Female sociopath are excel in false accusations, including rape accusations. They are born actresses and have no empathy, so
framing their victim is just an easy game for them
In a fiery speech announcing her decision, Collins ripped unsupported claims by Avenatti's
client, Julie Swetnick, that Kavanaugh facilitated a Cosby-esque "gang rape" operation while in
high school.
Some of the allegations levied against Judge Kavanaugh illustrate why the presumption of
innocence is so important . I am thinking in particular not of the allegations raised by
Professor Ford, but of the allegation that, when he was a teenager, Judge Kavanaugh drugged
multiple girls and used their weakened state to facilitate gang rape .
This outlandish allegation was put forth without any credible supporting evidence and
simply parroted public statements of others . That such an allegation can find its way into
the Supreme Court confirmation process is a stark reminder about why the presumption of
innocence is so ingrained in our American consciousness. -Sen. Susan Collins
I didn't really care much about the stuff alleged to have been done by Kavanaugh
thirty-five years ago. Arguing with a close family friend I stated that there was nothing
I found more tiresome than the old lawyers tactic of springing something on you at the last
possible minute, leaving a steaming pile of turds in the middle of your desk, and then
expecting to be taken seriously. Decorum? Rules of debate? How about the laws of
discovery, sharing info amongst colleagues?
Just because this was not a criminal trial is no reason to throw out the rules for policy
making, the nomination process, which both sides have adhered to in the past. People were
comparing this to the Anita Hill fiasco during the Clarence Thomas confirmation hearings.
Delay, interrupt, stall, maximum media exposure. Never any evidence or criminal charges to
point to.
In criminal trials there is the process of discovery by which the admission of
evidence at the last minute is strongly ill advised, and can result in it being tossed out.
Sen. Feinstein would be aware of all the rules and procedures, but she feels above it
all.
Hey Avenatti! If you and your client had any idea of what the truth is no one would every
have heard of her or of you. Don't give us this ******** that you were just representing your
client. If you had a brain you would have known she was FOS from the get go, and if you were
honest you never would have represented her. So what is it? Are you just stupid or are you
dishonest, or both?
People who make salacious claims unconfirmed or outright denied by their own named
"witnesses" tend to get sued for defamation. And the lawyers they rode in on.
Michael Avenatti is not a nice man at all. He was a factor in making the accusations seem
like a circus. No one takes him seriously as he slinks around the gutters.
Avenatti is the scapegoat. The Ford story was already fast breaking down, and the secret
polygraph and the secret therapist notes and her ex-boyfriend should have made more noise in
the Senate.
They embraced this puke and revelled in his garbage accusations. Now they need a
scapegoat, and he's it. God forbid Feinstein get raked over the coals for screwing this thing
up. The was a political hit, and everyone knew it. But the GOP are so spineless that a
high-school-drunken-grope-fest brought them to their knees. Fortunately, the Dems stayed true
to form and blew themselves up.
What I do not understand is how could they be so stupid as to endorse the Avenatti slime
factory in the first place? TONE DEAF.
Avenatti needs to be disbarred. To file a complaint for his breach of professional
responsibility, suborning perjury, and engaging in acts of moral turpitude:
If enough complaints are filed with the CA state bar, he may get disbarred.
Attorneys ALREADY have a really bad rep. Part of professional responsibility is to uphold
the integrity of the legal profession. The ONLY thing Avenatti did was to make every attorney
look like a complete shyster sleazeball, which given I just took the bar exam and will
probably become an attorney soon, I find immensely offensive.
The Demonrats used false sexual allegations against Roy Moore coupled with ballot box
cheating (their typical mode) to win a senate seat in conservative Alabama. So, since their
main national platform of open borders is so repugnant to any normal taxpaying voter, this is
their only strategy. They simply got caught. All the allegations against both Kavanaugh and
Moore were fabricated and the proof is the Soros' paid lawyers who represented them all. And
Feinstein and Schumer conspired in this farce. And independent voters know it!
They're just pissed they got caught in their fraud and this energized the R. base which
will lead to a red wave in a few weeks. And just think of the political commercial
possibilities for any Demonrat senator hoping to prevail if they vote against Kavanaugh. I
expect the final confirmation vote won't as close as the vote for cloture for this
reason.
Be careful, Roy Moore was a different story. There was evidence including him saying he
liked to date high school age girls as a 30 year old along with multiple other people who
remembered what was alleged. Not just Democrat operatives. Morals were not that different
then than now. Was he guilty of a crime no, could reasonable people still dislike his morals
sure. I grew up close to that era and thought the college age kids hanging around HS girls
was nasty. Moore verified as a 30 year old he liked them young.
Ford 0 corroborating evidence. By lumping in Moore with Kavanaugh you are giving credence
to believe the victim because all you are following the "patriarchy" of believing the accused
regardless of evidence.
The Democrats have a long history of making last minute sexual misconduct allegations
against their political opponents, always without any evidence or corroboration. And sexual
misconduct allegations that pale in comparison to what a lot of Democrats have been alleged
to do (rape allegations against Clinton, Kennedy having an affair that left a woman dead,
John Conyers for settling sexual harassment allegations with taxpayer money, Hillary for
trashing victims, or consider Weinstein and other famous/rich Democrat donors or newsmen).
I'd bet most of these allegations against Republicans were simply made up for political
purposes because they were plausible, couldn't be disproven, and couldn't be proven. Ford's
allegations fit the pattern.
The charges are always last minute, to deny the accused an opportunity to defend
themselves. Kavanaugh provided an excellent defense that would be good court room drama in a
movie, when no one in the GOP was willing to defend him, and too afraid of being accused of
not believing a victim and attacking them.
What's really going on are the Democrats in charge, are looking to deflect the attention
from what they did, to Avanetti because Avanetti did the same, except the charges of his
client, weren't believable, even though they couln't be proven or disproven. They don't want
to take the blame, for what voters might do in the midterms.
One thing's for sure, you don't see Democrats calling for indicting and prosecuting false
accusers. They're teaching people to bear false witness for their personal purposes.
avenatti gave the diversion, the clutter, the political sideshow so that all charges could
be swept away and completely fake and uncorroborated. there was no provable basis for the
ford charges, but the crazy swetnick stories simplified brooming the whole thing.
we can only hope that avenatti will be back in 2020, to run for president, and to come
marching with his parade of **** stars and "wronged" women who spend all their time
performing in strip clubs.
"... The USA hegemony is based on ideological hegemony of neoliberalism. And BTW both Russia and China are neoliberal countries. That's probably why President Putin calls the USA administration "partners," despite clearly anti-Russian policies of all US administrations since 1991. ..."
"... One fascinating fact that escapes my understanding is why the USA elite wasted colossal advantage it got after the collapse of the USSR in just 25 years or so. I always thought that the USA elite is the most shrewd out of all countries. ..."
"... May be because they were brainwashed by neocon "intellectuals." I understand that most neocons are simply lobbyists of MIC, and MIC has huge political influence, but still neocon doctrine is so primitive that no civilized elite can take it seriously. ..."
"... I also understand Eisenhower hypocritical laments that "train with MIC left the station" and that the situation can't be reversed (lament disguised as a "warning"; let's remember that it was Eisenhower who appointed Allen Dulles to head the CIA. ..."
>US hegemony is imposed militarily, both covertly and overtly, throughout the world. It is maintained through the petrodollar,
corporate power, and the Federal Reserve Bank and its overseas counterparts
All true, but the key element is missing. The USA hegemony is based on ideological hegemony of neoliberalism. And BTW both
Russia and China are neoliberal countries. That's probably why President Putin calls the USA administration "partners," despite
clearly anti-Russian policies of all US administrations since 1991.
Ability to use military is important but secondary. Without fifth column of national elites which support neoliberalism that
would be impossible, or at least more difficult to use. Like it was when the USSR existed (Vietnam, Cuba, etc). The USSR has had
pretty powerful military, which was in some narrow areas competitive, or even superior to the USA, but when the ideology of Bolshevism
collapsed, the elite changed sides and adopted a neoliberal ideology. This betrayal led to the collapse of the USSR and all its
mighty military and the vast KGB apparatus proved to be useless.
In this sense, the article is weak, and some comments are of a higher level than the article itself in the level of understanding
of the situation (Simon in London at December 21, 2018, at 9:23 am one example; longevity of neoliberalism partially is connected
to the fact that so far there is no clear alternative to it and without the crisis similar to Great Depression adoption of New
Deal style measures is impossible )
It is really sad that the understanding that the destiny of the USA is now tied to the destiny of neoliberalism (much like
the USSR and Bolshevism) is foreign for many.
So it might well be that the main danger for the US neoliberal empire now is not China or Russia, but the end of cheap oil,
which might facilitate the collapse of neoliberalism as a social system based on wasteful use on commodities (and first of all
oil)
One fascinating fact that escapes my understanding is why the USA elite wasted colossal advantage it got after the collapse
of the USSR in just 25 years or so. I always thought that the USA elite is the most shrewd out of all countries.
May be because they were brainwashed by neocon "intellectuals." I understand that most neocons are simply lobbyists of MIC,
and MIC has huge political influence, but still neocon doctrine is so primitive that no civilized elite can take it seriously.
I also understand Eisenhower hypocritical laments that "train with MIC left the station" and that the situation can't be reversed
(lament disguised as a "warning"; let's remember that it was Eisenhower who appointed Allen Dulles to head the CIA.
A fresh story at Bloomberg, which includes new analysis, shows the ugly student debt picture is getting uglier. The driver is
that higher education costs keep rising, often in excess of the likely wages for graduates. The article's grim conclusion: "The next
generation of graduates will include more borrowers who may never be able to repay."
Student debt is now the second biggest type of consumer debt in the US. At $1.5 trillion, is is second only to the mortgage market,
and is also bigger than the subprime market before the crisis, which was generally pegged at $1.3 trillion. 1 Bloomberg
also points out that unlike other categories of personal debt, student debt balances has shown consistent, or one might say persistent,
growth since the crisis.
From the article:
Student loans are being issued at unprecedented rates as more American students
pursue higher education . But the
cost of
tuition at both private and public institutions is touching
all-time
highs , while interest rates on student loans are also rising. Students are spending more time
working instead of studying . (Some 85 percent of current students now work
paid jobs while enrolled.) Experts and analysts worry that the next generation of graduates could default on their loans at
even higher rates than in the immediate wake of the financial crisis.
The last sentence is alarming. As graduates of the class of 2009 like UserFriendly can attest, the job market was desperate. And
for the next few years, the unemployment rate of new college graduates was higher than that of recent high school graduates. One
of the corollaries of that is that more college graduates than before were taking work that didn't require a college degree; this
is still a significant trend today. And on top of that, studies have found that early career earnings have a significant impact on
lifetime earnings. While there are always exceptions, generally speaking, pay levels key off one's earlier compensation, so starting
out at a lower income level is likely to crimp future compensation.
And on top of that, interest costs are rising. The rate for direct undergraduate loans is 5% and for graduate and professional
schools, 6.6%. So student debt costs will also go up even before factoring in inflating school costs. So the ugly picture of delinquencies
and defaults is destined to get worse.
Students attending for-profit universities and community colleges represented almost half of all borrowers leaving school and
beginning to repay loans in 2011. They also accounted for 70 percent of all defaults. As a result, delinquencies skyrocketed in
the 2011-12 academic year, reaching 11.73 percent.
Today, the student loan delinquency rate remains almost as high, which Scott-Clayton attributes to social and institutional
factors, rather than average debt levels. "Delinquency is at crisis levels for borrowers, particularly for borrowers of color,
borrowers who have gone to a for-profit and borrowers who didn't ultimately obtain a degree," she said, highlighting that each
cohort is more likely to miss repayments on their loans than other public and private college students.
Those most at risk of delinquency tend to be, counterintuitively, those who've incurred smaller amounts of debt, explained
Kali McFadden, senior research analyst at LendingTree. Graduates who leave school with six-figure degrees that are valued in the
marketplace -- such as post-graduate law or medical degrees -- usually see a good return on their investment.
I'm a little leery of cheerful generalizations like "big ticket borrowers for professional degrees do better." "Better" may still
not be that good. Recall that law school and in the last year, business school enrollments have fallen because candidates question
whether the hard costs and loss of income while in school will pay off. And there are some degrees, like veterinary medicine, that
are so pricey it's hard to see how they could possibly make economic sense.
What is distressing about this ugly picture is the lack of effective activism by the victims. I am sure some are trying, but in
addition to the burden of being so overwhelmed by the debt burden as to lack the time and energy to do anything beyond cope, is the
fact that being in debt is stigmatized in our society, and borrowers may not want to deal with condescension and criticism. Another
obstacle to organizing is that most of the victims are lower income and/or from minority groups, which means Team Dem can ignore
them on the usual assumption that they have nowhere else to go. It is also harder to create an effective coalition across disparate
economic, geographic, and age groups
But the experience of the post-Civil War South says things could get a lot worse. From Matt Stoller in 2010:
A lot of people forget that
having debt you can't pay
back really sucks. Debt is not just a credit instrument, it is an instrument of political and economic control.
It's actually baked into our culture. The phrase 'the man', as in 'fight the man', referred originally to creditors. 'The man'
in the 19th century stood for 'furnishing man', the merchant that sold 19th century sharecroppers and Southern farmers their supplies
for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they
were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing
agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts
were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started
the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.
They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together
by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty
in Arkansas and pronounce it 'shocking'. These were the fruits of usury, a society built on unsustainable debt peonage.
Sanders has made an issue of student debt, but politicians who want big bucks from financiers and members of the higher education
complex pointedly ignore this issue. As we've pointed out, top bankruptcy scholar Elizabeth Warren won't even endorse a basic reform,
that of making student debt dischargable in bankruptcy. So it may take student debtors becoming a bigger percentage of voters for
this issue to get the political traction it warrants.
______
1 Higher estimates typically included near subprime mortgages then called "Alt A".
There are many, many passages in this obscure old book called The Bible speaking of usury as a grave sin. So many it is actually
one of the most clear and condemned sins in the entire book. Maybe we could see if any of our Congress persons have ever heard
of it? They could learn something from it regarding this topic.
That said, it's passages on gender equality and family structures are pretty outdated and abhorrent so I wouldn't want them to
get any bad ideas from this book on those subjects.
Indeed, all of the old "Iron Age religions" (Judaism, Early Christianity, and Islam) explicitly denounce usury.
The great irony of the Deep South in te USA is that they've been frequently banning Sharia law, even when Sharia law is one
of the few types of law in the world which explicitly bans charging interest.
It is always intriguing how many politicians are so eager to endorse a literalist fealty to the social structures of the bible
but ignore, or even vehemently rail against, the more balanced social restrictions on things like usury or the old idea of a debt
jubilee. But then Jesus himself railed (physically) against embedding money in religion and now we have "entrepreneurial churches"
who preach a "doctrine of prosperity" so I guess times have changed.
I graduated 10 years ago and the most frustrating part was everyone telling me it would be alright and ignoring thw whole you
never recover thing. I am still unable to find worthwhile employment and probably never will be able to.
You really can't listen to many of us over 40.. we really lived in complete my different conditions. When I got out of college
in the 90's they were basically hiring everyone with a pulse in tech. From what I have seen from recent graduates it's getting
easier, as I am seeing a lot more intershops turn into job offers. But for the generation that you are part of, it's an economic
hole that may never be recovered from simply because you were born at the wrong time.
Looking at that graph, notice how the only debt that is backstopped completely by the federal government is growing the fastest.
The no default on student loans rules have to be rescinded.
Extrapolating from these trends, then in a few years the only young people that would be able to afford higher education in
the United States would the the children of the ten per cent – plus a smattering of scholarships to talented individuals found
worthy of supporting. It follows then that as these educated people entered the workforce, that over time that the people that
would be running the country would be children of the elite in a sort of inbred system. It sounds a lot like 19th century class-based
Britain that if you ask me.
As for the country itself it would be disastrous. Going by present population levels, it would mean that instead of recruiting
the leaders and thinkers of the country from the present population of 325 million, that at most you would be recruiting them
from a base level of about 30-40 million. It is to be hoped that these people are not from the shallow end of the gene pool. You
can forget about any idea of an even-handed meritocracy and America would be competing against countries that might employ the
idea of a full meritocracy in the recruitment of their leaders. I wonder how that might work out.
"America would be competing against countries that might employ the idea of a full meritocracy in the recruitment of their
leaders. I wonder how that might work out"
Would the performance of U. S. men in international soccer competition be a similar situation?
The concept of student debt as it exists today would be repulsive to our Founders. Not just for the larger issue of our country
being on the trajectory of becoming an economic aristocracy, but specifically because the Federal government is profiting tremendously
from this crushing usury being applied to majority and the least among us.
Our Founders had no problem with the conquest and seizure of Native Americans land, and they fully respected the rights and claims
of other European countries to do the same. One of their strongest repudiations of the aristocracy was the expansion of private
property rights beyond what was known under any monarchy on the planet to that point in history. In the pre-industrial world the
vast majority of people lived in an agrarian society and economy. Owning land secured you with your livelihood, your living, and
much of your resources; it fully supported most families.
For its founding and for generation after generation the United States government gave land to countless men for military service,
government service, homesteds, etc. Expansions by the Louisiana Purchase and war and treaties with other European nations, quickly
resulting in making these lands available for settlement to our citizens and to immigrants.
The point is that for well over 100 years the government provided to its citizens a huge amount of what our citizens needed
to live their lifetimes through these grants of land. These land grants were then passed from generation to generation and formed
the economic foundations for millions of people, their children and their next generations.
Our Government did this.
The United States ceased to be a predominantly agrarian country in the mid 20th century. But they did not stop aiding our people
and their economic needs. Our government (Federal and states) did continue to provide to our population through public education
(very affordable college), the GI Bill that served millions with income, housing and educational benefits, Social Security, Medicare,
etc.
Since our country's very founding our government has recognized the benefit and need to facilitate the support of its citizens.
The American economy became the greatest on earth because of our land conquest heritage and our collective investments as a nation.
No one did it all on their own, and no one pretended they did.
Reagan killed this legacy. Reagan claimed that our nations success and our heritage was built on our history of rugged individualism
and that our government was the obstacle to returning to these roots. It was a lie; nothing could have been further from the truth.
Student debt, as it exists to day, is crippling the economic futures of the millions who have accrued this debt and the millions
to come, year after year, who will do the same. The student is debt is robbing our nation of the economic activity that historically
matriculated out from those passing from college to the world. That has come almost to an end. Worse yet, our government has positioned
itself to also profit off this debt, and to prevent the indebted from escaping this type of debt through the legal means available
for virtually all other forms of debt.
Our student debt is un-American. It is a cancer on our economy. It exists for the vast short term profit of the few at the
expense of our nations future.
I hope people keep in mind it was the Democrats, specifically Joe Biden, who made student debt even more crippling and heartless
by changing the bankruptcy laws so that creditors can garnish your Social Security benefits (assuming Mitch McConnell doesn't
gut them first).
Republicans are open about what they hope to accomplish, you have to clear the verbal BS that clouds what Democrats are after,
but at the end of the day they are both about enslavement and debt bondage over unwashed masses.
I'm sure it's often the parents that end up paying the debt, as my sister is doing. Parents have deep pockets and are desperate
to help their loved ones get a good start in life.
In my sister's case, they sent their girls to private high school, where they spent the money that could have paid for college.
Not a smart decision. But they love their children and really wanted to do give them the best.
Now the girls are struggling to make a living and my sister cannot afford to retire.
There are so many feedback loops, multipliers, and perverse incentives driving forward this bubble (and its calamitous social
and cultural effects) that it's hard to know where to begin.
As Goldman Sachs
have pointed
out , student-loan-based securities are increasingly "attractive" investments for speculators:
Although the "bubble" is getting bigger, it's not a risk to overall financial stability, Goldman's Marty Young and Lotfi
Karoui said in a recent note. In fact, there's one segment of the market that's emerging as an attractive investment.
It's the $190 billion of outstanding [student] loans that are held within asset-backed securities (ABS) refinanced by private
lenders such as SoFi.
With these securities, lenders pool loans that have similar risk profiles and sell them as instruments in the public markets.
Investors profit as graduates pay back their principal and interest.
So the more student debt there is, and the higher the interest rates are, the better, from that perspective.
It's undeniable, too, that high student loan burdens mean graduates are slower to form households and will probably have fewer
children than they would otherwise. Their diminished spending power, meanwhile, adds to the ongoing erosion of the "real economy,"
in favour of the financial one. Student loans therefore disrupt the basic means of social reproduction. The resulting declines
in fertility then demand high rates of immigration to compensate. A fact cheered on, inevitably, by the open borders crowd (a
substantial number of whom, oddly or not, seem to work in or for universities).
So we see yet another instance in which "right" neoliberalism and "left" identitarianism go hand in hand–forming, indeed, two
heads of the same beast. Student loans have enabled the enormous inflation in tuition costs that have plagued the Anglosphere
over the last couple of decades. This fees income feeds the academic beast (or at least its administrators and senior managers),
while driving the one economic and social crisis (mass migration and the resulting populist backlash) that "left neoliberals,"
centrists, and Clinton/Progress types appear to care about. It's a self-licking ice cream of catastrophic size and reach.
One specific example: hospital chaplains are facing a big retirement crisis. And yet the job requires (to be hoard certified):
an undergraduate degree & then a Master's of Divinity degree, plus a year-long residency. For a job that pays around $60,000 to
$70,000. At least one school, Princeton, funds almost all of their divinity students. But I don't think it's the norm. And then
you throw in the fact that such person ideally would be emotionally & spiritually mature, with enough life experience to meet
with a wide range of people, who are often facing financial hardship due to being sick (as well as existential concerns). I don't
even know how to begin reframing the job or the qualifications or the salary to fit America in 2020. There are a lot of other
angles, such as: what about well-qualified people who can't afford seminary? I know there needs to be a way to screen-out and
screen-in the best people (who won't proselytize), but is a Master's degree the right hurdle? But, I must say, the need for access
to interfaith Spiritual Care is only increasing, as times get tougher & other hospital staff (RNs) don't have time to sit and
listen. People are in pain, not only in their bodies. One thought leader in the field has speculated that the job will just go
away due to lack of advocacy & inability to evolve into a profit center.
It would be interesting to see that student loan debt chart superimposed over %adjuncts and number of administrators. Its pretty
easy to guess what that would look like, but seeing that would be decisive.
I think a little delineation is in order. I've been an adjunct professor and believe the increasing use of adjuncts at universities
has been very beneficial overall -- in terms of the quality of education students are getting. Unfortunately, as we know, that's
not why universities are hiring so many more adjuncts; they're being hired because schools can get away with paying them abysmally.
The situation is so embarrassing that, at the university where I was teaching five years ago, the full-time faculty passed
a resolution asking the administration to give the entire projected increase in teaching salaries entirely to the adjuncts, an
amazing act of selflessness.
The relevance to our discussion here, of course, is the insupportable increase in the annual cost of attending college even
as the schools radically reduce their overall expenditures on faculty salaries.
So how long before this leads to a mass "We Won't Pay" movement? I'm stuck on the dumb treadmill myself, but I wouldn't begrudge
an entire generation for just saying no. Sure, they can garnish wages and the like, but if 30 million people simultaneously say
'eff this', it's more than just a wrench in the works it's drastic enough to force action.
Why DO they keep paying? The debts are always bought by debt collectors who don't even have COPIES promissory notes. Let them
sue you and show up for the hearing and demand proof. They can still ruin your "credit" but if student loans haven't taught you
to eschew credit nothing will. If EVERYONE "walked away" what could they do?
Unfortunately that is never going to happen. This society has been trained to worship at the altar of the FICO score, and most
job seekers cannot afford to have a low score. Said score will be examined and potentially held against you when pursuing employment.
Also, employers frown upon employees who do not pay their bills and then have their wages garnished – at least the smaller
emlpoyers do. This creates extra work for the employer and makes the employee suspect, as in irresponsible.
This problem was created by the political class and is going to require a political solution, i.e. legislation to assist the
student loan borrower or a debt jubilee. Unfortunately, there's too much money being made off the student borrower – even if the
practice is killing the host. And the "I got mine" crowd will not allow a jubilee even if it is for the greater good of society.
Lastly, student loan borrowers coming from a different era (who have paid off their loans) will begrudge the forgiving of the
loans and consider them undeserved. In this case, perhaps the best resolution is to give everyone money toward their student loans
– whether they are currently paid or unpaid.
I cannot jeopardize my employment by joining in a "eff this" movement as much as I would like to. Instead, I will continue
on this treadmill called life, pay my bills and hope to escape as unscathed as possible.
I work for a company that contracts with department of Ed to get student loan borrowers out if default and back into the hands
of loan servicers. The amount of money sloshing around is stunning. I'm sure they've got well paid lobbyists telling legislators
that people will be unemployed if student loans are reformed. I owe well over six figures so the irony is not lost on me. Hiring
one half of the working class to debt collect from the other.
Who pays for diploma-mill educations, and why? I have always assumed that people attended cash-n-carry schools because they
did not qualify aptitude/grade-wise for entrance to a state school, OR a 3rd party like DOD or VA was footing the tab. Both assumptions
appear to be supported by data. Given the far-above-average drop/flunkout rate of diploma mills. I know from my military career
that enlisted members sign up for courses (local or online) at diploma mills to get extra points toward promotions – at Navy expense.
Personally, I would not pay to send my dog to such institutions to learn how to sit up and beg.
One thing is certain, collich kidz do not appear to spend nearly as much time researching where they go to $chool as they do
buying the car they drive.
Jumping into the conversation a little late, but my alma mater recently embarked on a major rethink of the college business
model, and cut tuition from around 50k to around 30k. We even got
a writeup from Frank Bruni
for it .
College officials (I'm relatively active as a fundraiser for my class) describe it as a shift to a "philanthropy model" of
funding. Which worries me for lots of reasons. But at least it's a conversation-starter.
It's also very much a school that is not for people looking to buy a future income flow, but rather an education.
"... This episode of the Scott Horton Show is sponsored by: Kesslyn Runs , by Charles Featherstone; NoDev NoOps NoIT , by Hussein Badakhchani; The War State , by Mike Swanson; WallStreetWindow.com ; Roberts and Roberts Brokerage Inc. ; Zen Cash ; Tom Woods' Liberty Classroom ; ExpandDesigns.com/Scott ; and LibertyStickers.com . ..."
"... To me, it is not so much the lies that major media organizations may broadcast, but the enormous amount of news of major importance that the networks censor that is doing the greatest harm. ..."
Journalist Justin Elliott comes on the show to talk about casino magnate Sheldon Adelson, who has become one of President Trump's
biggest donors. Although Trump derided him early in his campaign, the two have formed a close partnership with Adelson providing
tens of millions in funding so long as Trump continues the correct policies with respect to Israel, Palestine, and Iran. Elliott
and others have also speculated that Trump is trying to get Adelson approval to open a casino in Japan, helping him to expand his
gambling empire in Asia.
"Adelson expresses support for ZOA efforts to depose McMaster" (
Times of
Israel )
Justin Elliott is a reporter for ProPublica . He
has produced stories for The New York Times and National Public Radio, and his reporting with NPR on the Red Cross' troubled post-earthquake
reconstruction efforts in Haiti won a 2015 Investigative Reporters and Editors award. Follow him on Twitter
@JustinElliott .
Whether Adelson or some other plutocrat, American politics is awash in money, and it this money is crippling our democracy. I
don't think that I have heard this topic discussed on any news program, and I don't expect to. To me, it is not so much the
lies that major media organizations may broadcast, but the enormous amount of news of major importance that the networks censor
that is doing the greatest harm.
Americans never get to see what they need to know. Keeping the peasants ignorant is the current mass media program, and they
are doing a great job of it.
Lambert here: There's no way I'm opening up comments for a post about gold, and be very
careful not to go crazy over in Links, either. Plus I don't care about shiny substances.
However, Wolf's thinking on asset correlation in the "Everything Bubble" is interesting, which
is why I'm cross-posting this.
Since October 1, the S&P 500 index has plunged 19.6%, to 2,351 as of Monday's fiasco.
Over the same period, the price of gold has risen 7.3% to $1,271/oz. Over this short period,
gold was an effective diversification.
For the year so far, the S&P 500 index is down 12.1%, gold is down 1.6%. For the past
two years, the S&P 500, despite the huge volatility, is up 4.2%, and gold, also with some
volatility, is up 9.7%. Moving in the same direction over these time frames, gold has been
somewhat less effective as diversification, than it has been over the past three months. But as
the chart below shows, its moves were not in lockstep with the S&P 500, and thus gold has
helped counter-balance the erratic gyrations of the S&P 500 with its own erratic but
different gyrations. Diversification can be messy:
There are many reasons to trade or own gold. But here I focus on gold as diversification to
the Everything Bubble and particularly to stocks – and how that panned out over the
longer term.
Nearly all asset classes have risen in parallel for nine years since the onset of global QE,
zero-interest-rate policy, and negative-interest-rate policy: Stocks, bonds, leveraged loans,
commercial real estate, residential real estate, art, classic cars, emerging market bonds,
emerging market stocks . We call it the Everything Bubble. And now they're headed down
together.
Diversification is not possible among asset classes that move together. If for nine years
all asset classes in your holdings rose together, no matter how good this feels, you're not
diversified.
Effective diversification means that some assets rise as others fall. But in the Everything
Bubble, most asset classes rose together. And "well-diversified" investors were diversified
only in their imagination, as they're now finding out as nearly all asset classes have been
falling in parallel.
Effective diversification comes with some costs, and it's not risk free, but it provides
some stability and lowers the overall risk of your holdings.
Cash always provides diversification in the sense of stability in addition to providing
liquidity. But from 2009 through 2016, the return on cash – such as short-term Treasury
bills, FDIC-insured CDs, or FDIC-insured high-yield savings accounts – has been near zero
even as inflation ate away at its purchasing power.
But since interest rates started rising, cash generates better returns. This year, the yield
on short-term Treasury bills, FDIC-insured CDs, or FDIC-insured high-yield savings accounts has
beaten most other assets classes (to find those CDs and savings accounts, you need to shop
around). They now yield between 2% and 3%. And when these instruments are held to maturity,
there is no risk to the principal since they're redeemed at face value.
Gold doesn't offer a yield. And its price changes constantly. So the only return obtained
from gold would be derived from an increase in price. And as long as that price moves in the
opposite direction over the longer term from stock-market indices, gold provides effective
diversification to stocks – even if it hurts, such as when stocks surge and gold plunges,
which is what happened from late 2011 through 2016.
Over the long term, gold and the S&P 500 have moved in lockstep some of the time, and
diverged much of the time. This chart goes back to 1995 (both gold in $/oz and the S&P 500
index on the same axis; click to enlarge):
And when asset classes have risen together like this, it becomes very difficult to achieve
diversification going forward – because now they're at risk of all going down
together.
My thoughts at the time were somewhat speculative since the S&P 500 was still surging.
The chart I provided at the time was the long-term chart above, but it lacked the near-20%
plunge of the S&P 500 since October 1 that the current chart shows. So in this instance,
over those three months since then, gold has turned out to be a very effective diversification
to stocks.
But the risk with gold remains: there is no guarantee that gold can't also plunge, right
along with the S&P 500. This is a real risk, and diversification might sound good, but when
push comes to shove in a sell-off, it might not work. Nevertheless, given the difficulties of
finding effective diversification in the Everything Bubble, other than cash, gold has shown it
could do the job over the past three months – which largely mirrors its performance as
diversification during the 2000-2002 crash and most of the 2008-2009 crash.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and
author, with extensive international work experience.
Originally published at Wolf Street .
By abetting the ad industry, universities are leading us into temptation, when they
should be enlightening us
... ... ...
I ask because, while considering the frenzy
of consumerism that rises beyond its usual planet-trashing levels at this time of year, I
recently stumbled across a paper that astonished
me . It was written by academics at public universities in the Netherlands and the US.
Their purpose seemed to me starkly at odds with the public interest. They sought to identify
"the different ways in which consumers resist advertising, and the tactics that can be used to
counter or avoid such resistance".
Among the "neutralising" techniques it highlighted were "disguising the persuasive intent of
the message"; distracting our attention by using confusing phrases that make it harder to focus
on the advertiser's intentions; and "using cognitive depletion as a tactic for reducing
consumers' ability to contest messages". This means hitting us with enough advertisements to
exhaust our mental resources, breaking down our capacity to think.
Intrigued, I started looking for other academic papers on the same theme, and found an
entire literature. There were articles on every imaginable aspect of resistance, and helpful
tips on overcoming it. For example, I came across a paper that counsels advertisers on how to
rebuild public trust when the celebrity they work with gets into trouble. Rather than dumping
this lucrative asset, the researchers advised that the best means to enhance "the authentic
persuasive appeal of a celebrity endorser" whose standing has slipped is to get them to display
"a Duchenne smile", otherwise known as "a genuine smile". It precisely anatomised such smiles,
showed how to spot them, and discussed the "construction" of sincerity and "genuineness": a
magnificent exercise in inauthentic authenticity.
