Zero Hedge

This Is How A State Goes Bankrupt, Illinois Edition

Sat, 24 Oct 2020 19:30:00 GMT

This Is How A State Goes Bankrupt, Illinois EditionTyler DurdenSat, 10/24/2020 - 15:30

Authored by John Rubino via DollarCollapse.com,

Somewhere back in the depths of the 20th century, a bunch of governors, mayors, and public sector union leaders got together and cooked up one of history’s greatest financial scams. They would offer teachers, cops, and firefighters extremely generous pensions but would avoid raising taxes to fund the resulting future obligations. Grateful workers would vote to re-elect their benefactors, while taxpayers would appreciate the combination of excellent public services and low taxes.

The beauty of the scheme flowed from its demographics: Most of the original public sector workers were young and therefore decades away from retirement, so the crime wouldn’t be discovered until long after the architects retired rich and revered.

Now, however, those baby boomer workers are retiring and the scam is revealed for all to see. Even in the absence of a pandemic lockdown, mass defaults on state and city obligations would be inevitable in the coming decade. But with the lockdown, they’re coming next year.

So what do the worst offenders do? What they’ve always done, of course, which is to look for ways to paper over the mess for one more election cycle. Illinois is the poster child for state financial mismanagement, with unfunded liabilities that have grown from virtually nothing to $137 billion in just the past two decades.

So it’s no surprise that its politicians are engaged in some truly ridiculous forms of damage control:

Illinois to sell $850 million of bonds as investors brace for junk status
CHICAGO (Reuters) – Illinois is scheduled to sell $850 million of bonds on Tuesday as investors demand fatter yields for the state’s debt due to increased worries over its deep financial woes, which were exacerbated by the coronavirus pandemic.
Ahead of the competitive sale of general obligation bonds due over the next 25 years, the spread for Illinois 10-year bonds over Municipal Market Data’s benchmark triple-A yield scale has widened by 10 basis points to 281 basis points since Oct. 1.
Howard Cure, director of municipal bond research at Evercore Wealth Management, pointed to “a legitimate fear that the state could go into junk status – although not default on its debt.”
“The state continues to delay tough decisions with a number of speculative revenues as part of its current budget, including additional federal aid, voter approval for a progressive income tax, and more Municipal Liquidity Facility (MLF) debt,” he said, referring to the possibility Illinois, which took out a $1.2 billion cash-flow loan in June from the Federal Reserve’s MLF, could borrow more.
Illinois is the lowest-rated state at a notch above junk due to its huge unfunded pension liability and chronic structural budget deficit. All three major credit rating agencies assigned negative outlooks to their ratings in the wake of the pandemic.
Earlier this month, a Citi research report said Illinois is “almost guaranteed” a credit rating downgrade to junk if a constitutional amendment to replace its flat income tax rate with graduated rates fails to pass on Nov. 3. The ability to tax high earners more would increase revenue by an estimated $3.1 billion annually.
In addition to uncertainty over congressional passage of unrestricted federal virus aid to states, Andrew Richman, senior fixed income strategist at Sterling Capital Management, said Illinois was experiencing a surge in virus cases ahead of its sizeable bond sale. The state reported its highest one-day total of 4,554 cases on Friday.
“Illinois had problems before the pandemic,” Richman said.“Things are getting worse not better.”
Still, John Mousseau, president and CEO of Cumberland Advisors, said the high yields will attract buyers.
“People will buy it. They are yield-starved,” he said.

Taking the scam to the next level

One part of one sentence jumps out of the preceding article:

“The state continues to delay tough decisions with a number of speculative revenues as part of its current budget, including additional federal aid...”

The last remaining escape hatch for the worst-run cities and states is a massive (easily multi-trillion dollar) bailout by the only remaining entity with access to that kind of credit, the federal government. After the upcoming election, whichever party ends up in charge will face the specter of bond defaults and mass layoffs in Illinois, California, New York, New Jersey, Connecticut, and Kentucky, among many other places.

A Democrat-led federal government will happily provide the trillions necessary to keep this from happening, while a Republican administration will dither for a while before caving. Either way, the original crime is swept under the rug and the financial pressure is socialized, with all US taxpayers on the hook for previously-local mistakes.

GSA Gave FBI, Mueller 'Secret Access' To Trump Records

Sat, 24 Oct 2020 19:00:00 GMT

GSA Gave FBI, Mueller 'Secret Access' To Trump RecordsTyler DurdenSat, 10/24/2020 - 15:00

The Federal Bureau of Investigation (FBI) and the General Services Administration (GSA) undermined the Trump transition team by violating a memorandum of understanding between the Trump transition team and the GSA - when they complied with requests from the FBI and special counsel Robert Mueller's office to provide private records on members of Trump's team, according to a Senate report released on Friday.

As Just the News notes:

The majority staff report from both the Senate Committee on Finance and the Committee on Homeland Security and Governmental Affairs claims that officials from both the FBI and Mueller's office "secretly sought and received access to the private records of Donald J. Trump’s presidential transition team, Trump for America, Inc."
"They did so," the report continues, "despite the terms of a memorandum of understanding between the Trump transition team and the General Services Administration...—the executive agency responsible for providing services to both candidates’ transition teams—that those records were the transition team’s private property that would not be retained at the conclusion of the transition."

According to the report, the GSA - without notifying the White House - reached out to the FBI following Michael Flynn's resignation as national security adviser and offered to retain records from the Trump transition teamin early 2017. The records compiled eventually made their way into Mueller's office, according to the report.

"At bottom," continues the report, "the GSA and the FBI undermined the transition process by preserving Trump transition team records contrary to the terms of the memorandum of understanding, hiding that fact from the Trump transition team, and refusing to provide the team with copies of its own records."

"These actions have called into question the GSA’s role as a neutral service provider, and those doubts have consequences," the report reads. "Future presidential transition teams must have confidence that their use of government resources and facilities for internal communications and deliberations—including key decisions such as nominations, staffing, and significant policy changes—will not expose them to exploitation by third parties, including political opponents."

Orange County Launches Student Contest To "Normalize Mask Wearing"

Sat, 24 Oct 2020 18:30:00 GMT

Orange County Launches Student Contest To "Normalize Mask Wearing"Tyler DurdenSat, 10/24/2020 - 14:30

Authored by Sarah Le via The Epoch Times,

To “help normalize mask wearing” in the community, the Orange County Health Care Agency (OCHCA) in California has launched a contest for students that will award the winners thousands of dollars in technology grants for their schools.

There are three categories in the contest: mask art, written essay, and social video. Entrants will be split into age groups including elementary schools, middle schools, and high schools.

“The three entries with the highest scores in each entry category for each school level will be named winners,” according to the agency’s website.

A total of 27 technology grants will be awarded: $7,000 for nine first-place winners, $6,000 for nine second-place winners, and $5,000 for nine third-place winners. The grants can be used to buy WiFi hotspots or other technology equipment for the winners’ schools.

The winning mask design in each of the county’s five districts will also be produced for students in those schools to wear.

For the projects, students are encouraged either to come up with a mask design that they think everyone will want to wear, explain why wearing a mask is important in a 300 to 400 word essay, or create an original video that shows the benefits of wearing a mask in 60 seconds or less.

Students are being asked to have fun, get creative, and do their best to make a project “that entertains and educates how awesome wearing a mask can be.”

The entries will be judged based on originality, creativity, technical skill, artistic value, and how well they encourage people to wear a mask.

The students can find a mask template and a helpful downloadable toolkit, including the official entry form, on the website. The deadline for entry is Nov. 19 at 11:59 p.m, and winners will be posted by Dec. 4 at 11:59 p.m.

Orange County Hires After-Hour Nurses

At a press conference on Oct. 22, the OCHCA also announced the agency will be hiring a team of nurses to be on-call outside of regular business hours for COVID-19-related issues at local schools, which are gradually reopening for on-site instruction.

The nurses will assist school representatives “with isolation, quarantine protocols, disinfection instructions, and other critical guidance,” said Dr. Margaret Bredehoft, deputy agency director of Public Health Services at OCHCA.

They will be available by phone or other contact methods on weekdays from 4 p.m. to 11 p.m. and on weekends from 8 a.m. to 11 p.m.

The nurses will also be consulting with physicians to conduct detailed investigations into any COVID-19 cases in students, teachers, and staff, and will communicate with school nurses as needed.

Dr. Matthew Zahn, OCHCA’s medical director for communicable disease control, said the county has realized that the faster officials can respond to COVID-19 cases at schools, the less disruption will occur for the students and the schools.

“When there is a case in a school, on an individual site, we rely on the school staff and the school nurse, if there’s a school nurse available, to communicate to us the information … then we give them guidance as to exactly how to respond, which people need to be excluded or not, which people need to be tested or not,” Zahn said.

COVID-19 Case Numbers Holding Steady

The OCHCA on Oct. 23 reported 162 new confirmed cases of COVID-19 and six additional fatalities.

Orange County now has a total of 58,010 reported cases of the disease and 1,440 deaths. There are 162 people currently hospitalized and 58 cases in the intensive care unit (ICU).

Zahn said the number of people hospitalized and in the ICU has not changed much over the last several weeks.

“That really tells us the burden of serious disease that we are seeing in our community,” he said. “We’ve also begun opening up schools, and so we really wanted to make sure there wasn’t a ripple effect from that process. So the fact that we have remained on a flat trajectory in a sense is good.”

However, Zahn said that the numbers could start to go up or down at any time. He also warned residents of a possible winter spike in COVID-19 cases.

“We are all anticipating a potential increase in numbers of cases simply because we are entering cold and flu season. This may affect California less than other jurisdictions, but the idea that as it gets colder, people go inside and crowd more often. That’s just a risk by itself,” he said.

New Data Reveals Just How Many Americans Temporarily Moved To Escape Pandemic

Sat, 24 Oct 2020 18:00:00 GMT

New Data Reveals Just How Many Americans Temporarily Moved To Escape Pandemic Tyler DurdenSat, 10/24/2020 - 14:00

Moving-focused group MyMove analyzed data from the USPS about change-of-address requests. By far, this is the most comprehensive snapshot of migration trends during the coronavirus pandemic - revealing nearly 16 million Americans moved between February and July.

MyMove determined temporary moves soared 27% between February and July compared with the same period last year. The data also shows permanent address changes rose by 1.9% year over year.

The most significant outlier in the USPS data was the parabolic spike in temporary address changes, mostly due to city-dwellers escaping large metros during coronavirus lockdowns.

Besides USPS data, MyMove also examined a Pew Research Center survey of 10,000 Americans conducted in July. The study allowed MyMove to understand why and where people moved.

"About a quarter (28%) told us [they chose to move] because they feared getting COVID-19 if they stayed where they were living," said D'Vera Cohn, senior writer and editor for Pew who published the study findings, told MyMove.

"About a fifth (20%) said they wanted to be with their family, or their college campus closed (23%). A total of 18% gave financial reasons, including job loss," Cohn said.

As the month-by-month chart below shows, "the number of total monthly moves has remained consistent throughout the pandemic, with slight spikes in March — at the onset of the pandemic — and in July. Summer months are peak moving season, which could also explain the July increase," MyMove said.

MyMove shows that people moved from metro areas, like Manhattan, Brooklyn, and Chicago, to less populated cities that were in Texas, George, Florida, and Idaho. We outlined this here:

Readers may recall, we pointed out, in late March, how city-dwellers were fleeing at least one major city.

Noel Roberts, real estate agent for Nest Seekers International, told MyMove the exodus from cities was because people are waiting out the virus pandemic storm in rural communities.

"Over the past several months, we've seen an influx of renters in the Hamptons coming from New York City to come and escape the city as well as wait out the virus," Roberts said.

MyMove also said people left metro areas to take "advantage of online learning or remote work to save money on housing and living expenses, and probably expect to return to their college campus or office spaces soon enough."

Cities that lost the most movers in 2019 and 2020:

Some smaller cities gained movers during the pandemic:

MyMove, on a metro level, shows outbound migration trends of city-dwellers in San Francisco, New York City, Los Angeles, and Chicago:

Pew found that many city-dwellers had their mail rerouted to nearby residences in less-populated areas.

