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The more things change in the USA casino capitalism the more they stay the same

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“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Note: Some thoughts  on 2019  added on Jan 3, 2019.

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Some thoughts  on 2019

It was clear that 2017 stock market run was detached from fundamentals. Mostly speculative run. And the current stock market decline could well happen three months aerler or three month later but it was in the cards. It is difficult to estimate the power of inertia in such speculative runs. Also layoffs and decline of the standard liming of workers and lower middle class still can continue to improve the balance sheet until "Yellow Vests" moment stops them.

Jobs created now are mostly "inferior" low paid or temp/contractor jobs and the numbers just mask the cruel reality of the USA job market.

Which in reality is dismal, especially for young and old workers. several more or less paid specialties disappeared in 2018 due to automation (cash office worker is one). automatic cashier is supermarkets are also now more visible.  So spontaneous cases of vandalism, killings of coworkers and other form of "action of desperation" (as well as the rate of death from opioids -- which is yet another form of the same) would not be too surprising in such an atmosphere. Even with the power of the current national security state. Trump is playing with fire trying to cut on food stamps and implementing some other action in this program of "national neoliberalism" which is in internal policy is almost undistinguishable from neofascism.  He risk facing "Macron situation" sooner or later.

In any case at some point Minsky moment should arrive for the stock market. I am not sure that the current decline is that start of such an event. It might be postponed further down the line for a year or two.  But it will eventually come.  We can only guess what form it might take, but with the current Apple troubles and valuations of tech sector I think it might take the form of something similar to dot-com bubble deflation No.2

I do not see Amazon, Google, Facebook and Microsoft and other tech high flyers completely immune to the stock crash of 50% magnitude or more. For example, Google is overly dependent on advertising revenue which can grow only by strangulating small sites owners which use it as the advertizing platform (which it successfully implements fro several years now). But at some point owners might revolt and start dropping it for Microsoft or other platform.  Facebook might face a backlash, if people understand that selling data about them in the part of the business model, not an aberration.

One of the most unexplainable things that happened in 2018 was dramatic fall of oil prices in the Q4. This was quite surprising (and destructive) after the period of little or no capital investment in the new fields for three years or so.  Shale oil production increases in the USA are only possible if junk bonds can be produced along with it. Junks bonds that will never be paid. With the current debt load and prices below $50 most of the USA shale oil companies are zombies. Most if not all of thenm are losing money.  Only return of ~$70 oil prices can save them, if anything at all. WSJ touched this topic recently.

So this surprising fall of oil prices (from around $70 to around $43 WTI) looks connected to the speculations in the "paper oil" market.

Financialization allows for oil price to be completely detached from fundamentals for a year or even two (Saudis need over $80 I think to balance the budget, I think; this represents "fair price" as they are one of the three largest producers).

But you will never know this unless there are shortages at gas stations. The difference is covered by inflated statistics from IEA and similar agencies as well as "paper oil" -- future contracts which are settled in dollars.

This is the reality of "casino capitalism" ( aka neoliberalism ) with its rampant and destructive financialization.


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[Jan 24, 2019] The Trump Tax Cut Is Even Worse Than They Say by Dean Baker

Notable quotes:
"... To this point, there is essentially zero evidence of the promised investment boom. There was respectable growth in investment in the first two quarters of 2018, but growth slowed to just 1.1 percent in the third quarter. ..."
"... In any case, there is zero evidence that the tax cut is leading to the sort of investment boom that will qualitatively boost the rate of productivity and GDP growth and provide workers with substantially higher pay. ..."
"... (irrational) confidence level is an important economic factor. ..."
"... What has been destructive in major recessions has not been "misdirected investment", it has been the leveraged and/or fraudulent financial manipulations which maximize profit but which cause rapid collapse when conditions turn bad. Again, interest rates have in practice not been a main factor in this. ..."
"... Keynes was adamantly against high interest rates and he favored usury laws: "the rate of interest is not self-adjusting at a level best suited to the social advantage but constantly tends to rise too high, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanctions of the moral law." The General Theory, p. 351. ..."
"... "The evidence is not consistent with the idea that central banks can control economies with interest rates." ..."
"... A much larger threat to world economies (than interest rates) is the huge capital investments in petroleum assets. At some point, those investments will need to be unwound in an orderly fashion but it doesn't seem that anyone is considering how to do that. ..."
Jan 18, 2019 | cepr.net
Details
Published: 18 January 2019

(This piece was originally posted on my Patreon page .)

Jim Tankersley had a nice piece in the New York Times last week pointing out that the tax cut pushed through by the Republicans in 2017 is leading to a sharp drop in tax revenue. While this was widely predicted by most analysts, it goes against the Trump administration's claims that the tax cut would pay for itself.

Looking at full-year data for calendar year 2018, Tankersley points out that revenue was $183 billion (5.6 percent) below what the Congressional Budget Office (CBO) had projected for the year before the tax cut was passed into law. This is a substantial falloff in revenue by any standard, but there are two reasons the picture is even worse than this falloff implies.

The first is that we actually did see a jump in growth in 2018 pretty much in line with what the Trump administration predicted. The tax cut really did stimulate the economy. It put a lot of money in the economy (mostly going to those at the top) and people spent much of this money. The result was that the growth rate accelerated from around 2.0 percent the prior three years to over 3.0 percent in 2018. (We don't have 4 th quarter data yet, which may be delayed by the shutdown, but growth should be over 3.0 percent.)

The jump in growth in 2018 means that the drop in revenue was not due to the economy being weaker than expected, it was due to the fact that the tax rate had fallen by a larger amount than the boost to growth. In fairness to the Trump administration, they had also projected a falloff in revenue due to the tax cut in 2018, but not one that was as large as what we saw.

... ... ...

To this point, there is essentially zero evidence of the promised investment boom. There was respectable growth in investment in the first two quarters of 2018, but growth slowed to just 1.1 percent in the third quarter. It is likely to be even weaker in the fourth quarter due to the drop in world oil prices (less oil drilling), although we won't get these data until the shutdown is over. In any case, there is zero evidence that the tax cut is leading to the sort of investment boom that will qualitatively boost the rate of productivity and GDP growth and provide workers with substantially higher pay.

In this context, the deficits from the Trump tax cut are a problem. If the economy is bumping up against its limits and the labor market is close to full employment, it means a much larger share of output is going to the consumption of the wealthy. That both means less private consumption for everyone else, and it makes it more difficult to have major initiatives that involve substantial spending, such as a Green New Deal or Medicare for All.

The long and short is that the revenue data for 2018 looks pretty bad on its face. It looks even worse on a closer examination.

pieceofcake • 4 days ago ,

...and perhaps this funny (American?) idea - that economics only exist in order to have some ''Boom'' going -- forever -- and ever - (which everybody knows is NOT possible) - is the root of US problem??!

Paul • 6 days ago ,

Deficits are not a problem, period. They are a benefit because they keep the boom going, just as lower interest rates forestall a recession. Keynes pointed this out 80 years ago: "Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom." The General Theory of Employment, Interest and Money, p. 322.

Keeping us out of a recession/slump ought to be the focus of economic policy, not hypothetical questions about the economy "bumping up against its limits" which anti-Keynesians have been obsessed with for years.

skeptonomist Paul • 6 days ago ,

Keeping out of bubbles is what keeps us out of slumps (in most cases). The usual pattern is that as conditions improve people put confidence where it does not belong and extend leverage, then financial collapse makes things look bad for everyone - the general (irrational) confidence level is an important economic factor.

Interest rates have an effect on speculation - when rates are low people have to turn to riskier things to make money, and leverage is cheap. Stock prices were very low in 1981 because interest rates were very high and they are very high now partly because interest rates have been very low. The effect on speculation may be a valid reason to raise rates - of course the imaginary threat of inflation is not.

But history indicates it is not a huge effect. The Fed did raise discount rate through 1928 and 1929 up to 6% and this did not seem to slow the development of the stock-market bubble. It is unlikely that the Fed can kill a bubble or boom now by raising at much lower levels. The housing bubble of 2006 was a matter of bad regulation. The Fed was involved in encouraging and then disregarding the bubble, but not by manipulating interest rates. Greenspan was always a cheerleader of deregulation.

Paul skeptonomist • 5 days ago ,

"Bubblenomics" was discredited by Keynes:

"Moreover, even if over-investment in this sense was a normal characteristic of the boom, the remedy would not lie in clapping on a high rate of interest which would probably deter some useful investments and might further diminish the propensity to consume, but in taking drastic steps, by redistributing incomes or otherwise, to stimulate the propensity to consume.

"It may, of course, be the case -- indeed it is likely to be -- that the illusions of the boom cause particular types of capital-assets to be produced in such excessive abundance that some part of the output is, on any criterion, a waste of resources; -- which sometimes happens, we may add, even when there is no boom. It leads, that is to say, to misdirected investment." The General Theory p.321

"Thus an increase in the rate of interest, as a remedy for the state of affairs arising out of a prolonged period of abnormally heavy new investment, belongs to the species of remedy which cures the disease by killing the patient." The General Theory p.323.

Causing a recession in order to kill a bubble is madness.

skeptonomist Paul • 5 days ago ,

I am not recommending killing a boom or bubble with interest rates. On the contrary I am always recommending against relying on manipulating interest rates to regulate the economy, whether it is to prevent inflation, real or imaginary, or to stimulate the economy in case of recession. While Keynes conjectured that interest rates could have effects, he certainly was very clear in not expecting that they would be sufficient to control the business cycle - see pp. 319-320, the end of Ch. 12 and ch. 24.

What has been destructive in major recessions has not been "misdirected investment", it has been the leveraged and/or fraudulent financial manipulations which maximize profit but which cause rapid collapse when conditions turn bad. Again, interest rates have in practice not been a main factor in this.

Paul skeptonomist • 5 days ago ,

"While Keynes conjectured that interest rates could have effects, he certainly was very clear in not expecting that they would be sufficient to control the business cycle"

Really? Then why did he include "Interest" in the title of his magnum opus?

Keynes was adamantly against high interest rates and he favored usury laws: "the rate of interest is not self-adjusting at a level best suited to the social advantage but constantly tends to rise too high, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanctions of the moral law." The General Theory, p. 351.

Further, he railed against using high interest rates to limit the boom: "The austere view, which would employ a high rate of interest to check at once any tendency in the level of employment to rise appreciably above the average of, say, the previous decade, is, however, more usually supported by arguments which have no foundation at all apart from confusion of mind." The General Theory, p. 327-8.

The rate of interest is critical to economic growth which is why the Fed's role is so important.

skeptonomist Paul • 5 days ago ,

The evidence is consistent with what Keynes said about high interest rates - the high rates in the 70's to 80's failed to prevent inflation but caused unemployment to go to 10.8%. The Fed failed utterly in both of its two objectives during that time. Since 2008 record low rates have not produced the claimed boost in investment and growth. This is especially obvious in Europe and Japan where conditions are worse than in the US despite negative interest rates. This is also consistent with Keynes' expectation that interest rates would not be sufficient to overcome variations in the perceived marginal efficiency of capital. The evidence is not consistent with the idea that central banks can control economies with interest rates, or even that their actions are always constructive. That idea was not Keynes'.

Paul skeptonomist • 5 days ago ,

"The evidence is not consistent with the idea that central banks can control economies with interest rates."

That is a bridge too far, and Keynes disagrees:

"There is, indeed, force in the argument that a high rate of interest is much more effective against a boom than a low rate of interest against a slump." The General Theory, p. 320.

Slowing a boom with higher interest rates is indeed feasible and that has been Fed doctrine for decades. Obviously, higher interest rates reduce consumption and investment so growth must slow. The high inflation of the 1970s was due to the OPEC oil shocks, not excessively rapid growth of the economy. In fact, growth had been faster in the 1960s with much lower inflation.

RAP77 Paul • a day ago ,

I understand why this economic discussion focuses only on interest rates but it leaves out a larger issue. That fact that, on CNBC and elsewhere, financial analysts obsess over interest rates, taxes, and the price of oil in relation to the market illustrates the cluelessness of the financial community. They all applaud "deregulation" without ever specifying which regulations. Do they mean all regulations?

Trump's deregulation of methane emissions, for example, will create future costs that are exponentially larger than any immediate savings to frackers and oil companies. That's just one example. Trump's environmental deregulatory agenda is stupidity writ large.

A much larger threat to world economies (than interest rates) is the huge capital investments in petroleum assets. At some point, those investments will need to be unwound in an orderly fashion but it doesn't seem that anyone is considering how to do that. Eventually, probably sooner than expected, a tipping point will be reached when mass realization of the threat climate change poses to our survival generates a mass panicked exit from petroleum assets which will create a financial crash that dwarfs what we saw in 2008.

Paul RAP77 • a day ago ,

Do you remember "Limits to Growth"? Doomsday scenarios have been around for a long time especially in regard to the national debt which supposedly will cause the collapse of our economy sometime soon. I am skeptical about that.

[Jan 24, 2019] Robert Shiller interviewed by Andy Serwer at Davos 2019

[Video] He views housing prices as a leading indicator, but he is not ready to forecast slowdown yet. Yes Home Sales Sank 6.4% in December . No, a recession isn't about to hit. The International Monetary Fund still thinks the global economy will grow a respectable 3.5% this year . By with the recent downgrade risks are higher and probably highest since 2010.
As for 2019 he said we are always at risk entering the recession. He thinks that as in June there will be the longest recession, that might be time for a recession including in housing market. Inverted curve is a sign of such comes are coming.
Housing market is closing down and that can lead to recession, but he is not giving it probability higher that 50 for this year. He also mentions that real interest rate of short end there are not much above inflation.
Jan 24, 2019 | finance.yahoo.com

Yale Economics Professor and Nobel Laureate Robert Shiller spoke with Yahoo Finance at Davos, telling Editor-in-Chief Andy Serwer: "People are starting to think housing is expensive, and that could lead to a turnaround and a drop in home prices. But I'm not ready to forecast that yet."

[Jan 24, 2019] Rubenstein predicts near-term resolutions on U.S.-China trade 'dispute' govt. shutdown

[Video]
Interesting discussion... He said tariff might not work as expected. He does not think recession in probable in 2018 but later it might became inveitable
14% are functionally illiterate. Those people are at he bottom and will stay at the bottom.
Jan 23, 2019 | finance.yahoo.com

David Rubenstein, Co-Founder and Co-Executive Chairman of The Carlyle Group, sits down for a one on one with Yahoo Finance editor-in-chief Andy Serwer at the World Economic Forum's annual meeting in Davos, Switzerland. They discuss U.S.-China relations, Alexandria Ocasio-Cortez, income inequality, the government shutdown, and more.

[Jan 24, 2019] Davos 2019 the thing that scares hedge fund titan Ray Dalio the most

Jan 24, 2019 | finance.yahoo.com

Speaking at a panel discussion on the first day of the World Economic Forum (WEF) , Dalio said: "The US, Europe, China – all of those will experience a greater level of slowing, probably a greater level of disappointment.

"I think there's a reasonable chance that by end of that, monetary policy and fiscal policy will have to become easier relative to what is now discounted in the markets.

He added: " What scares me the most longer-term is that we have limitations to monetary policy, which is our most valuable tool, at the same time as we have greater political and social antagonism.

"So the next downturn worries me the most. There are a lot of parallels with the late 1930s.

READ MORE: Ray Dalio's three-step formula for anyone to start investing

"In 1929-1932 we had a debt crisis, and interest rates hit zero. Then there was a lot of printing of money and purchases of financial assets which drives financial assets higher.

"It creates also a polarity, a populism and an antagonism. We also had at that time the phenomenon of a rising power, like China, dealing with conflict with an existing power.

"These types of political issues are now very connected to economic issues in policy."

Asked at the summit in Switzerland about increasing debt levels and signs of a global slowdown, Dalio said the world economy was in the later stages of a short-term debt cycle.

READ MORE: What is Davos? The 2019 World Economic Forum explained

He said there had been an "inappropriate, mistaken desire to tighten monetary policy at a level that was faster than what the capital markets could handle."

The renowned 69-year-old investor, who authored a free book called ' Principles for Navigating Big Debt Crises', also offered his take on corporate debt levels.

He said: "W hen we cut corporate taxes and made interest rates low enough that it was attractive enough to buy financial assets, particularly by companies having mergers and acquisitions, that caused a lot of growth in corporate debt. And that growth in corporate debt was used to finance the purchases. That is going to be less."

He suggested a slowdown could increase the link between politics and economic policy, and predicted increased debate over a 70% income tax rate next year.

[Jan 24, 2019] No One Said Rich People Were Very Sharp Davos Tries to Combat Populism by Dean Baker

Highly recommended!
Notable quotes:
"... the Davos crew is trying to combat populism, according to The Washington Post . It is kind of amazing that the rich people at Davos would not understand how absurd this is. ..."
"... The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world. ..."
"... It is important to remember, the World Economic Forum is not some sort of international organization like the United Nations, the OECD, or even the International Monetary Fund. It is a for-profit organization that makes money by entertaining extremely rich people. The real outrage of the story is that top political leaders, academics, and new outlets feel obligated to entertain them. ..."
"... Davos ought to be treated as a conspiracy against labor, representative government, environmental regulation and decent living standards, but of course our admiring national press corps doesn't see it that way -- their bosses attend, after all. ..."
"... It may be best to avoid the term "populist" because it tends to be applied indiscriminately to the likes of Trump and to leftist reformers. Or if it is used for Trump it should be "fake populist". Opposition to corporatist globalization can be populistic, but Trump's version so far has been mostly fake. ..."
"... Two kinds of populism: rightwing populism (which often looks like fascism) and leftwing populism. They are quite different critters and they don't have a lot to do with each other though they agree on a few things. ..."
"... People REALLY need to re-read 1984 & refresh their memories of Orwellian good-is-bad brainwashing ..."
"... Trump is a rightwing populist, but it is very confusing. In the US anyway and often in general, rightwing populists are NOT the enemies of the rich. Note Mussolini and Hitler. Fascism really is a type of rightwing populism. ..."
"... Rightwing populism pretends to be for the people and is to some extent (protectionism, isolationalism, nationalism) but in a lot of other ways, it's just fake and it's always a cover for class rule and rule by the rich. ..."
"... The rich will go to fascism or rightwing populism if they get a threat from the Left (read Trotsky), but they don't really like them very much, think they are classless brutes, barbarians, racists, bigots, etc. ..."
"... They're not worried about Donnie. He's no class traitor. They're worried about the populism of the Left and possibly about rightwing populism in Europe. Bolzonaro and Trump are hardly threats to capital. ..."
"... He pretends to be a populist because it helps him. For example, he doesn't care about illegal immigration. He's been happy to hire undocumented workers his whole life, even now in office. But it gets his base fired up so he rails about immigration. He has no ideology, he will use whatever helps him. ..."
"... Rightwing populism is NOT cool in my boat. Rightwing populism is Bolsonaro. It's Duterte too, but that's a bit different, he's a bit more pro-people. Erdogan is a rightwing populist too, but he's rather socialist. Marie Le Pen is out and out socialist and she gets called rightwing populist. Orban is 5X more socialist than Venezuela and he gets called rightwing populist. It's all very confusing. ..."
"... But in the US and Latin America, rightwing populism is ugly stuff all right, and it tends to be associated with fascism! ..."
Jan 22, 2019 | cepr.net
Let's see, cattle ranchers are against vegetarianism, coal companies are against restricting CO2 emissions, and the Davos crew is trying to combat populism, according to The Washington Post . It is kind of amazing that the rich people at Davos would not understand how absurd this is.

Yeah, we get that rich people don't like the idea of movements that would leave them much less rich, but is it helpful to their cause to tell us that they are devoting their rich people's conference to combating them? The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world.

It is important to remember, the World Economic Forum is not some sort of international organization like the United Nations, the OECD, or even the International Monetary Fund. It is a for-profit organization that makes money by entertaining extremely rich people. The real outrage of the story is that top political leaders, academics, and new outlets feel obligated to entertain them.


pieceofcake pieceofcake • a day ago ,

And the fact that so many Americans -(and especially American workers) still mistake Von Clownstick as a so called ''Populist'' - and being on their side - is... unbearable!

Robert Lindsay pieceofcake • 12 hours ago ,

He IS in fact a rigthwing populist of a sort. That's what rightwing populism in the US looks like, and what it's always looked like. Bunch of crap huh? Gimme Marie Le Pen any day.

Woodshedding • a day ago ,

"The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world." \

Agreed - like how people almost worship British Royals.. or American celebrities... and yet, unfortunately, isn't it true that the greedmongers at Davos are not "trying," but rather "largely succeeding" at setting said world agenda?

Robert Lindsay pieceofcake • 12 hours ago ,

Trump is a rightwing populist in fact. Nasty critters, aren't they?

pieceofcake Robert Lindsay • 7 hours ago ,

''Nasty critters, aren't they''?

Yes!

Dwight Cramer • 2 days ago ,

Nothing to see here, folks, move right along . . .

Davos and TED Talks. One entertains the rich, the other the smart. The skiing is better at Davos, the ideas are better at a TED Talk. Just remember, most of the rich aren't smart and most of the smart aren't rich. So it's all rather silly, 'though it's easier to get rich if you're smart than it is to get smart if you're rich. Don't ask me how I know that, but I'll tell you, if you have an ounce of human kindness in you, learning the second half of that lesson is more painful than the first.

None of this would be half as much fun outside the glare of publicity, or if not heavily spiced with the envy of the excluded.

Ishi Crew Dwight Cramer • 19 hours ago ,

in my view half of ted talks are extremely stupid; the other half are basic 101 (eg j Hari).

Dwight Cramer Ishi Crew • 17 hours ago ,

Ishi--I don't disagree with you. Just not as stupid as the Davos drivel. Perhaps I should have said 'less bad' ideas, but I liked the cadence of 'better' and 'better.' Gotta have cadence if you want to get the People Marching.

jake • 2 days ago ,

Davos ought to be treated as a conspiracy against labor, representative government, environmental regulation and decent living standards, but of course our admiring national press corps doesn't see it that way -- their bosses attend, after all.

pieceofcake jake • 2 days ago ,

Firstly we have to treat the so called ''Populists'' as a conspiracy against labor - because they pretended in the utmost conspirational way to be on labors side.

While It always was as clear as mud that Davos was a Party of the Rich!

skeptonomist pieceofcake • 2 days ago ,

It may be best to avoid the term "populist" because it tends to be applied indiscriminately to the likes of Trump and to leftist reformers. Or if it is used for Trump it should be "fake populist". Opposition to corporatist globalization can be populistic, but Trump's version so far has been mostly fake.

Robert Lindsay skeptonomist • 12 hours ago ,

You guys need to read up. Two kinds of populism: rightwing populism (which often looks like fascism) and leftwing populism. They are quite different critters and they don't have a lot to do with each other though they agree on a few things.

Woodshedding skeptonomist • a day ago ,

That's basically my take, too. The term is purposely misused by the propagandists to get normal people thinking "Populism" must be something they don't like. People REALLY need to re-read 1984 & refresh their memories of Orwellian good-is-bad brainwashing. [and even "brainwashing" is an orwellian term! Brain-NUMBING, maybe... but nothing's getting cleaned, that's for sure]

Robert Lindsay Woodshedding • 12 hours ago ,

Nope US rightwing populism has often looked a lot like Trump's crap. I mean some of it was better. I have a soft spot for Huey Long. But in the US, rightwing populism just helps the rich mostly and it tends to be fascist.

pieceofcake Woodshedding • a day ago ,

''The term is purposely misused by the propagandists to get normal people thinking "Populism" must be something they don't like'' You mean some con-artists have conned people who liked the term ''Populism'' into liking idiocy - racism and nationalism?.

Robert Lindsay pieceofcake • 12 hours ago ,

Rightwing populism is indeed often nationalism + racism. That's how it works.

pieceofcake skeptonomist • 2 days ago ,

- ''it tends to be applied indiscriminately to the likes of Trump and to leftist reformers''.

Only some very Confused (Americans?) confuse Idiotic (''Rightwing) ''Populists'' with Social (Leftwing) ''Socialists''.

Robert Lindsay pieceofcake • 12 hours ago ,

Rightwing populists are indeed a thing. Wikipedia is your friend. Just because they suck ass doesn't mean they don't exist, comrade.

It's very common to get mixed up about the types of populism and jumble them all together though.

Robert Lindsay pieceofcake • 3 hours ago ,

Trump is a rightwing populist, but it is very confusing. In the US anyway and often in general, rightwing populists are NOT the enemies of the rich. Note Mussolini and Hitler. Fascism really is a type of rightwing populism.

Rightwing populism pretends to be for the people and is to some extent (protectionism, isolationalism, nationalism) but in a lot of other ways, it's just fake and it's always a cover for class rule and rule by the rich.

The rich will go to fascism or rightwing populism if they get a threat from the Left (read Trotsky), but they don't really like them very much, think they are classless brutes, barbarians, racists, bigots, etc.