Another paper considered how
to persuade sceptical people to accept a company's corporate social responsibility claims,
especially when these claims conflict with the company's overall objectives. (An obvious
example is ExxonMobil's attempts to convince people that it is environmentally responsible,
because it is researching algal fuels that could one day reduce CO2 – even as it
continues to
pump millions of barrels of fossil oil a day ). I hoped the paper would recommend that the
best means of persuading people is for a company to change its practices. Instead, the authors'
research showed how images and statements could be cleverly combined to "minimise stakeholder
scepticism".
A further
paper discussed advertisements that work by stimulating
Fomo – fear of missing out . It noted that such ads work through "controlled
motivation", which is "anathema to wellbeing". Fomo ads, the paper explained, tend to cause
significant discomfort to those who notice them. It then went on to show how an improved
understanding of people's responses "provides the opportunity to enhance the effectiveness of
Fomo as a purchase trigger". One tactic it proposed is to keep stimulating the fear of missing
out, during and after the decision to buy. This, it suggested, will make people more
susceptible to further ads on the same lines.
Yes, I know: I work in an industry that receives most of its income from advertising, so I
am complicit in this too. But so are we all. Advertising – with its destructive
impacts on the living planet, our peace of mind and our free will – sits at the heart of
our growth-based economy. This gives us all the more reason to challenge it. Among the places
in which the challenge should begin are universities, and the academic societies that are
supposed to set and uphold ethical standards. If they cannot swim against the currents of
constructed desire and constructed thought, who can?
Which suckers will invest in companies with no profits? This is really repetition of Dotcom
era in tech.
Notable quotes:
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street ..."
"... Nasdaq down 24% already. Renaissance IPO ETF down 31%. But Uber and other unicorns are planning record IPOs in 2019, à la dotcom-crash-debut in 2000. ..."
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and
author, with extensive international work experience.
Originally published at Wolf Street
Nasdaq down 24% already. Renaissance IPO ETF down 31%. But Uber and other unicorns are
planning record IPOs in 2019, à la dotcom-crash-debut in 2000.
The IPO hype machine has produced some very successful companies and a lot of spectacular
wealth transfers from the hapless public to early investors selling their shares. Here are two
of the standouts that I covered:
Snap [SNAP] , purveyor of the
Snapchat app and must-have sunglasses with a built-in camera: Shares peaked at $29 on the
second day after its IPO, given it a market capitalization of $32 billion. Shares closed on
Friday at $4.96 and this morning trade at $5.24, down 82% from day two of trading.
Blue Apron [APRN] , the
cream of the crop of about 150 VC-funded meal-kit startups founded over the past five years,
was valued at $2 billion during its last round of funding in June 2015 when it was one of the
most hyped unicorns that would change the world. Then enthusiasm began to sag. By the time the
IPO approached, the IPO price was cut from a range of $15-$17 a share to $10 a share. Shares
closed on Friday at $0.68 and are trading this morning at $0.71, down 93% from its IPO
price.
But not all IPOs are "tech" companies – though there's nothing "tech" about a meal-kit
maker other than the least important part, the app. The Renaissance IPO ETF
[IPO] holds the shares of companies across the board that went public over the past two years.
After two years, the companies are removed from the ETF. Its top five holdings are in real
estate, insurance products, music streaming, and cable TV, so not exactly pushing the
boundaries of tech invention.
These five IPOs haven't done all that badly, compared to the wholesale destruction of Blue
Apron, though they all have dropped sharply from their recent peaks (prices as of this
morning):
Vici Properties [VICI], a casino property company, at $18.02, is down 22% from its
peak in January 2018 shortly after the IPO. Athene Holding [ATH] – a "retirement services
company that issues, reinsures and acquires retirement savings products" – at $38.36, has
dropped 29% since September, 2018. Invitation Homes [INVH], Blackstone's buy-to-rent creature
that acquired over 48,000 single-family homes out of foreclosure at the end of the housing
bust, at $19.40, is down 18% from its peak in September. Spotify [SPOT], the music streaming
service, at $107.46, has plunged 46% from its peak on July 26. It went public in April. Altice
USA [ATUS], a cable TV operator, at $15.37, is down 39% from the peak on the day after its IPO
in July 2017.
Overall, the Renaissance IPO ETF has plunged 31% from its peak in June 2018 (data via
Investing.com):
The Nasdaq itself has dropped 24% from its all-time peak at the end of August.
It is in this new reality that some of the biggest startups and some of the biggest
money-losers in the startup circus are trying to unload the shares to the public in 2019 before
the "window" closes. The enormous hype about these IPOs has already started, with bankers
funneling this hype to the Wall Street
Journal , which breathlessly reported on the big numbers to be transferred from the public
to the selling insiders and the companies. The hyped numbers are truly huge.
The biggest candidates that are that are now being hyped for an IPO in 2019 are:
Uber , with a current "valuation" of $76-billion, could go for an IPO in early 2019 that
would value it at "as much as $120 billion," the WSJ reported, based on the hype the bankers
are now spreading to maximize their bonuses. Not all shares would be sold in the IPO, so the
proceeds in this scenario could reach "as much as $25 billion."
Palantir (data mining), with a current valuation of $20 billion, could see an IPO valuation
of $41 billion, according to the WSJ's "people familiar with its plans," who also cautioned
that these plans remained in flux, and that, according to the WSJ, "investment bankers often
exaggerate projected IPO values to win business."
Lyft , with a current valuation of $15 billion, is also looking for an IPO in early 2019, at
"more than $15 billion."
Then there is a gaggle of other big startups that could also head for the IPO window in
2019, according to the WSJ's "people familiar with the matter," but apparently haven't decided
on the timing yet. They include:
The all-time high that "tech" IPOs combined raised in a single year was $44.5 billion. If
these tech IPOs come to pass in 2019, and if these valuations can be pulled off, with Uber
alone hoping to raise $25 billion, the 2000-record would be broken by a large amount.
That would make sense: The year 2000 was when the dotcom bubble began to collapse
catastrophically, and everyone tried to get their heroes out the IPO window before it would
close for years to come. The Nasdaq, where these IPOs were concentrated, would eventually crash
78% from its peak in March 2000, with catastrophic consequences for those who'd bought the
hype.
The WSJ muses about this new generation of record-setting IPOs and Wall Street bankers' hype
machine:
For average investors, it could mean they finally will be able to bet on companies like
Uber that have become part of their everyday lives but have been out of reach, even as their
estimated values ballooned.
When all IPOs are included, and not just "tech" IPOs, 2018 was a banner year, with $54
billion raised. This includes 47 tech companies that raised only about $18 billion – a
far cry from the $44.5 billion that tech IPOs raised in 2000. But 2019 is going to fix this
shortcoming, assuming that the hype works and that the public is buying.
The WSJ, citing Dealogic, pointed out that tech IPOs this year on average soared 28% on the
first day of trading. No word about what happened afterwards. But the Renaissance IPO ETF is
down 31% so far this year. Reality starts after the first few days of trading.
Tech companies that had already gone public raised an additional $21 billion in 2018 by
selling more shares to the public in follow-on offerings, the most for follow-on offerings
since 2000.
Then, the WSJ tucked this reality-infested warning into its last paragraph:
In another sign of exuberance, investors are overlooking lofty valuations and measly -- or
zero -- profits to have a shot at outsized returns. In the first three quarters of the year,
four-fifths of all U.S.-listed IPOs were of companies that lost money in the 12 prior months
. That is the highest proportion on record.
So the last three months of 2018 plus 2019 and perhaps years to come are shaping up to be,
by the looks of it, a similarly glorious period for tech stocks, IPOs, and the Nasdaq as the
period from March 2000 till late 2002.
So, the bastard waited until his last day on the job to do a little fake media
pay-per-view kiss-and-tell. He couldn't be mensch enough to give his boss a professional
courtesy of telling him to take this job and shove it, he just succumbed to the siren's call
of money and spilled the beans to the fake media first before anyone in the Administration
had a chance to tell him how dangerous and detrimental to the interests of American people
his words would become (anyone taking bets that the kiss-and-tell New York Times bestseller
memoir is in the works?). Such is the psycho-profile of an average Pentagon brass. No
vertebratae there -- just mollusks, tapeworms, snails and amoebas. Throw the money at them,
and watch them grovel. Everything is for sale: service record, decorations, rank, faux
military and political expertise, integrity, character, valor, heroism, cavalier and valiant
battlefield engagement, self-sacrifice, loyalty to the nation...their family...their
kids...their asses...everything@!. If it has a rank, it is casually sold on an open market.
The winning bidder takes all.
Yes, General, Donald Trump is a deeply flawed human being. To his credit, though. we have
been duly forwarned. He never - ever - claimed that he was a saint and cautioned us against
turning him into a Mao Zedong-like personality cu;t. We knew all along that we were electing
a profoundly imperfect person, and the reason why we elected him nonetheless is that the
honesty of his admission was so refreshing that it outweighed all other considerations and
was too brilliantly confessional to ignore. When was the last time you heard Hillary Clinton
focus on her shortcomings, ethical lapses, judgment failures and mental syncopes instead a
litany of her glorious accomplishments/?
Now, I have a question for you, General: what kind of ball-less, dickless and brainless
asswipe devoid of any moral scurples and personal values serves his "unfit-for-the-job "
(sic) and dangerous-to-the-country Supreme Commander for two consecutive years without
uttering a word of criticism and dissent and then, after being fired, unleashes a torrent of
hysterical fury and not even minimally credible accusations? In my mother tongue there is a
phrase for characters like you: worthless piece of ****. And you can quote me on it, Sir.
PresidentTrump , 24 minutes ago
good riddance kelly
veritas semper vinces , 37 minutes ago
"What difference does it make, at this point?" who is the president? To paraphrase a Soros
supported ex candidate, who is still not in jail.
As Ms. No a stutely observed a few days ago : there was a petition to investigate Soros ,
signed by more than the necessary number for the White House to respond, and this 1 year
ago.
And the Donald ignored it, braking the law this way.
Does this count as more or less evidence he is fighting the swamp, trumptards?
Together with the fact Sheldon Adelson , the zionist financed his campaign and Wilbur
Ross, Rothschild's man bailed him out of his bankruptcies.
Wilbur Ross , who is now his Commerce Secretary.
Can trumptards put 2+2 together ?
Conscious Reviver , 40 minutes ago
Kelly is just more senior management in the crime syndicate known by the acronym USG. What
about the oath he swore to defend the Constitution against all enemies, foreign and domestic?
If he was a true soldier and patriot, he would have arrested the criminals, hiding in broad
daylight, who did 9/11.
As it is, he's just another toady. Good riddance to bad trash.
youshallnotkill , 2 hours ago
These kind of threads always make me wonder how many of the commenters here are paid to
**** on our US military.
Hans-Zandvliet , 1 hour ago
No need to pay people for shitting on the US military. Even marine corps general Smedly
Butler (most decorated marine in US history) wrote it himself ("War is a Racket" [1935]),
saying: "[while serving as a marine] I spent most of my time as a high-class muscle-man for
Big Bussiness, for Wall St and for the Bankers. In short, I was a racketeer, a gangster for
capitalism."
Nothing much has changed since then in the US army, or has it?
11b40 , 46 minutes ago
Only gotten worse since eliminating the draft and getting a mercenary army.
Baron von Bud , 2 hours ago
These military generals portray themselves as selfless victims of Trump. These are the
same clueless idiots that couldn't or wouldn't grow a spine and tell Obama or Bush they were
destroying America with senseless wars. Trump may be a loose cannon but he has great
instincts. These generals make me want to puke. Starched uniforms and a high tipped hat but
no brain for good policy underneath and behind all those little medals. Good riddance. Trump
needs to dump these guys and John Bolton.
terrific , 2 hours ago
The title to this story is a lie. Just because the NYT reported that Kelly told two
anonymous sources that Trump is not up to the role of President, doesn't mean that Kelly
actually said it. I'm actually surprised that a news site like ZH would use that title for a
story, when the story was never even sourced, much less corroborated.
Celotex , 2 hours ago
He'll go to Boeing and will be pulling down eight figures annually.
Moribundus , 2 hours ago
„Every gun that is made, every warship launched, every rocket fired signifies, in
the final sense, a theft from those who hunger and are not fed, those who are cold and are
not clothed. This world in arms is not spending money alone. It is spending the sweat of its
laborers, the genius of its scientists, the hopes of its children." -- Dwight D.
Eisenhower
" Every gun that is made, every warship launched, every rocket fired signifies, in the
final sense, a theft from those who hunger and are not fed, those who are cold and are not
clothed. This world in arms is not spending money alone. It is spending the sweat of its
laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.
It is two electric power plants, each serving a town of 60,000 population. It is two fine,
fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single
fighter plane with a half million bushels of wheat. We pay for a single destroyer with new
homes that could have housed more than 8,000 people. This is, I repeat, the best way of life
to be found on the road the world has been taking. This is not a way of life at all, in any
true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.
Is there no other way the world may live?"
GoldRulesPaperDrools , 2 hours ago
That's because this county hasn't fought a REAL war in decades, and by a REAL war I mean
one where you can honestly expect if you go and you're in combat you're got no more than an
even chance to come back. Military service has become another gubmint job where you wear a
uniform and play with expensive hardware paid for by the taxpayer while doing some neocon's
bidding overseas.
Moribundus , 2 hours ago
The best amerikan soldier was Smedley Butler.
The best amerikan war is Vietnam war.
I spent 33 years and four months in active military service and during that period I spent
most of my time as a high class muscle man for Big Business, for Wall Street and the
bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and
especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a
decent place for the National City Bank boys to collect revenues in. I helped in the raping
of half a dozen Central American republics for the benefit of Wall Street. I helped purify
Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought
light to the Dominican Republic for the American sugar interests in 1916. I helped make
Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to
it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al
Capone a few hints. The best he could do was to operate his racket in three districts. I
operated on three continents.
Russia is not as desperate for higher oil prices as is Saudi Arabia. There are a few reasons
for this. One of the key reasons is that the Russian currency is flexible, so it weakens when
oil prices fall. That cushions the blow during a downturn, allowing Russian oil companies to
pay expenses in weaker rubles while still taking in U.S. dollars for oil sales. Second, tax
payments for Russian oil companies are structured in such a way that their tax burden is
lighter with lower oil prices.
Saudi Arabia needs oil prices at roughly $84 per barrel for its
budget to breakeven.
... ... ...
Igor Sechin, the head of Russia's state-owned Rosneft, said that oil prices "should have
stabilized, because everyone was supposed to be scared" by the enormous OPEC+ production cuts.
"But nobody was scared," he said, according to Bloomberg. He blamed the Federal Reserve's rate
tightening for injecting volatility into the oil market, because traders have sold off
speculative positions in the face of higher interest rates.
...
Novak
offered the market some assurances that the OPEC+ coalition would step in to stabilize the
market if the situation deteriorates, suggesting that OPEC+ has the ability to call an
extraordinary meeting. He
told reporters on Thursday that the market still faces a lot of unknowns. "All these
uncertainties, which are now on the market: how China will behave, how India will behave...
trade wars and unpredictability on the part of the U.S. administration... those are defining
factors for price volatility," Novak said.
Nevertheless, Novak predicted the 1.2 mb/d cuts announced in Vienna would be sufficient.
Some analysts echo Novak's sentiment that, despite the current panic in the market, the cuts
should be sufficient. "We are looking at oil prices heading towards $70 to $80 quite a recovery
in 2019. That's really predicated on the thought that first of all, OPEC still is here. And I
think that the market is underestimating that they are going to cut supply by 1.2 mb/d,"
Dominic Schnider of UBS Wealth Management told CNBC
. "And demand looks healthy so we might find ourselves into 2019 in a situation where the
market is actually tight."
High-frequency traders and quantitative funds are destabilizing the market by amplifying the
moves both up and down. In other words they do increase volatility and as such as undesirable
participants in the stock market. After stock market was converted into casino in 80th there is
not way back without decimating them.
Now it is difficult or even impossible to tell whether the drop is a sign of coming bear
market or is just a blip caused by high frequency traders. Looks like this is sign of bear
market because high frequency traders dampen investment sentiment by increaseing uncertaity. So
they, in this own way, accerate bear market occurrence, cousing it even when condition are not
completly ripe for it and profits are not affects (and thus GDP -- recession metric is GDP
which of caurse is a very questionable metric but we have what we have; U6 unemployment metric
is probably a better metric but it is lagging indicator; I think U6 above 10% is a definite
sign of the recession)
But job market right now deteriorating very quickly. Most firms stopped hiring around
September-Octover timeframe.
Investors have time to reflect on history, now that stocks have avoided a fourth straight
down week via the biggest one-day rally since 2009. After coming within a few points of a
bear market on Wednesday, the damage in the S&P 500 stands at 15 percent since Sept.
20.
... ... ...
A fair amount of complaining has gone on in recent months about the role of high-frequency
traders and quantitative funds in the drubbing that reached its peak around Christmas.
Perhaps. Those groups are big, and in the search for villains, they make easy targets.
Treasury Secretary Steven Mnuchin is among the people who have made the connection.
Overinvestment in stocks of retires is very common under neoliberalism.
There are several factors here: one is greed cultivated by neoliberal MSM, the second is
insufficient retirement funds (gambling with retirement savings) and the last and not least is
lack of mathematical skills an inability to use Excel for viewing their portfolio and making
informed decisions.
Notable quotes:
"... At the end of 2016, 69 percent of investors in their 60s had at least 40 percent of their 401(k) portfolio invested in stocks, up from 65 percent in 2007, according to the Employee Benefit Research Institute in Washington. ..."
"... 19 percent had more than 80 percent of their 401(k) invested in stocks in 2016 ..."
"... "We had lousy forecasts in 2008. The housing market was in a tailspin," said 76-year-old John Bauer, who worked for McDonnell Douglas and Boeing Co for 36 years in St. Louis. "Today, employment is way up. The housing market is steady and corporations are flush." ..."
BOSTON (Reuters) - Nancy Farrington, a retiree who turns 75 next month, admits to being in a
constant state of anxiety over the biggest December stock market rout since Herbert Hoover was
president.
"I have not looked at my numbers. I'm afraid to do it," said Farrington, who recently moved
to Charleston, South Carolina, from Boston. "We've been conditioned to stand pat and not panic.
I sure hope my advisers are doing the same."
Retirees are worrying about their nest eggs as this month's sell-off rounds out the worst
year for stocks in a decade, and some fear they are headed for a day of reckoning like the 2008
market meltdown or dot-com crash of the early 2000s.
Retirees have less time to recover from bad investment moves than younger workers. If they
or their advisers panic and sell during a brief downturn, they may lock in a more meager
retirement. But their portfolio could be even more at risk if they hold on too long in a
prolonged decline.
"I have no way of riding it out if that happens," said Farrington. "I can feel the anxiety
in my stomach all the time."
While many industrialized countries still have generous safety nets for retirees, pensions
for U.S. private-sector workers largely have been supplanted by 401(k) accounts and other
private saving plans. That means millions of older Americans are effectively their own pension
managers.
Workers in countries like Belgium, Canada, Germany, France and Italy receive, on average,
about 65 percent of their income replaced by mandatory pensions. In the Netherlands the ratio
of benefits to lifetime average earnings is abut 97 percent, according to a 2017 Organization
for Economic Cooperation and Development report.
The OECD says the comparable U.S. replacement rate from Social Security benefits is about 50
percent.
U.S. retirees had watched their private accounts mushroom during a bull stock market that
began in early 2009. Meanwhile, the Federal Reserve kept interest rates near zero for years,
enticing retirees deeper into stocks than previous generations as investments like certificates
of deposit, government bonds and money-market funds generated paltry income.
At the end of 2016, 69 percent of investors in their 60s had at least 40 percent of their
401(k) portfolio invested in stocks, up from 65 percent in 2007, according to the Employee
Benefit Research Institute in Washington.
Still, fewer have gone all in on stocks in recent years. Just 19 percent had more than 80
percent of their 401(k) invested in stocks in 2016, down from 30 percent at year-end 2007,
according to nonprofit research group EBRI.
"Nothing has gone wrong, but it seems the market is trying to figure out what could go
wrong," said Brooke McMurray, a 69-year-old New York retiree who says she became a financial
news junkie after the 2007-2009 financial crisis.
"Unlike before, I now know what I own and I constantly read up on my companies," she
said.
The three major U.S. stock indexes have tumbled about 10 percent this month, weighed by
investor worries including U.S.-China trade tensions, a cooling economy and rising interest
rates, and are on track for their worst December since 1931.
The S&P 500 is headed for its worst annual performance since 2008, when Wall Street
buckled during the subprime mortgage crisis. But some are not quite ready to draw
comparisons.
"We had lousy forecasts in 2008. The housing market was in a tailspin," said 76-year-old
John Bauer, who worked for McDonnell Douglas and Boeing Co for 36 years in St. Louis. "Today,
employment is way up. The housing market is steady and corporations are flush."
Still, Bauer said he is uneasy about White House leadership. He and several other retirees
referenced U.S. Treasury Secretary Steve Mnuchin's recent calls to top bankers, which did more
to rattle than assure markets. U.S. stocks tumbled more than 2 percent the day before the
Christmas holiday.
Nevertheless, Bauer is prepared to ride out any market turmoil without making dramatic moves
to his retirement portfolio. "When it's up, I watch it. When it's down, I don't," he said. And there are some factors helping take the sting out of the market rout, said Larry Glazer,
managing partner of Boston-based Mayflower Advisors LLC.
The Reuters/University of Michigan consumer sentiment index plunged to its lowest level
since March 2009, down from 71.5 in June to just 63.8 in the first of two readings in July, as
a faltering economy, weakening labor market, and the ongoing debate over the debt ceiling and
spending cuts sapped the confidence of Americans.
Interestingly, the last time the mood of the consumer was this sour, the S&P500 stock
index was below 800, more than 42 percent below its current level.
Though the July drop pales in comparison to the 10 point plunge in March (just as gasoline
prices were beginning to soar) and the 12.7 point free-fall in October 2008, it was one of the
biggest monthly declines in the last decade. The current conditions index fell from 82.0 in
June to 76.3 in July and the expectations index dropped nine points, from 64.8 to 55.8.
Unlike earlier in the year, rising inflation expectations played no role in the overall
decline as the one-year outlook for consumer prices fell from 3.8 percent to 3.4 percent and
the five year inflation forecast dipped from 3.0 percent to 2.8 percent.
MUST READS
S&P warns of US rating downgrade – BBC
Europe's banks brace for health test failures – Reuters
Stress Tests Compromised by Greek Non-Default – Bloomberg
Return of the Gold Standard as world order unravels – Telegraph
Worried About Debt Limit? The Bond Market Isn't – Baum, Bloomberg
If U.S. defaults on debt: How to protect your investments – USA Today
Bernanke Damps Bond Buying Prospects Amid Criticism – Bloomberg
Yes, You Really Can Cut Your Way to Prosperity – The American
Minnesota Ends Its Budget Crisis, at Heavy Cost – Time
Getting to Crazy – Krugman, NY Times
Curbing systemic inflation – China Daily
When we reported last week that Imran Awan and his wife had been indicted by a grand jury on
4 counts, including bank fraud and making false statements related to some home equity loans,
we also noted that those charges could simply be placeholders for further developments yet to
come. Now, according to a new report from the
Daily Caller , the more interesting component of the FBI's investigation could be tied to
precisely why New York Democrat Representative Yvette Clarke quietly agreed in early 2016 to
simply write-off $120,000 in missing electronics tied to the Awans.
A chief of staff for Democratic Rep. Yvette Clarke quietly agreed in early 2016 to sign
away a $120,000 missing electronics problem on behalf of two former IT aides now suspected of
stealing equipment from Congress, The Daily Caller News Foundation has learned. Clarke's
chief of staff at the time effectively dismissed the loss and prevented it from coming up in
future audits by signing a form removing the missing equipment from a House-wide tracking
system after one of the Awan brothers alerted the office the equipment was gone. The
Pakistani-born brothers are now at the center of an FBI investigation over their IT work with
dozens of Congressional offices.
The $120,000 figure amounts to about a tenth of the office's annual budget, or enough to
hire four legislative assistants to handle the concerns of constituents in her New York
district. Yet when one of the brothers alerted the office to the massive loss, the chief of
staff signed a form that quietly reconciled the missing equipment in the office budget, the
official told TheDCNF. Abid Awan remained employed by the office for months after the loss of
the equipment was flagged.
If true, of course this new information would seem to support previously reported rumors
that the Awans orchestrated a long-running fraud scheme in which their office would purchase
equipment in a way that avoided tracking by central House-wide administrators and then sell
that equipment for a personal gain while simultaneously defrauding taxpayers of $1,000's of
dollars.
Meanwhile, according to the Daily Caller, CDW Government could have been in on the
scheme.
They're suspected of working with an employee of CDW Government Inc. -- one of the Hill's
largest technology providers -- to alter invoices in order to avoid tracking. The result
would be that no one outside the office would notice if the equipment disappeared, and
investigators think the goal of the scheme was to remove and sell the equipment outside of
Congress.
CDW spokeswoman Kelly Caraher told TheDCNF the company is cooperating with investigators,
and has assurance from prosecutors its employees are not targets of the investigation. "CDW
and its employees have cooperated fully with investigators and will continue to do so,"
Caraher said. "The prosecutors directing this investigation have informed CDW and its
coworkers that they are not subjects or targets of the investigation."
Not surprisingly, Clarke's office apparently felt no need whatsoever to report the $120,000
worth of missing IT equipment to the authorities... it's just taxpayer money afterall...
According to the official who talked to TheDCNF, Clarke's chief of staff did not alert
authorities to the huge sum of missing money when it was brought to the attention of the
office around February of 2016. A request to sign away that much lost equipment would have
been "way outside any realm of normalcy," the official said, but the office did not bring it
to the attention of authorities until months later when House administrators told the office
they were reviewing finances connected to the Awans.
The administrators informed the office that September they were independently looking into
discrepancies surrounding the Awans, including a review of finances connected to the brothers
in all the congressional offices that employed them. The House administrators asked Clarke's
then-chief of staff, Wendy Anderson, whether she had noticed any anomalies, and at that time
she alerted them to the $120,000 write-off, the official told TheDCNF.
Of course, the missing $120,000 covers only Clarke's office. As we've noted before, Imran
and his relatives worked for more than 40 current House members when they were banned from the
House network in February, and have together worked for dozens more in past years so who know
just how deep this particular rabbit hole goes.
Also makes you wonder what else Debbie Wasserman-Schultz and the Awans might be hiding.
Certainly the decision by Wasserman-Shultz to keep Awan on her taxpayer funded payroll, right
up until he was arrested by the FBI while trying to flee the country, is looking increasingly
fishy with each passing day.
The 911 protection swamp is deep, and profiteers and drug, human traffic, NGO, Body part,
war mongers runs deep.
Please stop calling it building 7 It was the Solomon building.. While you are at it look
at the 1991 Solomon bond scandal which gave the Citi Clinton Mafia all power.... Oh yea
Bush/Clinton cabal did get Saudis to buy Citi stocks and GE plastics. Swampy enough?
120k write off ! You are kidding me?
south40_dreams , 1 year ago
Blackmail was where the real money was at
pissantra , 1 year ago
The real problem here is being completely ignored -- and that is this: the Awan bros were
likely spies (with Wasserman either forced to allow them to spy or the spymaster selling
intel to Pakistan). This would mean that 21+ congress-critters have been completely
compromised. THIS is important NOW, after Trumps Afghan speech -- if he plans to lean on
Pakistan with an "either you stop helping the Taliban or we will destroy you (economically
and/or physically) along with them...."--- these compromised congress-critters will defund
Trumps war.
Freddie , 3 weeks ago
No. Pakistan is the smokescreen. Wasserscum, like Scott Israel, are dual shitizens. This
is, as is Broward County, a MO$$$$ad op. Broward County for vote theft, fraud, attorney
killings, false flags, etc. I would guess a lot more in Congress are owned.
Just watched Congress during Bibi and even ko$$her Porschenko addressing Congrez-zio. They
jump up like circus trained animals to give standing ovations for every word.
Awans and Wasserscum will get passes. George Webb on youtube appears to be doing good work
but it is probably another smoke screen because George has said he is a zioni$$t.
Ban KKiller , 1 year ago
Gee Michelle....you used the Pakistanis for your IT work? What, you like filthy muslims?
Guess so.... When will you confess that you have NO IDEA where your confidential information is? Michelle Lynn Lujan Grisham is an American lawyer and politician who is the U.S.
Representative for New Mexico's 1st congressional district, serving since 2013.
mtanimal , 1 year ago
I didn't know espionage and extortion were tax deductible. Who's her accountant?
Cardinal Fang , 1 year ago
I regret that we may never know the extent of the duplicity of our government with this
ISI stooge.
pc_babe , 1 year ago
with Jeff Session at the helm, you can rest assured you never will
Loanman26 , 1 year ago
My spidy senses are flaring. It was the Russians who stole the equipment. It was comrade Sergei Awan
Blazing in BC , 1 year ago
To whoever is "in charge"....THE STENCH IS UNBEARABLE
runnymede , 1 year ago
Institutionalized unaccountability is what makes the systemic corruption function. As long
as Wasserman's brother is in charge of D.C. prosecutions, nothing will happen. He is the
gatekeeper, which is why DWS, the DNC and the Clinton Crime Machine have not only acted with
impunity, but with extreme contempt. They know they are untouchable. Honest prosecution would
expose D.C. itself as the professional criminal operation that it is, including most Repubs.
There will never be allowed a real look into the rabbit hole, George Webb's outstanding
efforts notwithstanding.
One of We , 1 year ago
President Not Hillary needs to lock some bitches up and expose the Clinton Crime Family
Foundation. Definitely lowering the bar from my lofty hopes but I'd be happy with a partial
roto rootering of the swamp if that's all he has to show for his term.
SRV , 1 year ago
The Awans were working for DWS and The Crook... this fruad is the tip of the
iceberg...
How about doping Blackberry's for 80 House Dems to sync with servers around the Capital
(remember DWS threatening the Capital Police Chief with "consequences" if he didn't give her
back her laptop found in a Capitol Hill building. The Awans were selling the access to most
of the secrets in congress since 2004... this was a spy ring (he has serious ties to
Pakistani ISI).
JiminyCrickets , 1 year ago
As long as Debbie Wasserman Schultz's Brother Steven Wasserman is running the Seth Rich
murder investigation this wont go any where.
gregga777 , 1 year ago
Unfortunately, the Anglo-Zionist FAKE NEWS Media won't cover this story, especially the
links to Debbie Wasserman Schultz. It's anti-Semitic to discuss her criminality or to
criticize her in any other way.
JiminyCrickets , 1 year ago
George Webb's detailed 300+ day investigation indicates the Awans were shipping stolen
high end cars to foreign diplomats and depleted uranium weapons using DNC Diplomatic
Containers.
no surprise that demonRat politicians throughout all legislatures have been guilty of
defrauding the tax payer for decades - in much the same way that demonRat politicians
directly legislate for welfare benefits, free insurance and tax cuts for their family and
friends - at the expense of tax payers - and who also extract tax payer funds via the gravy
train of internships, federal grants etc for their family and friends.
this is how libtard demonRat politicians infect the swamp and then infest it with their
filth and cronyism.
aided and abetted by the MSM.
if only iy was just the demonRats, there might be a chance - however, corrupt republicRats
have been just as guilty.
one day, all this will be out in the open and perhaps demonRat and republicRat voters will
see how they have been voting for corruption all these years.
are we there yet , 1 year ago
Because you are one of the little people.
NoPension , 1 year ago
We are below " little people". We are irrelevant. Just keep paying, slave. Someone correct
me if I'm wrong..... This country was founded on the principle that the individual had
sovereign rights, imbued from God...and was the vessel of ultimate power. Today...these
illegally elected ( it's almost ALL proven a fraud) cocksuckers go in broke and come out the
other end multimillionaires with legal immunity from anything, up to and including murder.
It's high time to water the ******* tree.
"
Nation
states must today be prepared to give up their sovereignty
",
according to German Chancellor Angela Merkel,
who told an audience in Berlin that sovereign nation states must not listen to the will of their citizens when it comes
to questions of immigration, borders, or even sovereignty.
No this wasn't something Adolf Hitler said many decades ago, this is what German Chancellor Angela Merkel
told
attendants
at an event by the Konrad Adenauer Foundation in Berlin. Merkel has announced she won't seek re-election
in 2021 and it is clear she is attempting to push the globalist agenda to its disturbing conclusion before she stands
down.
"
In
an orderly fashion of course,
" Merkel joked, attempting to lighten the mood. But Merkel has always had a tin ear
for comedy and she soon launched into a dark speech condemning those in her own party who think Germany should have
listened to the will of its citizens and refused to sign the controversial UN migration pact:
"
There
were [politicians] who believed that they could decide when these agreements are no longer valid because they are
representing The People
".
"
[But]
the people are individuals who are living in a country, they are not a group who define themselves as the [German]
people
," she stressed.
Merkel has previously accused critics of the UN Global Compact for Safe and Orderly Migration of not being patriotic,
saying "
That
is not patriotism, because patriotism is when you include others in German interests and accept win-win situations
".
Her words echo recent comments by the deeply unpopular French President Emmanuel Macron who stated in a Remembrance Day
speech that "
patriotism
is the exact opposite of nationalism [because] nationalism is treason
."
