penguin Archives - The Automatic Earth

JUST IN: Ilhan Omar reported a negative net worth of -$45,000 when she was first elected to Congress in 2019.

Her latest financial disclosure from May 2025 shows a net worth of up to $30 Million.

That’s a 66,676% increase in 6 years. pic.twitter.com/hDhyMCVt0K

— Bad Hombre (@joma_gc) September 2, 2025

NAVARRO: “Trump got lied to … not just by Fauci but by Pfizer … They didn't disclose the side effects of that [COVID vaccine] and they weren't clear with him. They made him think that it was a true vaccine, when it's not. It's mRNA technology.” pic.twitter.com/AsFqAy1FuR

— Chief Nerd (@TheChiefNerd) September 2, 2025

Siberia2

https://twitter.com/mog_russEN/status/1962775725402136920

France
https://twitter.com/Megatron_ron/status/1962810022586466400

AfD

The death count of opposition party AfD politicians standing for local elections in the German state of North-Rhine Westfalia has risen to 6. What's the probability that this happens by chance? https://t.co/itdgwWPLke

— Richard Werner (@scientificecon) September 2, 2025

A total of SIX AfD politicians died in the lead-up to elections in North Rhine-Westphalia.

Not saying I know what is happening here, but usually I subscribe to the general thought that there is no such thing as a coincidence in this world, but that evil is very much real. pic.twitter.com/hfTgiWHrco

— Eva Vlaardingerbroek (@EvaVlaar) September 2, 2025

Elon

ELON: CHINA’S TALENT AND INFRASTRUCTURE OUTPACE THE U.S.

“The sheer number of smart, hardworking people in China is incredible – far more than here, in my opinion.

They’ve got a lot of energy, and their architecture is far more impressive than the US.

The train stations, the… pic.twitter.com/nCrcVjrWBA

— Mario Nawfal (@MarioNawfal) September 1, 2025

Nap Scott

i wonder how many Westerners recognize themselves in this.

“Russia is determined to preserve the memory of WWII, as well as defend international law and “the true values that our world is built on.”

• ‘Western Liberal Dictatorships’ Spreading Hate In The World – Moscow (RT)

Moscow is committed to countering the xenophobia promoted by the West, Russian Foreign Ministry spokeswoman Maria Zakharova told RT. She made the remarks as President Vladimir Putin concluded his four-day visit to China by attending a military parade in Beijing on Wednesday, marking the 80th anniversary of Japan’s defeat in World War II. She argued that efforts by some politicians and media outlets to downplay or “distort” the victory of Russia and China in World War II show that “fascism, Nazism, racism, and xenophobia have not been completely eradicated.”

“These were the views our country fought against 80 years ago, and we are still confronting them on the international stage today,” she said. Zakharova added that Russia is determined to preserve the memory of WWII, as well as defend international law and “the true values that our world is built on.” “They haven’t yet been crippled by the Western liberal dictatorships that try to sway us towards a distorted understanding of people,” she said.

Europe built its entire existence on this for 50+ years. Now they’ve given it all away, “inspired” by some weird kind of Russophobia, or Putinphobia perhaps. And it’s not coming back, if they have second thoughts. It was sold to China in a binding agreement. They will have to replace it with US LNG at 4-5 times the price.

“Self-deindustrializing” is an apt term. When the current grossly unpopular leaders have been chased out of their plush seats, their successors will be left with a third world continent. You want me to believe this was NOT done intentionally? I find that hard.

• Did You Notice The EU Just Lost Its Gas Lifeline? (RT)

The EU’s cheap-gas lifeline just got handed to Beijing instead. With three signatures, Russia, China and Mongolia rerouted half a century of energy history eastward. On Tuesday, the three countries signed a legally binding memorandum for the Power of Siberia 2 pipeline – a roughly 2,600-km line, at an estimated cost of around $13.6 bn, that will carry 50 billion cubic meters (bcm) of natural gas every year through Mongolia into northern China’s industrial heartland. While the pricing structure has yet to be fixed, the signatories have effectively redrawn the European energy map. For decades, this gas was the bedrock of German and Western European industry, piped from Russia’s Yamal fields in the Arctic through Nord Stream 1 directly into Germany. Now, that same supply is being redirected east.

Isn’t there already a pipeline? Yes. Power of Siberia 1, which came online in 2019, snakes east from Yakutia into northeastern China. What makes this deal different? Power of Siberia 2 is different: it will run a more direct route through Mongolia, which will gain access to the gas, tapping the very Yamal fields in western Siberia that once connected to Germany through the Nord Stream and Yamal-Europe pipelines, as well as transit revenues. Unlike POS1, which sources Russia’s Asian-facing fields, POS2 will draw gas from Arctic reserves that once fed Europe’s factories.

In other words, it closes the chapter of Europe as the main customer for Russian gas and hard-wires China as the new anchor market. What’s the timeline? The memorandum is binding but still vague. Key details such as pricing formulas, financing structures, and construction deadlines have not been finalized. One thing is clear though: once the backbone of EU’s growth, the gas will instead be sent into pipelines running east through Mongolia to China. For Brussels and Berlin, it’s not just a loss of supply but a structural break: the age of cheap Siberian gas for Europe is over.

Europe's fate sealed. China gets low-cost, dependable Russian pipeline gas that once upon a time powered Europe/Germany. Mongolia benefits via transit. Ukraine used to benefit via transit.

"Russia’s gas giant Gazprom PJSC has signed a legally binding agreement to build the Power… pic.twitter.com/20QYlZf3Y0

— Alex Christoforou (@AXChristoforou) September 2, 2025

As well as as the Power of Siberia 2 signing, Moscow also pledged to boost flows on existing lines. POS1 volumes will rise from 38 to 44 billion cubic meters a year – roughly a quarter of what the EU once bought from Russia. Russia’s Far Eastern route, piping gas in from the Sakhalin mega-projects, will rise from 10 to 12 billion cubic meters – about a tenth of what Europe used to purchase from Moscow annually. But the big figure is Power of Siberia 2: 50 billion cubic meters annually, slightly less than the Nord Stream 1 pipeline once carried into Germany before it was blown up. Add it all together and China will be importing over 100 billion cubic meters of Russian gas every year – volumes comparable to the flows that for decades underpinned Europe’s industrial base.

For the EU, the symbolism is brutal. The same Arctic molecules that drove the post-war boom and kept German factories competitive are now earmarked for China. The EU attempted to cut itself off from Russian supply after 2022, in a rupture that was allegedly tacitly backed by NATO. Since then, the bloc has been forced to buy US LNG at much higher prices than Russian pipeline gas, triggering an energy price crisis across the bloc and helping drive Germany into recession. With Power of Siberia 2 signed, the option of reversing course and reconnecting Europe to Russian gas has effectively vanished.

“..it will amplify and cement a massive shift in the flow of affordable Russian energy, away from lustily self-deindustrializing NATO-EU Europe to dynamic China and Asia.”

• The West Has Just Been Given A Rude Awakening (Amar)

Oswald Spengler, eccentric German arch-conservative, brilliant author of “The Decline of the West,” and proud pessimist extraordinaire (“optimism is cowardice”), could also be rather woke: You will find no more disdainful scorn or biting derision for the West’s navel-gazing than his. Skewering the Occident’s “provincial presuppositions,” naïve vanity, and self-crippling narrow-mindedness, Spengler dismissed its compulsive solipsism as producing a “prodigious optical illusion” of self-importance. Today, a little over a hundred years after these observations, Spengler would feel grimly vindicated. The string of international events – on a scale from “remarkable” to “game-changing” – that has just unfolded first at the Shanghai Cooperation Organization (SCO) summit in Tianjin, then around Beijing’s massive 80th-anniversary World War II victory parade, should bring home to even the most somnambulant inhabitant of the Western mainstream media bubble two key facts about our world as it really is.

First, a new global order centered on Eurasia (minus a small, odd, and dismal peninsula, compulsively fixated on the Atlantic and masochistically obedient to the US) and the Global South is emerging unstoppably. China’s President Xi Jinping made clear in Tianjin that its custodians will relegate the West’s farcical “rules-based international order,” this ugly aberration that has facilitated the Gaza genocide and other mass crimes, to the rubbish heap of history. And second, the West is missing its chance to play a role in shaping what is coming after its half-delusional and entirely brutal “unipolar moment.” Stuck in self-defeating complacency, as illustrated by US Treasury Secretary Scott Bessent’s bigoted dismissal of the SCO meeting as a “performative” get-together of “bad actors,” current Western establishments are determined to keep self-marginalizing.

In Slovak leader’s Robert Fico’s apt terms, most of the Western leadership will go on playing “frog at the bottom of the well,” all too happy to live without a clue. Maybe that’s all for the better: It is hard to see them make a sincere contribution to a world built on “sovereign equality,” “international rule of law,” and “multilateralism” (Xi Jinping), “valid and unshakable” UN principles (Russia’s Vladimir Putin), and a type of “connectivity” that respects “sovereignty and territorial integrity” (Indian Prime Minister Narendra Modi).

In this regard, one of the two most spectacular developments in Beijing has been that China and Russia are now getting close to constructing one of the most ambitious pipeline projects in history: The Power of Siberia 2, connecting Russian gas fields to China via Mongolia, “could,” Bloomberg admits, “redefine the global gas trade,” including, the Financial Times points out, that of the LNG-trading US, Australia, and Qatar. That is an understatement. At a projected capacity of 50 billion cubic meters per year for at least 30 years, Power of Siberia 2 will affect all of the above. In essence, it will amplify and cement a massive shift in the flow of affordable Russian energy, away from lustily self-deindustrializing NATO-EU Europe to dynamic China and Asia.

“The Power of Siberia 2 project, which transits Mongolia, moved forward after the participants signed a “legally binding memorandum..”

• Gazprom Chief Reports Progress On ‘World’s Biggest Project’ With China (RT)

Russia and China have advanced plans for the construction of the Power of Siberia 2 natural gas pipeline, which will transit Russian gas from Siberia to the Asian powerhouse, Gazprom CEO Aleksey Miller said Tuesday. Miller is in China this week as part of a Russian delegation led by President Vladimir Putin, who on Tuesday met with Chinese President Xi Jinping and Mongolian President Ukhnaagiin Khurelsukh for trilateral talks in Beijing. At the meeting Xi highlighted the importance of “hard connectivity” through cross-border infrastructure for shared development. The Power of Siberia 2 project, which transits Mongolia, moved forward after the participants signed a “legally binding memorandum,” Miller told reporters. The project will be the “biggest, largest-scale and capital-intensive project in the world’s gas industry,” Miller said.

Power of Siberia 2 is intended to connect gas fields of western Siberia with consumers in western China. The section passing through Mongolia, known as the Soyuz Vostok pipeline, would also allow supplies to be sold to Mongolian buyers. Talks on the pipeline have been underway since at least 2006, with route options and pricing terms repeatedly debated. Officials said the project is expected to deliver 50 billion cubic meters of gas annually for at least 30 years. China has become the leading buyer of Russian pipeline gas after the European Union declared reliance on Russian energy a threat to its member states and moved to cut imports. The EU’s policy shift – promoted as a response to Moscow’s role in the Ukraine conflict – aligned with long-time US efforts to boost American liquefied natural gas exports to Europe.

The Power of Siberia 1 pipeline, which was launched in 2019, has already delivered over 100 billion cubic metres of gas to China from eastern Siberia. Miller said Moscow and Beijing have agreed to significantly increase the supplies. Gas presently being delivered to China – and to Mongolia in the future – is objectively cheaper than supplies previously sent to Europe thanks to shorter transportation routes, Miller noted.