But the rich allow them because they think they can control them and not let them get out of hand. This is what happened in Germany. This is what often happens actually.

In a sense, rightwing populism IS fake populism because it pretends to be for the people while often fucking them over with rightwing class rule via fascism. It's still populism, it's just not for the people. It's fraudulent, iike most rightwing bullshit.

pieceofcake • 2 days ago ,

- AND! -
to suggest - or imply? - that the type of ''Populism'' Trump -(and other so called ''Populists) represent - IS to ''leave the Davos Crowd much less rich'' -
could be the funniest thing ever written on this blog?

Robert Lindsay pieceofcake • 12 hours ago ,

They're not worried about Donnie. He's no class traitor. They're worried about the populism of the Left and possibly about rightwing populism in Europe. Bolzonaro and Trump are hardly threats to capital.

Lord Koos pieceofcake • 2 days ago ,

Trump is not a populist, even if he appeals to them. He's a very wealthy man who looks out for his rich friends.

DAS Lord Koos • 8 hours ago ,

He pretends to be a populist because it helps him. For example, he doesn't care about illegal immigration. He's been happy to hire undocumented workers his whole life, even now in office. But it gets his base fired up so he rails about immigration. He has no ideology, he will use whatever helps him.

Robert Lindsay Lord Koos • 12 hours ago ,

He actually has a lot of traits of a rightwing populist, US style, but then that's always been a suckhole anyway.

pieceofcake Lord Koos • 2 days ago ,

''Trump is not a populist, even if he appeals to them. He's a very wealthy man who looks out for his rich friends''.

How true - but as most of the current so called ''Populists'' are just as ''non-populist'' as Trump - it might be time to find a new ''expression''.

Robert Lindsay pieceofcake • 3 hours ago ,

Typical rightwing populism, which isn't really pro-people anyway, just another rightwing fraud.

pieceofcake pieceofcake • 2 days ago ,

and to makes sure not to be misunderstood - I also think Davos is ''pathetic'' and ''hypocritical'' - and everything else one wants to throw at it -
BUT as one of my favorite American Philosophers said:

"Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity."

And I think he meant the current ''Populists'' of this planet! -(and lets include especially the Brazilian one too)

pieceofcake • 2 days ago ,

But isn't it GREAT- that also ''the rich'' are starting to battle morons and a...holes like Baron von Clownsticks -(or the nationalistic idiots in the UK - or the Neo Nazis in Germany?) -

For I while I thought I was left ALL alone in order to battle the type of ''Populism''- which is nothing else than the sick racist phantasies of some nationalistic a...holes?

Robert Lindsay pieceofcake • 12 hours ago ,

Rightwing populism is NOT cool in my boat. Rightwing populism is Bolsonaro. It's Duterte too, but that's a bit different, he's a bit more pro-people. Erdogan is a rightwing populist too, but he's rather socialist. Marie Le Pen is out and out socialist and she gets called rightwing populist. Orban is 5X more socialist than Venezuela and he gets called rightwing populist. It's all very confusing.

But in the US and Latin America, rightwing populism is ugly stuff all right, and it tends to be associated with fascism!

[Jan 23, 2019] Another sign of collapse of neoliberal ideology: discussion of 70% tax rate on income over 10 million is no longer viewed as anathema; it is discussed

Jan 23, 2019 | finance.yahoo.com

Billionaire Michael Dell, chief executive officer of the eponymous technology giant, rejected a suggestion by U.S. Representative Alexandria Ocasio-Cortez of a 70-percent marginal tax rate on the wealthiest Americans.

"No, I'm not supportive of that," Dell said at a Davos panel on making digital globalization inclusive. "And I don't think it will help the growth of the U.S. economy. Name a country where that's worked."

She may not be in Davos, but the New York representative's influence is being felt on the slopes of the Swiss Alps. Three weeks after Ocasio-Cortez floated the idea in an interview on "60 Minutes" to raise the top marginal tax rate on Americans' income of more than $10 million to 70 percent, it was a hot topic at the gathering of the global financial and political elite.

... ... ...

"My wife and I set up a foundation about 20 years ago and we would've contributed quite a bit more than a 70 percent tax rate on my annual income," Dell said. "I feel much more comfortable with our ability as a private foundation to allocate those funds than I do giving them to the government."

Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology who was on the panel with Dell, said such a rate worked in the U.S. after World War II. But other executives were opposed, including Salesforce.com Inc. Co-Chief Executive Officer Keith Block.

... ... ...

Billionaire investor Ray Dalio suggested that the idea may have legs in the run-up to the U.S. presidential election. Discussing the outlook for a slowing world economy Tuesday, Dalio said that next year will see "the beginning of thinking about politics and how that might affect economic policy beyond. Something like the talk of the 70 percent income tax, for example, will play a bigger role." He didn't mention Ocasio-Cortez by name.

Currently in the U.S., the top marginal tax rate is 37 percent, which takes effect on income of more than $510,300 for individuals and $612,350 for married couples, according to the Tax Foundation.

The fortunes of a dozen attendees at the World Economic Forum in 2009 have soared by a combined $175 billion, a Bloomberg analysis found. The same cannot be said for people on the other end of the social spectrum: A report from Oxfam on Monday revealed that the poorest half of the world saw their wealth fall by 11 percent last year.

[Jan 23, 2019] Under neoliberalism stock market is a casino that might well hurt ordinary people, not help them to create sizable funds for retirement

Under neoliberalism 301K investors are overinvested in stock market essentially feeding Wall Street sharks. The net result even in case of investing strictly in S&P500 are not that great. From 2000 to 2019 S&P rose from approximately 1400 to 2600 or 1200 points in 18 years. That's around 4.7% per year. Adding dividends that's around 6%. As you add money each year for this 18 years period you will realize only half of this return or 3% a year which is close to 30 years bond return (they are tax free, unlike S&P500) and barely beats inflation.
401K was an ingenious design to enrich Wall Street the staple on neoliberal attack on middle class
Notable quotes:
"... Samuelson was responding to my recent publications advocating expanded insurance, futures, and options markets to mitigate the financial risks – for example, those related to housing prices and occupational incomes – that ordinary people face. He said that these markets could, if pitched to the general population, turn into "casino markets," with people using them to gamble, rather than to protect themselves. ..."
Jan 23, 2019 | www.project-syndicate.org

Morality and Money Management by Robert J. Shiller - Project Syndicate

Advising people simply to hold the market is advising them to free-ride on the wisdom of others who do not follow such a strategy. If everyone followed Bogle's advice, market prices would turn into nonsense and would provide no direction to economic activity. 3

I remember exactly when I began to appreciate the complexity of the moral issues money management entails: October 8, 2009. I received a phone call from the eminent MIT economist Paul Samuelson, who had been my teacher when I was a graduate student in the early 1970s. He was 94 years old at the time, and two months later he died. I was so impressed by the call that I took notes on it in my diary.

Samuelson was responding to my recent publications advocating expanded insurance, futures, and options markets to mitigate the financial risks – for example, those related to housing prices and occupational incomes – that ordinary people face. He said that these markets could, if pitched to the general population, turn into "casino markets," with people using them to gamble, rather than to protect themselves.

He then brought up the example of Bogle, who "gave up a billion dollars for a concept," Samuelson said. "He could easily have cashed this in," but he didn't. "The miracle that was Vanguard came from Bogle's principles."

I thought he was right. In the long run, markets reward principled people. But there is still need for an expanded set of risk markets, because these markets can – and do – carry out useful functions, including risk management, incentivization, and orienting business.

The problem is that attention to these markets requires intelligent and hard-working people to help others in their investing. Theirs is not a zero-sum game, for they help direct resources to better uses. And these people must be paid. Even Vanguard, which now has a number of different index funds, hires investment managers and charges a management fee, albeit a low one.

Not every fund needs a low fee. We live in a world where constant and rapid change and innovation require more attention, and attention is costly. While many financial managers are at times unscrupulous, a higher management fee is not always a sign that something is wrong.

But Bogle is still a hero of mine, because he provided an honest product and was motivated by a sincere desire to help people. And he should be a hero to all, because he showed that markets eventually recognize integrity.

[Jan 23, 2019] Trump is Russian asset memo is really neolicon propgaranda overkill

Highly recommended!
Jan 23, 2019 | www.zerohedge.com

The always excellent Moon of Alabama blog has just published a sarcasm-laden piece documenting the many, many aggressive maneuvers that this administration has made against the interests of Russia, from pushing for more NATO funding to undermining Russia's natural gas interests to bombing Syria to sanctioning Russian oligarchs to dangerous military posturing.

<picture deleted>

And yet the trending, most high-profile stories about Trump today all involve painting him as a Putin puppet who is working to destroy America by taking a weak stance against an alarming geopolitical threat. This has had the effect of manufacturing demand for even more dangerous escalations against a nuclear superpower that just so happens to be a longtime target of U.S. intelligence agencies.

If the mass media were in the business of reporting facts, there would be a lot less "Putin's puppet" talk and a lot more "Hey, maybe we should avoid senseless escalations which could end all life on earth" talk among news media consumers. But there isn't, because the mass media is not in the business of reporting facts, it's in the business of selling narratives. Even if those narratives are so shrill and stress-inducing that they imperil the health of their audience.

Like His Predecessors

Trump is clearly not a Russian asset, he's a facilitator of America's permanent unelected government just like his predecessors, and indeed as far as actual policies and administration behavior goes he's not that much different from Barack Obama and George W Bush. Hell, for all his demagogic anti-immigrant speech Trump hasn't even caught up to Obama's peak ICE deportation years.

If the mass media were in the business of reporting facts, people would be no more worried about this administration than they were about the previous ones, because when it comes to his administration's actual behavior, he's just as reliable an upholder of the establishment-friendly status quo as his predecessors.

Used to be that the U.S. mass media only killed people indirectly, by facilitating establishment war agendas in repeating government agency propaganda as objective fact and promulgating narratives that manufacture support for a status quo which won't even give Americans health insurance or safe drinking water. Now they're skipping the middle man and killing them directly by psychologically brutalizing them so aggressively that it ruins their health, all to ensure that Democrats support war and adore the U.S. intelligence community .

They do this for a reason, of course. The Yellow Vests protests in France have continued unabated for their ninth consecutive week , a decentralized populist uprising resulting from ordinary French citizens losing trust in their institutions and the official narratives which uphold them.

The social engineers responsible for controlling the populace of the greatest military power on the planet are watching France closely, and understand deeply what is at stake should they fail to control the narrative and herd ordinary Americans into supporting U.S. government institutions. Right now they've got Republicans cheering on the White House and Democrats cheering on the U.S. intelligence community, but that could all change should something happen which causes them to lose control over the thoughts that Americans think about their rulers.

Propaganda is the single most-overlooked and under-appreciated aspect of human society. The ability of those in power to manipulate the ways ordinary people think, act and vote has allowed for an inverted totalitarianism which turns the citizenry into their own prison wardens, allowing those with real power to continue doing as they please unhindered by the interests of the common man.

The only thing that will lead to real change is the people losing trust in corrupt institutions and rising like lions against them. That gets increasingly likely as those institutions lose control of the narrative, and with trust in the mass media at an all-time low, populist uprisings restoring power to the people in France, and media corporations acting increasingly weird and insecure , that looks more and more likely by the day.

[Jan 23, 2019] Mainstream Media Is Literally Making People Sick

Jan 23, 2019 | www.zerohedge.com

Authored by Caitlin Johnstone via ConsortiumNews.com,

A new, updated data set is now available on a psychological phenomenon that has been labeled "Trump Anxiety Disorder" or "Trump Hypersensitive Unexplained Disorder," and it says that the phenomenon only got worse in 2018. The disorder is described as a specific type of anxiety in which symptoms "were specific to the election of Trump and the resultant unpredictable sociopolitical climate," and according to the 2018 surveys Americans are feeling significantly more stressed by the future of their country and the current political environment than they were last year.

Pacific Standard reports as follows:

"As the possibility of a Hillary Clinton victory began to slip away -- and the possibility of a Donald Trump presidency became more and more certain -- the contours of the new age of American anxiety began to take shape . In a 2017 column, Washington Post columnist Dana Milbank described this phenomenon as "Trump Hypertensive Unexplained Disorder": Overeating. Headaches. Fainting. Irregular heartbeat. Chronic neck pain. Depression. Irritable bowel syndrome. Tightness in the chest. Shortness of breath. Teeth grinding. Stomach ulcer. Indigestion. Shingles. Eye twitching. Nausea. Irritability. High blood sugar. Tinnitus. Reduced immunity. Racing pulse. Shaking limbs. Hair loss. Acid reflux. Deteriorating vision. Stroke. Heart attack. It was a veritable organ recital.

Two years later, the physiological effects of the Trump administration aren't going away. A growing body of research has tracked the detrimental impacts of Trump-related stress on broad segments of the American population, from young adults to women , to racial and LGBT communities .

The results aren't good."

[Jan 22, 2019] The elite at Davos may have just destroyed the 2019 stock market rally

Jan 22, 2019 | finance.yahoo.com

Meanwhile, the International Monetary Fund slashed its global growth outlook for 2019 and 2020 the day before the WEF kicked off. Its growth forecasts for China in 2019 and 2020 -- 6.2% -- is lower than most top minds on Wall Street have modeled.

Credit Suisse came out today with a doozy of a 90-page "study" looking at global debt levels. A shout out like this in the report does nothing to engender confidence in risk assets: "Defaults are likely to rise in segments of the corporate debt markets once economic growth weakens more markedly or if monetary policy tightens further; in such a situation, an unwinding of positions could generate significant market stress due to illiquidity."

Credit Suisse Chairman Urs Rohner suggests on the first page of the report that a full-scale global debt blowup is unlikely. But the overall scope of the report is bearish to stocks, trust this writer who read the study in its entirety.

[Jan 22, 2019] Questions We Hear A Lot...

Jan 22, 2019 | www.zerohedge.com

Questions We Hear A Lot...

by Tyler Durden Tue, 01/22/2019 - 16:27 6 SHARES Via HussmanFunds.com,

"While we don't presently observe conditions to look for a 'buying opportunity' or a 'bottom' from a full-cycle standpoint, we do observe conditions that are permissive of a scorching market rebound, even if it only turns out to be the 'fast, furious, prone to failure' variety. We wouldn't dream of removing our safety nets against a market decline that I continue to expect to draw the S&P 500 toward the 1000 level by the completion of this cycle. Still, we've prepared for the possibility of unusual volatility here, most likely including one or more daily moves in the range of 4-6%, potentially to the upside. Yes, that means one or more daily moves on the order of 100-150 points on the S&P 500 and 900-1300 points on the Dow. You think I'm kidding."

– John P. Hussman, Ph.D., Interim comment, Pre-open, 12/26/18

In recent days, we've heard a number of analysts gushing that the S&P 500 is vastly cheaper than it was only a few months ago. It's worth noting that they're actually referring to an index that is now less than 10% below the steepest speculative extreme in history. The chart below puts current valuations into perspective, using our Margin-Adjusted P/E, which is better correlated with actual subsequent 10-12 year market returns than the price/forward operating earnings ratio, the Shiller CAPE, the Fed Model, and a wide range of alternative valuation measures that Wall Street uses to reassure investors that valuations are anything less than obscene.

As market conditions currently stand, valuations remain extreme and market internals remain negative. So aside from the likelihood of a knee-jerk market spike on any variant of the word "deal," we continue to be in a trap-door situation with respect to market risk. Though we did take the edge off of our negative outlook to allow for a scorching relief rally, my present view is that the overall function of that relief rally has been served.

...

One of the more cringe-worthy features of the behavior of investment professionals here is the spectacle of Wall Street analysts touting the "reasonableness" of valuations on the basis of year-ahead earnings expectations that they themselves are responsible for fabricating. Just as in 2000 and 2007, instead of the investment profession acting as a historically-informed buffer to defend investors against reckless speculation, extrapolative projections like these are actually endorsed and encouraged by the very people who should know better. The chart below is thanks to TopDownCharts .

...though we're inclined to wait for more data, and to look for greater deterioration before identifying a recession, it's important to remember how quickly the data can shift. The amount of time between the peak in economic confidence and the beginning of a recession is usually very short. In general, a uniform deterioration in financial, employment and economic confidence measures, even compared with 6 months earlier, strongly amplifies the risk of a recession, and there's not much lead time at all. Put simply, we want to have a reliable set of confirming evidence, but it's also important to remember how quickly that evidence can emerge .

Questions we hear a lot

Given the volatility of the financial markets in recent months, my sense is that the best comments to offer are those that relate to these questions:

Bull market or bear market?

My impression is that the recent bull market peaked on September 20, 2018, which is also when we observed the largest preponderance of historically useful top signals we've ever seen. As I noted at the time, the only other point that came close was March 24, 2000, the date of the 2000 bubble peak. Still, the primary usefulness of a bull/bear label is to emphasize the potential for steep market losses over the completion of the cycle. As long as one recognizes that risk, there's no need for labels.

It's probably better to recognize that the market remains hypervalued and that market internals remain unfavorable. If internals improve at high valuations, our outlook is likely to shift to something that might be described as "constructive with a safety net." If they improve at substantially lower valuations, we're likely to move to an unhedged or aggressive stance. For now, there's so much downside risk that we'd view an improvement in internals as a "bear market rally," but whatever one might call it, we'd likely be constructive with a safety net. Even that, I suspect, is likely to emerge from lower levels.

Buy stocks or buy bonds?

My impression is that neither provides much prospect for meaningful returns, and 10% off the most obscene valuations in U.S. history isn't what I'd call a "bargain." With the yield curve as flat as we currently observe, the main reason to own bonds is based on the likelihood of a decline in yields in the event of economic weakness. There's some potential for that, but I'd lean toward a mix of Treasury bills, modest bond market durations, high credit-quality, and hedged equity. Our estimated return/risk profile for precious metals shares is also fairly strong here, but given the volatility of those shares, I'd characterize that as a constructive situation rather than an aggressive one. None of these is without risk.

Recession or continued expansion?

We're seeing a good deal of weakness in our leading measures, and a lot of the regional purchasing managers indices and Fed surveys are deteriorating as well, but we don't have a sufficient basis for an outright recession warning. This expansion is very long in the tooth, unemployment is quite low, and the underlying structural growth factors are dismal. So my sense is we're far closer to a recession than to 4% real GDP growth "as far as the eye can see." Given the other factors already in place, be particularly watchful for an ISM Purchasing Managers Index below 50, a move above 4% in unemployment, and a slowdown in employment growth below about 1.4% year-over-year. A decline in aggregate hours worked versus 3-months earlier along with a steep drop in consumer confidence, particularly about 20 points below its 12-month average, would all be strong confirming evidence of an economic downturn.

More rate hikes or a new round of QE?

On December 19, Fed Chair Jerome Powell observed "We've reached the bottom end of the range of what the Committee believes might be neutral." I think that is exactly right. As I observed in the December comment, the combination of low structural economic growth and modest inflation pressure is fairly consistent with the current level of short-term interest rates. Long-term rates would normally be higher in the context of current data, but given the deterioration in leading economic measures (remember, payroll employment and the unemployment rate are two of the most lagging economic measures available), there's little compelling upward pressure.

Don't take hope in Fed intervention to support the market, other than knee-jerk reactions. First, remember that the Fed eased persistently throughout the 2000-2002 and 2007-2009 collapses with no effect. When investors are inclined toward risk-aversion, safe liquidity is a desirable asset, not an inferior one. My view is that it's essential to monitor market internals directly. We don't disclose the details of our own measures, but I've discussed uniformity, divergence, breadth, leadership, price-volume sponsorship, credit spreads, and other factors often enough that the central concept should be clear: when investors are inclined toward speculation, they tend to be indiscriminate about it.

If and when internals improve, virtually anything the Fed does will likely be associated with market gains. If internals continue to indicate risk-aversion among investors, then those knee-jerk "clearing rallies" would best be used as opportunities to sell marginal stock holdings and tighten up hedges.

My impression is that Jerome Powell is highly aware of how loose the cause-and-effect links are between monetary policy and the real economy. But apart from noting that the Fed's workhorse economic model estimates only a 0.2% change in the unemployment rate after 3 years in response to each $500 billion in asset purchases, there's nothing in his past speeches that indicates an intellectual opposition to QE. It's not at all clear that the Fed recognizes its role in creating repeated cycles of bubble and collapse. So we have to allow for another round of QE in response to the next recession. Again, the appropriate response on our part will be to align ourselves with market internals. A favorable shift would likely encourage a constructive or aggressive investment outlook, particularly if valuations have retreated substantially at that point.

Inflation or deflation?

One of the key features of the recent speculative episode has been yield-seeking speculation by investors starved for safe yields. In response, Wall Street and corporate America provided more "product" in the form of low-grade covenant-lite debt. Indeed, the median rating on U.S. corporate debt now stands just one notch above junk. In an economic decline, one should expect a disruptive wave of defaults, with far lower recovery rates than in previous economic cycles.

Now, defaults tend to be deflationary, so what you tend to see is an upward spike in the yields on junk bonds and corporate debt but a downward trend in the yields of securities viewed as being without credit risk, which has historically included Treasury securities. The question is what happens when we begin to run trillion dollar deficits.

In the event of a deflationary economic decline, even one where defaults are higher as a result of all the yield-seeking and low-grade debt issuance of recent years, another round of QE seems likely. Our response to that prospect is simple – we'll take our cue from market internals, particularly given that the entire net total return of the S&P 500 since 2007 occurred when our measures of internals have been favorable, and most of the 2007-2009 collapse occurred when they were not. As I've regularly noted, our problem during the recent half-cycle had nothing to do with valuations or market internals, but with our bearish response to "overvalued, overbought, overbullish" syndromes.

Meanwhile, it's also important to allow for an inflationary economic decline, which would result from a public loss of faith in the ability of the government to run a stable debt/GDP relationship. In that event, all bets on QE are off, and the country will just face a difficult situation, as it has periodically faced before.

The best indicator of inflation is inflation. It's difficult to forecast inflation with macroeconomic variables, because large shifts in inflation are typically linked to discrete events that provoke a loss of confidence in price stability itself, like the trifecta of Great Society deficits, Nixon closing the gold window, and an oil embargo, or the combination of money printing and a supply shock, like using deficit finance to pay striking workers in the Ruhr. Not surprisingly, we'll infer that shift in confidence from uniformity in the behavior of inflation-sensitive asset prices.

There's no economic factor that predicts the rate of inflation better than the rate of inflation itself (and related uniformity in the behavior of inflation-sensitive securities including precious metals, exchange rates, bond prices, commodities, TIPS, and related securities). Just like a shift in market internals, it may be difficult to predict, but it's fairly easy to align yourself with it.

I know that many observers are quietly repeating Milton Friedman's phrase that "inflation is always and everywhere a monetary phenomenon." The problem is, you won't reliably see that in the data. As a former economics professor, I get it. The quiet job of the economics profession is to indoctrinate teenagers with purely theoretical models by showing them line-drawings. Nobody ever asks them to spend time staring at actual numbers.

So they become adults – and sometimes even Fed governors – who take theoretical diagrams as reality, for example, the notion that the Phillips curve is a relationship between unemployment and general price inflation, when there's utterly no evidence for it. In fact, as I've regularly argued, when you actually look at A.W. Phillips' data (a century of British unemployment and wage data during a period of stable general prices under the gold standard), the Phillips Curve is actually a relationship between unemployment and real wage inflation.

Of course, money creation and general price inflation are undoubtedly linked when money creation hits the pace of the Weimar Republic or Zimbabwe. But for the U.S., there's no economic factor that predicts the rate of inflation better than the rate of inflation itself (and related uniformity in the behavior of inflation-sensitive securities including precious metals, exchange rates, bond prices, commodities, TIPS, and related securities). Just like a shift in market internals, it may be difficult to predict, but it's fairly easy to align yourself with it.

Rise Of The Machines , 1 hour ago link

Somebody explain to me why you pay 2 x sales for the S&P 500 when the risks on economic growth are on the downside. Please explain Wall Street. Please explain how this is cheap when the price to sales ratio is in bubble territory.

[Jan 22, 2019] Food Cart Lady At Women's March Denies Service To Man... Because He's A Man

The last comment belongs to "grapes are too green" variety ;-)
Jan 22, 2019 | www.zerohedge.com

Authored by Mac Slavo via SHTFplan.com,

In the America of today social justice warriors virtue signaling their tolerance for others have been repeatedly and quite often exposed for the bigots, sexists, and racists that they really are.

DFGTC

"Those whom the gods are about to destroy, they first make mad ..."

MaF , 4 minutes ago link

Why even bother going? These "Women's Marches" are a joke and half the time forces an area of a city to shutdown and "accomodate" then.

[Jan 22, 2019] At this point the Collusion Narrative is like the Pee Tape

And Mueller probably called called Pee Taper.
Jan 22, 2019 | www.theglobeandmail.com

DW1 , 1 week ago

while we are waiting for the final FINAL report of the endless interminable Mueller investigation, perhaps best to review the Mueller report of Feb. 16 2018, and the conclusions it drew: it identified 13 Russian nationals who were part of an organized effort based in the Internet Research Agency. Those 13 Russians were named and indicted; if they step foot in any Western space, they will be arrested and charged.

