F Financial Sector Induced Systemic Instability of Economy

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Financial Sector Induced Systemic Instability of Economy

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that  growth of financial sector represents a direct threat to the stability of the society. Positive feedback loops creates one financial crisis after another with the increasing magnitude leading up to a collapse of financial system like happened in 1927 and 2008.

News Casino Capitalism Recommended Links  Stability is destabilizing: The idea of Minsky moment Corruption of Regulators Quiet coup
Neoliberalism as a New Form of Corporatism Principal-agent problem Numbers racket Criminal negligence in financial regulation Corruption of FED Invisible Hand Hypothesis
The “Too Big To Fail” Problem In Goldman Sachs we trust Citi - The bank that couldn’t shoot straight JPMorgan AIG collapse Lehman
Free Markets Newspeak as Opium for regulators Derivatives Lobby Corrupts Congress Lobbying and the Financial Crisis Control Fraud
(crisis of corporate governance)
Stock Market with buybacks as a Ponzi scheme Derivatives
Small government smoke screen Financial Bonuses as Money Laundering Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Corporatism   Financial obesity
Webliography of heterodox economists HFT Aleynikov vs. Goldman Sachs Casino Capitalism Dictionary Financial Humor Etc
  "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

The Cost of Capitalism: Understanding Market Mayhem and Stabilizing our Economic Future, by Robert Barbera

The flaw with Capitalism is that it creates its own positive feedback loop, snowballing to the point where the accumulation of wealth and power hurts people — eventually even those at the top of the food chain. ”

Uncle Billy Cunctator
In comment to Economic Donkeys

 
  Banks are a clear case of market failure and their employees at the senior level have basically become the biggest bank robbers of all time. As for basing pay on current revenues and not profits over extended periods of time, then that is a clear case of market failure --  
  The banksters have been able to sell the “talent” myth to justify their outsized pay because they are the only ones able to deliver the type of GDP growth the U.S. economy needs in the short term, even if that kills the U.S. economy in the long term. You’ll be gone, I’ll be gone.  
  Unfortunately, many countries go broke pursuing war, if not financially, then morally (are the two different? – this post suggests otherwise).

I occurs to me that the U.S. is also in that flock; interventions justified by grand cause built on fallacy, the alpha and omega of failure. Is the financial apparatchik (or Nomenklatura, a term I like which, as many from the Soviet era, succinctly describes aspects of our situation today) fated also to the trash heap, despite the best efforts of the Man of the hour, Ben Bernanke?

 

Introduction

Financialization is a Damocles sword hanging over the neoliberal society

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that growth of financial sector represents a direct threat to the stability of the society (Keynesianism and the Great Recession )

Without adult supervision, as it were, a financial sector that was already inherently unstable went wild. When the subprime assets were found to be toxic since they were based on mortgages on which borrowers had defaulted, highly indebted or leveraged banks that had bought these now valueless securities had little equity to repay their creditors or depositors who now came after them. This quickly led to their bankruptcy, as in the case of Lehman Brothers, or to their being bailed out by government, as was the case with most of the biggest banks. The finance sector froze up, resulting in a recession—a big one—in the real economy.

Neoliberal revolution, or, as Simon Johnson called it after "quite coup" (Atlantic), brought political power to the financial oligarchy deposed after the New Deal. Deregulation naturally followed, with especially big role played by corrupt Clinton administration.  Positive feedback loops creates one financial crisis after another with the increasing magnitude. "Saving and loans" crisis followed by dot-com crisis of  2000, which in turn followed by the collapse of financial system in 2008, which looks somewhat similar to what happened in 1927.  No prominent financial honcho, who was instrumental in creating "subprime crisis" was jailed.  Most remained filthy rich.

Unless the society puts severe limits on their actions like was done during New Deal,  financial firms successfully subvert the regulation mechanisms and take the society hostage.  But periodic purges with relocation of the most active promoters of "freedom for banks" (aka free market fundamentalism) under the smoke screen of "free market" promotion does not solve the problem of positive feedback loops that banks create by mere existence. That's difficult to do while neoliberal ideology and related neoclassical economy dominates the society thinking (via brainwashing), with universities playing especially negative role -- most of economics departments are captured by neoliberals who censor any heretics. So year after year brainwashing students enter the society without understanding real dangers that neoliberalism brought for them.  Including lack of meaningful employment opportunities.

Of course, most of high level officers of leading finance institutions which caused the crisis of 2008-2009 as a psychological type are as close to  gangsters as one can get. But there is something in their actions that does not depend on individual traits (although many of them definitely can be classified as psychopaths), and is more related to their social position.  This situation is somewhat similar to Bolsheviks coup d'état of 1917 which resulted in capturing Russia by this ideological sect.  And in this sense quite coupe of 1980 is also irreversible in the same sense as Bolsheviks revolution was irreversible:  the "occupation" of the country by a fanatical sect lasts until the population rejects the ideology with its (now apparent) utopian claims.

Bolshevism which lasted 75 years, spend in such zombie state the last two decades (if we assume 1991 as the year of death of Bolshevism, its ideology was dead much earlier -- the grave flaws in it were visible from late 60th, if not after the WWII).  But only  when their ideology was destroyed both by inability to raise the standard of living of the population and by the growing neoliberal ideology as an alternative (and a new, more powerful then Marxism high-demand cult) Bolsheviks started to lose the grip on their power in the country. As a result Bolsheviks lost the power only in 1991, or more correctly switched camps and privatized the country. If not inaptness of their last General Secretary, they probably could last more. In any case after the ideology collapsed, the USSR disintegrated (or more correctly turn by national elites, each of which wanted their peace of the pie).

The sad truth is that the mere growth of financial sector creates additional positive feedback loops and increases structural instability within both the financial sector itself and the society at large. Dynamic systems with strong positive feedback loops not compensated by negative feedback loops are unstable. As a result banks and other financial institution periodically generate a deep, devastating crisis. This is the meaning of famous Hyman Minsky phrase "stability is destabilizing".

In other words, financial apparatchiks (or Financial Nomenklatura, a term from the Soviet era, which succinctly describes aspects of our situation today) drive the country off the cliff because they do not have any countervailing forces, by the strength of their political influence and unsaturable greed. Although the following analogy in weaker then analogy with dynamic systems with positive feedback loops, outsized financial sector can be viewed in  biological terms as cancer.

Cancer, known medically as a malignant neoplasm, is a broad group of diseases involving unregulated cell growth. In cancer, cells divide and grow uncontrollably, forming malignant tumors, and invading nearby parts of the body. The cancer may also spread to more distant parts of the body through the lymphatic system or bloodstream. Not all tumors are cancerous; benign tumors do not invade neighboring tissues and do not spread throughout the body. There are over 200 different known cancers that affect humans.[1]

Like certain types of cancer they depend of weakening "tumor suppressor genes"  (via "Quiet coup" mechanism of acquiring dominant political power) which allow then to engage in uncontrolled growth, destroying healthy cells (and first of all local manufacturing).   

The other suspicion is the unchecked financialization always goes too far and the last N percent of financial activity absorbs much more resources (especially intellectual resources) and creates more potential instability than its additional efficiency-benefits (often zero or negative) can justify. It is hard to imagine that a Hedge Fund Operator of the Year does anything that is even remotely socially useful to justify his enormous (and lightly taxed) compensation. It is pure wealth redistribution up based on political domination of financial oligarchy.  Significant vulnerabilities  within the shadow banking system and derivatives are plain vanilla socially destructive. Yet they persist due to inevitable political power grab by financial oligarchy  (Quiet coup).

Again, I would like to stress that this problem of the oversized financial sector which produces one devastating crisis after another   is closely related to the problem of a positive feedback loops. And the society in which banks are given free hand inevitably degrades into "socialism for banks"  or "casino capitalism" -- a type of neoliberalism with huge inequality and huge criminality of top banking officers.  

Whether we can do without private banks is unclear, but there is sound evidence that unlike growth of manufacturing, private financial sector growth is dangerous for the society health and perverts society goals.  Like cult groups the financial world does a terrific job of "shunning" the principled individuals and suppressing dissent (by capturing and cultivating neoliberal stooges in all major university departments and press),  so self-destructing tendencies after they arise can't be stopped within the framework of neoliberalism. In a way financial firm is like sociopath inevitable produces its  trail of victims (and sociopaths might be useful in battles exactly due to the qualities such as ability to remain cool in dangerous situation, that make them dangerous in the normal course of events).

This tendency of society with unregulated or lightly regulated financial sector toward self-destruction was first formulated as "Minsky instability hypothesis" -- and outstanding intellectual achievement of American economic Hyman Minsky (September 23, 1919 – October 24, 1996). Who BTW was pretty much underappreciated (if not suppressed) during his lifetime because his views were different from  orthodox (and false) neoclassic economic theory which dominates US universities, Like flat Earth theory was enforce by Catholic church before, it is fiercely enforced by an army of well paid neoliberal economics, those Jesuits of modern era. Who prosecute heretics who question flat Earth theory even more efficiently then their medieval counterparts; the only difference is that they do not burn the literally, only figuratively ;-)

Minsky financial instability hypothesis

Former Washington University in St. Louis economics professor Hyman P. Minsky had predicted the Great Recession decades before it happened.  Hyman Minsky was a real student of the Great Depression, while Bernanke who widely is viewed as a scholar who studied the Great Depression, in reality was a charlatan, who just tried to explain the Great Depression from the positions of neo-classical economy. That's a big difference.

Minsky instability hypothesis ("stability is destabilizing" under capitalism) that emerged from his analysis of the Great Depression was based on intellectual heritage of three great thinkers in economics (my presentation is partially based on an outstanding lecture by Steve Keen Lecture 6 on Minsky, Financial Instability, the Great Depression & the Global Financial Crisis). We can talk about three source of influence, there authors writing of which touched the same subject from similar positions and were the base of Hyman Minsky great advance in understanding of mechanics of development of financial crisis under capitalism and the critical role of financial system in it (neoclassical economics ignores the existence of financial system in its analysis): 

  1. Karl Marx influence
  2. Irving Fisher influence
  3. Joseph Schumpeter influence

Karl Marx influence

Minsky didn't follow the conventional version of Marxism  . And it was dangerous for him to do so due to McCarthysm. Even mentioning of Marx might lead to strakism fromthe academy those years.  McCarthy and his followers in academy did not understand the difference between Marx great analysis of capitalism and his utopian vision of the future. Impliedly this witch hunt helped to establish hegemony of neoclassical economy in economic departments in the USA.

While Minsky did not cited Marx in his writings and did use Marx's Labor Theory of Value his thinking was definitely influenced by Marx’s critique of  finance. We now know that he read and admired the Capital. And that not accidental due to the fact that his parents were Mensheviks -- a suppressed after Bolshevik revolution more moderate wing of Russian Social Democratic Party that rejected the idea of launching the socialist revolution in Russia --  in their opinion Russia needed first to became a capitalist country and get rid of remnants of feudalism. They escaped from Soviet Russia when Mensheviks started to be prosecuted by Bolsheviks.

And probably the main influence on Minsky was not Marx's discussion  of finance in Volume I of Capital with a "commodity" model of money, but critical remarks scattered in   Volumes II & III (which were not edited by Marx by compiled posthumously by Engels), where he was really critical of big banks as well as Marx's earlier works (Grundrisse, Theories of Surplus Value) where Marx was scathing about finance:

"A high rate of interest can also indicate, as it did in 1857, that the country is undermined by the roving cavaliers of credit who can afford to pay a high interest because they pay it out of other people's pocket* (whereby, however, they help to determine the rate of interest  for all) and meanwhile they live in grand style on anticipated profits. 

