial stock prices very closely. Last month, Richard Bove issued a chilling warning about bank stocks…
One of Wall Street’s most vocal bank analysts is troubled by the rally in financials.
The Vertical Group’s Richard Bove warns that the overall market is just as dangerous as the late 1990s, and he cites momentum — not fundamentals — as what’s driving bank stocks to all-time highs.
“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.” “I think that the risk in these stocks is very high at the present time.”
- It isn’t going to take much to set off an unstoppable chain of events. Our financial markets are even more vulnerable than they were in 2008, and the right trigger could unleash a crisis unlike anything we have ever seen in modern American history.
- Unfortunately, most Americans keep getting fooled by the artificial boom and bust cycles that the central banks create. Right now most people seem to have been lulled into a false sense of security, and they truly believe that everything is going to be okay.
- But every time before when the market has looked like this a crash has always followed, and this time will be no exception.
- While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.
- A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It’s upending many decades of established strategic relationships among the world’s superpowers and, in particular, is throwing the Middle East into turmoil.
- So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.
- The main elements currently in play are these:
- A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
- Huge changes in domestic policy and strategy
- A shift away from the US in all respects (politically, financially and militarily)
- Deepening ties to China
- A surprising turn towards Russia (economically and militarily)
- Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)
- Taken together, this is tectonic change happening at blazing speed.
- That it’s receiving too little attention in the US press given the implications, is a tip off as to just how big a deal this is — as we’re all familiar by now with how the greater the actual relevance and importance of a development, the less press coverage it receives. This is not a direct conspiracy; it’s just what happens when your press becomes an organ of the state and other powerful interests. Like a dog trained with daily rewards and punishments, after a while the press needs no further instruction on the house rules.
- It does emphasize, however, that to be accurately informed about what’s going on, we have to do our own homework. Here’s a short primer to help get you started.
- A Quick Primer
- Unless you study it intensively, Saudi politics are difficult to follow because they are rooted in the drama of a very large and dysfunctional family battling over its immense wealth. If you think your own family is nuts, multiply the crazy factor by 1,000, sprinkle in a willingness to kill any family members who get in your way, and you’ll have the right perspective for grasping how Saudi ‘politics’ operate.
- The House of Saud is the ruling royal family of the Kingdom of Saudi Arabia (hereafter referred to as “KSA”) and consists of some 15,000 members. The majority of the power and wealth is concentrated in the hands of roughly 2,000 individuals. 4,000 male princes are in the mix, plus a larger number of involved females — all trying to either hang on to or climb up a constantly-shifting mountain of power.
- Here’s a handy chart to explain the lineage of power in KSA over the decades:
- We’ll get to the current ruler, King Salman, and his powerful son, Mohammed Bin Salman (age 32), shortly. Before we do, though, let’s talk about the most seminal moment in recent Saudi history: the key oil-for-money-and-protection deal struck between the Nixon administration and King Faisal back in the early 1970’s.
- This pivotal agreement allowed KSA to secretly recycle its surplus petrodollars back into US Treasuries while receiving US military protection in exchange. The secret was kept for 41 years, only recently revealed in 2016 due to a Bloomberg FOIA request:
The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.
It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country’s Treasury purchases stay “strictly secret,” according to a diplomatic cable obtained by Bloomberg from the National Archives database.
“Buying bonds and all that was a strategy to recycle petrodollars back into the U.S.,” said David Ottaway, a Middle East fellow at the Woodrow Wilson International Center in Washington. But politically, “it’s always been an ambiguous, constrained relationship.”
- The essence of this deal is pretty simple. KSA wanted to be able to sell its oil to its then largest buyer, the USA, while also having a safe place to park the funds, plus receive military protection to boot. But it didn’t want anybody else, especially its Arab neighbors, to know that it was partnering so intimately with the US who, in turn, would be supporting Israel. That would have been politically incendiary in the Middle East region, coming as it did right on the heels of the Yom Kipper War (1973).
- As for the US, it got the oil it wanted and – double bonus time here – got KSA to recycle the very same dollars used to buy that oil back into Treasuries and contracts for US military equipment and training.
- Sweet deal.
- Note that this is yet another secret world-shaping deal successfully kept out of the media for over four decades. Yes Virginia, conspiracies do happen. Secrets can be (and are routinely) kept by hundreds, even thousands, of people over long stretches of time.
- Since that key deal was struck back in the early 1970s, the KSA has remained a steadfast supporter of the US and vice versa. In return, the US has never said anything substantive about KSA’s alleged involvement in 9/11 or its grotesque human and women’s rights violations. Not a peep.
- Until recently.
- Then Things Started To Break Down
- In 2015, King Salman came to power. Things began to change pretty quickly, especially once he elevated his son Mohammed bin Salman (MBS) to a position of greater power.
- Among MBS’s first acts was to directly involve KSA into the Yemen civil war, with both troops on the ground and aerial bombings. That war has killed thousands of civilians while creating a humanitarian crisis that includes the largest modern-day outbreak of cholera, which is decimating highly populated areas. The conflct, which is considered a ‘proxy war’ because Iran is backing the Houthi rebels while KSA is backing the Yemeni government, continues to this day.
- Then in 2016, KSA threatened to dump its $750 billion in (stated) US assets in response to a bill in Congress that would have released sensitive information implicating Saudi Arabia’s involvement in 9/11. Then-president Obama had to fly over there to smooth things out. It seems the job he did was insufficient; because KSA-US relations unraveled at an accelerating pace afterwards. Mission NOT accomplished, it would seem.
- In 2017, KSA accused Qatar of nefarious acts and made such extraordinary demands that an outbreak of war nearly broke out over the dispute. The Qatari leadership later accused KSA of fomenting ‘regime change’, souring the situation further. Again, Iran backed the Qatar government, which turned this conflict into another proxy battle between the two main regional Arab superpowers.
- In parallel with all this, KSA was also supporting the mercenaries (aka “rebels” in western press) who were seeking to overthrow Assad in Syria — yet another proxy war between KSA and Iran. It’s been an open secret that, during this conflict, KSA has been providing support to some seriously bad terrorist organizations like Al-Qaeda, ISIS and other supposed enemies of the US/NATO. (Again, the US has never said ‘boo’ about that, proving that US rhetoric against “terrorists” is a fickle construct of political convenience, not a moral matter.)
- Once Russia entered the war on the side of Syria’s legitimate government, the US and KSA (and Israel) lost their momentum. Their dreams of toppling Assad and turning Syria into another failed petro-state like they did with Iraq and Libya are not likely to pan out as hoped.
- But rather than retreat to lick their wounds, KSA’s King Salman and his son are proving to be a lot nimbler than their predecessors.
- Rather than continue a losing battle in Syria, they’ve instead turned their energies and attention to dramatically reshaping KSA’s internal power structures:
Saudi Arabia’s Saturday Night Massacre
For nearly a century, Saudi Arabia has been ruled by the elders of a royal family that now finds itself effectively controlled by a 32-year-old crown prince, Mohammad bin Salman. He helms the Defense Ministry, he has extravagant plans for economic development, and last week arranged for the arrest of some of the most powerful ministers and princes in the country.
A day before the arrests were announced, Houthi tribesmen in Yemen but allied with Iran, Saudi Arabia’s regional rival, fired a ballistic missile at Riyadh.
The Saudis claim the missile came from Iran and that its firing might be considered “an act of war.”
Saudi Arabia was created between the two world wars under British guidance. In the 1920s, a tribe known as the Sauds defeated the Hashemites, effectively annexing the exterior parts of Saudi Arabia they did not yet control. The United Kingdom recognized the Sauds’ claim shortly thereafter. But since then, the Saudi tribe has been torn by ambition, resentment and intrigue. The Saudi royal family has more in common with the Corleones than with a Norman Rockwell painting.
The direct attack was undoubtedly met with threats of a coup. Whether one was actually planned didn’t matter. Mohammed Bin Salman had to assume these threats were credible since so many interests were under attack. So he struck first, arresting princes and ex-minsters who constituted the Saudi elite. It was a dangerous gamble. A powerful opposition still exists, but he had no choice but to act. He could either strike as he did last Saturday night, or allow his enemies to choose the time and place of that attack. Nothing is secure yet, but with this strike, there is a chance he might have bought time. Any Saudi who would take on princes and clerics is obviously desperate, but he may well break the hold of the financial and religious elite.
- This 32 year-old prince, Mohammed bin Salman has struck first and deep, completely upending the internal power dynamics of Saudi Arabia.
- He’s taken on the political, financial and religious elites head on. For example, pushing through the decision to allow women to drive; a provocative move designed to send a clear message to the clerics who might oppose him. That message is: “I’m not fooling around here.”
- This is a classic example of how one goes about purging the opposition when either taking over a government after a coup, or implementing a big new strategy at a major corporation. You have to remove any possible opponents and then install your own loyalists. According the Rules for Rulers, you do this by diverting a portion of the flow of funds to your new backers while diminishing, imprisoning or killing all potential enemies.
- So far, Mohammed bin Salman’s action plan is par for the course. No surprises.
- The above article from Stratfor (well worth reading in its entirety) continues with these interesting insights:
The Iranians have been doing well since the nuclear deal was signed in 2015. They have become the dominant political force in Iraq. Their support for the Bashar Assad regime in Syria may not have been enough to save him, but Iran was on what appears to be the winning side in the Syrian civil war. Hezbollah has been hurt by its participation in the war but is reviving, carrying Iranian influence in Lebanon at a time when Lebanon is in crisis after the resignation of its prime minister last week.
The Saudis, on the other hand, aren’t doing as well. The Saudi-built anti-Houthi coalition in Yemen has failed to break the Houthi-led opposition. And Iran has openly entered into an alliance with Qatar against the wishes of the Saudis and their ally, the United Arab Emirates.
Iran seems to sense the possibility of achieving a dream: destabilizing Saudi Arabia, ending its ability to support anti-Iranian forces, and breaking the power of the Sunni Wahhabis. Iran must look at the arrests in Saudi Arabia as a very bad move. And they may be. Mohammad bin Salman has backed the fundamentalists and the financial elite against the wall.
They are desperate, and now it is their turn to roll the dice. If they fall short, it could result in a civil war in Saudi Arabia. If Iran can hit Riyadh with missiles, the crown prince’s opponents could argue that the young prince is so busy with his plans that he isn’t paying attention to the real threat. For the Iranians, the best outcome is to have no one come out on top.
This would reconfigure the geopolitics of the Middle East, and since the U.S. is deeply involved there, it has decisions to make.
- So given Yemen, Syria, and its recent domestic purges, Saudi Arabia is in turmoil. It’s in a far weaker position than it was a short while ago.
- This leaves the US in a far weaker regional position, too, at precisely the time when China and Russia are increasing their own presence (which we’ll get to next).
- But first we have to discuss what might happen if a civil war were to engulf Saudi Arabia. The price of oil would undoubtedly spike. In turn, that would cripple the weaker countries, companies and households around the world that simply cannot afford a higher oil price. And there’s a lot of them.
- Financial markets would destabilize as long-suppressed volatility would explode higher, creating horrific losses across the board. That very few investors are mentally or financially prepared for such carnage is a massive understatement.
- So..if you were Saudi Arabia, in need of helpful allies after being bogged down in an unwinnable war in Yemen, just defeated in a proxy war in Syria, and your longtime ‘ally’, the US, is busy pumping as much of its own oil as it can, what would you do?
- Pivot To China
- Given its situation, is it really any surprise that King Salman and his son have decided to pivot to China? In need of a new partner that would align better with their current and future interests, China is the obvious first choice.
- So in March 2017, only a very short while after Obama’s failed visit, a large and well-prepared KSA entourage accompanied King Salman to Beijing and inked tens of billions in new business deals:
China, Saudi Arabia eye $65 billion in deals as king visits
Mar 16, 2017
BEIJING (Reuters) – Saudi Arabia’s King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world’s largest oil exporter looks to cement ties with the world’s second-largest economy.
The deals included a memorandum of understanding (MoU) between giant state oil firm Saudi Aramco and China North Industries Group Corp (Norinco), to look into building refining and chemical plants in China.
Saudi Basic Industries Corp (SABIC) and Sinopec, which already jointly run a chemical complex in Tinajin, also agreed to develop petrochemical projects in both China and Saudi Arabia.
Salman told Xi he hoped China could play an even greater role in Middle East affairs, the ministry added.
Deputy Chinese Foreign Minister Zhang Ming said the memorandums of understanding and letters of intent were potentially worth about $65 billion, involving everything from energy to space.
- This was a very big deal in terms of Middle East geopolitics. It shook up many decades of established power, resulting in a shift away from dependence on America.