Oh, and the Americans? none named, none charged, none involved, concludes the Mueller team. This likely presages the wet firecracker of the Mueller final report, and its look into the media echo chamber's bottomless rumour mill.

just as good as you , 1 week ago

You seem to have forgotten the 33 indictments of 'Americans'. You seem to have forgotten the 4 guilty pleas, and the 7 jail terms.

Yada yada yada.

Moseby1 , 1 week ago

Who do you think you're kidding?

Paul Manafort
Rick Gates
George Papadopoulos
Michael Flynn
Michael Cohen
Richard Pinedo
Alex Van Der Zwaan
Konstantin Killmnik

https://www.vox.com/policy-and-politics/2018/2/20/17031772/mueller-indictments-grand-jury

just as good as you , 1 week ago

Kudos. I was just getting tired of typing the list, hence the "Yada yada yada".

Thanks.

Andy_Waxman1 , 1 week ago

Some of it happened pre-campaign, some of it is seriously dumb (Manafort not reporting that he had a contract with the Ukraine), but much is Crimes of the Investigation - that is, a crime caused by investigation. 'You told us you met with him Tuesday, but you met with him Friday, you lied to the FBI, federal crime!' Like John Kelly. The actual meeting wasn't a crime, though. Someone else tried to dangle a poll, "most of which was public," said the NYT. Double dumb.

At this point the Collusion Narrative is like the Pee Tape, waaaaay more Liberal Wishful Fantasy than proof. So far, there's no there there. Just endless breathless NYT CNN and Globe headlines. 'Nuclear war this weekend with NK!' Remember that one? Right wing Birthers were fringe. Left wing Haters are MSM. Big hat, no cattle. Waiting for Bob M.

[Jan 22, 2019] No longer a wild conspiracy theory: The possibility of Trump as Russian agent by Jared Yates Sexton

A nice exa,ple of checkbook journalism... Previously there were a difference between a Professor and a prostitute. No it completely disappeared.
Notable quotes:
"... I canceled my subscription to the Globalist and Mail it'll expire at the end of this month but I must say, I'm going to miss reading all the comedy I finded in this paper, particularly in its comment sections. ..."
"... At this point I think it would be much worse if Trump isn't a Russian agent. At least being a Russian agent would make the ruination of the US a valid goal. If he truly isn't an agent, he's just ruining the US for the fun of it? ..."
"... Trump is not an enemy of America. He is America at its strongest and most sinister form, just the way Wall Street likes it. If Americans want a better society, they'd better stop asking to be led by grifters and take the lead themselves. ..."
Jan 22, 2019 | www.theglobeandmail.com

Jared Yates Sexton is an associate professor at Georgia Southern University. He is the author of The People Are Going to Rise Like the Waters Upon Your Shore: A Story of American Rage.

This is, above all, a very real and very dangerous crisis. The time to wring our hands and hide behind faith and disbelief are over. To fully counter this possible betrayal we must look it dead in the face and begin to change our perception of what is feasible. Mr. Trump has capitalized on the good faith of the American people. In order to start healing, we must accept that, with this administration, with this group, with this movement that Mr. Trump embodies, almost anything is possible.

Opiedog , 3 days ago

What you are witnessing is the decline in American influence and might. This is very similar to the decline of the Roman Empire. Slow degradation of social norms. Donald is not the cause of this but we are in real time witnessing the decline of America.

Ramsey0 , 6 days ago

I canceled my subscription to the Globalist and Mail it'll expire at the end of this month but I must say, I'm going to miss reading all the comedy I finded in this paper, particularly in its comment sections.

dbns , 1 week ago

At this point I think it would be much worse if Trump isn't a Russian agent. At least being a Russian agent would make the ruination of the US a valid goal. If he truly isn't an agent, he's just ruining the US for the fun of it?

MG-TD , 1 week ago

Where is James Bond when you need him?

Unlimited reader , 6 days ago

I'm waiting eagerly for Bruce Willis to show up and save the USA

Globu , 1 week ago

Why the surprise? Mr. Trump is the very embodiment of the same cutthroat capitalism that has defined America since colonization, slavery and the Trail of Tears.

Trump is not an enemy of America. He is America at its strongest and most sinister form, just the way Wall Street likes it. If Americans want a better society, they'd better stop asking to be led by grifters and take the lead themselves.

M. Gavin , 1 week ago

One can see why this is in the Opinion section. It's melodramatic, devoid of facts, offers no reliable sources, fails to demonstrate motives, etc., etc. It's less obvious why the Globe would publish it at all, because "news" like this we can get listening to the barber.

tinman1957 , 1 week ago

This guy isn't offering any news or opinion of concern he is just venting his hatred.

Andrew Smith , 1 week ago

The author is an associate professor of creative writing at a community college and it shows.

Globu , 1 week ago

"Special to the Globe" always translates to chequebook journalism.

wellworn , 6 days ago

He is an associate professor of Writing and Linguistics; there is nothing in the profile to suggest "creative" writing. I suspect that you creatively included the word to discredit the very plausible premise that trump is an agent working for Russia; he certainly is not working for the United States of America.

Personally I believe trump should be thoroughly investigated by the House committee to look at his tax returns and banking records to determine how much money trump and company have earned from Russian sources.

wglenm , 1 week ago

Who chooses the opinion pieces for this newspaper? This article is a completely one sided joke.

just as good as you , 1 week ago

It IS - as you admit - an OPINION.

bdtaylor , 1 week ago

if Trump is such a boob, m_oron, rube and nitwitt that CNN and MSNBC make him out to be, then how has he managed to fool the most sophisticated surveillance network in the world: namely the CIA and NSA. if Trump was a Russian "Manchurian" candidate, does anyone actually think the CIA and NSA wouldn't have figured that out 2 years ago?

All we have are platitudes and no real evidence. Is their a bunch of corrupt people and dealing around Trump, yup (Michael Cohen, Maniford and probably others) is their actual Russian "conspiracy" NOPE.

This entire RussiaGate conspiracy was started by Robby Mook and John Podesta of the DNC (with the support of Clinton) to justify the embarrassment of losing to Trump in 2016. Imagine losing to Trump a complete political novice that Hillary outspent 2.5x (she spent almost $1Bil USD and still LOST).
Turn on your critical thinking and this entire RussiaGate is one big joke.

[Jan 22, 2019] Tucker Carlson Calls Out Famous Liberals Who Urged Doxing, Assault, Murder Of Covington MAGA Kids

Notable quotes:
"... Checking facts and adding context is what journalists are paid to do. It's in the first line of the job description. Yet, amazingly, almost nobody in the American media did that. ..."
"... That's a shame, because there was a lot to check. The full video of what happened on Friday in Washington is well over an hour long. The four minutes that made Twitter don't tell the story, but instead distorted the story. A longer look shows that the boys from Covington Catholic in Kentucky weren't a roving mob looking for a fight. They were, in fact -- and it shows it on the tape -- standing in place waiting to be picked up by a bus. ..."
"... As they waited there, members of a group called the Black Hebrew Israelites, a black supremacist organization, began taunting them with racial epithets. Nathan Phillips, the now-famous American Indian activist, also approached them, pounding his drum. The footage seems to suggest the boys were unsure whether Phillips was hostile or taking their side against the Black Hebrew Israelites. But in any case, there is no evidence at all that anyone said, "build a wall." ..."
"... So, what really happened on Friday? Watch and decide for yourself. There's plenty of video out there, and some of it is fascinating. What we know for certain at this point is that our cultural leaders are, in fact, bigots. They understand reality on the basis of stereotypes. When the facts don't conform to what they think they know, they ignore the facts. They see America not as a group of people or of citizens, but as a collection of groups. Some of these groups, they are convinced, are morally inferior to other groups. They know that's true. They say it out loud. That belief shapes almost all of their perceptions of the world. ..."
Jan 22, 2019 | www.zerohedge.com

Once footage emerged of the entire incident, however, it became clear that the left had gotten it completely wrong ; Phillips had approached the teens - many wearing MAGA hats, while a group of Black Israelites considered to be a hate group by the Anti-Defamation League hurled racial insults at the students.

After the truth emerged, famous liberals who were previously frothing at the mouth went on a mad scramble to delete their tweets full of hate, slander and disinformation . The internet never forgets, however, and neither does Tucker Carlson:

https://www.foxnews.com/opinion/tucker-carlson-covington-story-was-not-about-race-but-about-people-in-power-attacking-people-theyve-failed

If you were on social media over the weekend, you probably saw the video. It was shot Friday afternoon , on the steps of the Lincoln Memorial. It seemed to show a group of teenage boys taunting an elderly American Indian man who was holding a drum.

The young men had come to Washington from a Catholic school in Kentucky to demonstrate in the March for Life . Some of them wore "Make America Great Again" hats. They seemed menacing. Within hours, the video was being replayed by virtually every news outlet in America. The American Indian man with the drum in the video is called Nathan Phillips. He described the young men he encountered, the ones in the hats, as aggressive and threatening -- essentially shock troops for Donald Trump.

CLICK HERE TO READ MORE FROM TUCKER CARLSON.

"I heard them saying, 'Build that wall. Build that wall,'" Phillips said. "This is indigenous land. We're not supposed to have walls here."

It's hard to remember the last time the great American meme machine produced a clearer contrast between good and evil -- it was essentially an entire morality play shrunk down to four minutes for Facebook.

On one side, a noble tribal elder, weather-beaten, calm and wise. He looks like a living icon. You could imagine a single tear sliding slowly down his cheek at the senselessness of it all.

On the other side, you had a pack of heedless, sneering young men from the south, drunk on racism and white privilege. The irony is overwhelming: The indigenous man's land had been stolen by the very ancestors of these boys in MAGA hats. Yet they dare to lecture him about walls designed to keep people who look very much like him out what they were calling "their" country.

CLICK HERE TO VIEW THE ENTIRE EPISODE.

It was infuriating to a lot of people. At the same time, it was also strangely comforting to the people who watched it from Brooklyn and L.A. The people who run this country have long suspected that middle America is a hive of nativist bigotry. And now they had proof of that. It was cause for a celebration of outrage. There's nothing quite as satisfying as having your own biases confirmed.

But did the video really describe what happened? That should have been the first question journalists asked. Checking facts and adding context is what journalists are paid to do. It's in the first line of the job description. Yet, amazingly, almost nobody in the American media did that.

That's a shame, because there was a lot to check. The full video of what happened on Friday in Washington is well over an hour long. The four minutes that made Twitter don't tell the story, but instead distorted the story. A longer look shows that the boys from Covington Catholic in Kentucky weren't a roving mob looking for a fight. They were, in fact -- and it shows it on the tape -- standing in place waiting to be picked up by a bus.

As they waited there, members of a group called the Black Hebrew Israelites, a black supremacist organization, began taunting them with racial epithets. Nathan Phillips, the now-famous American Indian activist, also approached them, pounding his drum. The footage seems to suggest the boys were unsure whether Phillips was hostile or taking their side against the Black Hebrew Israelites. But in any case, there is no evidence at all that anyone said, "build a wall."

So, what really happened on Friday? Watch and decide for yourself. There's plenty of video out there, and some of it is fascinating. What we know for certain at this point is that our cultural leaders are, in fact, bigots. They understand reality on the basis of stereotypes. When the facts don't conform to what they think they know, they ignore the facts. They see America not as a group of people or of citizens, but as a collection of groups. Some of these groups, they are convinced, are morally inferior to other groups. They know that's true. They say it out loud. That belief shapes almost all of their perceptions of the world.

It's not surprising, then, that when a group of pro-life Catholic kids who look like lacrosse players and live in Kentucky are accused of wrongdoing, the media don't pause for a moment before casting judgment. Maggie Haberman of the New York Times suggested the boys needed to be expelled from school. Ana Navarro of CNN called the boys racists and "asswipes" and then went after their teachers and parents.

Others called for violence against them . CNN legal analyst Bakari Sellers suggested one of the boys should be, "punched in the face." Former CNN contributor Reza Aslan agreed. Aslan asked on Twitter, "Have you ever seen a more punchable face than this kid's?" Longtime CNN contributor Kathy Griffin seemed to encourage a mob to rouse up and hurt these boys, tweeting, "Name these kids. I want names. Shame them. If you think these effers wouldn't dox you in a heartbeat. Think again." She repeated her demand again later: "Names please. And stories from people who can identify them and vouch for their identity. Thank you."

Hollywood film producer Jack Morrissey tweeted that he wanted the boys killed: "MAGA kids go screaming, hats first, into the woodchipper." He paired that with a graphic photo. Actor Patton Oswalt linked to personal information about one of the boys, in case anyone wanted to get started on that project. Meanwhile, Twitter, which claims to have a policy against encouraging violence, stood by silently as all this happened.

But in case you think the response was entirely from the left, you should know that the abuse was bipartisan. This wasn't just left versus right. It was the people in power attacking those below them as a group. Plenty of Republicans in Washington were happy to savage the Covington kids, probably to inoculate themselves from charges of improper thought. Bill Kristol asked his Twitter followers to consider "the contrast between the calm dignity and quiet strength of Mr. Phillips and the behavior of MAGA brats who have absorbed the spirit of Trumpism."

So what's actually going on here? Well, it's not really about race. In fact, most of the stories about race really aren't about race. And this is no different. This story is about the people in power protecting their power, and justifying their power, by destroying and mocking those weaker than they are.

And then when the actual facts emerged, Kristol quietly deleted his tweet. He never apologized, of course. He hasn't apologized for the Iraq war, either. There's no need. People keep giving him money.

The National Review, meanwhile, ran a story entitled, "The Covington Students Might As Well Have Just Spit on the Cross." That story has since been pulled too, but not before the author admitted he never even bothered to watch all the videos. He knew what he knew. That was enough.

What was so interesting about the coverage of Friday's video was how much of it mentioned something called "privilege." Alex Cranz, an editor at Gizmodo, for example, wrote, "From elementary school through college, I went to school with sheltered upper middle-class white boys who could devastate with a smirk. A facial gesture that weaponized their privilege. Infuriatingly you can't fight that effing smirk with a punch or words. We saw that as Trump smirked his way through the election and we'll see it as that boy from Kentucky's friends, family, and school protect him. I effing hate that smirk. It says 'I'm richer, I'm white, and I'm a guy.'"

What's so fascinating about all these attacks is how inverted they are. These are high school kids from Kentucky. Do they really have more privilege than Alex Cranz from Gizmodo? Probably not. In fact, probably much less. They're far less privileged than virtually everyone who called for them to be destroyed, based on the fact that they have too much privilege.

Consider Kara Swisher, for example, an opinion columnist at the New York Times. Swisher went to Princeton Day School and then Georgetown, then got a graduate degree at Columbia. She's become rich and famous, in the meantime, by toadying for billionaire tech CEOs. She's their handmaiden. Nobody considers her very talented. And yet she's somehow highly influential in our society. Is she more privileged than the boys of Covington Catholic in Kentucky? Of course she is. Maybe that's why she feels the need to call them Nazis, which she did, repeatedly.

Video

So what's actually going on here? Well, it's not really about race. In fact, most of the stories about race really aren't about race. And this is no different. This story is about the people in power protecting their power, and justifying their power, by destroying and mocking those weaker than they are.

CLICK HERE TO GET THE FOX NEWS APP

Why? It's simple. Our leaders haven't improved the lives of most people in America. They can't admit that because it would discredit them. So, instead they attack the very people they've failed. The problem, they'll tell us, with Kentucky, isn't that bad policies have hurt the people who live there. It's that the people who live there are immoral because they're bigots. They deserve their poverty and opioid addiction. They deserve to die young.

That's what our leaders tell themselves. And now, that's what they're telling us. Just remember: they're lying.

[Jan 22, 2019] Death Of Russiagate Mueller Team Tied To Mifsud's Network

Looks like all of them were Brennan men. CIA used FBI counterintelligence and counter-terrorism personnel to kick start the investigation/scandal.
Notable quotes:
"... They quote anonymous officials who believe that their intelligence agencies used counter-terrorism personnel to kick start the investigation/scandal. ..."
Jan 22, 2019 | www.zerohedge.com
Tyler Durden Tue, 01/22/2019 - 10:22 2.3K SHARES

Via Disobedient Media ,

In April last year, Disobedient Media broke coverage of the British involvement in the Trump-Russia collusion narrative, asking why All Russiagate Roads Lead To London , via the quasi-scholar Joseph Mifsud and others.

The issue was also raised by WikiLeaks's Julian Assange , just days before the Ecuadorian government silenced him last March. Assange's Twitter thread cited research by Chris Blackburn , who spoke with Disobedient Media on multiple occasions covering Joseph Mifsud's ties to British intelligence figures and organizations, as well as his links to Hillary Clinton's Presidential campaign, the FBI, CIA and the private cyber-security firm Crowdstrike.

We return, now, to this issue and specifically the research of Chris Blackburn, to place the final nail in the coffin of the Trump-Russia collusion charade. Blackburn's insights are incredible not only because they return us to the earliest reporting on the role of British intelligence figures in manufacturing the Trump-Russia collusion narrative, but because they also implicate members of Mueller's investigation. What we are left with is an indication of collusion between factions of the US and UK intelligence community in fabricating evidence of Trump-Russia collusion: a scandal that would have rocked the legacy press to its core, if Western establishment-backed media had a spine.

In Disobedient Media's previous coverage of Blackburn's work, he described his experience in intelligence:

"I've been involved in numerous investigations that involve counter-intelligence techniques in the past. I used to work for the 9/11 Families United to Bankrupt Terrorism , one of the biggest tort actions in American history. I helped build a profile of Osama bin Laden's financial and political network, which was slightly different to the one that had been built by the CIA's Alec Station , a dedicated task force which was focused on Osama bin Laden and Al-Qaeda. Alec Station designed its profile to hunt Osama bin Laden and disrupt his network. I thought it was flawed. It had failed to take into account Osama's historical links to Pakistan's main political parties or that he was the figurehead for a couple of organizations, not just Al-Qaeda."

"I also ran a few conferences for US intelligence leaders during the Bush administration. After the 9/11 Commission published its report into the attacks on the World Trade Center and the Pentagon it created a public outreach program. The US National Intelligence Conference and Exposition ( Intelcon ) was one of the avenues it used. I was responsible for creating the 'View from Abroad' track. We had guidance from former Senator Slade Gorton and Jamie Gorelick, who both sat on the 9/11 Commission. We got leaders such as Sir John Chilcot and Baroness Pauline Neville Jones to come and help share their experiences on how the US would be able to heal the rifts after 9/11."

"The US intelligence community was suffering from severe turf wars and firewalls, which were hampering counter-terrorism efforts. They were concentrating on undermining each other rather than tackling terrorism. I had mainly concentrated on the Middle East, but in 2003 I switched my focus to terrorism in South Asia."

Counter Terrorism, Not Counter Intelligence, Sparked Probe

In an article published by The Telegraph last November, the paper acknowledged the following:

"It forces the spotlight on whether the UK played a role in the FBI's investigation launched before the 2016 presidential election into Trump campaign ties to the Kremlin... Mr. Trump's allies and former advisers are raising questions about the UK's role in the start of the probe, given many of the key figures and meetings were located in Britain... One former top White House adviser to Mr. Trump made similar insinuations, telling this newspaper: "You know the Brits are up to their neck." The source added on the Page wiretap application: "I think that stuff is going to implicate MI5 and MI6 in a bunch of activities they don't want to be implicated in, along with FBI, counter-terrorism and the CIA. " [Emphasis Added]

The article cites George Papadopoulos, who asked why the "British intelligence apparatus was weaponized against Trump and his advisers." Papadopoulos has also addressed the issue at length via Twitter. In response to the Telegraph's coverage of the issue, Chris Blackburn wrote via Twitter :

"The Telegraph story on Trump Russia acknowledges that activities involving counter-terrorism are at the heart of the scandal...not counter-intelligence. If the [London Centre for International Law Practice] was British state, not private, some Commonwealth countries are going to be seriously pissed off."

Blackburn spoke with Disobedient Media, saying:

" If you factor in the dreadful reporting to discredit Joseph Mifsud and leaks, it is pretty clear something rather strange happened to George Papadopoulos during the campaign while he was shuttling around Europe and the Middle East. He was working with people who have intelligence links at the London Centre of International Law Practice. A recent article in The Telegraph also alludes to MI5, MI6, and CIA using counter-terrorism assets which would tie into the London Centre of International Law Practice (LCILP), and its sister organizations, doing counter-terrorism work for the Australian, UK and US governments. They quote anonymous officials who believe that their intelligence agencies used counter-terrorism personnel to kick start the investigation/scandal." [Emphasis Added]

Blackburn discussed this differentiation with Disobedient Media:

"Counter-terrorism is obviously involved in more kinetic, violent political actions-concerning mass casualty events, bombings, assassinations, poisonings, and hacking. But, the lines are blurring between them. Counter-intelligence cases have been known to stretch for decades- often relying on nothing more than paranoia and suspicion to fuel investigations. Counter-terrorism is also a broader discipline as it involves tactical elements like hostage rescue, crime scene investigations, and explosive specialists. Counter-Terrorism is a collaborative effort with counter-terrorism officers working closely with local and regional police forces and civic organizations. There is also a wider academic field around countering violent, and radical ideology which promotes terrorism and insurgencies. Cybersecurity has become the third major discipline in intelligence. The London Center of International Law Practice, the mysterious intelligence company that employed both Papadopoulos and Mifsud , had also been working in that area."

Continuing, Blackburn pinpointed the significance of defining counter-terrorism as the starting point of the investigation, saying: "It shows that there is a high probability that intelligence was deliberately abused to make Papadopoulos' activities look like they were something else. As counter-terrorism and counterintelligence are close in tactics and methods, it would seem that they were used because they share the same skill sets - covert evidence gathering and deception. It's basically sleight of hand. A piece of theatre would be more precise. However, we don't know if the FBI knew it was real or make-believe. It's more likely that the CIA played the FBI with the help of close allies who were suspicious and frightened of a Trump presidency."

Mueller's Team And Joseph Mifsud

Zainab Ahmad , a member of Mueller's legal team, is the former Assistant United States Attorney in the Eastern District of New York. As pointed out by Blackburn , Ahmad attended a Global Center on Cooperative Security event in 2017. In recent days, Blackburn wrote via Twitter :

"Zainab Ahmad is a major player in the Russiagate scandal at the DOJ. Does she work for SC Mueller? She was at a GCCS event in May 2017. Arvinder Sambei, a co-director of the [London Centre of International Law Practice], worked with Joseph Mifsud, [George Papadopoulos] and [Simona Mangiante]. She's a GCCS consultant."

Blackburn told this author:

"Zainab Ahmad was one of the first DOJ prosecutors to have seen the Steele dossier. In May 2017, she attended a counter-terrorism conference in New York with the Global Center on Cooperative Security (GCCS), an organization which Joseph Mifsud, the alleged Russian spy, had been working within London and Riyadh, Saudi Arabia."

Zainab Ahmad (AHMAD). Image via the Combatting Terrorism Center, West Point

"Richard Barrett, the Former Chief of Counter-Terrorism at MI6, Britain's foreign intelligence department traveled with Mifsud to Saudi Arabia to give a talk on terrorism in 2017. Ex-CIA officers, US Defense, and US Treasury officials were also there. The London Centre of International Law Practice's relationship to the Global Center had been established in 2014. The Global Center on Cooperative Security made Martin Polaine and Arvinder Sambei consultants, they then became directors at the London Centre of International Law Practice."

"The Global Center on Cooperative Security's first major UK conference was at Joseph Mifsud's London Academy of Diplomacy (LAD). Mifsud then followed Arvinder Sambei and Nagi Idris over to the London Centre of International Law Practice. Sources have told me that Mifsud was moonlighting as a specialist on counter-terrorism and Islamism while working at LAD which explains why he went to work in counter-terrorism after LAD folded."

"I don't think it's a coincidence that Global Center on Cooperative Security is connected to various elements that popped up in the Papadopoulos case. The fact that a prosecutor on Mueller's team was at Global Center before Mueller was appointed as special counsel is also troubling."

Days ago, The Hill reported on Congressional testimony by Bruce Ohr, revealing that when served as a DOJ official, he warned FBI and DOJ figures that the Steele dossier was problematic and linked to the Clintons. Critically, The Hill writes:

"Those he briefed included Andrew Weissmann, then the head of DOJ's fraud section; Bruce Swartz, longtime head of DOJ's international operations, and Zainab Ahmad , an accomplished terrorism prosecutor who, at the time, was assigned to work with Lynch as a senior counselor. Ahmad and Weissmann would go on to work for Mueller, the special prosecutor overseeing the Russia probe." [Emphasis Added]

This point is essential, as it not only describes Ahmad's role in Mueller's team but places her at a crucial pre-investigation meeting.

