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Why Do You Let It Happen?

Oct 302023
 
 October 30, 2023  Posted by at 5:42 pm Finance Tagged with: , , , ,  11 Responses »


Willem de Kooning Police Gazette 1955

 

 

Two weeks ago, I wrote about Benjamin -Bibi- Netanyahu, Israel PM:

Bibi

Benjamin -Bibi- Netanyahu has always been a warmonger. He thinks he, and his people, are superior to the Palestinians, and come to think of it, to Muslims in general. And when he first appeared on the scene some 30 years ago, he might have had a point, at least from a military point of view. But he does not today, and that is very dangerous for his people. Bibi lives in the past, because he liked that past – he could feel superior. He does not recognize to what extent the world, including his, has changed. But change it did, while he was dreaming of winning warfare.

But that didn’t cover everything I think should be covered. So here’s some more. Let’s do a few quotes. First, Scott Ritter a few days ago:

Israel Failing in Global PR Campaign to Demonize Hamas

“Remember, Benjamin Netanyahu, the prime minister of Israel, was teetering on the brink of political collapse prior to the Hamas action of October 7,” Ritter recalled. “He is a man who is under the shadow of some very serious corruption charges, charges which, again, you’re innocent until proven guilty in a court of law, but if there was a court of law of relevant jurisdiction who heard the case, he probably be found guilty – and he knows it, which is why he is collaborating with his party in the Knesset, the Israeli parliament, to change the Israeli Basic Law so that there is no longer a separate-but-equal branch of government called the judiciary, but rather a judiciary that is subordinated to the Israeli parliament. And the Israeli parliament can basically veto any judge that they disagree with. They can impeach at will. So any judge who heard a corruption case against Ben Netanyahu, who allowed it to go forward would be subjected to impeachment, removal. It makes Benjamin Netanyahu literally above the law.”

Bibi would have been in jail if he wasn’t PM. How did he make it to PM again? He formed a coalition with extreme right, or whatever you call it. People like present-day Minister of National Security Itamar Ben-Gvir. Who is so extreme that the EU cancelled a reception in May 2023 because he was supposed to attend. The same EU who now supports Israel no matter what. Israel’s Opposition Leader Yair Lapid said: “Ben-Gvir is not a legitimate person in the international community (and not really in Israel either), and sometimes you have to be both wise and just and simply send someone else”. And Bibi’s cabinet – and wider government- holds many more people like that. Bibi sold his soul to the devil to stay in power, lest he’d be in shackles.

James Tweedie 4 days ago:

Netanyahu Dragging US Into War With Iran to Save His Political Career

And now we’re reaching a point where Israel, as we now know, could be extinguished if the Sunnis and the Shia unite and take on Israel all at once in a swarm approach from all directions.” He said Netanyahu had good reason to allow the situation to erupt on October 7 and to escalate it further, as he was “not in control” of the more extreme members of his coalition government while also facing criminal charges when he leaves office. “Netanyahu could make this an endless war just to stay in office and to protect himself personally.” Maloof argued. “There’s clear evidence now that he knew, he had information and intelligence that Hamas […] was planning an action. He was warned, but he let it happen.”

Ergo, Bibi’s not in charge. The right wing appears to be -as if he’s not right wing enough. If he doesn’t do what they want, they can cancel their support, and he will be locked up. I know, simplified, but still.

So it’s kind of puzzling when he doesn’t do what they desire. And you can be sure they desire bloodshed. These people are Old Testament, an eye for an eye, not turn the other cheek.

Netanyahu Refuses To Order Wide-Scale Ground Operation In Gaza – NYT

Israeli Prime Minister Benjamin Netanyahu refused to sign the order on beginning of a wide-scale ground operation in the Gaza Strip out of fear of losing trust of the people, should the operation fail, the New York Times reported citing sources in the Israeli government. According to two sources, who were present during meetings of the emergency cabinet, Netanyahu “outraged senior officers by refusing to sign the plan” of the. His refusal, the sources note, was partially motivated by the Prime Minister’s desire to obtain a unanimous approval of this step from the emergency cabinet, established jointly with the opposition after the October 7 attacks.

The NYT claims that Netanyahu’s refusal indicates disagreements within the cabinet, with some ministers considering a less ambitious invasion plan, which includes several operations covering a small portion of the enclave instead of a single wide-scale one. Analysts say that the Prime Minister is unwilling to approve the action plan out of concerns that he will be blamed for the operation’s potential failure amid the falling public trust. On October 25, Axios reported citing US officials that Netanyahu is skeptical about the armed forces’ command plans and intends to postpone the beginning of the ground operation in the Gaza Strip.

There’s Bibi, there’s the right wing that controls him, but there is a still bigger force that neither of them dares contradict. Turns out, it’s the US. Who claim they merely “advise” Israel, but who in actual fact call the shots regardless.

Bibi’s right wing pals would have gone in right away 3 weeks ago, he himself might have waited a week or so longer, but it’s not their decision. They have to sit tight until they get their orders.

Israel Scaled Back Gaza Ground Campaign After US Intervention – NYT

The Israeli military has limited the scope of its “expanded” ground operation against the Palestinian armed group Hamas in Gaza following consultations with senior White House officials, the New York Times reported on Saturday, citing sources. According to the paper, the initial plans “alarmed” officials in Washington, who voiced concern that they “lacked achievable military objectives,” with fears that the IDF was not yet prepared for a full-scale ground assault. However, an unnamed US government source told NYT that after discussions with Defense Secretary Lloyd Austin and other officials “the Israelis improved and refined their plan” for the offensive. As a result, the report said, the IDF’s actions in Gaza have so far been “smaller and more narrowly focused” than Israeli officials initially proposed to their US counterparts.