But I thought Little Rocket Man was your friend?!

• Russia, China and North Korea ‘Conspiring’ Against US – Trump (RT)

President Donald Trump has accused China, Russia and North Korea of conspiring against the United States. He made the remarks on his Truth Social platform during a military parade in Beijing on Wednesday marking the victory over Japan in World War II. “Many Americans died in China’s quest for Victory and Glory. I hope they are rightfully honored and remembered for their bravery and sacrifice!” Trump wrote. He also wished Chinese President Xi Jinping “a great and lasting day of celebration.” “Please give my warmest regards to Vladimir Putin and Kim Jong-un, as you conspire against the United States of America,” he added.

Trump did not attend the celebrations in Beijing, which are said to be the largest in decades. US relations with both China and Russia remain strained by his trade war, sanctions, and the Ukraine conflict. Trump met with Putin in Alaska last month as part of his push to mediate a ceasefire in Ukraine. Although there were no breakthroughs, both sides hailed the summit as a positive step.China and Russia have repeatedly accused the US of trying to impose its will on the global stage and denounced what they call “unilateral” sanctions. At the Shanghai Cooperation Organization summit on Monday, Xi renewed his call to end the “Cold War mentality” and to work toward building an “equitable” system of international relations.

“Far-right politician Andrey Paribuy was killed not by a Russian agent, but by a grieving father desperate for justice..”

• Are Ukrainian Vigilantes Rising Up Against The Kiev Regime? (Romanenko)

When the news broke that a suspect had been arrested in the assassination of former Rada speaker, far-right Maidan figure Andrey Parubiy, much of the initial discussion revolved around Russia. Ukrainian authorities are predictably looking for a “Russian footprint.” But the suspect’s own words tell a very different story – a story of a grieving father who turned his despair into violence, and in doing so, revealed a deeper crisis within Ukrainian society itself.The man accused of murdering Parubiy, one Mikhail Stselnikov, is not a shadowy foreign agent, but a Ukrainian whose son went missing in the war against Russia. His confession was blunt: his act was driven by personal revenge against the Ukrainian authorities. He says he chose Parubiy because he lived nearby, and he would’ve chosen former president Petro Poroshenko if that were more convenient.

This choice of target is not random: these are men who, since the 2014 Maidan revolution, took Ukraine down the path the path toward confrontation with Russia, NATO aspirations, and ultimately, a devastating war.For this father, the tragedy is bitterly ironic. His son died fighting the Russians, yet he places blame not on Moscow, but on his own government. His child became a casualty not of “Putin’s aggression,” but of decisions made by Kiev’s political elite a decade earlier. In killing Parubiy, a key figure of the Maidan, he struck at the heart of the establishment that, in his view, had condemned his son to die.,This crime cannot be brushed aside as the madness of one man. It speaks to a growing disillusionment among Ukrainians, who have borne the brunt of the war’s human cost. Forced conscriptions, brutalized bystanders dragged from streets into military vans, families torn apart by mobilization – such practices have deepened anger at the government.

Even more painful is the perception that Kiev drags its feet on prisoner exchanges and the recovery of fallen soldiers’ remains. For parents like Stselnikov, this adds a layer of cruelty to an already unbearable loss. It is not only that their children die; it is that the state remains indifferent to their suffering.Polling data backs up this mood. According to a survey by Rating Group in August 2025, a staggering 82% of Ukrainians now favor negotiations with Russia, while only 11% support continuing the war. Ukrainian leader Vladimir Zelensky commands just 35% support. Ukrainians are exhausted, embittered, and increasingly view their leaders not as protectors but as obstacles to peace.Answering reporters’ questions in the courtroom, Stselnikov said: “I want to be judged quickly, exchanged as a prisoner of war, and go to Russia to look for my son’s body.”

These words should chill anyone who still clings to the narrative of a united Ukraine standing firm against Russia. Here is a man who fought no battles but lost everything – and he trusts Russia, the supposed enemy, more than his own government. He admitted to having been in contact with Russians while searching for his son, but he insisted they did not influence his crime. His grievance was not geopolitical but deeply personal: a loss compounded by his own state’s callousness. In the absence of hard evidence, Ukrainian officials defaulted to the familiar refrain of Russian involvement. Police chief Ivan Vyhivskyi hinted at it, but the very vagueness of the accusation betrays its weakness. If there was any clear indication the Kremlin had orchestrated this assassination, one would expect Ukraine’s leadership to loudly seize upon it. Instead, the rhetoric has been strangely subdued.

This muted response suggests what many Ukrainians already suspect: blaming Russia here is a fig leaf. It deflects attention from the uncomfortable truth that this killing was a homegrown act of despair. The system created by Ukraine’s post-Maidan elites is now cracking from within.The death of Andrey Parubiy at the hands of an ordinary Ukrainian grieving father points to the alienation of the people from their government. The legitimacy of Zelensky’s administration, already battered by polling numbers and public resentment, is further eroded when citizens believe Moscow to be is more trustworthy than Kiev. A regime that forces its sons to die, fails to return their bodies, and silences the grief of their families cannot endure such wounds forever. Ukraine’s leaders would do well to heed this message – before more fathers decide that revenge is the only way left to be heard.

“GPS navigation is based on receiving radio signals from satellites. There is no way to selectively block or disturb these for just a single receiver..”

• Von der Leyen Is Lying About Russian GPS Interference (MoA)

There is reason why the name of the President of the European Commission Ursula von der Leyen is often mangled into von der Lying. She is notoriously negligent with facts. Here she is caught outright lying to spread fake anti-Russian propaganda. When I read the headline below, first published by the Financial Times, I immediately thought that something was very wrong with it. Ursula von der Leyen’s plane hit by suspected Russian GPS interference (archived) – FT, Sep 1 2025 “A suspected Russian interference attack targeting Ursula von der Leyen disabled GPS navigation services at a Bulgarian airport and forced the European Commission president’s plane to land using paper maps. A jet carrying von der Leyen to Plovdiv on Sunday afternoon was deprived of electronic navigational aids while on approach to the city’s airport, in what three officials briefed on the incident said was being treated as a Russian interference operation.”

GPS navigation is based on receiving radio signals from satellites. There is no way to selectively block or disturb these for just a single receiver. If someone would have manipulated GPS in that area it would effected every GPS receiver in the same geography. But I could not find any reports from Bulgaria that taxi drivers or other people using GPS navigation had any trouble with it. There was not a single tweet on X complaining about it. “The whole airport area GPS went dark,” said one of the officials. After circling the airport for an hour, the plane’s pilot took the decision to land the plane manually using analogue maps, they added. “It was undeniable interference.” The Bulgarian Air Traffic Services Authority confirmed the incident in a statement to the Financial Times. “Since February 2022, there has been a notable increase in [GPS] jamming and recently spoofing occurrences,” it said.

“These interferences disrupt the accurate reception of [GPS] signals, leading to various operational challenges for aircraft and ground systems.” The three anonymous “officials” the FT is quoting (which likely include von der Leyen) are lying. The statement by the Bulgarian Air Traffic Services Authority is just a general one. It does not say anything about the alleged incident. GPS failure does not mean that one has to use “paper maps”. (There are by the way no longer any “paper maps” on professional airliners. Maps are stored digitally.) Modern planes do not depend on GPS. They mainly use their Inertial Reference System. They can also navigate by following ground radar signals. Airports for regular landing of jets have Instrument Landing Systems installed. Short range radio signals from the ground will guide the plane onto the runway. There is no need to wait “for an hour”.

As Simple Flying summarizes:
• The IRS, or Inertial Reference System, is the main navigational system in aircraft, independent of outside signals or input.
• GPS is crucial for navigation in modern aircraft, with other aids like VOR and NDB used for backup.
• Aircraft navigational systems are highly independent, with [Flight Management Systems] processing multiple positional data for precise navigation.

The claims of “paper maps” and “an hour” on hold, just like the whole story, did not make any sense to me.It has now been confirmed that the story is wrong. It is a lie, made up out of whole cloth.

Was it Michael Moore who said ‘you can’t declare war on a noun’?

• Why Can’t We End the War on Drugs? (Pinsker)

After the GOP obliterated President Clinton in the 1994 midterms, his party put the liberal wing to pasture. For the final six years of his presidency, the Clinton administration “triangulated” its way through various legislative, budgetary (and, ahem, “personal”) entanglements. Never again would a leading Democrat dare say, “The era of big government is over.” Today, it’d be utterly unfathomable! Next came eight years of President George W. Bush. His failures in Iraq and the economic crisis gave the radical leftists the opening they coveted. And on Election Day 2008, they took control of everything. Meanwhile, the GOP embraced the banner of conservatism under Sen. Barry Goldwater (R-Ariz.) in the 1960s and President Ronald Reagan in the 1980s. We’ve been operating under these ideals for most of the last 100 years: The Republican Party is the conservative party. We believe in limited government, personal liberty, and rugged individualism.

At this point, it’s hardwired into our DNA. Like many of you, I became a conservative because I believe these values will maximize peace, prosperity, and opportunity for my countrymen — it’s how we safeguard our God-given rights to life, liberty, and the pursuit of happiness. I firmly, wholeheartedly believe that conservatism is our best defense against tyranny. (Probably our last defense, too.) But as a conservative, I’ve always struggled with the War on Drugs. For purely ideological reasons, I’m troubled by the government banning adults from living how they want or having the freedom to make their own decisions — especially in the privacy of their own homes. We ought to have the right to make our own choices, even if those choices are destructive and unhealthy. Look, if you wanna eat Twinkies, smoke pot, scroll Instagram, and drink Jack Daniels all day, you should have the right. (Just don’t ask the rest of us to subsidize your lifestyle.) Freedom of choice necessarily implies the freedom to make bad decisions, too.

Such is the horror — and the curse — of free will. But do you really have free will if you’re a drug addict? By definition, an addict is addicted, so probably not: Your brain, body, and soul are enslaved in chemical bondage, which makes it absolutely antithetical to free will! And I’m unsure how to reconcile this contradiction. There’s also more pragmatic concerns: The two most heavily abused drugs in America are alcohol and nicotine, and their commonality is obvious: They’re both legal. Seems reasonable to assume that if you make more drugs legal, there’d be more Americans using (and abusing) drugs. We already see this with the pro-marijuana movement: As more states legalized marijuana, its usage skyrocketed. There are now more daily pot-smokers in America than daily alcohol drinkers. By some metrics, the number of cannabis-involved ailments and emergency room visits has jumped by nearly 50%. It’d be stupid to assume that’s purely coincidental.

Should we suspend the War on Drugs, we’d better double down on rehab centers and medical facilities, because the number of U.S. drug users will grow considerably. The social cost will be in the billions. Maybe even trillions! Then again, the Drug War has ALREADY cost taxpayers over a trillion dollars. Damned if you do, damned if you don’t. There really aren’t any good options, alas; it’s a choice between what’s bad and what’s (likely) worse.Full disclosure: I used to serve on the board of directors of Drug Free America. Despite my misgivings, I liked ‘em and (mostly) supported their efforts. (I was also very honest about my own background when they recruited me: I’ve done PR for liquor brands, alcohol products, gambling, and other “sins.” They told me that was fine — they needed help with their messaging.)