Last year, Blackburn noted the connection between Mifsud and Arvinder Sambei , writing: "LCILP director and FBI counsel, works with Mike Smith at the Global Center. They ran joint counter-terrorism conferences and training with Mifsud's London Academy. Sambei then brought Mifsud over to the [London Centre of International Law Practice]. [Global Center works with Aussies, UK and US State too."

Sambei has been described elsewhere as a "Former practising barrister, Senior Crown Prosecutor with the Crown Prosecution Service of England & Wales, and Legal Adviser at the Permanent Joint Headquarters (PJHQ), Ministry of Defence." [British spelling has been retained]

Arvinder Sambei. Image via the Public International Law Advisory Group

That Sambei has been so thoroughly linked to organizations where Mifsud was a central figure is yet another cause of suspicion regarding allegations that Joseph Mifsud was a shadowy, unknown Russian agent until the summer of 2016 . She is also a direct link between Robert Mueller and Mifsud.

Blackburn wrote via Twitter : "Arvinder Sambei helped to organize LCILP's counter-terrorism and corruption events. She used her contacts in the US to bring in Middle Eastern government officials that were seen to be vulnerable to graft. Lisa Osofsky, former FBI Deputy General Counsel, was working with her." Below, Arvinder is pictured at a London Centre of International Law Practice (LCILP) event.

Arvinder Sambei, pictured at an LCILP event. Image via Chris Blackburn, Twitter

As Chris Blackburn told this author:

" Mifsud and Papadopoulos's co-director Arvinder Sambei was also the former FBI British counsel working 9/11 cases for Robert Mueller. She also runs a consultancy which deals with Special Investigative Measure (SIMs) which is just a posh description for covert espionage and evidence gathering. She has worked for major intelligence and national law agencies in the past. She wore two hats as a director of London Centre and a consultant for the Global Center on Cooperative Security (GCCS), a counter-terrorism think tank which is sponsored by the Australia, Canada, UK and US governments. Alexander Downer's former Chief of Staff while at the Australian Department of Foreign Affairs and Trade now works for the Global Center. Mifsud was also due to meet with Australian private intelligence figures in Adelaide in March 2016. So. Australia is certainly a major focus for the investigation." [Emphasis Added]

Below, former FBI Deputy General Counsel Lisa Osofsky is pictured at a London Centre for International Law Practice event . Osofsky also served as the Money Laundering Reporting Officer with Goldman Sachs International. Since 2018, she has served as the Director of the UK's Serious Fraud Office (SFO).

Lisa Osofsky, pictured at an LCILP event. Image via Chris Blackburn, Twitter

An Embarrassment For John Brennan?

Disobedient Media previously reported that Robert Hannigan, then head of British spy agency GCHQ, flew to Washington DC to share 'director-to-director' level intelligence with then-CIA Chief John Brennan in the summer of 2016. This writer noted that " The Guardian reported Hannigan's announcement that he would step down from his leadership position with the agency just three days after the inauguration of President Trump, on 23 January 2017. Jane Mayer, in her profile of Christopher Steele published in the New Yorker, also noted that Hannigan had flown to Washington D.C. to personally brief the then-CIA Director John Brennan on alleged communications between the Trump campaign and Moscow. What is so curious about this briefing "deemed so sensitive it was handled at director-level" is why Hannigan was talking director-to-director to the CIA and not Mike Rogers at the NSA, GCHQ's Five Eyes intelligence-sharing partner."

Blackburn told Disobedient Media:

"Former Congressman Trey Gowdy, who has seen most of the information gathered by Congress from the intelligence community concerning the Russia investigation, said that if President Trump were to declassify files and present the truth to the American public, it would " embarrass John Brennan ." I think that is pretty concrete for me, but it's not definitive. I know the polarization and spin in Washington has become perverse, but that statement is pretty specific for me. If Brennan is involved, it is most probably through Papadopoulos who sparked off the 'official' investigation at the FBI. He also made sure the Steele dossier was spread through the US government."

Blackburn added: "Chris Steele was also working on FIFA projects, and a source has told me that he was working to investigate the Russian and Qatari World Cup bids. The London Centre of International Law Practice has been working with Majed Garoub, the former Saudi legal representative of FIFA, the world governing body for soccer. He's also been working against the Qatari bid. Steele likes to get paid twice for his investigations."

"Mifsud has also been associated with Prince Turki the former Saudi intelligence chief, Mifsud and the London Academy of Diplomacy used to train Saudi diplomats and intelligence figures while Turki was the Saudi Ambassador to London. Turki is a close friend of Bill Clinton and John Brennan. Nawaf Obaid was also courting Mifsud and tried to get him a cushy job working with CNN's Freedom Project at Link Campus in Rome. He also knows John Brennan. Intelligence agencies like to give out professional gifts like this plum academic position for completing missions. In the US, it is widely known that intelligence agencies gift the children of assets to get them into prestigious Ivy League schools."

At minimum, we can surmise that Mifsud was not a Russian agent, but was an asset of Western intelligence agencies. We are left with the impression that the Mifsud saga served as a ploy, whether he participated knowingly or not. It seems reasonable to conclude that the gambit was initially developed with participation of John Brennan and UK intelligence. Following this, Mueller inherited and developed the Mifsud narrative thread into the collusion soap opera we know today.

Ultimately, we are faced with the reality that British and US interests worked together to fabricate a collusion scandal to subvert a US Presidency, and in doing so, intentionally raised tensions between the West and a nuclear-armed power.


snodgrass , 2 hours ago link

What ********. Britain was part of the group pulling of 911 along with the American and Jewish establishment. Blackburn was the inside guy, posing as an outsider, to deflect attention from the real perpetrators. These people always have agents on both sides of every issue in the same way they fund two "opposing" political parties and fund two "opposing" sides in the media.

freedommusic , 3 hours ago link

Ultimately, we are faced with the reality that British and US interests worked together to fabricate a collusion scandal to subvert a US Presidency , and in doing so, intentionally raised tensions between the West and a nuclear-armed power .

It's called TREASON .

Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies , giving them aid and comfort within the United States or elsewhere , is guilty of treason and shall suffer death, or shall be imprisoned not less than five years

Jung , 3 hours ago link

SteeleGate---his mate Skripal, boss Pablo Miller----novichok---Porton Down---anything to blame Russia in the end. After 30 dys of shutdown personnel of CIA, FBI and DOJ can be changed legally: draining of the swamp and DECLAS can begin with proper Military Tribunals in place. This according to Q who shared all of this, so it was not a conspiracy theory that the Q team exposed, but just MSM and Deep State in their last panic mode. Justice will now be able to follow: maybe rel end of endless wars too!

boooyaaaah , 3 hours ago link

There are more and more articles saying that the FBI, CIA, M14 15,16 yada yada, were overly concerned about Trump. Their sin...caring too much for the USA.

They attempted a coup de'etat for "our" own good...we... being "we the people".

To quote A Lincoln

"You will find that all the arguments in favour of kingcraft were of this class; they always bestrode the necks of the people,

-- not that they wanted to do it, but because the people were better off for being ridden."

Lincoln did not mince words

So now we have an international conspiracy of care. Not one power grubber in the group. A syndicate of misunderstood do gooders.

But not having the consent of the people, but rather trying to undo, and foil the consent of the people.

This part of the Declaration applies

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, -- That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Last of the Middle Class , 4 hours ago link

Ultimately, we are faced with the reality that British and US interests worked together to fabricate a collusion scandal to subvert a US Presidency, and in doing so, intentionally raised tensions between the West and a nuclear-armed power..."

Why do you not call it a coup d'etat? That is what it is, nothing less. If it were about something Trump did you would use the harshest possible language. Why not tell the truth here. Let the American people know what happened.

[Jan 22, 2019] The International Monetary Fund serves up depressing new outlook on the world for investors to ponder

Notable quotes:
"... Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter ..."
Jan 22, 2019 | finance.yahoo.com

The International Monetary Fund just uncorked a sobering outlook on the global economy and asset markets for the elite billionaires huddled up in Davos, Switzerland for the World Economic Forum to ponder.

In its latest World Economic Update report, the IMF said Monday the global economy is projected to grow at a meager 3.5% this year and only accelerate to 3.6% in 2020. The outlooks for 2019 and 2020 are 0.2 percentage point and 0.1 percentage point below the IMF's projections issued in October.

Hat tips to the ongoing U.S. trade war with China, tightening financial conditions globally and more volatile risk asset markets.

The finer points: The IMF pretty much had nothing good to say on the outlooks for developed and emerging markets. Although that is nothing unusual for the IMF -- who often takes a cautious stance on its outlooks for economies and financial markets -- it may give many investors a wake up call amid a somewhat hot start to the stock market in 2019.

Of note, U.S. growth is seen slowing to 2.5% in 2019 and dipping to 1.9% in 2020 at the hands of the unwinding of fiscal stimulus (see Trump tax cuts), higher interest rates and the U.S. trade war with China. The IMF tossed the U.S. a bone by noting the pace of expansion is above the country's estimated potential growth in both years.

As for Europe, the IMF is now more bearish on growth compared to its October outlook. Growth for emerging and developing Europe in 2019 is forecast to cool to 0.7% (from 3.8% in 2018) and then bounce to 2.4% in 2020. Previously, the IMF was looking for growth of 2% and 2.8% in 2019 and 2020, respectively. Lackluster growth in Italy, France and Germany as well as policy tightening in Turkey are the main culprits for the IMF's European growth downgrade.

Growth in emerging and developing Asia is expected to drop from 6.5% in 2018 to 6.3% in 2019 and reach 6.4% in 2020, said the IMF. The IMF expects growth in China to be 6.2% both in 2019 and 2020 versus 6.6% in 2018.

Interestingly, the IMF incorporates the impact of continued tariffs by the U.S. on China and vice versa in its baseline forecast. In other words, the organization does not expect there to be a trade truce between the countries on their self-imposed March 1 deadline.

For the investors out there: For those bulls that have returned to beaten up stocks in January, the IMF does its best to squash the hopium infiltrating your brains. "A range of catalyzing events in key systemic economies could spark a broader deterioration in investor sentiment and a sudden, sharp repricing of assets amid elevated debt burdens. Global growth would likely fall short of the baseline projection if any such events were to materialize and trigger a generalized risk-off episode," cautioned the IMF.

China's growth slowdown is also a risk that the IMF suggests investors don't fully appreciate.

"As seen in 2015–16, concerns about the health of China's economy can trigger abrupt, wide reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets under pressure," the IMF pointed out.

The bottom line: The IMF isn't exactly super plugged into global asset markets in the same vein as forecasters at Goldman Sachs and Morgan Stanley. But their latest assessment of the global economy and risk markets offers up a good counterbalance to the enthusiasm that has begun to creep back into financial markets after the October 2017 through December 2018 rout.

Happy trading, folks.

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter

[Jan 22, 2019] OPEC December Production Data " Peak Oil Barrel

Jan 22, 2019 | peakoilbarrel.com

HHH x Ignored says: 01/20/2019 at 1:20 pm

Sovereign Wealth Funds aren't immune to losses. They load up on assets in volume. Don't forget they have to exchange their currency for dollars or whatever currency is needed to buy whatever they are buying. Currency moves against their position. They are forced to sell or just eat the losses. But can't unload a large position in an illiquid market unless CB's start bailing out SWF by buying their assets at any price. Stock market crash wouldn't be the death of civilization and that's exactly why we will get another crash and soon. Might be the death of a few SWF's but not civilization. Might be the death of 2/3 of shale oil yet not the end of civilization. But you can only load up so much debt on a economy that is reaching energy limits. There will be a debt cleansing and soon. A lot of stuff we have now will be going away. Peoples current level of living standards are going to change and change in a big way. Not the end of civilization even though for some it will seem like it is.
Watcher x Ignored says: 01/20/2019 at 6:14 pm
They are immune to losses.

They don't sell. The oil flows, they buy more, the loss is erased by added oil money. Besides which, how can there be intolerable selling pressure if the owners of 23% of all shares in the world keep buying?

Numbers on a screen are never going to kill billions of people. The numbers will just be changed by decree, and systemically in cooperation with all CBs.

Only oil can't be addressed. Oil scarcity eliminates food from shelves and stomachs, no matter what money is created to pay truckers. The truckers can have all the money in the world and if there is no diesel available for the tank, the food doesn't move.

twocats x Ignored says: 01/21/2019 at 8:59 am
watcher, your general theory has been shown correct for a number of years.

But it also requires a certain amount of global consensus between CB's, nations, et al taking coordinated actions to keep a global corpse-economy rolling. This is not an assumption that can be made under all circumstances.

the theory also doesn't entire hold true for countries that are being exiled from this consensus, or otherwise aren't being allowed to participate (for whatever reason) in the forever-money you are referring to – essentially stranded on the rocks of collapse – Venezuela; Brazil; Iran; Syria – and innumerable small countries. Yes those countries with SWF and the Big Economies are still doing fine – but if their satellite countries raise enough of a stink, it could unravel the consensus.

the rise of right-wing nationalist governments around the world is a strong indicator of this new trend.

Watcher x Ignored says: 01/21/2019 at 12:51 pm
Well, there is certainly danger in absolutism as to . . . in all circumstances and at all times this theory must apply blah blah.

The central reality is that oil is everything. Has been since 1925 or so as its relentless power widened (widened, rather than "grew"). Caused Japan to bomb Pearl Harbor. Determined victory in Europe. Stressed the Soviet Union to its end. Has defined for 60ish years the Middle East as the flashpoint for global nuclear war.

CBs will probably communicate and cooperate from now on, since the systemic risk to their power unfolded in 2008. They kept the wheels turning the past 10 years. They don't have control of the SWFs, the new force in the universe that has appeared as a consequence of simply them getting bigger. They started in the 1990s, but it took until now for them to grow as oil money flowed to them. Now . . . 23% of all common stock shares on the planet. But though CBs don't have control of SWFs, they share the common goal of status quo maintenance.

As for the rise of nationalism (of any sort, Italy's nationalism is hardly right wing, nor was/is Greece's), this is something that for some reason instantly captured the disapproval of the left wing. It has not been thought through. Nationalism is the only possible mechanism for STOPPING the CBs from cooperating and instead actually acting in their own country's best interests, rather than imposing their orchestrated global control on society.

Nationalism is the force that threatens Deep States. This is not a bad thing. Unless you want perpetual slavery to the power of CBs.

HHH x Ignored says: 01/21/2019 at 1:37 pm
Limits to growth and or oil scarcity creates the environment for Nationalism. Oil scarcity is a direct threat to debt money. CB's are ultimately playing a losing hand of extend and pretend. Ultimately debt money is going bye-bye. Debt money doesn't work in an energy contracting environment. Interest on debt will be outlawed by government decree. Bond markets will disappear. Things will be funded without interest payments for awhile until that too doesn't work. But until then there will most certainly be a lot of can kicking.
twocats x Ignored says: 01/21/2019 at 7:36 pm
all I'm saying is that you've stated repeatedly that only "natural scarcity" will cause any sort of decline – and in your own response to that statement you actually agree with and confirm an opposing view – that a breakdown of global consensus between SWF, CBs, and powerful Nationalist Govt's could and probably will unravel the "oil must flow at all costs" dictum that has prevailed for the past 10 years. And this will happen BEFORE the gas lines. Many groups are already not getting what they want – yet no gas lines – except maybe South Sudan – and once they've been trimmed and skimmed enough – they'll begin to crack. and if those groups hold state power – they will use the power of the state to try and impose their will. good, bad, indifferent, left right, whatever.

[Jan 21, 2019] IMF cuts world growth forecast

Jan 21, 2019 | www.bloomberg.com

With American markets shut for a holiday, there seemed to be little to inspire either contracts on the S&P 500 Index or the Stoxx Europe 600 Index, with the latter paring the worst of an early drop but still ending slightly down. News that the IMF was cutting its global growth forecast to the weakest in three years -- in part because of softening demand in Europe -- merely cemented an already downbeat mood. Bonds across the region were mixed.

[Jan 21, 2019] Sound financial advice

Jan 21, 2019 | www.zerohedge.com

BandGap , 2 hours ago link

Retirement? Hahahahahahahahahaha! Whatever.

in 2008 I switched everything into bonds, didn't lose anything in the market. In 2011 I got divorced and lost 55%. My advice, stay married.

[Jan 21, 2019] Should Retirees Worry About Bear Markets

Notable quotes:
"... Currently, the S&P 500 (as of 1/18/19) is trading at 2,670 with Q4-2018 trailing reported earnings estimated to be $139.50. ( S&P Data ) This puts the 10-year average trailing P/E ratio of the S&P at a rather lofty 28.86x. ..."
Jan 21, 2019 | www.zerohedge.com

Should Retirees Worry About Bear Markets?

by Tyler Durden Mon, 01/21/2019 - 12:55 31 SHARES Authored by Lance Roberts via RealInvestmentAdvice.com,

Mark Hulbert recently wrote a piece suggesting "Retirees Should Not Fear A Bear Market." To Wit:

"Don't give up hope.

I'm referring to what many retirees are most afraid of: Running out of money before they die. An Allianz Life survey found that far more retirees are afraid of outliving their money than they are of dying -- 61% to 39%. This ever-present background fear is especially rearing its ugly head right now, given the bear market that too many came out of nowhere.

Retirement planning projections made at the end of the third quarter, right as the stock market was registering its all-time highs, now need to be revised.

The reason not to give up hope is that the stock market typically recovers from bear markets in a far shorter period of time than most doom and gloomers think. Consider what I found when measuring how long it took, after each of the 36 bear markets since 1900 on the bear market calendar maintained by Ned Davis Research Believe it or not, the average recovery time was 'just' 3.2 years."

Mark correctly used total return numbers in his calculations, however, while his data is correct the conclusion is not.

Here is why.

While Mark is discussing the recovery of bear markets (getting back to even) it is based on a "buy and hold" investing approach.

However, Mark's error is that he is specifically discussing "retirees" which are systematically withdrawing capital from their portfolios, paying tax on those withdrawals (from retirement accounts) and compensating for adjustments to the cost of living (not to mention spiraling "health care" costs.)

These are the same problems which plague most of the "off the shelf" financial plans today:

  1. Faulty assumptions based on average historic rates of returns rather than variable rates of return, and;
  2. Not accounting for the current level of market valuations at the outset of the planning process.

To explain the problems with both Mark's assumptions, and the vast majority of financial plans spit out of computer programs today, let's turn to some previous comments from Michael Kitces.

"Given the impact of inflation, it's problematic to start digging into retirement principal immediately at the start of retirement, given that inflation-adjusted spending needs could quadruple by the end of retirement (at a 5% inflation rate). Accordingly, the reality is that to sustain a multi-decade retirement with rising spending needs due to inflation, it's necessary to spend less than the growth/income in the early years, just to build enough of a cushion to handle the necessary higher withdrawals later!

For instance, imagine a retiree who has a $1,000,000 balanced portfolio, and wants to plan for a 30-year retirement, where inflation averages 3% and the balanced portfolio averages 8% in the long run. To make the money last for the entire time horizon, the retiree would start out by spending $61,000 initially, and then adjust each subsequent year for inflation, spending down the retirement account balance by the end of the 30th year."

Michael's assumptions on expanding inflationary pressures later in retirement is correct, however, they don't take into account the issue of taxation. So, let's adjust Kitces' chart and include not only the impact of inflation-adjusted returns but also taxation. The chart below adjusts the 8% return structure for inflation at 3% and also adjusts the withdrawal rate up for taxation at 25%. By adjusting the annualized rate of return for the impact of inflation and taxes, the life expectancy of a portfolio grows considerably shorter. While inflation and taxes are indeed important to consider, those are not the biggest threat to retiree's portfolios.

There is a massive difference between 8% "average" rates of return and 8% "actual" returns.

The Impact Of Variability

Currently, the S&P 500 (as of 1/18/19) is trading at 2,670 with Q4-2018 trailing reported earnings estimated to be $139.50. ( S&P Data ) This puts the 10-year average trailing P/E ratio of the S&P at a rather lofty 28.86x.

We also know that forward returns from varying valuation levels are significantly varied depending on when you start your investing. As shown in the chart below, from current valuation levels, forward returns from the market have been much closer to 2% rather than 8%.

As evidenced by the graph, as valuations rise future rates of annualized returns fall. This should not be a surprise as simple logic states that if you overpay today for an asset, future returns must, and will, be lower.

Math also proves the same. Capital gains from markets are primarily a function of market capitalization, nominal economic growth plus the dividend yield. Using the Dr. John Hussman's formula we can mathematically calculate returns over the next 10-year period as follows:

(1+nominal GDP growth)*(normal market cap to GDP ratio / actual market cap to GDP ratio)^(1/10)-1

Therefore, IF we assume that

We would get forward returns of:

(1.04)*(.8/1.25)^(1/30)-1+.02 = 4.5%

But there's a "whole lotta ifs" in that assumption.

More importantly, if we assume that inflation remains stagnant at 2%, as the Fed hopes, this would mean a real rate of return of just 2.5%.

This is far less than the 8-10% rates of return currently promised by the Wall Street community. It is also why starting valuations are critical for individuals to understand when planning for the accumulation phase of the investment life-cycle.

Let's take this a step further. For the purpose of this article, we went back through history and pulled the 4-periods where trailing 10-year average valuations (Shiller's CAPE) were either above 20x earnings or below 10x earnings. We then ran a $1000 investment going forward for 30-years on a total-return, inflation-adjusted, basis.

At 10x earnings, the worst performing period started in 1918 and only saw $1000 grow to a bit more than $6000. The best performing period was actually not the screaming bull market that started in 1980 because the last 10-years of that particular cycle caught the "dot.com" crash. It was the post-WWII bull market that ran from 1942 through 1972 that was the winner. Of course, the crash of 1974, just two years later, extracted a good bit of those returns.

Conversely, at 20x earnings, the best performing period started in 1900 which caught the rise of the market to its peak in 1929. Unfortunately, the next 4-years wiped out roughly 85% of those gains . However, outside of that one period, all of the other periods fared worse than investing at lower valuations. (Note: 1993 is still currently running as its 30-year period will end in 2023.)

The point to be made here is simple and was precisely summed up by Warren Buffett:

"Price is what you pay. Value is what you get."

This idea becomes much clearer by showing the value of $1000 invested in the markets at both valuations BELOW 10x trailing earnings and ABOVE 20x. I have averaged each of the 4-periods above into a single total return, inflation-adjusted, index, Clearly, investing at 10x earnings yields substantially better results.

Not surprisingly, the starting level of valuations has the greatest impact on your future results.

But, most importantly, starting valuations are critical to withdrawal rates

When we adjust the spend down structure for elevated starting valuation levels, and include inflation and taxation, a much different, and far less favorable, financial outcome emerges – the retiree runs out of money not in year 30, but in year 18.

As John Coumarionos previously wrote:

"And, if you're retired and withdrawing from your portfolio, the 'sequence-of-return' risk – the problem of the early years of withdrawals coinciding with a declining portfolio – can upend your entire retirement. That's because a portfolio in distribution that experiences severe declines at the beginning of the distribution phase, cannot recover when the stock market finally rebounds. Because of the distributions, there is less money in the portfolio to benefit from stock gains when they eventually materialize again.

I showed that risk in a previous article where I created the following chart representing three hypothetical portfolios using the '4% rule' (withdrawing 4% of the portfolio the first year of retirement and increasing that withdrawal dollar value by 4% every year thereafter). I cherry-picked the initial year of retirement, of course (2000), so that my graphic represents a kind of worst case, or at least a very bad case, scenario. But investors close to retirement should keep that in mind because current stock prices are historically high and bond yields are historically low. That means the prospects for big investment returns over the next decade are dim and that increasing stock exposure could be detrimental to retirement plans once again. In my example, decreasing stock exposure benefits the portfolio in distribution phase, and that could be the case for retirees now."

As John correctly notes, there is a case for owning stocks in a retirement portfolio, just maybe not as much as your "run of the mill" financial plan suggests. To wit:

"Returns from cash and bonds may not keep up with inflation, after all. But stock returns might fall short too. And if stocks do lag, they probably won't do so with the limited volatility that bonds tend to deliver, barring a serious bout of inflation. So, if you're within a decade of retirement, it may be time to think hard about how much stock exposure is enough. The answer might be less than you think for a portfolio in distribution phase."

Questions Retirees Need To Ask About Plans

Importantly, what this analysis reveals, is that "retirees" SHOULD be worried about bear markets. Taking the correct view of your portfolio, and the risk being undertaken, is critical when entering the retirement and distribution phase of the portfolio life cycle.

More importantly, when building and/or reviewing your financial plan – these are the questions you must ask and have concrete answers for:

If the answer is "no" to the majority of these questions then feel free to contact one of the CFP's in our office who take all of these issues into account.