Irving Fisher influence

The second source on which Minsky based his insights was Irving Fisher. Irving Fisher’s reputation destroyed by wrong predictions on stock market prices. In aftermath, developed theory to explain the crash and published it in his book  "The Debt Deflation Theory of Great Depressions". His main points are:

According to Fisher two key disequilibrium forces that push economic into the next economic crisis are debt and subsequent deflation

Joseph Schumpeter influence

Joseph Schumpeter was Joseph Schumpeter has more positive view of capitalism than the other two. He authored the theory of creative destruction as a path by which capitalism achieves higher and higher productivity. He capitalism as necessarily unstable, but for him this was a positive feature -- instability of capitalism the source of its creativity. His view of capitalism was highly dynamic and somewhat resembles the view of Marx (who also thought that capitalism destroys all previous order and create a new one):

Unlike Marx, who thought that the periodic crisis of overproduction  is the source of instability (as well as  gradual absolute impoverishment of workers), Minsky assumed that the key source of that instability of capitalist system is connected with the cycles of business borrowing and fractional bank lending, when "good times" lead to excessive borrowing leading to high leverage and overproduction and thus to eventual debt crisis (The Alternative To Neoliberalism ):

Minsky on capitalism:

The idea of Minsky moment is related to the fact that the fractional reserve banking periodically causes credit collapse when the leveraged credit expansion goes into reverse. And mainstream economists do not want to talk about the fact that increasing confidence breeds increased leverage. So financial stability breeds instability and subsequent financial crisis. All actions to guarantee a market rise, ultimately guarantee it's destruction because greed will always take advantage of a "sure thing" and push it beyond reasonable boundaries.  In other words, marker players are no rational and assume that it would be foolish not to maximize leverage in a market which is going up. So the fractional reserve banking mechanisms ultimately and ironically lead to over lending and guarantee the subsequent crisis and the market's destruction. Stability breed instability.

That means that fractional reserve banking based economic system with private players (aka capitalism) is inherently unstable. And first of all because  fractional reserve banking is debt based. In order to have growth it must create debt. Eventually the pyramid of debt crushes and crisis hit. When the credit expansion fuels asset price bubbles, the dangers for the financial sector and the real economy are substantial because this way the credit boom bubble is inflated which eventually burst. The damage done to the economy by the bursting of credit boom bubbles is significant and long lasting.

Blissex said...

«When credit growth fuels asset price bubbles, the dangers for the financial sector and the real economy are much more substantial.»

So M Minsky 50 years ago and M Pettis 15 years ago (in his "The volatility machine") had it right? Who could have imagined! :-)

«In the past decades, central banks typically have taken a hands-off approach to asset price bubbles and credit booms.»

If only! They have been feeding credit-based asset price bubbles by at the same time weakening regulations to push up allowed capital-leverage ratios, and boosting the quantity of credit as high as possible, but specifically most for leveraged speculation on assets, by allowing vast-overvaluations on those assets.

Central banks have worked hard in most Anglo-American countries to redistribute income and wealth from "inflationary" worker incomes to "non-inflationary" rentier incomes via hyper-subsidizing with endless cheap credit the excesses of financial speculation in driving up asset prices.

Not very hands-off at all.

Steve Keen is probably the most well know researcher who tried to creates model of capitalist economy based on Minsky work (  http://www.debtdeflation.com/blogs/manifesto/ )

John Kay in his January 5 2010 FT column very aptly explained the systemic instability of financial sector hypothesis: 

The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. The first phase was the emerging market defaults of the 1990s. The second was the new economy boom and bust at the turn of the century. The third was the collapse of markets for structured debt products, which had grown so rapidly in the five years up to 2007.

The manifestation of the problem in each phase was different – first emerging markets, then stock markets, then debt. But the mechanics were essentially the same. Financial institutions identified a genuine economic change – the assimilation of some poor countries into the global economy, the opportunities offered to business by new information technology, and the development of opportunities to manage risk and maturity mismatch more effectively through markets. Competition to sell products led to wild exaggeration of the pace and scope of these trends. The resulting herd enthusiasm led to mispricing – particularly in asset markets, which yielded large, and largely illusory, profits, of which a substantial fraction was paid to employees.

Eventually, at the end of each phase, reality impinged. The activities that once seemed so profitable – funding the financial systems of emerging economies, promoting start-up internet businesses, trading in structured debt products – turned out, in fact, to have been a source of losses. Lenders had to make write-offs, most of the new economy stocks proved valueless and many structured products became unmarketable. Governments, and particularly the US government, reacted on each occasion by pumping money into the financial system in the hope of staving off wider collapse, with some degree of success. At the end of each phase, regulators and financial institutions declared that lessons had been learnt. While measures were implemented which, if they had been introduced five years earlier, might have prevented the most recent crisis from taking the particular form it did, these responses addressed the particular problem that had just occurred, rather than the underlying generic problems of skewed incentives and dysfunctional institutional structures.

The public support of markets provided on each occasion the fuel needed to stoke the next crisis. Each boom and bust is larger than the last. Since the alleviating action is also larger, the pattern is one of cycles of increasing amplitude.

I do not know what the epicenter of the next crisis will be, except that it is unlikely to involve structured debt products. I do know that unless human nature changes or there is fundamental change in the structure of the financial services industry – equally improbable – there will be another manifestation once again based on naive extrapolation and collective magical thinking. The recent crisis taxed to the full – the word tax is used deliberately – the resources of world governments and their citizens. Even if there is will to respond to the next crisis, the capacity to do so may not be there.

The citizens of that most placid of countries, Iceland, now backed by their president, have found a characteristically polite and restrained way of disputing an obligation to stump up large sums of cash to pay for the arrogance and greed of other people. They are right. We should listen to them before the same message is conveyed in much more violent form, in another place and at another time. But it seems unlikely that we will.

We made a mistake in the closing decades of the 20th century. We removed restrictions that had imposed functional separation on financial institutions. This led to businesses riddled with conflicts of interest and culture, controlled by warring groups of their own senior employees. The scale of resources such businesses commanded enabled them to wield influence to create a – for them – virtuous circle of growing economic and political power. That mistake will not be easily remedied, and that is why I view the new decade with great apprehension. In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

While Hyman Minsky was the first clearly formulate the financial instability hypothesis, Keynes also understood this dynamic pretty well. He postulated that a world with a large financial sector and an excessive emphasis on the production of investment products creates instability both in terms of output and prices. In other words it automatically tends to generate credit and asset bubbles.  The key driver is the fact that financial professionals generally risk other people’s money and due to this fact have asymmetrical incentives:

This asymmetry is not a new observation of this systemic problem. Andrew Jackson noted it in much more polemic way long ago:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

This asymmetrical incentives ensure that the financial system is structurally biased toward taking on more risk than what should be taken. In other words it naturally tend to slide to the casino model, the with omnipresent reckless gambling as the primary and the most profitable mode of operation while an opportunities last.  The only way to counter this is to throw sand into the wheels of financial mechanism:  enforce strict regulations, limit money supplies and periodically jail too enthusiastic bankers. The latter is as important or even more important as the other two because bankers tend to abuse "limited liability" status like no other sector.

Asset inflation over the past 10 years and the subsequent catastrophe incurred is a way classic behavior of dynamic system with strong positive feedback loop.  Such behavior does not depends of personalities of bankers or policymakers, but is an immanent property of this class of dynamic systems. And the main driving force here was deregulation. So its important that new regulation has safety feature which make removal of it more complicated and requiring bigger majority like is the case with constitutional issues.

Another fact was the fact that due to perverted incentives, accounting in the banks was fraudulent from the very beginning and it was fraudulent on purpose.  Essentially accounting in banks automatically become as bad as law enforcement permits. This is a classic case of control fraud and from prevention standpoint is make sense to establish huge penalties for auditors, which might hurt healthy institutions but help to ensure that the most fraudulent institution lose these bank charter before affecting the whole system.  With the anti-regulatory zeal of Bush II administration the level of auditing became too superficial, almost non-existent. I remember perverted dances with Sarbanes–Oxley when it was clear from the very beginning that the real goal is not to strengthen accounting but to earn fees and to create as much profitable red tape as possible, in perfect Soviet bureaucracy style.

Deregulation also increases systemic risk by influencing the real goals of financial organizations. At some point of deregulation process the goal of higher remuneration for the top brass becomes self-sustainable trend  and replaces all other goals of the financial organization. This is the essence of  Martin Taylor’s, the former chief executive of Barclays,  article FT.com - Innumerate bankers were ripe for a reckoning in the Financial Times (Dec 15, 2009), which is worth reading in its entirety:

City people have always been paid well relative to others, but megabonuses are quite new. From my own experience, in the mid-1990s no more than four or five employees of Barclays’ then investment bank were paid more than £1m, and no one got near £2m. Around the turn of the millennium across the market things began to take off, and accelerated rapidly – after a pause in 2001-03 – so that exceptionally high remuneration, not just individually, but in total, was paid out between 2004 and 2007.

Observers of financial services saw unbelievable prosperity and apparently immense value added. Yet two years later the whole industry was bankrupt. A simple reason underlies this: any industry that pays out in cash colossal accounting profits that are largely imaginary will go bust quickly. Not only has the industry – and by extension societies that depend on it – been spending money that is no longer there, it has been giving away money that it only imagined it had in the first place. Worse, it seems to want to do it all again.

What were the sources of this imaginary wealth?

In the last two of these the bank was not receiving any income, merely “booking revenues”. How could they pay this non-existent wealth out in cash to their employees? Because they had no measure of cash flow to tell them they were idiots, and because everyone else was doing it. Paying out 50 per cent of revenues to staff had become the rule, even when the “revenues” did not actually consist of money.

In the next phase instability is amplified by the way governments and central banks respond to crises caused by credit bubble: the state has powerful means to end a recession, but the policies it uses give rise to the next phase of instability, the next bubble…. When money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up to the hilt. Thus previous bubble and crash become a dress rehearsal for the next.

Resulting self-sustaining "boom-bust" cycle is very close how electronic systems with positive feedback loop behave and   cannot be explained by neo-classical macroeconomic models. Like with electronic devices the financial institution in this mode are unable to provide the services that are needed.

As Minsky noted long ago (sited from Stephen Mihm  Why capitalism fails Boston Globe):

Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

...our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. But with a growing number of economists eager to declare the recession over, and the crisis itself apparently behind us, these policies may prove as discomforting as the theories that prompted them in the first place. Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

And he understood the roots of the current credit bubble much better that neoclassical economists like Bernanke: 
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what [Minsky] called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further.

As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Minsky’s financial instability hypothesis suggests that when optimism is high and ample funds are available for investment, investors tend to migrate from the safe hedge end of the Minsky spectrum to the risky speculative and Ponzi end. Indeed, in the current crisis, investors tried to raise returns by increasing leverage and switching to financing via short-term—sometimes overnight— borrowing (Too late to learn?):

In the church of Friedman, inflation was the ol' devil tempting the good folk; the 1980s seemed to prove that, let loose, it would cause untold havoc on the populace. But, as Barbera notes:

The last five major global cyclical events were the early 1990s recession - largely occasioned by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there a significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbable heights and then collapsed. From 1945 to 1985, there was no recession caused by the instability of investment prompted by financial speculation - and since 1985 there has been no recession that has not been caused by these factors.
Thus, meet the devil in Minsky's paradise - "an investment boom and an associated asset market [that] ran to improbable heights and then collapsed".

According the Barbera, "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

Current economy state can be called following Paul McCulley a "stable disequilibrium" very similar to a state  a sand pile.  All this pile of  stocks, debt instruments, derivatives, credit default swaps and God know corresponds to a  pile of sand that is on the verse of losing stability. Each financial player works hard to maximize their own personal outcome but the "invisible hand" effect in adding sand to the pile that is increasing systemic instability. According to Minsky, the longer such situation continues the more likely and violent an "avalanche".