What’s the US afraid of? Well, plenty. First of all, a repeat of the humiliation they’re suffering in Ukraine. Then, Israel not being able to defeat Hamas. After that, Hezbollah. Then Iran. And at the end, if it would come to that, confronting the entire Muslim world. Russia would choose the Muslim side. China would pick Russia’s side. OPEC countries would cut the oil supply.

The US tries to make you believe that Israel conducts its own actions. They do not. Everything Israel did do so far has required US permission. Which also means that the US is ultimately responsible for a campaign that has killed some 4,000 Palestinian children, and many more to come. That’s on Joe Biden’s head. And ultimately yours, if you’re American or European. Something’s off. That’s not what you want, you don’t want 1000s of children dying in your name. So why do you let it happen?

 

 

 

 

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Smokin’ a Pipeline

Sep 282022
 
 September 28, 2022  Posted by at 3:00 pm Finance Tagged with: , , , , , , , , , ,  45 Responses »


M.C. Escher Fish and Boat 1948

 

 

For the past 24 hours, I’ve been reading, and jotting down quotes, like an idiot, about the Nordstream pipes’ sabotage. Just trying to figure out what the hell happened. I doubt we will ever know who “killed Kennedy”, but we can try. I find it remarkable how eager certain parties are to blame Russia for blowing up its own infrastructure, how equally eager to discard alternative options, and most of all perhaps how eager “EU functionaries” are to claim they want a full investigation. Really? Even if your own allies did it?

Thinking that Russia blew up its own pipeline, while they could just close the tap, much easier and cheaper, appears to be very far fetched. In any Whodunnit you want some logic. First, my notes, from the past day, much from Twitter, plus some other sources, more or less in random order:

• Nord Stream 2 pipeline cost over 11 billion dollars and ten years to build. It’s going to take years to fix.

Note: it will take weeks, if not months, to just get started. Because all the gas will have to flow out first. The pipes were not active, but they were full of gas, over a very long distance. They were ready to go and supply Europe. Then when Germany suddenly reneged on the deal, where were they going to put the gas?

Laying (building) undersea pipelines is never an easy job, But the Baltic Sea adds a few extra problems, as per Lookout at the Saker :

Sitrep On Nord Stream 1 And 2 Gas Pipelines

The first step to building an offshore pipeline is to conduct extensive surveys of the seabed. In the case of NS2, this involved detailed seabed survey of areas potentially harmful to the building and operation of a pipeline. This was certainly the case for NS1 and NS2, especially in areas that were used to dump explosives and chemicals.


The Baltic Sea was the scene of maritime battles, laying of mines during WW2. Additionally, areas of it were used as a dumping ground for obsolete, damaged, or expired munitions & chemicals. This was widely carried out following the end of both world wars. “It is estimated that the Baltic Sea alone has around 50,000 tonnes of chemical munitions, 500,000 tonnes of conventional weapons, and 10,000 wrecks on its seabed.”

I loved this little bit:

• German Economy Minister Habeck: “speculations about the reason for nord stream 1 leak are currently forbidden.”

That’s German politics on its last legs. Y’all, shut up!

Nordstream has never been uncontested. This is from November 2015, at pipeline-journal.net:

Explosive-Laden Drone Found Near Nord Stream Pipeline

Ruling out sabotage, the Swedish military has successfully cleared a remote operated vehicle (drone) rigged with explosives found near Line 2 of the Nord Stream Natural Gas offshore pipeline system. The vehicle was discovered during a routine survey operation as part of the annual integrity assessment of the Nord Stream pipeline. Since it was within the Swedish Exclusive Economic Zone (EEZ) approximately 120 km away from the island of Gotland, the Swedes called on their armed forces to remove and ultimately disarm the object. “We don’t consider it to be dangerous to merchant vessels or the pipeline at this point,” Jesper Stolpe, Swedish Armed Forces spokesman, told Radio Sweden. According to Stolpe, the cable used to control the drone and to set off the explosive was cut off, so at the moment the vehicle is relatively harmless.

And more recently, there was activity in the area as well. Guess who…

• Apparently US 6th Fleet undersea explosives specialists were “scoping out” the situation back in June.

• An expeditionary detachment of US Navy ships led by the universal amphibious assault ship USS Kearsarge days ago was in the Baltic Sea. It was 30 km from the site of the alleged sabotage on the Nord Stream-1 gas pipeline and 50 km from the threads of Nord Stream-2 gas pipeline

• Tin Foil Hats: Russia and Germany were negotiating behind the scenes for gas, but a “3rd party caught on and put an end to it”.

• The Nordstream 2 pipeline allows Russia to send gas to Western Europe without paying transit fees to Ukraine and Poland. Russia just completed it in the teeth of massive opposition from Ukraine, Poland and USA. Now they are trying to convince you it was Russia who blew it up.

The mother of all coincidences:

• Baltic Pipe. This is the new Norway-Poland Baltic Pipeline that just coincidentally opened today.

• A former Polish defense minister has credited the United States with blowing up two Russian natural gas pipelines to Europe, Nord Stream 1 & 2, the day before Poland opened a major new pipeline from Norway. A new 900km pipeline “Baltic Pipe” will be opened today, a branch connecting from the Norway-Germany ‘“Europipe”. This branch bypasses Germany.

That former Polish defense minister, Radek Sikorski, [now] Chairman of the European Parliament’s delegation for relations with the US, and married to WaPo’s Anne Applebaum, writes “Thank you, USA”

• [..] looks like the pipeline attack wasn’t totally successful, as it failed to breach one of the NS2 lines – taking down only three of the four pipes. it will be interesting to see if there is any attempt to finish the job.