The French president's words were deeply unpopular with the French population and his approval rating nosedived even
further after the comments.
Macron, whose lack of leadership is proving unable to deal with growing protests in France, told the Bundestag that
France and Germany should be at the center of the emerging New World Order.
"
The
Franco-German couple [has]the obligation not to let the world slip into chaos and to guide it on the road to peace"
.
"
Europe
must be stronger and win more sovereignty
," he went on to demand, just like Merkel, that
EU
member states surrender national sovereignty to Brussels
over "
foreign
affairs, migration, and development
" as well as giving "
an
increasing part of our budgets and even fiscal resources".
Although he is certainly a giant, Knuth will never be able to complete this monograph - the
technology developed too quickly. Three volumes came out in 1963-1968 and then there was a lull.
January 10, he will be 81. At this age it is difficult to work in the field of mathematics and
system programming. So we will probably never see the complete fourth volume.
This inability to
finish the work he devoted a large part of hi life is definitely a tragedy. The key problem here is
that now it is simply impossible to cover the whole area of system programming and
related algorithms for one person. But the first three volumes played tremendous positive role
for sure.
Also he was distracted for several years to create TeX. He needed to create a non-profit and
complete this work by attracting the best minds from the outside. But he is by nature a loner,
as many great scientists are, and prefer to work this way.
His other mistake is due to the fact that MIX - his emulator was too far from the IBM S/360, which became the standard de-facto
in mid-60th. He then realized that this was a blunder and replaced MIX with more modem emulator MIXX, but it was
"too little, too late" and it took time and effort. So the first three volumes and fragments of the fourth is all
that we have now and probably forever.
Not all volumes fared equally well with time. The third volume suffered most IMHO and as of 2019 is partially obsolete. Also it was
written by him in some haste and some parts of it are are far from clearly written ( it was based on earlier
lectures of Floyd, so it was oriented of single CPU computers only. Now when multiprocessor
machines, huge amount of RAM and SSD hard drives are the norm, the situation is very different from late 60th. It requires different sorting
algorithms (the importance of mergesort increased, importance of quicksort decreased). He also got too carried away with sorting random numbers and establishing upper bound and
average
run time. The real data is almost never random and typically contain sorted fragments. For example, he overestimated the
importance of quicksort and thus pushed the discipline in the wrong direction.
Notable quotes:
"... These days, it is 'coding', which is more like 'code-spraying'. Throw code at a problem until it kind of works, then fix the bugs in the post-release, or the next update. ..."
"... AI is a joke. None of the current 'AI' actually is. It is just another new buzz-word to throw around to people that do not understand it at all. ..."
"... One good teacher makes all the difference in life. More than one is a rare blessing. ..."
With more than one million copies in print, "The Art of Computer Programming " is the Bible
of its field. "Like an actual bible, it is long and comprehensive; no other book is as
comprehensive," said Peter Norvig, a director of research at Google. After 652 pages, volume
one closes with a blurb on the back cover from Bill Gates: "You should definitely send me a
résumé if you can read the whole thing."
The volume opens with an excerpt from " McCall's Cookbook ":
Here is your book, the one your thousands of letters have asked us to publish. It has
taken us years to do, checking and rechecking countless recipes to bring you only the best,
only the interesting, only the perfect.
Inside are algorithms, the recipes that feed the digital age -- although, as Dr. Knuth likes
to point out, algorithms can also be found on Babylonian tablets from 3,800 years ago. He is an
esteemed algorithmist; his name is attached to some of the field's most important specimens,
such as the Knuth-Morris-Pratt string-searching algorithm. Devised in 1970, it finds all
occurrences of a given word or pattern of letters in a text -- for instance, when you hit
Command+F to search for a keyword in a document.
... ... ...
During summer vacations, Dr. Knuth made more money than professors earned in a year by
writing compilers. A compiler is like a translator, converting a high-level programming
language (resembling algebra) to a lower-level one (sometimes arcane binary) and, ideally,
improving it in the process. In computer science, "optimization" is truly an art, and this is
articulated in another Knuthian proverb: "Premature optimization is the root of all evil."
Eventually Dr. Knuth became a compiler himself, inadvertently founding a new field that he
came to call the "analysis of algorithms." A publisher hired him to write a book about
compilers, but it evolved into a book collecting everything he knew about how to write for
computers -- a book about algorithms.
... ... ...
When Dr. Knuth started out, he intended to write a single work. Soon after, computer science
underwent its Big Bang, so he reimagined and recast the project in seven volumes. Now he metes
out sub-volumes, called fascicles. The next installation, "Volume 4, Fascicle 5," covering,
among other things, "backtracking" and "dancing links," was meant to be published in time for
Christmas. It is delayed until next April because he keeps finding more and more irresistible
problems that he wants to present.
In order to optimize his chances of getting to the end, Dr. Knuth has long guarded his time.
He retired at 55, restricted his public engagements and quit email (officially, at least).
Andrei Broder recalled that time management was his professor's defining characteristic even in
the early 1980s.
Dr. Knuth typically held student appointments on Friday mornings, until he started spending
his nights in the lab of John McCarthy, a founder of artificial intelligence, to get access to
the computers when they were free. Horrified by what his beloved book looked like on the page
with the advent of digital publishing, Dr. Knuth had gone on a mission to create the TeX
computer typesetting system, which remains the gold standard for all forms of scientific
communication and publication. Some consider it Dr. Knuth's greatest contribution to the world,
and the greatest contribution to typography since Gutenberg.
This decade-long detour took place back in the age when computers were shared among users
and ran faster at night while most humans slept. So Dr. Knuth switched day into night, shifted
his schedule by 12 hours and mapped his student appointments to Fridays from 8 p.m. to
midnight. Dr. Broder recalled, "When I told my girlfriend that we can't do anything Friday
night because Friday night at 10 I have to meet with my adviser, she thought, 'This is
something that is so stupid it must be true.'"
... ... ...
Lucky, then, Dr. Knuth keeps at it. He figures it will take another 25 years to finish "The
Art of Computer Programming," although that time frame has been a constant since about 1980.
Might the algorithm-writing algorithms get their own chapter, or maybe a page in the epilogue?
"Definitely not," said Dr. Knuth.
"I am worried that algorithms are getting too prominent in the world," he added. "It started
out that computer scientists were worried nobody was listening to us. Now I'm worried that too
many people are listening."
Thanks Siobhan for your vivid portrait of my friend and mentor. When I came to Stanford as
an undergrad in 1973 I asked who in the math dept was interested in puzzles. They pointed me
to the computer science dept, where I met Knuth and we hit it off immediately. Not only a
great thinker and writer, but as you so well described, always present and warm in person. He
was also one of the best teachers I've ever had -- clear, funny, and interested in every
student (his elegant policy was each student can only speak twice in class during a period,
to give everyone a chance to participate, and he made a point of remembering everyone's
names). Some thoughts from Knuth I carry with me: finding the right name for a project is
half the work (not literally true, but he labored hard on finding the right names for TeX,
Metafont, etc.), always do your best work, half of why the field of computer science exists
is because it is a way for mathematically minded people who like to build things can meet
each other, and the observation that when the computer science dept began at Stanford one of
the standard interview questions was "what instrument do you play" -- there was a deep
connection between music and computer science, and indeed the dept had multiple string
quartets. But in recent decades that has changed entirely. If you do a book on Knuth (he
deserves it), please be in touch.
I remember when programming was art. I remember when programming was programming. These
days, it is 'coding', which is more like 'code-spraying'. Throw code at a problem until it
kind of works, then fix the bugs in the post-release, or the next update.
AI is a joke. None
of the current 'AI' actually is. It is just another new buzz-word to throw around to people
that do not understand it at all. We should be in a golden age of computing. Instead, we are
cutting all corners to get something out as fast as possible. The technology exists to do far
more. It is the human element that fails us.
My particular field of interest has always been compiler writing and have been long
awaiting Knuth's volume on that subject. I would just like to point out that among Kunth's
many accomplishments is the invention of LR parsers, which are widely used for writing
programming language compilers.
Yes, \TeX, and its derivative, \LaTeX{} contributed greatly to being able to create
elegant documents. It is also available for the web in the form MathJax, and it's about time
the New York Times supported MathJax. Many times I want one of my New York Times comments to
include math, but there's no way to do so! It comes up equivalent to:
$e^{i\pi}+1$.
I read it at the time, because what I really wanted to read was volume 7, Compilers. As I
understood it at the time, Professor Knuth wrote it in order to make enough money to build an
organ. That apparantly happened by 3:Knuth, Searching and Sorting. The most impressive part
is the mathemathics in Semi-numerical (2:Knuth). A lot of those problems are research
projects over the literature of the last 400 years of mathematics.
I own the three volume "Art of Computer Programming", the hardbound boxed set. Luxurious.
I don't look at it very often thanks to time constraints, given my workload. But your article
motivated me to at least pick it up and carry it from my reserve library to a spot closer to
my main desk so I can at least grab Volume 1 and try to read some of it when the mood
strikes. I had forgotten just how heavy it is, intellectual content aside. It must weigh more
than 25 pounds.
I too used my copies of The Art of Computer Programming to guide me in several projects in
my career, across a variety of topic areas. Now that I'm living in Silicon Valley, I enjoy
seeing Knuth at events at the Computer History Museum (where he was a 1998 Fellow Award
winner), and at Stanford. Another facet of his teaching is the annual Christmas Lecture, in
which he presents something of recent (or not-so-recent) interest. The 2018 lecture is
available online - https://www.youtube.com/watch?v=_cR9zDlvP88
One of the most special treats for first year Ph.D. students in the Stanford University
Computer Science Department was to take the Computer Problem-Solving class with Don Knuth. It
was small and intimate, and we sat around a table for our meetings. Knuth started the
semester by giving us an extremely challenging, previously unsolved problem. We then formed
teams of 2 or 3. Each week, each team would report progress (or lack thereof), and Knuth, in
the most supportive way, would assess our problem-solving approach and make suggestions for
how to improve it. To have a master thinker giving one feedback on how to think better was a
rare and extraordinary experience, from which I am still benefiting! Knuth ended the semester
(after we had all solved the problem) by having us over to his house for food, drink, and
tales from his life. . . And for those like me with a musical interest, he let us play the
magnificent pipe organ that was at the center of his music room. Thank you Professor Knuth,
for giving me one of the most profound educational experiences I've ever had, with such
encouragement and humor!
I learned about Dr. Knuth as a graduate student in the early 70s from one of my professors
and made the financial sacrifice (graduate student assistantships were not lucrative) to buy
the first and then the second volume of the Art of Computer Programming. Later, at Bell Labs,
when I was a bit richer, I bought the third volume. I have those books still and have used
them for reference for years. Thank you Dr, Knuth. Art, indeed!
@Trerra In the good old days, before Computer Science, anyone could take the Programming
Aptitude Test. Pass it and companies would train you. Although there were many mathematicians
and scientists, some of the best programmers turned out to be music majors. English, Social
Sciences, and History majors were represented as well as scientists and mathematicians. It
was a wonderful atmosphere to work in . When I started to look for a job as a programmer, I
took Prudential Life Insurance's version of the Aptitude Test. After the test, the
interviewer was all bent out of shape because my verbal score was higher than my math score;
I was a physics major. Luckily they didn't hire me and I got a job with IBM.
In summary, "May the force be with you" means: Did you read Donald Knuth's "The Art of
Computer Programming"? Excellent, we loved this article. We will share it with many young
developers we know.
Dr. Knuth is a great Computer Scientist. Around 25 years ago, I met Dr. Knuth in a small
gathering a day before he was awarded a honorary Doctorate in a university. This is my
approximate recollection of a conversation. I said-- " Dr. Knuth, you have dedicated your
book to a computer (one with which he had spent a lot of time, perhaps a predecessor to
PDP-11). Isn't it unusual?". He said-- "Well, I love my wife as much as anyone." He then
turned to his wife and said --"Don't you think so?". It would be nice if scientists with the
gift of such great minds tried to address some problems of ordinary people, e.g. a model of
economy where everyone can get a job and health insurance, say, like Dr. Paul Krugman.
I was in a training program for women in computer systems at CUNY graduate center, and
they used his obtuse book. It was one of the reasons I dropped out. He used a fantasy
language to describe his algorithms in his book that one could not test on computers. I
already had work experience as a programmer with algorithms and I know how valuable real
languages are. I might as well have read Animal Farm. It might have been different if he was
the instructor.
Don Knuth's work has been a curious thread weaving in and out of my life. I was first
introduced to Knuth and his The Art of Computer Programming back in 1973, when I was tasked
with understanding a section of the then-only-two-volume Book well enough to give a lecture
explaining it to my college algorithms class. But when I first met him in 1981 at Stanford,
he was all-in on thinking about typography and this new-fangled system of his called TeX.
Skip a quarter century. One day in 2009, I foolishly decided kind of on a whim to rewrite TeX
from scratch (in my copious spare time), as a simple C library, so that its typesetting
algorithms could be put to use in other software such as electronic eBook's with high-quality
math typesetting and interactive pictures. I asked Knuth for advice. He warned me, prepare
yourself, it's going to consume five years of your life. I didn't believe him, so I set off
and tried anyway. As usual, he was right.
I have signed copied of "Fundamental Algorithms" in my library, which I treasure. Knuth
was a fine teacher, and is truly a brilliant and inspiring individual. He taught during the
same period as Vint Cerf, another wonderful teacher with a great sense of humor who is truly
a "father of the internet". One good teacher makes all the difference in life. More than
one is a rare blessing.
I am a biologist, specifically a geneticist. I became interested in LaTeX typesetting
early in my career and have been either called pompous or vilified by people at all levels
for wanting to use. One of my PhD advisors famously told me to forget LaTeX because it was a
thing of the past. I have now forgotten him completely. I still use LaTeX almost every day in
my work even though I don't generally typeset with equations or algorithms. My students
always get trained in using proper typesetting. Unfortunately, the publishing industry has
all but largely given up on TeX. Very few journals in my field accept TeX manuscripts, and
most of them convert to word before feeding text to their publishing software. Whatever
people might argue against TeX, the beauty and elegance of a property typeset document is
unparalleled. Long live LaTeX
A few years ago Severo Ornstein (who, incidentally, did the hardware design for the first
router, in 1969), and his wife Laura, hosted a concert in their home in the hills above Palo
Alto. During a break a friend and I were chatting when a man came over and *asked* if he
could chat with us (a high honor, indeed). His name was Don. After a few minutes I grew
suspicious and asked "What's your last name?" Friendly, modest, brilliant; a nice addition to
our little chat.
When I was a physics undergraduate (at Trinity in Hartford), I was hired to re-write
professor's papers into TeX. Seeing the beauty of TeX, I wrote a program that re-wrote my lab
reports (including graphs!) into TeX. My lab instructors were amazed! How did I do it? I
never told them. But I just recognized that Knuth was a genius and rode his coat-tails, as I
have continued to do for the last 30 years!
A famous quote from Knuth: "Beware of bugs in the above code; I have only proved it
correct, not tried it." Anyone who has ever programmed a computer will feel the truth of this
in their bones.
'Trickle down effect' - the favourite buzzword of neoliberal supporters. I'd like to see
trickle down effect tried at the local pub on the taps by the local mp. Imagine what would
happen. Definitely doesn't pass the pub test.
Although he is certainly a giant, Knuth will never be able to complete this monograph - the
technology developed too quickly. Three volumes came out in 1963-1968 and then there was a lull.
January 10, he will be 81. At this age it is difficult to work in the field of mathematics and
system programming. So we will probably never see the complete fourth volume.
This inability to
finish the work he devoted a large part of hi life is definitely a tragedy. The key problem here is
that now it is simply impossible to cover the whole area of system programming and
related algorithms for one person. But the first three volumes played tremendous positive role
for sure.
Also he was distracted for several years to create TeX. He needed to create a non-profit and
complete this work by attracting the best minds from the outside. But he is by nature a loner,
as many great scientists are, and prefer to work this way.
His other mistake is due to the fact that MIX - his emulator was too far from the IBM S/360, which became the standard de-facto
in mid-60th. He then realized that this was a blunder and replaced MIX with more modem emulator MIXX, but it was
"too little, too late" and it took time and effort. So the first three volumes and fragments of the fourth is all
that we have now and probably forever.
Not all volumes fared equally well with time. The third volume suffered most IMHO and as of 2019 is partially obsolete. Also it was
written by him in some haste and some parts of it are are far from clearly written ( it was based on earlier
lectures of Floyd, so it was oriented of single CPU computers only. Now when multiprocessor
machines, huge amount of RAM and SSD hard drives are the norm, the situation is very different from late 60th. It requires different sorting
algorithms (the importance of mergesort increased, importance of quicksort decreased). He also got too carried away with sorting random numbers and establishing upper bound and
average
run time. The real data is almost never random and typically contain sorted fragments. For example, he overestimated the
importance of quicksort and thus pushed the discipline in the wrong direction.
Notable quotes:
"... These days, it is 'coding', which is more like 'code-spraying'. Throw code at a problem until it kind of works, then fix the bugs in the post-release, or the next update. ..."
"... AI is a joke. None of the current 'AI' actually is. It is just another new buzz-word to throw around to people that do not understand it at all. ..."
"... One good teacher makes all the difference in life. More than one is a rare blessing. ..."
With more than one million copies in print, "The Art of Computer Programming " is the Bible
of its field. "Like an actual bible, it is long and comprehensive; no other book is as
comprehensive," said Peter Norvig, a director of research at Google. After 652 pages, volume
one closes with a blurb on the back cover from Bill Gates: "You should definitely send me a
résumé if you can read the whole thing."
The volume opens with an excerpt from " McCall's Cookbook ":
Here is your book, the one your thousands of letters have asked us to publish. It has
taken us years to do, checking and rechecking countless recipes to bring you only the best,
only the interesting, only the perfect.
Inside are algorithms, the recipes that feed the digital age -- although, as Dr. Knuth likes
to point out, algorithms can also be found on Babylonian tablets from 3,800 years ago. He is an
esteemed algorithmist; his name is attached to some of the field's most important specimens,
such as the Knuth-Morris-Pratt string-searching algorithm. Devised in 1970, it finds all
occurrences of a given word or pattern of letters in a text -- for instance, when you hit
Command+F to search for a keyword in a document.
... ... ...
During summer vacations, Dr. Knuth made more money than professors earned in a year by
writing compilers. A compiler is like a translator, converting a high-level programming
language (resembling algebra) to a lower-level one (sometimes arcane binary) and, ideally,
improving it in the process. In computer science, "optimization" is truly an art, and this is
articulated in another Knuthian proverb: "Premature optimization is the root of all evil."
Eventually Dr. Knuth became a compiler himself, inadvertently founding a new field that he
came to call the "analysis of algorithms." A publisher hired him to write a book about
compilers, but it evolved into a book collecting everything he knew about how to write for
computers -- a book about algorithms.
... ... ...
When Dr. Knuth started out, he intended to write a single work. Soon after, computer science
underwent its Big Bang, so he reimagined and recast the project in seven volumes. Now he metes
out sub-volumes, called fascicles. The next installation, "Volume 4, Fascicle 5," covering,
among other things, "backtracking" and "dancing links," was meant to be published in time for
Christmas. It is delayed until next April because he keeps finding more and more irresistible
problems that he wants to present.
In order to optimize his chances of getting to the end, Dr. Knuth has long guarded his time.
He retired at 55, restricted his public engagements and quit email (officially, at least).
Andrei Broder recalled that time management was his professor's defining characteristic even in
the early 1980s.
Dr. Knuth typically held student appointments on Friday mornings, until he started spending
his nights in the lab of John McCarthy, a founder of artificial intelligence, to get access to
the computers when they were free. Horrified by what his beloved book looked like on the page
with the advent of digital publishing, Dr. Knuth had gone on a mission to create the TeX
computer typesetting system, which remains the gold standard for all forms of scientific
communication and publication. Some consider it Dr. Knuth's greatest contribution to the world,
and the greatest contribution to typography since Gutenberg.
This decade-long detour took place back in the age when computers were shared among users
and ran faster at night while most humans slept. So Dr. Knuth switched day into night, shifted
his schedule by 12 hours and mapped his student appointments to Fridays from 8 p.m. to
midnight. Dr. Broder recalled, "When I told my girlfriend that we can't do anything Friday
night because Friday night at 10 I have to meet with my adviser, she thought, 'This is
something that is so stupid it must be true.'"
... ... ...
Lucky, then, Dr. Knuth keeps at it. He figures it will take another 25 years to finish "The
Art of Computer Programming," although that time frame has been a constant since about 1980.
Might the algorithm-writing algorithms get their own chapter, or maybe a page in the epilogue?
"Definitely not," said Dr. Knuth.
"I am worried that algorithms are getting too prominent in the world," he added. "It started
out that computer scientists were worried nobody was listening to us. Now I'm worried that too
many people are listening."
Thanks Siobhan for your vivid portrait of my friend and mentor. When I came to Stanford as
an undergrad in 1973 I asked who in the math dept was interested in puzzles. They pointed me
to the computer science dept, where I met Knuth and we hit it off immediately. Not only a
great thinker and writer, but as you so well described, always present and warm in person. He
was also one of the best teachers I've ever had -- clear, funny, and interested in every
student (his elegant policy was each student can only speak twice in class during a period,
to give everyone a chance to participate, and he made a point of remembering everyone's
names). Some thoughts from Knuth I carry with me: finding the right name for a project is
half the work (not literally true, but he labored hard on finding the right names for TeX,
Metafont, etc.), always do your best work, half of why the field of computer science exists
is because it is a way for mathematically minded people who like to build things can meet
each other, and the observation that when the computer science dept began at Stanford one of
the standard interview questions was "what instrument do you play" -- there was a deep
connection between music and computer science, and indeed the dept had multiple string
quartets. But in recent decades that has changed entirely. If you do a book on Knuth (he
deserves it), please be in touch.
I remember when programming was art. I remember when programming was programming. These
days, it is 'coding', which is more like 'code-spraying'. Throw code at a problem until it
kind of works, then fix the bugs in the post-release, or the next update.
AI is a joke. None
of the current 'AI' actually is. It is just another new buzz-word to throw around to people
that do not understand it at all. We should be in a golden age of computing. Instead, we are
cutting all corners to get something out as fast as possible. The technology exists to do far
more. It is the human element that fails us.
My particular field of interest has always been compiler writing and have been long
awaiting Knuth's volume on that subject. I would just like to point out that among Kunth's
many accomplishments is the invention of LR parsers, which are widely used for writing
programming language compilers.
Yes, \TeX, and its derivative, \LaTeX{} contributed greatly to being able to create
elegant documents. It is also available for the web in the form MathJax, and it's about time
the New York Times supported MathJax. Many times I want one of my New York Times comments to
include math, but there's no way to do so! It comes up equivalent to:
$e^{i\pi}+1$.
I read it at the time, because what I really wanted to read was volume 7, Compilers. As I
understood it at the time, Professor Knuth wrote it in order to make enough money to build an
organ. That apparantly happened by 3:Knuth, Searching and Sorting. The most impressive part
is the mathemathics in Semi-numerical (2:Knuth). A lot of those problems are research
projects over the literature of the last 400 years of mathematics.
I own the three volume "Art of Computer Programming", the hardbound boxed set. Luxurious.
I don't look at it very often thanks to time constraints, given my workload. But your article
motivated me to at least pick it up and carry it from my reserve library to a spot closer to
my main desk so I can at least grab Volume 1 and try to read some of it when the mood
strikes. I had forgotten just how heavy it is, intellectual content aside. It must weigh more
than 25 pounds.
I too used my copies of The Art of Computer Programming to guide me in several projects in
my career, across a variety of topic areas. Now that I'm living in Silicon Valley, I enjoy
seeing Knuth at events at the Computer History Museum (where he was a 1998 Fellow Award
winner), and at Stanford. Another facet of his teaching is the annual Christmas Lecture, in
which he presents something of recent (or not-so-recent) interest. The 2018 lecture is
available online - https://www.youtube.com/watch?v=_cR9zDlvP88
One of the most special treats for first year Ph.D. students in the Stanford University
Computer Science Department was to take the Computer Problem-Solving class with Don Knuth. It
was small and intimate, and we sat around a table for our meetings. Knuth started the
semester by giving us an extremely challenging, previously unsolved problem. We then formed
teams of 2 or 3. Each week, each team would report progress (or lack thereof), and Knuth, in
the most supportive way, would assess our problem-solving approach and make suggestions for
how to improve it. To have a master thinker giving one feedback on how to think better was a
rare and extraordinary experience, from which I am still benefiting! Knuth ended the semester
(after we had all solved the problem) by having us over to his house for food, drink, and
tales from his life. . . And for those like me with a musical interest, he let us play the
magnificent pipe organ that was at the center of his music room. Thank you Professor Knuth,
for giving me one of the most profound educational experiences I've ever had, with such
encouragement and humor!
I learned about Dr. Knuth as a graduate student in the early 70s from one of my professors
and made the financial sacrifice (graduate student assistantships were not lucrative) to buy
the first and then the second volume of the Art of Computer Programming. Later, at Bell Labs,
when I was a bit richer, I bought the third volume. I have those books still and have used
them for reference for years. Thank you Dr, Knuth. Art, indeed!
@Trerra In the good old days, before Computer Science, anyone could take the Programming
Aptitude Test. Pass it and companies would train you. Although there were many mathematicians
and scientists, some of the best programmers turned out to be music majors. English, Social
Sciences, and History majors were represented as well as scientists and mathematicians. It
was a wonderful atmosphere to work in . When I started to look for a job as a programmer, I
took Prudential Life Insurance's version of the Aptitude Test. After the test, the
interviewer was all bent out of shape because my verbal score was higher than my math score;
I was a physics major. Luckily they didn't hire me and I got a job with IBM.
In summary, "May the force be with you" means: Did you read Donald Knuth's "The Art of
Computer Programming"? Excellent, we loved this article. We will share it with many young
developers we know.
Dr. Knuth is a great Computer Scientist. Around 25 years ago, I met Dr. Knuth in a small
gathering a day before he was awarded a honorary Doctorate in a university. This is my
approximate recollection of a conversation. I said-- " Dr. Knuth, you have dedicated your
book to a computer (one with which he had spent a lot of time, perhaps a predecessor to
PDP-11). Isn't it unusual?". He said-- "Well, I love my wife as much as anyone." He then
turned to his wife and said --"Don't you think so?". It would be nice if scientists with the
gift of such great minds tried to address some problems of ordinary people, e.g. a model of
economy where everyone can get a job and health insurance, say, like Dr. Paul Krugman.
I was in a training program for women in computer systems at CUNY graduate center, and
they used his obtuse book. It was one of the reasons I dropped out. He used a fantasy
language to describe his algorithms in his book that one could not test on computers. I
already had work experience as a programmer with algorithms and I know how valuable real
languages are. I might as well have read Animal Farm. It might have been different if he was
the instructor.
Don Knuth's work has been a curious thread weaving in and out of my life. I was first
introduced to Knuth and his The Art of Computer Programming back in 1973, when I was tasked
with understanding a section of the then-only-two-volume Book well enough to give a lecture
explaining it to my college algorithms class. But when I first met him in 1981 at Stanford,
he was all-in on thinking about typography and this new-fangled system of his called TeX.
Skip a quarter century. One day in 2009, I foolishly decided kind of on a whim to rewrite TeX
from scratch (in my copious spare time), as a simple C library, so that its typesetting
algorithms could be put to use in other software such as electronic eBook's with high-quality
math typesetting and interactive pictures. I asked Knuth for advice. He warned me, prepare
yourself, it's going to consume five years of your life. I didn't believe him, so I set off
and tried anyway. As usual, he was right.
I have signed copied of "Fundamental Algorithms" in my library, which I treasure. Knuth
was a fine teacher, and is truly a brilliant and inspiring individual. He taught during the
same period as Vint Cerf, another wonderful teacher with a great sense of humor who is truly
a "father of the internet". One good teacher makes all the difference in life. More than
one is a rare blessing.
I am a biologist, specifically a geneticist. I became interested in LaTeX typesetting
early in my career and have been either called pompous or vilified by people at all levels
for wanting to use. One of my PhD advisors famously told me to forget LaTeX because it was a
thing of the past. I have now forgotten him completely. I still use LaTeX almost every day in
my work even though I don't generally typeset with equations or algorithms. My students
always get trained in using proper typesetting. Unfortunately, the publishing industry has
all but largely given up on TeX. Very few journals in my field accept TeX manuscripts, and
most of them convert to word before feeding text to their publishing software. Whatever
people might argue against TeX, the beauty and elegance of a property typeset document is
unparalleled. Long live LaTeX
A few years ago Severo Ornstein (who, incidentally, did the hardware design for the first
router, in 1969), and his wife Laura, hosted a concert in their home in the hills above Palo
Alto. During a break a friend and I were chatting when a man came over and *asked* if he
could chat with us (a high honor, indeed). His name was Don. After a few minutes I grew
suspicious and asked "What's your last name?" Friendly, modest, brilliant; a nice addition to
our little chat.
When I was a physics undergraduate (at Trinity in Hartford), I was hired to re-write
professor's papers into TeX. Seeing the beauty of TeX, I wrote a program that re-wrote my lab
reports (including graphs!) into TeX. My lab instructors were amazed! How did I do it? I
never told them. But I just recognized that Knuth was a genius and rode his coat-tails, as I
have continued to do for the last 30 years!
A famous quote from Knuth: "Beware of bugs in the above code; I have only proved it
correct, not tried it." Anyone who has ever programmed a computer will feel the truth of this
in their bones.
After the US government elicited outrage from the Chinese due to its attempts to convince
its allies to bar the use of equipment made by telecoms supplier Huawei, President Trump is
apparently weighing whether to take another dramatic antagonistic step that could further
complicate trade negotiations less than two weeks before a US delegation is slated to head to
Beijing.
According to
Reuters , the White House is reportedly considering an executive order that would ban US
companies from using equipment made by Huawei and ZTE, claiming that both companies work "at
the behest of the US government" and that their equipment could be used to spy on US citizens.
The order would invoke the International Emergency Economic Powers Act to order the Department
of Commerce to prohibit the purchase of equipment from telecoms manufacturers that could
threaten national security. Though it wouldn't explicitly name Huawei or ZTE, the ban would
arise from Commerce's interpretation. The IEEA allows the president the authority to regulate
commerce in the face of a national emergency. Back in August, Congress passed and Trump signed
a bill banning the use of ZTE and Huawei equipment by the US government and government
contractors. The executive order has reportedly been under consideration for eight months,
since around the time that the US nearly blocked US companies from selling parts to ZTE, which
sparked a mini-diplomatic crisis, which
ended with a deal allowing ZTE to survive, but pay a large fine.
The feud between the US and Huawei has obviously been escalating in recent months as the US
has embarked on an
"extraordinary influence campaign" to convince its allies to ban equipment made by both
companies, and the arrest of Huawei CFO Meng Wanzhou in Canada has also blossomed into a
diplomatic crisis of sorts.
But the real reason issuing a ban on both companies' equipment is seen as a priority is
because Huawei's lead in the race to build 5G technology is making its products more appealing
to global telecoms providers. Rural telecoms providers in the US - those with fewer than
100,000 subscribers - are particularly reliant on equipment made by both companies. They've
expressed concerns that a ban would require them to rip out and scrap their equipment at an
immense cost.
Rural operators in the United States are among the biggest customers of Huawei and ZTE,
and fear the executive order would also require them to rip out existing Chinese-made
equipment without compensation. Industry officials are divided on whether the administration
could legally compel operators to do that.
While the big U.S. wireless companies have cut ties with Huawei in particular, small rural
carriers have relied on Huawei and ZTE switches and other equipment because they tend to be
less expensive.
The company is so central to small carriers that William Levy, vice president for sales of
Huawei Tech USA, is on the board of directors of the Rural Wireless Association.
The RWA represents carriers with fewer than 100,000 subscribers. It estimates that 25
percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to
the Federal Communications Commission earlier this month.
As Sputnik
pointed out, the news of the possible ban followed questions from Defense Secretary Gavin
Williamson, who expressed serious concerns over the involvement of Huawei in Britain's 5G
network, suggesting that Beijing sometimes acted "in a malign way." But even if it loses access
to the US market, Huawei's global expansion and its leadership in the 5G space are expected to
continue to bolster profits and growth. Currently, Huawei sells equipment in 170 countries.
According to a statement from the company's rotating chairman, the company's full-year sales
are expected to increase 21% to $108.5 billion this year. The company has signed 26 contracts
globally to supply 5G equipment for commercial use, leaving it well ahead of its US rivals.
"... Of course, I was just trying to make a point that wells drilled in 2015 that had seen 3 years of weak (and one year of average) oil prices were going to be total losers that would not payout within any reasonable time horizon, if at all. ..."
"... To continue, there is no mention in these numbers of how much land costs. I seem to recall many Permian players paying $15-60K per acre. So a two mile DSU would cost $19.2 million to $76.8 million. I just ignored land costs completely. Further, each of these companies has interest expense. One can go to the 10K's and 10Q's to see how much that is costing each per BOE. I just ignored interest expense too. ..."