With debt levels rising globally, economic growth on the long-end of the cycle, interest rates rising, valuations high, and a potential risk of a recession, the uncertainty of retirement plans has risen markedly. This lends itself to the problem of individuals having to spend a bulk of their "retirement" continuing to work.

Two previous bear markets have devastated the retirement plans of millions of individuals in the economy today which partly explains why a large number of jobs in the monthly BLS employment report go to individuals over the age of 55.

So, not only should retirees worry about bear markets, they should worry about them a lot.


WileyCoyote , 10 minutes ago link

The insidious and hidden tax - inflation. Retirement is mostly fantasy - it is always being one step away from poverty. Even after decades of sacrifice and saving.

buzzsaw99 , 32 minutes ago link

the nikkei topped out in 1989 and still hasn't recovered nearly 30 years later. most old farts, including family members, aren't balanced, they are almost totally in stocks because they believe that the fed guarantees the s&p only goes up. if someday it doesn't, too bad for them.

boo frikkedy hoo. [/dr. evil]

brushhog , 35 minutes ago link

The only way to retire [ unless you are very wealthy ] from the system is to adopt a self-reliant lifestyle where your cost of living is way down. A single adult, in fair condition, living a self reliant lifestyle can live comfortably on 15k per year. Thats assuming no debt. To do that privately, you'll need about 400-600k, the right piece of land [ paid for ], and a whole mess of specific skills.

You wont be laying on your ***. This isnt your father's retirement of leisure. This is a shifting of focus away from contribution / compensation through the system and towards independence and literal "Self" reliance.

Big Fat Bastard , 5 minutes ago link

What is the$600k for?

All Risk No Reward , 37 minutes ago link

Be afraid. Be very afraid.

ZD1 , 38 minutes ago link

Retirees should just avoid the rigged markets.

zob2020 , 1 hour ago link

bull, bear who gives a ****? Only an idiot eats up the seed capital in pensions. All that does is set down a death date you better follow thru with- With a bullet if neccesary.

Big Fat Bastard , 1 hour ago link

Answer: NO

Why: Because most retirees are dead broke swimming in a sea of mortgage debt on a depreciating asset called a house.

saldulilem , 1 hour ago link

Did they pick only companies that existed and survived the 30-year duration, in which case they may not be representative of the market? Or did they use index, in which case there is no complementary aggregate P/E ratio to account for dividends - or did they ignore dividends altogether?

This exercise doesn't seem to arrive anywhere.

Blankfuck , 1 hour ago link

Huh? Just print more ponzi! I didnt get mine the last few recessions!

RICKYBIRD , 1 hour ago link

Very easy to calculate amortization of a retirement boodle. Just go online to a mortgage amortization calculator. 1) Put in the initial amount of the retirement stake (= the amount of a mortgage to be paid off, e.g. $1 million) 2) Punch in the projected interest rate (= the interest on the mortgage). This will be the amount the retirement boodle pays in interest/dividends over time as it's being drawn upon 3) Punch in the number of years the retirement principle will have to pay out (= the number of years the mortgage is for). Crunch these with the calculator provided and you'll get the amount the account will pay out each month (= monthly payment of a mortgage with interest). Simple and free. The only uncertain thing is the interest/dividend rate of the account. But one can be conservative (Say 2-3%) and still get a very accurate monthly payout figure.

dead hobo , 1 hour ago link

Also, nothing personal, but why should I take investment advice from someone who is still working or paid to give it? I could never figure that one out.

If I were an investment genius, I would be rich, retired long before reaching age 65, and avoiding people who need investment advice.

admin user , 1 hour ago link

Does a wild bear market **** in the portfolio?

Fahq Yuhaad , 1 hour ago link

Lolz... No, the pope does.

GotAFriendInBen , 1 hour ago link

No Lance, they need not worry

Bear markets don't exist anymore

Hero Zedge , 22 minutes ago link

They exist, according to MarketWatch, they are just over before anyone knows we are in one (yes, they said that).

Batman11 , 1 hour ago link

How much have they skimmed out of my pension with HFT?

When Wall Street has finished there will be **** all left.

Get used to it.

ZENDOG , 1 hour ago link

Is Ruthy Bader dead yet????

dead hobo , 1 hour ago link

Who knows? She's going to make Trump pull a nomination for a new justice from her cold dead, possibly long refrigerated, hands.

dead hobo , 2 hours ago link

Retirees shouldn't worry about bear markets because retirees should never be in the equity market in the first place. Especially during the times of rate normalization, where sell-siders view every utterance by the Fed as 'dovish', and algos need ultra-volatility to keep in business.

Assume $1 million in savings and Social Security of $25,000/yr based on a life of very decent wages. At 4%, very easy to earn during normalized rates from fixed income, that's $65,000/yr with NO principal reduction. Paltry for NYC or CA, but very decent for a comfortable life almost everywhere else for an old person with no debts.

ZENDOG , 2 hours ago link

""Overall, between bank accounts and retirement savings, the median American household currently holds about $11,700 , according to MagnifyMoney. Almost 30 percent of households have less than $1,000 saved, MagnifyMoney finds, though the amount varies drastically by age.Aug 28, 2018""

itstippy , 53 minutes ago link

The article says, " For instance, imagine a retiree who has a $1,000,000 balanced portfolio, and wants to plan for a 30-year retirement . . . "

It's not aimed at the median American household. The median American household doesn't have a financial advisor, portfolio, or any hope for a retirement that goes beyond a $1,800 a month Social Security check.

dead hobo , 14 minutes ago link

People dig their own holes.

BandGap , 2 hours ago link

I could easily live on 35K right now. Social security? Hahahahahahaha, not in the cards for anyone.

hoffstetter , 45 minutes ago link

Here's why:

https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

http://www.multpl.com/inflation-adjusted-s-p-500/table/by-year

booboo , 2 hours ago link

and to make matters worse it is becoming more and more difficult to find a reasonably priced canned cat food that can substituted as a Decent Liver Pate. We have a high net worth Bridge Owners party next week and the stuff we tried last month pulled the bridges right out of their mouths.

CoCosAB , 2 hours ago link

retirees MUST worry about TERRORIST FINANCIAL MARKETS. But since they are dumb as a PoS they just do nothing.

All Risk No Reward , 28 minutes ago link

You proved his point. You would be very concerned if you knew the true Money Power Monopolist Game of Thrones.

===============

All Risk No Reward , 26 minutes ago link

It won't go to zero.

The debts will persist, only the fiat required to pay the debts will vaporize - at least for Main Street.

The people who believe that FRN's are based solely on faith are complete monetary illiterates.

No, their value is based upon the trillions in physical collateral backing the debt used to create them!

This is so simple, but the programming is too strong for most people, even otherwise smart people, to escape.

costa ludus , 2 hours ago link

"Retirement" is a fairly new fad- prior to the 1950s it was unheard of - expect that fad to end some point soon. The whole concept resembles a Pyramid Scheme- as long as there are enough people at the bottom supporting those at the top everything is OK- the problem occurs when there are not enough at the bottom contributing to support those above them - which we have now.

spastic_colon , 2 hours ago link

the answer is simple; the math of a distribution portfolio is vastly different than that of a portfolio NOT making withdrawals.....depending on the amount being withdrawn the recovery point will take longer if at all.

Sorry_about_Dresden , 2 hours ago link

just keep dry powder ready for when FERAL Reserve jacks discount rate up in the teens, the geezers will make it back fast. I do not doubt I will see rates in CDs at 10%. They have to drain 4.4 trillion of gravy from the system to protect what they stole in 2008 or inflation will get it fast.

All Risk No Reward , 18 minutes ago link

"If you must fight a war, end it quickly, or you will bankrupt the country." ~Sun Tzu, Art of War

The unstated corollary is, "Engineer a never ending war (on terror) if you goal is to bankrupt the country."

What makes you think the GOAL isn't to bankrupt USA, Inc. and then seize the tax payer collateral on the national debt?

You do know your property taxed home is contractually collateral for government debt, right?

You do KNOW that, right?

They aren't dumb, WE ARE GULLIBLE CHUMPS!

Dragon HAwk , 2 hours ago link

Retirement gives you time and a chance to work a few angles that your wisdom from living so long should be pointing out to you.

Die with your boots on and stick it to the man if you can, on the way out.

[Jan 21, 2019] U.S. fund investors put most cash in 'junk' since late 2016 by Trevor Hunnicutt

Jan 17, 2019 | www.nasdaq.com
NEW YORK, Jan 17 (Reuters) - U.S. fund investors charged into high-yield "junk" bonds during the latest week, pouring in $3.3 billion, the most cash flowing into that market since late 2016, Lipper said on Thursday, boosted by soothing words by Federal Reserve Chairman Jerome Powell.

Underscoring investors' appetite for some risk-taking, investors pulled $15 billion net cash from U.S.-based money market funds, according to the Refinitiv research service. For their part, U.S.-based equity mutual funds - which exclude exchange-traded funds - posted inflows of $4.8 billion, Lipper data showed.

[Jan 21, 2019] IEA OPEC+ Cuts Put Floor Under Oil Prices

Jan 21, 2019 | oilprice.com

OPEC released its Oil Market Report in recent days, which showed that the cartel slashed output by 750,000 bpd in December – sharp reductions that came before the deal even went into effect. Saudi Arabia led the way with 468,000 bpd in reductions, but its efforts were aided by the involuntary losses from Iran (-159,000 bpd), Libya (-172,000 bpd) and Venezuela (-33,000) bpd.

In fact, those three countries have accounted for massive output reductions over the past two months. The OPEC+ deal is using October as a baseline, calling for 1.2 million barrels per day (mb/d) in reductions, and the group is well on their way thanks to turmoil in just a few countries. Over the course of November and December, Iran has lost 561,000 bpd, Libya has lost 190,000 bpd, and Venezuela's output fell by 58,000 bpd. Taken together, the involuntary outages exceed 800,000 bpd.

[Jan 21, 2019] Skripal Story Just Got Weirder; First Responder Revealed As Chief Army Nurse; Steele Link Blamed On Russia

Notable quotes:
"... The whole affair is psyop, we know that already ..."
"... Stranger and stranger British press is saying that they did CPR on both victims at the scene of their collapse; being a trained nurse one of the first things they would have done is to have taken their pulse and other vitals and miraculously managed to do this and not become contaminated. Methinks something doth stink! ..."
"... Before any free-trade agreement can be reached with the United States, the Queen must issue a written apology to President Trump for attempting to overthrow his government. ..."
Jan 21, 2019 | www.zerohedge.com

The case of poisoned double-agent Sergei Skripal just got weirder after it was revealed that the first responder to the scene was the Chief Nursing Officer for the British Army after he daughter spotted Skripal and his daughter collapsed on a bench at the Maltings shopping center in Salisbury on March 5 of last year.

According to Spire FM , 16-year-old Abigail McCourt spotted the poisoned Russians while "out celebrating her brother's birthday," and then quickly alerted her mother - Alison McCourt. The two McCourts gave first aid to the Skripals until paramedics arrived.

Colonel McCourt - who was decorated for her efforts to fight Ebola in Sierra Leone, proposed her daughter as a candidate for the Lifesaver Award at Spire FM's Local Hero Awards.

"As a qualified nurse it was a fairly routine situation for me but my daughter was amazing. Her prompt actions, spotting them in difficulty, and the way she assisted me to put Yulia Skripal in the recovery position had a significant impact on the outcome of the two victims , " said Alison of her daughter.

The coincidence - kept under wraps for nearly a year , is sure to give skeptics plenty of new ammunition to refute the official narrative that Russia attempted to kill Skripal 10 years after the voluntarily gave him up in a spy exchange with the UK.

... ... ...

Christopher Steele connection walked back

In an embarrassing walkback of a story from March 2018, The Telegraph now says that the Kremlin laid a "false trail" linking Sergei Skripal to Christopher Steele - the former MI6 spy who crafted the infamous anti-Trump "Steele Dossier" paid for by Hillary Clinton's campaign.

In March, The Telegraph wrote:

The Telegraph understands that Col Skripal moved to Salisbury in 2010 in a spy swap and became close to a security consultant employed by Christopher Steele, who compiled the Trump dossier.

The British security consultant, according to a LinkedIn social network account that was removed from the internet in the past few days, is also based in Salisbury.

On the same LinkedIn account, the man listed consultancy work with Orbis Business Intelligence, according to reports. - Telegraph

On Sunday that entire connection - which implied that Skripal was somehow involved with the Steele Dossier, was blamed on Russia .

Russian intelligence created a false trail linking the double agent Sergei Skripal to the former MI6 officer behind the Trump dossier before carrying out the Salisbury nerve agent attack, the Telegraph has been told.

Well-placed sources now believe that the plot to kill Col Skripal may have included a 'black ops' attempt to sow doubt on the veracity of the explosive dossier that claims Donald Trump received Kremlin backing.

The year before the attempted assassination of Col Skripal, a mysterious post on LinkedIn suggested his MI6 handler, who is not being named, worked as a "senior analyst" at Orbis Business Intelligence, the firm that produced the Trump dossier.

...

But a number of sources have told The Telegraph that the LinkedIn profile is false - if it ever properly existed at all - and that Skripal's MI6 handler never worked for Orbis.

It is now suspected that the LinkedIn profile was created by the GRU, the Russian military intelligence unit which tried to kill Col Skripal with novichok nerve agent. - Telegraph

"By creating this link, they are suggesting that MI6 are involved with the dossier or Skripal or both. It adds to the confusion and acts as a wedge between the White House and Downing Street. It is exactly the kind of operation the Russians would order to sow confusion," said the Telegraph 's "well placed source."

"An internet hyperlink to the LinkedIn page appeared in an obscure blog posting in January 2017 - more than a year before the Salisbury attack - but the actual LinkedIn page itself has never been visible ," the Telegraph writes.

In other words, The Telegraph wrote an entire story in March of last year based on nothing more than "an internet hyperlink to the LinkedIn page" without actually having viewed the profile now blamed on a Russian black op.

But there was another possibility - one that is utterly ludicrous and now disproved - that was none the less championed by conspiracy theorists. Namely, that the death of Col Skripal was not ordered by the Kremlin at all - but carried out by British agents to silence the former Russian intelligence officer.

The reason was simple. Col Skripal - so the theory went - had helped provide information to Christopher Steele, a former senior MI6 officer, who authored an extraordinary dossier on Donald Trump, alleging that the soon-to-be president was effectively a puppet of Putin. The dossier claimed that the Kremlin had been "cultivating, supporting and assisting Trump for at least five years".

Oddly, however, a British spy named Pablo Miller was claimed by Russian media in 2007 as the MI6 agent who recruited Skripal in 1995. Miller apparently works (or worked) for Orbis - though it is unclear whether he is the same person noted in the original Telegraph report.

So - the British Army's head nurse was the first one to provide assistance to the dying Russians, while Skripal's link to Christopher Steele is now thought to be part of a Russian plot to discredit the Steele Dossier. Fascinating.


Leguran , 1 minute ago link

Fascinating??? Too much fantasy in this piece of fiction. The author seems uninterested in going beyond trying to make it look like a fantasy James Bond. Surely someone can give the 'patient in difficulty' symptoms. Good grief, to categorize this fantasy story cooked up by British Intel and hard-sell journalists, as NEWS. Is this the drivel we have to expect from journalism schools?

The_God_Particle , 22 minutes ago link

M eye 6 is complicit in the Steele Dossier on Fake Russian collusion, Trying to cover a big black eye from a so called British ally to USA that tried to run a coup on a sitting president...

keep the bastards honest , 12 minutes ago link

We always knew Pablo Miller worked for Orbis, Steele's consultancy, and was skripals handler,

the article brings out the the nurses daughter sad Yulia Skripal was not breathing, was dead, neither suffered any contact problems, unlike the policeman who was first on the scene on the old story.

FurgetStHEkatZ , 26 minutes ago link

The 'actor based reality,' which has always been a tool for TPTB to use the fair and balanced press to divide the public at large, utilizes much more than vast corps of characters, writers, producers and directors as the psyops event coordinators executing preplanned large scale operations to steer our perception with proven mind control tactics. But, they're tactics have become so simple to spot by researchers as the templates are basically similar and the plots of they're fake large scale events have become mind numbingly ridiculous for any body paying attention to even the smallest amount of detail exposed in these hoaxed

hxc , 32 minutes ago link

Wow, (((THEY))) sure LOVE gaslighting us. This mess of an attempt at an article shows how ******* stupid they really think we are. Even their warped version of one alternate theory fits their ******** narrative. ******* absurd.

rogermorris , 33 minutes ago link

Could be. but.

Porton Down is 8 miles...10 miles away? .. staff live in Salisbury...numbers of medical staff deployed at PD and area will be large...Interesting is all.

The whole affair is psyop, we know that already

Wrascaly Wabbit , 37 minutes ago link

Stranger and stranger British press is saying that they did CPR on both victims at the scene of their collapse; being a trained nurse one of the first things they would have done is to have taken their pulse and other vitals and miraculously managed to do this and not become contaminated. Methinks something doth stink!

Norfry , 43 minutes ago link

British authorities have refined to a whole new level offering bald faced lies and patent absurdities with a dignified stiff upper lip. I have it from a highly placed source that envious American and Israeli official and unofficial liars have been practicing posturing as dignified and putting glue on their upper lips.

indaknow , 44 minutes ago link

Chief nursing officer of the british army/first responder. I'm not supposed to question that right?

AutoLode , 45 minutes ago link

Remember novichok was believed to have never been achieved by the Soviets but the lab and all contents in Uzbekistan was captured by western forces

hxc , 31 minutes ago link

Invented in the USA but named in Russian.

CRITICAL THINKING

Pussy Biscuit , 46 minutes ago link

The brits are the deep statists of the deep state scum.

indaknow , 49 minutes ago link

It's all a coincidence. In fact the word coincidence is an exaggeration. Because the coincidences are happening more and more. Which makes them no longer a coincidence.

See how that works.

dunroamin , 54 minutes ago link

The previous alleged first responder was a policeman who became dangerously ill because the novichok was so potent but strangely, this woman and her daughter suffered no ill effects. I can only guess that due to her work with the British Army, she and her daughter had fortunately and coincidentally been innoculated with a novichok antidote.

hxc , 28 minutes ago link

Yeah somehow an old fat **** survived being dosed with enough nerve gas to kill a herd of elephants. Give me a ******* break.

AutoLode , 59 minutes ago link

And the only plane authorized to land on 9-12 2001 carried MI5 and MI6 chiefs

mog , 1 hour ago link

From John Helmer

Further points and questions.

http://johnhelmer.net/british-government-demolishes-skripal-house-because-sergei-skripal-poisoned-himself-roof-falls-in-on-theresa-may/

Helena Bonham-Carter , 1 hour ago link

"after he daughter spotted Skripal and his daughter"

What?

BT , 1 hour ago link

Not weirder, just the lies keep getting more obsene.

Zappalives , 1 hour ago link

Assume anything out of london is a bald face lie.

Karl Malden's Nose , 1 hour ago link

While a Mossad Agent and CIA station chief were flying kites they too noticed the Skripals and called the ambulance....

DEDA CVETKO , 1 hour ago link

And the MI-6 ambulance just happened to be passing by...

hannah , 1 hour ago link

what exactly did these 2 women do that 'saved the lives' except call 911 for help. they somehow cured a biological weapon on a park bench....?!....LOL

pablozz , 1 hour ago link

Did they use baby wipes to protect themselves?

insanelysane , 43 minutes ago link

+Infinity

The house was on lockdown forever. Even if you are a trained nurse, doctor, emt, you are out in a park with your family. What equipment are you carrying to defeat the effects of a biological weapon??? And they weren't affected. Simply amazing.

DEDA CVETKO , 1 hour ago link

Like a poorly-scripted Benny Hill show.

hooligan2009 , 1 hour ago link

a tangled web indeed. Smacks of editing completed by mr smith at the "Ministry of Truth"

let's just call it "manufactured, retrospective, plausible deniability" just so we can fit in with what other people might simply call "********".

Herodotus , 1 hour ago link

Before any free-trade agreement can be reached with the United States, the Queen must issue a written apology to President Trump for attempting to overthrow his government.

[Jan 21, 2019] Recent Market Dynamics Would Be Consistent With The Economy Already In A Recession

Jan 21, 2019 | www.zerohedge.com

One week ago, when we discussed why the Fed now finds itself trapped by the slowing economy on one hand, and the market's response to the Fed's reaction to the slowing economy (namely the market's subsequent sharp rebound, only the third time since 1938 that we've seen a V-shape recovery of this magnitude when the market dropped down more than ~10% and spiked +10% in the subsequent period), we said that the "obvious problem" is that the Fed is cutting because the economy is indeed entering a recession, even as market have already rebounded by over 10% from the recent "bear market" low factoring in a the economic response to an easier Fed, effectively cutting the drop in half expecting the Fed to react precisely to this drop, while ignoring the potential underlying economic reality (the one confirmed by the bizarrely low neutral rate, suggesting that the US economy is far weaker than most expect).

Ultimately, what this all boils down to as Bank of America explained yesterday , is whether the economy is entering a recession, or - somewhat reflexively - whether the suddenly dovish Fed, trapped by the market, has started a chain of events that inevitably ends with a recession. The historical record is ambivalent: as Bloomberg notes, similar to 1998 and 1987, the S&P fell into a bear market last month (from which it immediately rebounded) following a Fed rate hike. The difference is that in the previous two periods, the Fed cut rates in response to market crises - the collapse of Long-Term Capital Management in 1998 and the Black Monday stock crash in 1987 - without the economy slipping into a recession. In comparison, the meltdown in December occurred without a similar market event.

And yet, a meltdown did occur, and it has a lot to do with confusing messaging by the Fed, which did a 180-degree U-Turn when in the span of just two weeks, the Fed chair went from unexpectedly hawkish during the December FOMC press conference (which unleashed fire and brimstone in the market), to blissfully dovish when he conceded at the start of January that the Fed will be "patient" and the balance sheet unwind is not on "autopilot."

But it wasn't just the Fed's messaging in a vacuum that prompted the sharp December drop: it is also the fact that the Fed and the market continue to co-exist in a world of perilous reflexivity, a point made - in his typical post-modernist, James Joyceian, Jacque Lacanian fashion - by Deutsche Bank's credit strategist Aleksandar Kocic, who writes that

"the underlying ambiguities of the market's interpretation of economic conditions are an example of financial parallax – the apparent disorientation due to displacement caused by the change in point of view that provides a new line of sight" (or, said much more simply, the Market reacts to the Fed, and the Fed reacts to the market in circular, co-dependant fashion).

Yet while there is nothing new in the reflexive nature of the coexistence between the Fed and market, this process appeared to short-circuit in Q4. So "where is the problem and what are the sources of misunderstanding" asks Kocic, and answer by taking "the timeline from November of last year as the onset of the subverted perspective and the beginning of the self-referential circularity" (as we have said before, Kocic takes a certain delight in using just a few extra words than is necessary for the attention spans of most traders, even if liberal majors find a particular delight in his narrative). Anyway, continuing the Kocic narrative of where the reflexivity between the Fed and market broke down, in the chart below the Deutsche Bank strategist shows two snapshots of the swaps curve from November and January.

As we noted repeatedly over the past 4 weeks, while the long end has largely experienced a parallel shift lower, Kocic correctly points out that "the biggest drama has occurred in the belly of the curve which has inverted through the five-year horizon", yet where Kocic's view differs is that according to him, this is not indicative of a risk off trade but is instead "a radical repricing of the Fed." Meanwhile, according to the DB strategist, the inversion of the front end is the main source of the reinforcing loop "as it brings in the uncomfortable mode of what we think is a misidentified alarm and incorrect interpretation of its economic significance."

To make his point, Kocic looks at the previous episodes of curve flattening during the past two tightening cycles.

As DB notes, unlike the past two episodes of Fed tightening, when rate hikes were responsible for bear inversions, the last three months represent a bull inversion. In other words, "the recent flattening and inversion of some sectors of the curve has been driven by a decline in long rates that outpaced the decline in short rates."

As others have observed, this departure from history highlights a potential flaw in the logic behind the connection between inversion and recession, Kocic writes, and explains:

If excessive Fed tightening is the likely trigger of the next recession, then the underlying logic and causality must go as follows. The Fed continues to hike until it becomes restrictive and the economy begins to contract which eventually forces the Fed to reverse its direction. The former causes curve inversion and a tightening of financial conditions through a decline in the stock market and wider credit spreads together with an economic slowdown. The Fed then begins to cut rates in order to counter the effect of excessive tightening and the curve re-steepens.

Simple enough, and also extremely problematic, because as we explained last weekend , it's not the Fed tightening that is the recession catalyst: it is when the Fed begins cutting rates that one should be worried as all three prior recessions followed within 3 months of the first rate cut after a hiking cycle:

... while many analysts will caution that it is the Fed's rate hikes that ultimately catalyze the next recession and the every Fed tightening ends with a financial "event", the truth is that there is one step missing from this analysis, and it may come as a surprise to many that the last three recessions all took place with 3 months of the first rate cut after a hiking cycle !