• Javier Blas, Bloomberg: The size of the Nord Stream pipeline gas leak is huge. According to the Danish armed forces, it measures about 1 kilometer in diameter. The smaller circle in the center is approximately 200 meters wide

• Each line of the pipeline consists of about 100,000 24-tonne concrete-weight coated steel pipes laid on the seabed. The pipelines have a constant internal diameter of 1.153m, according to Nord Stream. Sections lie at a depth of around 80-110m.

• The approximate locations of the leaks are in the Bornholm Basin area (mean depth of 43m), closest to the island. The depth is shallow enough for specialised diving operations as well as the use of Remotely Operated Vehicles, (as was the case for the construction of both pipelines). The shallow area of the Bornholm Strait separating the Arkona Basin from the Bornholm Basin has a maximum depth of 45 metres.

• The steel pipe itself has a wall of 4.1 centimeters (1.6 inches), and it’s coated with another 6-11 cm of steel-reinforced concrete. Each section of the pipe weighs 11 tonnes, which goes to 24-25 tonnes after the concrete is applied.

• Assessment is that the second, bigger explosion corresponded to more than 100 kilos of dynamite.

 

This gives us at least some idea. That Russia would kill its own $11 billion 10-year hard-fought investment makes little sense. Not impossible, but very unlikely. The US, however…

 

We have Biden in February this year:

And Victoria Nuland just before that:

 

Tucker Carlson summarized it pretty well last night:

 

But now we still don’t know Whodunnit.

Gonzalo Lira says it’s “The Americans Declared War On Europe”:

 

 

I’m sure the Americans had a role in it. But that’s not the same as saying they were the direct perpetrators. There are still other candidates. Let’s rule out Russia, unless someone comes with a good explanation for why they would have acted against their own interest -or the semblance of it.

Germany is another party to this. But they are suffering already, and may indeed have held secret talks with Russia about gas deliveries. Now, they can forget about that for a long time to come. There are voices saying today that the pipelines are damaged beyond repair. I’m not sure that’s true, maybe they can replace one damaged pipe segment with a non-damaged one, but it would certainly take a lot of time and money.

So we strike off Russia and Germany, and keep the US in the back of our heads. That leaves two very obvious parties. First, the Ukraine, which loves not having to compete with Nordstream. But as far as we know, Kiev doesn’t have the equipment and/or capability to blow up a pipeline 100 meters under water. They could have asked the US, though, true enough.

That leaves one country that no-one is talking about, but is in the thick of it all: Poland.

The Poles stand to profit in two different ways from the explosions (and unlike Ukraine, they have the equipment to make it happen). First, there is a pipeline from Russia to Germany that runs through Poland, and for which they can now demand a user fee if any gas would flow. Second, they just opened the Norway-Poland branch of the Norway-Germany “Europipe” yesterday, which is labeled the Baltic Pipe.

Poland can make a killing off of the situation. There’s no way they could pull it off without the US knowing about it, but that can be arranged.

 

This all still leaves me with a few questions. As I knew it would. For the same reason I don’t know who killed Kennedy. First, why did the CIA warn of an attack on Nordstream weeks in advance?

And second, why are people like Von der Leyen, Borrell etc. clamoring so loudly for a thorough investigation when the Whodunnit logic says it may well point to one of their allies? Do they know something they’re not telling, do they think they can suppress whatever comes out? To be continued.

 

 

 

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Hope

Aug 162021
 
 August 16, 2021  Posted by at 6:57 pm Finance Tagged with: , , , , , , , , , ,  41 Responses »


Jules Adolphe Breton The Song of the Lark 1884

 

An article on Jim Quinn’s Burning Platform gave me hope. Hope that the madness will be forced to end, though I have no hope this will be an easy process. The article, by “Hardscrabble Farmer”, describes what happens in France now the even stricter Health Pass measures have come into force. Much of the country is grinding to a halt.

We’ll have to wait and see how it plays out, and sure, the French are out for the summer, so empty terraces and restaurants are not that exceptional. The writer is probably not native French, and doesn’t know the intricacies of the health care system which is not entirely state run, there are indeed private clinics, “elite” is a French word after all, but much of what he says is undoubtedly true. And not only in France.

I think most countries that now cajole and threaten their citizens into being vaccinated will find, and have to admit at some point, that they just don’t have the numbers. But first France:

 

Message From France

Here in France it has gone to the extreme with the “Health” Pass. Last week on the 21st ALL restaurants, bars, coffee shops, and any leisure activities like sporting events, theaters, cinemas, museums, were closed to anyone without “the pass” and all staff at these places are mandated to get the jab to keep their job. It is now a 6 Month prison sentence if you are caught inside any of these places without the pass (the man who slapped the president in the face got only 3 months prison time).

Business owners will get a fine of 45,000 euros and 1 year prison sentence if they do not comply with the use of “the pass” and force all their employees to get the jab. (If you know France, you can commit murder and have less of a sentence) So the result? All the low paid employees quit, they can make more on welfare here (for now). We can still technically “get take out food” but I just tried last night and every restaurant in our town (that is dine in with take out) has closed their doors due to the lack of staff.

As of last week ALL doctors, nurses and health industry workers have been mandated to get the jab or lose their license, practice, job, business etc. [..] Since the Health care system is state run and funded, it has been run into the ground. All the good doctors left France 5 Years ago, all the hospitals look like they are 3rd world hospitals since there is no money to repair them, half of the equipment doesn’t work and not every hospital is stocked with supplies needed for daily needs (masks, gels, disposable gowns etc).

For 5 years Nurses have been understaffed and doing double the work because the Health care system is nearly bankrupt…. So add to this the mandatory jab. So the result? Well they took to the streets by the millions and now all the hospitals just lost another 50% of staff capacity. My doctor just went into early retirement (a.k.a. he quit) and I have yet to find a replacement.