The late Hunt Taylor wrote, in 2006:

"Let us start with what we know. First, these markets look nothing like anything I've ever encountered before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness, the light-speed at which information moves, the degree to which the movement of one instrument triggers nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary to price them speak to the reality that we are now sailing in uncharted waters.

"... I've had 30-plus years of learning experiences in markets, all of which tell me that technology and telecommunications will not do away with human greed and ignorance. I think we will drive the car faster and faster until something bad happens. And I think it will come, like a comet, from that part of the night sky where we least expect it."

This is a gold age for bankers as Simon Johnson wrote in New Republic (The Next Financial Crisis ):

Banking was once a dangerous profession. In Britain, for instance, bankers faced “unlimited liability”--that is, if you ran a bank, and the bank couldn’t repay depositors or other creditors, those people had the right to confiscate all your personal assets and income until you repaid. It wasn’t until the second half of the nineteenth century that Britain established limited liability for bank owners. From that point on, British bankers no longer assumed much financial risk themselves.

In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous.

Enter, in the early part of the twentieth century, the Federal Reserve. The Fed was founded in 1913, but discussion about whether to create a central bank had swirled for years. “No one can carefully study the experience of the other great commercial nations,” argued Republican Senator Nelson Aldrich in an influential 1909 speech, “without being convinced that disastrous results of recurring financial crises have been successfully prevented by a proper organization of capital and by the adoption of wise methods of banking and of currency”--in other words, a central bank. In November 1910, Aldrich and a small group of top financiers met on an isolated island off the coast of Georgia. There, they hammered out a draft plan to create a strong central bank that would be owned by banks themselves.

What these bankers essentially wanted was a bailout mechanism for the aftermath of speculative crashes -- something more durable than J.P. Morgan, who saved the day in the Panic of 1907 but couldn’t be counted on to live forever. While they sought informal government backing and substantial government financial support for their new venture, the bankers also wanted it to remain free of government interference, oversight, or control.

Another destabilizing fact is so called myth of invisible hand which is closely related to the myth about market self-regulation. The misunderstood argument of Adam Smith [1776], the founder of modern economics, that free markets led to efficient outcomes, “as if by an invisible hand” has played a central role in these debates: it suggested that we could, by and large, rely on markets without government intervention. About "invisible hand" deification, see The Invisible Hand, Trumped by Darwin - NYTimes.com.

The concept of Minsky moment

The moment in the financial system when the quantity of debt turns into quality and produces yet another financial crisis is called Minsky moment. In other words the “Minsky moment” is the time when an unsustainable financial boom turns into uncontrollable collapse of financial markets (aka financial crash). The existence of Minsky moments is one of the most important counterargument against financial market self-regulation.  It also expose free market fundamentalists such as "former Maestro" Greenspan as charlatans. Greenspan actually implicitly admitted that he is and that it was he, who was the "machinist"  who helped to bring the USA economic train off the rails in 2008 via deregulation  and dismantling the New Deal installed safeguards. 

Here how it is explained by Stephen Mihm in Boston Globe in 2009 in the after math of 2008 financial crisis:

“Minsky” was shorthand for Hyman Minsky, an American macroeconomist who died over a decade ago.  He predicted almost exactly the kind of meltdown that recently hammered the global economy. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. As economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

Minsky theory was not well received due to powerful orthodoxy, born in the years after World War II, known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing free market had selectively absorbed a few insights from John Maynard Keynes, the great economist of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment. Most economists still believed that free-market capitalism was a fundamentally stable basis for an economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances play a role in keeping the economy - and employment - on an even keel.

Economists like Paul Samuelson became the public face of the new establishment; he and others at a handful of top universities became deeply influential in Washington. In theory, Minsky could have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter, as well as future Nobel laureate Wassily Leontief.

But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists. While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall Wray, a former student, a “character.”

So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University. Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997 simply noted that his “work has not had a major influence in the macroeconomic discussions of the last thirty years.”

Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which despite its seeming importance had no place in the theories formulated by Samuelson and others. He also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call “bastard Keynesianism.”

Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this shift was already underway: postwar stability, financial innovation, and the receding memory of the Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem, not the solution.

Moreover, the new dogma coincided with a remarkable era of stability. The period from the late 1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience among most major industrial economies. Things had never been more stable. The likelihood that “it” could happen again now seemed laughable.

Yet throughout this period, the financial system - not the economy, but finance as an industry - was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing use of leverage within the financial system.

By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.”

Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another depression [won’t] cure.”

But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive and unstable - never mind that it produces inequality and unemployment, as Keynes had observed - now what?

After spending his life warning of the perils of the complacency that comes with stability - and having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.

To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank” - step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of the Depression - it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor - by building a new high-speed train line, for example.

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”

But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into a catchy phrase and carried on banners.”

It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy. But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”

Stephen Mihm is a history professor at the University of Georgia and author of “A Nation of Counterfeiters” (Harvard, 2007). © Copyright 2009 Globe Newspaper Company.

 

Some important albeit random (and overlapping) points about instability of financial system

The first thing to understand is that attempt to weaken positive feedback looks via regulation, approach that can be called  “regulation as a Swiss knife” does not work without law enforcement and criminal liability for bankers, as there is an obvious problem of corruption of regulators. In this sense the mechanism of purges might be the only one that realistically can work.

In other words it’s unclear who and how can prevents the capture of regulators as financial sector by definition has means to undermine any such efforts. One way this influence work is via lobbing for appointment of pro-financial sector people in key positions. If such "finance-sector-selected" Fed chairman does not like part of Fed mandate related to regulation it can simply ignore it as long as he is sure that he will be reappointed. That happened with Greenspan.  After such process started it became irreversible and only after a significant, dramatic shock to the system any meaningful changes can be instituted and as soon as the lessons are forgotten work on undermining them resumes.

In essence, the Fed is a political organization and Fed Chairman is as close to a real vice-president of the USA as one can get.  As such Fed Chairman serves the elite which rules that country, whether you call them financial oligarchy or some other name. Actually Fed Chairman is the most powerful unelected official in the USA. If you compare this position to the role of the Chairman of the Politburo  in the USSR you’ll might find some interesting similarities.

In other words it is impossible to prevent appointment of another Greenspan by another Reagan without changes in political power balance.  And the transition to banana republic that follows such appointment is irreversible even if the next administration water boards former Fed Chairman to help him to write his memoirs.  That means that you need to far-reaching reform of political system to be able to regulate financial industry and you need to understand that the measures adopted need vigilant protection as soon as the current crisis is a distant history.

Additional reading

Several other source of financial instability were pointed out by others:

There are some outstanding lectures and presentation on YouTube on this topic. Among them:

See an expended list at Webliography of heterodox economists

Dr. Nikolai Bezroukov


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[Sep 17, 2018] Bill Browder Strikes Back In Europe

Sep 17, 2018 | www.zerohedge.com

by Tyler Durden Mon, 09/17/2018 - 09:34 27 SHARES Authored by Tom Luongo,

"I am altering the deal. Pray I don't alter it any further."
-- The Empire Strikes Back

Since Vladimir Putin brought up Bill Browder's name in Helsinki, events have escalated to a fever pitch. Russia is under extreme attack the U.S./European financial and political establishment.

And part of that push is coming from Browder himself. In July, just a week after Helsinki, Browder opened up a money laundering complaint against Denmark's largest bank, Danske , alleging over $8 billion in money 'laundered' from Russia, Moldova and Azerbaijan through its Estonian Branch.

The details here are important so bear with me.

Danske's report on these allegations are due on Wednesday.

No matter what they say, however, the die has been cast.

Danske is being targeted for termination by the U.S. and possible takeover by the European Central Bank.

There's precedent for this but let me lay out some background first.

The Oldest Trick

Browder's complaint says the money laundered is in connection with the reason why he was thrown out of Russia and the $230 million in stolen tax money which Browder's cause célèbre , the death of accountant Sergei Magnitsky, hangs on.

That crusade got the Magnitsky Act passed not only in the U.S. but all across the West, with versions on the books in Canada, Australia the EU and other places.

Danske's shares have been gutted in the wake of the accusation.

The U.S. is now investigating this complaint and that shouldn't come as much of a shock.

The Treasury Department can issue whatever findings it wants, and then respond by starving Danske of dollars, known as the "Death Blow" option the threat of which was plastered all over the pages of the Wall St. Journal on Friday.

Note this article isn't behind the Journal's pay-wall. They want everyone to see this.

Browder filed complaints both in Demmark and in Estonia, and the Estonian government was only too happy to oblige him.

The Devil Played

To see the whole picture I have to go back a littler further.

Back in March, Latvian bank, ABLV, was targeted in a similar manner, accused of laundering money. Within a week the ECB moved in to take control of the bank even though it wasn't in danger of failing.

It was an odd move, where the ECB exercised an extreme response utilizing its broader powers given to it after the 2008 financial crisis, like it did with Spain's Banco Popular in 2017.

Why? The U.S. was looking for ways to cut off Russia from the European banking system. And the ECB did its dirty work.

I wrote about this back in May in relation to the Treasury demanding all U.S. investors divest themselves of Russian debt within thirty days.
It threw the ruble and Russian debt markets into turmoil since Russian companies bought a lot of euro-denominated debt after the Ruble Crisis of 2014, having been shut off from dollars.

ABLV was a conduit for many Russian entities to keep access to Europe's banks, having been grandfathered in as clients when the Baltics entered the Euro-zone.

So, now a replay of ABLV's seizure is playing out through Browder's money laundering complaint against Danske.

Was Convincing Everyone

The goal of this lawsuit is two-fold.

The first is to undermine the faith in the Danish banking system. Dutch giant ING is also facing huge AML fines.

This is a direct attack on the EU banking system to being it under even more stringent government control.

The second goal, however, is far more important. As I said, the U.S. is desperate to cut money flow between the European Union and Russia, not just to stop the construction of Nordstream 2, but to keep Russia's markets weak having to scramble for euros to make coupon payments and create a roll-over nightmare.

Turkey is facing this now, Russia went through it in 2014/15.

In response to the Ruble's sharp drop this year on improving fundamentals, the Bank of Russia finally had to raise rates on Friday .

So, attacking a major bank like Danske for consorting with dirty Russians and using Mr. Human Rights Champion Browder to file the complaint is pure power politics to keep the EU itself from seeking rapprochement with Russia.

Anti-Money Laundering laws are tyrannical and vaguely worded. And with the Magnitsky Act and its follow-up, CAATSA, in place, they help support defining money laundering to include anything the U.S. and the EU deem as supporting 'human rights violations.'

Seeing the trap yet?

Now all of it can be linked through simple accusation regardless of the facts. The bank gets gutted, investors and depositors get nervous, the ECB then steps in and there goes another tendril between Russia and Europe doing business.

And that ties into Browder's minions in the European Parliament, all in the pay of Open Society Foundation, issued a threat of invoking Article 7 of the Lisbon Treaty to Cyprus over assisting Russia investigate Browder's financial dealings there.

Why? Violations of Mr. Browder's human rights because, well, Russia!

What's becoming more obvious to me as the days pass is that Browder is an obvious asset of the U.S. financial and political oligarchy, if not U.S. Intelligence. They use his humanitarian bona fides to visit untold misery on millions of people simply to:

1) cover up their malfeasance in Russia

2) wage hybrid war on anyone willing to stand up to their machinations.