If that wasn't bad enough, Kocic notes that if " this were how things work, the recent market dynamics would be consistent with the US economy already being in a recession" and explains that "with rates already rallying, the implication is that the Fed deliberately and mistakenly continued to hike. This is the territory of a serious policy mistake."

In other words, bull inversion and rate hikes would indicate that the Fed was totally detached from the realities of the market.

Yet after laying out this scenario, one which the market was obsessed with for much of December, Kocic counters that a closer look at the recent repricing "suggests that this narrative of a policy mistake may be misleading and market dynamics reveal something very different from a recessionary market mode" and further claims that what happened fits with the Fed sticking to the script of market normalization as a priority to wit:

this interpretation runs contrary to the recent response from the Fed, in which they have shown an unmistakable attention to detail with a thorough understanding of the complexity of the situation with all the risks associated with the stimulus unwind. The Fed has also gone to great lengths throughout this normalization process to prepare the markets for its exit and take care not to generate additional problems along the way. The well-telegraphed unwind of the balance sheet, which has come under increasing scrutiny over the past month is just one example of the Fed understanding the potential pitfalls of providing too little guidance.

Kocic then goes on to further claim that the market reaction is "a clear demonstration that the Fed is on track with the normalization of the rates market", and thatr "by sticking to its script, the Fed has forced another leg of normalization. The two aspects of this are shown both in the decline of the correlations back into negative territory as well as the migration of volatility to the front end of the curve, both corresponding to the pre-2008 curve functioning."

Why does Kocic take such a contrarian view, at least relative to the broader market? Because, as he explains, "if bear steepeners and bull flatteners were to continue to be the dominant curve modes, monetary policy shocks are at risk of being amplified, and the potential for a disruptive unanchoring of the back end of the curve, with its hazardous ramifications for risk assets and credit in particular, is heightened."

This is why normalization requires front-loading monetary policy shocks and focusing on the front end with the fed funds rate remaining the primary policy tool, while – despite some calls to the contrary – the balance sheet unwind should remain predictable and controlled.

Whether Kocic is correct or not we will know shortly, perhaps as soon as March, when the Fed - which as we discussed previously remains a hostage to markets - will be pressed to halt its balance sheet reduction, and which would immediately crush Kocic's theory that the Fed is purposefully normalizing instead of simply being forced to react to the market's every whim.

In any case - accuracy of the DB strategist notwithstanding - the bigger problem, and this goes back to our point from last week, is that no matter what the Fed does at this point, its actions will almost certainly precipitate the very recession it hopes to avoid.

Why? The following chart from SocGen answers that question in grandiose simplicity: because it is not the curve flattening that is the recession catalyst - it is sharp curve steepening, whether bull or bear-driven, that precedes the immediate onset of the recession.

And once the steepener trade finally takes off, Kocic's variant perception that " recent market dynamics would be consistent with the US economy already being in a recession" would be spot on: at that point, the bond market would finally admit that everything that happened ever since the Fed though it could normalize has been one massive mistake.... just as Ben Bernanke predicted admitted in May 2014, when he said that there would be " no rate normalization during my lifetime ." Tags Business Finance


crypt007 , 8 minutes ago link

The FED and Donald Trump have literally ****-up the economy !! [and i've already explained the intelligence-rational before]

1. Raise the interest rates.

2. Shrink the FED's balance sheet. [50 Billion a month]

3. Tariffs

4. Trade-Wars

zzzz88 , 5 minutes ago link

it is not a problem to raise rate and shrink sheet. they pumped trillons of dollar into market is the problem. they pumped the biggest bubble in human history. they are evils

2thepeople , 10 minutes ago link

Ive seen more commercial and industrial RE vacated in the past several months than ever before. A bit anicdotal but something seems to be rolling over

zzzz88 , 12 minutes ago link

all blame the fed and trump. they pump the biggest fat ugly bubble. it will burst, just matter of time

[Jan 21, 2019] The Money Mafia,

Jan 21, 2019 | www.unz.com

Robert Snefjella says: January 20, 2019 at 4:21 pm GMT 200 Words @Erebus Going from memory, in Hellyer's book The Money Mafia, his impression was that Bouey's decision was taken without real political understanding or guidance. Noteworthy was an attempt in recent years to restore that Bank of Canada fund-emission function via the court system. The attempt failed. The lawyer representing the group making the effort, Rocco Galati, indicated that the media in Canada had received pressure not to cover the story. The government of Canada at the time the court case was initiated was under Harper Conservative rule.

As to how astute Trudeau was, or how much practical influence he had when it came to national financial matters, I don't know. There was a lot of economic flux at the time involving the US dollar, oil, high inflation and gold. There was a big jump in Canadian interest rates around 1974. In any case, the emission of funds directly for productive purpose, without taxation and borrowing, is a beneficent unacknowledged elephant in the economic policy-options room.

[Jan 21, 2019] The tariff war with China, Europe and the rest creates enormous uncertainty. It makes all the predictions and plans of corporations and entire countries uncertain. People are holding back

Notable quotes:
"... Number two, the capitalist system that we're all part of has a downturn on average every four to seven years. It's been more than seven years since the last crash -- 2008/9 -- so everybody knows it's coming. ..."
"... And here's another one that people don't talk about. The big tax cut last December, 2017, gave an awful lot of money to the richest Americans and to big corporations. They had no incentive to plow that into their businesses, because Americans can't buy any more than they already do. They're up to their necks in debt and all the rest. ..."
Jan 21, 2019 | www.truthdig.com

Every time I sit down with economist Richard Wolff, he demonstrates why the field of economics is so necessary in the cultural critique of our American empire. In my recent interview with him, we discussed why the thriving economy touted by President Donald Trump hasn't translated into real gains for the majority of Americans. We also went over what is hidden by the economic indicators that allow the financial industry to celebrate while so many Americans are still suffering.

Professor Wolff talked with me on my show "Redacted Tonight: VIP" on RT America. Enjoy this excerpt from the interview .

LEE CAMP: Professor Wolff -- thanks for joining me! Last month was, apparently, the worst December for the stock market since the year 1980. What's going on here?

RICHARD WOLFF: A lot of things are coming to a head. Each one of them by itself might have gone by without this, but they're too many.

To list major ones: The tariff war with China, Europe and the rest creates enormous uncertainty. It makes all the predictions and plans of corporations and entire countries uncertain. People are holding back. Number one.

Number two, the capitalist system that we're all part of has a downturn on average every four to seven years. It's been more than seven years since the last crash -- 2008/9 -- so everybody knows it's coming.

It's not a question of whether, we've never been able to overcome these kinds of instabilities in our system. So we're overdue for one.

And here's another one that people don't talk about. The big tax cut last December, 2017, gave an awful lot of money to the richest Americans and to big corporations. They had no incentive to plow that into their businesses, because Americans can't buy any more than they already do. They're up to their necks in debt and all the rest.

So what they did was to take the money they saved from taxes and speculate in the stock market, driving up the shares and so forth. Naive people thought that was a sign of economic health. It wasn't. It was money bidding up the price of stock until the underlying economy was so far out of whack with the stock market that now everybody realizes that and there's a rush to get out and boom, the thing goes down.

Very serious. The question now is how badly the underlying economy -- jobs, incomes, and debts -- will be impacted negatively by all of this stock market downturn.

LC: You brought up predictions of an impending crash because it's been seven or eight years, even JPMorgan Chase has told investors that the next crash, the crisis, they think will be in 2020. What does it mean when the largest financial firms in the world are saying, "Oh yeah! We're just going to have another financial crisis around the corner"?

RW: It's a wonderful sign. (Laughs) And by the way, JPMorgan Chase is not the only one. Goldman Sachs has done that, the International Monetary Fund, lots of the major players know it's coming. The only disagree on exactly when which you can never know anyway. But here's what it means, it means that they have accepted, as if it were like rain falling from the sky, that this economic system we have crashes every few years. As if it's kind of in the cards. Unchangeable. Unaffected by anything we might do.

It's kind of like giving up on the human desire not to be plunged into a crazy unemployment and cutback every few years that interrupts people's lives, their educations, their savings for the future. I mean, we ought to have an economic situation, or at least a debate, about an economic system that works this way rather than simply accepting it in the manner of these predictions. As if there's nothing we can do.

LC: Absolutely. Donald Trump keeps telling us that unemployment is very low, so obviously he is a wonderful president. Is that true? Also I overheard on NPR that they had a panel or something about why wages aren't going up considering how well the stock market has done over the past years, and how low unemployment is. The host just seemed baffled as to why wages have not gone up.

RW: Well again, there are a number of reasons why wages aren't going up. What we've seen is a quote-unquote "recovery" that is very peculiar.

Two particular peculiarities: People who lost jobs -- and those are in the millions in 2008, 2009, and 2010 -- have now gotten jobs, that's true, but the jobs they've gotten have lower wages, have less security and fewer benefits than the ones they lost, which means they can't spend money like we might have hoped they would if they had got the kinds of jobs they lost, but they didn't. And the second thing is that large numbers, particularly of white men aged 30-60, have not gone back into the labor force.

They lost their jobs, it's very hard for them to find new jobs. The jobs they find are so poor that they're more likely to stay at home, or do something else. So as the economy comes back at least with some jobs, and as they run out of savings, these people are slowly coming back.

So there's no need for employers to raise wages to attract workers, they can just pull them slowly out of the desperate population of people who haven't worked for years and have run out of savings. They can't turn to their friends and relatives anymore, so they come back and accept the jobs that they were once too proud to accept. It's a real downturn of the quality of life of America, which is why you don't see the wages going up and why you see the anger and the bitterness, because all of the promises of Obama before, and of Trump now, are not changing that basic situation.

LC: Yeah, the quality of life has definitely gone down. If these jobs are not good -- as you say -- and also the gains have gone to the 1%, and something like 50% of Americans can't afford a $1000 emergency, then why does it seem like everything just keeps trucking along? You know, you don't really see things collapsing. There aren't strikes shutting down whole cities. What's the motor that keeps things going?

RW: Well at this point I think it really depends on what indexes you're looking at. The biggest thing that's kept this economy going in the last few years should make everybody tremble. It's called debt, let me give you just a couple of examples. Ten years ago, at the height of the crash, the total debt carried by students in the United States was in the neighborhood of $700 billion, an enormous sum. What is it today? Over twice that, one-and-a-half trillion dollars. The reason part of our economy hasn't collapsed is that students have taken up an enormous amount of debt that they cannot afford, in order to get degrees which will let them get jobs whose incomes will not allow them to pay back the debts. And forget about getting married, forget about having a family.

We have paid an enormous price in hobbling the generation of people who would have otherwise lifted this economy and made us more productive. It is a disastrous mistake historically, and if you face that, and if you add to it the increased debt of our businesses, and the increased debt of our government, you see an economy that is held up by a monstrous increase in debt, not in underlying productivity, not in more jobs that really produce anything, but in debt.

That should frighten us because it was the debt bubble that burst in 2008 and brought us the crash. It is as if we cannot learn in our system to do other than we've always done and that's taking us into another crash coming now.

LC: Yeah. This is the land of the free, but it seems like most of us are chained down by debt peonage.

[Jan 21, 2019] Is The Violent Dismemberment Of Russia Official US Policy

Jan 19, 2019 | www.zerohedge.com

Authored by Erik D'Amato via The Ron Paul Institute for Peace & Prosperity,

If there's one thing everyone in today's Washington can agree on, it's that whenever an official or someone being paid by the government says something truly outrageous or dangerous, there should be consequences, if only a fleeting moment of media fury.

With one notable exception: Arguing that the US should be quietly working to promote the violent disintegration and carving up of the largest country on Earth.

Because so much of the discussion around US-Russian affairs is marked by hysteria and hyperbole, you are forgiven for assuming this is an exaggeration. Unfortunately it isn't. Published in the Hill under the dispassionate title "Managing Russia's dissolution," author Janusz Bugajski makes the case that the West should not only seek to contain "Moscow's imperial ambitions" but to actively seek the dismemberment of Russia as a whole.

Engagement, criticism and limited sanctions have simply reinforced Kremlin perceptions that the West is weak and predictable. To curtail Moscow's neo-imperialism a new strategy is needed, one that nourishes Russia's decline and manages the international consequences of its dissolution.

Like many contemporary cold warriors, Bugajski toggles back and forth between overhyping Russia's might and its weaknesses, notably a lack of economic dynamism and a rise in ethnic and regional fragmentation. But his primary argument is unambiguous: That the West should actively stoke longstanding regional and ethnic tensions with the ultimate aim of a dissolution of the Russian Federation, which Bugajski dismisses as an "imperial construct."

The rationale for dissolution should be logically framed: In order to survive, Russia needs a federal democracy and a robust economy; with no democratization on the horizon and economic conditions deteriorating, the federal structure will become increasingly ungovernable...

To manage the process of dissolution and lessen the likelihood of conflict that spills over state borders, the West needs to establish links with Russia's diverse regions and promote their peaceful transition toward statehood.

Even more alarming is Bugajski's argument that the goal should not be self-determination for breakaway Russian territories, but the annexing of these lands to other countries . "Some regions could join countries such as Finland, Ukraine, China and Japan, from whom Moscow has forcefully appropriated territories in the past."

It is, needless to say, impossible to imagine anything like this happening without sparking a series of conflicts that could mirror the Yugoslav Wars. Except in this version the US would directly culpable in the ignition of the hostilities, and in range of 6,800 Serbian nuclear warheads.

So who is Janusz Bugajski, and who is he speaking for?

The author bio on the Hill's piece identifies him as a senior fellow at the Center for European Policy Analysis, a Washington, D.C. think-tank. But CEPA is no ordinary talk shop: Instead of the usual foundations and well-heeled individuals, its financial backers seem to be mostly arms of the US government, including the Department of State, the Department of Defense, the US Mission to NATO, the US-government-sponsored National Endowment for Democracy, as well as as veritable who's who of defense contractors, including Raytheon, Bell Helicopter, BAE Systems, Lockheed Martin and Textron. Meanwhile, Bugajski chairs the South-Central Europe area studies program at the Foreign Service Institute of the US Department of State.

To put it in perspective, it is akin to a Russian with deep ties to the Kremlin and arms-makers arguing that the Kremlin needed to find ways to break up the United States and, if possible, have these breakaway regions absorbed by Mexico and Canada. (A scenario which alas is not as far-fetched as it might have been a few years ago; many thousands in California now openly talk of a "Calexit," and many more in Mexico of a reconquista .)

Meanwhile, it's hard to imagine a quasi-official voice like Bugajski's coming out in favor of a similar policy vis-a-vis China, which has its own restive regions, and which in geopolitical terms is no more or less of a threat to the US than Russia. One reason may be that China would consider an American call for secession by the Tibetans or Uyghurs to be a serious intrusion into their internal affairs, unlike Russia, which doesn't appear to have noticed or been ruffled by Bugajski's immodest proposal.

Indeed, just as the real scandal in Washington is what's legal rather than illegal, the real outrage in this case is that few or none in DC finds Bugajski's virtual declaration of war notable.

But it is. It is the sort of provocation that international incidents are made of, and if you are a US taxpayer, it is being made in your name, and it should be among your outrages of the month.


Urban Roman , 8 minutes ago link

There is an official US policy? Would that be a Trump policy, or a Pentagram policy, or some TLA policy, or State Dept. policy?

It's looking more and more like a CF of shapeshifting space lizards. Inspires nostalgia for the Fixin' to Die Rag , . .

BrownTiger , 1 hour ago link

Putin knows that if he ignores the West and provides strong path for Russia growth, re-building economy, manufacturing and military; building international relationships - it will strengthen the country in a horror of it's enemies.

While others panicked over drop in oil prices - Putin was making adjustments to weather out the storm. While many nations were taking out massive development loans [advised by city, chase, goldman, etc] - Russia balanced the budget. While US government is in mayhem over protecting the border [seems like no brainer] - Putin continues with strong central policy. And the US sanction that crushed so many countries - appears to have limited effect [slowing down some growth].

This author, Bugajski, [MI5 agent] wrote countless self-promoting books. Russia will never want to fight a war with NATO [their customers]. Britain and France already lost that war. Russia is just waiting for EU and NATO to collapse over money disagreement. Because they were all happy as long as US was paying for all of it. Not anymore. Standby for Collapse of EU and NATO show coming soon.

falconflight , 1 hour ago link

...

Russia Raises Retirement Age Above Life Expectancy For 40% Of ...

The Russian Confederation of Labour (KTR) says that the average life expectancy for men is actually less than 65-years-old in over 60 regions in Russia. "KTR does not support such decisions and declares its intention to launch a broad public campaign against their implementation," the organization said in a statement .

https://www.zerohedge.com/news/2018-06-19/russia-raises-retirement-age-above-life-expectan

booboo , 1 hour ago link

You start off with "Putin is a cuck" which may or may not be a fact but if you actually read the article it clearly states "President Medvedev" and raising the retirement age from...wait for it... 60 to 63?? Really??

Rutalkingtome , 1 hour ago link

Most west european countries have a retirment age of around 65 years. In scandinavic countries they are going to increase to 67. They realized that importing rapefugees is not going to solve the demographic crisis.

[Jan 20, 2019] The USA LGBT political correctness bites Tulsi

Notable quotes:
"... I venture to guess, since Anne goes here several times. The 'militarists', unrelated to LGBT, faction of the DNC will use LGBT comments from Gabbard's past...... to show she is not liberal enough to defend the party's permanent war profiteering plank! ..."
Jan 20, 2019 | economistsview.typepad.com

Fred C. Dobbs , January 18, 2019 at 01:52 PM

Tulsi Gabbard, Democratic Presidential Candidate,
Apologizes for Anti-Gay Past https://nyti.ms/2HhUDev
NYT - Liam Stack - Jan. 17, 2019

Representative Tulsi Gabbard of Hawaii, who last week announced she was running for president, apologized Thursday for her history of anti-gay statements and her past work for an anti-gay advocacy group -- issues that have emerged as an early obstacle as she pursues a long-shot bid for the Democratic Party's nomination.

... ... ...

ilsm -> EMichael... , January 19, 2019 at 06:24 AM
read!

I venture to guess, since Anne goes here several times. The 'militarists', unrelated to LGBT, faction of the DNC will use LGBT comments from Gabbard's past...... to show she is not liberal enough to defend the party's permanent war profiteering plank!

[Jan 20, 2019] Note on students debt peonage

Jan 20, 2019 | www.truthdig.com

RW: Well at this point I think it really depends on what indexes you're looking at. The biggest thing that's kept this economy going in the last few years should make everybody tremble. It's called debt, let me give you just a couple of examples. Ten years ago, at the height of the crash, the total debt carried by students in the United States was in the neighborhood of $700 billion, an enormous sum. What is it today? Over twice that, one-and-a-half trillion dollars. The reason part of our economy hasn't collapsed is that students have taken up an enormous amount of debt that they cannot afford, in order to get degrees which will let them get jobs whose incomes will not allow them to pay back the debts. And forget about getting married, forget about having a family.

We have paid an enormous price in hobbling the generation of people who would have otherwise lifted this economy and made us more productive. It is a disastrous mistake historically, and if you face that, and if you add to it the increased debt of our businesses, and the increased debt of our government, you see an economy that is held up by a monstrous increase in debt, not in underlying productivity, not in more jobs that really produce anything, but in debt.

That should frighten us because it was the debt bubble that burst in 2008 and brought us the crash. It is as if we cannot learn in our system to do other than we've always done and that's taking us into another crash coming now.

LC: Yeah. This is the land of the free, but it seems like most of us are chained down by debt peonage.

[Jan 20, 2019] The breakup of the USSR was planned also. It was followed by the formation of oligarchs, IMF loans, and asset stripping. The economic advice and help Russia received from the west almost accomplished the goal of breaking up Russia.

Integrity Initiative infiltration ?
The breakup of the USSR was due to confluence of factors such as rise of neoliberalism, stagnation of oversentlised USSR economy, emergence of internat communications and personal computers which weakened official propaganda power, creation of fifth column within the USSR due to bad timing and execution of Gorbachev's reforms (Presetoyka was essentially the idea of repeating NEP on a new level), and extremely weak abilities of Gorbachov as a politician, growth of nationalism (well financed from theWest), degeneration of Bolshevik's elute and emergence of multiple neoliberal turncoats (Yeltsin, Gaidar, Yakovlev, etc). but dissolution of the USSR probably case as a surporse.
But after the dissolution CIA-Mossad-MI6 jumped into the dame with the explicit goal to destruction of Russian economy, asset stripping (Browder probably is connected to MI6), Harvard mafia probably also was somehow connected to CIA, and disintegration of the country (Chechnya insurrection was supported by the USA, Britain and their vassals in Persian gulf).
This is an interesting lesson for future reformers: the presence of CIA-Mossad-MI6 on the world scene changes the result of almost any forceful overthrow of the government, especially if it was done with the goal of neoliberalization, imposing a huge cost on the population. Ukraine is one recent example (the standard of living dropped probably 300 or so). Libya is another.
This particular neocon writing in his official capacity of a MIC lobbyist (that is what all neocons are), so his views are interesting only as an example of a dangerous trend.
Jan 20, 2019 | www.zerohedge.com
Like many contemporary cold warriors, Bugajski toggles back and forth between overhyping Russia's might and its weaknesses, notably a lack of economic dynamism and a rise in ethnic and regional fragmentation. But his primary argument is unambiguous: That the West should actively stoke longstanding regional and ethnic tensions with the ultimate aim of a dissolution of the Russian Federation, which Bugajski dismisses as an "imperial construct."
Even more alarming is Bugajski's argument that the goal should not be self-determination for breakaway Russian territories, but the annexing of these lands to other countries . "Some regions could join countries such as Finland, Ukraine, China and Japan, from whom Moscow has forcefully appropriated territories in the past."

It is, needless to say, impossible to imagine anything like this happening without sparking a series of conflicts that could mirror the Yugoslav Wars. Except in this version the US would directly culpable in the ignition of the hostilities, and in range of 6,800 Serbian nuclear warheads.

So who is Janusz Bugajski, and who is he speaking for?

The author bio on the Hill's piece identifies him as a senior fellow at the Center for European Policy Analysis, a Washington, D.C. think-tank. But CEPA is no ordinary talk shop: Instead of the usual foundations and well-heeled individuals, its financial backers seem to be mostly arms of the US government, including the Department of State, the Department of Defense, the US Mission to NATO, the US-government-sponsored National Endowment for Democracy, as well as as veritable who's who of defense contractors, including Raytheon, Bell Helicopter, BAE Systems, Lockheed Martin and Textron. Meanwhile, Bugajski chairs the South-Central Europe area studies program at the Foreign Service Institute of the US Department of State.

To put it in perspective, it is akin to a Russian with deep ties to the Kremlin and arms-makers arguing that the Kremlin needed to find ways to break up the United States and, if possible, have these breakaway regions absorbed by Mexico and Canada. (A scenario which alas is not as far-fetched as it might have been a few years ago; many thousands in California now openly talk of a "Calexit," and many more in Mexico of a reconquista .)

green dragon , 2 hours ago link

The breakup of the USSR was planned also. It was followed by the formation of oligarchs, IMF loans, and asset stripping. The economic advice and help Russia received from the west almost accomplished the goal of breaking up Russia.

Russia is well aware that war with NATO cannot be avoided in the long run. One only has to talk to Russians to see that they understand they are in a Cold war that they have to survive. From their view they did not seek this confrontation. They truly thought they would be embraced by the West after the fall and a new relationship benefiting both sides could have emerged. So now Russia has to turn to China and prepare for a future war within a decade with NATO!

CatInTheHat , 3 hours ago link

Disgusting projection of US imperialism. The elite never forgave Putin for throwing US Rothschild elites out of Russia so they could no longer plunder Russias extensive wealth under Yeltsin..

Let's see what happens when neocunts start that hot war, how Americans then feel about Russia

We truly have dumbfucks in this country who love the thought of other as enemy other than THEMSELVES. They never ONCE consider that in demonizing another countries leader, they are demonizing a whole nation of peoples too. I wonder how Americans would feel if constant demonizing and threats coming their way, with also say regime change in Mexico to provoke them?

US neocons are psychopaths that care nothing for Americans. What they do to others in regime change they will do to us. Oh, wait. They already have #9/11

August , 1 hour ago link

Poles actively pushing for the dismembering of Russia have been around for a long time.

https://en.wikipedia.org/wiki/Prometheism

Fluff The Cat , 4 hours ago link

Published in the Hill under the dispassionate title "Managing Russia's dissolution," author Janusz Bugajski makes the case that the West should not only seek to contain "Moscow's imperial ambitions" but to actively seek the dismemberment of Russia as a whole.

If that is the intended goal then wouldn't it be accurate to state that America, or at least its government, has imperial ambitions?

The rationale for dissolution should be logically framed: In order to survive, Russia needs a federal democracy and a robust economy; with no democratization on the horizon and economic conditions deteriorating, the federal structure will become increasingly ungovernable...