As of Aug 1st ALL large malls, retail stores and grocery store owners and their staff need to be jabbed and the health pass is required to enter for employees and customers. This would be the equivalent to closing ALL Targets, Walmarts, Costcos, Home Depots, and all major grocery stores [..] to those without “the pass”.

[..] As of Sept 15th All public areas and access will be off limits. No farmers markets, no parks, no national parks, lakes, rivers, beaches, recreation areas, campsites etc. and no gathering over 100 people, no churches, no weddings, etc. As of Oct 1st ALL small vendors such as, delis, pizza trucks, sandwich shops, butchers, bakers, vegetable stands etc.

So as of Oct 1st I will only be able to purchase food by internet and pick up (if allowed). Food shortages, Truckers strike, hospitals and airports shutting down unemployment going through the roof. Its going to be a bumpy ride folks. Is it me or does all this seem a bit extreme for a “pass” that isn’t exactly working?

About those numbers: according to Our World in Data, France has 52% fully vaccinated people, and 68% who’ve had at least a single dose. I don’t believe that for a second, just as I don’t believe any country’s official numbers. Because they are used to push more people into getting vaccines, the idea being that high numbers will make them think it’s time to be with the group.

A nice example is a CNBC piece from August 2 about the US, which claims:

70% of U.S. adults have had at least one shot of a Covid vaccine, according to data published Monday by the CDC, about a month behind President Joe Biden’s Fourth of July goal.


[..] “We need to have at least 80% of the population vaccinated to truly have some form of herd immunity,” Dr. Paul Offit, a voting member of the Food and Drug Administration’s Vaccines and Related Biological Products Advisory Committee, said in a recent interview. “This is a fairly contagious virus.”

But also on August 2, the Mayo Clinic had the US at 58% single dose vaccinated, which Our World in Data appears to confirm, and 49.9% fully vaccinated. But that doesn’t look too great a whole month after Biden’s July 4 70% goal ran out, dies it?

Two weeks later, on August 15, the number of fully vaccinated is up by just 1%, at 50.9%.

At that rate it will take a while. Or rather, that rate means they might as well give up. Because it’s an uphill battle in which the low hanging fruit has been picked. Vaccination centers are closing, demand is drying up. Just getting to 70% would be a miracle. But then the “experts” say that is not enough either, you need 80%. Forget about it. You will kill your economy first. Even at 70%, you have almost a third of your population not working, not shopping, living outside of the economy.

Bill H.R. 4980, posted on Congress.gov., says:

To direct the Secretary of Homeland Security to ensure that any individual traveling on a flight that departs from or arrives to an airport inside the United States or a territory of the United States is fully vaccinated against COVID-19, and for other purposes.

This means half of Americans won’t be allowed to fly. Happy Americans! Happy airlines! And of course these measures will subsequently at some point be applied to all the fields they already are in France. Hospitality, stores, hospitals, etc. Which will lose a lot of their staff. and a huge chunk of their customers. As the fully vaccinated go up by 1% per two weeks.

Oh, and wait, I haven’t even mentioned the 3rd, 4th and so on, booster shots. Think everyone will get them all? If these people have their way, we’re going to live in a world where one week you can dine out and fly, but the next you first need to get the umpteenth shot to do it. And you may get real sick if you don’t to boot.

In Greece, the government last week announced that 65.1% of the total population have one dose, and 61.1% “of adults have completed their inoculation.” That would mean they are way ahead of the US, even though they started much later, had supply problems and so on. No, they’re lying too, all governments massage the numbers.

With the US at 50%, I’d say Greece is at 30%, 40% max. And resistance here is high, so the numbers will only climb very slowly. But of course, threats. A friend who works in a restaurant told me today that they’re threatening to fire him in October. He’s trying, with 5 others at the same place, to hire a lawyer to take their case, but the lawyers have so many of these cases that their fees have skyrocketed.

They base their claim on the idea that the Greek parliament have said you can’t fire people for not taking the vaccine. I simply don’t know enough about that. But it’s clear which way the wind is blowing. Here and in so many other places. Some people are docile, some governments have better propaganda, but it’s still all moving in the same direction.

What may break this downhill, and dangerous, trend, is reports about severe adverse effects, such as antibody-dependent enhancement, breaking through the near perfect wall of silence built around “alternative” views and other things that don’t fit the narrative. You can’t fool all of the people all of the time. But you can obviously try. And you can try and set one half of your population against the other. That’s a lovely idea too. The Land of the Free, but only for those who follow orders.

Note: I know, I know, they’re all betting on boosting their numbers by inoculating every new born child, even the unborn. Problem is, people tend to love their children even more than themselves. And no-one can assure them it’s safe to jab their kids, even if they claim it: there’s no evidence of it, none.

 

 

 

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The Gerontocracy Strikes Back

Aug 142020
 
 August 14, 2020  Posted by at 12:35 pm Finance Tagged with: , , , , , , , , , , , , ,  11 Responses »


Egon Schiele Self-Portrait with Lowered Head 1912

 

 

Regular Automatic Earth guest writer Alexander Aston this time comes not from Zimbabwe, Cambridge or Greece, but from South Carolina, where he is on family business. And that’s where he’s venting his anger about. I’m pretty sure we would all benefit from doing more of that, get it all off our chests. I think maybe the main issue with it in the present day circumstances is you have to make sure it’s your anger, and not somebody else’s that you’re merely parroting.

I personally like Alexander’s notion of: “America, a Country For Old Men”.