He Didn't Exist

Because when looking at this situation rationally, how does this guy get to run around accusing banks of anything and mobilize governments into actions which have massive ramifications for the global financial system unless he's intimately connected with the very people that operate the top of that system?

How does this no-name guy in the mid-1990's, fresh 'off the boat' as it were, convince someone to give him $25 million in CASH to go around Russia buying up privatization vouchers at less than pennies on the dollar?

It simply doesn't pass a basic sniff test.

Danske is the biggest bank in Denmark and one of the oldest in Europe. The message should be clear.

If they can be gotten to this way, anyone can.

Just looking at the list of people named in the Magnitsky Act, a list given to Congress by Browder and copied verbatim without investigation, and CAATSA as being 'friends of Vladimir' it's obvious that the target isn't Putin himself for his human rights transgressions but anyone in Russia with enough capital to maintain a business bigger than a chain of laundromats in Rostov-on-Don.

Honestly, even some in the U.S. financial press said it looked like they just went through the Moscow phone book.

But, here the rub. In The Davos Crowd's single-minded drive to destroy Russia, which has been going on now for close to two generations in various ways, they are willing to undermine the very institutions on which a great deal of their power rests.

The more Browder gets defended by people punching far above his weight, the more obvious it is that there is something wrong with his story. Undermining the reputation of the biggest bank in Denmark is a 'playing-for-keeps' moment.

But, it's one that can and will have serious repercussions over time.

It undermines the validity of government institutions, exposing corruption that proves we live in a world ruled by men, not laws. That the U.S. and EU are fundamentally no different in their leadership than banana republics.

And that's bad for currency and debt markets as capital always flows to where it is treated best.

But, it's one that can and will have serious repercussions over time. The seizure of ABLV and 2017's liquidation of Spain's Banco Popular were rightly described by Martin Armstrong as defining moments where no one in their right mind would invest in a European banks if there was the possibility of losing all of your capital due to a change in the political winds overnight.

Using the European Parliament to censure Cyprus via Article 7 over one man's financial privacy, which no one is guaranteed in this world today thanks to these same AML and KYC laws, reeks of cronyism and corruption of the highest degree.

If you want to know what a catalyst for the collapse of the European banking system looks like, it may well be what happens this week if Danske tries to fight the spider's web laid down by Bill Browder and his friends in high places.

https://www.youtube.com/embed/Z_s5cRp5Ikk

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hanekhw , 1 minute ago

Browder, the Clintons, Soros and the EU were made for each other weren't they? They've been screwing us publicly for what, over two generations? And without a condom! We've gotten how many FTDs (financially transmitted diseases) from these people? They never unzip their flys.

geno-econ , 1 hour ago

According to Browder, Putin is worth over $100 Billion most of it stashed away in foreign banks through intermediates and relatives. If true, it will bring down Putin and many western banks. Perhaps a Red Swan is about to take off exposing an unsustainable .financial system and corrupt political enterprise on both sides of the divide sur to cause chaos. Ironically, Putin who represents Nationalism in Russia is under attack by Globalists accusing Putin of Capitalistic Greed utilizing western banks Suicidal !

hanekhw , 16 minutes ago

Browder, the Clintons, Soros and the EU were made for each other weren't they? They've been screwing us publicly for what, over two generations? And without a condom! We've gotten how many FTDs (financially transmitted diseases) from these people? They never unzip their flys.

zeroboris , 24 minutes ago

They use his humanitarian bona fides

Browder's bona fides? LOL

monad , 8 minutes ago

Minion (((Browder))) snitches on his masters. Nowhere to hide.

Vanilla_ISIS , 18 minutes ago

Someone should just kill this dude. Browder has certainly earned it.

roadhazard , 14 minutes ago

But what about the money laundering.

Panic Mode , 15 minutes ago

You better run. Your buddy McCain is gone and see who else will fight for you.

pndr4495 , 42 minutes ago

Somehow - Mnuchkin's desire to sell his Park Ave. apartment fits into this tale of intrigue and bullshit.

markar , 47 minutes ago

Send this guy Browder a polonium cocktail. It's on me.

TahoeBilly2012 , 1 hour ago

((Browder)) ??

Clogheen , 37 minutes ago

Yes. Did you really need to ask?

geno-econ , 1 hour ago

According to Browder, Putin is worth over $100 Billion most of it stashed away in foreign banks through intermediates and relatives. If true, it will bring down Putin and many western banks. Perhaps a Red Swan is about to take off exposing an unsustainable .financial system and corrupt political enterprise on both sides of the divide sur to cause chaos. Ironically, Putin who represents Nationalism in Russia is under attack by Globalists accusing Putin of Capitalistic Greed utilizing western banks Suicidal !

Max Cynical , 1 hour ago

I watch the banned documentary...The Magnitsky Act - Behind the Scenes.

Here's a link... https://seed02.bitchute.com/40940/lQ3qEwX66pIL.mp4

Browder seems like a real scumbag.

LA_Goldbug , 1 hour ago

Only the slimiest rats get into the club of "Can Do No Wrong" and these types of gigs.

Thaxter , 1 hour ago

This documentary is first class, a really absorbing look into the mind of the sociopath Browder, a pathological, absolutely shameless liar and a very stupid and weak person. To understand the influence that this insignificant invertebrate yields, look to his father, Earl Russell Browder, who was the leader of the Communist Party in the United States during the 1930s and the first half of the 1940s.

blindfaith , 22 minutes ago

Look no further than our own political circus to see that mighty hands pull the strings. Like all strings, they will fray and break...eventually.

Jim in MN , 1 hour ago

Yes well the Big Question for us now is the degree to which the President is in control of any of this.

Recall, dear ZH fighters, how we worked out a sound strategy for the Trump Administration in the early days. Key aspects were to leave the generals and the bankers alone for a couple of years. This would allow immigration, trade, health care and deregulation including tax reform to form the early core wins, along with Supreme Court nominees of course.

Lo, cometh the Deep State and its frantic attempts to both save and conceal itself.

One key tentacle was to rouse the intelligence community into an active enemy of the POTUS. This partially fouled up the 'leave the generals alone' strategy.

Another is to try to force war with the emergent Eurasian hegemony comprised of China and Russia. This is seen all across the 'hinterland' of Russia.

The USA has no vital strategic interests in Eurasia at this juncture of history. Everyone should be clear on that.

The USA's logical and sane policy stance is to support peace, free and fair trade, and stable democracy, including border controls and the rule of law through LEADING BY EXAMPLE.

So for Trump to continue to allow the financial sector Deep State traitors to operate against a peaceful Eurasia is becoming increasingly intolerable.

Where to from here?

BandGap , 1 hour ago

Keep opening it up to scrutiny.

This article opened my eyes, I did not fully understand why Russia was all over Browder except the stealing aspect, but bigger yet, why he was being protected by the EU/US.

No wonder Putin wants to work with the Donno. Taking Browder out and exposing this manipulation works for both sides.

LA_Goldbug , 40 minutes ago

If Browder is a surprise to you then look at Khodorkovsky (there is more of these types from he came from).

Good start is here,

http://thebirdman.org/Index/Others/Others-Doc-Economics&Finance/+Doc-Economics&Finance-GovernmentInfluence&Meddling/BankstersInRussiaAndGlobalEconomy.htm

I am a Man I am Forty , 1 hour ago

This guy is so shady. He's playing some dangerous games.

gmak , 1 hour ago

Huh? Could this be written more poorly?

TheBigOldDog , 1 hour ago

Houston, we have a problem..

akrainer , 1 hour ago

The twice banned book, "Grand Deception" deconstructing Browder's very dangerous game is here, since Amazon delisted its two previous editions:

Pdf / Kindle / Nook

Paperback

LA_Goldbug , 1 hour ago

"He Didn't Exist

Because when looking at this situation rationally, how does this guy get to run around accusing banks of anything and mobilize governments into actions which have massive ramifications for the global financial system unless he's intimately connected with the very people that operate the top of that system?"

Exactly. He was sent by the Anglo-Zionist Tribe otherwise he would be a nobody.

JacquesdeMolay , 1 hour ago

Also, a very good book on the topic: "suppressed and banned by the CIA's supplier, Amazon, The Grand Deception: The Browder Hoax is a highly intelligent, frank and entertaining take-down of one of the biggest hoaxes ever perpetrated on the US public and the world – The Magnitsky Act. Krainer's study of Bill Browder's book and actions is a riveting, unflinching expose of what might end up being pivotal in revealing one of this decade's big hoaxes."

https://thirdalliance.ch/product/grand-deception-the-browder-hoax/

JacquesdeMolay , 2 hours ago

Skullduggery: Confessions of a CIA Asset Bill Browder

[Sep 16, 2018] Amazon Employees Investigated Over Suspected Black Market For Information, Favors by Tyler Durden

So your information and private data can be traded for some small amount of money to God knows whom
Notable quotes:
"... Considering that Amazon employees in the US are some of the most poorly paid in tech and retail (Jeff Bezos was recently booed by his own employees over low wages), perhaps the WSJ' s theory holds water. ..."
Sep 16, 2018 | www.zerohedge.com

Amazon has launched an investigation to track down a sophisticated network of employees running a "black market" of confidential information and favors, illegally sold through intermediaries to site merchants in order to give them a competitive advantage over other sellers, reports the Wall Street Journal .

In addition to providing sales metrics, search keywords and reviewers' email addresses, bribed Amazon employees would delete negative feedback for around $300 per review, with middleman brokers typically demanding a five-review minimum from merchants looking to game the system.

Employees of Amazon, primarily with the aid of intermediaries , are offering internal data and other confidential information that can give an edge to independent merchants selling their products on the site, according to sellers who have been offered and purchased the data, brokers who provide it and people familiar with internal investigations.

...

In exchange for payments ranging from roughly $80 to more than $2,000 , brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers' email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts , the people said.

...

Amazon is investigating a number of cases involving employees, including some in the U.S., suspected of accepting these bribes , according to people familiar with the matter. -WSJ

The data brokers primarily operate ion China, as the number of new Amazon sellers in the country has been skyrocketing. The Journal speculates that " Amazon employees in China have relatively small salaries, which may embolden them to take risks. "

Considering that Amazon employees in the US are some of the most poorly paid in tech and retail (Jeff Bezos was recently booed by his own employees over low wages), perhaps the WSJ' s theory holds water.

The internal probe was launched after a tip over the practice in China was sent to Eric Broussard, an Amazon VP in charge of overseeing global marketplaces. The company has since moved key executives into different positions in China to try and "root out the bribery," reports the Journal .

"We hold our employees to a high ethical standard and anyone in violation of our Code faces discipline, including termination and potential legal and criminal penalties," an Amazon spokeswoman said of the situation, confirming that the company is investigating the claims. The same applies to sellers: "We have zero tolerance for abuse of our systems and if we find bad actors who have engaged in this behavior, we will take swift action against them ," she said.

Merchant network

A major component of Amazon's success is its massive network of third-party merchants, where the company derives the majority of merchandise sales. Over two million merchants now offer an estimated 550 million products over Amazon, which constitutes over half of all units sold on the site. Third party sales constituted an estimated $200 billion in gross merchandise volume last year, according to estimates by FactSet.

As such, "Sellers must aggressively compete to get their products noticed on the first page of search results, where customers typically make most of their purchase decisions," notes the Journal .

Evolving manipulations

Merchants have long sought competitive advantages over each other - first gaming Amazon's automated ranking system, by paying people to leave fake reviews and drive traffic to products.

After some time, the black market for internal information emerged, as bribed employees began providing data and access to various benefits, according to a person who has facilitated by brokers.