Cohn, of Pew, said, "Among those who moved due to the virus, 13% [of respondents] told us they moved to a second home or vacation home, many of which probably are outside cities."

Top Cities That Gained Most People During The Virus Pandemic:

States That Gained And Lost Most People During The Virus Pandemic:

Real estate experts have warned the "exodus" from cities will last two years.

Here's How Biden Will 'Ban' Fracking

Sat, 24 Oct 2020 17:30:00 GMT

Here's How Biden Will 'Ban' FrackingTyler DurdenSat, 10/24/2020 - 13:30

Authored by C.Boyden Gray via RealClearPolitics.com,

The “fracking” revolution has unleashed an incredible American energy boom over the past decade. America is now the biggest producer of oil and gas in the world, beating Saudi Arabia and Russia. Fracking has contributed to an economic revival in areas of the country once in freefall. Pennsylvania is now second only to Texas in natural gas production, and Ohio is now fifth. This has reduced air pollution by displacing coal.

Joe Biden wants a counter-revolution, but he does not want you to know about it.

Candidate Joe Biden has sent mixed messages.

During the primary debates, Biden and his running mate, Sen. Kamala Harris, said they supported a fracking ban. Their campaign, however, insists that the Biden plan would ban fracking only on federal lands, not on private lands. Fact checkers regularly parrot the talking point.

For the full picture, voters should take a look at Biden’s official clean energy plan. The Biden plan borrows the Green New Deal’s ambitious goal of a “carbon pollution-free power sector by 2035.”

Burning natural gas - methane - inevitably emits carbon, so the Biden plan requires eliminating natural gas for electricity generation by 2035.

Electricity generation is the main use of natural gas. It accounts for a third of all natural gas, using 11 trillion cubic feet of gas per year and growing. That is almost twice the amount of natural gas produced in all of Pennsylvania last year. Eliminating all this natural gas demand by 2035 would require idling countless natural gas wells and power plants, devastating local economies in Pennsylvania and elsewhere and destroying many good jobs. Without reliable natural gas electricity, states would experience California-like rolling blackouts.

This Green New Deal goal would never get congressional approval, but that may not matter. Biden promises to achieve his clean energy goals by fiat, issuing executive orders of “unprecedented reach that go well beyond the Obama-Biden Administration platform.” A Biden administration would move to achieve its goal of “carbon-free” electricity generation through an even more aggressive version of President Obama’s “Clean Power Plan” regulations. This Clean Power Plan 2.0 would require utilities to idle, then dismantle, their natural gas power plants.

President Trump’s accusation that Joe Biden would ban fracking is therefore closer to the truth than the fact checkers care to admit. It does not take a master’s degree in communications or journalism to realize that a ban on using natural gas is a ban on extracting it, whether through fracking or through ordinary drilling. That’s the Biden plan.

President Trump, for his part, has been crystal clear: if reelected, he will continue vigorously supporting America’s energy revolution, inexpensive energy, and jobs, as he has for four years.

No Signature Match? No Postmark? No Problemo! This Week In Ballot Shenanigans!

Sat, 24 Oct 2020 16:40:00 GMT

No Signature Match? No Postmark? No Problemo! This Week In Ballot Shenanigans!Tyler DurdenSat, 10/24/2020 - 12:40

Authored by Victoria Taft via PJMedia.cdom,

Last week, we were dumpster-diving for ballots, navigating the depths of a 15-yard box for the 100 stale beer and coffee ground-stained ballots dumped by some malevolent (or lazy) postal worker in Kentucky. This week, another 99 ballots and hundreds of pieces of first-class mail were found dumped by yet another postal worker, this one in New Jersey.

Both ballot-tossing layabouts are being prosecuted by the feds, but it’s unknown at this point if this is their first ballot-tossing caper or just their latest ballot-tossing caper.

It’s hard to judge what’s worse, some disgruntled postal worker tossing ballots or Pennsylvania accepting and counting all ballots – even ones that have no identifying information, the right postmark, and mailed after the election.

We’ll start with the story that made headlines recently when Pennsylvania authorities tossed out 372,000 ballot applications.

#Pennsylvania has rejected hundreds of thousands of mail-in #ballot applications this election year, with the vast majority of those rejections occurring because of #duplicate ballot requests from voters in the state. https://t.co/pm8UTtVHhb
— chris (@Gato_chris1) October 17, 2020

Far from disenfranchising voters, we are assured by Pennsylvania officials that 90% of the applications were duplicates due to confused voters signing up at multiple places and with different groups, according to Just the News. Hmm.

Federal and state court actions this week have amplified the warning issued by the CEO of the polling firm Trafalgar Group, Robert Cahaly. As I reported at PJMedia, Cahaly predicted Trump could win the state but could very well have it stolen from him through election fraud.

I believe Pennsylvania to be the number one state that Trump could win and have stolen from him through voter fraud. Pennsylvania has had a lot of voter fraud over the years and giving people unsolicited absentee ballots is literally like giving voter fraud operations steroids. I think it’s the state he’s most likely to win and not get the votes from.

And when you find out about the allowable ballot chicanery you’ll understand why Cahaly is concerned.

On Monday, the U.S. Supreme Court considered an appeal by Republicans to stay a Pennsylvania state Supreme Court ruling allowing ballots to be received and counted up to three days after the election. Since the U.S. Supreme Court was deadlocked 4-4 because John Roberts joined the liberal justices, and because there’s no 9th justice, the court allowed the ruling by the state court to stand. The coups de grace is that ballots will be received and counted “even if they don’t have a clear postmark, as long as there is not proof it was mailed after the polls closed.” That means unless you affirmatively saw Joe Blow physically submitting his ballot and got photographic proof of the actual ballot, there’s nothing that will stand in the way of that ballot being counted. Three days after the election. Without a clear postmark. Holy balls.

Republicans said, hey, wait a minute. Federal statute sets the first Tuesday after the first Monday in November as Election Day. Dia. Which has the same number of syllables as uno. One. Day. Remember when Trump tossed out the idea that maybe Election Day could be moved, instead of all the states changing their election rules for coronavirus to include the mail-in ballots? Remember the outrage? Those critics have scattered to the corners.

But, there’s more! Remember the signature on the ballot that is checked against voter registrations to supposedly ensure voter integrity? Take a seat.

Another Pennsylvania state Supreme Court ruling on Friday held that the signatures on the registration and the ballot don’t have to match. In September, Secretary of State Kathy Boockvar issued guidance that election workers would do no signature matching. The GOP sued to stop her, but Friday’s ruling seems to have settled the issue unless it goes back to John Roberts and the liberal wing of SCOTUS again. All this chicanery to fight COVID-19.

The GOP and Trump campaign sued the largest county in Nevada on Friday to prevent the separation of the ballot from its envelope until GOP election observers can get a better look at the ballots. The issue stems from Clark County, where 70% of the state’s residents reside. The GOP says local officials were preventing poll watchers from observing the processing of votes by keeping them 25 feet away and therefore cannot “meaningfully observe” the process.

Voting by fax? This guy claims to have done it.

The future is great! Just slide in paper, dial number, press start and done! Super easy!

I seriously just voted by fax in 2020.#fax #OurCounty #ballot pic.twitter.com/fk9S1WgK6y
— Albert Siegel (@AlbertSiegel) October 21, 2020

Usually, only people wearing the uniform of our country can vote like this, according to the National Conference of State Legislatures

Sending voted ballots electronically—via fax, email or web portal—is most often reserved for voters who fall under the federal Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA).

Four states—Arizona, Colorado, Missouri, and North Dakota—allow the use of some sort of digital portal to vote. What could go wrong?

Finally for this week, this Washington State resident is upset that his favorite candidate for president is not on the ballot.

Where’s Yeezy?

So... @kanyewest I don’t see you on the #Washington #President #ballot would this be a write in situation? pic.twitter.com/GyLZ1lOvOK
— ThatTonyAdams | The Tanned Manther (@ThatTonyAdams) October 16, 2020

Until next week.

Global COVID-19 Cases Top 500,000 In A Day For First Time: Live Updates

Sat, 24 Oct 2020 16:20:00 GMT

Global COVID-19 Cases Top 500,000 In A Day For First Time: Live UpdatesTyler DurdenSat, 10/24/2020 - 12:20

Summary:

US tops 80k cases for first time
Global daily cases top 500k
New record reported in Portugal
Austria sees record new cases for 4th day
Brussels imposes new restrictions for 14 days
Spain, Italy weighing stricter measures to fight outbreak

* * *

The US smashed its previous daily record on Friday when it reported 83,304 new cases, exceeding its prior July 29 peak with just 2 weeks to go before election day.

The new cases brought the US tally to 8,499,132 since the start of the pandemic, while another 945 new deaths reported on Friday once again swung the 7-day average for fatalities in the US to its highest level in at least a month. It brought the US death toll to 224,058, as hospitalizations across the US reach their highest levels in months, as we noted last night.

Globally, cases exceeded 42.3 million and deaths exceeded 1.1. million, as the number of new cases reported globally topped 500,000 for the first time yesterday, driven by rising case numbers in the US, Europe and Russia.

While an outbreak across the Midwest and Mountain West has seen states like Wisconsin, Ohio, Michigan and Montana report multiple record numbers within the span of a week as their total new confirmed cases climbed to record highs, states across Europe have suffered rising hospitalizations, cases, positivity rates and deaths.

As cases have risen, positivity rates have continued to climb across the US.

In Central Europe, Austria reported record new case numbers on Saturday for the fourth day in a row. Slovenia reported a record 1,963 new cases with an all-time high positivity rate of 27.9%. Another 19 deaths, a record for the tiny Alpine state with a population of 2.1 million, were reported, bringing the total death toll to 235. Poland also suffered its deadliest day yet, with 179 deaths, and 13,628 new cases.

In Germany, Chancellor Angela Merkel said the pandemic has worsened as a growing number of regional health authorities are struggling to track infections, Merkel said. "We’re not powerless against the virus," she said. "Our behavior decides how strong and how fast it spreads."

Of course, a growing body of evidence suggests that the worse an outbreak gets, the harder it is to trace contacts.

In Spain, Prime Minister Pedro Sanchez is reportedly holding an extraordinary cabinet meeting on Sunday to declare a national "state of alarm". The Italian government is also expected to approve new COVID-19 restrictions on Sunday as new cases topped 19k on Friday, the highest number yet.

In Brussels, one of the worst hit regions in all of Europe, a new curfew has been imposed, and museums, theaters, cinemas, swimming pools, fitness clubs and other sport venues will have to shut down. Stores will be forced to close at 2000 local time, with the exception of restaurants and takeaway shops.

Source: Bloomberg

Brussels and the five Walloon provinces have 14-day incidence rates that are 2x those of the Flemish provinces in the north of Belgium, ranging from 1,262 per 100,000 in Luxembourg to 2,100 per 100,000 in Liege.

Portugal on Saturday reported yet another record, with 3,669 new cases in a day, more than the prior record of 3,270 reported on Thursday. The new cases took Portugal's total to 116,109. The number of patients in the ICU rose by 23 to 221, still below the peak of 271 ICU patients from April.

Tesla Warns Its Full Self-Driving Beta "May Do The Wrong Thing At The Worst Time"

Sat, 24 Oct 2020 16:00:00 GMT

Tesla Warns Its Full Self-Driving Beta "May Do The Wrong Thing At The Worst Time"Tyler DurdenSat, 10/24/2020 - 12:00

Stuck between a rock and a hard place after taking thousands of dollars from customers for vaporware it likely felt it had to release at some point, Tesla has finally pushed out its Full Self Driving beta.

The company, whose Autopilot software has already been at the center of numerous wrecks and deaths that we have documented over the last few years, warns up front about "Full Self Driving" by telling the driver it "may do the wrong thing at the worst time."

FSD beta program here we go. Hell yeah pic.twitter.com/dNVGlwyYv6
— Tesla Owners Silicon Valley (@teslaownersSV) October 22, 2020

An article by the Verge called the beta "terrifying" and "scary as hell" due to the "way it will be inevitably misused." The article said that driver reactions have ranged from “that was a little scary” to full-throated enthusiasm for the product and for being a beta tester.