 

 

 

Alexander Aston: Is there any more perfect metaphor for a society in terminal decline than the senescent Joe Biden? The U.S. election has boiled down to a choice between the authoritarian versions of Mr. Magoo and P.T. Barnum. Truly, “there’s a sucker born every minute” is a far more apropos motto for the country than E. Pluribus Unum. The Republicans have adopted a Christian Nationalism that identifies with a New York shyster that says all the shitty things they’ve been feeling for decades while blaming the least powerful. It’s always easier to kick down than punch up and moral courage is not a common trait.

Likewise, the Democrats smug self-satisfied conviction of ethical superiority and sense of entitlement to the votes of every women, brown person and leftist makes them not only insufferable but delusional. The DNC managed to crush the momentum and energy of one of the most significant left- wing grassroots movements in US history. They have demoralised a huge swath of the under-45 crowd and subverted an actual political vision (regardless of whether you agree with it or not) in favour of a man with an abysmal record and signs of growing cognitive impairment. The DNC platform offers zero substantive policy other than “not Trump” (a policy that’s going to have a very short honeymoon in the face of cascading systems failure).

The Democrats have made no concessions on even one important progressive/left issue. Now they have picked a morally bankrupt prosecutor who’s deeply entangled with the prison industrial complex at a time in which “defund the police” has coalesced into a key feature of American discourse. Yet, liberals seem completely shocked and aghast by the fact that there are large numbers of young folks, minorities and women that are unwilling to shut up and put up. The level of enthusiasm beyond the party faithful, for those still willing to vote Democrat, amounts to the ever inspiring “I’ll grit my teeth.”

 

Meanwhile, I know middle aged folks that have never voted in their lives who have signed up just to support Trump. In other words, they are motivated. Like it or lump it, that’s some of the real political complexity behind the vacuous narrative management of the MSM. On a national level, the American sense of reality is becoming more unhinged than a schizophrenic dropping acid after a weeklong meth binge. George Soros funded Antifa and Putin’s army of trolls are all monsters of the same fevered social imagination. On its current trajectory, the American Right will soon believe anyone to the left of Attila the Hun is a “far-left radical.”

Likewise, U.S. liberals will be left haunted and terrified by the spectre of Russian agents stealing their precious bodily fluids. Meanwhile, the virus will continue to rage, and corporate feudalism will further entrench itself as the benefits of imperial citizenship rapidly fade. The only thing that’s certain is that huge swaths of Americans still won’t actually understand what is happening to them and continue to blame the opposing factions of management, figments of their propaganda, the dispossessed and the marginalised. I don’t believe the specific outcome of the American election is all that relevant anymore.

The sad truth is that the United States is collapsing under the weight of a microscopic entity and its own systemic contradictions. The various narratives of what is happening and what it means to be an American have become so wildly divergent that there are multiple parallel realities operating in the United States. What’s frightening is how few realise the diversity and complexity of these various perspectives, fears and aspirations. Regardless of who wins the election, trust in the political legitimacy of the American system is being fatally undermined. If the margin of the election is close, it is guaranteed that one side will not accept the results.

 

If the election is swept, then the winning party will be saddled with a crisis of unparalleled proportions in the history of the country. Furthermore, neither party has the political vision nor competence to actually address the challenges that beset them. The U.S. would need leadership on par with a Lincoln or Aurelius to rescue the political system. Whoever is in power will rapidly face multiple and intersecting forms of systemic breakdown, resistance and noncompliance as the extent of the economic devastation becomes truly apparent.

The first part of the 2020’s will consist of material deprivation, civil unrest and increasingly robust challenges to the United States’ geostrategic position. The more that authoritarians try to exert control in a high entropy environment (robbing Peter to pay Paul), the faster the system will fall apart. Ultimately, I believe that the break-up of the United States is all but inevitable at present. What I hope is that it will be a relatively peaceful dissolution and reorganisation. What should terrify us all is the prospect of real violence as the various factions and coalitions jockey for power in the new reality. A few truly smooth brained idiots think that they just need to tool up and go mow down a few “liberal snowflakes” so that they can return to the 1950’s by Christmas.

 

A conflict in North America would be a clusterfuck that would make Syria’s civil war look like a game of checkers. Forget electoralism and eschew romantic notions of purification through violence. Build solidarity networks, figure out how to make your communities economically, socially and psychologically resilient. My suggestion would be that Mutualism, Libertarian Municipalism and Democratic Confederalism offer some good starting points for thinking about these things. I would recommend setting up a micro- factory in your community so that you can start manufacturing necessary tools and goods on a local level. Here are some freely available schematics: Civilization Starter Kit.

Try to appreciate the limitations of your own understanding so that you might be more compassionate towards others. Don’t blame people for having problems they don’t know how to fix, try helping them instead. Some things, once broken, cannot be mended. This is very true for societies. I sincerely wish you all the best of luck. Please be good to one another and defend those less powerful and fortunate than yourself.

P.S. If you are in a swing state you should follow your conscience, but it should be beneath any person’s dignity to vote for either party in their safe states. If you don’t understand how the American electoral system works at this point then shame on you, stop berating people for voting Green in Montana or Libertarian in California, they’re actually displaying some political acumen.

 

 

 

 

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What? Default? Where? Dollar?

Jul 262020
 
 July 26, 2020  Posted by at 6:27 pm Finance Tagged with: , , , , , , , , , , , , ,  14 Responses »


Elaine de Kooning Fairfield Porter #1 1954

 

 

It won’t come as a surprise to anyone that the first half of 2020 has brought, among many other things, renewed calls for the demise of the US dollar. It’s been pretty much a non-stop call for over a decade now, and longer. But this time, like all previous ones, I’m thinking: I don’t see it. I guess my first question is always: please explain why the dollar would collapse before the euro does.