"... I do argue until we see some well payout data (hard data, not power point variety) from these companies, we should assume the wells generally do not payout within 36 months, or even 60 months. ..."
"... I was just trying to remind people of the numbers. I think most of the investing public has figured it out, based on where these companies are trading since oil dumped again. ..."
So to keep everyone happy, here are some averages for the all wells EFS, Bakken and Permian.
Decided to exclude Niobrara, oil numbers are much lower.
2015 Q3 36 months of production: 162,635 BO most recent monthly rate 58.6 BOPD
2016 Q3 24 months of production: 169,078 BO most recent monthly rate 103.5 BOPD
2017 Q3 12 months of production: 136,850 BO most recent monthly rate 213.1 BOPD
For 2015 162,635 x .80 x $45 = $5,854,860
7% severance $409,840
$5 per BO LOE $650,540
$2 per BO G & A $260,216
Net = $4,534,264
I lowered the costs some to make the economics more favorable from the standpoint of those
who love the sub $2 gasoline. Might be ok to look at 10K and 10Q if anyone would like to plug
in different cost estimates.
The 2016 wells described above are at $4,713,894 per well after 24 months.
The 2017 wells described above are at $3,815,378 per well after 12 months.
Of course, I was just trying to make a point that wells drilled in 2015 that had seen
3 years of weak (and one year of average) oil prices were going to be total losers that would
not payout within any reasonable time horizon, if at all.
To continue, there is no mention in these numbers of how much land costs. I seem to
recall many Permian players paying $15-60K per acre. So a two mile DSU would cost $19.2
million to $76.8 million. I just ignored land costs completely. Further, each of these
companies has interest expense. One can go to the 10K's and 10Q's to see how much that is
costing each per BOE. I just ignored interest expense too.
These wells are a lousy investment at $50 WTI. Only gets worse as the oil price sinks.
I think this all started because maybe GuyM was actually giving some credence to EOG
guidance. I don't blame GuyM, or anyone else, for believing what the companies say.
I do argue until we see some well payout data (hard data, not power point variety)
from these companies, we should assume the wells generally do not payout within 36 months, or
even 60 months.
I do agree, wells have residual value after 36 and 60 months. I also agree that much
higher oil prices make this business a money maker. Finally, I agree the wells have improved
every year, although it is looking like 2016 might have been the high water mark, with later
wells not moving the needle much higher.
Time for me to exit for awhile. I was just trying to remind people of the numbers. I
think most of the investing public has figured it out, based on where these companies are
trading since oil dumped again.
Good analysis, and thanks, again. No amount of increased productivity could make them
profitable at $45, especially not $37, or $16. The clock is ticking. Yeah, EOG has gone from
over $120 to $87.
Now investors will be super cautious that that will have depressing effect.
Notable quotes:
"... There are huge losses, we don't see that are happening now in the derivative market, besides the stock markets. There was something like 384 trillion just in interest rate bets in derivatives, that half are losing right now. ..."
"... Each crash is different. This one is just a slow meltdown. ..."
"... The stock market, and now especially derivatives, are nothing other than a gigantic Las Vegas casino. Elves in the market strive to maintain that there is a relation, but in the end, it doesn't pan out. ..."
Of course. But traditionally, crashes take from cash/growth after a period of time. Nine
months to a year, and growth in GDP precedes bull markets by the same. It's not a fritzing
law, but it's logical, and normal. Has been since I started following it in the 60's.
Last crash was different, in that the GDP growth declined before the crash, due to
housing. But, if the crash persists, my bet would be a lack of cash, eventually, to support
growth.
There are huge losses, we don't see that are happening now in the derivative market,
besides the stock markets. There was something like 384 trillion just in interest rate bets
in derivatives, that half are losing right now.
This is no traditional crash. FED can stop hiking interest rates and market might pause an
consolidate before going lower but lower they go. Until FED stops allowing it's balance sheet
to shrink, down is the direction for markets. Back when QE was full blown stuff like gov.
shutdown and trade wars were the very thing that made markets go higher because it meant more
QE for longer.
There is nothing organic about the recovery of markets since 2008-2009. All assets and
markets are mispriced. Price discovery wasn't allowed to happen after 2008-2009. Truth is
true price discovery won't be allowed to happen this time either.
Fed is manufacturing a market crash so they can do the next round of QE. Fact is QE works
but you can't end it and you sure as hell can't reverse it. QE creates the illusion that
everything is fine. There is a credibility issue if you can't ever end QE though. That's
where the Fed finds itself now.
Your right. Each crash is different. This one is just a slow meltdown.
And, since I have been following it, there has never been anything organic about market
growth, it's always BS. There was nothing organic about the first big market crash in the
early part of last century, it was purely speculative. The tulip crash, before established
markets was speculative.
Growth in GDP and markets are two separate animals. Although, as the previous crash
proves, GDP decline can affect the market, as well as market crashes affecting GDP.
The stock market, and now especially derivatives, are nothing other than a gigantic
Las Vegas casino. Elves in the market strive to maintain that there is a relation, but in the
end, it doesn't pan out.
Well the Dow has had its largest monthly loss ever recorded this December unless market
recovers some of that between now and the end of the year. Slow meltdown maybe not. It's
currently at about -4,200 which tops the largest monthly drop during 2008-2009 by about 1,000
points.
Just further to drop than the previous ones. Half would be about 10k more points. But, there
is nothing magical about half, it could stop well before that.
The analysis of the drop is still being speculated. The ones that make sense, so far, is that
there was a lot of market fear (tariffs, ad nauseum). Sell offs happened, snow balling into
covering margin calls. If so, that is a normal scenario, but I think the Fed raising interest
rates, and continuing to unravel QE is also a major, if not the major reason. There are a
bunch of other reasons that don't make a lot of sense. One blaming oil price. I think that is
yet to come, but not this time.
Unwinding of FED's balance sheet is also on autopilot. They don't have to have a Fed meeting
to vote on it like a rate hike. Much easier to deflect the blame elsewhere for the resulting
market decline.
-4,200 which tops the largest monthly drop during 2008-2009 by about 1,000 points.
Hey, it it's the precentage drop that counts. What was the largest monthly
percentage drop in the 2008-2009 crash? I would wager it was far greater than the percentage
drop this December.
This article is about the huge 1,175 one day drop last February, but the point still
holds.
The Dow's 4.6% loss on Monday was the worst since August 2011. But it didn't even crack
the top-20 of all-time losses. It was just the 25th worst loss since 1960.
The Dow's biggest one-day percentage loss was the 22.6% Black Monday crash on Oct. 19,
1987. In point terms, that was "only" 508 points. In second place, the Dow crashed 12.8% on
Oct. 28, 1929.
Looks like the biggest percentage drop for a month was Feb 2009, at around 21%. Eclipsing
this month. But, it had also been going down for a long time. What was this month, around
16%? But, it's just started,
Seems the break even is pretty low, as EIA has predicted about a million bpd increase out of
shale in 2019 It doesn't matter whether you
provide storage or increase the number of refineries, shale production is relatively dead at
these prices. The prices just need to stay ridiculously low for awhile to stop the EIA and
IEA from producing more imaginary oil, and face reality. Yeah, that would affect my wells,
but I would hope for a better price, later.
Less than $17 a barrel? Bakken is done for awhile. And there is NOBODY in the Permian
breaking even at $34. Remember what happened in 2015? Yeah, production dropped by over a
million barrels. These prices are as bad as 2015, and we have a bigger drop potential. Those
pipeline builders gotta be really worried. But, they should be anyway. How are you going to
keep the pipeline flowing if you can't take what's in there out, because there is nowhere to
put it? How many mentally challenged people are working in the Permian?
The amazing part is, this time there is no glut, at all. Inventories will drop, but just
let it happen. We have to forever eradicate the Permian and shale production will save the
world song. It's a thousand times more irritating than listening to Bing Crosby's white
Christmas on January1st. There ain't no fritzing Santa Clause, EIA!
Seems like a lot of year end liquidation of oil futures perhaps. That's the only explanation
I've got for how oil is this low. Probably will bounce back to the low 50's WTI by late
January. It will be interesting to see December through February US production data to see
what effect this price dive has done.
Two thoughts, immediately. The price is such now, that if it stays anywhere close to that for
awhile, completions won't be as expected, and there won't be enough oil to fill them. The
second is, that if the E&Ps had the right price, and did produce, there is probably not
enough shipping until late 2020 or 2021 to handle 2.5 million bpd extra. No place to store
it, and refineries can't use high API. Unless, I am missing something. Pipelines can't make
much money because a pipeline is filled, it has to be flowing.
Maybe not zero, but could be a lot more. It's reacting to the stock market, now. Dow down 15%
and still going. This is no simple correction, as that stops at around 10%, usually. Been a
long, long time since the last bear market, and is past due. Everything dives, until they
come to grips that commodities are a different animal. That may take months, or longer
depending on how bad it gets. Who knows, each bear market has a different generation, and
it's always new to them.
Especially this one, as it has been so long. New ball game.
I think it was EN who posted how rate hikes can cause this on a historical basis. Based on
that chart, we could be in a significant bear market. Bubbles are going to pop. Not sure what
the derivative markets are looking like, but they can't be healthy. The derivative markets
are many times bigger than the regular stock markets. Think Lehman Brothers, and margin call.
Lehman didn't fail over bad home loans, they failed over the derivatives of home loans. This
time, it won't be housing, but something will give. They made a big effort to control the
banks after the last fiasco in 2008, but made NO effort in regulating derivatives. Brilliant.
Some of the weaker oil companies may be in trouble. JMO.
Right on the move from 18,000 to 27,000 in the Dow was just hot air as we are seeing now.
Investors realize there isn't a fed put and are freaking out, how far will it sink before
Powell and company call off the dogs and say no more rate hikes and stop quantitative
tightening..cause it's on "autopilot" according to them. All I want is 4% on an 18 month CD,
fat chance now.
In other words, if you have to sell those paper barrels for margin calls, and there is too
few to buy, because they are selling, also; then price goes down, because there are too many
paper barrels, and not enough buyers. Probably, the original paper sellers lose their butt,
and have to sell something to cover their margins. Everyone now is paying homage to the
margin god. Because, there was never any real money to cause the stock market to soar like an
eagle.
Which reverses itself later, because when it is time to sell new paper barrels, less are
sold, enabling the price to go up (if anyone has any money left). Everyone else is busy
ducking Guido, because the value of what they had left in their portfolio was not enough to
cover margin. Er, I think
Anyway, that's Guy's course negative 101, on the current status of oil prices.
Of course. But traditionally, crashes take from cash/growth after a period of time. Nine
months to a year, and growth in GDP precedes bull markets by the same. It's not a fritzing
law, but it's logical, and normal. Has been since I started following it in the 60's. Last
crash was different, in that the GDP growth declined before the crash, due to housing. But,
if the crash persists, my bet would be a lack of cash, eventually, to support growth. There
are huge losses, we don't see that are happening now in the derivative market, besides the
stock markets. There was something like 384 trillion just in interest rate bets in
derivatives,that half are losing right now.
This is no traditional crash. FED can stop hiking interest rates and market might pause an
consolidate before going lower but lower they go. Until FED stops allowing it's balance sheet
to shrink, down is the direction for markets. Back when QE was full blown stuff like gov.
shutdown and trade wars were the very thing that made markets go higher because it meant more
QE for longer.
There is nothing organic about the recovery of markets since 2008-2009. All assets and
markets are mispriced. Price discovery wasn't allowed to happen after 2008-2009. Truth is
true price discovery won't be allowed to happen this time either.
Fed is manufacturing a market crash so they can do the next round of QE. Fact is QE works
but you can't end it and you sure as hell can't reverse it. QE creates the illusion that
everything is fine. There is a credibility issue if you can't ever end QE though. That's
where the Fed finds itself now.
Your right. Each crash is different. This one is just a slow meltdown. And, since I have been
following it, there has never been anything organic about market growth, it's always BS.
There was nothing organic about the first big market crash in the early part of last century,
it was purely speculative. The tulip crash, before established markets was speculative.
Growth in GDP and markets are two separate animals. Although, as the previous crash proves,
GDP decline can affect the market, as well as market crashes affecting GDP.
The stock market, and now especially derivatives, are nothing other than a gigantic Las
Vegas casino. Elves in the market strive to maintain that there is a relation, but in the
end, it doesn't pan out.
Well the Dow has had its largest monthly loss ever recorded this December unless market
recovers some of that between now and the end of the year. Slow meltdown maybe not. It's
currently at about -4,200 which tops the largest monthly drop during 2008-2009 by about 1,000
points.
Just further to drop than the previous ones. Half would be about 10k more points. But, there
is nothing magical about half, it could stop well before that.
The analysis of the drop is still being speculated. The ones that make sense, so far, is that
there was a lot of market fear (tariffs, ad nauseum). Sell offs happened, snow balling into
covering margin calls. If so, that is a normal scenario, but I think the Fed raising interest
rates, and continuing to unravel QE is also a major, if not the major reason. There are a
bunch of other reasons that don't make a lot of sense. One blaming oil price. I think that is
yet to come, but not this time.
Unwinding of FED's balance sheet is also on autopilot. They don't have to have a Fed meeting
to vote on it like a rate hike. Much easier to deflect the blame elsewhere for the resulting
market decline.
-4,200 which tops the largest monthly drop during 2008-2009 by about 1,000 points.
Hey, it it's the precentage drop that counts. What was the largest monthly
percentage drop in the 2008-2009 crash? I would wager it was far greater than the percentage
drop this December.
This article is about the huge 1,175 one day drop last February, but the point still
holds.
The Dow's 4.6% loss on Monday was the worst since August 2011. But it didn't even crack
the top-20 of all-time losses. It was just the 25th worst loss since 1960.
The Dow's biggest one-day percentage loss was the 22.6% Black Monday crash on Oct. 19,
1987. In point terms, that was "only" 508 points. In second place, the Dow crashed 12.8% on
Oct. 28, 1929.
Looks like the biggest percentage drop for a month was Feb 2009, at around 21%. Eclipsing
this month. But, it had also been going down for a long time. What was this month, around
16%? But, it's just started,
So markets look down 14ish% YTD. Still 4 days to worsen that or better that.
You know, there is no law of the universe that says markets can't be down more than 10%
this year, and next year, and the next, and the next for 10 years or so. Never done that
before? So what? Never printed 25% of GDP before. Never API 40.6 WTI before. After 10 yrs,
scarce oil, scarce life.
You have that right. The world is full of surprises.
And, I do not see QE, again. Different folks in the Fed. So, banks will lose big time on
easy money, and getting more is not going to be easy like last time. Over the past two years,
I have been getting endless calls and letters wanting to loan me money. Bet that slows
down.
And, because bear markets have a tendency to stick around for a few years, oil supply may
put a blanket on improvement. So it could be possible for continued decline, rather than a
rebound. Or, one real big final decline. No end to the possibilities.
One, I really see as a possibility, is another export ban. Think about it. Gasoline prices
go up due to a shortage. We could be in a recession with stagflation. The public, and the
illiterate congress would not be able to comprehend API. We are just exporting oil, when gas
prices are high. In a way, they would be right. Think how that would affect 2.5 million bpd
pipeline expansions, and extra shipping improvements.
Or, we could elect another flawed icon for President-Elon. Who would promise a Tesla for
every family, or a free trip to Mars.
Think in terms of the big SWFs. It is they that seek action.
As for quoting indices vs their histories, this sounds like a good thing. Just be sure
that you quote an index that has the same companies in it as it did historically. The Dow
with Apple will be difficult data to find for 1960. But you can find GE in it for then.
Ever notice they don't add a company that is failing? And never remove one that is doing
well? Similarly we should only quote WTI 39.6 API price. Difficult data to find.
Compare with "That's set to worsen in the new year, experts told CNBC on Monday, pointing to
risks including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown." The problem iether expecting rally or expecting further
downturn is that stock prices are so detached from reality that everything is possible.
Wall Street will see a "relief rally" in stocks that would offer a better selling
opportunity for investors, technical analyst Katie Stockton says.
The rally would last for several weeks and would be up to 8 percent higher than where
the markets closed on Friday, she says.
I still had some things I didn't talk about in Sunday's Trump Derangement
International , about how the European press have found out that they, like the US MSM, can
get lots of viewers and readers simply by publishing negative stories about Donald Trump. The
US president is an attention magnet, as long as you only write things about him designed to
make him look bad.
The Guardian is only too happy to comply. They ran a whole series of articles on Sunday to
do juts that: try to make Trump look bad. Note that the Guardian editorial team that okayed the
articles is the same as the one that allowed
the fake Assange/Manafort one , so their credibility is already shot to pieces. It's the
magic triangle of today's media profits: spout non-stop allegations against Russia, Trump and
Julian Assange, and link them when and where you can. It doesn't matter if what you say is true
or not.
Anyway, all the following is from the Guardian, all on December 23. First off, Adam Gabbatt
in New York, who has painstakingly researched how Trump's businesses, like Trump Tower and the
Trump store, don't appear to have sufficiently (as per him) switched from Happy Holidays to
Merry Christmas. Sherlock Holmes would have been proud. A smash hit there Adam, bring out the
handcuffs.
During Donald Trump's presidential campaign he talked often about his determination to win
one particular war. A war that had been raging for years, he said. Specifically: the war on
Christmas. But despite Trump's repeated claims that "people are saying Merry Christmas again"
instead of the more inclusive "happy holidays", there are several places where the Christmas
greeting is absent: Trump's own businesses.
The Trump Store, for example. Instead of a Christmas gift guide – which surely would
be more in keeping with the president's stated desire for the phrase to be used – the
store offers a holiday gift guide. "Shop our Holiday Gift Guide and find the perfect present
for the enthusiast on your list," the online store urges. "Carefully curated to celebrate the
most wonderful time of year with truly unique gifts found only at Trump Store. Add a bow on
top with our custom gift wrapping. Happy Holiday's!"
The use of the phrase "Happy Holiday's" [sic] in Trump marketing would seem particularly
egregious. The long-standing "War-on-Christmas" complaint from the political right is that
stores use the phrase "Happy Holidays", rather than specifically mentioning the Christian
celebration. It is offered as both an example of political correctness gone mad, and as an
effort to erase Christianity from the US.
It's just, I think that if Trump had personally interfered to make sure there were Merry
Christmas messages all around, you would have remarked that as president, he's not allowed to
be personally involved in his businesses. But yeah, you know, just to keep the negativity
going, it works, no matter how fluffy and hollow.
Second, still on December 23, is Tom McCarthy for the Guardian in New York, who talks about
Robert Mueller's phenomenal successes. Mueller charged 34 people so far. In a case that
involves "this complexity which has international implications, aspects relying on the
intelligence community, complicated cyber components". It really says that.
And yes, that's how many people view this. What do they care that Mueller's original mandate
was to prove collusion between the Trump campaign and 'Russians', and that he has not proven
any collusion at all so far, not even with 34 people charged? What do they care? It looks like
Trump is guilty of something, anything, after all, and that's all the circus wants.
One measure of special counsel Robert Mueller's prosecutorial success in 2018 is the list
of former top Donald Trump aides brought to justice: Michael Cohen pleaded guilty, a jury
convicted Paul Manafort, a judge berated Michael Flynn. Another measure is the tally of new
defendants that Mueller's team charged (34), the number of new guilty pleas he netted (five)
and the amount of money he clawed back through tax fraud cases ($48m).
Yet another measure might judge Mueller's pace compared with previous independent
prosecutors. "I would refer to it as a lightning pace," said Barb McQuade, a University of
Michigan law professor and former US attorney. "In a case of this complexity which has
international implications, aspects relying on the intelligence community, complicated cyber
components – to indict that many people that quickly is really impressive work."
But there's perhaps a more powerful way to measure Mueller's progress in his investigation
into Russian interference in the 2016 US election and links between Moscow and the Trump
campaign; that's by noticing how the targets of his investigation have changed their postures
over the course of 2018, from defiance to docility – or in the case of Trump himself,
from defiance to extreme, hyperventilating defiance.
In reality, you would be at least as correct if you would claim that Robert Mueller's
investigation has been an abject failure. Not one iota of collusion has been proven after 20
months and $20 million in funds have been used. And any serious investigation of Washington's
culture of fixers and lobbyists would land at least 34 people who have committed acts that
border on or over illegality. And in a matter of weeks, for a few hundred bucks.
Third, still on December 23, is Julian Borger in Washington, who's been elected to convey
the image of chaos. Trump Unleashed, says our modern day Shakespeare. With Jim Mad Dog Mattis
characterized as ".. the last independently minded, globally respected, major figure left in
the administration".. . Again, it really says that.
Because woe the man who tries to bring US troops home, or even promises to do so a few days
before Christmas. For pulling out America's finest, Donald Trump is being portrayed as
something eerily close to the antichrist. That truly is the world on its head. Bringing troops
home to their families equals chaos.
Look, guys, if Trump has been guilty of criminal behavior, the US justice system should be
able to find that out and convict him for it. But that's not what this is about anymore. A
million articles have been written, like these ones in the Guardian, with the sole intention,
evidence being scarce to non-existent, of smearing him to the extent that people see every
subsequent article in the light of a man having previously been smeared.
The US stumbled into the holiday season with a sense of unravelling, as a large chunk of
the federal government ground to a halt, the stock market crashed and the last independently
minded, globally respected, major figure left in the administration announced he could no
longer work with the president. The defense secretary, James Mattis, handed in his
resignation on Thursday, over Donald Trump's abrupt decision to pull US troops out of
Syria.
On Saturday another senior official joined the White House exodus. Brett McGurk, the
special envoy for the global coalition to defeat Isis and the US official closest to
America's Kurdish allies in the region, was reported to have handed in his resignation on
Friday. That night, senators flew back to Washington from as far away as Hawaii for emergency
talks aimed at finding a compromise on Trump's demand for nearly $6bn for a wall on the
southern border, a campaign promise which has become an obsession.
Now look at the next headline, December 23, Graeme Wearden, Guardian, and ask yourself if
it's really Trump saying he doesn't agree with the rate hikes that fuels the fears, or whether
it's the hikes themselves. And also ask yourself: when Trump and Mnuchin both deny reports of
Trump firing Powell, why do journalists keep saying the opposite? Because they want to fuel
some fears?
From where I'm sitting, it looks perfectly logical that Trump says he doesn't think Powell's
decisions are good for the US economy. And it doesn't matter which one of the two turns out to
be right: Trump isn't the only person who disagrees with the Fed hikes.
The main suspect for 2019 market turmoil is the inevitable fallout from the Fed's QE under
Bernanke and Yellen. And there is something to be said for Powell trying to normalize rates,
but there's no doubt that may hasten, if not cause, turmoil. Blaming it on Trump not agreeing
with Jay Powell is pretty much as left field as it gets.
Over the weekend, a flurry of reports claimed Donald Trump had discussed the possibility
of firing the Federal Reserve chairman, Jerome Powell. Such an unprecedented move would
trigger further instability in the markets, which have already had their worst year since the
2008 crisis. US officials scrambled to deny Trump had suggested ousting Powell, who was
appointed by the president barely a year ago.
The Treasury secretary, Steven Mnuchin, tweeted that he had spoken to the president, who
insisted he "never suggested firing" Powell, and did not believe he had the right to do this
. However, Trump also declared – via Mnuchin – that he "totally disagrees" with
the Fed's "absolutely terrible" policy of raising interest rates and unwinding its
bond-buying stimulus programme, piling further pressure on the US's independent central
bank.
And now, in the only article in the Guardian series that's December 24, not 23, by Victoria
Bekiempis and agencies, the plunging numbers in the stock markets are Trump's fault, too.
Top Democrats have accused Donald Trump of "plunging the country into chaos" as top
officials met to discuss a growing rout in stock markets caused in part by the president's
persistent attacks on the Federal Reserve and a government shutdown. "It's Christmas Eve and
President Trump is plunging the country into chaos," the two top Democrats in Congress, House
speaker nominee Nancy Pelosi and Senate minority leader Chuck Schumer, wrote in a joint
statement on Monday. "The stock market is tanking and the president is waging a personal war
on the Federal Reserve – after he just fired the Secretary of Defense."
Trump criticized the Federal Reserve on Monday, describing it as the "only problem" for
the US economy, even as top officials convened the "plunge protection team" forged after the
1987 crash to discuss the growing rout in stock markets. The crisis call on Monday between US
financial regulators and the US treasury department failed to assure markets, and stocks fell
again amid concern about slowing economic growth, the continuing government shutdown, and
reports that Trump had discussed firing Federal Reserve chairman Jerome Powell.
The last one is from one Jonathan Jones, again December 23, again for the Guardian. And it
takes the top award in the narrative building contest.
Again, the Guardian editorial team that okayed this article is still the same as the one
that allowed the fake Assange/Manafort one, an editorial team that sees no problem in making
things up in order to smear people. To portray Trump, Assange and anyone who's had the
misfortune of being born in Russia as suspicious if not outright criminal.
But look at what Jones has to say, and what Guardian editor-in-chief Kathy Viner and her ilk
allowed and pressured him to say. He wants to have a say in how Trump should dress (seasonal
knitwear), he evokes the image of Nazi architect Albert Speer for no reason at all, and then
it's a matter of mere inches until you arrive at Trump as a king, an emperor, an inner
tyrant.
"He's in a tuxedo!", Like that's a bad thing for Christmas. "She's in white!". Oh dear, call
the pope. If both Trumps would have put on Christmas sweaters in front of a fire, the writer
would have found something negative in that.
The absence of intimacy in the Trumps' official Christmas portrait freezes the heart. Can
it be that hard to create a cosy image of the presidential couple, perhaps in front of a
roaring hearth, maybe in seasonal knitwear? Or is this quasi-dictatorial image exactly what
the president wants to project? Look on my Christmas trees, ye mighty, and despair! If so, it
fuels suspicions that it is only the checks and balances of a 230-year-old constitution that
are keeping America from the darkest of political fates. You couldn't create a creepier
Yuletide scene if you tried. Multiple Christmas trees are currently a status symbol for the
wealthy, but this picture shows the risks.
Instead of a homely symbol of midwinter cheer, these disciplined arboreal ranks with their
uniform decorations are arrayed like massed soldiers or colossal columns designed by Albert
Speer. The setting is the Cross Hall in the White House and, while the incumbent president
cannot be held responsible for its architecture, why heighten its severity with such rigid,
heartless seasonal trappings? Everything here communicates cold, empty magnificence. Tree
lights that are as frigid as icicles are mirrored in a cold polished floor. Equally frosty
illuminations are projected on the ceiling. Instead of twinkling fairy magic, this lifeless
lighting creates a sterile, inhuman atmosphere.
You can't imagine kids playing among these trees or any conceivable fun being had by
anyone. It suggests the micromanaged, corporate Christmas of a Citizen Kane who has long
since lost touch with the ordinary, warm pleasures of real life. In the centre of this
disturbing piece of conceptual art stand Donald and Melania Trump. He's in a tuxedo, she's
wearing white – and not a woolly hat in sight. Their formal smartness adds to the
emotional numbness of the scene. Trump's shark-like grin has nothing generous or friendly
about it. He seems to want to show off his beautiful wife and his fantastic home rather than
any of the cuddly holiday spirit a conventional politician might strive to share at this
time.
It begs a question: how can a man who so glaringly lacks anything like a common touch be
such a successful "populist"? What can a midwestern voter find in this image to connect with?
Perhaps that's the point. After more than two centuries of democracy, Trump is offering the
US people a king, or emperor. In this picture, he gives full vent to his inner tyrant. If
this portrait contains any truth about the state of America and the world, may Santa help us
all.
I realize that you may be tired of the whole story. I realize you may have been caught in
the anti-Trump narrative. And I am by no means a Trump fan. But I will keep on dragging you
back to this. Because the discussion should not be based on a handful of media moguls not
liking Trump. It should not be based on innuendo and smear. If Trump is to be convicted, it
must be on evidence.
And there is no such evidence. Robert Mueller has charged 34 people, but none with what his
mandate was based on, none with Russia collusion. This means that the American political
system, and democracy itself, is under severe threat by the very media that are supposed to be
its gate keepers.
None of this is about Trump, or about whether you like him or not, or even if he's a shady
character or not. Instead, it's about the influence the media have on how our opinions and
ideas about people and events are being shaped on a daily basis.
And once you acknowledge that your opinions of Trump, Putin et al, even without any proof of
a connection between them, are actively being molded by the press you expect to inform you
about the truth behind what goes on, you will have to acknowledge, too, that you are a captive
of forces that use your gullibility to make a profit off you.
If our media need to make up things all the time about who's guilty of what, because our
justice systems are incapable of that, then we have a problem so enormous we may not be able to
overcome it in our present settings.
Alternatively, if we trust our justice systems to deliver true justice, we don't need a
hundred articles a day to tell us how Trump or Putin are such terrible threats to our world.
Our judges will tell us, not our journalists or media who are only in it for a profit.
I can say: "let's start off 2019 trying to leave prejudice behind", and as much as that is
needed and you may agree with me, it's no use if you don't realize to what extent your views of
the world have been shaped by prejudice.
I see people reacting to the star writer at Der Spiegel who wrote a lot about Trump, being
exposed as a fraud. I also see people trying to defend Julian Assange from the Guardian article
about his alleged meetings with Paul Manafort, that was an obvious big fat lie (the truth is
Manafort talked to Ecuador to help them 'sell' Assange to the US).
But reacting to the very obvious stuff is not enough . The echo chamber distorts the truth
about Trump every single day, and at least six times on Sunda y, as this essay of mine shows.
It's just that after two years of this going on 24/7, it is perceived as the normal.
Everyone makes money dumping on the Donald, it's a proven success formula, so why would the
Guardian and Der Spiegel stay behind? They'd only hurt their own bottom line.
It has nothing to do with journalism, though, or news. It's smear and dirt, the business
model of the National Enquirer. That's how far our once truthful media have fallen.
All these journalists are influenced and manipulated by 'Australian-American Leadership
Dialogue', 'Atlantikbrücke', Open Society Foundation money etc. Wars boost the NYSE
because many weapons manufacturers are listed there.
If the journalists weren't manipulated all 2018 compilations would not have omitted the
World Cup in Russia.
That'd be like astronomers saying that although Hellenic astrology is pseudoscientific nonsense they can probably do business
with Ptolemaic or Hindu astrology. Other scientists would laugh and call astronomy the dismal physics. Isn't it about time economists
like yourself just told the knuckle dragging ideologues - of whatever colour and salinity - to fuck off?
One interesting argument against bond rates rising further is that will be tremendous hit for
the USA budget as they need to pay interest of their debt. So it might be that there is just one
hike on the road from now.
Hasenstab described his market outlook during an interview with
the Financial Times .
"October was not a fluke," Hasenstab said. "There is a lot of entrenched interest rate
risk in all financial markets right now."
But even if raising interest rates leads to some discomfort in the short term, the Fed
should keep hiking, because "it's the right thing to do."
"I don't know what they will do, but I know what they should do, and that is to keep
raising rates," he said. "It is better to have these periodic downturns than procrastinating
and have to move even more aggressively later on."
Hasenstab's $35 billion Templeton Global Bond Fund is up 1.6% on the year, compared with a
2.2% loss for the global bond market , thanks to aggressive bets against the euro and US
equities. Judging by Hasenstab's outlook, if his view proves correct, those trades should
continue to generate profits during the new year.
A bond manager predicting rates will rise .... that´s a rarity in this business.
Looks like he is trying to tell the truth. But I don't trust politicians and neocons and Wall
Street guys. They will do everything to keep rates down. They will even start a war or sell
their mother, if that keeps rates down.
"...Templeton Global Bond Fund is up 1.6% on the year, compared with a 2.2% loss for
the global bond market, thanks to aggressive bets against the euro and US equities."
I was under the impression a bond fund invested in bonds? Stupid me! So I guess its not
really a bond fund - its just a fund.
Oh man, open up the holdings of any actively managed bond funds- MBS, CLOs, Loans, junk,
paper without ANY ratings. Very difficult to find a pure non-leveraged avtively managed bond
fund to hedge equities. You're better off building a ladder out of Treasuries and AAA
corporates yourself - and then holding till maturity.
A great many investors are about to be hit with huge margin calls and flushed out of this
market.
Imagine the shock this morning of a fictitious couple named Joe and Jill Average that are
nearing retirement with a net worth last month of around 250 thousand dollars as they check
to see how they are doing after hearing "murmurs" the market has slipped. With three-quarters
of it in the market, they will be horrified to find that the mere pullback of stocks in
recent weeks has ripped away over 50 thousand dollars or 20% of their wealth.
Few people watch their investments daily but rather chose to peek at them every now and
then. This is the main reason a lot more Americans are not waking up today sick to their
stomach and in near panic from the devastation markets have wrecked upon their savings as
trillions of dollars have vanished into a big black hole. The article below argues this does
not make for a Merry Christmas!
Neoclassical economics makes you thing the markets are something they are not.
The 1920's sucker that believed in free markets – "Everything is getting better
and better look at the stock market"
The 1920's neoclassical economist that believed in free markets - "Stocks have reached
what looks like a permanently high plateau." Irving Fisher 1929. It was obviously a
stable equilibrium.
What had gone wrong?
Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability
to create money, so that free market valuations could have some meaning.
The real world and free market, neoclassical economics would then tie up.