One driver said FSD allowed him to navigate streets without lane markers, something he was unable to do in the past with Autopilot. When the car started making turns, the driver called it: “kind of scary, because we’re not used to that.” He posted a video of his experience:

But not everyone has been excited about the idea of the public beta testing the feature.

Ed Niedermeyer, communications director for Partners for Automated Vehicle Education, said: “Public road testing is a serious responsibility and using untrained consumers to validate beta-level software on public roads is dangerous and inconsistent with existing guidance and industry norms.”

He continued: “Moreover, it is extremely important to clarify the line between driver assistance and autonomy. Systems requiring human driver oversight are not self-driving and should not be called self-driving.”

Recall, a couple of weeks ago we noted that FSD is supposed to allow Tesla vehicles to react to stop signs, stop lights and freeway exits.

At the time we called the software a "convenient promise"; enough of a gesture for Musk to say he fulfilled his previous promise of having Full Self Driving complete by the end of 2020, but a small enough testing size for Musk to not truly have to debut anything of substance on a grand scale.

Watching the software roll out we can't help but think it could be a long while before a final product is distributed and is being utilized ubiquitously. Until then, don't be surprised as the stories of both Autopilot and FSD showing off neat "features" like driving through storefronts, continue.

New Gold Standard: Orderly Or Chaotic?

Sat, 24 Oct 2020 15:35:00 GMT

New Gold Standard: Orderly Or Chaotic?Tyler DurdenSat, 10/24/2020 - 11:35

Authored by James Rickards via The Daily Reckoning,

Before 1914, the global monetary system was based on the classical gold standard. But over the past century, monetary systems change about every 30 to 40 years on average.

Sure enough, 31 years after the end of the classical gold standard, in 1945, a new monetary system emerged at Bretton Woods. The dollar was officially designated the world’s leading reserve currency — a position that it still holds today.

Under that system, the dollar was linked to gold at $35 per ounce. But 25 years later, in 1971, Nixon ended the direct convertibility of the dollar to gold. For the first time, the monetary system had no gold backing.

Today, the existing monetary system is nearly 50 years old, so the world is long overdue for a new monetary system. Gold should once again play a leading role. It may be the only asset that can anchor the international monetary system in these troubled times. But the gold price will be much, much higher.

I’ve written and spoken publicly for years about the prospects for a new gold standard. My convictions have only gotten stronger since the coronavirus and the monetary chaos it generated.

My analysis is straightforward…

International monetary figures have a choice. They can reintroduce gold into the monetary system either on a strict or loose basis (such as a “reference price” in monetary policy decision making).

This can be done as the result of a new monetary conference, a la Bretton Woods. It could be organized by some convening power, probably the U.S. working with China (which might seem unlikely these days, but not as unlikely as you think).

Or they can ignore the problem, let an even bigger debt crisis materialize (that will play out in interest rates and foreign-exchange markets) and watch gold soar to $14,000 per ounce or higher — that’s not a typo — not because they wanted it to but because the system is out of control.

I’ve also said that the former course (a conference) is more desirable — why not avoid the train wreck rather than clear up the wreckage? But the latter course (chaos) is more likely. A conference will probably be ignored until it’s too late.

Either way, the price of gold soars.

The same force that made the dollar the world’s reserve currency is working to dethrone it.

Under the Bretton Woods system, all major currencies were pegged to the dollar at a fixed exchange rate. Indirectly, the other currencies had a fixed gold value because of their peg to the dollar.

Other currencies could devalue against the dollar, and therefore against gold, if they received permission from the International Monetary Fund (IMF). However, the dollar could not devalue, at least in theory. It was the keystone of the entire system — intended to be permanently anchored to gold.

From 1950 into the 1960s, the Bretton Woods system worked fairly well. Trading partners of the U.S. who earned dollars could cash those dollars into the U.S. Treasury and be paid in gold at the fixed rate. But by 1970, the U.S. had lost over half of its gold.

In 1950, the U.S. had about 20,000 tons of gold. By 1970, that amount had been reduced to about 9,000 tons. The 11,000-ton decline went to U.S. trading partners, primarily Germany, France and Italy, who earned dollars and cashed them in for gold.

If you want to see where the dollar is ultimately heading, you should look to the U.K. pound sterling. It had previously held the dominant reserve currency role starting in 1816, following the end of the Napoleonic Wars and the official adoption of the gold standard by the U.K.

Many observers assume the 1944 Bretton Woods conference was the moment the U.S. dollar replaced sterling as the world’s leading reserve currency. But, that replacement of sterling by the dollar as the world’s leading reserve currency was a process that took 30 years, from 1914 to 1944.

The period from 1919–1939 was really one in which the world had two major reserve currencies — dollars and sterling — operating side by side.

Finally, in 1939, England suspended gold shipments in order to fight the Second World War and the role of sterling as a reliable store of value was greatly diminished. The 1944 Bretton Woods conference was merely recognition of a process of dollar reserve dominance that had started in 1914.

Like the pound sterling, slippage in the dollar’s role as the leading global reserve currency is not necessarily something that would happen overnight, but is more likely to be a slow, steady process. The change is often so gradual that few notice it until it can no longer be denied.

A major creditor nation is emerging to challenge the U.S. today just as the U.S. emerged to challenge the U.K. in 1914. That power is China. The U.S. had massive gold inflows from 1914-1944. China has been experiencing massive gold inflows in recent years.

China has acquired thousands of metric tonnes since without reporting these acquisitions to the IMF or World Gold Council.

Based on available data on imports and the output of Chinese mines, actual Chinese government and private gold holdings are likely much higher than official listings. It’s hard to pinpoint because China operates through secret channels and does not officially report its gold holdings except at rare intervals.

China’s gold acquisition is not the result of a formal gold standard, but has been happening by stealth acquisitions on the market. They’ve used intelligence and military assets, covert operations and market manipulation. But the result is the same. Gold’s been flowing to China in recent years, just as gold flowed to the U.S. before Bretton Woods.

China is not alone in its efforts to achieve creditor status and to acquire gold. Russia has greatly increased its gold reserves over the past several years and has little external debt. The move to accumulate gold in Russia is no secret, and as Putin advisor Sergey Glazyev has said, “The ruble is the most gold-backed currency in the world.”

Iran has also imported significant amounts of gold, mostly through Turkey and Dubai, although no one knows the exact amount, because Iranian gold imports are a state secret.

In recent years, other countries, including BRICS members Brazil, India and South Africa, have joined Russia and China in their desire to break free of U.S. dollar dominance.

The dollar collapse has already begun and the need for a new monetary order is now emerging. I believe it will involve gold. The question is whether it will be an orderly process resulting from a new monetary conference, or a chaotic one.

Unfortunately, it’ll probably be chaotic.

PG&E May Cut Power To Nearly 500k As California Wildfire Risk Surges

Sat, 24 Oct 2020 15:10:00 GMT

PG&E May Cut Power To Nearly 500k As California Wildfire Risk SurgesTyler DurdenSat, 10/24/2020 - 11:10

Utility Pacific Gas and Electric's meteorology team warned Friday that one of the strongest offshore wind events of the fire season could arrive in Northern California beginning Sunday. Ahead of the wind event, PG&E may be forced to cut power to hundreds of thousands of customers to avoid trees and branches from blowing into power lines, sparking fires.

PG&E said more than 466,000 customers across 38 counties, mainly situated in Northern and Central California, could risk potential power shutoffs as early as Sunday morning. The outages could disrupt large swaths of the San Francisco Bay area, the Sierra Nevada foothills, the Central Valley, and the Central Coast.

"Extremely dry, windy conditions with high gusts pose an increased risk for damage to the electric system that has the potential to ignite fires in areas with critically dry vegetation," the power company said.

The weather forecast for Sunday shows northerly gust of up to 80 mph and low humidity levels. Wind speeds are expected to stay around 20-30 mph, with temperatures in the low 70s, making it a perfect environment for wildfire conditions. The National Weather Service has issued Red Flag warnings for Northern California through Tuesday.

California has faced "extremely high winds, extremely low humidity, extremely dry fuels due to the hottest average temperatures over the last six months, according to records that go back 126 years, and extreme drought across the territory given lack of rainfall," said Scott Strenfel, PG&E's head of meteorology and fire science.

Another round of potential blackouts would be a devastating blow for the state, already battered by extreme weather this fire season, scorching more than 4 million acres so far. PG&E has preemptively cut power four times this season, though the new round of outages could be the largest one yet.

Here are the current wildfires burning in California:

Video: PG&E's Public Broadcast Warning Customers About Potential Outages

Readers may recall La Nina in the Northern Hemisphere has turned the western U.S. into a tinder box.

BLM Protesters Call For Defunding San Bernardino Police After Officer Kills Armed Black Suspect

Sat, 24 Oct 2020 14:45:00 GMT

BLM Protesters Call For Defunding San Bernardino Police After Officer Kills Armed Black SuspectTyler DurdenSat, 10/24/2020 - 10:45

The nationwide fervor that drove millions of white college students out into the streets to protest systemic racism and police brutality has since cooled, probably because, once the dust settled, most normal people had a second to survey the facts and realize that thousands of unarmed black men actually aren't being killed by police every year in the US (the real figure is closer to 9).

But that hasn't stopped a core contingent of BLM protesters from carrying on with their radical demands to defund police, seizing on every police-involved shooting, regardless of the circumstances, to create chaos and push their radical agenda.

In the latest example of this, a mob of protesters gathered in down town San Bernardino, Calif. Friday night, one day after police killed an armed suspect who reportedly tried to overpower an officer as he reached for his firearm.

Ignoring the circumstances surrounding the shooting, scores of Black Lives Matter demonstrators amassed in front of the King Tut liquor store in San Bernardino on Friday evening - the same spot where the suspect, Mark Matthew Bender, was shot and killed by a responding officer one day earlier.

SAN BERNARDINO: Earlier BLM protesters called to “abolish the police” in unison in front of the King Tut Liquor store where Mark Matthew Bender was shot and killed by an officer after reaching for a weapon while resisting arrest pic.twitter.com/uprmdz8Fad
— Drew Hernandez (@livesmattershow) October 24, 2020

Videos of the scene like the clip embedded above show protesters chanting "fuck the police" and "defund the police" (chants that have become virtually interchangeable in the modern climate, where radical left-wing priorities have been skillfully embroidered into the mainstream political discourse).

"We can abolish the police, we don’t need these motherf**kers, we don’t need them!" one speaker shouted as the crowd cheered.

SAN BERNARDINO: “What I can do, is tear down the system that lifts up crackers with badges”

A BLM protester expresses why he wants to defund and disarm the police pic.twitter.com/wEifcAONyU
— Drew Hernandez (@livesmattershow) October 24, 2020

Initially, a lone officer responded to a report that a man was behaving erratically - "jumping on top of cars and just going crazy" - in the liquor store parking lot.

Body camera footage released by the police showed one officer approaching the suspect and ordering him to put his hands up. Bender shouts: "Why do you have a gun on me?" in response. He briefly raised his hands, moments later, the man seemingly changed his mind and put his hands back down.

The female caller told 911 that the man was armed, "jumping on top of cars" and "just going crazy."

Police said Bodycam footage released by law enforcement shows an officer approaching a black man wearing a white T-shirt and black shorts, who police said fit the description of the suspect. The officer calls out to the man, telling him to put his hands in the air so he can see them. Bender shouts: “Why do you have a gun on me?” though he appears to comply. However, moments later, he puts his hands down, shouting "don't touch me" as he walks away from the police.

An officer tries to tackle Bender, but he fights him off with relative ease. Finally, in one final video released by the PD, Bender can be seen reaching for something from his waistband.

Regarding the last Press Release we just published, here is video of the incident. The images can be graphic, therefore, Viewer Discretion is Advised. Investigation #2020-114893. pic.twitter.com/9VM3oOZNQp
— San Bernardino PD (@SanBernardinoPD) October 23, 2020

The office takes a step back, and fires at point blank range. Frozen frames of the video appear to show Bender pulling a gun out of his waistband. Police said a loaded handgun was recovered from the scene.