For one thing, the dollar would have to collapse/default against one or more “entities”. The dollar is not like one of those highrises that collapse upon themselves. It will have to default or collapse against something(s) else. Since it is the world reserve currency, that means there would have to be a replacement reserve currency. Yes, that could also be for example gold or SDR’s, or even a basket of currencies, and something like that may happen eventually, but it doesn’t appear in the cards in the short run.

There are really only two candidates for the role, and neither looks at all fit to play it. The euro may have some ambitions in that direction, but it has far too many problems still. The yuan/renminbi certainly has such ambitions, but the Communist party refuses to let it get on stage to show what it’s got. As I recently wrote:

 

The main sticking point for Beijing is a conundrum it cannot solve. The CCP wants to have BOTH a global currency AND total control over that currency. It will have to choose between the two, and cannot make up its mind. So it pretends it doesn’t have to choose. Sure, there has been some advancement for the yuan, but I bet most of that is on the back of the Belt and Road (BRI), and that will turn out to be one of the main victims of the coronavirus. The BRI is China’s very clever way of exporting its overproduction, but potential buyers have other things on their mind today.


Meanwhile, even with that, the yuan is used in only 1.8% of cross-currency payments. [..] The sudden, and rushed, take-over of Hong Kong with the new security law will not help China’s plans to be accepted internationally. [..] The world’s large investors will not put their money into something that Xi Jinping can declare devalued by 50% on a rainy morning when he sees fit. He will have to cede that kind of control.

The euro has made some gains vs the USD recently, going from 1.07 to 1.16 or so, but that means very little once you look at the broader picture. Moreover, the reason the financial press provides for -much of- those gains, which is that the EU supposedly showed “unity” in its recent Recovery Fund talks, is bollocks.

If it showed one thing, it was a lack of unity. That’s why these were the longest talks they ever had. And if this had not been Angela Merkel’s last hurrah, they might not have agreed at all. They paid off the Frugal Four to the tune of hundreds of millions, and that’s how they got a deal. Horse traders.

A simple screenshot from Bloomberg of the USD vs EUR over the last five years makes clear why the recent changes are no big deal. (All BBG screenshots are from July 24 just before 10 AM EDT and all cover a 5 year period.)

 

 

A reserve currency has two roles: being the currency that most international trade is conducted in, and -closely related- being the currency that countries hold most as foreign exchange (FX) reserves. After WWII, the US dollar became the most important currency for trade more or less by default, a position that it greatly strengthened with the petrodollar.

A 2015 SWIFT paper provides details about the US dollar’s share of international trade:

The US dollar prevails as the dominant international trade currency, with a 51.9% share of the value of international currency usage in 2014. The euro is second, with a 30.5% share of the total value. The British pound is third, with a 5.4% share of the total value, followed by Asian currencies such as the Japanese yen and the Chinese yuan.

That’s from five years ago, but things won’t have changed much. The system is complex and inert, it has a very strong resistance against large and sudden changes. (Do note that the euro’s share of international trade is substantially skewed because it includes payments between countries that use the euro as their currency, plus those EU countries that don’t -yet-). Single market, international trade.

And then there’s the dollar’s FX role.

In September 2019, Eswar Prasad at Brookings reported that the dollar’s share of global FX reserves remains around 65%.

The drop from 66 percent in 2015 to 62 percent in 2018, is probably a statistical artifact related to changes in the reporting of reserves. Compared with 2007, however, the dollar’s share of global FX reserves has declined by 2 percentage points while the euro’s share is down 6 percentage points. Over this period, the Japanese yen’s share has risen by 2 percentage points, while other less prominent reserve currencies have increased their total share by 4 percentage points. The renminbi, which was not an official reserve currency in 2007, now accounts for 2 percent of global FX reserves. [..] .. the euro has stumbled, the renminbi has stalled, and dollar supremacy remains unchallenged.

[..] In July 2019, China’s total official reserve assets amounted to just over $3.2 trillion, of which $3.1 trillion (97 percent of the total) was held in the form of FX reserves. Gold holdings amounted to about $89 billion [..] Coming amid rising trade tensions with the U.S., the 5 percent increase in China’s gold stock and the 24 percent increase in the value of its official gold holdings during 2019 have been interpreted as a sign of China’s attempting to diversify its reserve holdings away from U.S. dollars.

If this interpretation was indeed correct, China has a long way to go. Gold now accounts for 3 percent of China’s gross international reserves. From a global financial market perspective, and especially relative to its overall international reserves, the $18 billion increase in the value of China’s gold reserves during 2019 is trivial; it barely registers as a shift in the composition of China’s overall reserves.

Assuming that China still holds 58 percent of its FX reserves in dollar-denominated assets, the value of those assets in July 2019 was $1.8 trillion. So, the value of its gold reserves, $94 billion, is a mere one twentieth of that of China’s dollar-denominated reserves.

With the euro and yuan out of the way as potential reserve currency candidates, we can take a look at gold. Senior commenter Dr.D at the Automatic Earth recently wrote: “As advertised, the US$ is defaulting. What? Where? US$ has been cut in half compared to Silver in 3 months. US$ has been cut in half compared to BTC in 3 months. US$ has been cut in half compared to Gold in 4 years.

Like many people talking about a USD demise, perhaps that’s too much of a dollar-centric view and conclusion. Surely gold and silver can rise vs the USD without announcing an imminent collapse of the latter. And since precious metals tend to go up in times of uncertainty, and COVID has brought shovels full of just that, you would expect them to rise.

Therefore you would have to also look at how they do vs for example the euro, before concluding anything. Note: I didn’t include Bitcoin because it’s too new and volatile. Makes me think of the Lindy Effect, often cited by Nassim Taleb, the idea that the older something is, the longer it’s likely to be around in the future.