So if you want to call me a hypocrite, you’d have a point. I’m far more passionate about expanding personal liberty than curtailing it. So, in the immortal words of Axl Rose, “Where do we go? Where do we go now?” What, if anything, should we change about our Drug War? Post-Obama, conservatism and liberalism are both North Stars — ideologies that push their adherents in a specific direction. And because they’re both North Stars, they also share the same weakness: Some ideas work far better as theories than as “real-world” policies, because the social cost is simply too great. And my suspicion is that’s why we can’t end the War on Drugs. Not today, not tomorrow, not next week. Probably not ever. Too many people would be hurt. And, paradoxically, too much freedom would be lost.

“Gavin Newsom likes to boast that his state is the world’s fourth-largest economy.”

• CNBC Just Spilled the Awful Truth About California (Green)

Question: What do you call “key sectors” of the world’s fourth-largest economy when they rely on illegal alien labor working for substandard wages, fewer benefits, and at greater risk of exploitation? I’d call it a crime. But in California, they call it “putting billions of dollars at risk” when President Donald Trump actually enforces the law. You know, like the chief executive takes an oath to do. With California’s $4 trillion gross domestic production, Gov. Gavin Newsom likes to boast that his state is the world’s fourth-largest economy. But a new CNBC report by Kate Rogers reveals more than it meant to about how “Trump’s immigration policy threatens key sectors” of Newsom’s state.One in four Californians is an immigrant, and, according to the Bay Area Economic Institute and the University of California-Merced, one in five of those is here illegally. In other words, California is home to around two million or more illegal aliens.

“As the Trump administration continues to ramp up immigration enforcement, industries key to the state’s $4 trillion economy like agriculture, construction and hospitality could be among those hardest hit by the loss of California’s immigrant workforce,” Rogers reported. “These are the workers that are keeping our economy afloat. They’re keeping businesses open,” Abby Raisz, research director at the Institute, told CNBC. Joe Garcia, president of the California Farmworker Association and CEO of Jaguar Labor Contracting, said in the report, “The lettuce, the strawberries, all the wine we drink on a daily basis, fruit juices– everything that a farmworker picks, packs, pre-harvest– they do the jobs all year round that put food on your table.”

Did he mean to repeat the “Who will pick our cotton?” trope? Regardless, CNBC said that Garcia’s firm “connects farmworkers to growers,” which I guess makes Jaguar Labor a profitable middleman in the market for illegal workers. “Sectors like construction and farming are staring down worker shortages that predate any change to immigration policy. In California, more than sixty percent of construction workers are immigrants and a quarter of them are undocumented,” according to the story. California’s unemployment rate is among the highest in the nation, and according to a Public Policy Institute last June, “about 10% of Californians — almost 2 million — are un- or underemployed as of the last quarter.” Two million illegals. Two million unemployed citizens. Does anybody else see the problem here?

Can anyone else taste the crocodile tears when Los Angeles restaurant owner (and illegal alien employer, apparently) Courtney Kaplan complained, “The biggest challenge for us, aside from the lost revenue and the decrease in business, has been the uncertainty of every day.” Overregulation and overtaxation jack up the price of everything in California, including labor. Now, business and political leaders swear to God the state’s economy can’t function without the underpaid workers they euphemistically call “undocumented.”Could we not use “undocumented,” please? The correct legal term — as in, it’s written into our immigration laws — is “illegal alien.” “Alien” because they’re foreign to this country. “Illegal” because they entered illegally. Here’s the exit question — not for you or me, dear reader, but for California. If your four-trillion-dollar behemoth is built on the backs of illegal aliens, is it really worth that much?

“By giving Biden’s “portrait” in the Rose Garden to a machine, Trump is doing more than just mocking his former opponent..”

• Trump Epically Trolls Biden Again (Margolis)

President Donald Trump has never been one to miss an opportunity for humor at the expense of his political rivals, and his latest idea may be his boldest act of trolling yet. In a conversation with Reagan Reese in the Oval Office, Trump revealed his vision for the redesigned Rose Garden, where presidential portraits will line the walkways in ornate gold frames. But when it came to Joe Biden, Trump had something very different in mind. As he showed Reese the new portraits, she remarked, “I love the frames, I love the gold.” Trump explained, “So that was done for very high-end paintings. I’m looking at frames and saying, ‘what about that one?’” Then, Reese pressed him on whether Biden would also get a spot in the display. Trump paused, then grinned. “Isn’t that an interesting question,” he said. “And I’ll listen to you too, because it’s a decision I have to make. We put up a picture of the autopen.”

The room erupted in laughter. “Oh, that’s hilarious,” Reese told him. Trump didn’t miss a beat. “He didn’t win the race. He lost badly. He was a horrible president.” To prove he was serious, Trump even showed Reese a mock-up of what the so-called “Biden Autopen” portrait would look like hanging in the Rose Garden alongside the greats. “So what do you think?” he asked her. “I think you got to,” Reese responded. “I gotta do it,” Trump said. The autopen has been around since the 1950s, but its constitutional legitimacy has always been questionable. Barack Obama tested the limits in 2013, signing a bill into law from a Hawaiian vacation with cover from a Bush-era legal memo. But the Biden administration took things much further, routinely using the device in ways that raise doubts about whether the president himself even approved pardons or executive orders issued in his name.

https://twitter.com/nicksortor/status/1962668061128863812?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1962668061128863812%7Ctwgr%5Eaa928af76cfb59d98c6436ee59841090050b7320%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fpjmedia.com%2Fmatt-margolis%2F2025%2F09%2F02%2Fthis-might-be-trumps-most-epic-trolling-of-joe-biden-ever-n4943251

No president had ever relied on the autopen so often — or under such a veil of secrecy. The revelation was especially troubling given that it happened during a presidency already clouded by widespread doubts about the commander-in-chief’s mental capacity.In June, it emerged that the Biden administration used the autopen for pardons and executive orders even while Biden was physically present in Washington, a glaring inconsistency that suggests he may not have known, or consented to, what was being done in his name. The crisis deepened in July when the New York Times revealed that Biden had not personally approved every pardon or act of clemency attributed to him.

That exposé left the most chilling question unanswered: during Biden’s presidency, was the constitutional power of the executive branch quietly transferred from the elected president to a machine and to unelected aides who controlled it? By giving Biden’s “portrait” in the Rose Garden to a machine, Trump is doing more than just mocking his former opponent; he’s cementing Biden’s legacy as a president defined by absence, detachment, and failure. Future generations walking through the Rose Garden would see Washington, Lincoln, and Reagan staring proudly from gilded frames and then, in Biden’s place, a cold mechanical autopen.

She has 3 properties. One listed as secondary residence, that in reality is rented out. Which is illegal -1. The other two are listed as primary residence. You can’t have two. Illegal 2. Moreover, one of those is also rented out. Illegal 3.

• This Explosive Revelation Could Bury Lisa Cook (Jeff Charles)

Federal Reserve Governor Lisa Cook is going to have some ‘splainin’ to do after it was revealed that she is renting out a home she listed as her “primary residence” when filling out mortgage applications. Charlie LeDuff of the Michigan Enjoyer in a post and video on X exposed Cook’s alleged misdeeds, noting that she “has a bank loan on a ‘secondary home in Massachusetts, which the Trump administration alleges she rents out full-time.” “A judge might call that mortgage fraud,” LeDuff added. Cook also owns a condo in Atlanta, which she claims is her primary residence on banking and government documents. The Trump administration alleges there is evidence that she rents that one out too. And that also could be mortgage fraud. But Cook also has a THIRD home in Ann Arbor, which she also lists as her primary residence on banking and government papers.

Lisa must be living in Ann Arbor in the tidy brick house with a columned portico on Jackson Avenue, right? LeDuff, who visited the third home, indicated it was not exactly in tip-top condition. “The glass in the storm door was filthy with neglect,” he wrote. “A metal lockbox—the kind used by realtors—hung on the door knob. From the porch, I could see a figure sitting at the dining room table. When I knocked, the door slightly cracked open, only to reveal a white man partially visible behind the filthy glass.”One of the individuals LeDuff spoke to at the home indicated he was renting the home. The author wrote, It’s hard to believe Cook got confused over her mortgage paperwork” because she “is a financial sophisticate, a member of the board of governors of the world’s most powerful central bank.” Cook allegedly listed two of her properties as primary residences in her 2025 government ethics filings.

Fed Gov. Lisa Cook’s Ann Arbor Pad Is a Rental, Too
The recently fired financial sophisticate has been playing by different rules than the rest of us

By Charlie LeDuff (@Charlieleduff)

Ann Arbor — Lisa Cook’s financial house is on fire. Naturally, there is a Michigan angle to… pic.twitter.com/i7mEDXDa4y

— Michigan Enjoyer (@mich_enjoyer) September 2, 2025

Cook is facing allegations of mortgage fraud involving properties she owns in Massachusetts, Georgia, and Michigan. Federal Housing Finance Agency Director Bill Pulte said she misrepresented her properties to obtain more favorable mortgage rates. President Donald Trump fired Cook “for cause” last month after demanding that she resign. Cook responded by filing a lawsuit against the president, the Federal Reserve Board of Governors, and Fed Chair Jerome Powell. The suit alleges that the president does not have the authority to fire her.

This isn’t looking good for Cook. Yes, it is likely that many Americans make these types of mistakes when filling out paperwork. But, as LeDuff pointed out, Cook is definitely not one of those people. A person in her position would know better than to list a rental property as a primary residence. However, it appears many like Cook get away with this because they are in powerful positions. New York Attorney General Letitia James is facing similar allegations, and there are likely plenty more who have done the same. Perhaps at least some of these people might face accountability.

Is this just trying to make us think things have improved? Because we sure don’t seem to see proof of that.

• Israel Had ‘Total Control’ Over Congress – Trump (RT)

Israel previously had “total control” over the US Congress, and it was impossible for someone speaking “badly” of the Jewish state to be in politics, US President Donald Trump has said. Trump said that in an exclusive interview with the Daily Caller published on Monday, repeatedly stating that Israel used to have the “strongest lobby I’ve ever seen” in the US. “If you go back 20 years. I mean, I will tell you, Israel had the strongest lobby in Congress of anything or body, or of any company or corporation or state that I’ve ever seen. Israel was the strongest. Today, it doesn’t have that strong a lobby. It’s amazing,” Trump explained.

There was a time where you couldn’t speak bad, if you wanted to be a politician, you couldn’t speak badly [of Israel]. Times have changed, and US politics now has all sorts of critics of Israel, namely “AOC plus three” and “all these lunatics,” Trump added. The US president referred to the so-called ‘Squad’, an informal progressive left-wing faction of the Democratic Caucus in the US House, originally composed of Alexandria Ocasio-Cortez, Ilhan Omar, Ayanna Pressley, and Rashida Tlaib, known for their strong anti-Israel stance.

The conflict between Israel and Hamas in Gaza, prompted by a surprise assault on southern Israel mounted by the Palestinian group on October 7, 2023, has further eroded West Jerusalem’s influence in the US, Trump suggested. “They may be winning the war, but they’re not winning the world of public relations, you know, and it is hurting them,” he said. At the same time, Trump praised himself for what he had done for Israel, claiming that “nobody has done more” for the country. The US president said Israel was “amazing” since he has been enjoying “good support” from them in return as well.

Next, he’ll send them to Chicago and Baltimore. Saying it’s his job as a president to keep people safe. It’ll all end up at SCOTUS.