Henry Simons was actually at the University of Chicago (free market headquarters), but
they had forgotten about his work in a few decades.
What is real wealth?
In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised
inflating asset prices doesn't create real wealth, they came up with the GDP measure to track
real wealth creation in the economy.
The transfer of existing assets, like stocks and real estate, doesn't create real wealth
and therefore does not add to GDP.
The real wealth in the economy is measured by GDP.
Inflated asset prices aren't real wealth, and this can disappear almost over-night, as it
did in 1929 and 2008.
Free and modestly regulated markets are good, no arguments there. The time for free
markets in interest rates, was before Nixon signed the Venganza contract. Now, it'd be
counterproductive, not with $22 Trillion in direct liabilities, and multiples in indirect
ones. If you're championing interest rates free markets under this condition, you're
suspicious.
How do you repay $22 Trillion under a free market determined 32% rate of interest, how? If
you default, the destabilization would be unimaginable. The governments can simply not be
allowed to keep piling on unproductive debt, not at all. If folks are bawling like newborns
at 2.7% rates, then what'd happen at conservative market rates of 6% and above, what
exactly?
Find out again, why the Federal Reserve Bank of the United States was founded, it'd open
your eyes to human depravity...
S&P still comfortably above anything 'real', and yet all this talk about the Fed's
unwavering resolve. And housing crisis 2.0 hasn't even rounded 2nd base.
The stock market's recent correction has been more abrupt than you'd expect if the market
were in the early stages of a major decline.
I say that because one of the hallmarks of a major market top is that the bear market than
ensues is relatively mild at the beginning, only building up a head of steam over several
months. Corrections, in contrast, tend to be far sharper and more precipitous.
Consider the losses incurred by the Dow Jones Industrial Average over the first three months
of all bear markets of the last 80 years. (I used the bear-market calendar maintained by Ned
Davis Research.) I focused on this three-month window since that is the length of time since
the stock market registered its all-time high in late September. As you can see from this
chart, its average loss over these three-month periods was "just" 9.0%.
The Guardian is the best newspaper with 4,049,000 daily readers, they are owned by
non-profit foundation and they are free to write whatever they are pleased but their contents
is verified 100% so you are free not to like it but you have to accept it as a facts.
Given the many factors driving shares up or down on any day or week, it's hard to make sense of what's
happening on Wall Street.
Based on my many years of experience teaching and writing about
financial markets and frauds
, I
believe the best way to understand what's happening on Wall Street – and puncture its mystique – is to imagine it
as a used car dealership.
Stock markets 101
Stock exchanges are places where people trade ownership in corporations by buying and selling shares.
Partial ownership of a company comes with benefits, such as a cut of future profits and rising stock prices.
But there are risks and costs as well. Share price can fall, reducing the value of one's wealth; even worse,
businesses can go under, reducing the value of ownership to zero.
About half the population
owns at least some stocks, mostly in their 401(k)s. But, except for the richest 10 percent of Americans, stock
holdings are usually on the smaller side.
Stock exchanges play an important economic role by helping companies finance new investments. When a large
company wants to expand, it goes to an exchange like the NYSE and offers investors a stake in its business through
what is known as an initial public offering. That's exactly what ride-hailing services
Lyft and Uber plan to do
at some
point in 2019.
Everyone
at the New York Stock Exchange is trying to make sense of what's happening.
Reuters/Brendan McDermid
Selling used cars
However, this is not what stock trading is mainly about. Virtually all the
$80 trillion or so
in daily trading on the NYSE
and other exchanges around the world involves someone who already owns shares of a company selling them to
somebody else. In other words, it is very much like a used car dealership.
Used car dealers buy old automobiles and resell them. Similarly, stock markets are places where someone sells
their ownership in a company to a dealer, who then finds someone else to buy it. That is it. Ownership of a
company changes hands, with the exchange serving as the middleman.
These exchanges have benefits. They enable us sell things quickly. When I want to get rid of my car, it is more
convenient to have a used car dealer serve as an intermediary than for me to sell it myself. Because it is easy to
sell my car every few years, I may purchase a new one more frequently, which increases consumer spending and
strengthens the economy.
Selling lemons
But there are also negatives to stock markets.
As used car buyers know, it is
easy to end up with a
lemon
. Most people don't know the specifics of a particular used car. Its past and even its present condition
is often a total mystery.
And car dealers
have
incentives
to hide flaws in what they're selling – and thus deceive potential buyers. Revealing flaws in the
car will likely lose them sales and commissions.
Similarly, investors typically don't know much about a particular company. Such knowledge requires doing a lot
of homework about the company – its past history, its senior executives and its future plans – as well as knowing
how to read financial statements. This is much harder than homework on a specific car that you are thinking about
buying.
And just as car dealers can make a lemon look good for a test drive, companies can
cook their books
or drive up their stock
price to make themselves look good.
Furthermore, the stock market can help turn companies into lemons. Wall Street's focus on short-term stock
price gains means that it
cares more
about what will generate a quick buck rather than what will support long-term growth and
profitability. Consequently, companies end up focusing more on doing whatever drives up the value of its shares at
the expense of producing quality products efficiently, worker training and customer satisfaction.
In
the old days, there used to be a lot more paper on the floor of the NYSE.
AP Photo
Making sense of the slump
So what does this all mean for the current market slump?
One important lesson is that Wall Street is not the economy. If stocks go up or down, this doesn't mean that
the economy has necessarily improved or worsened. It only means that "pieces of paper" being bought and sold have
changed in value. Some people get richer, others poorer.
However, sharp stock market declines can have a real world impact, such as when a "bubble" collapses. That's
what happened in 2008 and what happened in October 1929, when a
stock market crash
caused by
a bursting bubble led to an 80 percent drop in stock prices. That market swoon helped spawn the Great Depression,
which saw an average of 15 percent unemployment for an entire decade, soup lines throughout the country and a 30
percent decline in economic activity and average incomes.
In other words,
when bubbles burst
, the economic damage can be substantial. People become poorer and spend less. Corporate
profits plummet, causing stocks to fall even further. People become skeptical of the stock market and won't lend
money to firms that want to expand their operations. A downward spiral can quickly deepen and become
self-reinforcing.
The bottom line: While you shouldn't panic about Wall Street's current woes, there are still reasons to pay
attention to the economy and stock market. And, most important of all, if you're an investor, do your homework and
steer clear of lemons.
The S&P crashed below its bear market level of 2352.7 - the lowest since April 2017 -
ending the longest bull market in history. This is the worst December for the S&P 500 since
The Great Depression
Volatility on Wall Street has led shares worldwide on a wild ride in recent months,
resulting in a number of stock markets dipping into bear territory -- typically defined as
20 percent or more off a recent peak.
That's set to worsen in the new year, experts told CNBC on Monday, pointing to risks
including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown.
"I think the worst is yet to come next year, we're still in the first half of a global
equity bear market with more to come next year," said Mark Jolley, global strategist at CCB
International Securities. Volatility on Wall Street has led shares worldwide on a wild ride
in recent months, resulting in a number of stock markets dipping into bear territory --
typically defined as 20 percent or more off a recent peak.
That's set to worsen in the new year, experts told CNBC on Monday, pointing to risks
including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown.
"I think the worst is yet to come next year, we're still in the first half of a global
equity bear market with more to come next year," said Mark Jolley, global strategist at CCB
International Securities.
A decade after the subprime bubble burst, a new one seems to be taking its place – a
phenomenon aptly characterized by Ricardo Caballero, Emmanuel Farhi, and Pierre-Olivier
Gourinchas as "
Financial 'Whac-a-Mole .'" A world economy geared toward increasing the supply of
financial assets has hooked us into a global game of waiting for the next bubble to
emerge somewhere.
Like the synchronous boom in residential housing prior to 2007 across several advanced
markets, CLOs have also gained in popularity in Europe. Higher investor appetite for European
CLOs has predictably led to a
surge in issuance (up almost 40% in 2018). Japanese banks, desperately seeking higher
yields, have swelled the ranks of buyers. The networks for financial contagion, should things
turn ugly, are already in place.
The artificial bull market is officially over, with the SPX officially entering bear market
today. BTFD is dead. Worst single day drop ahead of Christmas since 1918! As the first bear
market in years hits the most artificial stock market in history...
... ... ...
Trump is right, the Fed is the problem, but not for raising rates. Trump and
the MSM media are saying the Fed is making a policy mistake by raising rates as the economy
slows, and more importantly because the stock market is selling off. The current FF rate is
sitting between 2.25 and 2.5%, which historically is still low and accomodative. But Trump
should have stuck to his campaign version of the Fed, when he called out the Fed for the bubble
in stocks, and for keeping rates to low which led to what he called a "big fat ugly bubble."
After his election, he embraced the stock market, and now he owns it.
The Fed is the problem because they cut rates to Zero and held it there for 7 years. The Fed
is the problem for helping orchestrate the bailouts. The Fed is the problem because they did
multiple rounds of QE which did NOTHING for the middle class and the average Americans, instead
it made the rich richer and created the largest wealth inequality. The Fed is the problem
because they waited too long to begin raising rates, which helped create the largest asset
bubbles the world had ever seen.
And on CNBC, as the market has been selling off nonstop, they have the audacity to ask 'why
the relentless selling'?! As the market rallied 342% over the last 10 years, not once did they
ever ask why the relentless buying. Not once were they or anyone else worried about the
repercussions. They were cheerleading the entire time. Not once did anyone mention that the
Fed's reckless policies led to a dangerous rally in stocks and across multiple asset classes.
People thought the party would and could never end.
So as the market is only down -20%, today former Hollywood movie director turned Treasury
Secretary sent the markets into deeper selling as he made headlines for calling Bank CEO's and
consulting with the Plunge Protection Team (PPT) about the market conditions and liquidity. We
haven't even seen panic in the markets yet, and we are consulting bank ceo's and the PPT??? But
once again, the old conspiracy theory of the existence of the PPT became a fact.
Mnuchin confirmed their existence. Now all of a sudden we are seeing "recession fears"
headlines all over the place, but a few months ago when stocks were at records you never heard
the "r" word. Yet they love to say the stock market is not the economy. The longest artificial
bull market is officially over. Now we will see just how bad it will get. We are only down
-20%, and it is a long way down if this is only the start.
They herded folks into gambling ventures, while piling them high with alcohol (debt), just
like in Vegas. We're tempted to just give up, and let the chips fall wherever. Some folks
think recalibration comes without unpleasantness. Making America Great Again, requires
sacrifice, work, and determination but if folks would rather sacrifice their children to the
Moloch of a levitated market, perhaps we're interacting with the wrong people and ought just
quit.
It's depressing that folks claim they wanna go to heaven, but keep looking longingly at
hell...
I stayed out of this abomination of a market once I made the money back I lost in 2008.
Never again, I said to myself. The Fed herds people into stocks, houses, whatever they think
they can pump and dump. Why doesn't Trump shut them down?
If the goal of the OPEC+ cuts was to boost oil prices, then the deal is clearly failing.
OPEC+ is scrambling to figure out a way to rescue oil prices from another deep downturn. WTI is
now down into the mid-$40s and Brent into the mid-$50s, both a 15-month low. U.S. shale
continues to soar, even if shale producers themselves are now
facing financial trouble with prices so low. Oil traders are clearly skeptical that OPEC+
is either willing or capable of balancing the oil market.
OPEC+ thought they secured a strong deal in Vienna in early December, but more needs to be
done, it seems. OPEC's Secretary-General Mohammad Barkindo wrote a letter to the cartel's
members, arguing that they need to increase the cuts. Initially, the OPEC+ coalition suggested
that producers should lower output by 2.5 percent, but Barkindo said that the cuts need to be
more like 3 percent in order to reach the overall 1.2 million-barrel-per-day reduction.
More importantly, the group needs to detail how much each country should be producing. "In
the interests of openness and transparency, and to support market sentiment and confidence, it
is vital to make these production adjustments publicly available," Barkindo told members in the
letter, according to
Reuters . By specifying exactly how much each country will reduce, the thinking seems to
be, it will go a long way to assuaging market anxiety about the group's seriousness.
Still, the plunge in oil prices this month is evidence that traders are not convinced.
The view is "that the U.S. will continue to grow like gangbusters regardless of price and
overwhelm any OPEC action," Helima Croft, the chief commodities strategist at Canadian broker
RBC, told
the Wall Street Journal .
"Unless there is a real geopolitical blowup, it could take time for these cuts to really
shift sentiment."
While cuts from producers like Saudi Arabia will help take supply off of the market, OPEC
might help erase the surplus in another unintended way. Bloomberg
raises the possibility that low oil prices could increase turmoil in some OPEC member
states . The price meltdown between 2014 and 2016 led to, or at least exacerbated, outages in
Libya, Venezuela and Nigeria. The same could happen again.
Just about all OPEC members need much higher oil prices in order to balance their books.
Saudi Arabia
needs roughly $88 per barrel for its budget to breakeven. Libya needs $114. Nigeria needs
$127. Venezuela needs a whopping $216. Only Kuwait -- at $48 per barrel -- can balance its
books at prevailing prices. Brent is trading in the mid-$50s right now.
How unlikely did it seem (pre-Khashoggi) that the Syrian situation would take the turns
we're now starting to witness?
Totally under the radar during the holiday newscycle.....major news story!
▪Saudi Arabia Agrees to Finance Rebuilding of Syria - Trump▪
US President Donald Trump said in a statement on Monday that Saudi Arabia has agreed to
pay for the reconstruction of Syria rather than the United States financing the
reconstruction of that country.
>>> "Saudi Arabia has now agreed to spend the necessary money needed to help
rebuild Syria, instead of the United States. See? Isn't it nice when immensely wealthy
countries help rebuild their neighbors rather than a Great Country, the U.S., that is 5000
miles away. Thanks to Saudi A! " Trump said via Twitter.<<<
Trump has welcomed Riyadh's decision, adding that it is "nice when immensely wealthy
countries help rebuild their neighbors rather than a Great Country, the US, that is 5000
miles away."
The US president's comment comes after, on Wednesday, he announced that the United States
would withdraw its roughly 2,000 troops from Syria since the Daesh* terror group had been
defeated. However, the White House later clarified the decision does not mean the US-led
international coalition's fight against the Daesh has ended.
Democratic and Republican lawmakers in the US Congress who have supported US military
engagement and intervention throughout the world have criticized Trump's decision, saying
that a US troop withdrawal from Syria will lead to the reemergence of the Daesh and aid
Russia, Turkey and Iran fulfilling their interests in the region.
The longest and most ridiculous bull market. I once saw an epitaph on a tombstone that
read "I told you I was sick". I want mine to say "I told you to sell at Dow 26,000".
This wasn't a bull market, it was a levitated market.
In other news, we heard the Saudis have committed to help in rebuilding Syria and if true,
then we say to the Saudis, find redemption within your reach. And while we're at that, what
plans are in place for Yemen, the Kashoggi family, and the Saudi next generations, beyond
financial subsidies.
Concisely, what's the human development plan, devoid of white elephants, that cogently
integrates Saudi Arabia into the 21st century. A plan that can be coherently backed by the
globe, shorn of repression and terror cultivation?
Repentance, Restitution, and Recalibration, the three R's of a new leaf...
The Saudis wont do ****, they will send a few dozen Indians and maybe 100 Pakis (someone
has to manage the pakis you know). They will Spackle over the noticeable bullet holes, duct
take the plumbing back together and if they are lucky they may even free up a few Filipino
maids from slavery to clean the bathrooms that ISIS fucked up due to squatting on the seats
of the toilets and shooting the *** washer water all over the place.
Other than that, Saudis dont do **** all for themselves.
The market and RSI where overheated. Just correcting and cooling of RSI. Reading ZH would
make you believe the end of the world was here. Smart money been in cash since august.
They'll be buying these heavenly discounted companies soon. Especially oil equipment and
services who are now below 2008 lows.
You could be right? But I remember doing some DOW studies going back to DOW inception, and
it was always a very ominous signal when markets crashed in late December.
President Donald Trump has put a number of burning issues back on the agenda.
These include the widening income gap in the United States, the unintended and unexpected
consequences of outsourcing, and the disequilibrium created by signing trade agreements with
countries with different labor laws and environmental, health and safety standards.
In foreign policy, Trump has managed to pass on an important message: don't take
American heavy lifting for granted!
More importantly, Trump has persuaded millions of
Americans excluded or self-excluded from the political arena to end their isolation and demand a
meaningful place in collective decision-making.
Thus, for the time being at least, air-brushing Trump out of the picture is a
forlorn task.
(Image source: Ryan Johnson/City of North Charleston/Wikimedia Commons)
As the American political elite head for Christmas holidays,
the buzz in Washington
circles is that 2019 will start with fresh attempts at curtailing the Trump presidency or, failing
that, preventing Donald Trump's re-election in 2020.
Amateurs of the conspiracy theory may
suggest that the whole thing may be a trap set by the Trump camp to keep the president's opponents
chained to a strategy doomed to failure.
By devoting almost all of their energies to attacking Trump personally and praying that the
Mueller probe may open the way for impeachment,
the president's opponents, starting with
the Democrat Party leadership, have shut down debate about key issues of economic, social and
foreign policy -- issues that matter to the broader public.
Reducing all politics to a
simple "Get Trump!' slogan makes them a one-trick pony that may amuse people for a while but is
unlikely to go very far.
Despite sensational daily headlines furnished by the Mueller soap opera,
there is little
chance of the impeachment strategy to get anywhere close to success.
And even if the
pro-impeachment lobby succeeds in triggering the process, it is unlikely that this would lead to
Trump's removal from office. In fact, out of the 45 men who have served as President of the United
States only two, Andrew Jackson and Bill Clinton, faced formal impeachment procedures, but neither
was driven out of office.
Two others, Richard Nixon and John Tyler, came close to being impeached but managed not to face
the music in the end.
Nixon resigned and Tyler dodged by not seeking re-electi
on.
With impeachment unlikely, Trump's opponents may be looking for other ways of terminating his
tenure at the White House. One way is to exert so much psychological pressure that he decides to
regain his tranquility by resigning. However, apart from Nixon's special case, the resignation has
never been a feature of the American presidential history.
In any case, Trump looks like the last man on earth to opt for the humiliation of entering
history as a quitter.
A third way to get rid of Trump is to persuade the Republican Party
not to nominate him for a second term
. At first glance that may look like a credible
option if only because the main body of the Republican Party has never warmed up to Trump.
In fact, calling Trump a Republican president may be more of a verbal conceit than an accurate
depiction of reality. In the mid-term elections in November, some Republican senators and
congressmen insisted that Trump should stay away from their campaigns. Some who did lose their
seats may have regretted their decision, as Trump proved to be in command of his own support base
beyond the Republican Party.
The anti-Trump section of the US media is desperate to find at least one Republican
figure capable of challenging the incumbent president in the coming nomination contest. So far,
however, none
of the putative knights-in-shining-armor fielded by the anti-Trump media has
succeeded in making an impression.
In any event,
there are only five cases in which an incumbent president failed to win
re-nomination by his party
. Of these, four were men who had inherited the presidency after
the death of the president.
One was the already mentioned -- John Tyler, who became president in 1841 after the death of
President William Henry Harrison. Another was Millard Fillmore, who entered the White House after
the death of President Zachary Taylor.
The third on the list was the already mentioned Andrew Jackson, who not only failed to secure
re-nomination but also narrowly escaped impeachment. The fourth was Chester Arthur, who took over
after the assassination of President James Garfield. He was ditched when he launched an anti-graft
campaign that alienated many within his own party.
Only one sitting president who had won the first term failed to secure re-nomination by his
party. He was Franklin Pierce, whose demise came in exceptional circumstances created by the
division over the issue of slavery as the nation moved towards the War of Secession. Today, none of
those conditions obtains in the United States and the Republican Party, and the possibility of a
palace revolt against the incumbent seems remote.
Some of Trump's opponents publicly pray
that he might forswear a second term because of poor health. Although he has entered his
eight-decade, however, Trump shows no signs of physical fatigue let alone serious illness leading
to possible incapacitation.
During the mid-term elections, this septuagenarian was capable
of flying from one end of the continent to the other in a single day to address half a dozen public
meetings.
That political power may act as an aphrodisiac and doping agent has been known at least since
the time of the great Xerxes, whose only regret was that, in 100 years, none in his million-man
army would be alive. There is no doubt that Trump thrives on power and, despite the extra kilos he
has gained in the past two years, still sees himself as a long-distance runner.
The mistake
that Trump's opponents made from the start, and some still continue to make, is to underestimate
him and dismiss his appeal to wide segments of society as an aberration.
Trump has, however, managed to question the political agenda by
questioning the
so-called Washington Consensus that led to globalization with all its benefits and drawbacks.
In his unorthodox manner, Trump has put a number of burning issues back on the agenda.
These include the widening income gap in the United States, the unintended and unexpected
consequences of outsourcing, and the disequilibrium created by signing trade agreements with
countries with different labor laws and environmental, health and safety standards. In foreign
policy, Trump has managed to pass on an important message: don't take American heavy lifting for
granted!
More importantly, Trump has persuaded millions of Americans excluded or
self-excluded from the political arena to end their isolation and demand a meaningful place in
collective decision-making.
Thus, for the time being at least, air-brushing Trump out of
the picture is a forlorn task.
Tags
Politics
Since
I last wrote about the bipartisan shrieking, hysterical reaction to Trump's planned
military withdrawal from Syria the other day, it hasn't gotten better, it's gotten worse. I'm
having a hard time even picking out individual bits of the collective freakout from the
political/media class to point at, because doing so would diminish the frenetic white noise of
the paranoid, conspiratorial, fearmongering establishment reaction to the possibility of a few
thousands troops being pulled back from a territory they were illegally occupying .
Endless war and military expansionism has become so normalized in establishment thought that
even a slight scale-down is treated as something abnormal and shocking. The talking heads of
the corporate state media had been almost entirely ignoring the buildup of US troops in Syria
and the operations they've been carrying out there, but as soon as the possibility of those
troops leaving emerged, all the alarm bells started ringing. Endless war was considered so
normal that nobody ever talked about it, then Trump tweeted he's bringing the troops home, and
now every armchair liberal in America who had no idea what a Kurd was until five minutes ago is
suddenly an expert on Erdoğan and the YPG. Lindsey Graham, who has never met an
unaccountable US military occupation he didn't like, is now suddenly cheerleading for
congressional oversight: not for sending troops into wars, but for pulling them out.
"I would urge my colleagues in the Senate and the House, call people from the
administration and explain this policy," Graham recently told
reporters on Capitol Hill. "This is the role of the Congress, to make administrations
explain their policy, not in a tweet, but before Congress answering questions."
"It is imperative Congress hold hearings on withdrawal decision in Syria --
and potentially Afghanistan -- to understand implications to our
national security," Graham tweeted today .
In an even marginally sane world, the fact that a nation's armed forces are engaged in daily
military violence would be cause for shock and alarm, and pulling those forces out of that
situation would be viewed as a return to normalcy. Instead we are seeing the exact opposite. In
an even marginally sane world, congressional oversight would be required to send the US
military to invade countries and commit acts of war, because that act, not withdrawing them, is
what's abnormal. Instead we are seeing the exact opposite.
A hypothetical space alien observing our civilization for the first time would conclude that
we are insane, and that hypothetical space alien would be absolutely correct. Have some Reese's
Pieces, hypothetical space alien.
It is absolutely bat shit crazy that we feel normal about the most powerful military force
in the history of civilization running around the world invading and occupying and bombing and
killing, yet are made to feel weird about the possibility of any part of that ending . It is
absolutely bat shit crazy that endless war is normalized while the possibility of peace and
respecting national sovereignty to any extent is aggressively abnormalized. In a sane world the
exact opposite would be true, but in our world this self-evident fact has been obscured. In a
sane world anyone who tried to convince you that war is normal would be rejected and shunned,
but in our world those people make six million dollars a year reading from a teleprompter on
MSNBC.
How did this happen to us? How did we get so crazy and confused?
I sometimes hear the analogy of sleepwalking used; people are sleepwalking through life, so
they believe the things the TV tells them to believe, and this turns them into a bunch of
mindless zombies marching to the beat of CIA/CNN narratives and consenting to unlimited
military bloodbaths around the world. I don't think this is necessarily a useful way of
thinking about our situation and our fellow citizens. I think a much more useful way of looking
at our plight is to retrace our steps and think about how everyone got to where they're at as
individuals.
We come into this world screaming and clueless, and it doesn't generally get much better
from there. We look around and we see a bunch of grownups moving confidently around us, and
they sure look like they know what's going on. So we listen real attentively to what they're
telling us about our world and how it works, not realizing that they're just repeating the same
things grownups told them when they were little, and not realizing that if any of those
grownups were really honest with themselves they're just moving learned concepts around inside
a headspace that's just as clueless about life's big questions as the day it was born.
And that's just early childhood. Once you move out of that and start learning about
politics, philosophy, religion etc as you get bigger, you run into a whole bunch of clever
faces who've figured out how to use your cluelessness about life to their advantage. You
stumble toward adulthood without knowing what's going on, and then confident-sounding people
show up and say "Oh hey I know what's going on. Follow me." And before you know it you're
donating ten percent of your income to some church, addicted to drugs, in an abusive
relationship, building your life around ideas from old books which were promoted by dead kings
to the advantage of the powerful, or getting your information about the world from Fox
News.
For most people life is like stumbling around in a dark room you have no idea how you got
into, without even knowing what you're looking for. Then as you're reaching around in the
darkness your hand is grasped by someone else's hand, and it says in a confident-sounding
voice, "I know where to go. Come with me." The owner of the other hand doesn't know any more
about the room than you do really, they just know how to feign confidence. And it just so
happens that most of those hands in the darkness are actually leading you in the service of the
powerful.
That's all mainstream narratives are: hands reaching out in the darkness of a confusing
world, speaking in confident-sounding voices and guiding you in a direction which benefits the
powerful. The largest voices belong to the rich and the powerful, which means those are the
hands you're most likely to encounter when stumbling around in the darkness. You go to school
which is designed to indoctrinate you into mainstream narratives, you consume media which is
designed to do the same, and most people find themselves led from hand to hand in this way all
the way to the grave.
That's really all everyone's doing here, reaching out in the darkness of a confusing world
and trying to find our way to the truth. It's messy as hell and there are so many
confident-sounding voices calling out to us giving us false directions about where to go, and
lots of people get lost to the grabbing hands of power-serving narratives. But the more of us
who learn to see through the dominant narratives and discover the underlying truths, the more
hands there are to guide others away from the interests of the powerful and toward a sane
society. A society in which people abhor war and embrace peace, in which people collaborate
with each other and their environment, in which people overcome the challenges facing our
species and create a beautiful world together.
People aren't sleepwalking, they are being duped . Duped into insanity in a confusing,
abrasive world where it's hard enough just to get your legs underneath you and figure out which
way's up, let alone come to a conscious truth-based understanding of what's really going on in
the world. But the people doing the duping are having a hard time holding onto everyone's hand,
and
their grip is slipping . We'll find our way out of this dark room yet.
Has anyone noticed that Rachel Maddow with her sooo patronizing, sooo objectionally smug
manner, implying that anyone who likes Trump is laughably pathetic, well – she keeps on
doing this and oddly (and effectively) generates a lot of support for Trump and what he's
doing. Her absolutely foul manner is perfectly crafted to turn folks against her and what she
espouses. You go girl!
It seems to me that, objectively, there are about three basic reasons for Endless War in
the Middle East.
One, to insure the security of the Israeli state. Two, to insure the free flow of cheap ME
petroleum to our 'trading partners' around the world who burn it to make cheap **** and ship
it across sealanes kept open by the U.S. Navy to Walmart and Amazon for resale (on credit!)
to the sheeple. Three, to finance the multi-billion dollar arms-building American MIC.
Purposes One, Two and Three mutually reinforce each other. You don't have to agree with all
Purposes as long as you agree with one of them. Proponents of Purpose One find allies among
the proponents of Purposes Two and Three. And vice versa. And, in a 'virtuous' (or is it
vicious?) circle, all at the top get very rich. The ultra-wealthy supporters of Israel, the
globalists, the corporatists, the militarists and their financiers and media mouthpieces.
Essentially all the new money in the Billionaire Class.
And who is opposed to this little arrangement? A few libertarians, and realists, and some
historians? A few folks on 'conservative' (but not neocon) websites? A few deplorables who
are actually thinking about their own best interests? A few people morally offended by the
notion of living in an 'exceptional' country which sponsors deadly perpetual war? A few
people who think its crazy to go half way around the world to kill people engaged in a
conflict which is critical to their daily lives but theoretical to us? A few men and women
who have seen combat and know the bloody truth? A few people who would prefer to re-invest in
the United States and repair the damage done to this country over the last forty years?
When you think about it the deck is definitely stacked in favor of Endless War. And what
Trump did on Thursday is again rather extraordinary.
He has announced his order to withdraw US troops from Syria.
His Defense Secretary James Mattis has resigned. There are rumors National Security
Adviser John Bolton may go too. (Please take
Secretary of State Mike Pompeo with you!)
He announced a start to withdrawing from Afghanistan.
He now says he will veto a government funding bill unless he gets $5 billion for his
Wall, and as of 12:01 AM Washington time December 22 the federal government is officially
under partial shutdown.
All of this should be taken with a big grain of salt. While this week's assertiveness
perhaps provides further proof that Trump's impulses are right, it doesn't mean he can
implement them.
Senator Lindsey Graham is demanding
hearings on how to block the Syria pullout . Congress hardly ever quibbles with a
president's putting troops into a country, where the Legislative Branch has legitimate
Constitutional power. But if a president under his absolute command authority wants to pull
them out – even someplace where they're deployed illegally, as in Syria – well hold
on just a minute!
This will be a critical time for the Trump presidency. (And if God is really on his side, he
soon might get
another Supreme Court pick .) If he can get the machinery of the Executive Branch to
implement his decision to withdraw from Syria, and if he can pick a replacement to General
Mattis who actually agrees with Trump's views, we might start getting the America First policy
Trump ran on in 2016.
Mattis himself said in his resignation letter, "Because you have the right to have a
Secretary of Defense whose views are better aligned with yours on these [i.e., support for
so-called "allies"] and other subjects, I believe it is right for me to step down from my
position."
Right on, Mad Dog! In fact Trump should have had someone "better aligned" with him in that
capacity from the get-go. It is now imperative that he picks someone who agrees with his core
positions, starting with withdrawal from Syria and Afghanistan, and reducing confrontation with
Russia.
Former Defense Secretary
Chuck Hagel complains that "our government is not a one-man show." Well, the "government"
isn't, but the Executive Branch is. Article II,
Section 1 : "The executive Power shall be vested in a President of the United States of
America." Him. The President. Nobody else. Period.
Already the drumbeat to saddle Trump with another Swamp critter at the Pentagon is starting:
"Several possible replacements for Mattis this week trashed the president's decision to pull
out of Syria. Retired Gen. Jack Keane called the move a "strategic mistake" on Twitter.
Republican Sens. Lindsey O. Graham (R-S.C.) and Tom Cotton (R-Ark.) signed a letter demanding
Trump reconsider the decision and warning that the withdrawal bolsters Iran and Russia." If
Trump even considers any of the above as Mattis's replacement, he'll be in worse shape than he
has been for the past two years.
On the other hand, if Trump does pick someone who agrees with him about Syria and
Afghanistan, never mind
getting along with Russia , can he get that person confirmed by the Senate? One possibility
would be to nominate someone like Acting White House Chief of Staff Mick Mulvaney specifically
to run the Pentagon bureaucracy and get control of costs, while explicitly deferring
operational decisions to the Commander in Chief in consultation with the Service Chiefs.
Right now on Syria Trump is facing pushback from virtually the whole Deep State
establishment, Republicans and Democrats alike, as well as the media from Fox News , to NPR ,
to MSNBC . Terror has again gripped the establishment that the Trump who was elected president
in 2016 might actually start implementing what he promised. It is imperative that he pick
someone for the Pentagon (and frankly, clear out the rest of his national security team) and
appoint people he can trust and whose views comport with his own. Just lopping off a few heads
won't suffice – he needs a full housecleaning.
In the meantime in Syria, watch for another "Assad poison gas attack against his own
people." The last time Trump said we'd be
leaving Syria "very soon " was on March 29 of this year. Barely a week later, on April 7,
came a supposed chemical incident in Douma, immediately hyped as a government attack on
civilians
but soon apparent as likely staged . Trump, though, dutifully took the bait, tweeting that
Assad was an "animal." Putin, Russia, and Iran were "responsible" for "many dead, including
women and children, in mindless CHEMICAL attack" – "Big price to pay." He then for the
second time launched cruise missiles against Syrian targets. A
confrontation loomed in the eastern Med that could to have led to war with Russia. Now, in
light of Trump's restated determination to get out,
is MI6 already ginning up their White Helmet assets for a repeat ?
Trump's claim that the US has completed its only mission, to defeat ISIS, is being compared
to George W. Bush's "Mission Accomplished" banner following defeat of Iraq's army and the
beginning of the occupation (and, as it turned out, the beginning of the real war). But if it
helps get us out, who cares if Trump wants to take credit? Whatever his
terrible, horrible, no good, very bad national security team told him, the US presence in
Syria was never about ISIS. We are there as Uncle Sam's Rent-an-Army for the Israelis and
Saudis to block Iranian influence and especially an overland route between Syria and Iran (the
so-called
"Shiite land bridge" to the Mediterranean ).