Brokers are the middlemen between Amazon employees and sellers who want negative reviews deleted or access to internal sales information. Brokers search for Amazon employees on Chinese messaging platform WeChat and send messages asking them if they would like to provide these services in exchange for cash , according to brokers and sellers who say they have been approached by brokers.

The going rate for having an Amazon employee delete negative reviews is about $300 per review , according to people familiar with the practice. Brokers usually demand a five-review minimum, meaning that sellers typically must pay at least $1,500 for the service, the people said. -WSJ

For a lower fee, merchants can pay Amazon employees for the email addresses of verified reviewers, giving them the opportunity to reach out to those who have left negative reviews for the opportunity to persuade them to adjust or delete their comment - sometimes bribing the reviewer with a free or discounted product.

Also offered for sale is proprietary sales information, "such as the keywords customers typically use to search for items on Amazon's site, sales volume and other statistics about buyers' habits, according to the people," enabling Amazon sellers to better craft product descriptions in a manner which will boost their search result rankings.

At a recent conference hosted for sellers -- which wasn't run by Amazon -- a broker pulled up internal keyword results on his laptop. The broker said $80 can buy information on sales data, the number of times users searched for a certain product and clicked on a product page, which sellers are bidding for advertisements and how much those cost, according to the person who viewed the results. -WSJ

One seller in China told the Journal that competition on the website had become so intense that he needs to cheat in order to gain a competitive advantage. " If I don't do bad things I will die ," he said.

If all else fails in rooting out the black market, perhaps Bezos will simply release the hounds:


surf@jm , 9 minutes ago

China's motto......

Who needs Christian morality, when lying, cheating and stealing is our religion.....

surf@jm , 9 minutes ago

China's motto......

Who needs christian morality, when lying, cheating and stealing is our religion.....

Suicyco , 44 minutes ago

If you pay peanuts, you get monkeys

Last of the Middle Class , 44 minutes ago

Just like Wal Mart charging by the inch for shelf space. Same game different monkeys.

Normal , 44 minutes ago

Prime example of how the US is a fascist state: the corporation gets government to enforce law on poor people.

DoctorFix , 1 hour ago

When Amazon opened the flood gates of corruption and scams by allowing Chinese sellers to compete with Americans on the US site... well, the locals were fucked! Lying, scamming Chinese fuckers don't care who or how they screw you. And Amazon doesn't give a shit so long as it makes money. Fuck Amazon! That's why I cancelled any prime membership and haven't bought a damn thing from them in ages.

803Mastiff , 1 hour ago

And the Pentagon farmed out their servers to AWS.....What are Amazon employees getting paid for military intel?

richsob , 1 hour ago

If local retailers have a crappy inventory and the stores are staffed with surly Millennials, then why shouldn't I buy stuff on Amazon at a better price? I support local businesses that deserve being supported. The rest of them sound like a bunch of whiny liberals who feel "entitled" to my money.

cornflakesdisease , 2 minutes ago

Everything on Amazon can be found online somewhere else cheaper. You check out the item on Amazon and then buy it elsewhere. Any seller has to mark up on Amazon to pay Amazon. Logically, then, from his direct website, he would be slightly cheaper.

Amazon: https://www.amazon.com/Stanley-Hardware-S758-305-Chest-Handle/dp/B000FKF1NQ/ref=sr_1_16?ie=UTF8&qid=1537135278&sr=8-16&keywords=chest+handles

https://www.midlandhardware.com/185512.html

Cardinal Fang , 1 hour ago

I'm sorry, did I miss the part where Disgruntled Amazon employees sell access to the CIAs web farms?

Being Free , 1 hour ago

I have a letter from a woman who used to work with Bezos at a McDonalds restaurant when they were both in high school in Miami. She says Bezos walked her home from McDonalds one day after work and sexually attacked her in her home. He tried to rip her clothes off her but she managed to escape his evil clutches. She was and is so distraught over this incident that she is still afraid especially now that he is such a wealthy and powerful man.

just the tip , 44 minutes ago

well played.

JoeTurner , 1 hour ago

Oligarchs bitchez ! it's their country....you just pay the taxes...

ZD1 , 1 hour ago

"A major component of Amazon's success is its massive network of third-party merchants, where the company derives the majority of merchandise sales. Over two million merchants now offer an estimated 550 million products over Amazon, which constitutes over half of all units sold on the site. Third party sales constituted an estimated $200 billion in gross merchandise volume last year, according to estimates by FactSet."

Mostly Chicom sweatshop shit.

abgary1 , 1 hour ago

Giving away our privacy for convenience sake is inane and insane.

Have we become that lazy and ignorant?

Without privacy and thus freedom we have nothing.

Midas , 37 minutes ago

Give me convenience or give me death!

--Jello Biafra

pitz , 1 hour ago

That's nothing. Amazon has access to the business data of a large number of businesses that use AWS. The possibilities of abuse there are nearly endless.

bluebird100 , 1 hour ago

Get fucked Amazon, that's what you get for doing business in China.

ExplodingEntropy , 1 hour ago

tiny dick chicom down-voted you

http://www.auricmedia.net/wp-content/uploads/2013/05/the_matrix_deciphered.pdf

wetwipe , 1 hour ago

Fuckin' sick of people moaning about Amazon, Google, Facebook, etc, yet spending half their life on there and buying shit from them.

Personally I can't stand what Amazon has become and would never spend £1 with them.

Facebook is evil shit designed to re-wire the brain to make you a self conscious narcissist which will ultimately end in misery.

Google are a million miles away from 'do no evil' but TBH they have a very good product however they are evil scumbags.

These companies literally believe they are gods, that they control the world.... just like the big banks did before 2008.

I hope the crash comes soon.

-WetWipe

mrtoad , 1 hour ago

Banks do control the world

MARDUKTA , 1 hour ago

President will destroy them soon/CIA.

MedicalQuack , 1 hour ago

Heck, this is not just China being solicited, a couple weeks ago I had 4 voicemails, all the same recording stating "making $17.00 to $35.00 an hour posting reviews to Amazon. I didn't answer the calls and saw that they were junk and didn't run upon them until I checked my voicemail for a real message I had missed and there they were.

They all had a different number to call and a different company name, but it was the same recorded message on all 4 of them and this happened in a couple days, 2 on one day, and another 2 the next day. I guess they figured I was not going to respond and took me off attempt #5:)

Why wouldn't folks in the inside go after a scam like this, look at their CEO, a big fat quant from Wall Street..and of course we have all heard and read the stories about how Amazon pays...

This being said, I don't think this scam was just limited to China..if I remember correctly, this was promoted as part time work with posting reviews to Amazon and work as many hours as you like. I deleted all of them so I can't go back and listen again as they were just nuisance calls like others that I just get rid of.

MARDUKTA , 1 hour ago

Bezos partnered with some tribal chieftain in Nigeria who is CEO of Scams-R-Us.

RafterManFMJ , 1 hour ago

Everything's a lie, and the lie is everything

[Sep 16, 2018] Spygate Operative Nellie Ohr To Testify Before Congress This Week About Work For Fusion GPS

Sep 16, 2018 | www.zerohedge.com

Nellie Ohr will sit for an interview with Congress next week, according to Rep. John Ratcliffe (R-TX).

Ohr, an expert on Russia who speaks fluent Russian, is a central figure in the nexus between Fusion GPS - the opposition research firm paid by the Clinton campaign to produce the "Steele Dossier " - and the Obama Justice Department - where her husband, Bruce Ohr, was a senior official. Bruce was demoted twice after he was caught lying about his extensive involvement with Fusion's activities surrounding the 2016 US election.

Notably, the Ohrs had extensive contact with Christopher Steele, the ex-MI6 spy who authored the salacious anti-Trump dossier used to justify spying on the Trump campaign during the election, and later to smear Donald Trump right before he took office in 2017. According to emails turned over to Congress and reported in late August, the Ohrs would have breakfast with Steele on July 30 at the downtown D.C. Mayflower hotel - days after Steele had turned in several installments of the infamous dossier to the FBI . The breakfast took place one day before the FBI/DOJ launched operation "Crossfire Hurricane," the codename for the official counterintelligence investigation into the Trump campaign.

"Great to see you and Nellie this morning Bruce," Steele wrote shortly following their breakfast meeting. " Let's keep in touch on the substantive issues/s (sic). Glenn is happy to speak to you on this if it would help," referring to Fusion GPS co-founder Glenn Simpson.

No stranger to the US intelligence community, Nellie Ohr represented the CIA's "Open Source Works" group in a 2010 " expert working group report on international organized crime" along with Bruce Ohr and Glenn Simpson .


Nayel , 56 minutes ago

I'd bet she gets up there and denies everything, lust like Strozk. And the DOJ does nothing, and even allows the perjury to slide.

Sessions is clearly complicit. Loretta Lynch might as well be still running the show...and perhaps she is...

Seeing as how the Shadow Government seems to be running the "Collusion Investigation" on themselves...

thebriang , 1 hour ago

Is she going to name the 3 "journalists" that Fusion paid to start pushing the Russia narrative in the MSM?

I want names, goddammit.

samsara , 1 hour ago

Thread by Thread the garment is unraveled for all to see

" Needless to say, Congress will have no shortage of questions to ask Nellie. "

Like why did she get a ham radio? I guess she didn't trust the NSA?

[Sep 16, 2018] These Four Predicted The Global Financial Crisis; Here's What They Think Causes The Next One

Notable quotes:
"... Rajan turned out to be a party pooper, questioning whether "advances" in the financial sector actually increased, rather than reduced, systemic risk . Former Treasury Secretary Larry Summers called him a Luddite . " I felt like an early Christian who had wandered into a convention of half-starved lions ," he wrote. But though delivered in genteel academic lingo, his paper was powerful and prescient. ..."
"... "There has been a shift of risk from the formal banking system to the shadow financial system." He also told me the post-crisis reforms did not address central banks' role in creating asset bubbles through accommodative monetary policy, which he sees as the financial markets' biggest long-term challenge. ..."
"... 99% of all people should invest in themselves first. That means having no debt and also having a small company that you only put sweat equity into to make it work starting out as a side business and keeping it as a side business even if it grows bigger. That also means going to college and earning a money making degree that is in demand. ..."
Sep 16, 2018 | www.zerohedge.com

"The ultimate thing that brings down financial markets is excess leverage So, you look where's the big leverage, and right now I think it's in emerging markets."

Shilling is particularly worried about the $8 trillion in dollar-denominated emerging-market corporate and sovereign debt, especially as the U.S. dollar rises along with interest rates. "The problem is as the dollar increases," he said, "it gets tougher and tougher for them to service [that debt] because it takes more and more of their local currency to do so." Of that, $249 billion must be repaid or refinanced through next year , Bloomberg reported.

... ... ...

That housing-related stocks "saw a parabolic run-up" in 2016-17, but in January his index "peaked and now it's coming down hard." And this spells "bad news on the housing market looking 12 months down the road."

Per Howard Gold's interview :

But the biggest danger, Stack told me, is from low-quality corporate debt. Issuance of corporate bonds has "gone from around $700 billion in 2008 to about two and a half times that [today]."

And, he added, more and more of that debt is subprime . Uh-oh.

In 2005, he pointed out, companies issued five times as much high-quality as subprime debt, but last year "we had as much subprime debt, poor quality-debt issued, as quality debt on the corporate level," he said, warning "this is the kind of debt that does get defaulted on dramatically in an economic downturn."

Per Howard Gold:

Rajan turned out to be a party pooper, questioning whether "advances" in the financial sector actually increased, rather than reduced, systemic risk . Former Treasury Secretary Larry Summers called him a Luddite . " I felt like an early Christian who had wandered into a convention of half-starved lions ," he wrote. But though delivered in genteel academic lingo, his paper was powerful and prescient.