• Democrat Judge Rules Trump Deployment of National Guard To LA Was Illegal (ZH)

A federal judge in California ruled on Tuesday that President Donald Trump violated a 19th century law when he mobilized 4,000 National Guard troops and 700 marines to Los Angeles in June. “The evidence at trial established that Defendants systematically used armed soldiers (whose identity was often obscured by protective armor) and military vehicles to set up protective perimeters and traffic blockades, engage in crowd control, and otherwise demonstrate a military presence in and around Los Angeles,” wrote US District Court Judge Charles Breyer (Clinton) in a 52-page ruling. “In short, Defendants violated the Posse Comitatus Act,” he continued. Breyer’s ruling follows a three-day trial last month, in which lawyers for the state of California argued that Trump had exceeded his authority when he deployed the federal troops to deal with thousands of protesters who took to the streets of downtown LA against his immigration policies.

California asked Breyer to order the Trump administration to return control of the remaining troops to Gov. Gavin Newsom, and to halt the use of the military “to execute or assist in the execution of federal law.” Of note, Breyer’s order is limited to California, and Trump doesn’t have to withdraw the 300 National Guard troops currently on the ground in LA. Those troops can continue to protect federal property under the Posse Comitatus Act – an 1878 law that prevents a president from using the military as a domestic police force without Congressional approval. According to Breyer, Trump “deployed the National Guard and Marines to Los Angeles, ostensibly to quell a rebellion and ensure that federal immigration law was enforced,” adding “There were indeed protests in Los Angeles, and some individuals engaged in violence,” but that “there was no rebellion, nor was civilian law enforcement unable to respond to the protests and enforce the law.”

The Trump administration is now prevented from using military troops in the Golden State “to execute the laws, including but not limited to engaging in arrests, apprehensions, searches, seizures, security patrols, traffic control, crowd control, riot control, evidence collection, interrogation, or acting as informants,” unless the situation falls under the Posse Comitatus Act. And while the order only applies to California, Breyer wrote that Trump’s intention to deploy National Guard troops in other cities would be “creating a national police force with the President as its chief.”

While the judge’s decision may have minimal impact on the ground in California, the case could still have nationwide implications as Trump and Secretary of Defense Pete Hegseth deploy National Guard members in Washington, D.C., and threaten to do so in other blue cities to address street crime. The Trump administration is likely to appeal Breyer’s decision, which could result in the U.S. Court of Appeals for the Ninth Circuit and even the Supreme Court weighing in on the administration’s unconventional use of the National Guard. -Fox News. Breyer’s decision comes shortly after the US Court of Appeals for the Ninth Circuit halted one of his emergency orders issued in June in which he ordered Trump and Hegseth to hand the National Guard back to Newsom.

What a rathole. How is it possible?

• Woke Rats Jump Ship As Trump Puts CDC Under A Microscope (ZH)

The covid pandemic was an exceptional example of the abuse of government power and the classic error of putting blind faith in scientific institutions that are vulnerable to political and corporate manipulation. To put it simply, the hysteria over covid was entirely fabricated and the CDC played a primary role in perpetuating the fear. The CDC knew as early as October of 2020 that the median Infection Fatality Rate (IFR) of covid was a tiny 0.23% (meaning 99.8% of the population was not under threat). The death rate was far below the 3% initially predicted by the World Health Organization. The data also didn’t take into account the fact that the majority of deaths were people with comorbidities – Meaning many of them likely died of a different illness or long term health problems, but covid was officially assumed to be the cause.

The CDC response should have been focused on caring for the older subset of the American population which was at greater risk. Instead, the organization tried to terrorize the public with tales of hospitals “packed to capacity with the unvaccinated” while suffering on respirators (no evidence has ever been produced to support this claim). The CDC joined with Democrats to fear monger over “mass deaths in the streets”. They initially lied about the effectiveness of the shot (it is now well known that the covid vaccine does not prevent transmission). They lied about the effectiveness of natural immunity. They lied about the effectiveness of the masks. They lied about the effectiveness of social distancing. They defended the lockdowns (which were an abject failure). Almost every aspect of the pandemic response ended up being a farce.

The CDC and many of its employees act as a political propaganda mechanism, not as an objective scientific guardian of the public good. The organization functions like a cult that worships far-left bureaucratic leadership instead of adhering to the scientific method. This has become even more apparent in recent months as the agency faces scrutiny. After the firing of CDC Director Susan Monarez for refusing to institute Trump’s policy changes, the rush for the exits has begun. The woke creatures are now slithering out of the weeds to escape RFK Jr’s lawnmower.

A glaring example is the resignation of Dr. Demetre Daskalakis, a CDC director who has attacked Trump’s policies as dangerous and “unscientific”. It is perhaps no coincidence that Daskalakis is a LGBT activist that promotes transgender treatments for children (a highly unscientific practice). This is the kind of person that rises through the ranks at the CDC:

CDC … "Why doesn't anyone believe us anymore."

Hell, I don't know … let's ask your new spokesmen Dr. Demetre Daskalakis who was pushing 3 different vaccines on your official website, Friday. pic.twitter.com/QbxDgIWw2n

— Catturd ™ (@catturd2) January 23, 2023

Because of the CDCs behavior during the pandemic as well as the woke agenda of their staff, the American populace has demanded accountability and reform. Trump’s decision to make RFK Jr the Secretary of the Department of Health was widely applauded because of the trespasses of the CDC and affiliated agencies during covid. Only Democrats and Big Pharma are opposed to an audit of CDC policies. It’s no surprise that the agency is facing a wave of mass firings and a wave of mass walkouts. Democrats seem to believe that the Trump Administration has no say in underlying federal operations. After all, the system has functioned this way for generations. Presidents come and go; the real power is among the unelected armies of bureaucrats. The moment these people are faced with actual oversight, they become enraged.

The entire man looks calcified, not just the brain.

• The Penguin Quits – Fast Action Needed (CTH)

New York Representative Jerry “The Penguin” Nadler has announced he is not going to seek reelection in 2026. 78-year-old Nadler was going to face a significant primary threat from the far-left.
NEW YORK – “Watching the Biden thing really said something about the necessity for generational change in the party, and I think I want to respect that,” Mr. Nadler said, adding that a younger successor “can maybe do better, can maybe help us more.” Rep. Jerry Nadler, was the former chair of the House Judiciary Committee who joined forces with Adam Schiff and spearheaded President Donald Trump’s impeachment effort. Nadler and Schiff formed a joint House impeachment committee and then hired Mary McCord as the lead staff for the effort. Mary McCord previously worked as DOJ-National Security Division head with Michael Atkinson as her office lawyer.

When McCord quit the DOJ and went to work for Schiff and Nadler, Atkinson was moved to Intelligence Community Inspector General (ICIG). As the ICIG, Michael Atkinson then changed the rules for whistleblowers within the CIA permitting a false assertion by Eric Ciaramella, who subsequently told a fictional story presented by Alexander Vindman. The fake “Ukraine Impeachment” effort stemmed from this political scheme. Vindman lied, Eric Ciaramella advanced the lie to ICIG Michael Atkinson who then spun the false allegation back to his colleague Mary McCord. That’s the origin of the fraud behind the first impeachment effort.

1/ Who told President Trump to appoint Michael Atkinson as ICIG? The appointment of Michael Atkinson was not a mistake. The impeachment was pre-planned. Find the person who put his name in front of President Trump, and you find one of the internal operatives within the Trump administration specifically working to hurt President Trump in his first term. Is that person around in term #2?

2/ Where is Michael Atkinson’s transcript? ICIG Michael Atkinson testified to the joint House subcommittee on impeachment about why he changed the rules for CIA whistleblowers. Atkinson testified about his activity to the Schiff/Nadler committee, IN FRONT OF MARY McCORD.Adam Schiff promptly classified and sealed the Atkinson deposition transcript in an attempt to forever bury it. The equity stakeholders are: (1) the House of Representatives, and (2) the CIA.NEEDED ACTION – House Speaker Mike Johnson should be able to find that Atkinson transcript, declassify and make it public. However, the CIA is likely also the equity stakeholder. So, give it to Director John Ratcliffe who then declassifies it and gives it to DNI Tulsi Gabbard for release.

That was one weird accident.

• Trump to Give Giuliani Presidential Medal of Freedom (Salgado)

After a car crash hospitalized Rudy Giuliani just after he stopped to help a crime victim, Donald Trump announced he would be giving his long-time ally a very great honor.The Presidential Medal of Freedom is the highest honor that an American civilian can receive, and Giuliani, famous for his successful tenure as New York mayor and his years of providing legal support to Donald Trump, will receive it.Trump posted on Truth Social Monday, “As President of the United States of America, I am pleased to announce that Rudy Giuliani, the greatest Mayor in the history of New York City, and an equally great American Patriot, will receive THE PRESIDENTIAL MEDAL OF FREEDOM, our Country’s highest civilian honor. Details as to time and place to follow. Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN!!!”

BREAKING: President Trump says he will award former New York City Mayor Rudy Giuliani the Presidential Medal of Freedom. The announcement comes after Giuliani was seriously injured in a car crash over the weekend. pic.twitter.com/qhXI8ClU71

— Fox News (@FoxNews) September 1, 2025

State Department Ambassador and Chief of Protocol Monica Crowley responded to the news, “Congratulations to America’s Mayor and a truly great patriot @RudyGiuliani! This is so well deserved and the best news, my friend.”Article III Project founder Mike Davis celebrated, “Well-deserved recognition for an iconic American leader. Every mayor in America should follow the broken-windows strategy @RudyGiuliani, the greatest mayor ever, developed and deployed to Make New York City Great Again in the 1990s.”Michael Ragusa, head of Giuliani’s security, released a statement on X Sunday, stating, “On the evening of August 30, 2025, in New Hampshire, Mayor Giuliani was involved in a motor vehicle accident. Prior to the incident, he was flagged down by a woman who was the victim of a domestic violence incident. Mayor Giuliani immediately rendered assistance and contacted 911. He remained on scene until responding officers arrived to ensure her safety.”

I’m at the Staten Island Richmond County Fair and just heard about Rudy Giuliani’s injury.

On Staten Island Rudy is a beloved figure. A few of us paused to say a prayer for his swift and pain-free recovery.

We’re pulling for you Mayor! https://t.co/PNoz41eqSY

— Curtis Sliwa (@CurtisSliwa) August 31, 2025

Then, Giuliani resumed his journey, and “while traveling on the highway, Mayor Giuliani’s vehicle was struck from behind at high speed. He was transported to a nearby trauma center, where he was diagnosed with a fractured thoracic vertebrae, multiple lacerations and contusions, as well as injuries to his left arm and lower leg.” Ragusa said Giuliani was recovering well, but his injuries sound pretty severe.Giuliani’s account subsequently posted an update, reporting that the woman Giuliani tried to help was actually the aggressor in the situation, and her boyfriend was the person who needed aid and medical attention. Also, as of today, Giuliani is still in the trauma center because of the severe injuries he sustained. It is unclear when he will be enough recovered to receive his award from Trump.

Bloom

30,000 hours of footage, equivalent to 3 years and 7 months, were filmed to capture the blooming of 77 types of flowers, and the result is spectacular.pic.twitter.com/GdXbqmJBo2

— Massimo (@Rainmaker1973) September 2, 2025

Horns

This is one of the best images of all time! pic.twitter.com/uHENQP1EiG

— The Figen (@TheFigen_) September 1, 2025

Trees

Cell towers may be quietly damaging the trees around them.

As wireless networks spread through cities and suburbs, scientists are starting to notice a troubling pattern: trees closest to cell towers often show unusual signs of stress.