Russia already tried "democracy" and the end result spelled disaster for their country. Minorities were put on a pedestal while their economy was in shambles, all the while the oligarchs, who were mostly Jewish, made a fortune plundering their natural resources. Sound familiar?

Some regions could join countries such as Finland, Ukraine, China and Japan, from whom Moscow has forcefully appropriated territories in the past."

The hypocrisy in this statement is breathless. Is America going to return Alaska to Russia? Allow Hawaii to once again be an autonomous entity? Cease the illegal occupation of countries throughout the Middle East? Remove their Neo-Nazi stooges from Ukraine?

It is, needless to say, impossible to imagine anything like this happening without sparking a series of conflicts that could mirror the Yugoslav Wars. Except in this version the US would directly culpable in the ignition of the hostilities, and in range of 6,800 Serbian nuclear warheads.

The idea seems to be to stoke regional tensions in order to provoke Russia and start a conflict where the surrounding countries are put on the front lines while being provided with logistics from the outside, meaning the US. Washington could then play up the plausible deniability angle, even while technology from Lockheed Martin, Raytheon and other Western contractors is primarily being used against the Russians.

Russia is not a direct threat to Western nations, only to their (((governments))), because during any attempted implementation of a JWO (as in the EU for example), Russia will serve as a reminder to all Western peoples - especially white people - as to what their nations once were: independent, sovereign and self-determined. Russia prevented ISISrael from taking over Syria, thwarted their Oded Yinon plan and threw out their oligarchs, so World Judaism is using America as their bludgeon against the Russian Federation while preventing us from forming an alliance.

CatInTheHat , 3 hours ago link

Browder a ******* fraud who owes Russia hundreds of millions in back taxes.

And along with **** Cardin, DEMOCRAT, helped to fraudulently create the Magnistky Act

back to basics , 5 hours ago link

74 years after Nazi Germany miscalculated Russian resolve some idiot dreams of carving Russia up like it's a Thanksgiving turkey and some people actually take him seriously. Yeah, good luck with that.

6 hours ago Bug-aj-ski - neocon shrill writing for and paid by the MIC it looks like from the sponsors of this think tank

let;s have a look see at their website

https://www.cepa.org

https://www.cepa.org/international-advisory-council - more neocons

oh yah Brzezinski - deceased tho - oops -

Albright - not dead yet

https://www.cepa.org/experts - and more "expert" neocons

https://www.cepa.org/strategy-and-statecraft

"Cultivating new sources of competitive advantage for U.S. strategy."

no list of sponsors tho I can see from the website - real MIC platform it sounds like from the article

6 hours ago Yep, it's a Zbigniew Brzezinski memorial. The money seems to come mostly from the MIC and the usual Cold War think tanks, like the Harry and Lynde Bradley Foundation. 5 hours ago These necons need to remember that chess is the national passtime of Russians, while making mudpies is the what they do in the West. These "think-tanks" are very childish. 3 hours ago 9 hours ago here's where some of it started/got turbocharged:

https://www.lrb.co.uk/v41/n02/seymour-m-hersh/the-vice-presidents-men LA_Goldbug 10 hours ago The only way I can understand this twat is to think that he is just earning his shekels. He knows what the Party Line is in DC requires and is writing accordingly. I just checked a bit of his BS and this one is definitely written for the uninformed or deeply indoctrinated Western sheep.

"Taking Stock of Ukraine's Achievements Amidst Russia's Aggression

Five years ago, the Ukrainian people staged a peaceful "revolution of dignity" against a corrupt regime sponsored by the Kremlin. They stood firm even under gunfire and it was the discredited President Viktor Yanukovych who eventually retreated and took refuge in Russia. With Moscow engaging in renewed attacks against Ukraine in the Sea of Azov it is important to take stock of Ukraine's achievements since those fateful days in Kyiv's Independence Square."

You need to be brain dead to think it was peaceful !!!!

[Jan 20, 2019] John Bogle's Bombshell Gift to Americans

Jan 20, 2019 | wallstreetonparade.com

John Bogle's Bombshell Gift to Americans

John Bogle, Founder of the Vanguard Group

By Pam Martens: January 17, 2019 ~

The legendary John Bogle passed away yesterday in Bryn Mawr, Pennsylvania. He was 89. Bogle was the founder of Vanguard Group. In announcing his death, Vanguard said that Bogle "introduced the first index mutual fund for investors and, in the face of skeptics, stood behind the concept until it gained widespread acceptance; and he drove down costs across the mutual fund industry by ceaselessly campaigning in the interests of investors."

We'll always remember Bogle for the courage he demonstrated on April 23, 2013 when he appeared on the PBS program Frontline . Bogle dropped the bombshell that Wall Street has attempted to hide for half a century: If you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street.

Bogle explained the math to Frontline's Martin Smith:

Bogle: What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compounding costs. It's a mathematical fact. There's no getting around it. The fact that we don't look at it -- too bad for us.

Smith : What I have a hard time understanding is that 2 percent fee that I might pay to an actively managed mutual fund is going to really have a great impact on my future retirement savings.

Bogle: Well, you have to rely on somebody to get out a compound interest table and look at the impact over an investment lifetime. Do you really want to invest in a system where you put up 100 percent of the capital, you the mutual fund shareholder, you take 100 percent of the risk and you get 30 percent of the return?

You can check the math yourself. Access a compounding calculator on line. Input an account with a $100,000 balance and compound it at 7 percent for 50 years. That gives you a balance of $3,278,041.36. Now change the calculation to a 5 percent return (reduced by the 2 percent annual fee) for the same $100,000 over the same 50 years. That delivers a return of $1,211,938.32. That's a difference of $2,066,103.04 – the same 63 percent reduction in value that Smith's example showed.

If you don't know the amount of fees that you're paying on the mutual funds in your 401(k) plan, 403(b) plan, IRA or other retirement vehicle, you may be putting your ability to retire with adequate income and dignity at risk.

[Jan 20, 2019] Bubblicious Disregard for Risks

Notable quotes:
"... Mispricing risk is the new normal, apparently. The assumption is that the stock market is now in hand and will be fine -- unless something startles it. ..."
Jan 20, 2019 | jessescrossroadscafe.blogspot.com

We will be getting more individual company financial results now that we are in the reporting period again. These may help to sway the markets in some direction, or not.

The market seemed to be shrugging off the results being shown by the financials thus far.

Mispricing risk is the new normal, apparently. The assumption is that the stock market is now in hand and will be fine -- unless something startles it.

Have a pleasant evening.

[Jan 20, 2019] Who Could See It Coming - Dead Reckoning the Minsky Moment

Jan 20, 2019 | jessescrossroadscafe.blogspot.com

Stocks and Precious Metals Charts - Who Could See It Coming? - Dead Reckoning the Minsky Moment

"

In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance."

Hyman Minsky, The Financial Instability Hypothesis

"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles. The only way to break this pattern was for the government to step in and regulate the moneymen.

Many of Minsky's colleagues regarded his 'financial-instability hypothesis,' which he first developed in the nineteen-sixties, as radical, if not crackpot. Today, with the subprime crisis seemingly on the verge of metamorphosing into a recession, references to it have become commonplace on financial web sites and in the reports of Wall Street analysts. Minsky's hypothesis is well worth revisiting."

John Cassidy, The Minsky Moment , The New Yorker, 4 February 2008.

"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."

Charles Kindelberger, Manias, Panics, and Crashes: A History of Financial Crises

"The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil. Perhaps this is inherent. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street [and in the professional and credentialed class] are nearly always silent."

John Kenneth Galbraith, The Great Crash of 1929

"People who lost jobs -- and those are in the millions in 2008, 2009, and 2010 -- have now gotten jobs, that's true, but the jobs they've gotten have lower wages, have less security and fewer benefits than the ones they lost, which means they can't spend money like we might have hoped they would if they had got the kinds of jobs they lost, but they didn't...

The big tax cut last December, 2017, gave an awful lot of money to the richest Americans and to big corporations. They had no incentive to plow that into their businesses, because Americans can't buy any more than they already do. They're up to their necks in debt and all the rest.

So what they did was to take the money they saved from taxes and speculate in the stock market, driving up the shares and so forth. Naive people thought that was a sign of economic health. It wasn't. It was money bidding up the price of stock until the underlying economy was so far out of whack with the stock market that now everybody realizes that and there's a rush to get out and boom, the thing goes down."

Richard Wolff, The Next Economic Crisis Is Coming


Bubbles most often resolve their imbalances irresponsibly and jarringly, with a correction that is sharp and destructive. It is often triggered by some seemingly trivial event, especially if its predatory mispricing of risk has been allowed to fester for an extended period of time.. How can this be?

Credit cycles explain bubbles in modern finance, but the elite protect themselves and their banks from the effects. Hence, only the middle and working class loses. And this has been the case for many years now. Hence the growing unrest abroad, and the decisions by the electorate at home that seem to puzzle and provoke the very comfortable 'credentialed' class.

The reason for this is quite easy to understand. Those who benefit the most from the bubble both actively and passively help sustain it. They are reluctant to surrender any potion of their enormous advantage and personal gains, even if it might be better for them in the long term.

They do not consider the damage that may be done to the underlying social fabric that supports and protects their wealth. Contrary to all of the familiar assumptions, they are not acting rationally or prudently, even for themselves. Their focus is short term and short-sighted. They are drunk on their own success.

The interpreters and creators of the prevailing narrative are themselves beneficiaries of the bubble economy, and will go to great lengths to misdirect the public discussion from any root causes, and often from its very existence. They will distract the public with inflammatory issues, economic fear, stage-managed spectacles, and manufactured complexity. And finally, in the extremes of their shamelessness, they will seek to blame the victims for their lack of sophistication and the government for its efforts to restrain their predatory frauds.

This enables the cycle of boom and bust to repeat and worsen beyond all reasonable expectations.

The lesson from history is that a system based on the ascendant greed of powerful insiders is rarely rational and self-correcting, and is often spectacularly self-destructive. And those with the most power, in their wonderful self-delusion, simply do not care until it is too late. They are blinded by the moment, in their competition with each other, and the insatiable nature of greed itself. 'Enough' is not in their reckoning.

To this end governments are fashioned, and people organize themselves from the damage that can be done to society as a whole by a few. Unfortunately people forget, and it seems that at least once every generation or so the madness slips loose its restraints, and this sad lesson from history repeats.

And so once again the world must face its rendezvous with destiny.

The box scores for today's market action are shown in the graphs below.

Apparently rough weather is heading towards the east coast. The local grocery store was a nuthouse even in the early afternoon. I am making some chicken soup for myself and Dolly. Even if I could coax her out of her fuzzy blanket and pillows, Dolly would offer limited assistance. She is clearly just in it for the chicken.

Have a pleasant evening.

[Jan 20, 2019] NATO Expansion: What Gorbachev Heard

Jan 20, 2019 | www.zerohedge.com

B-Bond 13 hours ago

NATO Expansion: What Gorbachev Heard

Declassified documents show security assurances against NATO expansion to Soviet leaders from Baker, Bush, Genscher, Kohl, Gates, Mitterrand, Thatcher, Hurd, Major, and Woerner

U.S. Secretary of State James Baker's famous "not one inch eastward" assurance about NATO expansion in his meeting with Soviet leader Mikhail Gorbachev on February 9, 1990, was part of a cascade of assurances about Soviet security given by Western leaders to Gorbachev and other Soviet officials throughout the process of German unification in 1990 and on into 1991 , according to declassified U.S., Soviet, German, British and French documents posted today by the National Security Archive at George Washington University ( http://nsarchive.gwu.edu ).

The documents show that multiple national leaders were considering and rejecting Central and Eastern European membership in NATO as of early 1990 and through 1991 , that discussions of NATO in the context of German unification negotiations in 1990 were not at all narrowly limited to the status of East German territory, and that subsequent Soviet and Russian complaints about being misled about NATO expansion were founded in written contemporaneous memcons and telcons at the highest levels.

The documents reinforce former CIA Director Robert Gates's criticism of "pressing ahead with expansion of NATO eastward [in the 1990s], when Gorbachev and others were led to believe that wouldn't happen. " [1] The key phrase, buttressed by the documents, is "led to believe."

President George H.W. Bush had assured Gorbachev during the Malta summit in December 1989 that the U.S. would not take advantage ("I have not jumped up and down on the Berlin Wall") of the revolutions in Eastern Europe to harm Soviet interests; but neither Bush nor Gorbachev at that point (or for that matter, West German Chancellor Helmut Kohl) expected so soon the collapse of East Germany or the speed of German unification. [2]

The first concrete assurances by Western leaders on NATO began on January 31, 1990 , when West German Foreign Minister Hans-Dietrich Genscher opened the bidding with a major public speech at Tutzing, in Bavaria, on German unification. The U.S. Embassy in Bonn (see Document 1) informed Washington that Genscher made clear "that the changes in Eastern Europe and the German unification process must not lead to an 'impairment of Soviet security interests.' Therefore, NATO should rule out an 'expansion of its territory towards the east , i.e. moving it closer to the Soviet borders.'" The Bonn cable also noted Genscher's proposal to leave the East German territory out of NATO military structures even in a unified Germany in NATO. [3]

https://nsarchive.gwu.edu/briefing-book/russia-programs/2017-12-12/nato-expansion-what-gorbachev-heard-western-leaders-early falconflight 13 hours ago It was a horrible betrayal of a promise that should have been greatly enhanced by promoting free enterprise concepts, and personal freedoms propaganda (Not lies), and even economic assistance where reasonable. A historical opportunity lost. Those powerful Kremlinologists couldn't pivot, it was easier to continue to treat Russia as an existential adversary and in certain circumstances, purposely attempt to humiliate them, such as in Serbia.

[Jan 20, 2019] >MSM Begs For Trust After Buzzfeed Debacle

Jan 20, 2019 | www.zerohedge.com

by Tyler Durden Sun, 01/20/2019 - 19:10 356 SHARES Authored by Caitlin Johnstone via Medium.com,

Following what the Washington Post has described as "the highest-profile misstep yet for a news organization during a period of heightened and intense scrutiny of the press," mass media representatives are now flailing desperately for an argument as to why people should continue to place their trust in mainstream news outlets.

On Thursday Buzzfeed News delivered the latest "bombshell" Russiagate report to fizzle within 24 hours of its publication, a pattern that is now so consistent that I've personally made a practice of declining to comment on such stories until a day or two after their release. "BOOM!" tweets were issued by #Resistance pundits on Twitter, "If true this means X, Y and Z" bloviations were made on mass media punditry panels, and for about 20 hours Russiagaters everywhere were riding the high of their lives, giddy with the news that President Trump had committed an impeachable felony by ordering Michael Cohen to lie to Congress about a proposed Trump office tower in Moscow, a proposal which died within weeks and the Kremlin never touched .

There was reason enough already for any reasonable person to refrain from frenzied celebration, including the fact that the story's two authors, Jason Leopold and Anthony Cormier, were giving the press two very different accounts of the information they'd based it on, with Cormier telling CNN that he had not personally seen the evidence underlying his report and Leopold telling MSNBC that he had. Both Leopold and Cormier, for the record, have already previously suffered a Russiagate faceplant with the clickbait viral story that Russia had financed the 2016 election, burying the fact that it was a Russian election .

me title=

Then the entire story came crashing down when Mueller's office took the extremely rare step of issuing an unequivocal statement that the Buzzfeed story was wrong , writing simply, "BuzzFeed's description of specific statements to the special counsel's office, and characterization of documents and testimony obtained by this office, regarding Michael Cohen's congressional testimony are not accurate."

According to journalist and economic analyst Doug Henwood, the print New York Times covered the Buzzfeed report on its front page when the story broke, but the report on Mueller's correction the next day was shoved back to page 11 . This appalling journalistic malpractice makes it very funny that NYT's Wajahat Ali had the gall to tweet , "Unlike the Trump administration, journalists are fact checking and willing to correct the record if the Buzzfeed story is found inaccurate. Not really the actions of a deep state and enemy of the people, right?"

This is the behavior of a media class that is interested in selling narratives, not reporting truth. And yet the mass media talking heads are all telling us today that we must continue to trust them.

"Those trying to tar all media today aren't interested in improving journalism but protecting themselves," tweeted NBC's Chuck Todd.

"There's a lot more accountability in media these days than in our politics. We know we live in a glass house, we hope the folks we cover are as self aware."

More accountability in media than in politics, Chuck? Really? Accountability to whom? Your advertisers? Your plutocratic owners? Certainly not to the people whose minds you are paid exorbitant sums to influence; there are no public elections for the leadership of the mass media.

https://www.youtube.com/embed/rMY-zTxPCuY

"Mueller didn't do the media any favors tonight, and he did do the president one," griped the odious Chris Cuomo on CNN. "Because as you saw with Rudy Giuliani and as I'm sure you'll see with the president himself, this allows them to say 'You can't believe it! You can't believe what you read, you can't believe what you hear! You can only believe us. Even the Special Counsel says that the media doesn't get it right.'"

"The larger message that a lot of people are going to take from this story is that the news media are a bunch of leftist liars who are dying to get the president, and they're willing to lie to do it, and I don't think that's true" said Jeffrey Toobin on a CNN panel , adding "I just think this is a bad day for us."

"It does reinforce bad stereotypes about the news media," said Brian Stelter on the same CNN panel.

"I am desperate as a media reporter to always say to the audience, judge folks individually and judge brands individually. Don't fall for what these politicians out there want you to do. They want you to think we're all crooked. We're not. But Buzzfeed now, now the onus is on Buzzfeed. "

CNN, for the record, has been guilty of an arguably even more embarrassing Russiagate flub than Buzzfeed 's when they wrongly reported that Donald Trump Jr had had access to WikiLeaks' DNC email archives prior to their 2016 publication, an error that was hilariously due to to the simple misreading of an email date by multiple people.

me title=

The mass media, including pro-Trump mass media like Fox News, absolutely deserves to be distrusted. It has earned that distrust. It had earned that distrust already with its constant promotion of imperialist wars and an oligarch-friendly status quo, and it has earned it even more with its frenzied promotion of a narrative engineered to manufacture consent for a preexisting agenda to shove Russia off the world stage.

The mainstream media absolutely is the enemy of the people; just because Trump says it doesn't mean it's not true. The only reason people don't rise up and use the power of their numbers to force the much-needed changes that need to happen in our world is because they are being propagandized to accept the status quo day in and day out by the mass media's endless cultural engineering project . They are the reason why wars go unopposed, why third parties never gain traction, why people consent to money hemorrhaging upward to the wealthiest of the wealthy while everyone else struggles to survive. The sooner people wake up from the perverse narrative matrix of the plutocratic media, the better.

* * *

The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website , which will get you an email notification for everything I publish. My articles are entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook , following my antics on Twitter , throwing some money into my hat on Patreon or Paypal , purchasing some of my sweet new merchandise , buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone , or my previous book Woke: A Field Guide for Utopia Preppers .

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[Jan 20, 2019] The USA foreign policy is run by defense contractors

Notable quotes:
"... Politicians and their sanctions are like the fabled neutron bomb. Very little physical damage but huge death and suffering. ..."
"... Iraq is a perfect example. Sanctions killed far more than than bombs and bullets. ..."
Jan 20, 2019 | www.zerohedge.com

Baron von Bud 13 hours ago

Our foreign policy is run by defense contractors.

notdead yet 12 hours ago

It takes two to tango. The defense contractors can jaw jaw and spread around loads of cash but without someone in power having the same views war doesn't happen. You don't buy politicians they willingly sell you their services at top dollar if the cause is right.

Too many people with big ego's and tiny dicks proving their manhood by sending in the military to kill and maiming or piling on sanctions to slowly starve any country that stands in the way of the one indispensable nation on the planet.

Politicians and their sanctions are like the fabled neutron bomb. Very little physical damage but huge death and suffering.

Iraq is a perfect example. Sanctions killed far more than than bombs and bullets.

DEDA CVETKO 13 hours ago

Is The Violent Dismemberment Of Russia Official US Policy?

Yes. Obviously.

I am Groot, 13 hours ago

Disband NATO now Mr President !

[Jan 20, 2019] Has the USA become an elite club for financial bandits manipulating sheep under the name "American Nation".

Jan 20, 2019 | www.zerohedge.com

CatinThe Hat 3 hours ago

Taking Stock of Ukraine's Achievements Amidst Russia's Aggression

Five years ago, the Ukrainian people staged a peaceful "revolution of dignity" against a corrupt regime sponsored by the Kremlin. They stood firm even under gunfire and it was the discredited President Viktor Yanukovych who eventually retreated and took refuge in Russia. With Moscow engaging in renewed attacks against Ukraine in the Sea of Azov it is important to take stock of Ukraine's achievements since those fateful days in Kyiv's Independence Square."

Talk about Orwellian double speak. Only Russiagaters would eat that **** up in their stupidity .

pparalegal 10 hours ago (Edited)

Oligarchs, corporations and want to be psychopathic rulers East and West run the political/ think tank know-it-all class. All profit by it. Governments start wars, not people.

I am still waiting for an explanation of how the mythical beast New Russia will own the USA and what they will do with it after that. If we don't bomb the s**t out of some third country because we can. I am much more concerned about the in house mad cows we have elected to boss the American public and take the gold out of my teeth for the greater good..

Helg Saracen 10 hours ago (Edited)

I'm just curious. How many real estate over the past 15 years has been bought by the Chinese in New York, Chicago and California? How many brands, businesses were bought by the Chinese from the Americans? How many were "borrowed" technology? And how many Russians bought (rich Jews from Russia cannot be taken into account, they came to their relatives, well, they bought a little of everything)? :( 30 years ago, the USSR was communist, and the US was capitalist, now Russia has become capitalist, and the USA (I don't even know how to say) has become an elite club for financial bandits manipulating sheep under the name "American Nation".

Mantis964 6 hours ago

and the USA (I don't even know how to say) has become an elite club for financial bandits manipulating sheep under the name "American Nation".

Wouldn't you call that Fascism ?

[Jan 20, 2019] Dear elites

Jan 20, 2019 | www.theamericanconservative.com

Brad F January 18, 2019 at 10:26 am

Dear Elites

We appreciate that you have built a successful career and/or business under the prevailing laws, and that changing these laws would cause the destruction and/or appropriation of much of your wealth (while costing us little).

Nonetheless we've had a vote and decided that we will indeed go ahead and make these changes. Sorry about your luck.

What? You don't agree! Don't you believe in democracy? You hypocrite you!

[Jan 20, 2019] In fact, we don't have a real democracy anymore. We have a Potemkin Village democracy.

Notable quotes:
"... In addition, Trump is a pretend President. He doesn't control his own government. Hell, a single judge anywhere in the hinterlands evidently has the power to veto pretty much whatever the Trumpster does. It's clear that the real power resides in the hands of the Ruling Class, most of whom are unelected and unaccountable. Judges. Bureaucrats. Regulators. The Deep State. They now run the show. ..."
Jan 20, 2019 | www.theamericanconservative.com

Gerard January 17, 2019 at 3:12 pm

Great article and right on target. In fact, we don't have a real democracy anymore. We have a Potemkin Village democracy. Our national legislature is paralyzed and impotent. And honestly, that's the way its membership likes it. Pretend to govern. Hold tight to the seats of privilege and status.

In addition, Trump is a pretend President. He doesn't control his own government. Hell, a single judge anywhere in the hinterlands evidently has the power to veto pretty much whatever the Trumpster does. It's clear that the real power resides in the hands of the Ruling Class, most of whom are unelected and unaccountable. Judges. Bureaucrats. Regulators. The Deep State. They now run the show.

Meanwhile, the mainstream media plays the role of Orwell's Squealer the Pig from Animal Farm. Propagandists. Purveyors of fake news and fake truth. This is not going to end well. The only question is how and when the ending comes.

[Jan 20, 2019] Degeneration of the US neoliberal elite can be partially attributed to the conversion of neoliberal universities into indoctrination mechanism, rather then institutions for fostering critical thinking

Notable quotes:
"... An excellent piece. I would add only that the so-called elites mentioned by Mr Bacevich are largely the products of the uppermost stratum of colleges and universities, at least in the USA, and that for a generation or more now, those institutions have indoctrinated rather than educated. ..."
"... As their more recent alumni move into government, media and cultural production, the primitiveness of their views and their inability to think -- to say nothing of their fundamental ignorance about our civilization other than that it is bad and evil -- begin to have real effect. ..."
Jan 20, 2019 | www.theamericanconservative.com

Paul Reidinger, January 17, 2019 at 2:03 pm

An excellent piece. I would add only that the so-called elites mentioned by Mr Bacevich are largely the products of the uppermost stratum of colleges and universities, at least in the USA, and that for a generation or more now, those institutions have indoctrinated rather than educated.

As their more recent alumni move into government, media and cultural production, the primitiveness of their views and their inability to think -- to say nothing of their fundamental ignorance about our civilization other than that it is bad and evil -- begin to have real effect. The new dark age is no longer imminent. It is here, and it is them. I see no way to rectify the damage. When minds are ruined young, they remain ruined.