His predictions pre-2008:

"Managers have greater incentive to take risk because the upside is significant, while the downside is limited."

"Moreover, the linkages between markets, and between markets and institutions, are now more pronounced. While this helps the system diversify across small shocks, it also exposes the system to large systemic shocks "

"The financial risks that are being created by the system are indeed greater [potentially creating] a greater (albeit still small) probability of a catastrophic meltdown."

What he says now:

"There has been a shift of risk from the formal banking system to the shadow financial system." He also told me the post-crisis reforms did not address central banks' role in creating asset bubbles through accommodative monetary policy, which he sees as the financial markets' biggest long-term challenge.

"You get hooked on leverage. It's cheap, it's easy to refinance, so why not take more of it? You get lulled into taking more leverage than perhaps you can handle."

And what might be coming:

Rajan also sees potential problems in U.S. corporate debt, particularly as rates rise, and in emerging markets, though he thinks the current problems in Turkey and Argentina are "not full-blown contagion."

"But are there accidents waiting to happen? Yes, there are."

What he says now:

"I think the choice of Europe is going to have to put [all the debt] on the balance sheet of the European Central Bank. If they don't, then the euro zone breaks apart and we're going to get a 50% valuation collapse."

"Greece...is a rounding error. Italy is not . And Brussels and Germany are going to have to allow Italy to overshoot their persistent debt, and the ECB is going to have to buy that debt."

"If it doesn't happen, the debt triggers a crisis in Europe, [and] that triggers the beginning of a global recession" but... "there are so many little dominoes, if they all start falling, one leads to the next."

Comments Howard Gold ,

Mauldin estimates the world has almost "half a quadrillion dollars," or $500 trillion, in debt and unfunded pension and other liabilities, which he views as unsustainable.

But the flashpoint for the next crisis is likely to be in Europe, especially Italy, he maintains.


Fed-up with being Sick and Tired , 3 minutes ago

It is an interesting piece. I do recall seeing A. Gary Shilling speaking back then when I watched mainstream financial news which I no longer do. It would be interesting now to hear what these four would have to see to actually see de-leveraging occur, and a reset put in motion. I am tiring of the shenanigans of Central Bankers who clearly are trying everything to keep this mess propped up.

Iskiab , 21 minutes ago

These guys are all right in their risk assessments but are being cautious on saying how it will play out. Debt is one factor; but protectionism, demographic changes, and dedollarization are the other threats.

The truth is no one knows how things will unfold, but I'm betting stagflation will be in the works for the US for an extended period soon.

smacker , 1 hour ago

The 2008 financial crash was fundamentally caused by excessive DEBT.

That excessive debt was in the hands of: government, corporates and private individuals and the banksters were making huge profits out of it, so they had no incentive to rein it in. Clowns like UK Chancellor Gordoom Brown went on record claiming that he'd abolished boom & bust, so the borrow/spend culture went on. ho-ho.

But borrowers eventually got to the point where they simply couldn't take on any more debt, so the economy crashed, given that it was based on rising never-ending debt.

All of the labels given to this debt mountain such as: sub-prime mortgages, derivatives, excessive leverage etc are all valid for analysts to analyse but the common connection between them all was excessive DEBT.

That is what I concluded at the time and it has been confirmed 1,000,000 times since then.

I am on record saying that this huge debt pile would take a generation to work its way thru the economy which implied a long recession or depression.

I also predicted there'd likely be a BIG RESET to speed up the adjustment process. Despite central banks irresponsibly printing vast amounts of fiat to alleviate the consequences for their friends the banksters (but in reality to create new asset price bubbles) and dropping interest rates to near zero to encourage more debt and mal-investment, nothing that has happened has changed my mind.

The situation today, 10 years later, is that debt levels are hugely higher than in 2008 and the solution which existed then remains on the table. It's just that central banks falsely believe their money-printing actions will solve the problem whereas in truth they are in denial.

You cannot solve a debt problem by printing more money and taking on more debt. Central banks and the likes of Krugman think otherwise.

The day of reckoning is on the horizon: either there will be a huge long recession/depression to work debt out of the system with all of its implications to asset values and social cohesion AND/OR a BIG RESET will be enacted. The latter will destroy the wealth of vast numbers of ordinary people with their savings and investments going down the flusher.

Neither solution will be a pretty sight.

Prepare accordingly.

Cincinnatuus , 1 hour ago

I think you are spot on with your assessment of the situation, and it seems a great many other knowledgeable people agree with you. In fact, many market prognosticators are openly talking about a RESET as a result of the dollar value collapsing and a resulting hyper-inflation. Too many people think this.

The Contrarian in me says because everybody is expecting that, it's not going to play out that way. I too, talk about the value of the dollar getting cut in half from here. Instead of a RESET, I expect the collapse of the value of the dollar to usher in a deflationary implosion as all that unpayable debt and financial obligations collapses and gets marked down to zero. Likely the Banksters try some sort of money printing orgy along the way... Never let a good crisis go to waste.

smacker , 1 hour ago

This article from Robert Prechter dating back to 2010 predicted the:

" US economy is heading for systemic collapse into hyperinflation "

Prechter wasn't wrong, he just couldn't predict when it would happen. He understood that the only solution to the huge debt crises was to clear it by letting it work its way thru the economy (a generation or so to do) or by a BIG RESET.

Nothing has changed. Except that in the last 10 years, central banks have taken actions to kick the can down the road because they're in denial and think they know better.

What the central banks never took into account in 2008 was that ((other things)) have changed in the past 10 years, most notably the waning power of the USD as the Global Reserve Currency which can only have negative consequences.

Fed-up with being Sick and Tired , 3 minutes ago

It is an interesting piece. I do recall seeing A. Gary Shilling speaking back then when I watched mainstream financial news which I no longer do. It would be interesting now to hear what these four would have to see to actually see de-leveraging occur, and a reset put in motion. I am tiring of the shenanigans of Central Bankers who clearly are trying everything to keep this mess propped up.

Iskiab , 21 minutes ago

These guys are all right in their risk assessments but are being cautious on saying how it will play out. Debt is one factor; but protectionism, demographic changes, and dedollarization are the other threats.

The truth is no one knows how things will unfold, but I'm betting stagflation will be in the works for the US for an extended period soon.

bunkers , 1 hour ago

Greg Hunter, on YouTube, interviews Catherine Austin Fitts in an early Sunday morning release. It's excellent.

turkey george palmer , 1 hour ago

Ha, good times bad times like the song says

But when I whispered in her ear, I lost another friend, oooh.

smacker , 1 hour ago

The 2008 financial crash was fundamentally caused by excessive DEBT.

That excessive debt was in the hands of: government, corporates and private individuals and the banksters were making huge profits out of it, so they had no incentive to rein it in. Clowns like UK Chancellor Gordoom Brown went on record claiming that he'd abolished boom & bust, so the borrow/spend culture went on. ho-ho.

But borrowers eventually got to the point where they simply couldn't take on any more debt, so the economy crashed, given that it was based on rising never-ending debt.

All of the labels given to this debt mountain such as: sub-prime mortgages, derivatives, excessive leverage etc are all valid for analysts to analyse but the common connection between them all was excessive DEBT.

That is what I concluded at the time and it has been confirmed 1,000,000 times since then.

I am on record saying that this huge debt pile would take a generation to work its way thru the economy which implied a long recession or depression.

I also predicted there'd likely be a BIG RESET to speed up the adjustment process. Despite central banks irresponsibly printing vast amounts of fiat to alleviate the consequences for their friends the banksters (but in reality to create new asset price bubbles) and dropping interest rates to near zero to encourage more debt and mal-investment, nothing that has happened has changed my mind.

The situation today, 10 years later, is that debt levels are hugely higher than in 2008 and the solution which existed then remains on the table. It's just that central banks falsely believe their money-printing actions will solve the problem whereas in truth they are in denial.

You cannot solve a debt problem by printing more money and taking on more debt. Central banks and the likes of Krugman think otherwise.

The day of reckoning is on the horizon: either there will be a huge long recession/depression to work debt out of the system with all of its implications to asset values and social cohesion AND/OR a BIG RESET will be enacted. The latter will destroy the wealth of vast numbers of ordinary people with their savings and investments going down the flusher.

Neither solution will be a pretty sight.

Prepare accordingly.

U. Sinclair , 1 hour ago

"The definition of insanity is doing the same thing over and over again, but expecting different results".

Cincinnatuus , 1 hour ago

I think you are spot on with your assessment of the situation, and it seems a great many other knowledgeable people agree with you. In fact, many market prognosticators are openly talking about a RESET as a result of the dollar value collapsing and a resulting hyper-inflation. Too many people think this.

The Contrarian in me says because everybody is expecting that, it's not going to play out that way. I too, talk about the value of the dollar getting cut in half from here. Instead of a RESET, I expect the collapse of the value of the dollar to usher in a deflationary implosion as all that unpayable debt and financial obligations collapses and gets marked down to zero. Likely the Banksters try some sort of money printing orgy along the way... Never let a good crisis go to waste.

smacker , 1 hour ago

This article from Robert Prechter dating back to 2010 predicted the:

" US economy is heading for systemic collapse into hyperinflation "

Prechter wasn't wrong, he just couldn't predict when it would happen. He understood that the only solution to the huge debt crises was to clear it by letting it work its way thru the economy (a generation or so to do) or by a BIG RESET.

Nothing has changed. Except that in the last 10 years, central banks have taken actions to kick the can down the road because they're in denial and think they know better.

What the central banks never took into account in 2008 was that ((other things)) have changed in the past 10 years, most notably the waning power of the USD as the Global Reserve Currency which can only have negative consequences.

Wahooo , 56 minutes ago

Got the collapse right, but not the hyperinflation.

smacker , 51 minutes ago

Time will tell... if the huge debt problem is resolved correctly by actions intended to clear it and the USD loses its GRC status, deflation followed by hyperinflation will likely follow as USDs flood back into the US economy.

CoCosAB , 16 minutes ago

The simple solution is - an old fashion I know - a DEBT JUBILEE !

The last time some schmuck tried to make the millennia tradition return he got himself crucified!

There's NO OTHER SOLUTION in the present status of the MONETARY SYSTEM to re-balance it. Of course that the OWNERS of the SYSTEM and the WEALTH (DEBT) don't wont to see their WEALTH disappear in a click of a button...

So, the next Great Transference of Wealth (1st in 2007/8 and so on) its about to start!

The example given above its just a peanut " Paulson, of course, loaded up on CDS's and made $4 billion in what has been called "the greatest trade ever." "We made 15 times our money," Shilling says. "...

Keep it up SLAVES... "WORK, DEBT, CONSUME"

smacker , 7 minutes ago

A "debt jubilee" is equal to a BIG RESET. I believe this will be enacted but for .govs to get away with it, there'll have to create a huge distraction so they can blame it on someone else.

That distraction will almost certainly be WAR or some other major event on a big enough scale to distract attention away from what they're doing.

Push , 2 hours ago

I guess Tyler has never heard of Lyndon LaRouche? He accurately predicted the 2008 crash, and others previously. The fact is that monetary policy is not economics, and when you look at the inter-connectivity of human labor from the perspective of scientific progress it's easy to see where the financial system is heading, for a huge collapse.

If you study what the United States did coming out of the Revolutionary War to build this nation, then the subsequent dismantling of Hamilton's system by Andrew Jackson, the the re-implementation of Hamilton's system by Carey and Clay through Lincoln, you can see that what people today consider "economics" has nothing to do with the productive powers of the labor force. British Free Trade, floating exchange rates, the offshore banking industry, Wall Street, and the City of London are subverting economic fortitude in favor of the consolidation of power in a process to build a new kind of empire.