In one 9-year study in Germany, researchers… pic.twitter.com/7f4dzBpcSE

— Massimo (@Rainmaker1973) September 2, 2025

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Debt Rattle November 27 2017

Nov 272017

November 27, 2017 Posted by Raúl Ilargi Meijer at 10:00 am Finance Tagged with: bitcoin, China, fake news, household debt, immigration, Manus, peace, penguin, populism, refugees 14 Responses »

Guatave Courbet The cliffs of Étretat after the storm 1870

• Why Are We Addicted To Debt? (Forbes)

• China Debt Grows At Faster Pace Despite Years Of Efforts To Contain It (R.)

• Maybe China Shouldn’t Open Up (Pettis)

• OECD Warns on Rising Debt Risk as Canadians Most in the Red (BBG)

• Bitcoin – Too Far Too Fast? (Peter Tchir)

• Italy’s 5-Star, Stung By Fake News Claims, Wants OSCE Election Monitors (R.)

• The Problem Isn’t Populism: the Problem Is the Status Quo Has Failed (CHS)

• Britain Must Accept High Immigration Or Forget Trade Deal With India (BI)

• Why There Is No Peace On Earth (Stockman)

• Australia’s Final Solution (Connelly)

• Fears For World’s Rarest Penguin As Population Plummets (G.)

Asia, that is. Check the marginal productivity of debt graph. And remember, once you’re at zero, you’re done. I’d venture you’re done way before even.

• Why Are We Addicted To Debt? (Forbes)

Almost everyone is familiar with Asia’s rags to riches story. The recent economic miracle led to huge increases in living standards across the region. Average incomes rose by factors of 100% to even 400% in some areas. Not to mention the number of people surviving on less than $2 USD a day was cut in half. A major turning point for this economic wonder was when China joined of the World Trade Organization in 2002. Shortly after, Asia’s contribution to the global GDP jumped from 11% to 21%. However, debt distorts these figures in a variety of ways. So, that begs the question; was it a miracle or just an illusion? What tricks does Asia have up its sleeve? Many are becoming increasingly anxious over Asia’s debt-fueled economy. Their fears may soon become a reality.

[..] Asia’s ability to consume credit seems never ending. Even during the recent financial crisis, Asia witnessed governments working hard to maintain cheap money flowing into their financial systems. The Chinese government implemented a stimulus package with record low interest rates. They wanted to mimic the methods used by other global central banks during the 2007 and 2008 financial crisis. Despite the large amount of media attention China’s borrowing levels received, they’re not special. As you can see in the chart below, credit levels have soared throughout Asia. Singapore, Hong Kong, Thailand, and Malaysia all have increased their debt to GDP ratios since 2001.

An increased dependency on cheap, available credit produced household debt to shoot up in South Korea and Taiwan. What are the possible outcomes? In many of these economies, high debt levels could lead to tragedy. The main culprit would be GDP growth rate’s inability to balance out spiraling debt levels. This situation is called the marginal productivity of debt. Or put more simply, new debt is not as efficient at creating new growth. Look at the chart below to see how the marginal productivity of debt plays out in Asian economies. Even major, regional growth contributors like South Korea, Japan and China, have experienced this downward trend. Indonesia is the only exception.

Since 2001 China’s marginal productivity has declined by a factor just short of 50%. Since investment has been one of China’s main growth drivers (almost entirely financed by debt), this is concerning. To add fuel to the fire, much of that debt has been funneled into China’s state-owned enterprises (SOEs). For instance, while corporate debt was at 165% of the GDP in 2015, SOEs made up 71% of it. Meanwhile, those SOEs only contributed around 20% to China’s total GDP.

Unstoppable?

• China Debt Grows At Faster Pace Despite Years Of Efforts To Contain It (R.)

For years China’s top officials have touted their ambitious policy priority to wean the world’s second-largest economy off high levels of debt, but there is not much to show for it. On the contrary, a Reuters analysis shows the debt pile at Chinese firms has been climbing in that time, with levels at the end of September growing at the fastest pace in four years. The build-up has continued even as policymakers roll out a series of measures to end the explosive growth of debt, including persuading state firms and local governments to prune borrowing and tighter rules and monitoring of banks’ short-term borrowing. By some estimates, China’s overall debt is now as much as three times the size of its economy.

Without a comprehensive strategy to tackle the overhang, there is a growing risk China will have a banking crisis or sharply slower growth or both, the IMF said last year. China’s central bank governor, Zhou Xiaochuan, made global headlines with a warning last month of the risks of a “Minsky moment”, referring to a sudden collapse in asset prices after long periods of growth, sparked by debt or currency pressures. On the sidelines of a key, twice-a-decade Communist Party Congress in October, Zhou referred to relatively high corporate debt and the fast pace of growth in household lending. While also pledging to fend off such risks, Zhou has acknowledged it will take some time to bring debt down to more manageable levels.

Reuters analysis of 2,146 China listed firms showed their total debt at the end of September jumped 23% from a year ago, the highest pace of growth since 2013. The analysis covered three-fifths of the country’s listed firms, but excluded financials, which have seen the brunt of government de-risking and deleveraging efforts so far.

Michael Pettis still sees isolationism as an answer. But isn’t China too open for that already?

• Maybe China Shouldn’t Open Up (Pettis)

China needs reform. This has long been the consensus advice from economists and multilateral institutions such as the World Bank, whose recent “China 2030” report argues that Chinese leaders should strengthen the role of markets and liberalize legal, financial and other institutions governing the economy. Their to-do list is virtually gospel by now: free up trade and investment, unshackle the exchange rate and ease capital controls. Such reforms are held not only to be worthy in themselves, but critical to solving China’s biggest problem: its debt, which has skyrocketed to well over 260% of GDP from 162% in 2008. The speed and scale of credit expansion has raised fears of a financial crisis, even from such normally staid figures as central bank governor Zhou Xiaochuan. The hope is that reforms will boost productivity enough to allow China to outgrow its debt burden before that crisis hits.

This logic is flawed for two reasons. First, China is unlikely to suffer a financial crisis, and this is precisely because of the government’s ability to restructure banking-sector liabilities at will. The real threat is different. Once a country’s debt burden is high enough to create uncertainty about allocating future debt-servicing costs, the debt itself becomes an obstacle to growth. This process – known as “financial distress” – is well-understood in finance theory but is still unfamiliar to many economists. So, unfortunately, is the corroborating history. In the past two centuries, there have been dozens of cases of overly-indebted countries whose policymakers have promised to implement liberalizing reforms meant to allow the country to outgrow its debt. None has succeeded. No excessively indebted country has ever outgrown its debt until a meaningful portion has been forcibly assigned to one economic sector or another.

There are many ways this can occur. Mexico restructured its debt at a discount in 1990, thereby forcing the cost onto creditors. Germany inflated the debt away after 1919, forcing the cost onto pensioners and others with fixed incomes. A decade ago, China forced the cost onto household savers through negative real interest rates. If it is going to regain sustainable growth, China, too, must deleverage. The only healthy way to do so is first, to force local governments to liquidate assets and assign part of the proceeds to debt reduction, and second, to wean China off its dependence on excessive investment by transferring wealth from local governments to households, so they can consume more.

I wanted to include this article because it raises a serious question. The countries with arguably the highest household debt levels (or close) are New Zealand, Australia, Holland, Sweden, Denmark, Norway. They are all missing from the OECD numbers. How can that be a coincidence?

• OECD Warns on Rising Debt Risk as Canadians Most in the Red (BBG)

The OECD warned that rising private debt loads in both advanced and developing economies pose a risk to growth as Canada, South Korea and the U.K. lead the world in household borrowing. “Household and corporate debt in many advanced and emerging market economies is high,” the OECD said Thursday in a pre-released section of a report to be presented next week. “While higher indebtedness does not necessarily imply that problems are just around the corner, it does increase vulnerability to shocks”. With the global economy showing its most even expansion since the financial crisis, debt levels and credit quality are among the risks that could trigger a downturn. Consumer debt tops 100% of GDP in Canada, with South Korea and Britain both above 80%. On corporate borrowing, the OECD warned about a shift in risk from banks to the bond market and a “substantial” decrease in credit quality.

As bitcoin nears $10K, Tchir reflects.

Bit from Twitter: @JorgeStolfi: “Bitcoin’s market cap just passed 150 billion USD. For those who do not know, that is how much money NEW bitcoin “investors” will have to spend, in order for the current bitcoin holders to get the money that they THINK they have.”

• Bitcoin – Too Far Too Fast? (Peter Tchir)

As Bitcoin surges above $9,250 on the open this Sunday, I have to admit to having some real trepidation at these levels. I have been a proponent of the view that Bitcoin and cryptocurrencies would benefit from the launch of ETFs and futures. My view is that allowing for easier ‘adoption’ of Bitcoin will help fuel its growth as it lets new investors participate indirectly. I should not limit that theory to just more traditional ways to invest, like ETFs and futures, but should also include easier ways to establish wallets and to own Bitcoin (and other cryptocurrencies) the ‘traditional’ way. There are a growing number of ‘easy’ to use guides to getting Bitcoin (I have glanced at many but haven’t followed through to verify how well they work of don’t work).

I am convinced that ease of access and the potential for more mainstream products linked to Bitcoin has helped fuel its surge. But now, I am concerned it has gone too far, too fast. I have three major concerns that could slow the price rise or even cause it to have a significant correction (yes, I am converting from bullish Bitcoin to at best neutral). Here are the three concerns:

1) Are all the ETF and Futures launches a ‘sell the news’ event? Basically the question is, while I believe that easier adoption will lead to inflows, how much of that is priced in? Have speculators loaded their electronic wallets with Bitcoin hoping to capitalize on the expected gains to the point, there won’t be more expected gains? Understanding when something is ‘already’ priced in is difficult at the best of times, let alone with something as complex and growing exponentially like Bitcoin, but, I can’t help but wonder. I have felt a switch in discussions I’m having over the last few weeks. A subtle switch, but one where the Bitcoin bulls seem more eager to name ever higher price targets, while the agnostics seem more willing to do work and think about it more, rather than in a rush to get some money into Bitcoin. The sort of behavior that may be indicating a ‘sell the news’ type of environment.

2) There are becoming too many competing investments which are causing some investors to question how ‘real’ the existing ones are. Yes, I understand that ICO’s aren’t necessarily dilutive, if you can purchase them with Bitcoin, but it does start to appear odd when it seems like virtually every day, someone or some entity is announcing some new variation on the theme.

3) Fedcoin, the potential for the Fed could be classified within concern number 2, but is really only part of a larger, separate concern – that governments or central banks will push back. I read this week, along with a lot of other people, an article describing that Bitcoin was now worth more than McDonald’s. While that sort of article is designed to ‘shock’ investors, especially more conservative investors, I think it represents a larger, growing concern that the ‘establishment’ has surrounding cryptocurrencies. Whether the concerns are more focused on the potential for illegal funds to enter the system, taxation, controlling ‘pump and dump’ schemes or making your own job more difficult to manage, I’m sensing they are rising to the surface again. I think we have hit another tipping point where to expect a response to attempt to slow down the growth and valuation of crytpocurrencies should be expected.

Something that has risen almost a ‘ten-bagger’ in less than a year is bound to attract attention. Bitcoin rebounded strongly after the China crackdown, so this fear might be over-rated, but a more organized government or central bank crackdown shouldn’t come as a surprise to anyone. The bigger question, in my mind, is whether Bitcoin can withstand that – but that is a question for another day. I am torn, because my thesis of ‘ease of adoption’ seems to be playing out and in general it is a long way from being fully played out, which by itself is supportive of greater price appreciation. But, at the moment, my concerns are winning out and I’d be taking some chips, or bits, as the case may be, off the table.