He was clearly reaching for something and it kind of looks like a gun. pic.twitter.com/ueygXrh1uy
— alexisonline ???????????????????????? (@inditoso) October 23, 2020

However, in an indication of just how radical the remaining protesters have become, those who took to the streets on Friday claimed that the officer still shouldn't have fired.

SAN BERNARDINO: A BLM supporter claims the officer who shot and killed Mark Matthew Bender after realizing he was armed with a weapon wasn’t justified

The man claims “whether he had a gun or not, he (the officer) is supposed to follow a certain protocol” pic.twitter.com/it2sfB8TSZ
— Drew Hernandez (@livesmattershow) October 24, 2020

We can't help but wonder how they would have reacted if it was an armed white man who was shot by police?

Policies Over Politics. Whoever Wins, We All Lose

Sat, 24 Oct 2020 14:20:00 GMT

Policies Over Politics. Whoever Wins, We All LoseTyler DurdenSat, 10/24/2020 - 10:20

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Great Divide

One of the great tragedies of the modern age is that we have stopped “listening” to each other. There was a time when individuals could have a conversation about political issues. While neither person would change their position, they could politely agree to disagree. Today, the media has locked individuals into “information silos” where they disregard any “facts” which conflict with personal bias. If an intruder infiltrates the space, the “mob” levies a torrent of hate-filled expletives and threats

More than ever, such is the case in 2020.

“For the second election in a row, voters will cast ballots for the candidate they dislike less, not whose policies they like more.” – Lance Roberts, Real Investment Show

Today, the division between parties is greater than at any other single point in history. (2017 was the latest data from a 2019 report. That gap is even larger currently as Social Media fuels the divide.) The divide between parties has many dire long-term outcomes, from transitioning to a socialistic economy to the lack of real positive changes.

How can progress occur when no one is willing to listen, much compromise, with anyone else?

The Cynic In Me

In 2020, both parties are proposing fairly disastrous policies.

Biden’s proposed tax changes, green energy plans, and Government takeover of “healthcare” would indeed be bad for the markets. Such policies would weaken corporate profitability, specific sectors (energy and healthcare) would come under stress, and the surge in debt will make the Fed’s programs less effective.

On the other hand, Trump’s plans are not much better economically. More bailouts, poorly chosen infrastructure projects, and proposed tax policy lead to further indebtedness, larger deficits, and slower economic growth.

However, the reality is that while Presidential candidates make lots of claims on the campaign trail, it is Wall Street and Corporations that ultimately dictate policy. Such is why many suggest that our Congressmen wear racing jackets to see who is sponsoring them for office.

If you think for a moment that Congress comes up with, and writes, bills on their own, you are sadly mistaken. They are not that smart. Such is why whenever bills come to the floor for a vote, they always favor the group or industry whose lobby wrote and promoted the bill in the beginning.

I am not cynical. It is just how the Government works.

Okay, let’s dig into the policies with some help from our friends at the Committee For A Responsible Federal Budget (CFRB)

The Proposed Policies

“President Donald Trump has issued a 54 bullet point agenda. It calls for lowering taxes, strengthening the military, increasing infrastructure spending, expanding spending on veterans and space travel. It also calls for lowering drug prices, expanding school and health care choice, ending wars abroad, and reducing spending on immigrants. He also has proposed a “Platinum Plan” for black Americans, which increases spending on education and small businesses.
Meanwhile, Vice President Joe Biden has proposed a detailed agenda. From increasing spending on child care and education, health care, and retirement, to disability benefits, infrastructure, research, and climate change. It also aims to lower the costs of prescription drugs, ending wars abroad, and increasing taxes on high-income households and corporations.
Under our central estimate, both plans would add substantially to the debt. Specifically, we find the Trump plan would add $4.95 trillion to the debt over the 2021 to 2030 budget window. The Biden plan would add $5.60 trillion.” – CFRB

The table below breaks down the spending by candidates in different areas of the economy.

Assuming that both candidates were able to get their respective policies passed, which is highly doubtful, the impact on economic growth will be negative as the Federal debt surges higher.

The Cost

“Under the candidates’ plans, debt will continue to grow over the next decade and beyond. Debt has already grown from 39 percent of the economy in 2008 to 76 percent in 2016. It is estimated to reach 98 percent by the end of FY2020. Under current law. The Congressional Budget Office (CBO) projects debt will continue to rise to 109 percent of GDP by 2030.
Our central estimate of the Trump plan finds debt would rise to 125 percent of the economy by 2030, excluding the effects of further COVID relief. Under our central estimate of the Biden plan, debt would rise to 128 percent of the economy by 2030, again excluding COVID proposals. For context, the standing historical record for debt is 106 percent of GDP, set just after World War II.” – CFRB.

As discussed in CBO & The One-Way Trip Of American Debt,” instead of running on a policy platform to reduce spending and the debt, both candidates have decided that more deficit spending is the only solution.

“Debt continues to increase in most years thereafter, reaching 195 percent of GDP by 2050. That amount of debt will be the highest in the nation’s history, and will increase further. High and rising federal debt makes the economy more vulnerable to rising interest rates and, depending on financing of the debt, rising inflation. The growing debt burden also raises borrowing costs and slows the growth of the economy and national income. There is an increased risk of a fiscal crisis or a gradual decline in the value of Treasury securities.” – CBO

The Debt

The policies put forth by both President Trump and Joe Biden require substantial debt issuance to meet those objectives. Given that mandatory spending already consumes more than 100% of Federal revenues, the debt increases will be massive.

Unfortunately, what continues to elude policy-makers in Washington is that the continuing expansion of debt erodes economic growth.

It is a myth that the economy has grown by roughly 5% since 1980. In reality, economic growth rates have been steadily declining over the past 40 years, supported by a massive push into deficit spending by both the Government and consumers.

Up until 1980, economic growth was trending higher from roughly 5% to a peak of nearly 15%. There were a couple of reasons for this.

Lower levels of debt allowed for personal savings to remain robust, fueling productive investment in the economy.
The focus of the economy was primarily on production and manufacturing, which has a high multiplier effect on the economy.

Unlike the steadily growing economic environment before 1980, the post-1980 economy has experienced a steady decline. Therefore, a statement the economy has been growing at 5% since 1980 is grossly misleading. The trend of economic growth, wages, and productivity (5-year averages) show the real problem.

As wages declined, families turned to credit to fill the gap in maintaining their current living standards. What should be evident is that it requires increasing amounts of debt to create each dollar of economic growth. Such is due to the “diminished rate of return” for each successive increase in debt-funded growth.

Debt Isn’t The Answer

Such is one of the primary reasons why economic growth will continue to run at lower levels going into the future. As I showed just recently in the “2nd Derivative Of Debt:”

“From 1947 to 2008, the U.S. economy had real, inflation-adjusted economic growth than had a linear growth trend of 3.2%.
However, following the 2008 recession, the growth rate dropped to the exponential growth trend of roughly 2.2%. Unfortunately, instead of reducing outstanding debt problems, the Federal Reserve provided policies that fostered even greater unproductive debt and leverage levels.
Coming out of the 2020 recession, the economic trend of growth will be somewhere between 1.5% and 1.75%. Given the amount of debt added to the overall system, the ongoing debt service will continue to retard economic growth.”

Given the permanent loss in output and rising unproductive debt levels, the recovery will be slower and more protracted than those hoping for a “V-shaped” recovery. Notably, the U.S. economy will never return to either its long-term linear or exponential growth trends.

The Markets

The Republicans claim that Biden will crash the market. The Democrats suggest the same with President Trump. From a portfolio management perspective, we need to understand what happens during election years to stock markets and investor returns.

Since President Rosevelt’s victory in 1944, there have only been two losses during presidential election years: 2000 and 2008. Those two years corresponded with the “Dot.com Crash” and the “Financial Crisis.” On average, stocks produced their second-best performance in Presidential election years.

However, it is worth noting that while returns are positive regardless of who is elected, it should be of no surprise the markets performed better during a year when voters re-elect the incumbent.

The market hates uncertainty.

What markets do prefer is “political gridlock.”

“A split Congress historically has been better for stocks, which tend to like that one party doesn’t have too much sway. Stocks gained close to 30% in 1985, 2013, and 2019, all under a split Congress, according to LPL Financial. The average S&P 500 gain with a divided Congress was 17.2% while GDP growth averaged 2.8%.” – USA Today

It’s Not A Risk-Free Outcome

We can derive from the data that the odds suggest the market will end this year on a positive note. However, such says little about next year. If you go back to our data table above, the 1st year of a new Presidential cycle is roughly a 50/50 outcome. It is also the lowest average return year going back to 1833.

I don’t envy the person who takes the Oval Office in the months ahead. Whoever is inaugurated on January 20, 2021, will enormous fiscal challenges as trillion-dollar annual budget deficits will become the new normal. As we discussed recently, the national debt is projected to exceed the post-World War II record high over the next four-year term and reach twice the economy’s size within 30 years.

Four major trust funds are also headed for insolvency, including the Highway and Medicare Hospital Insurance trust funds, within the next presidential term. Furthermore, economic growth rates will continue to decline as the “wealth gap” widens.

There is no “will” to fix the problems plaguing the economy and welfare system before they break. Such is why whoever wins the Presidency, we all still wind up losing.

Recent College Grads Face Worst Employment Prospects In Decades Thanks To COVID-19

Sat, 24 Oct 2020 13:55:00 GMT

Recent College Grads Face Worst Employment Prospects In Decades Thanks To COVID-19Tyler DurdenSat, 10/24/2020 - 09:55

Just like their forebears (the millennials who graduated from college between 2008 and 2012) it appears Gen Z is facing a labor-market shock of serious magnitude, spurred by the coronavirus pandemic and its attendant impact on the American economy, swelling the unemployment rolls while also disrupting the typical pipeline of internships and entry-level gigs that usually help students find permanent entry-level jobs.

In a report published Friday morning, Bloomberg illustrated the difficulties faced by college graduates, and students in their early 2020s, who have just seen their job market plans go up in smoke. Data released yesterday showed the number of Americans filing for the first time for unemployment benefits fell to 787k (870k exp), the lowest point since lockdowns began.

But even worse for young people, the unemployment rate for those between 20 and 24 climbed to 12.5% in September, the highest among all adults. Joblessness peaked at nearly 26% in April at the height of the pandemic, which was 4x the level two months earlier, a bigger jump than in any previous recession going back to 1940.

Following on from this, recent college graduates during the worst of COVID-19 saw unemployment peak at 20% in June, the highest of any age group with at least a bachelor's degree.

That's compared with a 13% peak during the years immediately after the financial crisis.

Young people without college degrees fared just as badly, as workers under the age of 20 saw an even larger spike in unemployment.

Bloomberg interviewed Tessa Filipczyk, a young recent college graduate, who hoped to kick-start her career in marine and coastal sciences. But after applying to dozens of jobs, and hearing nothing back, Flipiczyk has started babysitting for neighbors and doing whatever she can for cash.

For Tessa Filipczyk, this year was supposed to springboard her career in marine and coastal science. Graduating in June from the University of California at Davis, Filipczyk, 22, had applied for jobs related to ocean conservation, marine plant research and climate change advocacy. But none of those have panned out.
Now, she’s tutoring three children she used to babysit and it’s just eight hours of work a week.
“I was like ‘OK, I’m going to find a job; I’m going to work for a year and then I’m going to go to grad school,’” said Filipczyk, who’s living with her parents in Burlingame, California. “That all just got swept under the rug by Covid.”

And for students like Filipczyk who have missed the employment pipeline on their way out of college, does this mean their entire four years were a waste.

"There is a structure to the labor market - if you miss the entrance, how do you get back in?” said Julia Coronado, founder of MacroPolicy Perspectives LLC. “If you veer off the career path by necessity, how do you get back into the pipeline?”
That's a huge problem for this generation of young people, who, in many cases, borrowed larger sums than their forebears as college tuition rates peaked during the 2010s, while the quantity of young people with college degrees also reached a new level of saturation. Economic research suggests that young people who struggle to get a job early in their career can see lower total earnings dog them for their entire professional lives.