[Jan 20, 2019] Explaining marginal taxes to a far-right former Governor

Jan 20, 2019 | economistsview.typepad.com

anne , January 17, 2019 at 05:12 AM

http://cepr.net/blogs/beat-the-press/washington-post-forgets-to-mention-scott-walker-misled-fifth-graders-about-taxes

January 16, 2019

Washington Post Forgets to Mention, Scott Walker Misled Fifth Graders About Taxes
By Dean Baker

The Washington Post had an article * about how Republicans and right-wingers have become obsessed with trying to attack Alexandria Ocasio-Cortez, the newly elected representative from Brooklyn. At one point it refers to former Wisconsin governor Scott Walker's attack on Ocasio-Cortez's position advocating a high marginal tax rate on high income individuals.

"Former Wisconsin governor Scott Walker, a Republican who was defeated in November, on Tuesday mocked Ocasio-Cortez for her tax proposal and suggested it was an elementary-school understanding of the issue. 'Even 5th graders get it,' he tweeted."

While the piece noted part of Ocasio-Cortez's response, that rich people are the one's with the money, it left out the more important part, Walker misled the fifth graders he refers to in his tweet. In his tweet, Walker confuses a marginal tax rate with an average tax rate

"Explaining tax rates before Reagan to 5th graders: 'Imagine if you did chores for your grandma and she gave you $10. When you got home, your parents took $7 from you.' The students said: 'That's not fair!' Even 5th graders get it."

Ocasio-Cortez correctly pointed out in her reply that the $10 the students earned for doing chores for their grandma would not be taxed because the 70 percent tax rate she proposes would only apply to incomes above $10 million.

"Explaining marginal taxes to a far-right former Governor:

"Imagine if you did chores for abuela & she gave you $10. When you got home, you got to keep it, because it's only $10.

"Then we taxed the billionaire in town because he's making tons of money underpaying the townspeople."

Ocasio-Cortez is right on this point and Walker is wrong. He either does not understand how our income tax system works or is deliberately lying to advance his agenda. Either way, the Post should have pointed out that Walker was wrong.

Many people are confused about the concept of a marginal tax rate (the higher tax rate only appears to the income above a cutoff). Opponents of high marginal taxes on the rich try to take advantage of this confusion in the way Scott Walker did with his class of fifth graders. It is the media's responsibility to try to inform people about how the tax system works and to expose politicians who misrepresent the issue.

* https://www.washingtonpost.com/powerpost/what-have-you-got-left-ocasio-cortez-taunts-gop-critics-obsessing-over-her/2019/01/15/a48b5832-1455-11e9-803c-4ef28312c8b9_story.html

RC AKA Darryl, Ron said in reply to anne... , January 17, 2019 at 05:49 AM
That's funny in a sad sort of way. Dean has his hands full. There is no explaining the stupidity of politicians, media, and ordinary people in the US these days.
Darrell in Phoenix said in reply to anne... , January 17, 2019 at 07:39 AM
The whole Laffer Curve is based on this lie.

100% tax, no economy, so no revenue.
0% tax, no revenue.

So, maximum revenue is somewhere between those.. and the 70% top rate is clearly above that.. so we have to lower the top rate.

Let's unwrap the lies.
1) At 100% top rate, there is no economy.
WRONG! Ignores brackets, marginal rates, deductions, effective rates... Even at 90% top rate, the rich were averaging 40% effective.

2) The goal of taxation is maximum revenue. NO!!! The tax code should be viewed as a tool to keep the right amount of money, actively circulating in the economy. As such, is not only about getting back out the money the government adds, but also about limiting how much the rich take out.

3) Even if we assumed there is some taxation rate that hurts the economy, there was no evidence presented to say we were above that point.


OF course, it is point #2 (limiting how much money the rich take from the economy) that the Laffer Curve was created to destroy. And destroy it did, which is why we've been going into debt at 3x the sustainable rate.

Julio -> Darrell in Phoenix... , January 18, 2019 at 10:21 AM
Very good take on this discussion.

I would add that there is plenty of historical evidence ("90% destroys all incentives!" "70% destroys all incentives!"..."39.5% destroys...") to conclude that the plutocrats believe that all taxation is theft.

Darrell in Phoenix said in reply to anne... , January 17, 2019 at 07:43 AM
People on the left need to realize that high top rates are NOT to take money from the rich. They will spend or invest in ways that lets them avoid taxes.

High top rates are needed to get the rich to spend and capital invest, to reverse the structural imbalances.

That spending and investing creates demand, jobs, wages, lifting the poor into the middle class.

The extra revenue comes from that growth in the middle class as the poor go from 0% effective rate to 10-15% effective rate.

kurt -> Darrell in Phoenix... , January 17, 2019 at 01:07 PM
Agree - but it also changes the incentives for corporations and CEOs. By taxing away huge windfalls for CEOs it allows corporations to set a max wage around 15-20M. This means instead of the 700M to 1B salaries of big corps going to one guy, they pay their mid managers more and their line staff more. It means they invest more in R&D. I agree with you - just an supporting argument.

[Jan 20, 2019] Cohan has been on a rant for years about how high risk corporate bonds are going to default in large numbers. Never happened

Jan 20, 2019 | economistsview.typepad.com

anne , January 17, 2019 at 09:35 AM

http://cepr.net/blogs/beat-the-press/does-william-cohan-s-nyt-tirade-against-low-interest-rates-make-any-sense

January 17, 2019

Does William Cohan's New York Times Tirade Against Low Interest Rates Make Any Sense?
By Dean Baker

It doesn't as far as I can tell. Cohan has been on a rant * for years about how high risk corporate bonds are going to default in large numbers and then ... something. It's not clear why most of us should care if some greedy investors get burned as a result of not properly evaluating the risk of corporate bonds. No, there is not a plausible story of a chain of defaults leading to a collapse of the financial system.

But even the basic proposition is largely incoherent. Cohan is upset that the Federal Reserve has maintained relatively low, by historical standards,interest rates through the recovery. He seems to want the Fed to raise interest rates. But then he tells readers:

"After the fifth straight quarterly rate increase, Mr. Trump, worried that the hikes might slow growth or even tip the economy into recession, complained that Mr. Powell would 'turn me into Hoover.' On January 3, the president of the Federal Reserve Bank of Dallas said the Fed should assess the economic outlook before raising short-term interest rates again, a signal that the Fed has hit pause on the rate hikes. Even Mr. Powell has signaled he may be turning more cautious."

It's not clear whether Cohan is disagreeing with the assessment of the impact of higher interest rates, not only by Donald Trump, but also the president of the Dallas Fed, Jerome Powell, and dozens of other economists.

Higher interest rates will slow growth and keep people from getting jobs. The people who would be excluded from jobs are disproportionately African American, Hispanic, and other disadvantaged groups in the labor market. Higher unemployment will also reduce the bargaining power of tens of millions of workers who are currently in a situation to secure real wage increases for the first time since the recession in 2001.

If Cohan had some story of how bad things would happen to the economy if the Fed doesn't raise rates then perhaps it would be worth the harm done by raising rates, but investors losing money on corporate bonds doesn't fit the bill.

* https://www.nytimes.com/2019/01/17/opinion/shutdown-recession.html

[Jan 20, 2019] Psychologogical prerequisites for the financial bubble: gullibility of most people

Look at financial fraud and smoke and mirrors in the current USA "casino capitalism" as another example of the same. People do believe the insane valuations of tech firms like Apple, Facebook, Google and Amazon despite dot-com bubble. A lot of people put hard earned money in stock of those companies in wane hope to get out before the bubble pops.
Jan 20, 2019 | www.moonofalabama.org
the pair , Jan 18, 2019 1:42:50 PM | 4 ">link

"war is a racket" as the saying goes. it's usually less about actual capability than it is keeping all the usual suspects latched firmly on the "military industrial" teat. it's basically the world's largest welfare program disguised as "national defense" and - coupled with financial fraud/smoke and mirrors - what props up the sad remnants of the US. unless people believe the insane overvaluation of tech firms like facebook and amazon for another generation.

it is also - like you and others have mentioned - an offensive system allowing for first-strike capability and not feasible for many reasons (not the least of which is the sheer amount of "space junk" floating around in orbit.) all it takes is one russian/chinese/belgian/? missile getting through anyway...unless these idiots still agree with bush sr's idea of "acceptable losses of entire cities".

[Jan 20, 2019] Is "zastoy"(stagnation) a blessing in disguise fir Russian citizents ?

Jan 20, 2019 | economistsview.typepad.com

anne , January 17, 2019 at 03:19 PM

http://glineq.blogspot.com/2019/01/russias-circular-economic-history.html

January 17, 2019

Russia's circular economic history?

Today I participated in a nice web-based program started by the Central Bank of Russia (it will be posted soon). An economist is being interviewed by another, and then the one who has been interviewed becomes in his/her turn the interviewer of yet a third one. My friend Shlomo Weber, the head of the New School of Economics interviewed me, and then I interviewed Professor Natalya Zubarevich, from the Lomonosov Moscow State University and a noted scholar of Russian regional economics.

Just a couple of days ago Natalia gave a very well-received talk at the Gaidar Forum in Moscow on (what one might call) "unhealthy convergence" of Russian regions. In fact, Natalia shows that most recently regional per capita GDPs have started a mild convergence, but that this is due first to low growth rate of most of them and the economy as a whole, and to the redistribution mechanism (mostly of the oil rent) between the regions. A healthy convergence, Natalia says, would be the one where economic activity, and especially small and medium size private businesses, were much more equally distributed across some ninety subjects of the Russian Federation. She also had very interesting insights into the excessive "verticalization" of economic power and decision-making in Russia, and the economic growth of Moscow (much faster than of any other part of Russia) driven by centralization of that power, and concentration of large state-owned or state-influenced enterprises as well as bureaucracy in Moscow.

What most attracted my attention during Natalia's presentation at the Gaidar Forum was her description of the current period of low growth rates in Russia as zastoi, or stagnation. Now, zastoi has a very special political meaning in Russian because it was a disparaging term used in the Gorbachev era, and by Gorbachev himself, to define the Brezhnevite period of declining growth rates, lack of development perspectives, unchanging bureaucracy, and general demoralization and malaise.

But I asked Natalia the following question. Looking over the past 150 years of Russian history (and I think it is hard to go further back), were not really the best periods for ordinary people exactly the periods of zastoi: incomes rose by little for sure, but the state repression was weak, there were no wars, and probably if you look at violent deaths per capita per year, the lowest number of people died precisely during the periods of zastoi. So perhaps that zastoi is not so bad.

Natalia said, "I know I lived through the Brezhnevite period. Many people were demoralized; but I used it to study. I never read so many books and learned so much as then -- you could do whatever you wanted because your actual job really did not matter much." (Even art, as I saw in the Tretyakovska Gallery, even if some of these paintings were never exhibited in the official museums, seems to have done well during the Brezhnevite zastoi. And as the recent film, which I have not seen, but read the reviews, Leto, appears to indirectly argue as well.)

The best growth periods, as Natalia said, and as is generally accepted by economic historians were the 1950s up to about 1963-65, and then the period of the two first Putin's terms. In both cases, the growth spurs came as a ratchet effect to the previous set of disasters: in the Khrushchev period, to the apocalypse of the Second World War, in the Putin period, as a reaction to the Great Depression under Yeltsin during the early transition.

So this then made us think a bit back into the past (say, going back to 1905) and put forward the following hypothesis: that Russian longer-term economic growth is cyclical. The cycle has three components. First a period of utter turbulence, disorder, war, and huge loss of income (and in many cases of life as well), followed by a decade or so of efflorescence, recovery and growth, and finally by the period of "calcification" of whatever (or whoever) that worked in that second period -- thus producing the zastoi or stagnation.

I do not know if this is something specific to the Russian economic history. It made me think of Naipaul's observation on successful and unsuccessful countries. The history of the former consists of a number of challenges and setbacks indeed, but certain things are solved forever, and then new challenges appear. Take the United States: the Indian challenge and then the independence from Britain were not easy to overcome/acquire, but eventually, they were and they never came back; then the Civil War and the Emancipation; then the Great Society etc. But unsuccessful countries, according to Naipaul (and he had, I think, Argentina in mind) always stay within the circular history. The same or similar events keep on repeating themselves forever without any upward trend -- and no single challenge is forever overcome. In each following cycle everything simply repeats itself.

The challenges for Russia today is, I think, to break this cycle.

-- Branko Milanovic

[Jan 20, 2019] I want to tell all those who have fueled the arms race over the last 15 years, sought to win unilateral advantages over Russia, introduced unlawful sanctions aimed to contain our country's development: You have failed to contain Russia," Putin said during a national address in March.

Jan 20, 2019 | economistsview.typepad.com

Friday, January 18, 2019 at 04:23 PM

Russia's PL-19 Nudol, a system U.S. military intelligence assesses will be focused primarily on anti-satellite missions, was successfully tested twice in 2018. The weapon, which was fired from a mobile launcher, was last tested on Dec. 23 and marked the seventh overall test of the system, according to one of the people who spoke on the condition of anonymity.

The Russian anti-satellite weapon is expected to target communication and imagery satellites in low Earth orbit, according to the other person, who also spoke on condition of anonymity. For reference, the International Space Station and the Hubble Space Telescope travel in low Earth orbit.

While anti-satellite missiles are by no means new, the latest revelation comes less than a year after Putin touted his nation's growing military arsenal.

"I want to tell all those who have fueled the arms race over the last 15 years, sought to win unilateral advantages over Russia, introduced unlawful sanctions aimed to contain our country's development: You have failed to contain Russia," Putin said during a national address in March.

A recently unclassified report from the National Air and Space Intelligence Center, or NASIC, explained how the U.S. advantage above the Earth's atmosphere is eroding to "an emergent China and a resurgent Russia."

The NASIC report said there number of foreign intelligence and imaging satellites "has tripled" to 300 in orbit in the last two decades. The U.S. itself has 353 of its own space assets in orbit for those purposes. In response, military superpowers have poured funding into researching and developing anti-satellite weapons.

Missiles are the most high-profile, physical manifestation of anti-satellite weapons. Frank Slazer, the vice president of space systems at the Aerospace Industries Association, told CNBC about how those missiles may be physically effective, but are likely not the "first line of approach on this."

"You'd much rather jam the satellite, blind it [with a laser], or take over its control systems with a cyberattack," Slazer said. "Kinetic impacts could cause problems for other nations, besides the one you are attacking, and possibly for your own system's for many years afterwards."

Both Slazer and the NASIC report pointed to the example of China's anti-satellite test in 2007. China fired an anti-satellite missile at one of its own, discarded weather satellites. The test was successful, but the satellite shattered into thousands of pieces, which continue to zip around in an orbital cloud of deadly debris.

"A huge percentage of the debris in low earth orbit is still attributable to that one test," Slazer said.

As far as the U.S. military's ability to defend against anti-satellite weapons, the assets and capabilities in orbit "are the same as they have been for awhile," Tommy Sanford, director of the Commercial Spaceflight Federation, told CNBC.

Sanford contends that there has not been much in the way of progress when it comes to defending U.S. space-based assets. Sanford gave the example of using networks of smaller and cheaper satellites, like cubesats and nanosats, to offer "effective platforms to augment and support missions carried out by the DoD's larger exquisite satellites."

"The idea behind a distributed architecture for space support is – instead of having one exquisite target – you'd have a system which could presumably survive some loss of its elements and still be able to provide function," Slazer said.

[Jan 20, 2019] Democrats in 2019 admit that Obama was a sellout: especially Obama's indefensible handouts to bankers, drill-baby-drill energy policy, Lybia, Syria and Ukraine

Jan 20, 2019 | economistsview.typepad.com

Thursday, January 17, 2019 at 09:08 AM

First, a quick précis of what is under discussion. The Obama stimulus package was less than half as big as it needed to be, meaning unemployment was at 10 percent in November 2010, sending Democrats to a massive defeat in the midterms. Obama's foreclosure policy was a monumental catastrophe which crushed the wealth of middle-class homeowners -- particularly African-American ones -- to save the banks from their own fraudulent schemes. His corporate crime policy amounted to a near-halt of prosecutions of top white-collar crime, again largely to protect the banks.

Obama's health-care reform, while a step forward in some ways, was poorly designed and failed to stop skyrocketing cost growth. His climate policy was timid and inexcusably slow -- while at the same time he enabled enormous growth of U.S. oil and gas drilling. He also made excuses for torture and largely embraced the Bush security apparatus -- even extending it in places, like dragnet surveillance and assassinating American citizens.

Obama apologists typically deal with these problems in one of three ways. One strategy is to ignore them in favor of his positive record, which to be fair is pretty substantial. Jonathan Chait points to the stimulus, some moderate corporate regulation (Dodd Frank), and modest tax hikes on the rich as evidence he is basically just like FDR. Another strategy is slanted arithmetic: Michael Grunwald says the stimulus was as big as the New Deal in inflation-adjusted dollars, which is true but leaves out overall economic size, which is far more telling since the point of that spending was to restore full employment at the time it was passed. The Recovery Act spending was 5.7 percent of 2008 output, while the New Deal was 40 percent of 1929 output. A final strategy is just to point at Obama's popularity among Democrats (95 percent approval) as speaking for itself, as former administration staffer Jon Favreau does here.

I would guess that of the three, this final strategy will be the one that actually prevents any very searching debate over Obama's failures. Bringing that topic up online always creates an instant snarling fight between critics and the vastly more numerous legions of die-hard Obama partisans. For a candidate to do it would distract from their upcoming campaign and likely polarize Democratic loyalists against whatever a critic was saying, regardless of content. Even Bernie Sanders has become hesitant to obliquely criticize the Democratic Party as such, because of the instant backlash from Obama fans.

However, that's not the end of the story. The very terrain of political and policy debate among Democrats in 2019 is a tacit admission that the Obama presidency was a wrong turn to a great degree. Instead of building on the clearly lousy ObamaCare exchange model, most presidential candidates so far have endorsed Medicare-for-all, or at least the idea of expanding Medicare and Medicaid. Elizabeth Warren wants to give workers 40 percent of corporate board seats -- which is hugely more radical than anything Obama ever did or proposed. Kirsten Gillibrand supports universal paid leave and postal banking, instead of Medicare and Social Security cuts to reduce the deficit.

Cory Booker is talking about a quasi-social wealth fund for children, instead of tax cuts for companies who hire domestically. Kamala Harris is proposing big income boosts for the working and middle class. Even Joe Biden is considering free college.

The turn away from Obama-style policy can also be seen in what gets attention now. The new hotness in tax policy is Alexandria Ocasio-Cortez's 70 percent top marginal tax rate -- over 30 percentage points above its highest rate during the Obama years. Instead of a disastrous "all of the above" energy policy, Democrats are debating how to slash domestic oil and gas production with a Green New Deal.

Politically, most Democrats have quietly abandoned Obama's asinine notion that America is crying out for a return to bipartisanship -- in favor of the clearly correct view that defeating Republicans is what matters. Even the Democratic rank and file have ditched their traditional attachment to compromise, apparently radicalized by the ongoing disaster of the Trump presidency.

So while nobody is likely to want to hash out Obama's indefensible handouts to bankers or drill-baby-drill energy policy over the next two years, the political debate will still proceed as if everyone agrees they were a bad idea. Because they were.

[Jan 19, 2019] Three Bernie Sanders Bills to Arrest the Highway Robbery in the Prescription Drug Market

Jan 19, 2019 | economistsview.typepad.com

anne , January 15, 2019 at 05:59 PM

https://prospect.org/article/three-bernie-sanders-bills-arrest-highway-robbery-prescription-drug-market

January 14, 2019

Three Bernie Sanders Bills to Arrest the Highway Robbery in the Prescription Drug Market
Allowing foreign imports, authorizing Medicare bargaining, or setting prices at what other nations pay -- all good options
By DEAN BAKER

The prescription drug market in the United States is an incredible mess. From an economic standpoint, everything is wrong. Drugs that would sell for a few hundred dollars in a free market often sell for tens or even hundreds of thousands of dollars because we give their manufacturers patent monopolies. This leads to the sort of distortions and inefficiency that would be expected from tariffs as high as many thousands percent.

From a heath perspective the situation is no better. The huge markups give drug companies enormous incentive to misrepresent the safety and effectiveness of their drugs and to push them for uses where they may not be appropriate. This is a big part of the story of the opioid epidemic.

Cumulatively, it is a huge deal in both economics and health. We spent more than $430 billion (2.2 percent of GDP) on prescription drugs last year. These drugs likely would have cost less than $80 billion in a free market. The difference of $350 billion is almost five times the annual federal budget for food stamps. This is real money.

This is the backdrop for three bills proposed last week by Senator Bernie Sanders, along with Representatives Elijah Cummings and Ro Khanna, to address the high and rapidly rising cost of prescription drugs. The three measures provide alternative paths for reducing drug prices.

The first one, "The Prescription Drug Price Relief Act," would end the patent monopoly for any drug that sold for a price exceeding the median price in five other major countries: Canada, the United Kingdom, France, Germany, and Japan. This would allow large savings since drug prices in these countries are roughly half as much as in the United States. Drug companies would have a choice of either lowering their prices or losing their patent monopoly.

In the latter case, the competition is likely to push the price well below the levels in the five countries. While these nations do regulate drug prices, patent monopolies still let the companies charge a price that is far higher than the price that would exist in a competitive market with generic competition.

The second bill is "The Medicare Drug Price Negotiation Act." This bill would allow Medicare to negotiate collectively for the drugs purchased through Medicare prescription drug insurance. Since this program spends roughly $100 billion annually on drugs, it should have serious bargaining power.

Anyone designing a rational drug insurance program would have required negotiation when the program was created, but rational design was not necessarily the top priority at the time this program was enacted.

Anyone designing a rational drug insurance program would have required negotiation when the program was created, but rational design was not necessarily the top priority at the time this program was enacted. Representative Billy Tauzin, who headed the Energy and Commerce Committee, which structured the Medicare prescription drug legislation, resigned immediately after the bill was signed into law to become head of the pharmaceutical industry's trade association.

The third bill, "The Affordable and Safe Prescription Drug Importation Act," is also an effort to take advantage of the fact that drugs are so much cheaper in other countries than in the United States. This bill would allow people to freely import drugs from other wealthy countries that have safety standards that are comparable to those in the United States.

This bill both highlights the sharp differences in prices between the United States and other countries and calls out one of the big lies used to justify these differences. Allies of the drug industry often claim that we cannot count on getting safe drugs from other countries, implying that countries like Canada and Germany do not protect their populations from unsafe drugs.

This is, of course, absurd. The standards in these countries are every bit as high as in the United States. And, if we think the quality of imported drugs is a problem, we all should already be very worried because many of the drugs and ingredients in drugs sold in the United States are already imported, largely from China. So the idea that we can't be assured of the safety of imported drugs is simply an industry talking point, not a real concern.

Which of these paths for reducing drug costs is best? Importation is probably the most far-reaching, since it should quickly bring our prices down to the level of other wealthy countries. As a practical matter, however, progressives should back anything that moves the debate forward.

We really need to turn the industry on its head, paying for research upfront and then having drugs sold in a free market, like paper plates and shovels. It is absurd to pay for research that has already been done, at the point when people are suffering from serious conditions jeopardizing their health or their life.

No one thinks it makes sense to pay firefighters based on the value of their work when they come to our burning house with our families inside, yet this is essentially how we pay for drug research under the patent monopoly system. In fact, the story is even worse with drugs, since typically we have a third party payer (either an insurance company or the government) who we are trying to get pick up most of the tab.

These bills would not fully solve the problem, but each would be a big step in the right direction. Sanders, Cummings, and Khanna have done a great service in pushing them forward.

mulp -> anne... , January 16, 2019 at 04:33 PM
"No one thinks it makes sense to pay firefighters based on the value of their work ..."

We value fire fighters as worthless, by not paying most fire fighters in the US.

After all, requiring the people saving your life to be paid kills jobs, so we end up with unpaid life savvers.

We should appply the same principle to people providing life saving food, the people building the roads needed to deliver life savings, the people making the vehicles used by those providing life saving services.

In fact, no one should be paid to work! Thats free lunch economics!

Sarcastic, yes.

Dean Baker meantioned nothing about costs, which are always labor costs.

Look, Keynes argued that when there were unemployed workers, and capital is scarce, government should tax and spend to pay workers to build capital.

For drugs, paying unemployed researchers to build capital, eg, life saving drugs, then taxing the drugs produced to repay the cost of developing the drugs, with so many new drugs developed, the private capital in drug factories, etc will produce so many drugs that drug prices fall to total labor costs per unit, plus the drug tax.

We know there are unemployed drugresearchers because NIH always runs out of money to pay all thre recent collage grads seeking grants to fund their hoped for job as a researcher.

Plp -> mulp ... ,