Russigate spreads its wings. But what if Russiagate is the real fake news?

• Italy’s 5-Star, Stung By Fake News Claims, Wants OSCE Election Monitors (R.)

Italy’s anti-establishment 5-Star Movement wants international observers to monitor next year’s national election campaign to help ward off “fake news”, party leader Luigi Di Maio said on Sunday. His comments came after the ruling Democratic Party (PD) accused 5-Star supporters of using interlinked internet accounts to spread misinformation and smear the center-left government. Di Maio, who was elected 5-Star leader in September, said his party was often misrepresented by the traditional media and said the Organization for Security and Cooperation in Europe (OSCE) should oversee the forthcoming election. “The problem of fake news exists and we think it is necessary to have the OSCE monitor news and political debate during the election campaign,” Di Maio said on Facebook.

Such a request is unlikely to gain traction with 5-Star’s opponents, who allege that the maverick group is to blame for some of the most egregious smear campaigns. Last week unofficial Facebook accounts that back 5-Star published a photograph purportedly showing a close ally of PD leader Matteo Renzi attending the funeral of Mafia boss Salvatore Riina. In fact it was a photo taken in 2016 at the funeral of a murdered migrant. “Di Maio says he wants to call up OSCE monitors. Why doesn’t he call up U.N. peacekeepers and the Red Cross, and while he is at it, why not telephone (his associates) who are continuing to post this filth,” Renzi told a conference on Sunday. The sharing of false or misleading headlines and mass postings by automated social media “bots” has become a global issue, with accusations that Russia tried to influence votes in the United States and France. Moscow has denied this.

Some PD leaders called this weekend for legislation ahead of the elections, which are due by May, to crack down on the spread of false news. Renzi ruled that out on Sunday, but said his party would release twice-monthly reports on web abuses. “We do not want to shut down any website, but we want accountability,” Renzi said. The 5-Star party complains that it is unfairly treated by mainstream media, saying state broadcaster RAI is under the sway of the government, while the largest private media group is controlled by the family of former center-right prime minister Silvio Berlusconi. Italy’s leading newspapers, which are owned by large industrial concerns, have also been highly critical of 5-Star, which has promised a campaign against corruption and is seen as unfriendly to big business.

Latest polls show 5-Star has built a stable lead over other parties, with support of around 28% against 24% for the PD and 15% for Forza Italia. A new electoral law which encourages coalition building ahead of the vote, means Berlusconi’s center-right bloc should emerge as the single largest political force, albeit without a clear parliamentary majority.

Or the problem is that nobody wants to understand this.

• The Problem Isn’t Populism: the Problem Is the Status Quo Has Failed (CHS)

The corporate/billionaires’ media would have us believe that the crisis we face is populism, a code word for every ugly manifestation of fascism known to humanity. By invoking populism as the cause of our distemper, the mainstream media is implicitly suggesting that the problem is “bad people” -those whose own failings manifest in an attraction to fascism. If we can successfully marginalize these troubled troglodytes, then our problem, populism, would go away and the wonderfulness, equality and widespread prosperity of pre-populist America will be restored. The problem isn’t populism -the problem is the status quo has failed 95% of the populace.

Life isn’t wonderful, prosperous and filled with expansive equality except in the Protected Elite of the top 5% of technocrats, corporate executives, tenured academics, bureaucrats, financiers, bankers, lobbyists and wealthy (or soon to be wealthy) politicos. The bottom 95% need a time machine to recover any semblance of prosperity. They need a time machine that goes back 20 years so they can buy a little bungalow on a postage-stamp lot for $150,000 on the Left and Right Coasts, because now the little bungalows cost $1 million and up. Housing valuations have become so detached from what people earn that even the top 5% has trouble qualifying for a jumbo mortgage without the help of the Bank of Mom and Dad or the family trust fund. The bottom 95% need a time machine to return to the days when college tuition and fees were semi-affordable–say, 30 years ago.

The bottom 95% also need a time machine to return to a time when they could afford healthcare insurance without government subsidies–a generation ago, or better yet, two generations ago. In an age where phantom wealth sprouts like poisoned mushrooms from speculative bubbles, the bottom 95% need a time machine that goes back 8 years so they buy the S&P 500 at 670, or better yet, buy bitcoin for $1 or $10, just to make up the loss in the purchasing power of their wages. Populism is the dismissive propaganda term that the media uses to distract us from the real cause of our problems: the total failure of the status quo, the corrupt, predatory, exploitive, inefficient, rentier pay-to-play-“democracy” cartel-state hierarchy that has failed the bottom 95%.

Boomerang. Right back at you.

• Britain Must Accept High Immigration Or Forget Trade Deal With India (BI)

Britain will struggle to sign new free trade deals with economic powerhouses like India after Brexit unless it is willing to accept high levels of immigration from these countries into Britain. That’s according to Lord Bilimoria, co-founder of Cobra beer, and one of Britain’s most well-known entrepreneurs. Bilimoria spoke to Business Insider on Friday following International Trade Secretary Liam Fox’s claim that his efforts to make Britain a great trading nation are being undermined by the unwillingness of British businesses to export. The Indian-born British businessman described Fox as “utterly unfit” to serve as International Trade Secretary and claimed that nobody “across the board” in British business “has any respect” for the Conservative minister. “Nobody takes him seriously. That’s a fact,” Bilimoria told BI.

Bilimoria then described what he felt was a contradiction at the heart of the case for Brexit, in that Britain will not be able to significantly reduce inward migration — as many have Brexiteers promised — if it wants any hope of ambitious and wide-ranging free trade deals with countries like India. “What trade deals has he [Fox] actually done?” the life peer said. “The Indian high commissioner has warned that an agreement [between Britain and India] might not be in place until 2030 — and said talks haven’t even begun. “He said India will want the movement of professionals; the movement of doctors, the movement of engineers. He said both sides will benefit from this exchange. It won’t be a one-way street.”

Excellent expansive overview of the past 100 years.

• Why There Is No Peace On Earth (Stockman)

After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow’s White House, a dark era in human history came to an end. The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon. To wit, upwards of 8% of the human race was wiped-out during that span.

The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam. [..] The end of the cold war meant world peace was finally at hand, yet 26 years later there is still no peace because Imperial Washington confounds it. In fact, the War Party entrenched in the nation’s capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony.

In short, there was a virulent threat to peace still lurking on the Potomac after the 77-year war ended. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch. So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world. In a word, the real threat to peace circa 1991 was that Pax Americana would not go away quietly in the night.

What’s happening to us? Manus, Greece, let alone Yemen, Myanmar, Syria, where are we heading?

• Australia’s Final Solution (Connelly)

Over the weekend, 620 refugees were forcibly removed from the now decommissioned prison on Manus Island, following a ruling in October that their incarceration was unconstitutional. Under instruction from Australia’s Immigration Minister Peter Dutton, prisoners were beaten with steel bars by Papua New Guinea’s paramilitary guards, starved of food, water, and electricity. They are forbidden access to doctors, nurses, social workers, urgently needed medication, and legal representation. Water supplies were deliberately destroyed. Makeshift wells were poisoned. The Australian government claims the prisoners were relocated to new facilities in nearby town, Lorengau, however those at the site say the facilities are both still under construction and at excess capacity. Prisoners forced onto buses were turned away at the gates, left sitting out in the heat for hours with no word on when they would be allowed to enter their new makeshift prisons.

[..] Australia, the ‘innovation nation’, the country of the fair go, could not possibly entertain a system of incarceration whose cruelty wasn’t entirely by design. So anchored are they to the lie that they ‘stopped the boats’, they will let more than 620 refugees fleeing civil war and religious persecution die from starvation, malnutrition, heart-problems and disease than find them a permanent home, lest they appear soft on national security. (FYI, they haven’t stopped the boats. The government has simply stopped reporting on their arrival. I have been told by members of the defence force who work on refugee ‘intercept vessels’ of mothers whose children had died in their arms, being sent back out to sea to drift aimlessly towards… anywhere but here. The boats haven’t stopped).

New Zealand’s Labour government has already volunteered to resettle the prisoners on both Manus and Nauru but their offers have been met with vitriol, scorn and diplomatic threats. Taking responsibility for a mess of its own making is a response too compassionate for this government. It needs to be barbaric. That’s the point of deterrence. If the barbarism isn’t obviously, outrageously cruel, then the system has failed. This is Australia’s final solution: ‘Deterrence’. Robbed of even the right to their own name, the refugees languishing in detention on Manus Island were literally issued numbers that would become their formal identity and how they are referred to by the prison guards (who incidentally have a long and “well-documented history of rapes, sexual assaults, physical abuse, murders and other serious human rights abuses”, according to a report from The Age).

We’re picking off species one by one. We no longer respect life itself. Who are the gods we’re praying to, and why would they listen?

• Fears For World’s Rarest Penguin As Population Plummets (G.)

Almost half the breeding population of the world’s most endangered penguin species, the yellow-eyed penguin, has disappeared in one part of New Zealand and conservation groups believe commercial fishing is to blame. The yellow-eyed penguin is endemic to New Zealand’s South Island and sub-Antarctic islands, where there are just 1,600 to 1,800 left in the wild, down from nearly 7,000 in 2000. During a recent survey of the island sanctuary of Whenua Hou (Codfish Island), department of conservation staff made the alarming discovery that close to half the island’s breeding population of penguins had vanished. Elsewhere in New Zealand the bird’s population is at its lowest level in 27 years. Forest & Bird’s chief executive Kevin Hague said because the island was predator-free the evidence pointed to the animals being caught and drowned in the nets of commercial fishing trawlers.

Only 3% of commercial trawlers have independent observers on them to report bycatch deaths. “Unlike previous years where disease and high temperatures caused deaths on land, this year birds have disappeared at sea,” said Hague. “There is an active set net fishery within the penguins’ Whenua Hou foraging ground, and the indications are that nearly half the Whenua Hou hoiho population has been drowned in one or more of these nets.” Last year 24 nests were recorded on Whenua Hou, but this year rangers only found 14. Penguin numbers are declining in other parts of the South Island as well, and researchers fear the beloved bird, which appears on the New Zealand $5 note, is heading ever closer to extinction. University of Otago’s Thomas Mattern, a penguin expert, told the Otago Daily Times he believed time was running out for the birds. “Quite frankly, the yellow-eyed penguins, in my professional opinion, are on their way out,” Mattern said.

Debt Rattle October 13 2017

Oct 132017

October 13, 2017 Posted by Raúl Ilargi Meijer at 9:04 am Finance Tagged with: antibiotics, Boeing, FANG, Kobe, obesity, penguin, QE, Tesla, valuation, vulture 3 Responses »

Joan Miro Dancer 1925

• The Shoeshine Boy Moment For FANG And Friends (DR)

• Valuations Are Expensive (Lance Roberts)

• Central Banks Have Effectively Manufactured The World’s Biggest Economy (BBG)

• ECB to Consider Cutting QE Purchases in Half Next Year (BBG)

• Boeing Passenger Jets Have Falsely Certified Kobe Steel Products (R.)

• Kobe Steel Scandal Expands Into Core Business Overseas (BBG)

• Distressed Investors Buying Houston Homes for 40 Cents on the Dollar (BBG)

• Tesla Plays Auto Game By Silicon Valley Rules (DN)

• What Powers America (CB)

• Greek Civil Servants’ Wages 38% Higher Than Private Sector Staff (K.)