For US forces the war against ISIS was always a sideshow, mainly carried on by the Syrians
and Russians and proportioned about like the war against the Wehrmacht: about 20% "us," about
80% "them." The remaining pocket ISIS has
on the Syria-Iraq border has been deliberate ly left alone, to keep handy as a lever to
force Assad out in a settlement (which is not going to happen). Thus the claim an American
pullout will
lead to an ISIS "resurgence " is absurd. With US forces ceasing to play dog in the manger,
the Syrians, Russians, Iranians, and Iraqis will kill them. All of them.
If Trump is able to follow through with the pullout, will the Syrian war wind down? It needs
to be kept in mind that the whole conflict has been because we (the US, plus Israel, Saudi
Arabia, Qatar, Turkey, UAE, the United Kingdom, etc) are the aggressors. We sought to use
al-Qaeda and other jihadis to effect regime change via the tried and true method. It
failed.
Regarding Trump's critics' claim that he is turning over Syria to the Russians and Iranians,
Assad is nobody's puppet. He can be allied with a Shiite theocracy but not controlled by it;
Iran, likewise, can also have mutually beneficial ties with an ideologically dissimilar
country, like it does with Christian Armenia. The Russians will stay and expand their presence
but unlike our presence in many countries – which seemingly never ends, for example in
Germany, Japan, and Korea, not to mention Kosovo – they'll be there only as long and to
the extent the Syrians want them. (Compare our eternal occupations with the Soviets' politely
leaving Egypt when Anwar Sadat asked them, or leaving Somalia when Siad Barre wanted them out.
Instead of leaving, why didn't Moscow just do a " Diem " on them?) It
seems that American policymakers have gotten so far down the wormhole of their paranoid
fantasies about the rest of the world – and it can't be overemphasized, concerning areas
where the US has no actual national interests – that we no longer recognize classic
statecraft when practiced by other powers defending genuine national interests (which of course
are legitimate only to the extent we say so).
Anyway, if this week's developments are the result of someone putting something into
Donald's morning Egg
McMuffin , America and the world owe him (or her) a vote of thanks. Let's see more of
the wrecking ball we Deplorables voted for !
Trump thought that by bringing the swamp into his fold he might be able to defang it. He
bent the knee, played nice and kissed the ring but still they kept at him. I think Trump has
had enough of giving a mile for getting an inch. I like Trump when he presents himself as a
human wrecking ball to all the evil plans of the Washington establishment and if he continues
like this I honestly believe he will be reelected in 2020, and one day will be acknowleged as
a true chapion for every day Americans but if he shrinks back into his shadow and gives the
likes of Bolton and Pompeo free reign to **** all over the globe with their insane scheming
he will be a one term failure.
Don't get too excited about the possibility that there may be more kinds of viagra to try
out, Jattras. If Trump recently seems to be more like the candidate we voted for, the real
reason for his reversion back is because the midterm elections are over and Trump kept the
Senate.
Check with me before you start making a lot of crack-pot statements
It was over two years ago that Wells Fargo's fake accounts scandal burst into the headlines, and since then, there has been an
unrelenting torrent of bad news. In late October, the American Banker
reported
that two executives were placed on leave after they received notifications of pending sanctions from the Office of the Comptroller
of the Currency. In November, Federal Reserve chairman Jerome Powell sent a
letter
to Senator Elizabeth Warren saying the Fed will not lift a cap on Wells's growth until the bank addresses deficiencies in oversight
and risk management. "The underlying problem at the firm was a strategy that prioritized growth without ensuring that risks were
managed, and as a result the firm harmed many of its customers," Powell wrote.
In early November, Jay Welker, who was the head of the private bank, which sits within the bank's wealth management business,
retired . Under Welker,
the private bank
pushed wealth advisors to vigorously sell
high-fee products . There may be more bad news about this aspect of the embattled bank. The Justice Department, the SEC, the
Labor Department, and Wells Fargo's own board are conducting ongoing investigations into its wealth management business that have
yet to be resolved.
There's still one aspect of how the wealth management business pushed for growth that former Wells Fargo employees say hasn't
gotten the scrutiny it should. For four years, starting in 2012 and through the end of 2015, Wells incentivized some of its advisors
in that business through something called the "Growth Award." Some former employees say these awards led to behavior that was not
in the best interest of clients, including steering them towards higher-fee products. The Growth Award was much discussed internally,
says a former investment strategist at Wells, although not everyone was privy to the details of how it worked.
Last summer, the Wall Street Journal
reported
the existence of the growth award, but not the details of how the money worked. Essentially, the growth award was a way of motivating
advisors to grow their businesses. In and of itself, that isn't unusual. The industry has for years offered successful brokers incentives,
often in the form of elaborate trips to exotic locales.The SEC is
weighing new rules that may curtail the use of such rewards under the theory that they could make brokers "predominantly motivated"
by "self enrichment." Firms have also long used rich packages to lure successful brokers to move their business.
But firms are cutting back on the use of such packages, according to industry insiders. When told about the details of the growth
award, three financial advisors at other firms with whom Yahoo Finance spoke expressed shock at both the sheer size and the way it
incentivized advisors for short-term growth, rather than long-term business building. (Another advisor thought that in the context
of the packages that were used to incentivize brokers to switch, it wasn't so surprising.) Or as former Wells Fargo executive, who
was in the retail brokerage industry for decades, says, "If a free golf outing is bad business, then the Growth Award is bad business
on steroids."
In a statement to Yahoo Finance, spokesperson Shea Leordeanu said, "At Wells Fargo Wealth and Investment Management, we are committed
to taking care of our clients' financial needs every day and take seriously our responsibility to help them preserve and invest their
hard-earned savings. Our primary goal is to be a trusted advisor to our clients and to act in their best interests. And we have supervisory
processes and controls in place so that, if a team member acts in a manner not in line with our values and our policies, we take
appropriate action."
An enormous, compounding bonus for bringing revenue to Wells Fargo
The Growth Award wasn't available to the entire army of some 14,000 advisors, who make up the broad group of Wells Fargo Advisors.
(Many others, most prominently those who came with the 2008 Wachovia merger, had different compensation plans with lock-ups that
are just now expiring, leading to something of an
exodus , according to press reports.) This Growth Award, on the other hand, was meant for the 3,000 or so advisors who were part
of something known as Wealth Brokerage Services, or WBS. These advisors are located in the bank branches, or in hubs -- Wells Fargo
buildings in cities -- that housed wealth management personnel among others like business bankers. (Wells Fargo subsequently
announced a reorganization
that is expected to combine what were separate groups of advisors.) To be eligible, you couldn't be a newbie -- you needed a two
year minimum at the bank -- and you had to be doing more than $350,000 in annual revenue. The former executive and another advisor
estimate that narrowed the group down to about 2,000 people.
The amounts people stood to make were extraordinary. Here's how the math worked. The goal was for an individual financial advisor
to increase his or her revenue by at least 15% for each of the four years that the Growth Award was in place. The award multiplied
each year the goal was achieved. So if you achieved 15% growth in the first year, you received a 15% bonus. If you achieved 15% growth
again in the second year, you received a 30% bonus. If you achieved 15% growth in the third year, you received a 45% bonus. Finally,
if you achieved 15% growth again in the 4th year, you received a whopping 60% bonus.
If you didn't achieve the goal, you were not penalized, but you didn't receive the bonus.
To get specific about just what these percentages could mean, say you generated $1 million in revenue in 2011, and you achieved
precisely 15% growth each year for the next 4 years. In year one, your revenue would be $1,150,000, and your bonus, at 15% of that,
would be $172,500. The new 2013 goal would be $1,322,500 (a 15% increase from the $1,150,000.). If you hit that goal, your Growth
Award bonus for 2013 would be $396,393. And so on. If you hit the goals for 2014 and 2015, you stood to make a bonus of $684,393
and $1,049,403, respectively. That means you stood to make $2.3 million in total Growth Award bonuses. In other words, the financial
incentives to hit the numbers were enormous.
Perhaps for the very reason the incentives were so enormous, more advisors hit the numbers than Wells had expected. (Of course,
there was also a strong bull market during that period.) The Journal reported that Wells had allotted $250 million for the Growth
Award bonuses. Instead, Wells had to pay $750 million between 2012 and 2015. "It's widely known inside Wells that they were so way
over budget," says another former advisor. "I personally know brokers who were awarded bonuses of over $2 million, which is a stunning
amount of money," says a former investment advisor.
Roughly two-thirds of the 2,000 or so eligible advisors earned an award.
"When you throw that kind of money out, it incentivizes."
Now consider the Growth Award from the perspective of a client, who might wander into a bank branch, maybe having gotten an unexpected
inheritance. "You have to connect the dots," the former executive says. "This is where the sales pressure in the bank branches meets
the wealth and investment management business."
The staff of the branch was incentivized to steer clients to a Wells financial advisor, because investment management referrals
helped them meet their sales goals, and that advisor, in turn had incentives -- really big incentives -- to steer the clients toward
products that generate upfront revenue. "If you don't have a high moral background, it'll put you in a position to do things for
clients that aren't in their best interest," says a former advisor. "I'm always looking at what's best for the client but it's also
what's best for my paycheck." "You are absolutely incentivizing advisors to sell the products with the highest upfront fees," says
the former executive.
"Yeah, when you throw that kind of money out, it incentivizes," says another former advisor. "Jesus would probably be okay. But
the disciples probably would have had some morals put to the test on that one."
Multiple sources say the Growth Award helps explain why annuity sales at Wells Fargo were so high, especially after the bank tried
to tamp down on the amount the Award was going to cost them. In 2014, Wells Fargo decided to stop "fee fronting," which allowed advisors
to count fees that would be paid in subsequent years toward their annual tally. So advisors began to search for products with high
initial fees, one former advisor said.
Annuities come with high upfront revenues for the broker, making them an obvious choice for someone who is trying to hit a revenue
target -- but maybe not the optimal choice for the client. "You think Wells Fargo's Bankers Are Bad? Take a Look at its Brokers,"
was the headline of an October 2016 piece in thestreet.com. The piece
noted that Wells had argued to the Securities and Exchange Commission that it should not be subject to rules to put its investors
first in cases where its advisors were making referrals for products including annuities, and that in 2015, Wells was number one
in the country for annuity sales.
"It's pretty stunning that a firm that has just half the assets of its larger competitors sells more annuities," says a former
advisor. "I think that just speaks to the emphasis on making sales numbers and a need to sell more of the highest payout products."
Indeed, the Journal reported and several former advisors corroborate that internally, 2015 was dubbed "The Year of the Annuity."
It wasn't just annuities. One former advisor also noted that advisors trying to chase the growth award also favored mutual funds
with high upfront fees. "You'd think if revenue was going up by 15% a year, your AUM would at least go up at least 12% or 13%," a
former advisor said. "That was not the case. The award was only revenue based -- there was nothing in there for AUM, longevity, or
anything like that. Strictly show us the money and we'll show you the money."
All the fees were disclosed to Wells Fargo's clients. But what clients didn't know was the incentive structure that was in place
for their advisor. So yes, clients understood the fees -- but they were in the dark as to at least part of the reason one product
might have been recommended over another. "Imagine that it's November," says the former executive. "You have to do $250,000 in revenue,
or you going to leave a million dollars on the table. What are you doing to do?" He continues, "Every client of WBS has to go back
and look at every trade, every single decision, from 2012 to 2015 and scrutinize whether it was impacted by the Growth Award." "I
think if clients and the public knew that Wells Fargo Advisors had given such substantial and amazing well-timed retention bonuses
to lock up their advisors, they would begin to wonder whether their advisors were giving the best advice to their clients," says
another former investment strategist.
There could be another problem, too. "If you achieved the goal early, you would stop doing business so you didn't have the higher
base to start from in the next year," says the former executive. "You'd sand bag -- and that might not be in the client's best interest
either."
A golden handcuff at a very good time for Wells Fargo
The Growth Award may also help explain why Wells has been able to retain as many advisors as it has, despite the ongoing scandals.
Six months before the end of the Growth Award program, midway through 2015, Wells Fargo asked those advisors who had qualified for
the award how they would like to receive their pay. There were two options. The first option essentially allowed the advisor to unlock
all the money at the end of February 2021. If the advisor left before that, the money was forfeited. A third of the advisors who
earned awards chose this option.
The other option paid out a tenth of the bonus each year for 10 years. If the advisor so chose, they could get that money up front
as a forgivable loan. Every year the advisor remained at Wells Fargo, he or she would simply pay the interest on their bonus, and
a tenth of the principle would be forgiven. But if the advisor left, he or she had to pay back the unforgiven principle. (Or if the
advisor hadn't taken the forgivable loan, the annual checks would stop.) Two-thirds of advisors opted for this route.
The Growth Award also had the potential to create another problem for advisors. The nice thing about building a fee-based business
is that it's an annuity for the advisor. Every year, there's a fee. If, on the other hand, the advisors put clients' money into things
that generate a one-time pop of revenue, the advisor doesn't get the same type of ongoing fees. So, the former executive says, some
advisors are in a hole, where they owe taxes on the Growth Award, while their income has shrunk dramatically. "I know guys who got
it who built or bought a huge house and are now stuck," he says.
The golden handcuff of the Growth Award has been good for the bank in the face of all of the scandals. One advisor told Yahoo
Finance that the growth in the number of clients also shrank dramatically amid the unrelenting negative news.
"I went from around 30 referrals to two in six months after the scandal hit," this person said. What had been a solid stream of
clients slowed to a trickle. But the only out for advisors would have been to have another firm hire them away and pay off their
loan.
Perhaps the most interesting thing about the Growth Award is how deliberate it was. "It was not a computer glitch or an oversight,"
as the former executive says. "It was not perpetrated by a few rogue employees. The Growth Award was conceived by the Compensation
Committee. The Compensation Committee is the most senior of senior management. The goal was to drive growth and drive growth it did."
But perhaps at a price for clients -- making the Growth Award, in its way, the most telling evidence yet of the cultural issues within
Wells Fargo.
President Donald Trump is planning on using his executive powers to cut food stamps for more
than 700,000 Americans.
The United States Department of Agriculture is proposing that states should only be allowed
to waive a current food stamps requirement -- namely, that adults without dependents must work
or participate in a job-training program for at least 20 hours each week if they wish to
collect food stamps for more than three months in a three-year period -- on the condition that
those adults live in areas where unemployment is above 7 percent,
according to The Washington Post . Currently the USDA regulations permit states to waive
that requirement if an adult lives in an area where the unemployment rate is at least 20
percent greater than the national rate. In effect, this means that roughly 755,000 Americans
would potentially lose their waivers that permit them to receive food stamps.
The current unemployment rate is 3.7 percent.
The Trump administration's decision to impose the stricter food stamp requirements through
executive action constitutes an end-run around the legislative process. Although Trump is
expected to sign an $870 billion farm bill later this week -- and because food stamps goes
through the Agriculture Department, it contains food stamp provisions -- the measure does not
include House stipulations restricting the waiver program and imposing new requirements on
parents with children between the ages of six and 12. The Senate version ultimately removed
those provisions, meaning that the version being signed into law does not impose a conservative
policy on food stamps, which right-wing members of Congress were hoping for.
"Congress writes laws, and the administration is required to write rules based on the law,"
Sen. Debbie Stabenow, D-Mich., told The New York Times (Stabenow is the top Democrat on the
Senate's agriculture committee). "Administrative changes should not be driven by ideology. I do
not support unilateral and unjustified changes that would take food away from families."
Matthew Rozsa is a breaking news writer for Salon. He holds an MA in History from
Rutgers University-Newark and is ABD in his PhD program in History at Lehigh University. His
work has appeared in Mic, Quartz and MSNBC.
Wow the only difference in the last one is that the FED or any central bank in the world
right now, doesn't have any ammunition left to kick start the economy back with cheap money.
Quite worrying.
Overall, oil prices will continue to "be difficult to predict," said Youngberg. "2019
will be volatile just as 2018 was."
Even so, he still offered some predictions for next year. He sees WTI prices averaging
$60 a barrel and global benchmark Brent averaging $66 in 2019. That would mark increases of
roughly 30% for WTI and 20% for Brent from Thursday's levels.
US stocks are decreasing at a slow time of year at about 2% a month. US will have minimal
growth in 2019, in all likelihood at current or even at $60 due the current low price. OPEC
plus is up to about a 1.5 million cut, so even at zero growth inventories will go away. So,
an equilibrium is assured damn, I ran out of fingers and toes,
I hope that is right.
Know it's not fair to ask with the recent price drop, but considering $46 a barrel price,
which shale play is going to contribute to a 600k barrel increase next year
By my logic, prices should be substantially higher, already. But, there is NO current
discussion which I believes touches on reality. Oil companies have to feel the same way.
Hence, my expectation of reduced capex through the first half. But, that's using logic over
future actions, which is a losing proposition. Oil prices will be volatile, and discussions
over supply/demand will be far from reality. That's a pretty good guess.
x Ignored says: 12/18/2018 at 10:56
pm So what are people going to say if the price goes low $40s, production increases and
companies post losses? And then the next year exactly the same thing happens. And the next.
Reply
Yes I don't believe chapter 11 bankruptcies stopped much production in 2016, will have to
wait and see if higher rates and a weaker junk bond market do anything
Look at the EIA field crude production page, which I assume for 2015, 2016 and 2017 is now
fairly accurate.
Production dropped more than 1.1 million BOPD from the 2015 peak.
The Permian frenzy appears to have been the primary driver of growth since, with US
production up 3 million BOPD from 9/15-9/18.
The price unfortunately needs to drop another $10 or so and stay there for awhile, as many
are hedged on a percentage of barrels in the Permian and I assume there is still quite a bit
of acreage that is not HBP.
I wound up owning FANG when it bought EGN. It is down $48 pretty quickly, and has been
considered one of the best independents in the Permian. I have heard claims they are
profitable in the $20s so I guess maybe we will find out.
The algos have been in charge of the oil market for awhile. Wouldn't surprise me if we
challenge 2016 low, if for no other reason than short to medium term oil prices near little
relation to the physical market.
When they're profitable in the 20s, they should have now tons of cash and dividends. At the
60$ WTI they should have made much more than 50% earning from total revenue, and should be
able to finance whole 2019 drilling program from cash they already earned.
Economic downturn . Perhaps the largest pricing risk, and one of the hardest to
predict, is the possibility of an economic
downturn . The global economy has already thrown up some red flags, with slowing growth in
China, contracting GDP in parts of Europe, currency crises in emerging markets and financial
volatility around the world. The tightening of interest rates looms large in many of these
problems. "Alarm bells are starting to ring. Demand growth has been a pillar of strength for
the oil market since prices fell and has exceeded 1 million b/d every year since 2012,"
WoodMac's Simon Flowers wrote. "We forecast 1.1 million b/d in 2019, but the trend is at risk."
The U.S.-China trade war could still drag down the global economy, but financial indicators are
already flashing warning signs.
Looks like a lot of bubbles bursting. Not likely to bounce back, so not much financing
available to float pure Permian players. Doesn't look good for any increase in production.
Oil prices will probably stay low with Dow for awhile. Until inventories get closer to zero.
Madness.
Interesting article from Goehring investment bank. They estimate that KSA remaining reserves
are around 50 billion bbls, instead of the 260 b claimed. They also (surprise) think that was
the reason the Aramco IPO was pulled. I also thought the Aramco IPO would never happen
because they would not be able to buy an acceptable reserve report.
Interesting, they are probably right.
I knew Aramco would pull out of the IPO. They are one of the most secretive companies. How
you going to float on the NYSE or London SE with no transparency, which is required by
law.
50 billion sounds about right in my worthless opinion. Interestingly enough that would be
more or less close to the Permian basin reserves.
I think peak oil will arrive without many people noticing until after it has occurred.
A few more thoughts about the referenced Goering report.
First, the basis or their report: "We have good data going up to 2008, however after that
point data becomes difficult to find."
Does anyone else have good data on Ghawar production through 2008. Actual Saudi production
data is hard to come by, and I would like to see a table of Ghawar production through 2008 if
it is out there.
Based on their 2008 data they have included a Hubbert Linearization which is the basis for
their claim.
Second, if their production data and linearization are correct, they have not been
adjusted for improved results from better technology. I believe the multi lateral super wells
Saleri described in his 2005 SPE paper have allowed KSA to recover several percent of
additional original oil in place, as well as to maintain high production rates longer.
Third is that it appears many of those super wells were drilled beginning in mid 2000's.
It would make sense that the change in Saudi attitudes regarding production restraint between
2014 and now could be due to those multilateral wells watering out.
Coffee. I hope if you have been investing in the Appalachian gas players that you have been
short.
The only investment class in oil and gas that may be worse over the past ten years would
be the service sector, particularly the drillers.
Interesting that, despite all the activity, the US onshore drillers are becoming penny
stocks. I have pointed out Nabors. The rest are all tanking bad it appears.
You made a big deal out of a very long lateral operated by Eclipse Resources. Eclipse
equity closed at 76 cents a share.
I am not so sure that ultra cheap oil and gas is such a great thing for the US, given we
are now the world's largest producer of both.
I never have, nor will I ever in the future, take any financial stake in these or any
other companies.
As I have stated numerous times over the years, my primary interest is in operations who
is doing what, how it is being done, who is doing it better – or claims to be.
My initial interest in this site way back when was to learn why some people seemed to
think this so called Shale Revolution was No Big Deal a retirement party, in the words of
Berman.
It was quickly apparent to me that a great deal of unawareness vis a vis industry
developments permeated this site's participants.
This, alongside several predisposing factors to NOT want the shale production to explode
upwards provided fertile grounds for the soon 12 to 16 million barrels per day US oil
production, along with 100+ Bcfd gas production to be a spectaculsrly unforseen reality.
What I prefer or not prefer is secondary to what I believe to be occurring, shallow.
If anyone cares to spend 3 minutes reading the April, 2017 USGS press release accompanying
the Haynesville/Bossier assessment, they will read the following from Walter Guidroz, Program
Coordinator of the USGS Energy Resources Program
"As the USGS revisits many of the oil and gas basins of the US, we continually find that
technological revolutions of the past few years have truly been a game changer in the amount
of resources that are now technically recoverable".
Addendum Eclipse is being shut down/folded into another entity.
The lead engineer behind their ultra long laterals is now working with the new outfit from
which this technology will continue to spread.
No offense meant coffee. I know some who post here like to tangle with you. I am not
interested in that, just straightforward discussion.
Shale has surprised the heck out of me, and has made me several times strongly consider
liquidating my entire investment in oil and gas, absent maybe keeping just a couple of KSA
like cheap (to quote PXD CEO) LOE wells to fool around with. Had I known in 2012-13 that this
was coming, would have sold all but those few "piddle around with wells." It has been
absolutely no fun when these price crashes occur, and is especially no fun knowing that this
shale miracle is less profitable than an operation producing less than one bopd per well from
very, very old and tired wells.
You have to admit that the way the shale is being developed is destroying the oil and gas
industries that are developing it.
Particularly hard hit are the service companies, many which are already bankrupt.
Even XOM, which I have owned for many, many years (prior to the merger, I owned both Exxon
and Mobil) has hit the skids, having fallen through the $70 per share barrier.
Range Resources is at $10.26, a level not seen since 2004. It traded as high as $90 before
the 2014 crash.
EQT was over $100. Today $18.55
Whiting was nearly $400 (accounting for a reverse split) and now is $21.98
CHK closed at $1.84. All time high was $64.
Nabors Industries, the largest onshore US driller closed at $2.09. Traded at split
adjusted $10 in 1978.
Halcon Resources Corp. was over $3,000 split adjusted at one time, went Ch 11 BK, now at
$1.65, looking not so good re: BK again.
We shall soon see who can access what in the way of capital to keep going assuming oil
prices stay below $50 WTI for a considerable time.
I guess I am always concerned about whether businesses make money. Seems to me that would
be of some importance to you, but it isn't, and I suppose there is no harm in that.
I have yet to work anywhere where making money was not the primary motivation.
If the money wasn't important, the shale executives would not make so much of it, I
suppose.
I have always had a hard time understanding why they kept drilling wells in Appalachia
when the gas was selling for 50 cents per mcf. Not important to you, but maybe to others.
Anyway, if we didn't have different views, places like this wouldn't be very
interesting.
For the past year I have concluded that the market was vulnerable to a number of factors and
was likely making an important top and likely setting up for a Bear Market:
Global economic growth was becoming more ambiguous and the fragility of worldwide growth
would be shortly exposed
An avalanche of debt would serve as a governor to growth
Corporate profit expectations for 2018-20 were too elevated
The pivot to monetary restraint by the Federal Reserve (taking the punch bowl away) would
be market unfriendly
With less liquidity would come a new regime of volatility
The risks of fiscal and monetary policy mistakes were growing
The behavior of the President and hastily crafted policy (e.g. the U.S. retreat from
Syria) would make economic uncertainty and market volatility great again (#muvga)
The reduction in the corporate tax rate has failed to deliver the growth expected to
reduce the burgeoning deficit – the benefit has trickled up and not down
Market structure represented a potential market threat that was being underestimated
Investors, participating in The Bull Market of Complacency, were ignoring the risks of a
large market drawdown
I concluded that the notion of T.I.N.A ("there is no alternative) was no longer applicable
and that rising short term interest rates made the compelling case for C.I.T.A. ("cash is the
alternative"):
Chart Courtesy of Charlie Bilello of Pension Partners
Out of 15 major asset classes ranging from stocks to bonds to REITs to Gold and Commodities,
only one is higher in 2018: Cash.
After the markets responded quite vigorously to the corporate tax reduction and cash
repatriation bills in January, markets swiftly moved higher – making a top near month
end. Consolidation and a multi-month period of choppiness followed but the markets made a new
high by mid-September at about 2920.
The toxic cocktail of the above factors have contributed to a more than 400 handle drop
(-13%) in the S&P Index to 2500 currently – below my (short term) expected trading
range of 2550-2700.
Back in early July I presented this suite of projections for the S&P Index – which
proved reasonably prescient, and to the penny we have just hit my six month projection of
S&P 2500 (!):
By the Numbers
As SPYDERS moved towards $273 yesterday afternoon -- on a full day spike in the S&P
Index of over 20 handles -- I moved back to market neutral.
Should the S&P Index climb back to 2,750-2,750 (my very short term prognostication), I
will move back again to a net short exposure, as downside risk expands over upside
reward.
My gross and net exposures remain light in a background of uncertainty (e.g., current
trade battle with China) and in the new regime of volatility. Quite frankly, I am playing
things "tight" in light of these factors -- and in consideration that I have had a very good
year thus far.
Again, my expectations below should be viewed not with precision, but rather as a
guideline to overall strategy:
Very Short Term (in the next five trading days)
–Higher, but not materially so. 2,750-2,775 seems a reasonable guesstimate.
–I plan to scale into a net short position on strength, but I will give the market a
wider berth today and into the first few days of the second half (inflows expected).
Short Term (in the next two months)
–Lower, but not materially so.
–I expect a series of tests of the S&P level 2,675-2,710.
Intermediate Term (in the next six months)
–Lower, a break towards "fair market value" of about 2,500 is my expectation.
More Lessons Learned
"When we ask for advice we are looking for an accomplice." – Saul Bellow
The investment mosaic is complex and Mr. Market is often unpredictable.
There is no quick answer or special sauce to capture the holy grail of investment results
– it takes hard work, common sense and the ability to navigate the noise.
The common thread of these naked swimmers are self confidence, smugness and the failure to
memorialize their investment returns (because the typically are so inconsistent and
dreadful).
They are bad and deceptive actors who are in denial to themselves and are artful and
accountable dodgers to the investing masses.
"In my next life I want to live my life backwards." – Woody Allen
Take Woody Allen's advice (above) – be forewarned and learn from history as common
sense is not so common as:
"A nickel ain't worth a dime anymore."– Yogi Berra
I have spent a lot of time over the last few months exposing the bad actors who, we learned,
were swimming naked this year; as the market's tide went out .
I did so, not because of any hatred but because I saw this also in 2008-09 and we should
finally be learning from history so that we don't call on those same resources in the
futures.
Where Do We Go From Here?
"I'll just conclude by saying most of the issues we are dealing with today are induced by
bad political choices."– Fred Smith, CEO Of Fed Express (
conference call )
Over the last year I have consistently written that "fair market value" (based on a
multi-factor analysis) for the S&P Index was between 2400-2500 – well below the
expectations of every major Wall Street strategist. I posited that 2018 would be the first year
(in many) in which the revaluation of price earnings ratios would be headed lower. (Multiples
are down by nearly 20% this year).
The major indices have had the worst month of December since the Great Depression –
declining by about -9%. Though many pin the loss (especially yesterday's) on the Federal
Reserve's actions and communications, the recent market drawdown is a function of the reality
of the headwinds I listed at the beginning of this morning's missive (that most have
dismissed).
We are now at 2500 (down from 2920 three months ago) – which means the market is at
the upper end of being fairly valued for the first time all year. It also means that an
expanding list of stocks are now attractive if my recession expectations prove unfounded.
Expanding problems facing the White House and policy blunders (underestimated by investors
– see FedEx quote above), reduced domestic economic expectations and a continuation of
Fed tightening (and balance sheet drawdowns) have contributed to the latest market swoon. That
drawdown has occurred in a backdrop of rising fear and some extreme sentiment readings –
abetted by a changing market structure in which passive products and strategies "buy high and
sell low."
As posited this week I believe we are now going to have a playable year end rally from here
but as we move into the New Year things get more problematic.
"Though the third year of a Presidential cycle is usually bullish – it's different
this time.
Trump confusing brains with a bull market can't fathom the emerging Bear Market. At first
he blames it on Steve Mnuchin, his Secretary of Treasury (who leaves the Administration in
the middle of the year). Then he blames a lower stock market on the mid-term election which
turned the House. Then he blames the market correction on the Chinese.
The S&P Index hits a yearly low of 2200 in the first half of the year as the market
worries about slowing economic and profit growth and a burgeoning deficit/monetization. The
announcement of QE4 results in a year end rally in December, 2019. In a continued regime of
volatility (and in a market dominated by ETFs and machines/algos), daily swings of 1%-3%
become more commonplace. Investor sentiment slumps as redemptions from exchange traded funds
grow to record levels. The absence of correlation between ETFs and the underlying component
investments causes regulatory concerns throughout the year.
Congress holds hearings on the changing market structure and the weak foundation those
changes delivered during the year.
Short sellers provide the best returns in the hedge fund space as the S&P Index
records a second consecutive yearly loss (which is much deeper than in 2018).
As the Fed cuts interest rates the US dollar falls and emerging markets outperform the US
in 2019. The ten year Treasury note yield falls to 2.25%.
I, like many, are concerned about corporate credit (See Surprise #8) and though credit is
not unscathed, it is equities that bear the brunt of the Bear since they are below credit in
the company capitalization structure.
Bottom line, after a steep drop in the first six months of the year, the markets rise off
of the lows late in the year in response to this shifting political scene (the decline of
Trump) and a reversal to a more expansive Fed policy – ending the year with a -10%
loss."
Bottom Line
* For now, think like a trader and not an investor"
The illusion of positive possibilities is fading quickly in a market hampered by political
turmoil and strapped with untenable debt loads.
The key to delivering superior investment performance in 2018 was not a buy and hold
strategy. Rather, it was opportunistic and unemotional trading and for the foreseeable future
this will likely be the case.
While I believe we are likely to rally into year end, the near term upside to that rally has
been markedly reduced (though I still believe we can reach to at least 2600 or so on the
S&P Index by year end, a gain of 100 handles or more) -- the likelihood of a recession and
Bear Market in 2019 has increased.
Many threads to tug on at the close of this tumultuous work-week before the supreme holiday
of white privilege rolls through, all silver bells and hovering angels.
It took hours of rumination and prayer to arrive at a coherent notion about the strange
doings in Gen. Mike Flynn's sentencing hearing, but here goes: Judge Emmet Sullivan sent Gen
Flynn to the doghouse for three months to reconsider his guilty plea. The judge may believe
that Gen. Flynn needs to contest the charge in open court, where all the Special Prosecutor's
janky evidence will be subject to discovery and review. Mr. Mueller tried to toss a wrecking
bar into the proceedings the day before by pressing charges against two of Gen. Flynn's
colleagues in the Turkish lobbying gambit, which was meant to terrify Gen. Flynn as a hint that
separate charges would be dumped on him if he doesn't play ball. A lot can happen in three
months, including the arrival of a new Attorney General, and we'll leave it there for the
moment.
The stopgap spending bill before congress -- to avert a government shut-down -- is based on
the comical idea that the money is actually there to spend. Everyone with half a brain knows
that it's not money but " money ," a hypothetical abstraction composed of hopes and wishes. The
USA is worse than broke. It's down to liquidating its rehypothecated hypotheticals. After all,
financialization added up to money with its value removed . The global credit markets seem to
be sensing this as the tide of borrowings retreats , exposing all the wretched, slimy creatures
wheezing in the exposed mudflats who have no idea how to service their old loans or generate
credible new ones. But, no matter. We'll continue pretending until the US$ flies up its own
cloacal aperture and vanishes.