- The Saudis arrived in China with such a huge crowd in tow that a reported 150 cooks had been brought along to just to feed everyone in the Saudi visitation party.
- The resulting deals struck involved everything from energy to infrastructure to information technology to space. And this was just on the first visit. Quite often a brand new trade delegation event involves posturing and bluffing and feeling each other out; not deals being struck. So it’s clear that before the visit, well before, lots and lots of deals were being negotiated and terms agreed to so that the thick MOU files were ready to sign during the actual visit.
- The scope and size of these business deals are eye catching, but the real clincher is King Salman’s public statement expressing hope China will play “an even greater role in Middle East affairs.”
- That, right there, is the sound of the geopolitical axis-tilting. That public statement tells us everything we need to know about the sort of change the Salman dynasty intends to pursue.
- So it should have surprised no one to hear that, in August this year, another $70 billion of new deals were announced between China and KSA. The fanfare extolled that Saudi-Sino relations had entered a new era, with “the agreements covering investment, trade, energy, postal service, communications, and media.”
- This is a very rapid pace for such large deals. If KSA and China were dating, they’d be talking about moving in together already. They’re clearly at the selecting furniture and carpet samples stage.
- As for the US? It seems KSA isn’t even returning its calls or texts at this point.
- You Ain’t Seen Nothing Yet…
- All of the above merely describes how we arrived at where things stand today.
- But as mentioned, the power grab underway in KSA by Mohammed bin Salman is unfolding in real-time. Developments are happening hourly — while writing this, the very high-profile Prince Bandar bin Sultan (recent head of Saudi Intelligence and former longtime ambassador to the US) has been arrested.
- The trajectory of events is headed in a direction that may well end the arrangement that has served as the axis around which geopolitics has spun for the past 40 years. The Saudis want new partners, and are courting China hard.
- China, for reasons we discuss in Part 2 of this report, has an existential need to supplant America as Saudi Arabia’s most vital oil customer.
- And both Saudi Arabia and China are inking an increasing number of strategic oil deals with Russia. Why? We get into that in Part 2, too — but suffice it to say, in the fast-shifting world of KSA foreign policy, it’s China and Russia ‘in’, US ‘out’.
- Maybe not all the way out, but the US clearly has lost a lot of ground with KSA over the past few years. My analysis is that by funding an insane amount of shale oil development, at a loss, and at any cost (such as to our biggest Mideast ally) the US has time and again displayed that our ‘friendship’ does not run very deep. In a world where loyalty counts, the US has proved a disloyal partner. Can China position itself to be perceived of as a better mate? When it comes to business, I believe the answer is ‘yes.’
- In Part 2: The Oil Threat we couple these developments with China and Russia’s recent efforts to drop the dollar from trade, especially when purchasing oil, and clearly see the unfolding of the biggest new driver of the world’s financial, monetary and geopolitical arrangements in 50 years.
- We also explain why, unless something very dramatically changes in either the supply or demand equation for oil, and soon, we can now put a timeline in place for when the great unraveling begins. Somewhere between the second half of 2018 and the end of 2019 oil will dramatically increase in price and that will shake the foundations of the global mountain of debt and its related underfunded liabilities. Think 9.0 on the financial Richter scale.
- Let me be blunt – you have to have your preparations done before this happens. You really, really want to be a year early on this (at least). When it starts happening, the breakdown will progress faster than you can react.
- One day after Saudi Arabia and Kuwait ordered their citizens to evacuate Lebanon – a move many suggested telegraphed an imminent “military intervention” – the mainstream media has begun building the case for a new mid-east war, one which will involve Iran and Hezbollah (and potentially Russia, not to mention other Shia Muslims) on one hand, and Saudi Arabia and Israel on the other.
- wrong: The system generates a culture of rape.
- For that, it got help from the US Air Force today, and as AP reports this morning, “the ballistic missile fired by Yemeni rebels that targeted the Saudi capital was from Iran and bore “Iranian markings,” the top U.S. Air Force official in the Mideast said Friday.” Lt. Gen. Jeffrey L. Harrigian, who oversees the Air Forces Central Command in Qatar, made the comments at a news conference in Dubai.
- The narrative is familiar: just as European terrorists conveniently commit suicide and always dutifully bring along their passports so they can be identified, so Iran always makes sure it leaves identifying marks when it illegally sells its weapons to Houthi rebels in Yemen.
- No really: after the Nov. 4 strike near Riyadh, Saudi Arabia’s Foreign Ministry said investigators examining the remains of the rocket found evidence proving “the role of Iranian regime in manufacturing them.” It did not elaborate what, though it also mentioned it found similar evidence after a July 22 missile launch. French President Emmanuel Macron similarly this week described the missile as “obviously” Iranian.
Nikki Haley, the U.S. ambassador to the United Nations, said in a statement Tuesday that the July launch involved an Iranian Qiam-1, a liquid-fueled, short-range Scud missile variant. Iran used a Qiam-1 in combat for the first time in June when it targeted Islamic State group militants in Syria over twin militant attacks in Tehran.
- It was unclear what, exactly, constitutes “Iranian markings”: perhaps a stamp on the side saying “this ballistic missile was made in Iran, if found please return to PO Box 666, Tehran.”
A still image of the missile taken from a video distributed by Yemen’s pro-Houthi
Al Masirah television station on November 5, 2017.
- To be sure, this was not the first time the rocket was “found” to be Iranian, and the news first emerged hours after the missile was miraculously intercepted by Saudi counter missiles, and then again earlier this week when U.S. Ambassador to the United Nations Nikki Haley said “information released by Saudi Arabia showed the missile fired in July was an Iranian Qiam, which she described as “a type of weapon that had not been present in Yemen before the conflict.”
Haley said that by providing weapons to the Houthis, Iran’s Islamic Revolutionary Guard Corps had violated two U.N. resolutions on Yemen and Iran. She said a missile shot down over Saudi Arabia on Saturday “may also be of Iranian origin.”
“Wencourage the United Nations and international partners to take necessary action to hold the Iranian regime accountable for these violations,” Haley said. It was not immediately clear what action the United States was calling for.
- The fact that the story of “Iran’s missile” made the mainstream media for the third time in one week, is just another indication that this story is meant to remain fresh in the mind of the public, even though – as AP reported – there was no elaboration or evidence actually disclosed to the public. Just like when Russia hacked the American middle class to vote for Trump…
- Trivial (lack of) details aside, Harrigian said authorities were investigating how the missile was smuggled into Yemen amid a Saudi-led coalition controlling the country’s airspace, ports and borders. What authorities will find is that Iran was in breach of a variety of embargos, and further violated the nuclear deal, giving the democratic western media just the right amount of justification to root for Saudi Arabia and Israel when the next war begins.
- * * *
- Update: and then there’s this:
- HEZBOLLAH LEADER NASRALLAH SAYS SEES AN ISRAELI WAR WITH LEBANON AS UNLIKELY
- HEZBOLLAH LEADER SAYS TODAY WE ARE STRONGER, WARNS ISRAEL AGAINST ANY ATTEMPT TO EXPLOIT THE SITUATION
- NASRALLAH SAYS YEMENIS HAVE CAPACITY TO PRODUCE MISSILES, APPARENTLY DENYING SAUDI CLAIMS THAT HEZBOLLAH FIRED MISSILE AT RIYADH
- HEZBOLLAH’S NASRALLAH SAYS SAUDI ARABIA WILL FAIL IN LEBANON AS IT DID IN ALL THE OTHER ARENAS IN THE REGION
- In a odd coincidence, just moments after we published an article laying out Hezbollah’s military power at a time when both Saudi Arabia and Lebanon appear to be targeting Lebanon, and just two days after we discussed a leaked Israeli cable that confirmed Saudi Arabia and Israel are deliberately coordinating to destabilize the region and push Lebanon to a state of war, Saudi Arabia has ordered its citizens residing in Lebanon to leave immediately in a travel warning issued on Thursday, November 9. As Al Arabiya adds, the travel warning also called for Saudi nationals not to travel to Lebanon from any point of origin.
- Full advisory below:
Official Source at the Ministry of Foreign Affairs: Saudi nationals visiting or residing in Lebanon are asked to leave the country as soon as possible.
Riyadh, Safar 20, 1439, November 09, 2017, SPA — Due to the situations in the Republic of Lebanon, the official source at the Ministry of Foreign Affairs stated that the Saudi nationals visiting or residing in Lebanon are asked to leave the country as soon as possible.
The Kingdom advised all citizens not to travel to Lebanon from any other international destinations.
- This follows a similar warning issued by the Kingdom of Bahrain on November 5 urghing its nationals residing in Lebanon to leave immediately and to “exercise caution.” The Bahraini call came a day after Lebanese Prime Minister Saad Hariri announced his resignation, while on location in Saudi Arabia, citing concerns he could be assassinated like his father, criticized the Lebanon-based Hezbollah paramilitary and political movement and accused Iran of alleged attempts to bring destruction to the region. The Bahraini foreign ministry said in a statement received by AFP that its call was “in the interest of its citizens’ safety and to avoid any risks they may be exposed due to the conditions and developments” that Lebanon is going through.
- Earlier, Reuters reported that Lebanon believes former premier Saad al-Hariri, who as noted above resigned on Saturday while in Saudi Arabia, is being held by Riyadh, and Beirut plans to work with foreign states to secure his return, a top Lebanese government official said on Thursday. A second Reuters source, a senior politician close to Saudi-allied Hariri, said Saudi Arabia had ordered him to resign and put him under house arrest. A third source familiar with the situation said Saudi Arabia was controlling and limiting his movement.
- Saudi Arabia and members of Hariri’s Future Movement have denied reports that he is under house arrest. But he has put out no statements himself denying his movements are being restricted. He made a one-day flying visit to the United Arab Emirates earlier this week before returning to Saudi Arabia.
- Earlier on Thursday, Saudi Arabia’s foreign minister also urged the international community to slap fresh sanctions against Iran, accusing its regional rival of supporting terrorism.
- “We would like to see sanctions on Iran for its support of terrorism and sanctions on Iran for violating the ballistic missile resolutions of the United Nations,” Adel Al-Jubeir, Saudi minister of foreign affairs, told CNBC Thursday.
- Al-Jubeir also said that the landmark nuclear deal between Iran and six world powers was “weak,” especially given Tehran would be capable of assembling a bomb “within weeks.” He added he would like to see international agencies carry out a “much more robust” job when conducting inspections in Iran.
- Al-Jubeir also described the situation in Lebanon as “unfortunate” and went on to accuse Hezbollah of “hijacking the system” and putting “roadblocks” in front of Hariri at every opportunity. When asked whether Saudi Arabia was headed for a direct conflict with Iran, Al-Jubeir replied, “We hope not”, and yet just hours later Riyadh made it clear that any Saudi citizens in Lebanon are now in danger.
- Needless to say, traditionally such accelerate evacuation orders have preceded military intervention. Should that be the case again, keep a close eye on oil.
11.08.17 – America’s “Abject Servitude” Is Now Exposed
- These are the poisoned fruits of a neofeudal system in which power, wealth and political influence are concentrated in the apex of the wealth-power pyramid.
- Stripped of pretense, ours is a culture of rape. Apologists for the system that spawned this culture of rape claim that this violence is the work of a few scattered sociopaths. The apologists are The engine of our culture of rape is the elevation of the entitled-insider class to untouchability: they are above the law, and more equal than others in their freedom to impose every sick sociopathology known to humanity on the powerless peasants imprisoned in our noxious neofeudal system.
- For the true sickness of our society and culture is measured not in the vile crimes of our entitled-insider class: it’s measured by the armies of enablers, protectors, enforcers and apologists who protect the entitled-insider class from exposure and justice. After 25 years of blatant abuse of power and crimes that have yet to enter the court docket, 25 years during which the cream of the American media purposefully ignored his blatant abuses of power, the moldering putrid remains of American journalism has finally emerged from its fetid nests, trembling in the unaccustomed brightness of day, to “report,” 25 years too late to save his innumerable victims, Harvey Weinstein’s Army of Spies (New Yorker).
- You know how incestuous and cowardly our entitled-insider class is, and how they operate: for 25 long years, editors in the self-glorifying citadels of American journalism killed every story that would have exposed Mr. Weinstein’s actions to the world.
- The same can be said of all the other predators hiding beneath the cloak of secrecy that protects the entitled-insider class from exposure.
- Voracious predators like Bill Clinton mastered the fine art of forcing consensuality on their innumerable victims, considering the act of forced sex as little more than a standard perquisite of power, much like having the hotel door opened by servants.
- The armies of spies, informers, PR flacks, security guards, attorneys, thugs, sycophants and handlers didn’t just enable predatory exploitation of the peasantry: they actively recruited victims and set them up, just as powerless maids were trapped in the chambers of lords in feudal times.