The Real Tony , 2 hours ago

Eventually America will run out of lies to tell. This will be the catalyst for the next crises.

truthalwayswinsout , 2 hours ago

No reason to listen to any of this or even care. Do not invest in the stock market; it is a scam and will always be a scam.

99% of all people should invest in themselves first. That means having no debt and also having a small company that you only put sweat equity into to make it work starting out as a side business and keeping it as a side business even if it grows bigger. That also means going to college and earning a money making degree that is in demand.

Everyone in our family has no mortgages. Everyone in our family has small companies that because they have no debt churn out cash like ATMs from $6K to $170K per year. And when the markets crash or assets become extremely cheap we buy assets. We bought homes in the last fiasco, did minor fixes, rented them, and sold them all 3 years ago. We made a 220% return in 6 years.

We are going to do it again with homes because they will again fall off dramatically and this time we can pay cash for all the purchases. We will also be looking at unique food companies that are over leveraged that we can buy at 10 cents on the dollar. (One of our family is a chef and makes all kinds of stuff that can be packaged and sold but we have no market access).

Batman11 , 3 hours ago

Problem solving involves two steps.

  1. Understand the problem
  2. Find a solution

Post 2008 - "It was a black swan". We didn't complete step 1, so we couldn't learn anything. The Chinese have now completed step one and have seen their Minsky moment on the horizon. The indicators of financial crises are over inflated asset prices and the private debt-to-GDP ratio. Debt is being used to inflate asset prices.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

They are called Minsky moments. Too late for Australia, Canada, Sweden, Norway and Hong Kong as they've been inflating their real estate markets with mortgage lending. Wall Street leverages up the asset price bubble to make the bust much worse.

"It's nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world" All the Presidents Bankers, Nomi Prins.

Leverage is just a profit and loss multiplier. The bankers take the bonuses on the way up and taxpayers cover the losses on the way down.

Batman11 , 3 hours ago

Bankers only have one real product and that's debt. When they are messing about you can see it in the private debt-to-GDP ratio. It's that simple. They are clever and hide what they are doing on the surface, you just look underneath.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

It's easy to see when you know where to look. Even the FED should be able to understand it. Well, we can just tell them where to look anyway; Harvard PhDs aren't what they used to be.

Batman11 , 2 hours ago

How can bankers use their debt products to create real wealth and increase GDP for growth? The UK:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

Before 1980 – banks lending into the right places that result in GDP growth. After 1980 – banks lending into the wrong places that don't result in GDP growth. The UK eliminated corset controls on banking in 1979 and the banks invaded the mortgage market and this is where the problem starts.

Richard Werner was in Japan in the 1980s when it went from a very stable economy and turned into a debt fuelled monster. He worked out what happened and had all the clues necessary to point him in the right direction. Bank credit (lending) creates money.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

The three types of lending:

  1. Into business and industry - gives a good return in GDP and doesn't lead to inflation
  2. To consumers – leads to consumer price inflation
  3. Into real estate and financial speculation – leads to asset price inflation and gives a poor return in GDP and shows up in the graph of debt-to-GDP

Bank credit has been used for all the wrong things during globalisation.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

Inflating asset prices with debt (type 3 lending).

Batman11 , 56 minutes ago

Economic liberalism – the fundamental flaw. Everyone looks to make as much money as possible, doing as little as possible. Asset stripping, activist shareholders being a very good example. Real wealth creation involves making real goods and providing real services, and involves real work.

It doesn't look very attractive; there are easier ways to make money.

hillwalker , 3 hours ago

The Parasites! No mention of the over $600 TRILLION opaque OFF BALANCE SHEET derivatives market!

Nelbev , 5 hours ago

I think these guys miss the obvious.

1.) There is a housing bubble in London, OZ, Canada in Vancouver and Toronto. US prices have bounced back nominally, but financing better than prior. The banking crisis will start with housing bubble abroad.

2.) US deficits and debts are at a stage where inflation will lead to higher rates. The amount to service the public and private debt load will increase with interest rates. You cannot just print money forever and expect it never to catch up, or excess reserves not to escape the banking system blowing air on the fire. The debt load publicly is dangerously high and will trigger a fiscal crisis when add about $200+ billion a year to fiscal budget.

3.) The EU will disintegrate over next few years, global recession will just accelerate that and be a feedback, could be a bit of a buffer on US with flight to quality. Think about when UK contribution to EU budget drys up in March 2019, will EU raise taxes on rest by 20% to pay for Eurocrats salaries?, and what if Italy has a referendum? EU is mess in making.

4.) Next recession, which could be triggered by stochastic shock of a trade war (err ... gov managing economy always f*cks it up), the monetary authorities have no buffer to lower interest rates due to policy since housing bubble, only more useless QE, little stimulus, just inflation in works.

5.) Last was housing bubble, next is bond bubble . 30 yr tb at 3.13 - you have to be idiot (or PBC which cannot unload their trill $ portfolio of US toilet paper without depressing prices) to hold and expect inflation next 30 years at less. You think magically a trillion dollar year federal deficit will shrink under DT? It really does not matter what the fed does, stuck in a hard space, print more money to keep ponzi scheme going or neutralize federal with higher rates and try to shrink balance sheet. You cannot keep interest rates low when commodity futures arbitrage during inflation offer an alternate return. Easy money will just fuel fire.

Md4 , 3 hours ago

The Fed can, and does, manipulate some interest rates, and it's balance sheet, all the time.

But, as I see it, (hyper) inflation isn't just a money supply issue.

It's also a vote of confidence...

Ballooning deficits, and rising debt loads are not elements of fundamentally healthy economies.

Rather than disappearing dumped U.S. debt, the Fed may just add it to it's "holdings", and therefore, ensure there's always a "buyer".

Theoretically, perhaps.

But, it can't buy all U.S. debt, lest there be no real "market".

So, that means debt issued won't be free.

It also means there's a real limit to just how much the Fed can manage inflation...

Normalisation of Deviance , 4 hours ago

Excellent comment. Reminds me of the good old days when the comments at ZH were more more informative and well written than the articles, (which were also informative and well written).

Also Gold Bitchezz!

Superlat , 4 hours ago

Whether or not this matters, the housing bubble in Seattle has peaked, if not completely popped. However, it's gone far enough that just about everyone including the media is admitting a downturn is happening. Whether it persists is anyone's guess.

Maybe the next crisis is just cumulative, not one big thing.

The Real Tony, 2 hours ago

More like the Chinese buying up everything in Seattle has peaked.

The Real Tony , 2 hours ago

The Pakis in Brampton and Mississauga Ontario, Canada will throw their last welfare cheque towards housing before losing their home/homes to the bank. It might take longer than you think.

ZIRPdiggler , 5 hours ago

Sorry to rain all over your doom porn ZH'ers but I don't think we are going to have an "economic collapse". Also, I just heard a new Lindsay Williams.....he says the Trump election changed everything for the dark cabal's plans lol. Says they're gonna take the DOW over 40,000. Of course, Armstrong has been predicting that for a long long time. So go figure. Maybe cycles are bullet proof, regardless of who's trying to do the manipulation. keep buying that gold though....maybe your great grand children can benefit from it.

Md4 , 5 hours ago

"If it doesn't happen, the debt triggers a crisis in Europe, [and] that triggers the beginning of a global recession" but... "there are so many little dominoes, if they all start falling, one leads to the next."

What people don't seem to understand yet, is that this is no longer just an economic or even a debt problem ex parte.

The non-solution of the last ten years have now made this a human quality of life problem.

The loss of so many middle class income opportunities over the now-near 50 years of outsourcing, has not only caused more insurmountable debt loads to form, but the chronic income insufficiency is hammering even first-world social psyches as never before.

After all, rising debt is rising for a reason.

It's a big mistake to automatically assume a financial collapse has to precede a social calamity.

It can easily be the other way around...

Captain Nemo de Erehwon , 3 hours ago

You have to design financial systems for human needs, taking into account human characteristics. There are no "laws" of social sciences that "must" be followed. Physics is the only constraint.

Fred box , 6 hours ago

Bottom line folks,this party is over done.One of many different things can cause at the least a 20% correction(-5000pts) as well as bigger.The TBTF are now To Humungous To Fail.We live in interesting times!

TRN , 6 hours ago

Likely 40% correction.

LeftandRightareWrong , 6 hours ago

Public pension systems and unfettered illegal immigration.

Normal , 6 hours ago

$500 trillion, in debt. That means that some kind of system had it to lend. Makes me want to puke and then go start a revolution.

Bricker , 7 hours ago

All 3 in common...Debt bomb. 1929 Debt, 2008 Debt, 20?? debt; IMO its student loans wrapped up as commercial paper and bonds.

Someone is going to miss an interest payment after tranches are bet on with student loans

GoldHermit , 7 hours ago

Watch the Big Short. Those guys came as close as anyone IMO

daedon , 7 hours ago

No, READ The Big Short.

Erwin643 , 7 hours ago

Yeah, try making a movie based on a book. You have to take a lot of shortcuts. I think The Big Short was one of the very best films ever made, based on a book. The actors played their real-life counterparts perfectly.

daedon , 7 hours ago

Forget (broken clock) Schiff, I read a great book in 1993, The Great Reckoning: Protect Yourself in the Coming Depression. That was 25 years ago, I'm getting impatient. French president Charles de Gaulle saw this shit coming in 1968 and he died waiting for it.

The Roman Empire lasted 500 years, so be patient, Trump's bosses have an armada of think tanks staffed with Aspies that have IQs well above low earth orbit at their disposal, so they could drag this out another 1000 years.

So don't worry, be happy !

TeethVillage88s , 3 hours ago

Four Horsemen - Feature Documentary - Official Version https://www.youtube.com/watch?v=5fbvquHSPJU

[Sep 15, 2018] Dershowitz Says Manafort Plea Big Win For Mueller; White House Should Be Alarmed

Notable quotes:
"... That said, many - including Yahoo News's Michael Isikoff (the guy whose article containing info fed to him by Christopher Steele was used by the FBI to obtain Carter Page's FISA warrant) - have pointed to potential targets on the left. ..."
"... Those people include former Manafort associates Tony Podesta, Vin Weber and Greg Craig - all of whom failed to register as foreign agents in connection with work outside the United States, as well as members of the Obama administration . Of course, the thought of Mueller going after "the untouchables" seems a bit far fetched. ..."
"... The FSB ambition: to choose the least competent Presidential candidate and, unbeknownst to him, smooth his way to the White House. Thus Robert Meuller's inconvenient truth: If Donald Trump were competent enough to be entrusted with collusion, then he would be too competent for the FSB to achieve its ambitions! I bet the FSB people in charge are gobsmacked that The Donald hasn't been impaled on the 25th Amendment yet! ..."
"... I don't understand Dershowitz here. What could Manafort say that Papadopoulos and Flynn haven't already told Mueller? He was Trump's campaign manager for what three months? ..."
"... If anyone had something juicy on Trump it'd be Michael Flynn since he was in the Trump administration if just for a short time. This is about keeping this farce of a charade going as long as humanly possible. ..."
"... My guess -- a guess -- is that Mueller is under a lot of pressure from the Clinton Family including Brennan, Clapper et al to find something, anything, on enough people to make the last 2 years look legit to the Americans who watch CNN. ..."
"... My guess is that the CF has gone from supporting Mueller to making him scared. ..."
"... That should work for continuing the Conspiracy theory... It is all the DOJ, FBI, Sessions and now newcomer Manafort trying to BRING Down the POTUS. All of this is happening to such a great guy like Trump... Sad huh... ..."
"... Jesus you Trumptards are delusional. The average American is no more likely to take up arms against his masters than the North Koreans are. ..."
Sep 15, 2018 | www.zerohedge.com

Harvard Law professor and prominent liberal Alan Dershowitz - who has been shunned by the liberal elite of late for defending President Trump - now says that the White House should be alarmed over Paul Manafort's plea deal with special counsel Robert Mueller.