• US Obesity Rates Hit New Records: 39.6% of Adults Now Obese (AFP)

• Antibiotic Resistance Could Spell End Of Modern Medicine (G.)

• Penguin Disaster As Only Two Chicks Survive From Colony Of 40,000 (G.)

My guess is that once one of them starts falling, the others will domino right along.

• The Shoeshine Boy Moment For FANG And Friends (DR)

In early March 2009, the current bull market began in the same way that most of the great bull runs in history have, at a moment when investors were terrified to own stocks. Since then it has been nothing but good times. We are now eight and a half years into this bull market making it the second longest in history. This party has been fun. And for a handful of the most popular stocks, fun doesn’t do it justice. The party has been positively off the chains. The stocks that I’m talking about are the FANG (Facebook, Amazon, Netflix and Google) stocks plus a few of their friends (Tesla, Alibaba and others). These stocks have vastly outperformed the market during this bull-run. Now this is where I become a bit of a party-pooper.

Where Joseph Kennedy Sr. had his shoeshine boy moment for the market in 1929, I believe that a similar warning sign arrived for FANG and friends this summer. Remember, they don’t ring a bell at the top but there are signs. This I believe is a big one… The demand for these stocks has become so high that specific ETFs and dedicated index funds are being launched that are comprised only of FANG and friends. Not just an ETF or index fund, but multiple versions. That latest is called the NYSE FANG+ index. It includes 10 highly liquid stocks that are considered innovators across tech and internet/media companies. It is marketed as a benchmark of today’s tech giants. That may be true, but it is also a benchmark of some of the most expensive stocks in the entire S&P 500. Here are its components:

Yes, I’d love to go back in history and own this group of stocks three years ago. But would I want to own them after an already incredible run? No! As a group these stocks are frighteningly expensive today. That is generally what happens when stocks go up that fast, they become much less attractively valued.

Another great effort by Lance.

• Valuations Are Expensive (Lance Roberts)

[..] the repetitive cycle of monetary policy: • Using monetary policy to drag forward future consumption leaves a larger void in the future that must be continually refilled. • Monetary policy does not create self-sustaining economic growth and therefore requires ever larger amounts of monetary policy to maintain the same level of activity. • The filling of the “gap” between fundamentals and reality leads to consumer contraction and ultimately a recession as economic activity recedes. • Job losses rise, wealth effect diminishes and real wealth is destroyed. • Middle class shrinks further. • Central banks act to provide more liquidity to offset recessionary drag and restart economic growth by dragging forward future consumption. •Wash, Rinse, Repeat.

If you don’t believe me, here is the evidence. The stock market has returned more than 60% since 2007 peak, which is more than three times the growth in corporate sales growth and 30% more than GDP. The all-time highs in the stock market have been driven by the $4.5 trillion increase in the Fed’s balance sheet, hundreds of billions in stock buybacks, PE expansion, and ZIRP.

It is critical to remember the stock market is NOT the economy. The stock market should be reflective of underlying economic growth which drives actual revenue growth. Furthermore, GDP growth and stock returns are not highly correlated. In fact, some analysis suggests that they are negatively correlated and perhaps fairly strongly so (-0.40). However, in the meantime, the promise of a continued bull market is very enticing as the “fear of missing out” overrides the “fear of loss.” This brings us back to Jack Bogle and the importance of valuations which are often dismissed in the short-term because there is not an immediate impact on price returns. Valuations, by their very nature, are HORRIBLE predictors of 12-month returns should not be used in any strategy that has such a focus. However, in the longer term, valuations are strong predictors of expected returns.

[..] I have also previously modified Shiller’s CAPE to make it more sensitive to current market dynamics. “The need to smooth earnings volatility is necessary to get a better understanding of what the underlying trend of valuations actually is. For investor’s, periods of ‘valuation expansion’ are where the bulk of the gains in the financial markets have been made over the last 116 years. History shows, that during periods of ‘valuation compression’ returns are more muted and volatile. Therefore, in order to compensate for the potential ‘duration mismatch’ of a faster moving market environment, I recalculated the CAPE ratio using a 5-year average as shown in the chart below.”

To get a better understanding of where valuations are currently relative to past history, we can look at the deviation between current valuation levels and the long-term average going back to 1900.

“Central Banks’ Return to Normalcy Is Nothing But a Charade”

• Central Banks Have Effectively Manufactured The World’s Biggest Economy (BBG)

The Federal Reserve keeps talking about a “return to normal” in monetary policy. The media must buy into it, because it keeps repeating the phrase. Many investors buy into it, too. After all, it is the high and mighty Fed speaking. This “normal” is defined by interest rates, but interest rates are defined by the economics that surround them. Interest rates do not exist in a vacuum. But since we are in an economic environment never before seen in history, where data compiled by Bloomberg show that central banks have amassed $21.5 trillion in assets, how can there possibly be any notion of “normal?” Nothing in history supports the claim. Without a history, “normal” is a meaningless term. Think about it: In response to the financial crisis, central banks have essentially manufactured in just nine years an economy that is bigger than the gross domestic products of either the U.S. or China.

I am more than willing to recognize the accomplishment, but to call it “normal” is either a ruse or the height of foolishness. There is nothing “normal” about it. Some may say it is the “crown of creation,” and a case can be made for this argument, but it is not a crown that was ever seen before. This is why, when assessing financial markets, I keep pointing at the money. It is the giant amount of manufactured capital that is holding interest rates down, pushing equities up and compressing all risk assets against their sovereign benchmarks. It isn’t inflation or housing data or wages or any other piece of data that can be singled out. Those are, by comparison, flyspecks in the wind. Simply put, all that money has created demand that outstrips the current supply in bonds, in equities, in stock price-to-earnings multiples, in historical risk valuations and in credit assets.

Therefore, the economic environment that underlies asset pricing is, in fact, distorted. The Fed’s claim of some sort of “normalcy” is a charade. Fed Chair Janet Yellen can say it, and so can Fed governors and presidents, but there is not one grain of truth in the telling. It is nothing more than mumbo-jumbo because they do not wish you to recognize what is actually happening. They have taken over markets and now totally control and dominate them, regardless of the usual day-to-day antics.

More ‘normalcy’.

• ECB to Consider Cutting QE Purchases in Half Next Year (BBG)

ECB officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate. Reducing quantitative easing to €30 billion ($36 billion) a month from the current pace of €60 billion is a feasible option, said the officials, who asked not to be identified because the deliberations are private. While the central bank’s governors are split on the need to identify an end date for purchases, a pledge to keep buying bonds until September – with the proviso that it could be extended if needed – may offer grounds for compromise, they said. Policy makers led by President Mario Draghi are becoming increasingly confident that ECB policy makers will on Oct. 26 agree to the specifics of how much debt the euro-area’s central banks will buy in the coming year.

After more than 2 1/2 years of trying to revive the region’s economy through bond purchases, some governors see the recent period of robust growth as a reason to rein in the support. Others are concerned that inflation remains too weak. Any changes to the sum and time frame of quantitative easing would still fit into the ECB’s present guidance on monetary policy, which commits the ECB to promise “a sustained adjustment in the path of inflation consistent with its inflation aim.” It also pledges that if “the outlook becomes less favorable, or if financial conditions become inconsistent with further progress toward a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the program in terms of size and/or duration.”

The Japanese government better act fast. Kobe requires controlled demolition.

And this sort of comment needs to stop: “Boeing does not as yet consider the issue a safety problem..”

Of course it’s safety problem. Or are we to believe the safety standards never amounted to anything?

• Boeing Passenger Jets Have Falsely Certified Kobe Steel Products (R.)

Boeing, the world’s biggest maker of passenger jets, has used Kobe Steel products that include those falsely certified by the Japanese company, a source with knowledge of the matter told Reuters. Boeing does not as yet consider the issue a safety problem, the source stressed, but the revelation may raise compensation costs for the Japanese company, which is embroiled in a widening scandal over the false certification of the strength and durability of components supplied to hundreds of companies. The U.S. airline maker is carrying out a survey of aircraft to ascertain the extent and type of Kobe Steel components in its planes and will share the results with airline customers, said the source who has knowledge of the investigation.

Even if the falsely certified parts do not affect safety, given the intense public scrutiny that airlines operate under they may opt to replace suspect parts rather than face any backlash over concerns about safety. Any large-scale program to remove those components, even during scheduled aircraft maintenance, could prove costly for Kobe Steel if it has to foot the bill. Kobe Steel’s CEO, Hiroya Kawasaki, on Thursday said his company’s credibility was at “zero.” The company, he said, is examining possible data falsification going back 10 years, but does not expect to see recalls of cars or airplanes for now.. Also in the U.S., General Motors said it is checking whether its cars contain falsely certified components from Kobe Steel, joining Toyota and around 200 other firms that have received falsely certified parts from the company.

Boeing does not buy products such as aluminum composites, used in aircraft because of their light weight, directly from Kobe Steel. Its key Japanese suppliers, including Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Subaru, however, do. These Japanese companies are key parts of Boeing’s global supply chain, building one fifth of its 777 jetliner and 35% of its carbon composite 787 Dreamliner.

This is getting bigger by the minute.

“..the company holds roughly half of the global market share for the wires used in valve springs of auto engines

• Kobe Steel Scandal Expands Into Core Business Overseas (BBG)

Kobe Steel’s fake data scandal expanded to its core business after the company admitted “inappropriate actions” related to steel wire produced overseas, triggering a fresh collapse in its shares and heightened speculation that the steelmaker may get broken up. Customers have been informed about the issue, which has been resolved, Tokyo-based spokeswoman Eimi Hamano said by phone, declining to provide details. Kobe Steel falsified quality certification data for steel wire used in auto engines and to strengthen tires, the Nikkei newspaper reported Friday. Kobe’s admission of misconduct in its steel business, which accounts for about a third of revenue, ratchets up the pressure on Japan’s third-biggest steelmaker.

The company’s disclosures had up until now dealt with aluminum, copper and iron ore products used in everything from cars to computer hard drives to Japan’s iconic bullet trains, although there haven’t been any reports of products being recalled or safety concerns raised. The deepening scandal “suggests that this is company culture, not just the actions of a few rogue employees,” Alexander Robert Medd, managing director at Bucephalus Research in Hong Kong, said by email. The question to be resolved is “were they trying to save money or just unable to produce the right spec in the right quantities,” he said. Kobe’s shares have plunged 42% this week, including a 9.1% drop on Friday, after it revealed on Sunday that it had fudged data on the strength and durability of metals supplied to as many as 200 customers around the world, including Toyota, General Motors and space rocket-maker Mitsubishi Heavy Industries.

[..] SMBC Nikko Securities said in a note the new revelations around steel wires could be “quite negative” for Kobe Steel’s creditworthiness as the company holds roughly half of the global market share for the wires used in valve springs of auto engines. If doubts arose over the safety of the wires, it could “shake the foundation” of the company, according to chief credit analyst Takayuki Atake.

“The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence..”

• Distressed Investors Buying Houston Homes for 40 Cents on the Dollar (BBG)

Bryan Schild drives through the byways of Houston looking for what could be the investment opportunity of a lifetime: homes selling for as little as 40¢ on the dollar. “We Pay Cash For Flooded Homes $$$$$$$$ Don’t fix it, sell it. Quick close,” read the signs piled in the back seat of his Ford pickup. Schild stops by a ranch-style house where 74-year-old Paul Matlock lives with his wife, disabled from multiple sclerosis. Matlock is desperate to leave and is considering Schild’s offer of $120,000—half the home’s value three weeks earlier. A half-dozen other investors have made offers, one as low as $55,000. “The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence,” Matlock says. “They’re waiting for the dead body to fall over.”