- The truly sick reality of our culture of rape is that nobody involved reckoned they were doing anything wrong. The sociopathological predators reckoned they were simply exercising their droit du seigneur, their right to take any woman they desired as a privilege of belonging to the entitled-insider class.
- Every single individual in the vast armies of spies, informers, PR flacks, security guards, attorneys, thugs, sycophants and handlers were simply doing their job, doing what they were told to avoid reprimand or being fired. In other words, every one of these individuals was a good German, pulling the trigger, defending predators from justice, protecting the most vile, sick abusers of power from exposure and attacking any victim who dared speak the truth, because, well, they were paid to do so.
- Were there no other jobs in America other than protecting evil predators from exposure and justice? Or did these good Germanssecretly revel in their proximity to power, much like the SS reveled in their proximity to Nazi power? All you good Germans who served your overlords so well: please don’t deny the thrill of being close to sociopathological power. Or were you just too afraid of losing your own pretty perquisites?
- These are the poisoned fruits of a neofeudal system in which power, wealth and political influence are concentrated in the apex of the wealth-power pyramid, a system so corrupted that predators don’t just get off scot-free, they are celebrated as wunnerful guys because their abuses of power are so well hidden, their victims so well marginalized and their PR flacks so relentless in painting over the rotting flesh of their corruption.
- While tens of thousands of men and women rot away in America’s teeming Drug War gulag, the exploiters and predators of our entitled-insider class are free to ruin and rape. It’s time we stop making excuses for the predators of our entitled-insider class, stop accepting the cover provided by the worm-ridden decaying corpse of our corporate media, and stop the armies of Good Germanexecutioners who have bludgeoned every attempt to expose the truth of our pervasive culture of rape, exploitation and pillage.
- Our abject servitude is now exposed. We are peasants and debt-serfs imprisoned in a deeply corrupt and oppressive neofeudal society. Will we ever tire of worshiping our predatory entitled-insider class exploiters?
- If the ownership of bitcoin is as concentrated as some estimate, then the liquidity issue distills down to the actions of the top tier of owners.
- Whenever I raise the topic of bitcoin and cryptocurrencies, I feel like an agnostic in the 30 Years War between Catholics and Protestants. There is precious little neutral ground in the crypto-is-a-bubble battle; one side is absolutely confident that bitcoin and the other cryptocurrencies are in a tulip-bulb type bubble, while the other camp is equally confident that we ain’t seen nuthin’ yet in terms of bitcoin’s future valuation.
- I’ve stated here more than once that in my view the real value of bitcoin will only be revealed in a financial/market crisis/crash like 2008-09. Longtime correspondent Mark G. recently proposed three tests that illuminate some of the dynamics that might come into play in the next financial/market crash/crisis.
- (CHS NOTE: gold fell from a peak around $1,100 per ounce in March 2008 to $830 in October 2008. It then bounced back to $1,100 in February 2008. The standard explanation for the sharp decline was that gold was sold off to meet margin calls and other obligations arising from the Global Financial Meltdown of late 2008. That gold was perceived as a reliable store of value may have increased its attractiveness as an asset to sell in the mad scramble to raise cash.)
- Here is Mark’s commentary:
- I propose that the performance of gold in 2008-2009 offers an indicator into how bitcoin is likely to behave.
- I propose three practical tests for bitcoin.
- Test 1. Is it possible to meet any sort of ‘margin call’ using bitcoin directly? Is it possible to do so on a large enough scale to affect market liquidity in any particular market? i.e. are any margin loans or the functional equivalent thereof denominated in bitcoin? In 2008 as “margin calls” flowed in from everywhere, all speculative assets experienced the same selling pressure to raise cash to meet obligations denominated in “money”.
- Test 2. Can the physical necessities of daily life be commonly paid for directly and locally using bitcoin? I mean things like food, fuel, medicine, clothing and local debts for utilities, taxes, rents and mortgages. Or is it necessary to first exchange one’s bitcoin for ‘legal tender’ to conduct these transactions?
- Test 3. Can bitcoin even be used to financially sustain bitcoin’s minimum physical infrastructure of servers, brokers and trading desks? Can it pay leases, electric bills and purchase the servers required for this?
- Are there any lenders of “last resort” ready, willing and able to sustain bitcoin banks, traders and speculators? If not, and precisely because there is a limited supply of bitcoin, it seems a certainty that the financial failures previously seen in the decades prior to the Federal Reserve Act are likely to recur in the bitcoin infrastructure for precisely the same reason: liquidity crunches appearing.
- These are precisely the tests that gold and silver failed in 2008/2009. And until bitcoin is ready to pass these tests I think it too will collapse in any future Global Financial Crisis.
- Thank you, Mark. Liquidity is an issue in any financial crisis, as sellers may be unable to find buyers at any price. Bitcoin has two liquidity issues:
- 1. Will sellers of bitcoin find a bid from buyers if a flood of bitcoins hit the market as speculators sell assets to raise cash to meet margin calls (or simply book profits in volatile markets)?
- 2. Since bitcoin must generally be converted to local currencies to buy the supplies and pay the bills Mark listed above, liquidity must also include the convertibility of bitcoin to USD, euros, yen and yuan, that is, the willingness of traders to exchange USD, euros, yen and yuan for bitcoin.
- A liquidity crunch has the potential to unleash a positive feedback loop (i.e. self-reinforcing feedback loop) in which the absence of liquidity triggers panic that then sparks more selling which then worsens the liquidity crunch which then increases panic selling, and so on.
- Another potential factor is the ownership of bitcoin. The topic is complicated because one individual can own a number of exchange accounts, wallets and coins in cold storage. On the other hand, one address might represent more than one owner.
- To further complicate matters, an unknown number of bitcoins have been lost, i.e. the keys have been lost in hard drive crashes and the like. There is no way to know the number of zombie bitcoins with any precision.
- For this reason, charts of bitcoin distribution refer to addresses, not individuals.
- The acronym HODL pops up a lot in the crypto space: hold on for dear life, meaning hold on to your bitcoin, Ether, etc. through thick and thin rather than trade or sell it.
- If the ownership of bitcoin is as concentrated as some estimate, then the liquidity issue distills down to the actions of the top tier of owners: if some substantial percentage of major owners are forced to liquidate their bitcoin to cover massive margin calls elsewhere in their financial holdings, the sale of big blocks could overwhelm buyers, creating a liquidity crunch.
- If most of the major owners have eschewed debt and margin in favor of cash, bitcoin, gold, etc., then they might be in a position to provide liquidity as speculators dump bitcoin to raise cash or lock in gains.
- Given the limited number of bitcoin available to trade, liquidity could dry up very quickly if major blocks are dumped on the market.
- Given the strong views bitcoin arouses, it may come down to how many major owners will HODL in a panic-soaked financial crisis, how many will avoid being forced to liquidate their bitcoin holdings to meet margin calls or other obligations, and how many will have the wherewithal and the courage of their convictions to be buyers when volatility soars.
- Put another way, beliefs and confidence can generate behaviors and decisions that may well appear irrational to speculators.
- I don’t know how the market for bitcoin will react in a 2008-type crisis, but the small float of available coins practically guarantees high volatility. How it all shakes out a year after the crisis is another question that’s unanswerable.
- Why have stock prices risen so dramatically since the last financial crisis? There are certainly many factors involved, but the primary one is the fact that the Federal Reserve has been creating trillions of dollars out of thin air and has been injecting all of that hot money into the financial markets. But now the Federal Reserve is starting to reverse course, and this has got to be the greatest sell signal for financial markets in modern American history. Without the artificial support of the Federal Reserve and other global central banks, there is no possible way that the massively inflated asset prices that we are witnessing right now can continue.
- The chart below comes from Sven Henrich, and it does a great job of demonstrating the relationship between the Fed’s quantitative easing program and the rise in stock prices. During the last financial crisis the Fed began to dramatically increase the size of our money supply, and they kept on doing it all the way through the end of October 2017…
- Unfortunately for stock traders, the Federal Reserve has now decided to change course, and that means that the process that has created these ridiculous stock prices is beginning to go in reverse. In fact, according to Wolf Richter this reversal just started to go into motion within the past few days…
On October 31, $8.5 billion of Treasuries that the Fed had been holding matured. If the Fed stuck to its announcement, it would have reinvested $2.5 billion and let $6 billion (the cap for the month of October) “roll off.” The amount of Treasuries on the balance sheet should then have decreased by $6 billion.
And that’s what happened. This chart of the Fed’s Treasury holdings shows that the balance dropped by $5.9 billion, from an all-time record 2,465.7 billion on October 25 to $2,459.8 billion on November 1, the lowest since April 15, 2015
- Does anyone out there actually believe that the immensely bloated balance sheet that the Fed has accumulated can be unwound without having an enormous negative impact on Wall Street?
- And even more frightening is the fact that central banks all over the planet appear to be acting in coordinated fashion. I really like how Brandon Smith made this point…
An observant person, however, might have noticed that central banks around the world seem to be acting in a coordinated fashion to remove stimulus support from markets and raise interest rates, cutting off supply lines of easy money that have long been a crutch for our crippled economy. The Bank of England raised rates this past week, as the Federal Reserve indicated yet another rate hike in December. The Europeans Central Bank continues to prep the public for coming rate hikes, while the Bank of Japan has assured the public that “inflation” expectations have been met and no new stimulus is necessary. If all of this appears coordinated, that is because it is.
- When interest rates are low and central banks are injecting money directly into the financial system, that tends to promote economic activity.
- But when they raise interest rates and pull money out of the financial system, the exact opposite is true.
- At this point Americans are more optimistic about the stock market than they have ever been before, and it is at this exact moment that the Fed is pulling the financial markets off of life support.
- And it isn’t as if the “real economy” ever recovered in any meaningful way. Most American families are still living paycheck to paycheck, and a new economic crisis would push millions more out of the middle class.
- For a long time I have been warning that the only reason why stock prices ever got this high was because of the central banks, and I have also been warning that they could crash the markets if they wanted to do so.
- Hopefully there is nothing nefarious going on, but I do find it very strange that all of the major global central banks are moving toward tightening at the exact same time.
- If things go south for the global economy in the months ahead, we will know exactly where to point the blame…
- Less than a month ago, Bitcoin was selling for less than $5000, but now it has smashed through the $7000 mark with seemingly no end in sight. At this point Bitcoin has a total market cap of more than 100 billion dollars, and some analysts are suggesting that it could eventually go as high as a trillion dollars. Cryptocurrencies overall are up an astounding 640 percent so far in 2017, and personally I regret not investing when Bitcoin was still in the very early stages. I always thought that governments would eventually crack down and regulate cryptocurrencies out of existence, and that still may happen someday, but it hasn’t happened yet.
- One of the great things about Bitcoin is that it represents a medium of exchange that is not controlled by the central bankers. So when you use Bitcoin you are choosing to become less dependent on a system that is designed to financially dominate the entire planet. Any way that we can become more independent is a good thing, and so I greatly applaud the use of cryptocurrencies.
- But there are those that are warning that a major bubble is forming and that extreme downward price action will be coming at some point. Needless to say, the upward momentum that we are witnessing at the moment is certainly not sustainable indefinitely. The following comes from Breitbart…
The price of Bitcoin smashed another record early Thursday morning — $7,000 for each unit of the digital currency.
As of 7 AM Eastern time, BTC is selling for $7,191.16, according to data from Coinbase. Bitcoin — which is minted by a decentralized network of miners, not a governing body — hit this latest benchmark with a single-day increase of nearly $640, only 13 days after it first became valued at $6,000. If an individual bought 1 BTC exactly one month ago, it has grown $2,902.33 or +67.67% in value.
- Anything that goes up that fast is eventually going to come down, and those that invest at $7,000 could end up seeing the price fall back several thousand dollars. Or, the euphoria surrounding Bitcoin cold propel it through the $10,000 mark and make all of the skeptics look like idiots.
- We just don’t know, and that is part of the charm of Bitcoin.
- And according to Bloomberg, soon investors will be able to trade Bitcoin futures…
The digital currency got new impetus this week after CME Group Inc., the world’s largest exchange owner, said it plans to introduce bitcoin futures by the end of the year, citing pent-up demand from clients. Skeptics including Themis Trading say the rally is evidence that the software-created asset is a bubble that should not be given regulatory cover.
- Of course Bitcoin is not the only major cryptocurrency that is out there. In fact, there are rumblings that Amazon is about to start promoting Bitcoin’s chief competitor…
Ethereum, the top digital currency behind Bitcoin, has plunged in price as Bitcoin enjoys its massive surge, falling from a 24-hour high of $301.41 to $277.82 Thursday morning.