Here are a few more Bloomberg screenshots. And yes, gold has done well vs the USD in, say, the past two years, no doubt.

 

 

But gold has pretty much followed the exact same pattern vs the euro:

 

 

Silver has done even better, more recently, vs the USD, though compared to where it was in 2016 it’s not that big a step (barely more than 10%):

 

 

And the pattern of silver vs the euro is so similar it’s almost eery.

 

 

I don’t see anything there that would make me think the dollar is collapsing, no more than the euro is. What I see is gold and silver rising. People move into precious metals, perceived as safe havens; they always do when the world is in turmoil. And don’t forget there are trillions in additional recent central bank money sloshing around that have to move somewhere.

As for the changes of the USD vs the euro: we’ve already seen that they are not exceptional. Losing a few percent vs the euro will not collapse the dollar.

Also, there’s something missing in the discussion as far as I’ve seen: the option that it’s the US itself that wants a lower dollar at this point in time, and actively works to get it lower. A strong dollar works for a strong economy, but not for one weakened by a pandemic and an acrimonious political climate.

But the US has borrowed so much money!, you say. Yes, but so have Europe, and Japan, and China, everyone has who could.

 

A little more about gold, since some are clamoring for a return to the gold standard. Which is not likely, because too many parties would resist, either for ideological or practical reasons. But say you would consider it, then you would as one of the first things you do, look at gold reserves. Here are the top ten gold holding countries per March 2020, as assembled by TradingEconomics.com:

 

 

Note: Britain is not there, because “Between 1999 and 2002 the Treasury sold 401 tonnes of gold – out of its 715-tonne holding – at an average price of $275 an ounce, generating about $3.5bn during the period.” (BBC). Gold is at $1,900 today. Nuff said.

The US gold reserves are so large it would appear to give them an unfair advantage if a gold standard were considered. Same as they have in the current set-up. Then again, if you insert population numbers into the equation, Germany, Italy, Switzerland, even the Netherlands, have more in relative terms. Question is: where does that leave all the others?

Long story short: I don’t see a US dollar default or collapse in the near future. But by all means enlighten me.

 

 

 

 

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Intelligence

Jul 162020
 
 July 16, 2020  Posted by at 7:46 pm Finance Tagged with: , , , , , , , , , , , ,  8 Responses »


Utagawa Yoshitoshi Ariko weeps as her boat drifts in the moonlight 1886

 

 

Sometimes I think I can only do this work properly if I’m angry all the time 24/7. But I don’t want to be angry all the time; what kind of life is that? Still, there are days when I just can’t help it. The British intelligence services (please let find another word for that, so as to not insult actually smart people) came out with a couple anti-Putin press releases today, and there we go again.

We can only guess at what they want this time, whether it to keep the UK’s own “RussiaRussia Putin is Hitler” flame alive, or are they seeking to help their US counterparts to rise from the ashes of their fully discredited years-long Orange Man Bad narratives, but boy, is this nauseating. What’s even worse is that people eat it up like candy.

Guys, this is your own highly paid snoops lying to you -along with your government(s)- like there’s no tomorrow, and you’re just sitting there worrying about wearing a face mask next time you go to a store. Know what that makes you? Sheep. I know y’all still know what those look like, and how they behave. So what’s the attraction?

Here’s BIGLY revelation no. 1 per the BBC. Do note the “almost certain” in both pieces, they need an easy way out if the story doesn’t stick. It also means that obviously they’re not at all certain, they’re just making it up.

Russian Hackers Target COVID19 Vaccine Research

Russian hackers are targeting organisations trying to develop a coronavirus vaccine, a group of national security services has warned. The UK’s National Cyber Security Centre (NCSC) said the hackers “almost certainly” operated as “part of Russian intelligence services”. It said the group used malware to try and steal information relating to Covid-19 vaccine development. NCSC director of operations Paul Chichester said it was “despicable”. The hackers are part of a group called APT29, also known as “the Dukes” or “Cozy Bear”.

Some people will remember the name Cozy Bear from Robert Mueller’s failed $40 million “investigation”. Is that why the NCSC put it in? But to the point: Why would Russia hack the UK for vaccine info if and when the UK has no vaccine? Put it another way: what are the odds that UK “intelligence” is not at the same time trying to hack Russia for its own info? Think British scientists are smarter than Russian ones? How much money would you want to put on that?

Everyone is spying on everyone, always have, and today that may require some hacking skills. Big surprise. You leave your backdoor open, someone may try to have a look inside. Same for everyone. Not even the beginning of a newsworthy story; it happens all the time and everywhere. Next.

Next one is even flimsier. This one implies that since Jeremy Corbyn had some papers on the NHS in the last election, RussiaRussia gave them to him. And he’s an anti-semite too. So there. Can anyone explain why Russia would want to interfere in a UK election?

This seems to allege that Putin wanted to help Corbyn win. But is that for the same reason that he wanted to help Corbyn’s ideological twin Donald Trump win? Which we now know he didn’t? Or is it just that Putin the evil mastermind wants to confuse all parties? Given what I see and hear, he needn’t bother; they’re all already confused as can be.

 

UK Says Russia Sought To Interfere In 2019 Election

Dominic Raab’s statement is the first time ministers have admitted that the Kremlin has tried to distort the workings of British democracy – a practice the foreign secretary said was “completely unacceptable”. “On the basis of extensive analysis, the government has concluded that it is almost certain that Russian actors sought to interfere in the 2019 general election through the online amplification of illicitly acquired and leaked government documents,” Raab said in a written statement.