Will we see a wave of these students enroll in non-target MBA programs three years from now, when they get tired of working retail and decide it's time to give a real career one last shot?

Or better yet: maybe some of them will give writing code a try: "Getting rejected constantly and being in that emotion was pretty hard,” Ghadiyali said of her early post-grad challenges. "Learning how to write code was far easier."

Monkeys Or Children? Russia Chooses Neither, Dooming Germany

Sat, 24 Oct 2020 13:20:00 GMT

Monkeys Or Children? Russia Chooses Neither, Dooming GermanyTyler DurdenSat, 10/24/2020 - 09:20

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

Russia is done with the European Union. At last week’s Valdai Discussion Forum Russian Foreign Minister Sergei Lavrov made this quite clear with this statement.

Those people in the West who are responsible for foreign policy and do not understand the necessity of mutually respectable conversation–well, we must simply stop for a while communicate with them. Especially since Ursula von der Leyen states that geopolitical partnership with current Russia’s leadership is impossible. If this is the way they want it, so be it. (H/T Andrei Martyanov)

Lavrov’s statements echo a number of statements made in recent months by Russian leadership that there is no opportunity for diplomacy possible with the United States.

We can now add the European Union to that list. Pepe Escobar’s latest piece goes over Lavrov’s comments about the European Union and they are devastating, as devastating as when he and Putin described the U.S. as “Not Agreement Capable” a few years ago.

Lavrov reiterated this with the following comments at Valdai last week.

But as badly as the U.S. has acted in recent years in international relations, unilaterally abrogating treaty after treaty, nominally with the goal of remaking them to be more inclusive, Lavrov’s upbraiding of the current leadership of the European Union is far worse.

Because they have gone along with, if not openly assisted, every U.S.-backed provocation against Russia for their own advantage. From Ukraine to MH-17, to Skripal to now Belarus and the ridiculous Navalny poisoning, the EU has proved to be worse than the U.S.

Because there can be no doubt the U.S. views Russia as an antagonist. We’re quite clear about this. But Europe plays off U.S. aggression, hiding in the U.S.’s skirts while telling Russia, usually through German Chancellor Angela Merkel, “Be patient, we are reluctantly going along with this.” But really they’re happy about it.

So Russia is ultimately caught between the U.S. and Europe on all basic issues of trade, politics, and international law.

Adding to Lavrov’s frustration, Andrei Martyanov, as an astute analyst on Russian politics as anyone, is correct when he says (H/T to Pepe Escobar).

You do not negotiate with monkeys, you treat them nicely, you make sure that they are not abused, but you don’t negotiate with them, same as you don’t negotiate with toddlers. They want to have their Navalny as their toy–let them. I call on Russia to start wrapping economic activity up with EU for a long time. They buy Russia’s hydrocarbons and hi-tech, fine. Other than that, any other activity should be dramatically reduced and necessity of the Iron Curtain must not be doubted anymore.

And the truth is that Russia is dealing with monkeys in the U.S. and toddlers in the EU. And Martanyov’s right that it’s time Putin et.al. simply turn their backs on the West and move forward.

Lavrov’s statements at Valdai were momentous. They sent a clear signal that if Europe wants a future relationship with Russia they will have to change how they do business.

The problem is however, that the EU is suffused with arrogance on the eve of the U.S. election, mistakenly thinking Joe Biden will beat Trump.

Merkel has betrayed Putin at every turn since 2013. And Germany’s appalling behavior over the Alexei Navalny poisoning was the last straw.

That what was another sabotage effort to stop the Nordstream 2 pipeline and add grist to Trump’s re-election mill was given even a cursory glance by the highest levels of the German government was insulting enough.

That Merkel allowed her Foreign Minister Heiko Maas to run his mouth on the subject, and then throw the decision to sanction Russia (again) over this to the EU parliament and give it any kind of political play was truly treacherous.

And it proved, yet again, that Merkel’s word is worth less than nothing. She tells Putin one thing and then does the exact opposite. Glenn Deisen writing for RT chalked this up to Germany’s plans for domination. He rightly sees Germany using Russia to get what it wants in Europe.

Germany has taken the lead in advancing “European integration” and therefore prioritizes Eastern European member states that push for a more aggressive stance towards Russia. Economic connectivity with Russia is no longer an instrument for building trust and cooperation in the pan-European space, rather it was intended to strengthen Germany’s position as the center of the EU. Moscow should work with Berlin to construct Nord Stream 2, but not forget why Nord Stream 1 was built while South Stream was blocked.

This is a point I’ve been making for years. Nordstream 2 is a political tool for Germany to reroute gas coming in from Russia which Merkel can use as a political lever over Poland and the Visegrads.

And it is the Poles who have consistently shot themselves in the foot by not reconciling their relationship with Russia, banding together with its Eastern European brothers and securing an independent source of Russian gas. Putin and Gazprom would happily provide it to them, if they would but ask.

But they don’t and instead turn to the U.S. to be their protectors from both Russia and Germany, rather than conduct themselves as a sovereign nation.

That said, I think Mr. Diesen misses the larger point here. It is true Germany under Merkel is looking to expand its control over the EU and set itself up as a superpower for the next century. Putin himself acknowledged that possibility at Valdai. That may be more to dig at the U.S. and warn Europe rather than him actually believing it.

Because under Merkel and the EU Germany is losing its dynamism. And it may even lose control over the EU if it isn’t careful. If you look at the current situation from a German perspective you realize that Germany’s mighty export business is surrounded by hostile foreign powers.

Russia — Merkel cut off the country from Russian markets. Even though some of the trade with Russia has returned since sanctions over Crimea went into place in 2014 she hasn’t fought the U.S.’s hyper-aggressive use of sanctions to improve Germany’s position.
The U.K. — French President Emmanuel Macron looks like he’s engineered a No-Deal Brexit with Boris Johnson which will put up major export barriers for Germany into the U.K. cutting them off from that market.
The U.S. – Trump has all but declared Germany an enemy and when he wins a second term will tighten the screws on Merkel even tighter.
China – They know that the incoming Great Reset, which will have its Jahr Null event in Europe likely next year, is all about consolidating power into Europe and sucking it away from the U.S., a process Trump is dead-set against.

However, don’t think for a second that the Commies that run the EU and the World Economic Forum are teaming up with the Commies in China. Oh no, they have bigger plans than that.

And what’s been pretty clear to me is Europe’s delusions that it can subjugate the world under its rubric, forcing its rules and standards on the rest of us, including China, again allowing the U.S. to act as its proxy while it tries to maintain its standing.

I know what you’re thinking. That sounds completely ludicrous.

And you’re right, it is ludicrous.

But that doesn’t mean it isn’t true. This is clearly the mindset we’re dealing with in The Davos Crowd. They engineered a mostly-fake pandemic to accelerate their plans to remake the world economy by burning it down.

The multi-polar world will see the fading U.S. and U.K. band together while Russia and China continue to stitch together Asia into a coherent economic sphere. Trump is right to pull the U.S. out of Central Asia and has gotten nothing but grief from the U.S. establishment while Europe, through NATO, continues trying to expand to the Russian border, now with openly backing the attempted coup in Belarus.

This was the dominant theme at Valdai and the focus of Putin’s opening remarks.

Putin’s big failing as a leader has been his reluctance to see the EU as his real enemy. He’s been infinitely patient with them trying to pull them away from the U.S.

I don’t blame him, most people don’t see this. Putin had to try everything possible to get Europe to see the future and has now washed his hands of them. Most observers see the flailing of the U.S. empire and the rise of China and miss the real intentions of the EU, quietly pursuing a new empire based on usurping the U.S. and subsuming it into its technocratic Borg Cube.

But the EU is irredeemable in its dealings with Russia and the Navalny incident is simply a bridge too far.

The events of 2020 have laid this groundwork for the EU’s apotheosis. The upcoming Great Reset in 2021 and beyond will solidify this. They are crazy enough to believe they can pull this off, but only if they defeat the American voter who they think they can gaslight and blackmail into submission.

I just don’t think that’s likely. But, make no mistake, in two weeks we’re going to get a look here in the U.S. at what happens to a country that votes against the wishes of our European betters. They’ve reduced us to a bunch of poo-flinging monkeys screaming at each other behind masks sinking into inter-sectional madness.

However, now that Germany, and by extension, the EU have de facto declared their imperial intentions I expect the only thing the U.S., U.K. Russia and China will agree upon is that Europe should be relegated to eating at the kid’s table for the rest of the 21st century

* * *

Join my Patreon to stop the horde of monkeys taking over the asylum. Install the Brave Browser to fight the growing Panopticon.

Passengers Push Back On Airline Mask Requirements As Travel Bans Soar

Sat, 24 Oct 2020 12:45:00 GMT

Passengers Push Back On Airline Mask Requirements As Travel Bans SoarTyler DurdenSat, 10/24/2020 - 08:45

As air traffic once again heads back toward normal levels, airlines are seeing more and more travelers unwilling to succumb to their rules about wearing masks.

For example, there was this incident we documented weeks ago, wherein a black Trump supporter was removed from a flight for pulling down his mask to eat some peanuts.

And, there have been a steady number of similar cases on airlines, according to a new report from the WSJ. Nearly 1,500 people have been banned across 6 different airlines for violating facemask requirements, according to the report. Flight attendants have said that incidents have increased as the President has "belittled mask-wearing".

The CDC reminded travelers at the beginning of this week that it "strongly recommends" masks or face coverings on flights.

Airlines had previously made exceptions for those with medical reasons, but they had to roll back that concession after it became an outlet for widespread non-compliance. Now the Transportation Department argues that airlines may have "gone too far" for people with disabilities.

After changes were put in place in July, only Delta will still allow medical exemptions - after a one hour virtual consultation with a Delta agent so you can explain your medical issue. The Transportation Department says it has gotten complaints from passengers who said they had disabilities and were denied boarding for not wearing a mask.

The airlines don't however, have the option of banning eating or drinking during flights; and this is where many anti-maskers find their "exception" while on the plane. Some will sip a coffee "for an hour or more", the Journal notes, just so they don't have to put their mask back on.

The Association of Flight Attendants was pushing for an emergency federal rule that requires the masks, which means non-compliance could result in conviction and fines. Passenger group FlyersRights.org argued the government was creating "nationwide confusion among the public".

The Transportation Department denied these requests, stating: “The Department also embraces the notion that there should be no more regulations than necessary.”

Sara Nelson of the flight attendants' union AFA, argued against airlines enforcing the policy: “It’s not the same as having a federal mandate with consequences and fines.”

She continued: “This is putting not only our lives but also our jobs at risk. It’s incredibly frustrating. People are starting to understand it can be safe to travel. But people do not buy airplane tickets if there’s a question on safety.”

Airlines say they will continue to enforce the mask rule since it is recommended by the CDC. Meghan Ludtke, managing director of regulatory affairs at American Airlines, said: “It is a critical and obvious and important step that is not being disputed across the medical literature. This is a thing that works. We need to keep our team members and passengers safe, and this is a simple thing you can do to make it so.”

The issue remains crucial to a recovery in the airline business. Delta CEO Ed Bastian said last month: “Our customers overwhelmingly support the enforcement of masks on board our flights. Our medical experts we work with at the Mayo Clinic and Emory [University] tell us that masks are the single most important preventive measure we can take.”

Gary Tomasulo, managing director of corporate security at American, concluded: “For the most part, all our passengers need is a simple reminder and we see compliance in most cases.”

Gold And Crypto: Is This How Charts Look Before A Monetary Collapse?

Sat, 24 Oct 2020 12:10:00 GMT

Gold And Crypto: Is This How Charts Look Before A Monetary Collapse?Tyler DurdenSat, 10/24/2020 - 08:10

Authored by Hubert Moolman,

It is the the massive debt. It cannot be serviced. It will collapse the whole system.

The gold, silver and cryptocurrencies charts are showing signs of going parabolic. The US dollar is close to confirming a massive breakdown.

Gold, silver and cryptocurrencies all provide “crisis value” by simply being an acceptable debt-based-fiat alternative. It is only later in this crisis that we will see a divergence between cryptocurrency and precious metals.