However, this Tuesday, Amazon bought the domain namesamazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com, fueling speculation that it may get into the action on decentralized digital currencies. Ethereum is not just a currency like Bitcoin but an app development platform — the Windows or OSX of blockchain. The domain purchase could be a sign that Amazon may join the Enterprise Ethereum Alliance — a group of large companies, including JP Morgan and Microsoft, putting their weight behind blockchain tech.
- If Ethereum ultimately becomes the dominant cryptocurrency in the marketplace, what would that do to Bitcoin?
- Or could it be possible that there is room enough for both of them?
- The truth is that we don’t know what the future will hold. Cryptocurrencies have never existed before, and there are so many variables at play. The biggest variable is how national governments will respond to these alternate currencies, and I still believe that they will eventually make a move to heavily regulate them.
- And unlike gold and silver, these cryptocurrencies do not have any intrinsic value. The only reason that they have any value at all is because people believe they have value. But for the moment the number of believers continues to rise, and this may be a factor in why the price of gold is relatively low right now. This is something that Ron Paul commented on recently…
“Does it represent real money to you?” Cambone further asked the former presidential candidate.
“Not to me, no, it doesn’t,” Paul answered. “But if it serves the voluntary exchanges of people, and serves the purpose of exchanging wealth, … it could act as if it were money ….” he stated.
“Some say Bitcoin is stealing the thunder away from gold,” Cambone continued, “and that’s one of the reasons the yellow metal is not rallying further. Do you agree with this?”
“I think that’s a very strong possibility,” he considered. “I am amazed,” he laughed, “at all the capitalization on these cryptocurrencies. It’s a huge amount of money,” Paul emphasized.
- Once again, I greatly applaud the use of cryptocurrencies as a way to become more independent from the system. I love the fact that mediums of exchange are being developed outside of the control of the central banks, and we should greatly resist any efforts by national governments to take control of these emerging new currencies.
- However, as an investment these cryptocurrencies are exceedingly risky.
- There are some that have already become quite wealthy by investing in Bitcoin at the very beginning, but there are others that will invest at the peak of the market and will get very badly burned.
- As with all forms of investing, there will be winners and there will be losers, and timing is everything.
- But we should all love the principles underlying Bitcoin and other cryptocurrencies. To me, they are all about liberty and freedom, and the more liberty and freedom we have the better.
- As the mainstream media continues to obsess over $100,000 worth Facebook ads allegedly purchased by Russian spies in 2016 seeking to throw the presidential election, behind the scenes, far removed from the sight of CNN and MSNBC, the Uranium One scandal, in which the Obama administration approved a deal that handed a Russian-controlled corporation 20% of America’s uranium reserves despite the existence of an FBI investigation into ongoing illegal bribery, extortion and money laundering schemes, is slowly spiraling out of control…despite CNN’s continued ignorance of the topic.
- By now we’re sure that most of our readers are well aware that Obama’s approval of the Uranium One deal seemingly landed the Clinton Foundation some $145 million in donations and a $500,000 speaking gig for former President Bill Clinton from a very thankful Russian bank…if not, here are a couple of recent posts on the topic as a recap:
- FBI Uncovered Russian Bribery Plot Before Obama Approved Uranium One Deal, Netting Clintons Millions
- Emails Reveal Bill Clinton Met With Vladimir Putin Just Before Uranium One Deal
- FBI Informant “Threatened” After Offering Details Linking Clinton Foundation To Russian Bribery Case
- That said, one thing that you probably don’t know yet, primarily because of the Obama administration’s proactive attempt conceal such information, is that despite repeated assurances from Congress and Obama’s Nuclear Regulatory Commission that U.S. uranium reserves wouldn’t leave U.S. shores, it, in fact, did.
- As The Hill points out today, assurances that U.S. uranium would not be exported to foreign countries was a key sticking point when Congress reviewed the deal back in 2010. As such, repeated assurances were provided that such exports would never occur…here are just a couple of examples of those assurances:
“No uranium produced at either facility may be exported,” the NRC declared in a November 2010 press release that announced that ARMZ, a subsidiary of the Russian-owned Rosatom, had been approved to take ownership of the Uranium One mining firm and its American assets.
A year later, the nuclear regulator repeated the assurance in a letter to Sen. John Barrasso, a Wyoming Republican in whose state Uranium One operated mines.
“Neither Uranium One Inc. nor AMRZ holds a specific NRC export license. In order to export uranium from the United States, Uranium One Inc. or ARMZ would need to apply for an obtain a specific NRC license authorizing the exports of uranium for use in reactor fuel,” then-NRC Chairman Gregory Jaczko wrote Barrasso.
The NRC never issued an export license to the Russian firm, a fact so engrained in the narrative of the Uranium One controversy that it showed up in The Washington Post’s official fact-checker site this week. “We have noted repeatedly that extracted uranium could not be exported by Russia without a license, which Rosatom does not have,” The Post reported on Monday, linking to the 2011 Barrasso letter.
- That said, new memos obtained by The Hill now confirm that, in fact, Uranium One yellowcake did manage to escape U.S. shores repeatedly between 2012 – 2014.
Yet NRC memos reviewed by The Hill shows that it did approve the shipment of yellowcake uranium — the raw material used to make nuclear fuel and weapons — from the Russian-owned mines in the United States to Canada in 2012 through a third party. Later, the Obama administration approved some of that uranium going all the way to Europe, government documents show.
NRC officials said they could not disclose the total amount of uranium that Uranium One exported because the information is proprietary. They did, however, say that the shipments only lasted from 2012 to 2014 and that they are unaware of any exports since then.
NRC officials told The Hill that Uranium One exports flowed from Wyoming to Canada and on to Europe between 2012 through 2014, and the approval involved a process with multiple agencies.
- Of course, given his repeated assurances to the contrary, Obama couldn’t simply allow Uranium One to ship uranium to the nearest port for export, so he instead signed a waiver allowing a Kentucky trucking company to carry the product across the Canadian border and then approved export from Canada to Europe.
Rather than give Rosatom a direct export license — which would have raised red flags inside a Congress already suspicious of the deal — the NRC in 2012 authorized an amendment to an existing export license for a Paducah, Ky.,-based trucking firm called RSB Logistics Services Inc. to simply add Uranium One to the list of clients whose uranium it could move to Canada.
The license, reviewed by The Hill, is dated March 16, 2012, and it increased the amount of uranium ore concentrate that RSB Logistics could ship to the Cameco Corp. plant in Ontario from 7,500,000 kilograms to 12,000,000 kilograms and added Uranium One to the “other parties to Export.”
The move esaped notice in Congress.
- And while it will be dismissed by the Left as a convenient attempt for Republicans to change the “Russian collusion” narrative, Senator Chuck Grassley and others are finally starting to press for a special counsel to investigate what is clearly a scandal that is far more pervasive than anyone originally thought.
“The more that surfaces about this deal, the more questions it raises,” Sen. Chuck Grassley (R-Iowa) said in a statement released after this story was published. Grassley, the chairman of the Senate Judiciary Committee, has launched an investigation into Uranium One.
“It now appears that despite pledges to the contrary, U.S. uranium made its way overseas as a part of the Uranium One deal,” Grassley said in the statement. “What’s more disturbing, those transactions were apparently made possible by various Obama Administration agencies while the Democrat-controlled Congress turned a blind eye.
“Americans deserve assurances that political influence was not a factor in all this. I’m increasingly convinced that a special counsel — someone with no prior involvement in any of these deals — should shine a light on this ordeal and get answers for the American people.”
- So, is this what Obama meant when he told Russian President Dmitry Medvedev to let Putin know that he would “have more flexibility” after the 2012 election?
- Are you living paycheck to paycheck? Is so, you are just like most other hard working Americans. As you will see below, 78 percent of full-time workers in the United States say that they are living paycheck to paycheck. That is the highest figure ever recorded, and it is yet more evidence that the middle class is under an increasing amount of stress. The cost of living is rising at a much faster pace than our paychecks are, and more families are falling out of the middle class with each passing month. Unfortunately, this is something that the mainstream media really doesn’t want to talk about these days. Instead, they just keep having us focus on the soaring financial markets which are being grossly artificially inflated by global central banks.
- When I came across the numbers that I am about to share with you I was actually quite stunned. I knew that things were not great in “the real economy”, but I didn’t expect that the number of Americans living paycheck to paycheck would actually be rising. But that is precisely what a brand new survey that was just released by CareerBuilder is saying…
Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year, according to a recent report from CareerBuilder.
Overall, 71 percent of all U.S. workers said they’re now in debt, up from 68 percent a year ago, CareerBuilder said.
While 46 percent said their debt is manageable, 56 percent said they were in over their heads. About 56 percent also save $100 or less each month, according to CareerBuilder.
- The first thing that we want to note about this survey is that it only includes full-time workers. So the unemployed, part-time workers, those that work for themselves and those that are independently wealthy were not included.
- The second thing that we want to note is that these numbers have gotten worsesince last year.
- That certainly does not fit with the narrative that we are being fed by the mainstream media, but it does fit with the reality that most people are living on a daily basis.
- Most Americans work extremely hard, but they can never seem to get ahead. Most of us are in debt, and a couple of weeks ago I wrote about how the elite use debt as a tool of enslavement. As we work endless hours to “pay the bills”, we are steadily enriching those that are holding our debts.
- In addition, the cost of living is steadily going up, and most U.S. families are just barely scraping by from month to month as a result. Just a couple days ago I wrote about how Obamacare was causing health insurance premiums to skyrocket, and today I came across another example of someone that has seen their annual premiums more than double during the Obamacare era…
For some lower-income people in Obamacare, the rising premiums President Donald Trump has talked so much about will barely be felt at all. Others, particularly those with higher incomes, will feel the sharp increases when insurance sign-ups begin Wednesday.
Richard Taylor is one of the people on the wrong end. The 61-year-old, self-employed Oklahoman has meticulously tracked his medical costs since 1994. In 2013, he signed up for an Affordable Care Act plan for the law’s first year offering coverage to millions of Americans.
Four years ago, annual premiums for a mid-level “silver” plan to cover his family totaled $10,072.44. For 2017, they were $21,392.40—up 112 percent.
- Who can afford $21,000 a year for health insurance?
- I know that I can’t.
- And rates are supposed to go up substantially again in 2018. We must repeal Obamacare, and we must do it now.
- In addition to financial stress, most Americans are also deeply concerned about the future of this country. Just consider the following numbers from a poll that was released this week…
Almost two-thirds of Americans, or 63 percent, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday. This worry about the fate of the union tops longstanding stressors such as money (62 percent) and work (61 percent) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73 percent) reported feeling stress than independents (59 percent) and Republicans (56 percent).
- I certainly can’t blame the Democrats for being stressed out. Donald Trump is in the White House and pro-Trump forces are taking over the Republican Party. And if a large wave of pro-Trump activists goes to Congress in 2018, we are going to take this nation in a completely different direction.
- That same survey referenced above also discovered that 59 percent of Americans consider this “to be the lowest point in our nation’s history that they can remember”…
A majority of the more than 3,400 Americans polled, 59 percent, said “they consider this to be the lowest point in our nation’s history that they can remember.” That sentiment spanned generations, including those that lived through World War II, the Vietnam War, and the terrorist attacks of Sept. 11. (Some 30 percent of people polled cited terrorism as a source of concern, a number that’s likely to rise given the alleged terrorist attack in New York City on Tuesday.)
- That number seems very strange.
- Yes, I can understand that those on the left are very pessimistic now that Trump is in the White House, but this is definitely not the lowest point in recent history.
- Have people totally forgotten the financial crisis of 2008?
- What about 9/11?
- The JFK assassination, the Vietnam War, the deep recession during the Carter years and the entire Obama era are also examples of very low points in recent history.
- Yes, great challenges are coming, but for the moment the economy is relatively stable, much of the world is at peace, and at least Hillary Clinton is not in the White House.
- There is so much to be thankful for, and if people out there think that this is the “lowest point” in recent American history, how are they going to feel when a real crisis comes along?
- Are you ready to pay 37 percent more for health insurance in 2018? Obamacare is imploding faster than most of us imagined, and these rate increases are absolutely killing hard working middle class families all across the country. I wrote about the steady erosion of the middle class yesterday, and health insurance is one of the main reasons why the cost of living is increasing at a much faster rate than our paychecks are. It greatly frustrates me that we have given the Republicans control of the White House, the Senate and the House of Representatives and Obamacare still has not been repealed. The truth is that should have happened on day one of the Trump presidency.