Contingent on that exercise is "money" for Mr. Trump's promised-and-requested border wall.
The wall is really a symbol for the nation's unwillingness to set a firm policy on immigration.
Half of the political spectrum refuses to even make a basic distinction between people who came
here legally and those who snuck in and broke the law. They've super-glued themselves to that
position not on any plausible principle, but because they're desperate to corral Hispanic votes
-- and notice how eager they are to get non-citizens on the voting rolls. Their mouthpiece, The
New York Times , even ran an op-ed today,
None of Us Deserve Citizenship , (is that even grammatical?) arguing that we should let
everybody and anybody into the country because of our longstanding wickedness.
The simple resolve to firmly and politely send interlopers back across the border would go a
long way to providing border security, but we've allowed this process to be litigated into
incoherence so that it is increasingly impossible to enforce the existing rules. Mr. Trump's
wall is an acknowledgement of that failure to agree on lawful action to defend the border. It
evokes the works of past empires, like the wall built across Britain by the Roman emperor
Hadrian to keep out the warlike, filthy, blue-faced Scots, or the Great Wall of China built to
block marauding Mongols. Of course, these societies didn't have closed circuit TV, drones,
laser sensors, four-wheel-drive landcruisers, and night-vision goggles. I'm not persuaded that
the US really requires Mr. Trump's wall, but it does require a functioning consensus that
national borders mean something, and the president's argument is a lever to produce that
consensus.
In the meantime, the condition of the US economy, which Mr. Trump has boasted is roaring on
his account, wobbles badly. It has been based for two decades on a three-card-monte trade
set-up in which China sends us amazingly cheap products and we send them IOUs (dollars, i.e.
Federal Reserve promissory notes). It was not an arrangement bound to last. And it entailed a
lot of mischief around the theft of complex intellectual property. The damage there appears to
be already done. China may have enough computer mojo now to make all kinds of trouble in the
world. Of course, China will have enough political and economic trouble when its Molto-Ponzi
banking system flies apart, so I would not assume that they are capable of attaining the kind
of world domination that scenario-gamers in the US Intel-and-Military offices dream up.
To me, these disturbances and machinations suggest the unravelling of the arrangements we've
called "globalism." That's what we face most acutely in 2019, along with the fragile conditions
in banking, markets, and currencies that can put the schnitz on supply lines as everybody and
his uncle around the world fear that they will never get paid. It all makes for a suspenseful
holiday. Bake as many cookies as you can while the fixings are still there and stuff a few in
your ammunition box for the fretful days ahed.
Once is happenstance. Twice is coincidence. Three times is enemy action. ~ Ian Fleming
Notable quotes:
"... We believe that in all three cases Guccifer 2 was unlikely to anticipate that this Eastern timezone setting could be derived from the metadata of the documents that he published. However, one vocal critic with significant media reach objected to our East Coast finding as it related to our analysis of the ngpvan .7z file. This critic concluded instead that Guccifer 2 deliberately planted that clue to implicate a DNC worker who would die under suspicious circumstances a few days later on July 10, 2016. ..."
"... Now, we have this additional East Coast indication, which appears just one day after the ngpvan.7z files were collected. This new East Coast indication is found in a completely different group of files that Guccifer 2 published on his blog site. Further, this East Coast finding has its own unique and equally unlikely method of derivation. ..."
"... If we apply our critic's logic, what do we now conclude? That Guccifer 2 also deliberately planted this new East Coast indication? To what end? We wonder: Will this new evidence compel our out-spoken critic to retract his unsubstantiated claims and accusations? ..."
Editorial Note: The Forensicator recently published a report, titled " Guccifer
2 Returns To The East Coast ." Forensicator provided the following introduction to his
latest findings, reproduced here with the permission of the author.
In this post, we announce a new finding that confirms our previous work and is the basis for
an update that we recently made to Guccifer 2's Russian
Breadcrumbs . In our original publication of that report, we posited that there were
indications of a GMT+4 timezone offset (legacy Moscow DST) in a batch of files that Guccifer 2
posted on July 6, 2016. At the time, we viewed that as a "Russian breadcrumb" that Guccifer 2
intentionally planted.
Now, based on new information, we have revised that conclusion: The timezone offset was in
fact GMT-4 (US Eastern DST) . Here, we will describe how we arrived at this new, surprising
conclusion and relate it to our prior work.
A month/so after publication, Stephen McIntyre ( @ClimateAudit ) replicated our analysis. He ran a few
experiments and found an error in our
original conclusion.
We mistakenly interpreted the last modified time that LibreOffice wrote as
"2015-08-25T23:07:00Z" as a GMT time value. Typically, the trailing "Z" means " Zulu Time ", but
in this case, LibreOffice incorrectly added the "Z". McIntyre's tests confirm that LibreOffice
records the "last modified" time as local time (not GMT). The following section describes the
method that we used to determine the timezone offset in force when the document was saved.
LibreOffice Leaks the Time Zone Offset in Force when a Document was Last Written
Modern Microsoft Office documents are generally a collection of XML files and image files.
This collection of files is packaged as a Zip file. LibreOffice can save documents in a
Microsoft Office compatible format, but its file format differs in two important details: (1)
the GMT time that the file was saved is recorded in the Zip file components that make up the
final document and (2) the document internal last saved time is recorded as local time (unlike
Microsoft Word, which records it as a GMT [UTC] value).
If we open up a document saved by Microsoft Office using the modern Office file format (
.docx or .xlsx ) as a Zip file, we see something like the following.
LibreOffice , as shown below, will record the GMT time that the document components were
saved. This time will display as the same value independent of the time zone in force when the
Zip file metadata is viewed.
For documents saved by LibreOffice we can compare the local "last saved" time recorded in
the document's properties with the GMT time value recorded inside the document (when viewed as
a Zip file). We demonstrate this derivation using the file named
potus-briefing-05-18-16_as-edits.docx that Guccifer 2 changed using LibreOffice and then
uploaded to his blog site on July 6, 2016 (along with several other files).
Above, we calculate a time zone offset of GMT-4 (EDT) was in force, by subtracting the last
saved time expressed in GMT (2016-07-06 17:10:58) from the last saved time expressed as local
time (2016-07-06 13:10:57).
We've Been Here Before
The Eastern timezone setting found in Guccifer 2's documents published on July 6, 2016 is
significant, because as we showed in Guccifer 2.0
NGP/Van Metadata Analysis , Guccifer 2 was likely on the East Coast the previous day, when
he collected the DNC-related files found in the ngpvan.7z Zip file. Also, recall that Guccifer
2 was likely on the East Coast a couple of months later on September 1, 2016 when he built the
final ngpvan.7z file.
We believe that in all three cases Guccifer 2 was unlikely to anticipate that this Eastern
timezone setting could be derived from the metadata of the documents that he published.
However, one vocal critic with significant media reach objected to our East Coast finding as it
related to our analysis of the ngpvan .7z file. This critic concluded instead that Guccifer 2
deliberately planted that clue to implicate a DNC worker who would die under suspicious
circumstances a few days later on July 10, 2016.
Further, this critic accused the Forensicator (and Adam Carter ) of using this finding to amplify the
impact of Forensicator's report in an effort to spread disinformation. He implied that
Forensicator's report was supplied by Russian operatives via a so-called "tip-off file." The
Forensicator addresses those baseless criticisms and accusations in The Campbell
Conspiracy .
Now, we have this additional East Coast indication, which appears just one day after the
ngpvan.7z files were collected. This new East Coast indication is found in a completely
different group of files that Guccifer 2 published on his blog site. Further, this East Coast
finding has its own unique and equally unlikely method of derivation.
If we apply our critic's logic, what do we now conclude? That Guccifer 2 also deliberately
planted this new East Coast indication? To what end? We wonder: Will this new evidence compel our out-spoken critic to retract his
unsubstantiated claims and accusations?
Closing Thought: Once is happenstance. Twice is coincidence. Three times is enemy action. ~ Ian Fleming
It is curious how those running vpn's often don't bother appropriately setting their
device time zones.
Regarding the closing thought, that was my thinking regarding the Byzantine Vegetable
'ally' at /qr in a non-American time zone who repeatedly attacked me.
Perhaps I have shared some harsh words with you and William, but I do sincerely care for
your well being and my appreciation for the work you both have done remains. The Optics have
been understandably difficult to swallow for many, but I hope that in your own time, you both
will be willing to take another look at Q.
Interesting to see Fleming -- as time goes on, it is pretty clear that he was telling us a
few things about how power really works--psychopathic oligarchs with private wetworkers. Of
course now we have governments competing to hire the same mercenaries -- and the uniformed
mercenaries working oligarchs with government complicity.
Believe it or not, all these faces are fake. They have been synthesized by Nvidia's new AI
algorithm, a generative adversarial network capable of automagically creating humans, cats, and
even cars.
Credit: Nvidia
The technology works so well that we can expect synthetic image search engines soon - just
like Google's, but generating new fake images on the fly that look real. Yes, you know where
that is going - and sure, it can be a lot of fun, but also scary . Check out the video. It
truly defies belief:
According to Nvidia, its GAN is built around a concept called "style transfer." Rather than
trying to copy and paste elements of different faces into a frankenperson, the system analyzes
three basic styles - coarse, middle, and fine styles - and merges them transparently into
something completely new.
Coarse styles include parameters such as pose, the face's shape, or the hair style. Middle
styles include facial features, like the shape of the nose, cheeks, or mouth. Finally, fine
styles affect the color of the face's features like skin and hair.
According to the scientists, the generator is "capable of separating inconsequential
variation from high-level attributes" too, in order to eliminate noise that is irrelevant for
the new synthetic face.
For example, it can distinguish a hairdo from the actual hair, eliminating the former while
applying the latter to the final photo. It can also specify the strength of how styles are
applied to obtain more or less subtle effects.
Not only the generative adversarial network is capable of autonomously creating human faces,
but it can do the same with animals like cats. It can even create new cars and even
bedrooms.
Credit: Nvidia
Nvidia's system is not only capable of generating completely new synthetic faces, but it can
also seamlessly modify specific features of real people, like age, the hair or skin colors of
any person.
The applications for such a system are amazing. From paradigm-changing synthetic free-to-use
image search pages that may be the end of stock photo services to people accurately previewing
hair styling changes. And of course, porn.
"... If you can keep your head when all about you are losing theirs ... If you can wait and not be tired by waiting ... If you can think – and not make thoughts your aim ... If you can trust yourself when all men doubt you ... Yours is the Earth and everything that's in it. ..."
The stock market has had a volatile year, and it's not over yet: The Dow Jones Industrial
Average lost more than 520 points on Monday and the S&P 500 fell 2.1 percent. Both are in
correction and on pace for their worst December performance since the Great Depression in
1931.
But for the average person, shifts in the market , even ones as dramatic as the ones we've
seen this year, shouldn't be cause for panic. During times of volatility, seasoned investor
Warren Buffett says it's best to stay calm and stick to the basics, meaning, buy-and-hold for
the long term.
So, during downturns, "heed these lines" from the classic 19th century Rudyard Kipling poem
"If -- " which help illustrate this lesson, Buffett wrote in his 2017 Berkshire Hathaway
shareholder letter :
If you can keep your head when all about you are losing theirs ...
If you can wait and not be tired by waiting ...
If you can think – and not make thoughts your aim ...
If you can trust yourself when all men doubt you ...
Yours is the Earth and everything that's in it.
Market downturns are inevitable, Buffett pointed out, using his own company as an example:
"Berkshire, itself, provides some vivid examples of how price randomness in the short term can
obscure long-term growth in value. For the last 53 years, the company has built value by
reinvesting its earnings and letting compound interest work its magic. Year by year, we have
moved forward. Yet Berkshire shares have suffered four truly major dips."
He went on to cite each of the steep share-price drops, including the most recent one from
September 2008 to March 2009, when Berkshire shares plummeted 50.7 percent.
Major declines have happened before and are going to happen again, he says: "No one can tell
you when these will happen. The light can at any time go from green to red without pausing at
yellow."
Rather than watch the market closely and panic, keep a level head. Market downturns "offer
extraordinary opportunities to those who are not handicapped by debt," he says, which brings up
another important investing lesson: Never borrow money to buy stocks .
"There is simply no telling how far stocks can fall in a short period," writes Buffett.
"Even if your borrowings are small and your positions aren't immediately threatened by the
plunging market, your mind may well become rattled by scary headlines and breathless
commentary. And an unsettled mind will not make good decisions."
Don't miss: Warren Buffett and Ray Dalio agree on what to do when the stock market
tanks
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Stock Sell-Off Defies Everything the Bulls Hoped Would Stop It
(Bloomberg) -- Valuations aren't stopping it. Jerome Powell's softer tone failed
to soothe anyone. The moratorium on tariffs is a fading memory and now the
sturdiest chart level of the year is in danger of giving way.
A stock rout that bulls thought was finished three different times since October
is in a new and ominous phase, with the Dow Jones Industrial Average losing 1,004
points in two days. No Santa Claus rally. Instead, the S&P 500 Index is hurtling
toward the second-worst December on record.
"The stock market doesn't care what looks good now. It's wondering if
fundamentals will deteriorate in the future," said Peter Mallouk, co-chief
investment officer of Creative Planning, which has around $36 billion under
management. "You have a lot of people that are scared, and they're sitting on the
sidelines to wait it out."
Waiting it out is starting to look like the only viable strategy. On Monday, the
S&P 500 briefly pierced a level that had been a psychological foundation for 10
months, its intraday low from Feb. 9. Valuations shrink and shrink -- computer
and software stocks trade at 15 times next year's earnings estimates, cheaper
than utilities and soapmakers -- and the selling just gets worse.
With Monday's 54-point loss, the S&P has now fallen 2 percent or more six times
this quarter. The Nasdaq Composite has done it 10 times. Both are the most since
the third quarter of 2011.
Pinning a single cause on the carnage has become an exercise in absurdity, with
analysts cycling through a rotating list of reasons that include trade, Donald
Trump's legal travails, China data, sinking oil and cooling home prices. Anyone
daring to suggest economic growth may slow in 2019 is pointed to charts showing
factories, employment and profits are booming -- but those assurances are
starting to fall on deaf ears.
While S&P 500 Index futures indicated a potential respite in Asian trading
Tuesday, rising as much as 0.5 percent, traders remained cautious.
Investors "are too worried, but that's the big driver behind the declines we've
seen recently, overall worries about U.S. growth and worries about global
growth," said Kate Warne, investment strategist at Edward Jones. "Investors have
gotten very nervous about the changes they're seeing ahead and they're uncertain
about what they mean."
A troubling sign for Americans: equity pain, which all year has been worse
overseas, is landing with more force in the U.S. The Russell 2000 Index of small
caps, a proxy for domestically oriented companies, slid into a bear market
Monday, falling 21 percent since Aug. 31.
On the other hand, since hitting a 19-month low in late October, the MSCI
Emerging Markets Index has trended higher, even as the S&P 500 Index keeps making
new lows. Stocks in the EM gauge have outperformed the S&P 500 for three
consecutive weeks, the most since late January, data compiled by Bloomberg show.
To comfort themselves in the face of such depressing facts, beaten-up investors
have looked at past corrections and noticed that this one is still playing out
according a relatively benign plan. Under the pattern, major swoons that have
interrupted the bull market that began in 2009 have taken around 100 days to tire
out before dip-buyers swooped in to put things right.
At the same time, anyone betting the New Year will bring an end to the volatility
should be aware that bull markets can die slow deaths. The 88-day sell-off has
been going on roughly one-third as long as it has taken for the S&P 500 to fall
into the 11 bear markets it's suffered going back to World War II.
How many more sellers than buyers were there on Monday? The volume of stocks
trading lower on the New York Stock Exchange reached 1 billion shares, compared
with 158 million that were bought. The difference in trading volume, at 883
million shares, is on track to become the biggest weekly gap since 2016, data
compiled by Bloomberg show.
That the worst two-day sell-off since October landed on the same week Powell's
Federal Reserve is expected to announce its ninth interest rate hike was grist
for those who see central bank policy behind everything. As willingly as the Fed
chairman has walked back his most hawkish pronouncements, nobody thinks monetary
policy is likely to loosen even as growth in the economy and earnings slows from
this year's pace.
"That's what the market is struggling with right now -- do they believe in a
growth slowdown to trend or something more sinister than that?" said Phil
Camporeale, managing director of multi-asset solutions for JPMorgan Asset
Management. "I don't think people really want to take risk, but especially
trying to catch a falling knife on equity prices."
(Adds details on S&P 500 futures trading in seventh paragraph.)
j
3 hours ago
Don't borrow money to buy stocks. Got
that ? No margin accounts. Ever.
H
5
hours ago
This has been a long, ho-hum recovery
from the Great Recession. Asset prices got way ahead of the
fundamentals. Everything returns to the mean; margins, interest
rates, unemployment, etc. Count your blessings, a nine year
bull is rare.
s
3
hours ago
To make matters worse I read a
story earlier today indicating that the hedge funds in
Europe are literally being wiped out and those are their
favourite & biggest ones. Yup, Alex Jones (yeah I know
how everyone in mainstream media loves to hate the guy
and even censors him) predicted what would happen back in
2008 or 2009. He said that the recession then was just
the start of it. That the powers that be would facilitate
a come back, so that people could get into EVEN BIGGER
DEBTS (which they did with the 0% interest rates) and
then they'd engineer an even more massive crash that
would suck all the liquidity and equity out of the
markets towards the big wigs that controls everything -
read BOIS (Bank of International Settlements) which is
owned by a few very wealthy secretive people and they are
the ones that basically owns and operates the banks the
world over - and dictating all the banking laws too. They
just keep getting richer & richer at our expense. Like as
if they need all that wealth.
K
1 hour ago
40 years watching markets and people
just do not understand that forward PE's get cut in half or go
as low as 5x PE with a recession -- all the fluff on the upside
gets parsed out and once the income flows slow the gratuitous
accounting stops and suddenly there is transparency and people
wait 10 years to get even-maybe 20 this cycle- and the public
realizes they have been hoodwinked
b
2 hours
ago
Maybe POTUS can rehire Yellin after he
fires Powell (if only he could)
"... Jeffrey Gundlach, chief executive of DoubleLine Capital, on Monday said the S&P 500 stock index is headed to new lows and that U.S. equities are in a long-term bear market. ..."
"... "I think it is a bear market. I think we've had the first leg down and the second leg down is usually more painful than the first leg down," said Gundlach, who oversees more than $123 billion. ..."
"... "I think this lasts a long time. It has a lot to do with the fact that, I believe, that we're in a situation that is ... highly unusual - that we're increasing the budget deficit so spectacularly so late in the cycle while the Fed is hiking interest rates." ..."
"... The intraday low for the year in the S&P was on Feb. 9, when it bottomed at 2532.69. The low close for the year was on April 2 at 2581.88. On Monday, the S&P closed 2545.94. ..."
<img alt="FILE PHOTO: Jeffrey Gundlach, CEO of DoubleLine Capital, speaks during the Sohn Investment Conference in New York" src="https://s.yimg.com/it/api/res/1.2/BXVsdhZsK0OiZdcOd8_ffw--~A/YXBwaWQ9eW5ld3M7c209MTt3PTQ1MDtoPTMwMDtpbD1wbGFuZQ--/http://media.zenfs.com/en_us/News/Reuters/2018-12-17T182416Z_1_LYNXMPEEBG1NJ_RTROPTP_2_FUNDS-DOUBLELINE-GUNDLACH.JPG.cf.jpg" itemprop="url"/>
NEW YORK (Reuters) -
Jeffrey Gundlach, chief executive of DoubleLine Capital,
on Monday said the S&P 500 stock index is headed to new lows and that U.S.
equities are in a long-term bear market.
Gundlach, speaking on CNBC TV, said passive investing has reached "mania status"
and will exacerbate market problems.
"I think it is a bear market. I think we've had the first leg down and the
second leg down is usually more painful than the first leg down," said
Gundlach, who oversees more than $123 billion.
"I think this lasts a long time. It has a lot to do with the fact that, I
believe, that we're in a situation that is ... highly unusual - that we're
increasing the budget deficit so spectacularly so late in the cycle while the
Fed is hiking interest rates."
The S&P 500 briefly erased its losses in late-morning trade on Monday but resumed
its steep decline and pierced through Gundlach's target after he made his "bear
market" comments.
The intraday low for the year in the S&P was on Feb. 9, when it bottomed at
2532.69. The low close for the year was on April 2 at 2581.88. On Monday, the S&P
closed 2545.94.
Investors are also bracing for the Federal Reserve's last rate decision of the
year on Wednesday, when they are expected to raise U.S. interest rates for a
fourth time for 2018.
Gundlach said the Fed should not raise rates this week but will. "The bond market
is basically saying, 'You know, Fed, there's no way you should be raising
interest rates'," he said.
The U.S. central bank's quantitative tightening campaign has made markets nervous
because of the ultra-low levels that have remained in place for several years,
Gundlach said.
"The problem is that the Fed shouldn't have kept them (rates) so low for so long.
The problem is, we shouldn't have had negative interest rates like we still have
in Europe. We shouldn't have had done quantitative easing, which is a circular
financing scheme," he said.
Gundlach also said the China-U.S. trade war gets worse from here. "China doesn't
like to be told what to do by President Trump," he said. For its part, "I think
they (the United States) will probably ratchet up the tariffs."
The remarks by Gundlach, who in April recommended investors short Facebook Inc,
extended losses in Facebook shares on Monday after he characterized the social
media giant as a "diabolical data-collection monster that would ultimately fall
victim to regulation." The stock closed 2.69 percent lower.
Gundlach took a shot at passive investment strategies such as index funds,
declaring the investing strategy a "mania" that is causing widespread problems in
global stock markets.
"I'm not at all a fan of passive investing. In fact, I think passive investing
... has reached mania status as we went into the peak of the global stock
market," Gundlach said. "I think, in fact, that passive investing and robo
advisers ... are going to exacerbate problems in the market because it's hurting
behavior," he said.
(Bloomberg Opinion) -- Traders and investors will be glad to see the back of 2018. It's been
the worst rout since 1901, by Deutsche Bank AG's reckoning, with almost every asset class
delivering losses. These charts illustrate the backdrop to what went wrong this year –
and hint at what could go better in 2019.
$14,889,930,106,680
That's how much the total value of companies listed on the world's stock markets has
declined since peaking at $87,289,962,917,450 on Jan 28. In other words, almost $15 trillion
has been wiped off the global equity market this year.
The list of potential motivations for the sell-off is long and includes rising geopolitical
risks, the prospect of trade wars erupting, the risk that a slowdown in global growth that
could degenerate into a worldwide recession, and the evergreen what-goes-up-must-come-down. But
might it just be possible that investors start to take the view stocks have fallen far and fast
enough to offer value next year?
Talkin' About a Recession
It's clear that one of the fundamental worries spooking investors is that the period of
coordinated global growth that propelled stock markets higher in recent years is coming to an
end.
The R word is increasingly cropping up in news articles. But economists put the chances of a
recession in the coming year at 15 percent in the U.S. and 18 percent in the euro zone,
according to Bloomberg surveys. Even the Brexit-battered U.K. economy is only at a 20 percent
risk, while for Japan the likelihood rises to 30 percent. Perhaps those concerns about a
recession are overdone.
Curving to Inversion
Or perhaps not. One trend was omnipresent in 2018 – the relentless flattening of the
yield curve in the U.S.
Yields at the short end of the Treasury market pushed higher with every quarterly increase
in the Fed's benchmark interest rate. Longer-dated bonds danced to a different beat,
particularly as the October equity shakeout drove a flight to quality.
An inverted yield curve – when yields on shorter-dated bonds are higher than their
longer-dated counterparts – is often seen as an indicator of impending recession. It's
finally happened: yields on five-years are below those for two-years. A key question for 2019
will be how the feedback loop develops between the Federal Reserve's policy intentions and the
shape of the curve.
Quantitative Tightening
The Fed has been reducing its economic stimulus by not replacing the bonds it bought under
its Quantitative Easing program as they mature.
But this "normalization" is already taking its toll as the sharp equity market sell off in
October showed. The Fed has a tricky choice to make in 2019 about whether it can persist both
with hiking rates and reducing quantitative easing. Is the world ready yet to stand on its own
feet without ongoing central bank support?
No Alarms and No Surprises
Economic surprise indexes – which measure actual economic data compared to forecasts
– are designed to be portents of the future. And for 2018 they largely did their job.
U.S. strength is waning and Brexit is taking a toll on the U.K. In particular the third-quarter
weakness in euro-zone growth, when both Germany and Italy turned negative, was well-flagged
from as early as the first quarter.
For 2019 there is a more neutral outlook, but it is interesting that the U.S. economic data
is much more evenly balanced in terms of expectations. Europe continues to be the worst
performer – quite something considering the predicament the U.K. is in.
Europe Stumbles
Europe has seen growth falter this year, with Italy's political crisis and Germany's diesel
vehicle emissions scandal taking their toll.
Italy's third-quarter growth was revised to -0.1 percent, beating only Germany. The
prospects for 2019 are none-too-rosy, bar the notable exception of Spain, as momentum has
evaporated. Europe remains in the sick bay of the developed world – just as the European
Central Bank prepares to remove its monetary stimulus to the economy.
Relying on China
China came to the global economy's rescue in the wake of the financial crisis, but it is
starting to pay the price for increasing its debt to create additional GDP growth. Total social
financing as a percentage of gross domestic product – a broad measure of credit creation
– is flat-lining. Adding extra debt to boost the economy is becoming a less effective
measure. It is not just the threat of a trade war with America that has pushed Chinese equities
down by 20 percent in 2018.
China faces the classic emerging-market middle-income trap where growth fueled by credit
runs out of road. This debt bubble will not be easily fixed.
Finding Reverse Again
Japanese Prime Minister's famous three economic arrows are failing to hit their mark. Debt
that stands in excess of 250 percent of GDP is hampering all efforts to resuscitate inflation
and sustainable growth in the world's third-largest economy. Third-quarter GDP contracted 2.5
percent on an annualized basis, the worst performance for four years.
Tokyo might be hosting the Olympics in 2020, but there is little benefit flowing through so
far. Japan, like the rest of the once dominant Asian export powerhouses, is just as beholden to
the outcome of the trade war with Trump as China is.
Hunting for Neutral
Until very recently, many economists were anticipating at least four more rate increases
from the Fed next year at a pace of one per quarter. While the futures market still suggests a
Dec. 19 hike is a done deal, the outlook for monetary policy in 2019 has shifted significantly
in recent weeks.
Goldman Sachs Group Inc. has trimmed its forecast for number of potential Fed rate increases
in 2019; billionaire fund manager Paul Tudor Jones said earlier this month that he's not
expecting any additional tightening from the U.S. central bank next year. A halt to the hikes
might prove as pleasing to financial markets as to President Donald Trump.
Credit Squeeze
Companies with dollar bonds have seen their borrowing costs soar relative to those of the
U.S. government as the Fed has driven its benchmark interest rate higher this year. Investors
have seen a corresponding slump in the value of the corporate debt they own.
Any slowdown in the ascent of U.S. borrowing costs as the Fed pauses for breath should give
succor to corporate bonds – provided it isn't accompanied by a rise in defaults.
Other People's Money
It's been a terrible year for the stocks of firms that manage other people's money for a
living.
Fund managers tend to invest in each other's shares. And you'd expect them to have
better-than-average insight into the business prospects of their peers. So watch for an
inflection point in asset management stocks – it might be a sign of a turning point for
the wider market.
Happy Birthday to the Euro
The common European currency celebrates its 20th birthday at the start of January. During
the two decades of its existence, rumors of the euro's demise have been proven to be greatly
exaggerated.
The European debt crisis at the beginning of this decade posed an existential threat to the
euro's well-being. The currency survived. At several points in the past few years, Greece
seemed on the verge of either quitting or being ousted from the project. Its membership
survived. And Italy's election of a populist government earlier this year raised the prospect
of a founding member threatening to leave if it wasn't allowed to break the bloc's budget
rules. Still, the euro survives.
In fact, as the chart above shows, investors are close to the most relaxed they've been
about the euro fracturing in more than five years based on the Sentix Euro Break-Up Index, a
monthly gauge of investor concern about the threat. So let's end by wishing the euro many happy
returns.
To contact the editor responsible for this story: Edward Evans at [email protected]
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP
and its owners.
Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was
the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and
Collusion Made the Credit Crisis Unstoppable."
Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three
decades in the banking industry, most recently as chief markets strategist at Haitong
Securities in London.
Two months ago, to the chagrin of a generation of traders, Morgan Stanley made a dismal
observation : Price action in 2018 has shown that 'buy the dip' is on its way out. To wit,
buying the S&P 500 after a down week was a profitable strategy from 2005 through 2017, and
buying these dips fueled most of the post-crisis S&P 500 gains (relative to buying after
the market rallied). But in 2018 'buying the dip' has been a negative return strategy for the
first time in 13 years . In other words, "buying the fucking dip" is no longer the winning
strategy it had been for years (even if buying the most shorted hedge fund names still is a
stable generator of alpha).
However, a more concerning observation is that while BTFD may no longer work, it has been
replaced with an even more troubling trend for market bulls: Selling The Fucking Rip, or as it
is also known, STFR.
This selling of rallies has been especially obvious for the past two weeks as traders have
observed ongoing intra- US session asset-allocation trades out of the S&P and into TY, with
simultaneous volume spikes / blocks trading in ESH9 (selling) and THY9 (buying) at a number of
points throughout the day, but usually after the European close, and toward the end of the
trading day.
"SELL THE RIPS" IN SPOOZ BECOMING THE NORM
So what is behind this pernicious, for bulls if quite welcome for bears, pattern?
Here, Nomura's Charlie McElligott has some thoughts and in his morning note reminds clients
that he had previously highlighted a similar potential observation YTD between the inverse
relationship of UST stripping activity (buying US fixed-income) and the SMART index (end of day
US Equities flows being sold) -- which indicates a similar trend with pension fund de-risking
throughout 2018, as their funding ratios sit at post GFC highs.
In other words, one possible culprit is pension funds who have decided that the market may
have peaked, and are taking advantage of the recent selldown in fixed income, to reallocate
back from stocks and into bonds, locking in less risky funding ratios.
And, as McElligott concludes, this equities de-risking/outflow corroborates what we touched
upon this morning, namely this week's EPFR fund flows data which showed an astounding -$27.7B
outflow for US Equities (Institutional, Retail, Active and Passive combined), the second worst
weekly redemption of the past 1Y period.
Meanwhile, the equity weakness is being coupled with surprising strong bid for US
Treasuries, further confirmation of an intraday Pension reallocation trade.
According to McElligott, the price-action in the long-end of late indicates "that we
potentially are seeing "real money" players back involved for the first-time in awhile,
"toe-dipping" again in adding / receiving as the global slowdown story picks-up steam amidst
growing 2019 / 2020 recession belief", a hypothesis which is further validated by the sharp
rebound in direct bidders in recent auctions and especially yesterday's 30Y which we have
documented extensively, as the "buyers-strike" in long duration auctions seems to have
ended.
This Treasury bid could include large overseas pensions (which are less sensitive to hedge
costs than say Lifers), Risk-Parity (as previously-stated, our QIS RP model estimated the
risk-parity universe as a large buyer of both USTs and JGBs over the past month and a half) and
potentially, resumption of long-end buying from "official" overseas sources as well (with
market speculation that there could be an implicit agreement / gesture coming out of the G20
trade truce arrangement), McElligott notes.
One tangent to note: the bid has been more evident in futures and derivatives (as they are
"off-balance sheet" expressions into a liquidity constrained YE reality), which is reflected in
the fresh record dealer holdings of USTs and which the Nomura strategist notes has made made
futures super rich to cash, creating arb opportunities in the cash/futures basis as the
calendar is about to flip.
Finally, as to who or what is the real reason behind these inexplicable bouts of "selling
the rip", whoever it is, the biggest threat to the market is that once the pattern manifests
itself enough times it becomes a self-fulfilling prophecy at which point it's not a question of
who started it - as everyone will be doing it - but rather at what point does the Fed step in
to stop it.
Considering that nothing was fixed in 2008, we have had zirp for a decade, there is no
doubt that capital has been misallocated....GM closing plants, Caterpillar closing plants are
economic manifestations of this ponzi scheme...They cannot normalize interest rates with the
amount of debt used to paper over the last crisis...or to satisfy an American government
spending a trillion dollars a year more than they take in....Dow 6000...
Yes they CAN normalize interest rates. Why should someone with saved capital hold the bag
so that crooks who gamed the Globalist movement remain whole? Flotsam in the middle who lose
are fodder. Sorry but even the new socialism won't save them.
Blame the Globalists, not the savers. I suspect many Globalists are morphing into the new
Socialists. Yet to come is the Globalist definition of the new Socialist. Globalists demanded
low rates, low wages, open boarders for goods, and open boarders for people. Socialists will
demand much the same, I suspect.
Selling overvalued stocks and buying Treasuries after the Fed's brief tightening cycle
with the backdrop of a slowing global economy would be a smart and coherent move. Call me
skeptical but I just can't see pension funds behind such a logical move.