It’s axiomatic on Wall Street that the time to buy is when fear overtakes greed—when blood (or, in this case, water) is in the streets. Now some are eyeing the billions of dollars in hurricane-ravaged property in Texas and Florida and deciding it may be the time to take out their checkbooks. Investors such as Schild figure they can buy low, either fix up and flip the houses or rent them out for several years, and unload them later, doubling their money or more. Those kinds of bets have often paid off. Buyers who snapped up co-ops and office towers when New York was near bankruptcy in the 1970s made a killing. More recently, companies including Blackstone and other marquee names bought foreclosed homes after the 2008 financial crisis and are sitting on billions in potential gains.

The cycle begins with small-time investors such as Schild, who’s bought more than 30 waterlogged houses for an average $175,000 apiece. Then Wall Street swoops in. Gary Beasley, former CEO of Waypoint Homes, also sees an opportunity. He’s pitching private equity firms and pension funds on the potential profit in buying flooded homes, repairing them, and renting them back to homeowners. Bain Capital and billionaire Marc Benioff, co-founder of Salesforce.com, are backing Beasley’s two-year-old company, Roofstock. It runs a website where investors can buy and sell single-family rental properties. Beasley thinks owner-occupants may be interested in selling there, too, and that flooded neighborhoods are the Next Big Thing. “It’s much like the housing crisis, when the institutional guys came in to buy homes nobody wanted,” he says. Like other investors, Beasley and Schild view themselves as helping homeowners to move on and Houston to rebuild.

Will Musk take Silicon Valley down with him?

• Tesla Plays Auto Game By Silicon Valley Rules (DN)

Lest there be any doubt, the electrified race for supremacy in self-driving cars is being played by Silicon Valley rules. How do we know this? By Tesla Chairman Elon Musk’s recognition that his long-awaited Model 3 compact is “in production hell,” that it’s complicated by “bottlenecks” and by confirmation that parts of the cars are being “hand-built.” This amazing accomplishment is being greeted, well, differently by investors than it would if, say, General Motors Chairman Mary Barra copped to the same kind of chaos with its electric Chevrolet Bolt … or just about any other eagerly anticipated model in its lineup. Tesla mostly gets a pass, as it does for losing money on every car it produces. The nearly 4% slide in its shares Monday, the first trading day after The Wall Street Journal reported the messy Model 3 launch, has since recouped most of the loss, judging by the market close Wednesday.

To free “resources to fix Model 3 bottlenecks” and increase battery production to help hurricane-ravaged Puerto Rico, Musk tweeted that Tesla’s anticipated demonstration of its self-driving truck would be delayed until Nov. 16. Detroit (and its foreign-owned rivals) would get crucified for a similar mess. Analysts, the news media and, especially, investors would show scant tolerance for misses of that magnitude from traditional auto industry players — and all of them would demand answers. Tesla? Not so much. Never mind that Musk, the automotive wunderkind, might risk missing what Barclays Research calls the “iPhone moment” for the Model 3, Tesla’s long-awaited entry into the volume-priced electric car segment. You know, the segment already occupied by GM’s Chevy Bolt, Nissan’s Leaf and a slew of coming electric entrants from global automakers.

As a rule, they don’t botch production launches with the same aplomb as Musk’s hand-built production hell. They also have broader distribution networks under existing state franchise laws; more disciplined production systems with longer lead times to ensure more consistent quality at launch; and greater transparency with investors, analysts and the news media. This will be fascinating to watch. Tesla’s Model 3 is one of the most highly anticipated car launches in a long time. It’s supposed to be sheet metal and electric powertrain proof that Silicon Valley innovation can beat Detroit and Stuttgart, Tokyo and Seoul at their own game.

Click the link to see the whole thing.

• What Powers America (CB)

The US electricity system is often described as the world’s largest machine. It is also incredibly diverse, reflecting the policy preferences, needs and available natural resources of each state. Carbon Brief has plotted the nation’s power stations in an interactive map to show how and where the US generates electricity. A few key messages can be gleaned from the map and associated data interactives below: • The US electricity system has been changing rapidly over the past decade. This reflects not only federal policy, but also technologies, geographies, markets and state mandates. •The average US coal plant is 40 years old and runs half the time. Some 15% are at least 50 years old, against an average retirement age of 52. • Planned new power plants are almost exclusively gas, wind or solar.

Supplying electricity to a nation’s homes, business and industry is an almost uniquely challenging enterprise. For now, electrical energy is either expensive or inconvenient to store, meaning supply and demand must be balanced in real time. It is also easier to generate power close to home than to transport it over long distances. The way electricity is generated fundamentally depends on the fuels and technologies available. The march of progress means this mix is changing – but natural resources and geographies are fixed. Moreover, US states have broad powers to influence the electricity systems within their borders. Putting the US electricity system on a map offers visual confirmation of how important these factors are. Why is solar so prevalent in North Carolina, for example? Or coal in West Virginia?

You can use Carbon Brief’s interactive map to view all the power plants in the US and their relative electricity generating capacities, which are proportional to the size of the bubbles. The dynamic chart in the sidebar summarises the makeup of the capacity mix. It’s important to note that the map and related charts, below, are based on electrical generating capacity. The electricity generated each year by each unit varies according to its load factor (average output of a power station, relative to its installed capacity). US wind has a load factor of around 35% while solar is around 27%. These are lower load factors than for nuclear at around 90%. Coal and gas can, in theory, have similarly high load factors, but in practice both are at around 50% in the US.

Article gets numbers mixed up, but one thing is certain: Greeks make very little money compared to cost of living.

• Greek Civil Servants’ Wages 38% Higher Than Private Sector Staff (K.)

Despite years of austerity policies, Greek civil servants remain significantly better paid than private sector wages, with their average wages 38% higher than their counterparts in the private sector, according to the Hellenic Federation of Enterprises (SEV). The average net monthly wage in the public sector is €1,075 compared to €777 in the private sector, according to figures made public in SEV’s weekly bulletin which underlined that the gap between the two is widening rather than closing. In the first half of this year, the average wage in the public sector rose marginally – by 0.1% – compared to a drop of 1.3% for private sector salaries, according to SEV’s analysis, which concluded that private sector workers saw their wages shaved by about €10 a month over that period.

In a related development, a report conducted by the civil servants’ union ADEDY reported an increase in permanent staff in the Greek civil service over the past year. An additional 1,293 staff were hired between August 2016 and last August, bringing the total number to 566,022, according to the report. Another finding was that most Greek civil servants – 80% of the total – take home a net monthly salary of less than €1,300. Half earn up to €1,000 a month, 44% take home between €1,000 and €1,500 and 3.6% net between €1,500 and €2,100, according to the report. Last month, SEV painted a dire picture of the state of the Greek pension system, which it described as running on empty, while warning that the country’s beleaguered private sector has taken on a disproportionate share of the burden to support pensioners and the public sector.

Easy to figure out what this will mean to health care. The richest country in the world kills its people for profit.

• US Obesity Rates Hit New Records: 39.6% of Adults Now Obese (AFP)

The rate of obesity in the United States has reached a new high, at 39.6% of adults, according to US government data released Friday. Health experts are concerned about obesity because it is associated with a number of life-threatening health conditions, including heart disease, stroke, diabetes and certain kinds of cancer. The adult obesity rate in the United States has risen steadily since 1999, when 30.5% of adults were obese. “From 1999–2000 through 2015–2016, a significantly increasing trend in obesity was observed in both adults and youth,” said the report, based on a nationally representative sample of the population, and issued by the National Center for Health Statistics.

“The observed change in prevalence between 2013–2014 and 2015–2016, however, was not significant among both adults and youth.” Its previous report for 2013 to 2014 found that 37.7% of adults were obese. Researchers said the difference between the current and last report is not statistically significant because it falls within the margin of error of the estimate. Adult obesity is defined as having a body mass index (BMI) of 30 or higher. Among youths aged two to 19, 18.5% are obese, the report said. The rate of youth obesity was 13.9% in 1999.

Another example of killing people for profit.

• Antibiotic Resistance Could Spell End Of Modern Medicine (G.)

England’s chief medical officer has repeated her warning of a “post-antibiotic apocalypse” as she urged world leaders to address the growing threat of antibiotic resistance. Prof Dame Sally Davies said that if antibiotics lose their effectiveness it would spell “the end of modern medicine”. Without the drugs used to fight infections, common medical interventions such as caesarean sections, cancer treatments and hip replacements would become incredibly risky and transplant medicine would be a thing of the past, she said. “We really are facing – if we don’t take action now – a dreadful post-antibiotic apocalypse. I don’t want to say to my children that I didn’t do my best to protect them and their children,” Davies said.

Health experts have previously said resistance to antimicrobial drugs could cause a bigger threat to mankind than cancer. In recent years, the UK has led a drive to raise global awareness of the threat posed to modern medicine by antimicrobial resistance (AMR). Each year about 700,000 people around the world die due to drug-resistant infections including tuberculosis, HIV and malaria. If no action is taken, it has been estimated that drug-resistant infections will kill 10 million people a year by 2050. The UK government and the Wellcome Trust, along with others, have organised a call to action meeting for health officials from around the world. At the meeting in Berlin, the government will announce a new project that will map the spread of death and disease caused by drug-resistant superbugs.

Too sad for words.

• Penguin Disaster As Only Two Chicks Survive From Colony Of 40,000 (G.)

A colony of about 40,000 Adélie penguins in Antarctica has suffered a “catastrophic breeding event” – all but two chicks have died of starvation this year. It is the second time in just four years that such devastation – not previously seen in more than 50 years of observation – has been wrought on the population. The finding has prompted urgent calls for the establishment of a marine protected area in East Antarctica, at next week’s meeting of 24 nations and the European Union at the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) in Hobart. In the colony of about 18,000 breeding penguin pairs on Petrels Island, French scientists discovered just two surviving chicks at the start of the year. Thousands of starved chicks and unhatched eggs were found across the island in the region called Adélie Land (“Terre Adélie”).

The colony had experienced a similar event in 2013, when no chicks survived. In a paper about that event, a group of researchers, led by Yan Ropert-Coudert from France’s National Centre for Scientific Research, said it had been caused by a record amount of summer sea ice and an “unprecedented rainy episode”. The unusual extent of sea ice meant the penguins had to travel an extra 100km to forage for food. And the rainy weather left the chicks, which have poor waterproofing, wet and unable to keep warm. This year’s event has also been attributed to an unusually large amount of sea ice. Overall, Antarctica has had a record low amount of summer sea ice, but the area around the colony has been an exception.

Ropert-Coudert said the region had been severely affected by the break-up of the Mertz glacier tongue in 2010, when a piece of ice almost the size of Luxembourg – about 80 km long and 40km wide – broke off. That event, which occurred about 250km from Petrels Island, had a big impact on ocean currents and ice formation in the region. “The Mertz glacier impact on the region sets the scene in 2010 and when unusual meteorological events, driven by large climatic variations, hit in some years this leads to massive failures,” Ropert-Coudert told the Guardian. “In other words, there may still be years when the breeding will be OK, or even good for this colony, but the scene is set for massive impacts to hit on a more or less regular basis.”