- Monday’s news was dominated by headlines about the indictments of Paul Manafort and Robert Gates, but a new round of Obamacare rate increases is going to have much more of a direct impact on the lives of ordinary Americans. According to CNN, premiums for silver Obamacare plans will increase by an average of 37 percent next year…
Premiums for the benchmark silver Obamacare plan will soar 37%, on average, for 2018, according to federal data released Monday.
- And remember, this 37 percent increase is on top of all of the other yearly increases that we have seen so far. Many families have already seen their health insurance premiums more than double since Obamacare became law, and now things are going to get even worse.
- The silver plans are the most popular, and this is especially true among younger people. According to that same CNN story, a 27-year-old will now be paying almost five thousand dollars a year for one of these silver plans…
The steep rate hike means a 27-year-old will pay nearly $5,000 a year, on average, for the benchmark silver plan, upon which premium subsides are based. That’s up from $2,600 when the Obamacare exchanges opened in 2014. This is before subsidies are factored in, however.
Premiums are skyrocketing for a second year in a row. Rates rose 24% this year in the states using healthcare.gov.
- Do you know any 27-year-old that can afford to pay $5000 a year for health insurance?
- I don’t.
- And because deductibles are so high, most of them are quite afraid to go to the hospital anyway.
- As Obamacare plan premiums go up, so do the subsidies. At this point more than 80 percent of all those enrolled in Obamacare plans receive subsidies, and that means that much of the burden for paying these rate increases ultimately falls on the taxpayers.
- And by taxpayers, I mean you and me.
- Here in Idaho, the rate increases are going to be even higher than the national average. In fact, it is being reported that silver plan rates will be going up by an average of about 50 percent in 2018…
Idaho Statesman reporter Audrey Dutton reports that the largest increases are proposed in the “silver” plans, which are the most popular ones on the exchange, falling mid-range in pricing and benefits between the lower-level “bronze” plans and the high-end “gold” plans. Silver plans are showing average increases of 50 percent in premiums; they range from a low of 40 percent at Blue Cross to 69 percent at SelectHealth.
- Needless to say, Idaho families cannot afford these sorts of rate increases, and I am for a 100 percent repeal of Obamacare immediately. In my new book entitled “Living A Life That Really Matters”, I touch on some of the things that we need to do to start fixing our deeply broken healthcare system. We once had the greatest system of healthcare on the entire planet, and I believe that we can get there again, but we desperately need to return to free market principles. I am very much in favor of the kinds of association buying groups that Rand Paul has proposed, and I would like to see exciting new concepts such as direct primary care implemented much more extensively.
- Doing nothing is not an option. The longer that Obamacare is allowed to exist, the more financial damage it will do to middle class families.
- Today, we learned that the U.S. savings rate has fallen to a 10 year low. Most families cannot save much money because they are just scraping by from month to month. The middle class is now a minority of the population, and as health insurance rates continue to rise the financial stress on American families is only going to intensify.
- We also just learned that real disposable income per capita has been declining since May. The following comes from Wolf Richter…
But consumers don’t feel that. What they feel is their slice of the pie, but that pie got cut into more slices as the US population expanded. And this leaves disposable income “per capita,” which the BEA also discloses, but mercifully buried in the data.
This real disposable income per capita — a function of income, taxes, inflation, and population growth — peaked in May and has been declining ever since.
- A 37 percent rate increase is going to be absolutely devastating to those that are on silver plans. We were promised that Obamacare would make healthcare cheaper and more affordable, but instead the exact opposite has been true.
- By the time the 2018 mid-term elections roll around, there are going to be tens of millions of Americans that are deeply angry about health insurance rates, and many believe that they will take that anger out on Democrats and on establishment Republicans that blocked the repeal of Obamacare.
- But the Democrats are hoping for a different result. They are hoping to retake either the House or the Senate in 2018, and if Republicans have not repealed Obamacare by then the Democrats will completely block any further attempts to do so.
- The clock is ticking, and the Republicans need to get something done. Up to this point they have completely fumbled the football, but there is still time to recover if they can get their act together.
- The federal government is now 20.4 trillion dollars in debt, and most Americans don’t seem to care that the economic prosperity that we are enjoying today could be completely destroyed by our exploding national debt. Over the past decade, the national debt has been growing at a rate of more than 100 million dollars an hour, and this is a debt that all of us owe. When you break it down, each American citizen’s share of the debt is more than $60,000, and so if you have a family of five your share is more than $300,000. And when you throw in more than 6 trillion dollars of corporate debt and nearly 13 trillion dollars of consumer debt, it is not inaccurate to say that we are facing a crisis of unprecedented magnitude.
- Debt cannot grow much faster than GDP indefinitely. At some point the bubble bursts, and when it does the pain that the middle class is going to experience is going to be off the charts. Back in 2015, the middle class in the U.S. became a minority of the population for the first time ever. Never before in our history has the middle class accounted for less than 50 percent of the population, and all over the country formerly middle class families are under a great deal of stress as they attempt to make ends meet. The following comes from an absolutely outstanding piece that was just put out by Charles Hugh Smith…
If you talk to young people struggling to make ends meet and raise children, or read articles about retirees who can’t afford to retire, you can’t help but detect the fading scent of prosperity.
It has steadily been lost to stagnation, under-reported inflation and soaring inequality, a substitution of illusion for reality bolstered by the systemic corruption of authentic measures of prosperity and well-being.
In other words, the American-Dream idea that life should get easier and more prosperous as the natural course of progress is still embedded in our collective memory, even though the collective reality has changed.
- The reality that most of us are facing today is a reality where many are working two or three jobs just to make it from month to month.
- The reality that most of us are facing today is a reality where debts never seem to get repaid and credit card balances just continue to grow.
- The reality that most of us are facing today is a reality where we work day after day just to pay the bills, and yet we never seem to get anywhere financially.
- The truth is that most people out there are deeply struggling. The Washington Post says that the “middle class” encompasses anyone that makes between $35,000 and $122,500 a year, but very few of us are near the top end of that scale…
It’s also situation specific. “The more people in a family, the more money they typically need to live a comfortable middle-class lifestyle,” writes the Post. Likewise, the more expensive your area, the more you need to make to qualify. Overall, “America’s middle-class ranges from $35,000 to $122,500 in annual income, according to The Post’s calculation” approved by the Pew Research Center.
“The bottom line is: $100,000 is on the middle-class spectrum, but barely: 75 percent of U.S. households make less than that,” writes the Post.
- In a previous article, I noted that the bottom 90 percent of income earners in the U.S. brought home more than 60 percent of the nation’s income back in the early 1970s, but last year that number fell to just 49.7 percent.
- The middle class is shrinking year after year, and the really bad news is that it appears that this decline may soon accelerate. In fact, one major European investment bank is warning that the U.S. economy will “slow down substantially” in 2018.
- But we can’t afford any slow down at all. As it is, there is no possible way that we are going to be able to deal with our exploding debts at the rate the economy is growing right now. According to Boston University professor Larry Kotlikoff, we are facing a “fiscal gap” of 210 trillion dollars over the next 75 years…
We have all these unofficial debts that are massive compared to the official debt. We’re focused just on the official debt, so we’re trying to balance the wrong books…
If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $210 trillion. That’s the fiscal gap. That’s our true indebtedness.
- Where in the world is all of that money going to come from?
- Are you willing to pay much higher taxes?
- Are you willing to see government programs slashed to a degree that we have never seen before in U.S. history?
- If your answer to both of those questions is no, then what would you do to solve the fiscal nightmare that we are facing?
- According to Brian Maher, author Robert Benchley once sat down to write an article about this fiscal mess, and what he came up with sums up the situation perfectly…
Benchley sat at his typewriter one day to tackle a vexing subject.
He opened his piece with “The”… when the full weight of his burden collapsed upon his shoulders.
He abandoned his typewriter in frustration.
He returned shortly thereafter and resumed the task anew…
With only “The” to work with… Benchley immediately knocked out the article, presented here in its entirety:
“The hell with it.”
- Unfortunately, we can’t afford to say that.
- Our exploding debt is a crisis that we must tackle, and the first step is to understand that our current financial system was literally designed to create as much debt as possible. Once we abolish the Federal Reserve, our endless debt spiral will end, but until we do our debt problems are only going to continue to grow until the system completely implodes in upon itself.
- Oh, the revisions.
- The US economy, as measured by “real” GDP (adjusted for a version of inflation) grew 0.74% in the third quarter, compared to the prior quarter. That was a tad slower than the 0.76% growth in Q2, but up from the 0.31% growth in Q1.
- GDP was up 2.3% from a year ago.
- To confuse things further, in the US, we cling to the somewhat perplexing habit of expressing GDP as an “annualized” rate, which takes the quarterly growth rate (0.74%) and projects it over four quarters. This produced the annualized rate of 2.99%, or as we read this morning all over the media, “3.0%.”
- This was the “advance estimate” by the Bureau of Economic Analysis. The BEA emphasizes that the advance estimate is based on source data that are “incomplete or subject to further revision by the source agency.” These revisions can be big, up or down, as we’ll see in a moment.
- The BEA will release the “second estimate” for Q3 on November 28 and the “third estimate” on December 21. More revisions are scheduled over the next few years.
- So 2.99% GDP growth annualized, or 0.74% GDP growth not annualized, or 2.3% growth from a year ago… is pretty good for our slow-growth, post-Financial-Crisis, experimental-monetary-policy era, but well within the range of that era, that goes from 5.2% annualized growth in Q3 2014 to a decline of 1.5% in Q1 2011. So nothing special here:
- I circled Q1 2014 and Q1 2011 in blue to show how much GDP estimates can get revised as time passes: both of these decliners showed growth in the “advance estimate.”
- The “advance estimate” of GDP in Q1 2014, released on April 30, 2014, showed a growth rate of +0.1% annualized. That was a measly growth rate. It was terrible. It caused a lot of hand-wringing. But it was growth.
- By the “third estimate,” released on June 25, 2014, GDP growth had been revised to a sharp decline of -2.9%. And it continues to be revised. The most recent estimate put it at a decline of -0.9%. From +0.1% to -2.9% to -0.9% are dramatic revisions. Throughout that time, no one knew exactly how the economy had been doing in that quarter, except that it had hit a rough spot.
- Q1 2011 is an even starker example of the revisions. The advance estimate, released on April 28, 2011, figured that GDP increased at a rate of 1.8% annualized. By now this “growth” has been revised to a decline of -1.5%! So on first sight, the quarter looked decent. With years of hindsight, it looked terrible.
- After serial revisions, there are now two quarters since the end of the Great Recession when GDP had declined, but the “advance estimates” for both had shown growth.
- But up-revisions are also common: The advance estimate of GDP growth in Q2 2017 came in at 2.6%; the second estimate at 3.0%; and the third estimate at 3.1%. As far as revisions are concerned, rather unspectacular.
- The BEA points out in its GDP press releases that the “average revision without regard to sign” (so growth or decline) between 1993 through 2016 is a massive 1.3 percentage points from the “advance estimate” to the “latest estimate” which can be years after the fact.
- In other words, we won’t really know how the economy did in the last quarter until we have a lot more hindsight.
- Point one: It’s devilishly hard to estimate what’s going on in the vast and complex US economy. The BEA comes up with an “advance estimate” to give economy watchers a feel, but it concedes that there will be many and substantial revisions as more data become available, and that initial “feel” may be wrong.
- Point two: Equally complex economies, such as China’s, are equally hard to estimate. Yet China’s National Bureau of Statistics comes up with one big-fat figure that is always very near the number the central government had mandated earlier. It publishes its GDP number less than three weeks after the end of the quarter, and a week or more before the BEA’s advance estimate. For example, on October 18, the National Bureau of Statistics reported that GDP in Q3 grew 6.8% year-over-year. And this figure – however hastily concocted, inflated, or just plain fabricated – becomes etched in stone. No one believes it.
- At least in the US, after many revisions and years down the road, GDP becomes a credible number. In China, you’ll never get there.
- And point three: GDP is a terrible measure of the economy. It measures what money gets spent on and invested in. It’s a measurement of flow. Among other shortcomings, it doesn’t include the source of money – whether it’s earned money or borrowed money. This leads to the distortion that piling on debt is somehow good for the economy, when in reality it’s only good for GDP but will act as a drag on the economy down the road.
- Nevertheless, to estimate the overall economy, GDP is the measure we’ve got. And until something better is widely used, we’re stuck with it.
- No, our American consumers didn’t suddenly perform a miracle.