For now, they are likely to move higher together.

Gold has recently made new all-time highs, and seems ready to go higher after a decent consolidation. The importance of the 2011 all-time high can be seen on these charts:

I have marked two fractals (ABC). Both fractals start from the Dow/Gold ratio peaks (1966 and 1999). For these to continue the similarity, the level ($1920) at A and C needs to be surpassed on the current fractal.

We’ve already seen the breakout, now price has just been consolidating around that level. It is very close to blasting higher.

From a cycle analysis point of view, we are right at a point where a sustained multi-year gold rally is possible:

The top chart is gold from about 1997 to 2020 (current fractal), and the bottom chart is gold from about 1965 to 1980 (70s fractals). If the current fractal continues to follow the 70s fractal, then we could see gold continue to multiples of its current all-time high.

Currently, we are just after, or close to, a major Dow peak in the economic cycle. Again, you can see that the 2011 peak is an important indicator to confirm these fractals as relevant. It could also be considered a marker after which the chart is likely to go parabolic.

Bitcoin has been quiet, but could be ready to move higher at a frightening pace. Here is an updated chart that I shared on my blog previously:

The setup for Bitcoin is very similar to the end of 2013, based on these fractals. Price has completed a successful breakout at the wedge, and the retrace is also done.

We are likely in a move towards the $100 000 level at least.

The outlook for silver is really the same: continue on its parabolic path.

Vatican Silent After Pope Appears To Endorse Same-Sex Unions

Sat, 24 Oct 2020 11:35:00 GMT

Vatican Silent After Pope Appears To Endorse Same-Sex UnionsTyler DurdenSat, 10/24/2020 - 07:35

Pope Francis has once again shaken up the Vatican with his progressive politics, but this time, instead of weighing in on economic matters with little consequence to the Vatican (like the morality of capitalism, which the Pope has frequently attacked in his sermons), it seems he has touched a nerve by appearing to endorse same-sex marriage, a position the Church has vehemently opposed.

Bloomberg reports that the Vatican's massive media apparatus has gone silent, and that all of the Pope's spokespeople aren't returning reporters calls while struggling to formulate a statement of their own. It appears they were as taken aback by the Pope's comment as millions of practicing Catholics.

Neither the daily newspaper produced by the Vatican, nor the official Twitter feed of the Pope have made mention of either.

In an interview from the documentary film "Francesco", which premiered Wednesday at the Rome Film Festival, the Pope appeared to break with Catholic dogman by saying all homosexuals are "children of God" and "have a right to a family." The Pope even mentioned a "Civil Union law", a much more progressive policy position than the Church has ever endorsed.

"They’re children of God and have a right to a family. Nobody should be thrown out, or be made miserable because of it," he said, speaking in Spanish. "What we have to create is a civil union law. That way they are legally covered. I stood up for that."

But some from inside the Vatican press shop have been talking - off the record, of course - with reporters, and they're saying that "a response is still being hashed out." That means that inside the Vatican, the notion of endorsing Civil Unions is probably being taken seriously, as the Church contemplates what would be its most progressive step yet under a Pope who has made his progressive approach to the Church a cornerstone of his reign. This wave of enthusiasm among the faithful that has yet to die out. But after COVID-19 forced Catholics around the world out of the pews for months, the Church probably understands that it must tread carefully as worshippers slowly return to Church.

Meanwhile, some have raised questions about when the Pope first made the remark, as the rest of his interview was virtually identical to an interview he gave last year to the Mexican broadcaster Televisa, though that interview didn't include any comments on homosexuality when it aired.

The Destruction Of The Euro

Sat, 24 Oct 2020 11:00:00 GMT

The Destruction Of The EuroTyler DurdenSat, 10/24/2020 - 07:00

Authored by Alasdair Macleod via GoldMoney.com,

The Eurozone is bust. The deterioration of TARGET2 imbalances have been hardly noticed, but in recent months it has been alarming. Despite official denials over the years that it is a matter of concern, it is increasingly obvious that the national banks of Italy, Spain and other nations with increasing bad debts are hiding them within the TARGET2 system. The first wave of Covid-19, which is leading to bankruptcies throughout the Eurozone, is now being followed by a second wave, which will almost certainly take out a number of important banks, in which case the cross-border euro system will implode.

Introduction

If ever there was a political construct the unstated objective of which is to enslave its population, it is the European Union. Its opportunity stems from national governments which, with the exception of Germany and a few other northern states, had driven or were on the way to driving their failed states into the ground. The EU’s objectives were to support the policies of failure by corralling the accumulated wealth of the more successful nations to fund the failures in a socialistic doubling-down, and to accelerate the policies of failure to ensure that all power resides in the hands of statist looters in Brussels.

It is Ayn Rand’s vision of the socialising state as looter in action.[i] All of surviving big business is aligned with it: those who refused to play the game have disappeared. Senior executives with extensive lobbying budgets are no longer at the beck and call of contentious consumers and have hollowed out their smaller competitors. They have opted for the easier non-contentious life of seeking favours of the looters in Brussels, enjoying the champagne and foie gras, the partying with the movers and shakers, and the protection they bribe for their businesses

It is a corrupt super-state that evolved out of American post-war policy — the child of the American Committee of United Europe. Funded and staffed by the CIA in 1948, the committee’s objectives were to ensure the European countries bought into a US-controlled NATO, in the name of stopping Stalin’s westwards expansion from the post-war boundaries. This was the official story, but it is notable how it formed a template for subsequent American control of other foreign states. It is the action of the jewel wasp that turns a cockroach into a zombie, so that its lava can subsequently feed off it.

This European cockroach is now in the final stages of its zombified existence. In Brussels they don’t realise it, but they are partying into the dawn of the next world, and they will have nowhere left to go. Outside of the Brussels hothouse and EU capitals it is hard to discern any support for a failing political system, beyond simply keeping the show on the road. The German population grumbles about lending their money to economic failures, but like any creditor deep in the hole they will remain blind to the deeper systemic problem for fear of its collapse. At the other extreme are the Greek socialists who claim Germany still owes them for their brutality and destruction seventy-five years ago. It is a Faustian pact between creditors and debtors to ignore the reality of their respective positions. It is the method of imperialism; but instead of being applied to other nations, Brussels applies imperial suppression to its own member states. And now that they been hollowed out, there is nothing left to sustain Brussels.

This is the destination they have arrived at today. Brussels and its European Parliament are nearing the end of their ridiculously expensive and pointless pig-on-pork socialising destruction. Not only have the panjandrums no one left to rob, nowhere left to go, but they have bankrupted a whole continent. Surely, the robbing of the rich and giving to the poor is close to its end. The creditors and debtors have nothing material left — money in everyone’s balance sheet will be written off through a monetary and economic collapse. It is the process of it and the destination we must analyse.

The Eurozone’s banking system is a heartbeat from collapse, as will become evident in this article. There are two basic elements involved. At the bottom there are the commercial banks with rapidly escalating non-performing loans, a phrase which hides the truth, that they are irretrievable bad debts. At the top is the Eurozone-wide settlement system, TARGET2, which is increasingly used to hide the bad debts accumulating at national levels.

Before we look at the position of the commercial banks, in order to understand how toxic the Eurozone has become we will start by exposing the dangers hidden in the settlement system.

TARGET2 — chickens are coming home to roost

The imbalances between the ECB and the national central banks in the TARGET2 Eurozone settlement system are indicative of the current situation.

Germany (light blue) is now “owed” €1.15 trillion, an amount that has escalated by 27% between January and September. At the same time, the greatest debtors, Italy, Spain and the ECB itself have increased their combined debts by €275bn to €1.3 trillion (before September’s additional deterioration for Spain and the ECB are reported — only figures up to August for them are currently available). But the most rapid deterioration for its size is in Greece’s negative balance, increasing by €45.6bn between January and August.

Is the Bundesbank worried by the increasing quantities of euros owed to it in a system that was always intended to roughly balance? Certainly. Will it publicly complain, or privately demand they be corrected? Almost certainly not. For statist systems such as the EU depend entirely on total obedience towards a common objective. All dissenters are punished, in this case by the waves of destruction that would be unleashed by any state refusing to continue to support the PIGS. TARGET2 is a devil’s pact which is in no one’s interest to break.

The imbalances are all guaranteed by the ECB. In theory, they shouldn’t exist. They partially reflect accumulating trade imbalances between member states without the balancing payment flows the other way. Additionally, imbalances arise when the ECB instructs a regional central bank to purchase bonds issued by its government and other local corporate entities. As the imbalances between national banks grew, the ECB has stopped paying for some of its bond purchases, leading to a TARGET2 deficit of €297bn at the ECB. The corresponding credits conceal the true scale of the deficits on the books of the PIGS national central banks. For example, to the extent of the ECB’s unpaid purchases of Italian debt, the Bank of Italy owes more to the other regional banks than the €546bn headline amount suggests.

Inside the workings of TARGET2

The way TARGET2 works, in theory anyway, is as follows. A German manufacturer sells goods to an Italian business. The Italian business pays by bank transfer drawn on its Italian bank via the Italian central bank through the Target2 system, crediting the German manufacturer’s German bank through Germany’s central bank.

The balance was restored by trade deficits, in Italy, for example, being offset by capital inflows as residents elsewhere in the eurozone bought Italian bonds, other investments in Italy and the tourist trade collected net cash revenues. As can be seen from the chart, before 2008 this was generally true. Part of the problem is down to the failure of private sector investment flows to recycle trade-related payments.

Then there is the question of “capital flight”, which is not capital flight as such. The problem is not that residents in Italy and Spain are opening bank accounts in Germany and transferring their deposits from domestic banks. It is that the national central banks which are heavily exposed to potentially bad loans in their domestic economy know that their losses, if materialised in a general banking crisis, will end up being shared throughout the central bank system, according to their capital keys if they are transferred into the TARGET2 settlement system.

If one national central bank runs a Target2 deficit with the other central banks, it is almost certainly because it has loaned money on a net basis to its commercial banks to cover payment transfers, instead of progressing them through the settlement system. Those loans appear as an asset on the national central bank’s balance sheet, which is offset by a liability to the ECB’s Eurosystem through Target2. But under the rules, if something goes wrong with the TARGET2 system, the costs are shared out by the ECB on the pre-set capital key formula.

It is therefore in the interest of a national central bank to run a greater deficit in relation to its capital key by supporting the insolvent banks in its jurisdiction. The capital key relates to the national central banks’ equity ownership in the ECB, which for Germany, for example, is 26.38% of the euro-area national banks’ capital keys.[ii] If TARGET2 collapsed, the Bundesbank, to the extent the bad debts in the Eurosystem are shared, would lose the trillion plus euros owed to it by the other national central banks, and instead have to pay up to €400bn of the net losses, based on current imbalances.

To understand how and why the problem arises, we must go back to the earlier European banking crisis following Lehman, which has informed national regulatory practices. If the national banking regulator deems loans to be non-performing, the losses would become a national problem. Alternatively, if the regulator deems them to be performing, they are eligible for the national central bank’s refinancing operations. A commercial bank can then use the questionable loans as collateral, borrowing from the national central bank, which spreads the loan risk with all the other national central banks in accordance with their capital keys. Insolvent loans are thereby removed from the PIGS’ national banking systems and dumped on the Eurosystem.

In Italy’s case, the very high level of non-performing loans peaked at 17.1% in September 2015 but by mid-2019 had been reduced to 6.9%. Given the incentives for the regulator to deflect the non-performing loan problem from the domestic economy into the Eurosystem, it would be a miracle if any of the reduction in NPLs is genuine. And with all the covid-19 lockdowns, Italian NPLs will be soaring again.

In the member states with negative TARGET2 balances such as Italy there have been trends to liquidity problems for legacy industries, rendering them insolvent. With the banking regulator incentivised to remove the problem from the domestic economy, loans to these insolvent companies have been continually rolled over and increased. The consequence is that new businesses have been starved of bank credit, because bank credit in the member nation’s banks is increasingly tied up supporting the government and businesses that should have gone to the wall long ago. The added pressure on failing Italian businesses from covid-19 is now being reflected in the Bank of Italy’s soaring TARGET2 deficit. The system could not be more calculated to cripple the Italian economy over the longer term.