" Well of course they should be ," replied Dershowitz - though he added the rather large caveat that Mueller is "not a credible witness," and would be at best be a corroborating witness against Trump.

"There's nothing he can testify to that would probably lend weight to impeachment because he didn't have close contact with President Trump while he was president," said Dershowitz. " What they are looking for is self-corroborating information that can be used against Trump if they can make him sing and then there's the possibility of him composing, elaborating on the story ."

Dershowitz added that there is "no doubt" Mueller is trying to flip Manafort against Trump.

" Once he agrees to cooperate, he has to cooperate about everything , said Dershowitz. "There's no such thing as partial cooperation."

As for Trump pardoning Manafort? That's now "off the table," and that flipping on the President "opens up a lot of doors that probably haven't been opened before."

It's a "big win" for Mueller, Dershowitz concludes.

That said, many - including Yahoo News's Michael Isikoff (the guy whose article containing info fed to him by Christopher Steele was used by the FBI to obtain Carter Page's FISA warrant) - have pointed to potential targets on the left.

Those people include former Manafort associates Tony Podesta, Vin Weber and Greg Craig - all of whom failed to register as foreign agents in connection with work outside the United States, as well as members of the Obama administration . Of course, the thought of Mueller going after "the untouchables" seems a bit far fetched.


quintus.sertorius , 19 minutes ago

The Tribe plays both sides: Dershowitz the plant in Trump team has the same real loyalty as fellow tribesman Haim Saban or Sheldon Adelson. They want to blackmail Trump into fighting Israel's war in Syria.

radbug , 55 minutes ago

The FSB ambition: to choose the least competent Presidential candidate and, unbeknownst to him, smooth his way to the White House. Thus Robert Meuller's inconvenient truth: If Donald Trump were competent enough to be entrusted with collusion, then he would be too competent for the FSB to achieve its ambitions! I bet the FSB people in charge are gobsmacked that The Donald hasn't been impaled on the 25th Amendment yet!

ZazzOne , 1 hour ago

"Big Win For Mueller"? Only if he plans on going after the founders of the Red Shoe "Pedo" Club.....John and Tony Podesta! Though I highly doubt he'll ever go down that rabbit hole!!!!!

Straddling-the-fence , 2 hours ago

Once he agrees to cooperate, he has to cooperate about everything , said Dershowitz. "There's no such thing as partial cooperation.

That's asinine. There are terms to a plea agreement. Unless those terms encompass what is claimed above, then that is simply false.

KekistanisUnite , 3 hours ago

I don't understand Dershowitz here. What could Manafort say that Papadopoulos and Flynn haven't already told Mueller? He was Trump's campaign manager for what three months?

George Papadopoulos I don't know how long he was there but if really has nothing of value to offer then neither would Manafort.

If anyone had something juicy on Trump it'd be Michael Flynn since he was in the Trump administration if just for a short time. This is about keeping this farce of a charade going as long as humanly possible.

Econogeek , 3 hours ago

My guess -- a guess -- is that Mueller is under a lot of pressure from the Clinton Family including Brennan, Clapper et al to find something, anything, on enough people to make the last 2 years look legit to the Americans who watch CNN.

My guess is that the CF has gone from supporting Mueller to making him scared.

ThePhantom , 4 hours ago

i like to think Mueller is on the plate too, and this is his chance to save his own ass. Greg Craig and Podesta's names are out in all the papers .... they worked with manafort first and foremost....

no idea what dershowitz is talking about.. none.

Calvertsbio , 4 hours ago

Yea sure he is, the SPECIAL Counsel running the show to bring down corruption is "ON THE PLATE" yea, ok...

That should work for continuing the Conspiracy theory... It is all the DOJ, FBI, Sessions and now newcomer Manafort trying to BRING Down the POTUS. All of this is happening to such a great guy like Trump... Sad huh...

Doesn't make much difference how much of this BS is posted, no one is buying it anymore... Even FAUX news has basically given up on him... Everyone know that once it all comes out, it will be labelled by HIS SHEEPLE that it is all made up BS to take him down...

Hillary did it... no ! Sessions did it, nope, it was RYAN ? McConnell... lets keep the guessing game going... The Dossier did it...

BigJim, 4 hours ago

"The swamp critters better stop ignoring the Hillary/DNC side of this or the population is going to be marching in with pitchforks and guillotines."

Jesus you Trumptards are delusional. The average American is no more likely to take up arms against his masters than the North Koreans are.

[Sep 15, 2018] Kerry Trashes Trump Amidst Iran Row 8-Year Old Boy With The Insecurity Of A Teenage Girl

It's really difficult rationally explain Trump obsession with Iran. may be Israeli lobby influence would be the most appropriate instead of "The Insecurity Of A Teenage Girl"
Sep 15, 2018 | www.zerohedge.com

At the end of a week in which former Secretary of State John Kerry's unauthorized meetings with top Iranian officials have taken center stage, and in which both President Trump and current Secretary of State Mike Pompeo have publicly thrashed Kerry's "unheard of" and "illegal meetings" with Iran that "undercut" the White House, Kerry has gone on his own anti-Trump rant .

Appearing on HBO's Real Time with Bill Maher Friday night, Kerry slammed the president as having "the maturity of an 8-year-old boy with the insecurity of a teenage girl" in remarks that are sure to continue the ongoing war of words. Previously in the week upon news of John Kerry's Wednesday Hugh Hewitt Show radio interview in which he admitted meeting with Iranian Foreign Minister Javad Zarif "three or four times" since Donald Trump took office, President Trump slammed the "illegal meetings" as serving to "undercut" White House diplomatic dealings with Iran .

Trump further hinted that Kerry violated the Logan Act by rhetorically asking whether Kerry is officially registered as a foreign agent .

The president tweeted: John Kerry had illegal meetings with the very hostile Iranian Regime, which can only serve to undercut our great work to the detriment of the American people. He told them to wait out the Trump Administration! Was he registered under the Foreign Agents Registration Act? BAD!

When asked about the White House's potential threats of legal inquiry into the meetings, Kerry dismissed: "There's nothing unusual about it. The conversation he really ought to be worrying about is Paul Manafort with Mueller."

"Unfortunately, we have a president, literally, for whom the truth, the whole truth and nothing but the truth is three different things, and you don't even know what they are," Kerry added.

We can only imagine how Trump is going to respond, whether on Twitter, or perhaps by announcing a legal inquiry over Kerry possibly breaking the Logan Act and failing to register as a foreign agent, as Trump's Thursday evening tweet suggested.

[Sep 15, 2018] Clapper lied on national TeeeVeee, to the American public with a straight face

Clapper and Brennan as MSM pundits are also kind of "insurance" against Trump, very true.
Sep 15, 2018 | www.zerohedge.com

nmewn ,

All up to their beady little eyeballs in it...

CHUCK TODD TROTSKY: Yeah, I was just going to say, if the F.B.I., for instance, had a FISA court order of some sort for a surveillance, would that be information you would know or not know?

CLAPPER: Yes.

CHUCK TODD TROTSKY: You would be told this?

CLAPPER: I would know that.

CHUCK TODD TROTSKY: If there was a FISA court order–

CLAPPER: Yes.

CHUCK TODD TROTSKY: –on something like this.

CLAPPER: Something like this, absolutely.

CHUCK TODD TROTSKY: And at this point, you can't confirm or deny whether that exists?

>>>CLAPPER: I can deny it.<<<

The head of ObaMao's intelligence, the DNI ...(Clapper)...just lied on national TeeeVeee, to the American public, with a straight face, something we all now know to be absolutely, verifiably, true.

Something as blatantly deceptive as this needs something special in return. Like a noose.

FreedomWriter ,

Yeah, lying on CNN, apparently you can be arrested for that, it's almost as bad as lying to Congress under oath..... oh wait...

nmewn ,

They are twisted, seditious, criminal , lying, bastards.

In a nutshell: Hillary Clinton paid a foreign agent (Christopher Steele, via two entities to wipe her fingerprints, those being Perkins Coie & Fusion GPS) to fabricate the pretext of FISA warrants... which her cronies then dutifully introduced into a secret court ...and were granted FISA warrants (not once but FOUR TIMES) for US government intelligence agencies to spy on her political opponents.

Its unprecedented, a scandal more vast and all encompassing than Watergate.

And...having found NOTHING (again, four times) to charge Carter Page with, they leak to their cronies in the Alinsky Press that US government intelligence agencies do in fact have an active spying operation going on against American citizens to damage the reputations and careers having failed to find any evidence of "Russian collusion" which (again) was the pretext for the FISA warrants.

Now that those among us with a fully functional brain know FOR SURE that there are TWO SETS of laws in this nation we can go about our individual activities and businesses with total disregard to "their laws" without any self imposed moral or ethical trepidation.

herbivore ,

There's just one set of laws, but they're selectively enforced, depending on whether you're one of the little people or you're among the elite. Must be nice to be one of the elite, not having to worry about laws and stuff.

[Sep 15, 2018] Carter Paige? You mean the guy this time last year was a Russian spy? The guy who hasn't been charged with anything? The guy that the original FISA warrants were issued against in order to spy on the trump campaign? Oh yeah that guy.

Sep 15, 2018 | www.zerohedge.com

indaknow ,

Carter Paige? You mean the guy this time last year was a Russian spy? The guy who hasn't been charged with anything? The guy that the original FISA warrants were issued against in order to spy on the trump campaign? Oh yeah that guy.

Is he connected to the Papadopoulos guy? You know... The guy that got 14 days for lying to meathead?

And now Manafort. Somehow hes bringing Trump down for sure. Even if it doesn't have anything to do with the Trump campaign.

As looney would say... Looney

Dilluminati ,

From my understanding the unmasking of a national security investigation does make liable to suit the press by Carter Page, additionally I'm still amazed that people are seeing this through their preconceptions. How NSL (national security letters) and FISA material made it consistently from the top echelons of government needs people asking some genuine questions. If you have followed this carefully, it is evident that despite the non-related charges brought forth by Mueller that this was a politicized prosecution by the establishment. The questioning of the narrative of this gets people called all types of names.

Talking about establishment behaving badly:

I finally came across an article where the establishment is calling people "Satan" and the article was accurate from the standpoint of an "establishment analysis" but of course left out the actual details of the ongoing criminal racketeering.

https://www.weeklystandard.com/jonathan-v-last/vigano-letter-mccarrick-wuerl-and-pope-francis-are-breaking-the-catholic-church

I had a person say that they "felt sorry for me" Pity being an expression of disrespect that I no longer attended Church, and I thought to myself that it wasn't worth the reply that saying sorry or asking forgiveness cuts it, or that the decision or another or your belief yourself guarantees you are saved if your repeated heinous crimes boil down to asking "forgiveness" a mistake, bad judgement.

And the abuse was SEVERE again the details are slowly coming out but you see how the Demonization process works. The response in both cases identical.

https://www.cbsnews.com/news/pennsylvania-grand-jury-report-details-disturbing-abuse-allegations/

And remember that none of this is new.. simply signs of very corrupt people feeling non-accountable to anything. I fully expect the abuse at the Church to continue, I expect the Star Chamber establishment to become more bold.. and in summation I'm predicting very cleanly and accurately this ends badly. No escaping this.. it ends badly

https://www.thesun.co.uk/news/7260306/vatican-photo-pope-francis-cardinals-laughing-sex-abuse-scandal-meeting/