- Once we wake up to how the game is being played, then we will have a real shot at changing things. For decades, the elite have been pulling the strings behind the scenes in both major political parties. That is why nothing has ever seemed to change very much no matter which party has been in power. The agenda of the elite has always seemed to march forward, and ordinary people like us have always been frustrated that we can’t seem to make a difference. But now a shift seems to be taking place. Donald Trump took on the establishment in both major parties, and he miraculously won the presidency. Down in Alabama, the elite spent more than 30 million dollars to defeat Roy Moore, and he still defeated Luther Strange. A political awakening is taking place, and I can’t wait to see what happens during the mid-term elections in 2018.
- In Part I and Part II of this series, I talked about how the elite use debt as a tool of enslavement. In Part III, I went over how the elite use the colossal media corporations they own to control what we think. Today, I want to talk about their influence in the realm of politics.
- In Washington D.C., it is well understood that the game of politics is all about the money. If I win my election, and online polling suggests that there is a ton of enthusiasm for my campaign, I will be expected to spend most of my time on the phone raising money. As a freshman member of Congress, at orientation it will be explained to me that I am supposed to spend approximately four hours a day doing fundraising, and that is why the House and Senate floors are so empty most of the time.
- By law, members of Congress cannot make fundraising calls from their offices, and so both parties have huge call centers just across from the Capitol. Especially around lunch and dinner times (because those are some of the best times to reach people), those call centers are packed as members of the House and Senate run through lists of potential donors.
- And it isn’t just about raising money for their own campaigns. As a freshman member of Congress I would be expected to raise at least $200,000 for the NRCC (the National Republican Congressional Committee). If I don’t pay my dues, I would get into big trouble with party leadership.
- But you know what? I have already pledged that I am not going to participate in this very corrupt system. If I am sent to Congress, I am going to spend my time doing the job that the people of Idaho sent me there to do.
- So will Paul Ryan and the others in leadership get very upset with me for not “paying my dues”?
- Of course.
- But it is time for some of us to take a stand and do what is right. Congress has become a cesspool of filth and corruption, and it is time to flush the toilet.
- Because if we don’t fight this corrupt system, the influence of money in politics will just get worse and worse. Today, the elite pour millions upon millions of dollars even into small campaigns, and in 2016 it took an average of more than 10 million dollars to win a U.S. Senate seat…
While the White House may not have gone to the biggest spender, an awful lot of House and Senate seats did — as usual. And it was pricier than ever to win them.
This election cycle, an average winning Senate candidate had spent $10.4 million through Oct. 19 (reflecting the latest reports filed with the Federal Election Commission). That’s a $1.8 million increaseover the same period in the 2014 cycle. By the end of last cycle, the number rose to $10.6 million, and a similar uptick is expected this time once post-election and year-end reports are filed.
- Once you win, the pressure to raise money for your next campaign never ends.
- The elite know this, and they use this pressure to influence votes. Prior to a big vote, lobbyists will make it abundantly clear how they want certain members of Congress to vote, and if they vote the “right way” those members of Congress will be rewarded.
- Just across from the U.S. Capitol there are clubs where fancy receptions are regularly held. If you vote the “right way” on a particular bill, you may be invited to one of these receptions, and there will be big, fat donation checks waiting there for you.
- Of course most members of Congress have learned how to play the game, and this is why it is nearly impossible to defeat incumbents. Over the past six decades, the re-election rate for members of the House of Representatives has consistently been well over 80 percent, and according to the UVA Center for Politics incumbents actually did far better than that in 2016…
This election cycle, 393 of 435 House representatives, 29 of 34 senators, and five of 12 governors sought reelection (several of the governors were prohibited from seeking another term). Of those, 380 of 393 House members (97%), 27 of 29 senators (93%), and four of five governors (80%) won another term. These members of Congress and governors not only won renomination, but also won in November.
- Since World War II, the overall success rate for Senate incumbents has been 84 percent, and the overall success rate for House incumbents has been 94 percent.
- Incumbents are almost always armed with huge war chests and most of them have tremendous name recognition, and so toppling them is not easy.
- Fortunately, there is no incumbent in my race because Raul Labrador is running for governor. So the race is completely wide open, and right now my campaign has the most enthusiasm by far. If you would like to help me flush the toilet in Washington, I would encourage you to visit MichaelSnyderForCongress.com.
- If we don’t fight back, we will never break the stranglehold that the elite have on our political system.
- Every generation of Americans has had to stand up and fight for liberty and freedom, and now it is our turn. This particular battle will not be fought with guns and bullets, but rather with ideas, values and principles.
- We are part of a movement that is sweeping the nation. Good men and women are rising up to run in federal, state and local races all across the country, and it is absolutely imperative that we all get behind them and support them.
- The mystery surrounding Mandalay Bay security guard Jesus Campos grows increasingly bizarre by the day. Following Stephen Paddock’s October 1st massacre in Las Vegas, Campos, who may or may not have been shot by Paddock, flaked on a press conference that he reportedly scheduled then went missing for days before suddenly resurfacing on the ‘Ellen’ show.
- Now, Fox News has uncovered Customs and Border Patrol documents showing that Campos apparently crossed the border into Mexico days after the Vegas massacre. Campos reportedly crossed the border at the same place in January but, for whatever reason, was driving a rental car this time around instead of his own vehicle. Per the New York Post:
Mandalay Bay security guard Jesus Campos mysteriously left the country just days after the Las Vegas massacre, a report says.
Customs and Border Patrol documents obtained by Fox News show that the 25-year-old entered the United States from Mexico at the San Ysidro border crossing in California — one week after the mass shooting.
It’s unclear how long Campos was out of the country. The documents only show that he entered back into the US.
The young man reportedly crossed the border at the same location in January.
While Campos was driving his own vehicle with Nevada plates during that trip, sources told Fox that he took a rental car this time around — which was registered in California.
- Of course, this raises a number of new questions including, but certainly not limited to, the following: (1) why would the FBI allow a material witness to flee the country during an ongoing investigation, (2) if Campos was shot, why/how did he spend hours in a car on a road trip to Mexico rather recuperating in a hospital bed and (3) if this was a “pre-planned” visit, as his union suggests, then why did investigators seem so baffled by his disappearance.
The new information raises even more questions about Stephen Paddock’s Oct. 1 massacre — such as why authorities would allow Campos to leave the country in the middle of their investigation or how the security guard managed to make it down to Mexico with a gunshot wound to his leg.
Campos reportedly took a bullet from gunman Stephen Paddock at the start of his killing spree.
The union that represents him told Fox that they were aware of his trip to Mexico and claimed it was pre-planned visit. What’s unclear, though, why the group didn’t report his whereabouts in the days following the massacre.
- So what say you? Was this just an innocent, pre-planned trip to Mexico or is there a lot more to the Jesus Campos saga?
- The majority of middle class wealth is locked up in unproductive assets or assets that only become available upon retirement or death.
- Compare these lockboxes and limitations with the top 1%, which owns the bulk of business equity assets. Business equity means ownership of businesses; ownership of shares in corporations (stocks) is classified as ownership of financial securities.One of my points in Why Governments Will Not Ban Bitcoin was to highlight how few families had the financial wherewithal to invest in bitcoin or an alternative hedge such as precious metals.
- The limitation on middle class wealth isn’t just the total net worth of each family; it’s also how their wealth is allocated: the vast majority of most middle class family wealth is locked up in the family home or retirement funds.
- This chart provides key insights into the differences between middle class and upper-class wealth. The majority of the wealth held by the bottom 90% of households is in the family home, i.e. the principal residence. Other major assets held include life insurance policies, pension accounts and deposits (savings).
- What characterizes the family home, insurance policies and pension/retirement accounts? The wealth is largely locked up in these asset classes.
- Yes, the family can borrow against these assets, but then interest accrues and the wealth is siphoned off by the loans. Early withdrawals from retirement funds trigger punishing penalties.
- In effect, this wealth is in a lockbox and unavailable for deployment in other assets.
- IRAs and 401K retirement accounts can be invested, but company plans come with limitations on where and how the funds can be invested, and the gains (if any) can’t be accessed until retirement.
- These two charts add context to the ownership of business equity. Note that despite the recent bounce off a trough, the percentage of families with business equity has declined for the past 25 years. The chart is one of lower highs and lower lows, the classic definition of a downtrend.
- The mean value of business equity is concentrated in the top 10% of families.While the value of the top 10%’s biz-equity dropped sharply in the global financial crisis of 2008-09, it has since recovered and reached new heights, while the value of the biz equity held by the bottom 90% has flatlined.
- Assets either produce income (i.e. they are productive assets) or they don’t (i.e. they are unproductive assets). Businesses either produce net income or they become insolvent and close down. Family homes typically don’t produce any income (unless the owners rent out rooms), and whatever income life insurance and retirement funds produce is unavailable.
- This is the key difference between financial-elite wealth and middle class wealth: the majority of middle class wealth is locked up in unproductive assets or assets that only become available upon retirement or death.
- The income flowing to family-owned businesses can be spent, of course, but it can also be reinvested, piling up additional income streams that then generate even more income to reinvest.
- No wonder wealth is increasingly concentrated in the hands of the top 5%: those who own productive assets have the means to acquire more productive assets because they own income streams they can direct and use in the here and now without all the limitations imposed on the primary assets held by the middle class.
- I don’t remember ever having seen crazier times of more pandemic proportions.
- “It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing,” explained Jordan Belfort concerning ICOs (initial coin offerings) of cryptocurrencies. The former penny-stock broker portrayed by Leonardo DiCaprio in The Wolf of Wall Street should know: He spent 22 months in the hoosegow for securities fraud and money-laundering.
- Just about anyone can call themselves a startup, make promises of future products or services, and sell digital tokens to raise funds. These digital tokens become tradable cryptocurrencies. Buyers do not receive any ownership of the startup, which is what traditional startup investors get. Instead they’re usually promised something in the future, such as free access to the service once available. It doesn’t really matter what the promises are because people buy the tokens to get rich, hoping that they’re getting into the hottest cryptocurrency on the ground floor. ICOs are not regulated and anything goes.
- So far this year, there have been 202 ICOs that have raised just over $3 billion, according to the Financial Times.
- Including those ICOs, there are now about 1,000 cryptocurrencies with a total market capitalization of around $170 billion, from bitcoin on down. Hundreds have fizzled, their value has evaporated, and trading activity has died. Whoever bought them has now become the end user of a useless digital token.
- “Promoters [of ICOs] are perpetuating a massive scam of the highest order on everyone,” Belfort told the FT, though he conceded that many promoters may not have “bad intentions.”
[H]e said the techniques employed by ICO salespeople appeared to be similar to the “pump and dump” tactics used by boiler-rooms: get supply, promote aggressively, leak a little into the market, stir interest — perhaps via celebrity endorsements — then sell the rest before the price collapses.
- “Everyone and their grandmother wants to jump in right now,” he said. “I’m not saying there’s something wrong with the idea of cryptocurrencies, or even tulip bulbs. It’s the people who will then get involved and bastardize the idea.”
- But cryptocurrencies is where volatility is, and traders yearn for volatility in an era when stock markets only go up but without volatility. They yearn for big price swings, and they get those in cryptocurrencies, when prices jump or plunge in the high single digits and occasionally in the double digits in a single day. And so Wall Street has discovered cryptocurrencies, according to the Financial Times:
Proprietary trading firms, which bet their own capital in markets from stocks to futures, are wading into bitcoin, ethereum, and other cryptocurrencies better known as a playground for small speculators and a haven for money-laundering.
DRW of Chicago, one of the world’s largest proprietary trading companies, has led the charge. About a dozen of its more than 800 employees buy and sell bitcoin at a subsidiary named Cumberland Mining, which was established in 2014.
Other firms have followed, including Jump Trading, DV Trading and Hehmeyer Trading + Investments, according to industry executives.
- “The volatility in asset classes is at all-time historic lows – everywhere except for cryptocurrencies; so there’s obviously a lot of interest in this space,” Garrett See, CEO of DV Chain – the cryptocurrency affiliate of DV Trading – told a trading industry conference in Chicago last week.
- Proprietary trading firms have jumped in, amassing large inventories and making markets for hedge funds, family investment offices, and wealthy individuals, according to the FT:
Such firms are renowned as high-frequency traders, using computing firepower and telecommunications hardware to execute deals in millionths of a second. But in cryptocurrency, they are conducting many of their trades with tools such as email, Skype and phones.
- “The flavor of the counterparties has definitely shifted pretty dramatically in the last year,” DRW CEO Don Wilson told the FT.
DRW has long-term holdings of cryptocurrencies, giving it stocks to be able sell to buyers. In March 2015, it bought 27,000 bitcoins that the US government had confiscated in a case involving a drug marketplace called Silk Road, according to a report by Coindesk. Worth $7.6 million at the time of the auction, the sum would now be valued at about $160 million.