Officially, there is no problem, because the ECB and all the national central bank TARGET2 positions net out to zero, and the mutual accounting between the national central banks keeps it that way. To its architects, a systemic failure of TARGET2 is inconceivable. But, because some national central banks end up using TARGET2 as a source of funding for their own balance sheets, which in turn fund their dodgy commercial banks using their non-performing loans as collateral, some national central banks have mounting potential liabilities, the making of national bank regulators.

The Eurosystem member with the greatest problem is Germany’s Bundesbank, now owed well over a trillion euros through TARGET2. The risk of losses is now accelerating rapidly as a consequence of the first round of Covid lockdowns, as can be seen in the chart of TARGET2 imbalances above. The second round of surging infections is leading to yet more economic destruction, yet to be reflected in TARGET2 balances, which will increase again. The Bundesbank should be very concerned.[iii]

Current imbalances in the system total over €1.5 trillion. According to the capital keys, in a systemic failure the Bundesbank’s assets of €1.115 trillion would be replaced by liabilities up to €400bn, the rest of the losses being spread around the other national banks. No one knows how it would work out because failure of the settlement system was never contemplated; but many if not all of the national central banks will have to be bailed out on a TARGET2 failure, presumably by the ECB as guarantor of the system. But with only €7.66bn of subscribed capital the ECB’s balance sheet is miniscule compared with the losses involved, and its shareholders will themselves be seeking a bailout to bailout the ECB. A TARGET2 failure would appear to require the ECB to effectively expand its QE programmes to recapitalise itself and the whole eurozone central banking system.

Now that really would be a crisis, the likes of which has never been seen before, where a central bank prints money purely to save itself and its regional agents.

The commercial banks are also in deep trouble

The deterioration in TARGET2 imbalances cannot be ignored by those with links to or outside of the Eurozone. While the UK is not in the euro or the TARGET2 settlement system, the Bank of England is a 14% shareholder in the ECB and could be on the hook for significant sums in the case of a Eurozone systemic crisis. Furthermore, with the City of London being the international financial centre for Europe, the UK banking system has considerable counterparty risks with Eurozone banks and other European banks.

Over 50% of the iShares STOXX Europe 600 Banks ETF is invested in Eurozone banks: 28% is invested in UK banks, 13% in Swedish banks, and the balance in Danish and Swiss banks. Its weighting in favour of the Eurozone and UK makes it a reasonable proxy for the market rating of the major banks based in the European time zone. Figure 2 shows the performance of this ETF compared with the S&P500 Index, taken as a proxy for the world’s stockmarkets.

Since the aftermath of the Lehman crisis in 2008, the S&P500 index was in a continual bull market until February this year. At the same time, the share prices of European banks as represented in the ETF were in a bear market. Ahead of the Fed’s reflationary move on 23 March, from mid-February both the S&P500 and the European banks ETF crashed, but the S&P then soared to new hights. After the briefest of recoveries, the ETF sank to new lows.

Given the strong performance of equity markets following the March lows, the abysmal performance of the banks’ shares is ominous. In fact, the contradiction is so great the message from the stock markets appears to be that the Fed and other central banks will ensure, so far as they can, that stimulus will reach businesses sufficiently for them to recover from the covid-19 hiatus irrespective of the banks survival. It is a contradictory message suggesting businesses may survive and prosper but banks might not.

Besides the enormous implied faith among investors being placed in the ability of central banks to keep the wealth creating stock market bubble on the boil, either banks are being overlooked or are in serious trouble. The latter appears to be the case. Being more undercapitalised than the major commercial banks in any other region, many Eurozone banks present serious systemic risks and should not be trading. Figure 1 shows the market leverages of European globally-important banks — the G-SIBs, including those of EU, UK and Switzerland.

Only two of them, the Swiss banks, have price to book ratios in excess of 50%. As well as these G-SIBs there are many other commercial banks in Europe with similarly horrifying price to book ratios and balance sheet to market capital leverage ratios. Blind to the implications of market capitalisations, regulators look no further than the relationship between total assets and balance sheet equity. But when markets place a price to book valuation of considerably less than 100% on any enterprise, they tell us the enterprise is not just insolvent, but in a winding-up, shareholders are unlikely to recover their funds. So, when we observe that Société Generale, the major French bank, has a price to book ratio of only 16.4%, without a major capital injection it is almost certainly bankrupt because its share price is little more than option money on its future survival.

The price to book values of all these G-SIBs have improved marginally in recent weeks, carried along by a dead-cat bounce. Even then, bank stocks remain close to their long-term lows when stock indices such as the S&P500 index have been forging new highs. This contradiction also suggests that investors have not been making rational decisions, and that with the exception of banks, stock markets are being driven by a combination of monetary expansion and the madness of crowds.

European businesses are now being bankrupted by a second covid-19 wave. The bankruptcies from the first have not yet fully worked into the financial system and will now be compounded by a second wave. Nothing can stop non-performing loans increasing and undermining overstretched commercial banks. The game of passing the parcel up into TARGET2 imbalances will continue until it crashes. Since few understand TARGET2 and those that do are frightened into silence, presumably it will be market assessments of individual banks and their collapse into bankruptcy that will be the trigger for a widespread systemic crisis in the Eurozone. The whole Eurozone monetary system is deep into borrowed time.

The euro’s valuation

For the moment, the euro is riding high against the dollar, encouraging the ECB to explore deeper negative interest rates. But it is worth reminding ourselves of the currency dynamics behind the euro-dollar cross rate.

Until September 2019, large hedge funds were playing the fx swaps market. In effect, through their banks they were borrowing euros, selling them for dollars, and gaining the interest differential. This was one of the reasons for last September’s repo crisis in New York, when the leading banks ran out of balance sheet to finance both fx swaps and other derivative and credit activities. The repo crisis ended with the Fed cutting its funds rate from 2%, first to 1.5% then 1%, which took much of the steam out of the euro-dollar fx cross. With those positions now closed down the euro is more influenced by trade flows. And here, the EU runs a trade surplus of about €150bn with the US, which given that the US budget deficit has increased substantially, seems set to increase further unless Americans suddenly adopt a savings habit.

The capital position is favourable to the euro as well, when in June 2019, the last recorded total of US financial securities held by EU residents, totalled $9.631 trillion.[iv] And US residents’ ownership of Euro area securities totalled $2.952 trillion at end-2019[v] — a gap of $6.679 trillion. Therefore, in a banking crisis when foreign investments get sold down, there is likely to be substantial net buying of the euro against the dollar.

The euro has the potential to rise further against the dollar before and possibly during a systemic banking crisis. After such a crisis, all bets will be off. All we know is that the rottenness of the euro area monetary system will almost certainly lead to its destruction and most likely the end of the euro itself. The immediacy of the problem allows us to dismiss talk of resets and central bank digital currencies, which are being pushed by the monetary looters at the ECB who might sense there is a crisis to avoid. The talk of monetary stimulation with yet deeper negative interest rates is part of it, the hope being a new central bank digital currency will bypass a broken banking system.

But now the commercial banks are bust, we are about to see a monetary implosion that can only result in the euro’s destruction.

A Phoenix will arise from the ashes — eventually

It was not the people, but the governments they were fooled into electing, and which in turn were fooled into the European project, which will bear responsibility for the collapse of the European Union. The large corporations which were corrupted into supporting socialistic ideals instead of serving their customers for profit, played their part in the looting. All this will be destroyed. There will be acute hardship as the rotten system collapses, but so be it.

Hopefully, the civil conflicts and the evolution to a sounder form of money and monetary system will be time-limited — but that depends on how long events take to evict the looters in government. The best that the residents of Euroland can hope for at this juncture is that the collapse of the money will hasten their demise.

The fate of the euro will be shared with the majority — if not all — of other fiat currencies for reasons specific to them. The recovery from the ashes of government incompetence can be swift — a matter of a year or two, so long as successor governments quickly learn that free markets, sound money and minimal interference from government are all required for the restoration of economic progress. Additionally, all socialist policies must be discarded, and the profit motive and individual wealth creation embraced.

It will require the wholesale destruction of state bureaucracies — that will happen when the euro collapses. And they must not be replaced by new bureaucracies beyond a bare minimum required for administering law and order. Politicians must learn that bureaucratic power is a false and dishonest objective, and that a nation can only become great by the efforts of its people pursuing profits by providing what consumers want. As a creed, Caveat emptor for consumers must be reinstated.

Consumers are the kings to be worshipped by producers seeking profits. And consumers have a responsibility to themselves, judging what is best for them and not relying on regulating government agencies to decide on their behalf. In business, there is no room for the luxuries of dissent. Employing people on the basis of their sex, race, disabilities and other mores must cease. The basis of any employment must be purely on ability, skills and suitability. All regulations over production must be abandoned. The businesses that supped with the devil in Brussels must never regain the advantages through their political influence. If they don’t collapse with the euro, these corporations will have to learn to survive competition from new challengers on their own.

The concept of a European superstate must be discarded, and any attempt to reinvent it firmly stopped. European nations must stand by the successes and failures of their national abilities to create wealth, allowing their peoples to do it and retain it for themselves. Tax competition between jurisdictions will help guarantee that the growth of government is contained.

Underwriting a new Europe must be small government, free markets and sound money. As Germany discovered following both world wars, sound money is the precondition for economic progress. Fortunately, there are still a few sound money men in the central banks of Germany, The Netherlands, and believe it or not France and Italy — evidenced by their gold holdings and in the case of the former two their repatriation from foreign vaults. They must establish their own gold substitutes and be directly exposed to the consequences of monetary manipulation, should future governments be tempted to corrupt the money again.

The concept of farming out monetary affairs to a superstate organisation will have been disproved by the collapse of the euro and must not be attempted again. In a successful future, the people of Europe will decide personal their needs and wants, individually.

Whose Great Reset? The Fight For Our Future – Technocracy Vs. The Republic

Sat, 24 Oct 2020 03:40:00 GMT

Whose Great Reset? The Fight For Our Future – Technocracy Vs. The RepublicTyler DurdenFri, 10/23/2020 - 23:40

Authored by Joaquin Flores via The Strategic Culture Foundation,

People living in the western world are in the greatest fight for the future of pluralist and republican forms of governance since the rise and fall of fascism 75 years ago. As then, society had to be built up from a war. Today’s war has been an economic war of the oligarchs against the republic, and it increasingly appears that the coronavirus pandemic is being used, on the political end, as a massive coup against pluralist society. We are being confronted with this ‘great reset’, alluding to post-war construction. But for a whole generation people have already been living under an ever-increasing austerity regimen. This is a regimen that can only be explained as some toxic combination of the systemic inevitabilities of a consumer-driven society on the foundation of planned obsolescence, and the never-ending greed and lust for power which defines whole sections of the sociopathic oligarchy.

Recently we saw UK PM Boris Johnson stand in front of a ‘Build Back Better’ sign, speaking to the need for a ‘great reset’. ‘Build Back Better’ happens to be Joe Biden’s campaign slogan, which raises many other questions for another time. But, to what extent are the handlers who manage ‘Joe Biden’, and those managing ‘Boris Johnson’ working the same script?

The more pertinent question is to ask: in whose interest is this ‘great reset’ being carried out?

Certainly it cannot be left to those who have built their careers upon the theory and practice of austerity. Certainly it cannot be left to those who have built their careers as puppets of a morally decaying oligarchy.

What Johnson calls the ‘Great Reset’, Biden calls the ‘Biden Plan for a Clean Energy Revolution & Environmental Justice’. Certainly the coming economy cannot be left to Boris Johnson or Joe Biden.

How is it that now Boris Johnson speaks publicly of a ‘great reset’, whereas just months ago when those outside the ruling media paradigm used this phrase, it was censured by corporate Atlanticist media as being conspiratorial in nature? This is an excellent question posed by Neil Clark.

And so we have by now all read numerous articles in the official press talking about how economic life after coronavirus will never be the same as it was before. Atlanticist press has even run numerous opinion articles talking about how this may cut against globalization – a fair point, and one which many thinking people by and large agree with.