Buying Treasuries today is not smart. Flight to safety, multiplied by big money pouring
into the interest rate dip as a 'taper tantrum' move to scare the Fed into not raising rates
any more, is sucker money.
Money market funds are the only safe harbor at this moment.
Wait until rate increases from the Fed end, perhaps in another 3 or 4 increases.
Between now and then, liquidity issues will create big capital gains opportunities on debt
and debt funds if you wait it out.
Both BTFD and STFR are cynical HFT strategies. The faster algos prey on the slower ones,
except for the unique cases where a human predator preys on the algos. (In England, it's a
crime for humans to prey on algos.)
BTFD has a warm appeal because it appears to forecast blue skies and better days, but is
still a predator strategy if there's no fundamental reason to expect better times ahead.
STFR is based on the fear of missing out. Any human who loses on that one makes me
sad.
No, the day they stop will be the day the EU officially starts to decompose and rot in
front of the world. The entertainment will be watching and listening as the try to explain
away the festering and leprosy. All due to 'Kick the Can', not to mention the fact they were
dumb enough to fall for the Globalist scam of low rates and open boarders. There's no
explanation for that level of stupid. A few people sold out the entire Continent using
ideology and gullibility. All it took was a great sales pitch.
ok, so with the 10-yr already falling, what exactly is the Fed going to do. If they lower
then bonds just become a better investment (short run). Guess that's why they're gonna raise.
It's like a house of mirrors.
The Fed and/or SEC will not act until there is a major decline; like circuit breakers
kicking in. Which by the way were put in after the 1987 crash and have never been used.
The 80's had program buying/selling and portfolio insurance. Now we have algos and
computers running the show. Same kind of thing just faster to act with better speeds and
computer power.
This will eventually lead to a similar market mega move and those in power will not act
until it does.
They need something to blame (not someone-think financial crisis) as it can't be their
lack of oversight and blindness [sarc]
Anything goes until the market comes unglued and then the rules get changed. The
regulators are always late to the show and need to be shown what to do after it happens even
though it was clear to many.
Swing between extremes, however, consistent in US history, economic predatory dependence on
free/ultra cheap labor with no legal rights. Current instantiation, offshored and illegal and
"temporary" immigrant labor. Note neither party in the US is proposing "immigration reform"
is green card upon hire. Ds merely propose green card for time served for those over X number
of years donated as captive/cheap.
The entitled to cheap/captive now want it in law, national laws and trade agreements.
All privilege/no responsibilities, including taxes.
Doesn't scale. 1929 says so, 2008 says so.
Liberals, the Left, Progressives -- whatever you want to call them suffer from a basic
problem. They don't work together and have no common goals. As the article stated they
complain but offer no real solutions that they can agree on. Should we emphasize gay pride or
should we emphasize good-paying jobs and benefits with good social welfare benefits? Until
they can agree at least on priorities they will never reform the current corrupt system -- it
is too entrenched. Even if the Capitalist Monstrosity we have now self-destructs as the
writer indicates -- nothing good will replace it until the Left get their act together.
"Lesser of two evils" needs to go on the burn pile.
Encumbent congress needs a turn over.
Not showing up to vote is not okay. If people can't think of someone they want to write-in,
"none of the above" is a protest vote. Not voting is silence, which equals consent.
Local elections, beat back Koch/ALEC, hiding on ballots as "Libertarian". "Privatize
everything" is their mantra, so they can further profitize via inescapeable taxes, while
gutting "regulation" - safety and market integrity, with no accountability.
Corporation 101: limited liability. While means we are left holding the bag. As in bailout -
$125 billion in 1990, up to $7.7 trillion in 2008.
Anything the Economist presents as the overriding choice is probably best relegated to
one factor among many. I respect Milanovic's work, but he's seeing things from where we are
now. Remember we've seen populist surges come and go from the witch-burnings and religious
panics of the 17th century to 1890s Bryanism and the 1930s far right, and each time they've
yielded to a more articulate vision, though the last time it cost sixty million dead - not
something we want to see repeated. This time it's hard because dissent still clings to a
"post-ideological" delusion that those on top never succumbed to. But change will come as
what I'd term "post-rational" alternatives fail to deliver. Let's hope it's sooner rather
than later.
"Brexit, too, was primarily a working-class revolt." Thank you Martin, at least someone
writing in the Guardian has got the point!
We voted against the EU's unelected European Central Bank, its unelected European Commission,
its European Court of Justice, its Common Agricultural Policy and its Common Fisheries
Policy.
We voted against the EU's treaty-enshrined 'austerity' (= depression) policies, which have
impoverished Greece, Spain, Portugal and Italy.
We voted against the EU/US Transatlantic Trade and Investment Partnership, which would
privatise all our public services, which threatens all our rights, and which discriminates
against the countries of Africa, Asia and Latin America.
We voted against the EU's tariffs against African farmers' cheaper produce.
We opposed the City of London Corporation, the Institute of Directors, the CBI, the IMF,
Citigroup, Goldman Sachs, JP Morgan, Citigroup and Morgan Stanley, which all wanted us to
stay in the EU.
We voted against the EU's undemocratic trilogue procedure and its pro-austerity Semester
programme. We voted to leave this undemocratic, privatisation-enforcing, austerity-enforcing
body.
Bailout was because that was public savings, pensions, 401ks, etc. the banks were playing
with, and lost. Bailout is billing all of us for it. Bad, letting the banks/financial
"services" not only survive but continue the exact same practices.
Bailout: $7.2 to $7.7 trillion. Current derivative holdings: $500 trillion.
Not just moral hazard but economic hazard when capitalism basic rule is broken, allow bad
businesses to die of their own accord. Subversion currently called "too big to fail", rather
than tell the public "we lost all your savings, pensions, ...".
Relocating poverty from the East into the West isn't improvement.
Creating sweatshops in the East isn't raising their standard of living.
Creating economies so economically unstable that population declines isn't improvement.
Trying to bury that fact with immigration isn't improvement.
Configuring all of the above for record profit for the benefit of a tiny percentage of the
population isn't improvement.
Gaming tax law to avoid paying into/for extensive business use of federal services and tax
base isn't improvement.
Game over. Time for a reboot.
I am glad you finally concede a point on neo-liberalism. The moral hazard argument is
extremely poor and typical in this era of runaway CEO pay, of a tendency to substitute
self-help fables (a la "The monk who sold his Ferrari) and pop psychology ( a la Moral
Hazard) for credible economic analysis.
The economic crisis is rooted in the profit motive just as capitalist economic growth is.
Lowering of Tarrif barriers, outsourcing, changes in value capture (added value), new
financial instruments, were attempts to restore the falling rate of profit. They did for a
while, but, as always happens with Capitalism, the seeds of the new crisis were in the
solution to the old.
And all the while the state continues growing in an attempt to keep capitalism afloat.
Neoliberalism failed ( or should I say "small state" ) and here is the graph to prove it: http://www.usgovernmentspending.com/include/usgs_chartSp03t.png
Interesting, and I believe accurate, analysis of the economic and political forces afoot.
However it is ludicrous to state that Donald trump, who is a serial corpratist, out-sourcer,
tax avoider and scam artist, actually believes any of those populist principles that you
ascribe so firmly to him. The best and safest outcome of our election, in my opinion, would
be to have a Clinton administration tempered by the influences from the populist wings of
both parties.
Great article, however the elite globalists are in complete denial in the US. Our only choice
is to vote them out of power because the are owned by Wall Street. Both Bernie and Trump
supporters should unite to vote establishment out of Washington.
There were similar observations in the immediate aftermath of 2008, and doubtless before.
Many of us thought the crisis would trigger a rethink of the whole direction of the previous
three decades, but instead we got austerity and a further lurch to the right, or at best
Obama-style stimulus and modest tweaks which were better than the former but still rather
missed the point. I still find it flabbergasting and depressing, but on reflection the 1930s
should have been a warning of not just the economic hazards but also the political fallout,
at least in Europe. The difference was that this time left ideology had all but vacated the
field in the 1980s and was in no position to lead a fightback: all we can hope for is better
late than never.
Yes it is, it's an extremely bad thing destroying the fabric of society. Social science
has documented that even the better off are more happy, satisfied with life and feel safer in
societies (i.e. the Scandinavian) where there is a relatively high degree of economic
equality. Yes, economic inequality is a BAD thing in itself.
Oh, give me a break. Social science will document anything it can publish, no matter how
spurious. If Scandanavia is so great, why are they such pissheads? There has always been
inequality, including in workers' paradises like the Soviet Union and Communist China.
Inequality is what got us where we are today, through natural selection. Phenotype is largely
dependent on genotype, so why shouldn't we pass on material wealth as well as our genes?
Surely it is a parent's right to afford their offspring advantages if they can do so?
Have you got any numbers? Or references for your allegations. I say the average or median
wealth, opportunity, economic circumstance and health measures are substantially better than
a generation (lets say 30 years) ago.
Again I don't think our system is perfect. I don't deny that some in our societies
struggle and don't benefit, particularly the poorly educated, disabled, mentally ill and drug
addicted. I actually agree that we could better target our social redistribution from those
that have to those that need help. I disagree that we need higher taxes, protectionism,
socialism, more public servants, more legislation. Indeed I disagree with proposition that
other systems are better.
George Orwell said, in the 30s, that the price of social justice would include a lowering of
living standards for the working- & middle-classes, at least temporarily, so I follow
your line of thought. However, the outrageous tilt toward the upper .1% has no "adjustment"
fluff to shield it from the harsh despotism it represents. So, do put that in your
statistical pipe and smoke it.
Trump never ceases to crack me up. While his (terrible) current lawyer, declares on TV
that there was collusion but it just didn't last long, Trump calls his former lawyer/fixer at
"Rat".
This is just too funny, I mean this is the President of the United States calling his
former personal lawyer a "Rat" which of course is a common mob term for a witness testifying
against you.
Of course it never happened, just like Manafort didn't make 3 trips to London to meet
Julian Assange. These fictions were just used as a pretext for diving into the backgrounds of
Trump's political supporters and find crimes to charge them with.
The Cohen raid was particularly egregious, a likely violation of attorney-client
privilege. Not suprisingly the American Bar Association is silent.
So, Manafort never laundered money and failed to report taxes? Did Flynn never fail to
report his work as a foreign agent? Did he also not report income taxes?
Look at all these poor crooks, unfairly being prosecuted for cheating and stealing.
All that could have been prosecuted by a district attorney. They looked at all of
Manafort's dealings 10 years ago and passed because he was working with the Podesta Group at
the time and thus protected by Hillary Clinton's influence.
" Miller also admits that the dossier's broad claims are more closely aligned with
reality, but that the document breaks down once you focus on individual claims. "
"... I see this in young people all around, 25-35 year old's saddled with $50-100k in debt defining every action and option they have (or don't!). Not everyone gets themselves into this bind, people make poor decisions, but our higher educational institutions readily promote without ample warning and education and the result is what's rumored to be a $1 Trillion student loan debt bubble. This isn't sustainable ..."
"... Educational institutions should not be seen as a profit making enterprise, education should be attainable to all without the fear of untenable costs. ..."
A very scholarly and educational read, well researched and documented. It is very in-depth,
perhaps not for the light hearted but I learned quite a bit about education philosophies
world-wide, their origins, how that effects current thoughts and practices, etc. And how the
United States higher educational institutions have gotten to where they are today, money
printing machines with unsustainable growth and costs being pushed onto those just seeking to
potentially better themselves.
I see this in young people all around, 25-35 year old's
saddled with $50-100k in debt defining every action and option they have (or don't!). Not
everyone gets themselves into this bind, people make poor decisions, but our higher
educational institutions readily promote without ample warning and education and the result
is what's rumored to be a $1 Trillion student loan debt bubble. This isn't sustainable
My years in oversea schools took place long ago, I can't testify nor draw direction
comparisons to the situation we face today. But I can say, that with three young kids
approaching college age we remain highly concerned to terrified what the costs and our kids
futures.
Educational institutions should not be seen as a profit making enterprise, education
should be attainable to all without the fear of untenable costs.
The median retirement account balance among all working US adults is $0 . This is true
even for the cohort closest to retirement age, those 55-64 years old.
The average (i.e., mean) near-retirement individual has less than 8% of one year's income
saved in a retirement account
77% of all American households aren't on track to have enough net worth to retire , even
under the most conservative estimates.
There a number of causal factors that have contributed to this lack of retirement
preparedness (decades of stagnant real wages, fast-rising cost of living, the Great Recession,
etc), but as we explained in our report The Great Retirement Con
, perhaps none has had more impact than the shift from dedicated-contribution pension plans to
voluntary private savings:
The Origins Of The Retirement Plan
Back during the Revolutionary War, the Continental Congress promised a monthly lifetime
income to soldiers who fought and survived the conflict. This guaranteed income stream,
called a "pension", was again offered to soldiers in the Civil War and every American war
since.
Since then, similar pension promises funded from public coffers expanded to cover retirees
from other branches of government. States and cities followed suit -- extending pensions to
all sorts of municipal workers ranging from policemen to politicians, teachers to trash
collectors.
A pension is what's referred to as a defined benefit plan . The payout promised a worker
upon retirement is guaranteed up front according to a formula, typically dependent on salary
size and years of employment.
Understandably, workers appreciated the security and dependability offered by pensions.
So, as a means to attract skilled talent, the private sector started offering them, too.
The first corporate pension was offered by the American Express Company in 1875. By the
1960s, half of all employees in the private sector were covered by a pension
plan.
Off-loading Of Retirement Risk By Corporations
Once pensions had become commonplace, they were much less effective as an incentive to
lure top talent. They started to feel like burdensome cost centers to companies.
As America's corporations grew and their veteran employees started hitting retirement age,
the amount of funding required to meet current and future pension funding obligations became
huge. And it kept growing. Remember, the Baby Boomer generation, the largest ever by far in
US history, was just entering the workforce by the 1960s.
Companies were eager to get this expanding liability off of their backs. And the more
poorly-capitalized firms started defaulting on their pensions, stiffing those who had loyally
worked for them.
So, it's little surprise that the 1970s and '80s saw the introduction of personal
retirement savings plans. The Individual Retirement Arrangement (IRA) was formed by the
Employee Retirement Income Security Act (ERISA) in 1974. And the first 401k plan was created
in 1980.
These savings vehicles are defined contribution plans . The future payout of the plan is
variable (i.e., unknown today), and will be largely a function of how much of their income
the worker directs into the fund over their career, as well as the market return on the
fund's investments.
Touted as a revolutionary improvement for the worker, these plans promised to give the
individual power over his/her own financial destiny. No longer would it be dictated by their
employer.
Your company doesn't offer a pension? No worries: open an IRA and create your own personal
pension fund.
Afraid your employer might mismanage your pension fund? A 401k removes that risk. You
decide how your retirement money is invested.
Want to retire sooner? Just increase the percent of your annual income contributions.
All this sounded pretty good to workers. But it sounded GREAT to their employers.
Why? Because it transferred the burden of retirement funding away from the company and
onto its employees. It allowed for the removal of a massive and fast-growing liability off of
the corporate balance sheet, and materially improved the outlook for future earnings and cash
flow.
As you would expect given this, corporate America moved swiftly over the next several
decades to cap pension participation and transition to defined contribution plans.
The table below shows how vigorously pensions (green) have disappeared since the
introduction of IRAs and 401ks (red):
So, to recap: 40 years ago, a grand experiment was embarked upon. One that promised US
workers: Using these new defined contribution vehicles, you'll be better off when you reach
retirement age.
Which raises a simple but very important question: How have things worked out?
The
Ugly AftermathAmerica The Broke
Well, things haven't worked out too well.
Four decades later, what we're realizing is that this shift from dedicated-contribution
pension plans to voluntary private savings was a grand experiment with no assurances.
Corporations definitely benefited, as they could redeploy capital to expansion or bottom line
profits. But employees? The data certainly seems to show that the experiment did not take
human nature into account enough – specifically, the fact that just because people have
the option to save money for later use doesn't mean that they actually will.
And so we end up with the dismal retirement stats bulleted above.
The Income Haves
& Have-Nots
In our recent report The Primacy Of Income , we
summarized our years-long predictions of a coming painful market correction followed by a
prolonged era of no capital gains across equities, bond and real estate.
Simply put: the 'easy' gains made over the past 8 years as the central banks did their
utmost to inflate asset prices is over. Asset appreciation is going to be a lot harder to come
by in the future.
Which makes income now the prime source of building -- or simply just maintaining -- wealth
going forward.
That being the case, it's obvious that those receiving a pension will be in far better shape
than those who aren't. They'll have a guaranteed income stream to partially or fully fund their
retirement.
Resentment Brewing
While the total number of people expecting a pension isn't tiny, it's certainly a minority
of today's workers.
31 million private-sector, state and local government workers in the US participate in a
pension plan. 3.3 million currently-employed civilian Federal workers will receive a pension;
as will some percentage of the 2 million people serving in the active military and
reserves.
Combined, that's about 25% of current US workers; roughly 13% of total US adults.
The danger here is of festering social discord. The majority, whom we already know will not
be able to retire, will highly likely start regarding pensioners with envy and resentment.
"Hey, I worked as hard as Joe during my career. How come he gets to retire and I don't?"
will be a common narrative running in the minds of those jealous of their neighbors.
This bitterness will only increase as taxes continue to rise to fund government pension
payouts, already
a huge drain on public budgets . "Why am I paying more so Joe can relax on the beach??"
Humans are wired to react angrily to perceived injustice and unfairness. This short clip
shows how it's hard-coded into our primate brains:
So it's not a stretch at all to predict the divisive tension and prejudice that will result
from the growing gap between the pension haves and have-nots.
The negative stereotypes of union workers will be tightly re-embraced. This SNL sketch
captures a good number of them:
The steady news
reports of pension fraud and abuse will anger the majority further. Any projected decreases
in Social Security (benefit payouts will only be 79 cents on the dollar by 2035 at our current
trajectory) will only exacerbate the ire, as the small governmental income the have-nots
receive becomes even more meager.
The growing potential here is for an emerging social schism, possibly accompanied with
intimidation and violence, not dissimilar to that which has occurred along racial or religious
lines during darker eras of our history.
As people become stressed, they react emotionally, and look for a culprit to blame. And as
they become more desperate, as many elderly workers with no savings often do, they'll resort to
more desperate measures.
Broken Promises
And it's not all sunshine and roses for the pensioners, either. Being promised a pension and
actually receiving one are two very different things.
Underfunded pension liabilities are a massive ticking time bomb, certain to explode over the
next few decades.
For example, many pensions offered through multi-employer plans are bad shape. The
multiemployer branch of the Pension Benefit Guaranty Corporation, the federally-instated
insurer behind private pensions, will be out of business by 2025 if no changes in law are made
to help. If that happens, retirees in those plans will get only 10% of what they were
promised.
Moreover, research conducted by the Pew Charitable Trusts shows a
$1.4 trillion shortfall between state pension assets and guarantees to employees. There are
only two ways a gap that big gets addressed: massive tax hikes or massive benefit cuts. The
likeliest outcome will be a combination of both.
So, many of those today counting on a pension tomorrow may find themselves in a similar boat
to their pension-less neighbors.
No Easy Systemic Solutions, So Act For Yourself
There's no "fix" to the retirement predicament of the American workforce. There's no policy
change that can be made at this late date to reverse the decades of over-spending,
over-indebtedness, and lack of saving.
All we can do at this time is influence how we take our licks. Do we simply leave the masses
of unprepared workers to their sad fate? Or do we share the pain across the entire populace by
funding new social support programs via more taxes?
Time will tell. But what we can bet on is tougher times ahead, especially for those with
poor income prospects.
So the smart strategy for the prudent investor is to prioritize building a portfolio of
income streams in order to have sufficient dependable income for a sustainable retirement. Or
for simply remaining afloat financially.
Sadly, accustomed to the speculative approach marketed to us for so long by the financial
industry, most investors are woefully under-educated in how to build a diversified portfolio of
passive income streams (inflation-adjusting and tax-deferred whenever possible) over time.
Those looking to get up to speed can read our recent report A
Primer On Investing For Inflation-Adjusting Income , where we detail out the wide range of
prevalent (and not-so-prevalent) solutions for today's investors to consider when designing an
income-generating portfolio. From bonds, to dividends (common and preferred), to real estate,
to royalties -- we explain each vehicle, how it can be used, and what the major benefits and
risks are.
And in the interim, make sure the wealth you have accumulated doesn't disappear along with
the bursting of the Everything Bubble. If you haven't already read it yet, read our premium
report from last week What To Do Now That 'The
Big One' Is Here .
They can try and tax to fill pension buckets that are empty, but the population is more
likely than ever to react negatively to this sort of thing.
People will not move to areas where the potential for extortion to satisfy pension
promises exists. Nor will they move to any place where there's the possibility of a big tax
increase to fill public coffers.
In my own area there's already the threat of a large property tax increase to cover
'social improvements' that are not really the responsibility of the local government, but you
can't tell them that, they extend their tentacles into everything. The county is just as bad,
with property tax increases and then handing out grants that no one monitors and no one knows
about.
If govt's would go back to doing what they're supposed to do instead of the garbage
they're involved in now we'd be better off and it would cost those who actually pay the taxes
a lot less. It's one big reason people are moving to rural areas. My muni has voted several
times now to increase local option sales tax, the people keep putting it down, the voting
costs thousands to conduct, I wish they would give it up.
It's no wonder that Chicago loses 150 people every day...not a good thing.
"The list includes a married couple -- a police captain and a detective -- who joined DROP
at around the same time and collected nearly $2 million while in the program. They both filed
claims for carpal tunnel syndrome and other cumulative ailments about halfway through the
program. She spent nearly two years on disability and sick leave; he missed more than two
years ... the couple spent at least some of their paid time off recovering at their condo in
Cabo San Lucas and starting a family theater production company with their daughter..."
Pensions in many ways they are the biggest Ponzi Scheme of modern man. Pension payouts are
often predicated on the idea the money invested in these funds will yield seven to eight
percent a year and in today's low-interest rate environment, this has forced funds into ever
riskier investments.
The PBGC America's pension safety net is already under pressure and failing due to the
inability of pension funds to meet their future obligations. The math alone is troubling but
when coupled with the overwhelming possibility of a major financial dislocation looming in
the future a nightmare scenario for pensions drastically increases. More on this subject in
the article below.
84% of state and local public sector workers receive defined benefit pensions as do 100%
of federal workers with little to no contribution on their part. After 30 years Federal
workers receive 33% of their highest 3 consecutive years pay and state workers average
benefits are $43000 with a range from 15000 (MS) to 80000 (CA). Private sector employees get
to pay for this and have little if anything coming from their employers in the form of a
pension. Instead, private sector employees get to gamble their savings in the stock and bond
markets to secure a retirement. And don't thing government employees are paid less - they are
usually paid very competitively with the private sector. Bottom line is private sector
employees are slaves to federal, state, and local governments.
Not only are government workers not paid that less, they get a slew of days off, sicks
days, mental health days , every minor holiday is a day off. And because they never get laid
off, the lower salary is worth more over the long term. then the private sector worker who
gets fired every 5 years
A 401K is not a pension plan and if you don't put anything into the 401K then you get
nothing out of the 401K. Plus, pensions can fail. The people that made no other arrangements
for their retirement other than rely on SocSec will have more because they will qual for food
stamps, housing subsidies, utility credits, etc. The picture is being distorted.
There is not going to be the old American pension, it's the new America, where everything
has been hollowed out. The new American economic conditions has created a vast
underclass.
The growing underclass is because of being hollowed out. Social services for the
underclass is costing hundreds of billions. The Trumpers want a massive cut in social
funding.
The communist Democratic Socialist have a wedge issue of underclass causes which keeps the
Democratic Socialist party growing. Clinton is their enemy as we now know from Clinton's out
burst.
The only way out for Trumpers is an infrastructure build. This will draw in the masses as
labor markets tighten, thus pushing wages up.
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Jointly published with New Economic Perspectives ..."
"... Wall Street Journal ..."
"... Wall Street Journal ..."
"... The idea that examiners should not criticize any bank misconduct, predation, or 'unsafe and unsound practice' that does not constitute a felony is obviously insane. ..."
"... The trade association complaint that examiners dare to criticize non-felonious bank conduct – and the WSJ ..."
"... I have more than a passing acquaintance with banking, banking regulation, and banking's rectitude (such an old fashioned word) in the importance for Main Street's survival, and for the country's as a whole survival as a trusted pivot point in world finance , or for the survival of the whole American project. I know this sounds like an over-the-top assertion on my part, however I believe it true. ..."
"... Obama et al confusing "banking" with sound banking is too ironic, imo. ..."
"... It was actually worse than this. The very deliberate strategy was to indoctrinate employees of federal regulatory agencies to see the companies they regulated not as "partners" but as "customers" to be served. This theme is repeated again and again in Bush era agency reports. Elizabeth Warren was viciously attacked early in the Obama Administration for calling for a new "watchdog" agency to protect consumers. The idea that a federal agency would dedicate itself to protecting citizens first was portrayed as dangerously radical by industry. ..."
"... Models on Clinton and Bush. What's not to like? Why isn't msm and dem elites showing him the love when he's following their long term policies? And we might assume these would be hills policies if she had been pushed over the line. A little thought realizes that in spite of the pearl clutching they far prefer him to Bernie. ..."
By Bill Black, the author of The Best Way to Rob a Bank is
to Own One, an associate professor of economics and law at the University of Missouri-Kansas
City, and co-founder of Bank Whistleblowers United. Jointly published with New Economic Perspectives
The Wall Street Journal published an article
on December 12, 2018 that should warn us of coming disaster: "Banks Get Kinder, Gentler
Treatment Under Trump." The last time a regulatory head lamented that regulators were not
"kinder and gentler" promptly ushered in the Enron-era fraud epidemic. President Bush made
Harvey Pitt his Securities and Exchange Commission (SEC) Chair in August 2001 and, in one of
his early major addresses, he spoke on October 22, 2001 to a group of accounting
leaders.
Pitt, as a private counsel, represented all the top tier audit firms, and they had
successfully pushed Bush to appoint him to run the SEC. The second sentence of Pitt's speech
bemoaned the fact that the SEC had not been "a kinder and gentler place for accountants." He
concluded his first paragraph with the statement that the SEC and the auditors needed to work
"in partnership." He soon reiterated that point: "We view the accounting profession as our
partner" and amped it up by calling accountants the SEC's "critical partner."
Pitt expanded on that point: "I am committed to the principle that government is and must be
a service industry." That, of course, would not be controversial if he meant a service agency
(not "industry") for the public. Pitt, however, meant that the SEC should be a "service
industry" for the auditors and corporations.
Pitt then turned to pronouncing the SEC to be the guilty party in the "partnership." He
claimed that the SEC had terrorized accountants. He then stated that he had ordered the SEC to
end this fictional terror campaign.
[A]ccountants became afraid to talk to the SEC, and the SEC appeared to be unwilling to
listen to the profession. Those days are ended.
This prompted Pitt to ratchet even higher his "partnership" language.
I speak for the entire Commission when I say that we want to have a continuing dialogue,
and partnership, with the accounting profession,
Recall that Pitt spoke on October 22, 2001. Here are the relevant excerpts from the NY
Times' Enron
timeline :
Oct. 16 – Enron announces $638 million in third-quarter losses and a $1.2 billion
reduction in shareholder equity stemming from writeoffs related to failed broadband and water
trading ventures as well as unwinding of so-called Raptors, or fragile entities backed by
falling Enron stock created to hedge inflated asset values and keep hundreds of millions of
dollars in debt off the energy company's books.
Oct. 19 – Securities and Exchange Commission launches inquiry into Enron
finances.
Oct. 22 – Enron acknowledges SEC inquiry into a possible conflict of interest
related to the company's dealings with Fastow's partnerships.
Oct. 23 – Lay professes confidence in Fastow to analysts.
Oct. 24 – Fastow ousted.
The key fact is that even as Enron was obviously spiraling toward imminent collapse (it
filed for bankruptcy on December 2) – and the SEC knew it – Pitt offered no warning
in his speech. The auditors and the corporate CEOs and CFOs were not the SEC's 'partners.'
Thousands of CEOs and CFOs were filing false financial statements – with 'clean' opinions
from the then 'Big 5' auditors. Pitt was blind to the 'accounting control fraud' epidemic that
was raging at the time he spoke to the accountants. Thousands of his putative auditor
'partners' were getting rich by blessing fraudulent financial statements and harming the
investors that the SEC is actually supposed to serve.
Tom Frank aptly characterized the Bush appointees that completed the destruction of
effective financial regulation as "The Wrecking Crew." It is important, however, to understand
that Bush largely adopted and intensified Clinton's war against effective regulation. Clinton
and Bush led the unremitting bipartisan assault on regulation for 16 years. That produced the
criminogenic environment that produced the three largest financial fraud epidemics in history
that hyper-inflated the real estate bubble and drove the Great Financial Crisis (GFC).
President Trump has renewed the Clinton/Bush war on regulation and he has appointed banking
regulatory leaders that have consciously modeled their assault on regulation on Bush and
Clinton's 'Wrecking Crews.'
Bill Clinton's euphemism for his war on effective regulation was "Reinventing Government."
Clinton appointed VP Al Gore to lead the assault. (Clinton and Gore are "New Democrat" leaders
– the Wall Street wing of the Democratic Party.) Gore decided he needed to choose an
anti-regulator to conduct the day-to-day leadership. We know from Bob Stone's memoir the sole
substantive advice he gave Gore in their first meeting that caused Gore to appoint him as that
leader. "Do not 'waste one second going after waste, fraud, and abuse.'" Elite insider fraud
is, historically, the leading cause of bank losses and failures, so Stone's advice was sure to
lead to devastating financial crises. It is telling that it was the fact that Stone gave
obviously idiotic advice to Gore that led him to select Stone as the field commander of Clinton
and Gore's war on effective regulation.
Stone convinced the Clinton-Gore administration to embrace the defining element of crony
capitalism as its signature mantra for its war on effective regulation. Stone and his troops
ordered us to refer to the banks, not the American people, as our "customers." Peters' foreword
to Stone's book admits the action, but is clueless about the impact.
Bob Stone's insistence on using the word "customer" was mocked by some -- but made an
enormous difference over the course of time. In general, he changed the vocabulary of public
service from 'procedure first' to 'service first.'"
That is a lie. We did not 'mock' the demand that we treat the banks rather than the American
people as our "customer" – we openly protested the outrageous order that we embrace and
encourage crony capitalism. Crony capitalism's core principle – which is unprincipled
– is that the government should treat elite CEOs as their 'customers' or 'partners.' A
number of us publicly expressed our rage at the corrupt order to treat CEOs as our customers.
The corrupt order caused me to leave the government.
Our purpose as regulators is to serve the people of the United States – not bank CEOs.
It was disgusting and dishonest for Peters to claim that our objection to crony capitalism
represented our (fictional) disdain for serving the public. Many S&L regulators risked
their careers by taking on elite S&L frauds and their powerful political fixers. Many of us
paid a heavy personal price because we acted to protect the public from these elite frauds. Our
efforts prevented the S&L debacle from causing a GFC – precisely because we
recognized the critical need to spend most of our time preventing and prosecuting the elite
frauds that Stone wanted us to ignore..
Trump's wrecking crew is devoted to recreating Clinton and Bush's disastrous crony
capitalism war on regulation that produced the GFC. In a June 8,
2018 article , the Wall Street Journal mocked Trump's appointment of Joseph Otting
as Comptroller of the Currency (OCC). The illustration that introduces the article bears the
motto: "IN BANKS WE TRUST."
Otting, channeling his inner Pitt, declared his employees guilty of systematic misconduct
and embraced crony capitalism through Pitt's favorite phrase – "partnership."
I think it is more of a partnership with the banks as opposed to a dictatorial perspective
under the prior administration.
Otting, while he was in the industry, compared the OCC under President Obama to a fictional
interstellar terrorist. Obama appointed federal banking regulators that were pale imitation of
Ed Gray, Joe Selby, and Mike Patriarca – the leaders of the S&L reregulation. The
idea that Obama's banking regulators were akin to 'terrorists' is farcical.
The WSJ's December 12, 2018 article reported that Otting had also used Bob Stone's
favorite term to embrace crony capitalism.
Comptroller of the Currency Joseph Otting has also changed the tone from the top at his
agency, calling banks his "customers."
There are many terrible role models Trump could copy as his model of how to destroy banking
regulation and produce the next GFC, but Otting descended into unintentional self-parody when
he channeled word-for-word the most incompetent and dishonest members of Clinton and Bush's
wrecking crews.
The same article reported a trade association's statement that demonstrates the type of
outrageous reaction that crony capitalism inevitably breeds within industry.
Banks are suffering from "examiner criticisms that do not deal with any violation of law,"
said Greg Baer, CEO of the Bank Policy Institute ."
The article presented no response to this statement so I will
It doesn't matter whether you provide storage or increase the number of refineries, shale production is relatively dead at these prices. The prices just need to stay ridiculously low for awhile to stop the EIA and IEA from producing more imaginary oil, and face reality. Yeah, that would affect my wells, but I would hope for a better price, later.