- And there are tantalizing tidbits, according to the FT:
Hehmeyer, led by a longtime Chicago futures executive Chris Hehmeyer, was advertising a job opening for a “crypto trade engineer” who has a “passion for cryptocurrencies and the role they play in global markets.”
- “It is exploding,” Hehmeyer said. “It’s a rapidly growing set of instruments, unlike anything we have ever seen. There are risks but we are cautiously in.”
- I, on the other hand, don’t remember ever having seen crazier times of more pandemic proportions than these, and this whole craze is another shining manifestation.
- US Treasury securities with maturities of two years or less have taken a beating, and their yields have been soaring, but the yield spread has collapsed to the lowest level since early in the Financial Crisis, and even the Fed is worried
10.22.17 – Which Rotten Fruit Falls First?
- I predict the current investigations will widen and take a variety of twists and turns that surprise all those anticipating a tidy, narrowly focused denouement.
The theme this week is The Rot Within.
- To those of us who understand the entire status quo is rotten and corrupt to its core, the confidence of each ideological camp that their side will emerge unscathed by investigation is a source of amusement. The fake-progressives (fake because these so-called “progressives” support Imperial over-reach and a status quo whose only possible output is soaring wealth and income inequality) are confident that a “smoking gun” of corruption will deliver their most fervent dream, the impeachment of President Trump, while Trump supporters are equally confident there is no “smoking gun.”
- One camp is confident that the wily Clintons and their army of enablers, from former FBI Director Comey on down, will finally be brought to long-evaded justice for their various perfections of corruption and collusion: pay to play, and so on.
- Clinton supporters are equally confident that there is no “smoking gun” that will bring down the House of Clinton, and by proxy, the organs of the Democratic Party.
- The implicit historical model each camp is anticipating is of course Watergate, which unfolded with a dramatic inevitability that in retrospect almost seems scripted: a minor burglary led to the hubris of cover-up which led to the destruction of the Nixon presidency.
- Often overlooked in this history is the key roles played by insider informants (such as Deep Throat) and the wider political demands for greater transparency the scandal triggered. The Church Committee ended up investigating the illegal campaigns of the FBI and CIA against the anti-war and civil rights movements (COINTELPRO etc.), and a small dent was made in the federal government’s decades-long reliance on official secrecy to cover up official corruption, collusion, malfeasance, lies, etc.– the ugly underbelly of agencies protecting the Empire from any inconvenient leaks of truth.
- I submit that Watergate will not be the template for the multiple investigations being pursued in the present. It seems highly likely to me that who and what gets taken down by the investigations is much less predictable than in the Watergate template, which distilled down to an escalating campaign of cover-ups and stonewalling which simply compounded the crimes previously committed.
- I submit that the investigations launched with an implicit intent of bringing down selected targets may well end up destroying people and institutions that weren’t in the crosshairs. The reason why this seems so likely is that the entire status quo is corrupt: the fraud, pay-to-play, lies and collusion are institutionalized and system-wide, and once some investigation drills a hole in the dam of secrecy and collusion, the hole may quickly widen as the fetid gush of hidden truths pours out.
- In other words, when the entire status quo is corrupt and hiding its collusion, gathering evidence to nail one target inevitably tugs loose other threads, threads that the original investigators reckoned could be safely left untouched.
- It doesn’t work that way, folks. Insiders end up releasing more than investigators bargained for, and all it takes is one insider and one journalist who isn’t beholden to a colluding-insider corporate boss to widen the hole in the dam into a veritable flood.
- Longtime readers know I have long made the case that the Deep State has fractured into competing camps. For example:
- Is the Deep State Fracturing into Disunity? (March 14, 2014)
- Surplus Repression and the Self-Defeating Deep State (May 26, 2015)
- Public investigations are one field where this conflict plays out, but unfortunately for the players, it’s a game that’s easier to start than to control.
- For this reason, I predict the current investigations will widen and take a variety of twists and turns that surprise all those anticipating a tidy, narrowly focused denouement. Which of the many rotten fruits will fall first? How many will fall by the time the investigations have burned through a corrupt status quo that’s exquisitely vulnerable to a single lightning strike? Only one lightning strike is needed to ignite the combustible corruption and trigger a conflagration tha quickly escapes the handlers’ control.
- If you want a recent example of this dynamic, consider Harvey Weinstein, a mere brush fire that may well spread further and faster than the handlers expect.
- In light of the 30-year anniversary of the Black Monday Crash in 1987 (when the Dow lost more than 20% in “one day”, we should be reminded that investor anxiety usually increases when markets get to extremes. If stock prices fall steeply, people fret about money lost, and if they move too high too fast, they worry about sudden reversals. As greed is supposed to be counterbalanced by fear, this relationship should not be surprising. But sometimes the formula breaks down and stocks become very expensive even while investors become increasingly complacent. History has shown that such periods of untethered optimism have often presaged major market corrections. Current data suggests that we are in such a period, and in the words of our current President, we may be “in the calm before the storm.”
- Many market analysts consider the Cyclically Adjusted Price to Earnings (CAPE) ratio to be the best measure of stock valuation. Also known as the “Shiller Ratio” (after Yale professor Robert Shiller), the number is derived by dividing the current price of a stock by its average inflation-adjusted earnings over the last 10 years. Since 1990, the CAPE ratio of the S&P 500 has averaged 25.6. The ratio got particularly bubbly, 44.2, during the 1999 crescendo of the “earnings don’t matter” dotcom era of the late 1990’s. But after the tech crash of 2000, the ratio was cut in half, drifting down to 21.3 by March of 2003. For the next five years, the CAPE hung around historic averages before collapsing to 13.3 in the market crash of 2008-2009. Since then, the ratio has moved steadily upward, returning to the upper 20s by 2015. But in July of this year, the CAPE breached 30 for the first time since March 2002. It has been there ever since (which is high when compared to most developed markets around the world). (data from Irrational Exuberance, Princeton University Press 2000, 2005, 2015, updated Robert J. Shiller)
- But unlike earlier periods of stock market gains, the extraordinary run-up in CAPE over the past eight years has not been built on top of strong economic growth. The gains of 1996-1999 came when quarterly GDP growth averaged 4.6%, and the gains of 2003-2007 came when quarterly GDP averaged 2.96%. In contrast Between 2010 and 2017, GDP growth had averaged only 2.1% (data from Bureau of Economic Analysis). It is clear to some that the Fed has substituted itself for growth as the primary driver for stocks.
- Investors typically measure market anxiety by looking at the VIX index, also known as “the fear index”. This data point, calculated by the Chicago Board Options Exchange, looks at the amount of put vs. call contracts to determine sentiment about how much the markets may fluctuate over the coming 30 days. A number greater than 30 indicates high anxiety while a number less than 20 suggests that investors see little reason to lose sleep.
- Since 1990, the VIX has averaged 19.5 and has generally tended to move up and down with CAPE valuations. Spikes to the upside also tended to occur during periods of economic uncertainty like recessions. (The economic crisis of 2008 sent the VIX into orbit, hitting an all-time high of 59.9 in October 2008.) However, the Federal Reserve’s Quantitative Easing bond-buying program, which came online in March of 2009, may have short-circuited this fundamental relationship.
- Before the crisis, there was still a strong belief that stock investing entailed real risk. The period of stock stagnation of the 1970s and 1980s was still well remembered, as were the crashes of 1987, 2000, and 2008. But the existence of the Greenspan/Bernanke/Yellen “Put” (the idea that the Fed would back stop market losses), came to ease many of the anxieties on Wall Street. Over the past few years, the Fed has consistently demonstrated that it is willing to use its new tool kit in extraordinary ways.
- While many economists had expected the Fed to roll back its QE purchases as soon as the immediate economic crisis had passed, the program steamed at full speed through 2015, long past the point where the economy had apparently recovered. Time and again, the Fed cited fragile financial conditions as the reason it persisted, even while unemployment dropped and the stock market soared.
- The Fed further showcased its maternal instinct in early 2016 when a surprise 8% drop in stocks in the first two weeks of January (the worst ever start of a calendar year on Wall Street) led it to abandon its carefully laid groundwork for multiple rate hikes in 2016. As investors seem to have interpreted this as the Fed leaving the safety net firmly in place, the VIX has dropped steadily from that time. In September of this year, the VIX fell below 10.
- Untethered optimism can be seen most clearly by looking at the relationship between the VIX and the CAPE ratio. Over the past 27 years, this figure has averaged 1.43. But just this month, the ratio approached 3 for the first time on record, increasing 100% in just a year and a half. This means that the gap between how expensive stocks have become and how little this increase concerns investors has never been wider. But history has shown that bad things can happen after periods in which fear takes a back seat.
- Past performance is not indicative of future results. Created by Euro Pacific Capital from data culled from econ.yale.edu & Bloomberg.
- On September 1 of 2000, the S&P 500 hit 1520, very close to its (up to then) all-time peak. The 167% increase in prices over the prior five years should have raised alarm bells. It didn’t. At that point, the VIX/CAPE ratio hit 1.97…a high number. In the two years after September 2000, the S&P 500 retreated 46%. Ouch.
- Unfortunately, the lesson wasn’t well learned. The next time the VIX/CAPE hit a high watermark was in January 2007 when it reached 2.39. At that point, the S&P 500 had hit 1438 a 71% increase from February of 2003. As they had seven years earlier, the investing public was not overly concerned. In just over two years after the VIX/CAPE had peaked the S&P 500 declined 43%. Double Ouch.
- For much of the next decade investors seemed to have been twice bitten and once shy. The VIX/CAPE stayed below 2 for most of that time. But after the election of 2016, the caution waned and the ratio breached 2. In the past few months, the metric has risen to record territory, hitting 2.57 in June, and 2.93 in October. These levels suggest that a record low percentage of investors are concerned by valuations that are as high as they have ever been outside of the four-year “dotcom” period.
- Investors may be trying to convince themselves that the outcome will be different this time around. But the only thing that is likely to be different is the Fed’s ability to limit the damage. In 2000-2002, the Fed was able to cut interest rates 500 basis points (from 6% to 1%) in order to counter the effects of the imploding tech stock bubble. Seven years later, it cut rates 500 basis points (from 5% to 0) in response to the deflating housing bubble. Stocks still fell anyway, but they probably would have fallen further if the Fed hadn’t been able to deliver these massive stimuli. In hindsight, investors would have been wise to move some funds out of U.S. stocks when the CAPE/VIX ratio moved into record territory. While stocks fell following those peaks, gold rose nicely.
- Past performance is not indicative of future results. Created by Euro Pacific Capital from data culled from Bloomberg.
- Past performance is not indicative of future results. Created by Euro Pacific Capital from data culled from Bloomberg.
- But interest rates are now at just 1.25%. If the stock market were again to drop in such a manner, the Fed has far less fire power to bring to bear. It could cut rates to zero and then re-launch another round of QE bond buying to flood the financial sector with liquidity. But that may not be nearly as effective as it was in 2008. Given that the big problem at that point was bad mortgage debt, the QE program’s purchase of mortgage bonds was a fairly effective solution (although we believe a misguided one). But propping up overvalued stocks, many of which have nothing to do with the financial sector, is a far more difficult challenge. The Fed may have to buy stocks on the open market, a tactic that has been used by the Bank of Japan.
- It should be clear to anyone that since the 1990s the Fed has inflated three stock market bubbles. As each of the prior two popped, the Fed inflated larger ones to mitigate the damage. The tendency to cushion the downside and to then provide enough extra liquidity to send stock prices back to new highs seems to have emboldened investors to downplay the risks and focus on the potential gains. This has been particularly true given that the Fed’s low interest rate policies have caused traditionally conservative bond investors to seek higher returns in stocks. Without the Fed’s safety net, many of these investors perhaps would not be willing to walk this high wire.
- But investors may be over-estimating the Fed’s ability to blow up another bubble if the current one pops. Since this one is so large, the amount of stimulus required to inflate a larger one may produce the monetary equivalent of an overdose. It may be impossible to revive the markets without killing the dollar in the process. The currency crisis the Fed might unleash might prove more destructive to the economy than the repeat financial crisis it’s hoping to avoid.
- We believe the writing is clearly on the wall and all investors need do is read it. It’s not written in Sanskrit or Hieroglyphics, but about as plainly as the gods of finance can make it. Should the current mother-of-all bubbles pop, for investors and the Fed it won’t be third time’s the charm, but three strikes and you’re out.
10.19.17 – GDP Is Bogus: Here’s Why
- Here’s a chart of our fabulous always-higher GDP, adjusted for another bogus metric, official inflation.
The theme this week is The Rot Within.