Yet they have set aside any substantive discussion about what exists in lieu of globalization, and what the economy looks like in various parts of the world if it is not globalized. We have consistently spoken of multipolarity, a term that in decades past was utilized frequently in western vectors, in the sphere of geopolitics and international relations. Now there is some strange ban on the term, and so we are now bereft of a language with which to have an honest discussion about the post-globalization paradigm.

Technocracy or Pluralism? A Fight Against the Newspeak

Until now, we have only been given a steady diet of distancing, of lockdown provisions, quarantining, track and trace, and we have forgotten entirely about the fact that all of this was only supposed to be a two or three-week long exercise to flatten the curve. And now the truth is emerging that what is being planned is a new proposal being disguised as a ‘great reset’.

One of the large problems in discussing the ‘great reset’ is that a false dichotomy has arisen around it. Either one wants things to be how they were before and without changes to the status quo, or they promote this ‘great reset’. Unfortunately, Clark in his RT article falls into this false dichotomy, and perhaps only for expedience sake in discussing some other point, he does not challenge the inherent problems in ‘how things were before’. In truth, we would be surprised if Clark did not appreciate what we are going to propose.

What we propose is that we must oppose their ‘new normal’ ‘great reset’, while also understanding the inherent problems of what had been normalized up until Covid.

The way things were before was also a tremendous problem, and yet now it only seems better in comparison to the police state-like provisions we’ve encountered throughout the course of politicizing the spectre of this ‘pandemic’.

Oddly this politicization is based in positive cases (and not hospitalizations) ostensibly linked to the novel coronavirus. Strangely, we are told to ‘listen to the consensus science’ even as these very institutions consist of politically arrived at appointments. Certainly science is not about consensus, but about challenging assumptions, repeatability and a lively debate between disagreeing scientists with relatively equal qualifications. As Kuhn explains in The Structure of Scientific Revolutions, science is always evolving, and by definition potentially overturns consensus paradigms. This is a debate we have not seen, and this fact by itself represents an illiberal cancer growing on an already defective pluralist society – ironically, all flying under the banner of liberalism.

Decisions that a society decides to take should be driven by reason, prudence, and justice. What is or isn’t scientific plays a role, but cannot be the deciding factor. Science clearly says that we may eliminate cross-walk injuries by banning street-crossing or by banning driving, but what policy makers must do is account for the need to have both cars and crossing the street, in deciding how – if it’s even possible – to reduce or eliminate such injuries. Science is only one part of this equation.

But isn’t economics also a science? Is sociology not a science? What about psychology and psychiatry – as in the known effects of social isolation and, say, suicide prevention? What about housing and urban planning? The great sociologist Emile Durkheim explains how these are sciences – they adopt and apply the scientific method in their work. Universities have been awarding doctoral degrees in these sciences for a century or more, do these expert opinions not count when managing a public catastrophe?

It is, and always has been, a political and politicized position to listen to some scientists, and not others.

And so what of our term ‘reset’? Indeed, it is itself misleading, and we would propose it is intentionally so if we understand Orwell’s critique of the use of language – newspeak – in technocratic oligarchies.

A ‘reset’ textually refers to going back to something once known, erasing defects or contradictions which arose along the way, which carries with it the familiar, and something we had previously all agreed to. A ‘reset’ by definition means going back to how things were before – not just recently, but before at some point farther back. Its definition is literally contrary to how Boris Johnson means it in his shocking public statement at the start of October.

The term ‘reset’ was therefore arrived with extraordinary planning and thoughtfulness, with the intent to persuade [manipulate] the public. It simultaneously straddles two unique concepts, and bundles them together at once into a single term in a manner that reduces nuance and complexity and therefore also reduces thinking. It does so while appealing to the implicit notion of the term that it relates to a past consensus agreement.

If understood as we are told to understand it, we must hold two mutually contradictory notions at the same time – we are incongruously told that this reset must effectively restore society to how it was at some point before because things can never be how they were at any time before. Only within the paradigm of this vicious newspeak could anything ever have the public thinking that such a textual construction makes any bit of sense.

What are Our Real Options? Whose Reset?

Those who understand that this ‘reset’ is not a reset but rather a whole new proposal on the entire organization of society, but being done through oligarchical methods and without the sort of mandate required in a society governed by laws and not men, are – as we have said – reluctant to admit that a great change is indeed necessary.

Rather, we must understand that the underlying catastrophic economic mechanisms which are forcing this great change exist independently of the coronavirus, and exist independently of the particular changes which the oligarchs promoting their version of a ‘reset’ (read: new proposals) would like to see.

You see, the people and the oligarchs are locked into a single system together. In the long-term, it seems as if the oligarchs are looking for solutions to change that fact, and effect a final solution that grants them an entirely break-away civilization. But at this moment, that is not the case. Yet this system cannot carry forward as it has been, and the Coronavirus presents a reason at once both mysterious in its timing and also profound in its implications, to push forward a new proposal.

We believe that technology is quickly arriving at a point where the vast majority of human beings will be considered redundant. If the technocracy wants to create a walled civilization, and leave the rest of humanity to manage their own lives along some agrarian, mediaeval mode of production, there may indeed be benefits to those who live along agrarian lines. But based in what we know about psychopathy, and the tendency of that among those who govern, such an amicable solution is likely not in the cards.

That is why the anti-lockdown protests are so critically important to endorse. This is precisely because the lockdown measures are used to ban mass public demonstrations, a critical part of pushing public policy in the direction of the interests of the general public. A whole part of the left has been compromised, and rolled out to fight imaginary fascists, by which they mean anyone with conventional social views which predate May of 1968. All the while the actual plutocrats unleash a new system of oligarchical control which, for most, has not been hitherto contemplated except by relatively obscure political scientists, futurists, and science fiction authors.

Certainly the consumerist economic system (sometimes called ‘capitalism’ by the left), which is based in both globalized supply chains but also planned obsolescence, is no longer feasible. In truth, this relied upon a third-world to be a source of both raw materials and cheaper labor. The plus here is that this ‘developing world’ has largely now developed. But that means they will be needing their own raw materials, and their own middle-classes have driven up their own cost of labor. Globalization was based in some world before development, where the real dynamic is best explained as imperialism, and so it makes sense that this system is a relic of the past, and indeed ought to be.

It increasingly appears that the ‘Coronavirus pandemic’, was secondary to the foregone economic crisis which we were told accompanied it. Rather, it seems that the former came into being to explain-away the latter.

Another world is possible, but it is one which citizens fight for. In the U.S., England, Scotland, Ireland, and Germany, there have already been rather large anti-lockdown demonstrations. These, as we have explained, are not just against lockdown but are positively pushing to assert the right to public and political association, to public and political speech, and the redressing of grievances. This is a fundamental right for citizens in any republic where there is any sort of check on the oligarchy.

We have written on the kind of world that is possible, in our piece from April 2020 titled: “Coronavirus Shutdown: The End of Globalization and Planned Obsolescence – Enter Multipolarity”. That lays out what is possible, and what the problems of pre-corona system were, in economic terms more than political. Here we discuss the problems of globalization-based supply chain security in a multipolar world, and the larger problem of planned obsolescence, especially in light of 3D printing, automation, and the internet of things.

We posed the philosophical question as to whether it is justified to have a goods-production system based upon both the guaranteed re-sale of the same type of goods due to planned obsolescence and the ‘work guarantees’ that came with it. In short, do we live to work or to we work to live? And with the 4th industrial revolution looming, we posed the question of what will happen after human workers are no longer required.

Pluralist society is the compromise outcome of a ceasefire in the class war between the oligarchy and the various other classes that compromise the people, at large. Largely idealized and romantic ideas that form the basis of the liberal-democratic ideology (as well as classical fascism) are used to explain how it is the oligarchy that is so very committed to that arrangement of pluralism, and that this very arrangement is the product of their benevolence, and not the truth: that it was the fight put up by common people to fight for a more just future. No doubt there have been benevolent oligarchs who really believed in the liberal ideology, of which fascism is one of its more radical products. But the view that the class struggle can be acculturated or legislated into non-existence is similar to believing that the law of gravity can be ruled unlawful in a court.

Perhaps we have forgotten what it takes, and perhaps things just have not gotten bad enough. Decreases in testosterone levels in the population may be leading to a dangerous moment where vigorous defiance to injustice is much less possible. Critical now is to avoid any artificial means to opiate ourselves into thinking things are better than they are, whether by way of anti-depressants or other self-medication. Only with a clear assessment of the real situation on the ground can we forge the necessary strategy.

The great political crisis now is that a pandemic is being used to justify an end-run around constitutional rights, an end-run around pluralist society, and so the vehicle – the mechanism – that the general public might use to fight for their version of a ‘reset’ is on the verge of disappearing.

In many ways this means that now is the final moment. We ask – whose great reset, ours or theirs?

Havana Syndrome: US Still Probing Mystery "Sonic Attacks" On Diplomats 3 Years Later

Sat, 24 Oct 2020 03:20:00 GMT

Havana Syndrome: US Still Probing Mystery "Sonic Attacks" On Diplomats 3 Years LaterTyler DurdenFri, 10/23/2020 - 23:20

The mysterious Havana “sonic attacks” are back in the media after Secretary of State Mike Pompeo on Wednesday said an investigation is still underway. He was responding to newly published allegations of a cover-up.

Recall that starting in 2016 into 2017 there were bizarre reports that nearly two dozen American diplomats - and a handful of Canadians - serving at embassies in Havana suffered hard-to-pin-down symptoms from the alleged “sonic attacks”. Personnel reported experiencing everything from vomiting to concussions to chronic headaches to minor brain injuries.

"It's a very complicated situation and there is not yet any complete US government analysis which definitively tells us precisely how these all came to be, whether they're part of a single cohort," Pompeo told reporters Wednesday.

Via The Independent

"There are multiple theories, and you should know there are significant US government resources... three-plus years on, devoted to getting to the bottom of this and then holding those responsible accountable should we determine that that's required," he said.

It was thought serious enough for the Trump administration to withdraw half the US embassy staff while expelling Cuban diplomats in September 2017, given the 'sound waves' were thought intentional, or "specific attacks". Investigators had offered several theories about a high-tech attack by Cuba's government, or perhaps a rogue faction of its security forces, or possibly a third country like – wait for it - Russia. Another theory was that an eavesdropping device may have gone awry.

The whole episode gave rise to endless theories, even that it was a natural phenomenon due to sounds produced by crickets in Havana, according to one scientific inquiry featured in The Guardian in 2019. Other scientists posited the possibility of mass hysteria among staff serving in a high stress environment.

Asked about the mysterious 'Havana Syndrome' among US diplomats in #Cuba, #China and elsewhere, @SecPompeo says it's "patently false" that @StateDept didn't protect its personnel because of larger political objectives. "We can continue to try to determine the causation of this." pic.twitter.com/o1fGGdLxEq
— Steve Herman (@W7VOA) October 21, 2020

But apparently it wasn't just American personnel stationed in Cuba that were harmed, as the AFP notes this week:

Similar cases began emerging in 2018 among US personnel in the southern Chinese city of Guangzhou, with Pompeo initially linking the situation to the episodes in Havana.
But The New York Times, in an investigation published Tuesday, said that the State Department had played down the incidents in China and did not open a similar investigation.
The newspaper said that a clandestine CIA officer in Moscow also suffered debilitating headaches that forced him into retirement, raising suspicions that Russia was waging non-traditional warfare in multiple sites.

The issue is also surfacing again over allegations the Trump administration ultimately did nothing to resolve the issue. US diplomats and spies have recently accused the White House and top brass in federal agencies of intentionally downplaying it to the point of cover-up, given they don't have answers.

"There were no politics attached to this. The suggestion somehow is that we didn't protect our officers because of some larger political objective - that is patently false," Pompeo hit backed when pressed.

There now appears to be consensus within the US administration that Cuba or Russia may be using James Bond villain type high-tech devices which can imperceptibly impact the health of American personnel stationed abroad without them knowing about it. At this point there's even a name for it and lengthy entry in Wikipedia, called "Havana Syndrome".