- The rot eating away at our society and economy is typically papered over with bogus statistics that “prove” everything’s getting better every day in every way. The prime “proof” of rising prosperity is the Gross Domestic Product (GDP), which never fails to loft higher, with the rare excepts being Spots of Bother (recessions) that never last more than a quarter or two.
So if we borrow money to pay people to dig holes and then fill them with the excavated dirt, GDP rises to general applause. The debt we took on to fund the make-work isn’t accounted for at all.Longtime correspondent Dave P. of Market Daily Briefing recently summarized the key flaw in GDP: GDP doesn’t reflect changes in the balance sheet, i.e. debt.
- Here’s Dave’s explanation:
- Once I learned about accounting, I figured out why the GDP metric wasn’t sufficient. What is missing?
- The balance sheet.
- Hurricanes are a direct hit to your nation’s balance sheet. The national income statement goes up because of increased spending to replace lost assets, but the “equity” part of the national balance sheet ends up taking a hit in direct proportion to the damage that occurred. Even if you rebuild everything just the way it was, your assets remain the same, while your liabilities have increased.
- We know this because we use the balance sheet equation: equity = assets – liabilities. Equity is another word for wealth.
- Before hurricane:
- wealth = (house + car) – (home debt + car debt)
- After hurricane, you rebuild your house, and buy a new car, using borrowed money:
- wealth = (house + car) – (2 x home debt + 2 x car debt)
- Wealth (equity) has declined by the sum (home debt + car debt)
- So when you see pictures of a hurricane strike, you can now look through all that devastation and see the impact on the balance sheet. National equity (wealth) just dropped by the amount of damage inflicted by the hurricane. Whether it is ever rebuilt doesn’t actually matter; that equity is just gone. Destruction is always a downside for equity – even if there is a temporary positive impact on the income statement.
- Isn’t it interesting that the mainstream economists, who don’t use banks, debt, or money in their models, largely ignore balance sheets and instead just looks at the income statement alone? Its almost as if the entire education system was organized so that people paid no attention to banks, debt, and money. Who do you think might benefit from our flock of PhD economists ignoring the extremely profitable debt-elephant in the room, and its purveyors, the banks?
- Thank you, Dave, for an explanation we never see in the mainstream. And here’s a chart of our fabulous always-higher GDP, adjusted for another bogus metric, official inflation:
- How much is your view of the world shaped by what you see on television? On average, Americans spend more than 150 hours watching television every month, and it is called “programming” for a reason. If you allow anyone to pour ideas and information into your mind for five hours a day, it is going to change how you look at reality. Everyone has an agenda, and every single news program, television show and movie is trying to alter your views. Sadly, our society has become absolutely addicted to media, and the mainstream media is completely dominated by the elite. In fact, about 90 percent of the programming that comes through your television is controlled by just 6 gigantic media corporations. Most of us are willingly plugging ourselves into this “propaganda matrix” that is completely dominated by the elite for several hours each day, and that gives them an enormous amount of power over the rest of us.
- In Part I and Part II of this series, I discussed how the elite use money as a tool to dominate the planet. Today, we are going to talk about how they use information. If you control what people think, then you control a society. And through their vast media empires, the elite are able to shape how we all think to a frightening degree.
- Just think about it. What do we talk about with our family, our friends and our co-workers? To a large extent, those conversations are about movies, television shows, something that we just saw on the news or a sporting event that just took place. The reason why we talk about certain things is because the mainstream media gives those things attention, and other things we ignore because the mainstream media does not make them seem to be important.
- The mainstream media literally sets the agenda for our society, and it would be difficult to overstate the power that is in their hands. And as I mentioned above, the mainstream media is almost entirely controlled by just 6 colossal corporations. The following list of these 6 corporate giants comes from one of my previous articles, and this is just a sampling of the media properties that they each own…
The Weather Channel
Universal Parks & Resorts
Universal Studio Home Video
- The Walt Disney Company
- ABC Television Network
The Disney Channel
Walt Disney Pictures
Pixar Animation Studios
Disney Consumer Products
Disney Theme Parks
- News Corporation
- Fox Broadcasting Company
Fox News Channel
Fox Business Network
Fox Sports 1
Fox Sports 2
Nat Geo Wild
FX Movie Channel
Fox Sports Networks
The Wall Street Journal
The New York Post
20th Century Fox
Fox Searchlight Pictures
Blue Sky Studios
- Time Warner
Turner Classic Movies
Warner Bros. Interactive Entertainment
New Line Cinema
Paramount Home Entertainment
Country Music Television (CMT)
The Movie Channel
- CBS Corporation
- CBS Television Network
The CW (along with Time Warner)
CBS Sports Network
CBS Radio, Inc.
CBS Television Studios
Simon & Schuster
Westwood One Radio Network
- If nobody tuned in to their “programming”, they would not have any power over us.
- But according to a report put out by Nielsen, Americans are plugging into “the matrix” more than ever before. The following is how our daily use of media breaks down by device…
- Live TV: 4 hours, 31 minutes
Time-Shifted TV: 33 minutes
Radio: 1 hour, 52 minutes
DVDs: 8 minutes
Video Game Consoles: 14 minutes
Multimedia Devices (Apple TV, Roku, etc.): 13 minutes
Internet on PC: 58 minutes
Smartphone: 1 hour, 39 minutes
Tablet: 31 minutes
- When you total those numbers up, it comes to 10 hours and 39 minutes.
- In essence, Americans are spending most of their waking hours plugged in to something.
- And if you only add together “live television” and “time-shifted television”, Americans are spending an average of more than five hours each day just watching television.
- Of course many of us spend countless hours on the Internet as well. It has been estimated that 54,907 Google searches are conducted, 7,252 tweets are posted, 125,406 YouTube videos are viewed, and 2,501,018 emails are sent out every single second.
- You may have guessed this already, but most of the news and information that we consume on the Internet is also controlled by the elite…
Overall, the top 10 publishers — together owning around 60 news sites — account for 47% of total online traffic to news content last year, with the next-biggest 140 publishers accounting for most of the other half, SimilarWeb found.
The biggest online news publisher for the U.S. audience was MSN, owner of MSN.com, with just over 27 billion combined page views across mobile and desktop, followed by Disney Media Networks, owner of ESPN and ABC News, with 25.9 billion.
- This is why the “alternative media” is so important. All over America and all over the world, people are waking up and realizing that they aren’t getting the truth from the mainstream media, and they are hungry for truly independent sources of information.
- The only way that we are ever going to be able to throw off the insidious system of control that the elite have established is by winning the information war. We are literally in a constant battle for hearts and minds, and the good news is that we have made a lot of progress. Over the past decade we have “red pilled” millions upon millions of people, but we still have a long way to go.
- Faith in the corporate media is dwindling, and the elite are deeply concerned about this. The Internet has allowed ordinary people like us to communicate on a mass scale, and this has never been the case before in human history. We have a window of opportunity to fight back against the elite, and we must not let this opportunity pass us by.
- We are literally engaged in a battle for the future of this planet, and let us never waver in our pursuit of victory.
- Even though the nations of the world are very deeply divided on almost everything else, somehow virtually all of them have been convinced that central banking is the way to go. Today, less than 0.1% of the population of the world lives in a country that does not have a central bank. Do you think that there is any possible way that this is a coincidence? And it is also not a coincidence that we are now facing the greatest debt bubble in the history of the world. In Part I of this series, I discussed the fact that total global debt has reached 217 trillion dollars. Once you understand that central banks are designed to create endless debt, and once you understand that 99.9% of the global population lives in a country that has a central bank, then it finally makes sense why we have accumulated so much debt. The elite of the world use debt as a tool of enslavement, and central banking has allowed them to literally enslave the entire planet.
- Some of you may not be familiar with how a “central bank” differs from a normal bank. The following definition of a “central bank” comes from Wikipedia…
A central bank, reserve bank, or monetary authority is an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency, which usually serves as the state’s legal tender.
- Over the past 100 years or so, we have seen central banks steadily be established all over the planet. At this point, there are just 8 very small nations that still do not have a central bank…
-Federated States of Micronesia
- When you add the populations of those 8 nations together, it comes to much less than 0.1% of the global population.
- But even though central banking is nearly universal, only a very small fraction of the global population can tell you how money is created.
- Do you know where money comes from?
- Here in the United States, most people just assume that the federal government creates money. But that is not true at all.
- Many are absolutely shocked when they discover that U.S. currency is actually borrowed into existence. The federal government gives U.S. Treasury bonds (debt) to the Federal Reserve in exchange for money that the Federal Reserve creates out of thin air. The Federal Reserve then auctions off those bonds to the highest bidder.
- Since the federal government must pay interest on those bonds, the amount of debt that is created in these transactions is actually greater than the amount of money that is created. But we are told that if we can just circulate the money throughout our economy fast enough and tax it at a high enough rate, then we can eventually pay off the debt. Of course that never actually happens, and so the federal government always has to go back and borrow even more money. This is called a debt spiral, and at this point we will never be able to escape it until we do away with this horrible system.
- But why does our government (or any government for that matter) have to borrow money that is created by a central bank in the first place?
- Why can’t governments just create money themselves?
- Oops. That is the big secret that nobody is supposed to talk about.
- Theoretically, the U.S. government doesn’t actually have to borrow a single penny. Instead of borrowing money the Federal Reserve creates out of thin air, the federal government could just create money directly and spend it into circulation.
- Yes, this could actually happen. Back in 1963, President John F. Kennedy signed Executive Order 11110 which authorized the U.S. Treasury to issue debt-free “United States Notes” which were not created by the Federal Reserve. These debt-free notes began to be issued, and you can still find them for sale on eBay today. Unfortunately, President Kennedy was assassinated shortly after this executive order was issued, and the notes were not in production for long.
- If we had ultimately fully adopted “United States Notes” and had phased out Federal Reserve notes, we would not be 20 trillion dollars in debt today.
- The elite of the world love to get national governments deep into debt, because it enables them to enslave entire populations while making an obscene amount of money in the process.
- Back in 1913, an insidious plan was rushed through Congress just before Christmas that was based on a blueprint that had been developed by very powerful Wall Street interests. Author G. Edward Griffin did an extraordinary job of documenting how all of this happened in his book entitled “The Creature from Jekyll Island: A Second Look at the Federal Reserve”. A central bank was established, and it was purposely designed to create a government debt spiral, and that is precisely what happened.
- Since 1913, the size of the national debt has gotten more than 6,000 times larger, and the value of our dollar has declined by more than 98 percent. Many conservatives are still under the illusion that we could get out of debt someday if we just grow the economy fast enough, but I have shown in another article that we have gotten to the point where this is mathematically impossible.
- And most people are also operating under the false assumption that the Federal Reserve is part of the federal government. But that is not accurate either. The following comes from one of my previous articles…
There is often a lot of confusion about the Federal Reserve, because a lot of people think that it is simply an agency of the federal government. But of course that is not true at all. In fact, as Ron Paul likes to say, the Federal Reserve is about as “federal” as Federal Express is.
The Fed is an independent central bank that has even argued in court that it is not an agency of the federal government. Yes, the president appoints the leadership of the Fed, but the Fed and other central banks around the world have always fiercely guarded their “independence”. On the official Fed website, it is admitted that the 12 regional Federal Reserve banks are organized “much like private corporations”, and they very much operate like private entities. They even issue shares of stock to the private banks that own them.
In case you were wondering, the federal government has zero shares.
- According to the U.S. Constitution, a private central banking cartel should not be issuing our currency. In Article I, Section 8 of our Constitution, Congress is solely given the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.
- So why in the world has this authority been given to a central bank?
- The truth is that we do not need a central bank.
- From 1872 to 1913, there was no central bank and no income tax, and it turned out to be the greatest period of economic growth in all of U.S. history.
- But since the Fed was established, there have been 18 different recessions or depressions: 1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1969, 1973, 1980, 1981, 1990, 2001, 2008.
- Abolishing the Federal Reserve is one of the core issues of my platform, and I have been writing about these things for the last seven years.
- As I discussed yesterday, the elite use debt to enslave all of the rest of us, and central banking allows them to literally dominate the entire planet.
- Until we abolish this debt-based system and go to a currency that is debt-free, we are never going to permanently solve our very deep long-term economic and financial problems.
- But because they are so immensely wealthy, the elite are able to wield extraordinary influence in our society. They control the mainstream media, our politicians and even global institutions such as the United Nations. Anyone that would dare to question the validity of the current system is marginalized, and for a long time very few politicians around the world were even willing to speak out against central banking.
- However, that is starting to change. A new generation of leaders is rising up, and they are absolutely determined to break the stranglehold that the elite have on our society. It won’t be easy, but if we are able to wake enough people up, I believe that we will eventually be able to free ourselves from this insidious system.
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