Next. Only days ago, there was this from Britain about a court case concerning the infamous novichok “attack” in Salisbury, in which first former Russian GRU agent Sergei Skripal and his daughter, and months later two other Brits, ostensibly came in contact with what was called the deadliest nerve agent in the world.

Neither Sergei Skripal nor his daughter Yulia have ever been seen again. There was a vague message from a niece, but that was it. But the story is alive and kicking. And can thus continue to be used. By the media-intelligence cartel.

 

Russian Agents May Have Deliberately Left Bottle Of Novichok In Salisbury

Russian agents may have deliberately discarded a bottle of the deadly nerve agent novichok, used in the assassination attempt of former spy Sergei Skripal, in Salisbury in a bid to undermine UK security, the High Court today heard. The claim was made during a legal challenge by the family of Dawn Sturgess, 44, who died in 2018 after coming into contact with novichok in a fake perfume bottle which her partner had found in a park. The family are embroiled in a High Court action in a bid to get ‘key questions’ asked at Ms Sturgess’ inquest.

[..] According to the Guardian, he also referenced then UK prime minister, Theresa May, in September 2018 in which she said: ‘This chemical weapons attack on our soil was part of a wider pattern of Russian behaviour that persistently seeks to undermine our security and that of our allies around the world.’

[..] ‘The use of novichok in Salisbury was the first aggressive use of a nerve agent in Europe since the Second World War,’ said Mr Mansfield in a written case summary. ‘It put hundreds of members of the British public at risk and killed Ms Sturgess. ‘The issue of who was responsible for it is a matter of almost unparalleled public concern. ‘There is no realistic prospect that the two suspects will face a criminal trial in the UK or that the Russian state will carry out a comprehensive investigation, and no public inquiry into these events has been established.

This is the pattern: it’s nothing to do with UK security. The pattern is that both the US and UK use their lack of control over Russia as an excuse and reason to blame Russia for anything they feel like. As five-year old kids would. Robert Mueller, the liar and coward, having failed to produce one shred of evidence against Trump, left two things alive in his final report: empty accusations against Assange, who was muzzled, and against “13 Russians”, who he knew would never contest whatever he said.

And when he was challenged because Concord Management decided to show up with a lawyer, he lost that too. The official line was: “It is no longer in the best interests of justice or the country’s national security” to continue. What a bunch of losers.

And we’re not done. Assange smearer no. 1 and hidden intelligence agent Luke Harding, who invented more smear stories about Julian than anyone on the planet, had this three weeks ago. I kid you not, his point was that Russian intelligence is really really stupid. To prove it, he paints a shining portrait of … US/UK intelligence operation Bellingcat.

This is mainly about the Skripal case again, but of course we also remember their role in the never ever existing chemical attack in Syria by Assad on his own people. Yes, the one where they, the OPCW was involved too, planted the canisters and shot some grueling staged photographs.

 

A Chain Of Stupidity’: The Skripal Case And The Decline Of Russia’s Spy Agencies

Bellingcat revealed the identity of poisoner No 1 in a message on its website. Having unmasked one assassin, it seemed likely that Bellingcat would succeed in identifying Petrov, too. Sure enough, in late September I received an invitation to a press conference. It was to be held in an illustrious location: the Houses of Parliament, in an upstairs committee room, number nine. Its subject was Petrov’s real identity. By the time I arrived, the room was full. I spotted a reporter from the New York Times, Ellen Barry, together with leading representatives from the British and US media. It was hard to escape the conclusion that power in journalism was shifting.


It was moving away from established print titles and towards open-source innovators. The new hero of journalism was no longer a grizzled investigator burning shoe leather, à la All the President’s Men, but a pasty-looking kid in front of a MacBook Air. Higgins and Grozev were there, as well as a Conservative MP, Bob Seely. I found a spot on a bench and sat down. The mood was expectant. Seely set the scene. He described Bellingcat as a “truly remarkable group of digital detectives”. Their success was due to an explosion of digital technology and a rise in digital activism, he said.

Here’s Canadian journalist Eva Bartlett about Bellingcat:

Bellingcat & Atlantic Council Join To Award Exploited Syrian Child & American Mass Murderer

Is the Atlantic Council some benevolent organization handing out awards to do-gooding people? No. It’s a Washington DC-based think tank, which promulgates lies and propaganda to further imperialist wars and weapons sales, among other things. One of its Syria “experts” is none other than Bellingcat’s Eliot Higgins, who recently took to social media to tell people to suck his “big balls,” making him more of a laughing stock than this backgrounder on the man with no qualifications to his title.


Some of the Atlantic Council’s funders include: the US State Department, oil and weapons manufacturing companies, banks, NATO, various nations’ ministries of defence, and the US Air Force, Army, Marine Corps and Navy. Even just based on funding alone, and ignoring their pro-NATO policy papers, the Atlantic Council clearly exists to further the interests of those involved in weapons manufacturing, wars, and oil.

Of course the entire lying fanfare is a direct result of the west failing to capture Crimea from Russia. They lost that one too; they sure lose a lot when engaging with Russia, don’t they? All they end up with is stories. John McCain and Victoria Nuland thought they had it all in their hands, and then it slipped right through.

And from Maidan and Crimea it’s just a skip and a hop to MH17, plus more -and heavy- Bellingcat involvement. This made the news again a week ago.

 

MH17 Disaster: Dutch Take Russia To European Rights Court

Citizens of 10 different countries died on board the Boeing 777 airliner that was flying from Amsterdam to Kuala Lumpur, Malaysia. More than two-thirds of the victims were Dutch nationals. In March, a trial opened in the Netherlands of three Russian and one Ukrainian citizens – still at large – for the murder of 298 people on board the plane. They are all linked to the pro-Moscow separatists. The trial, in a court near Amsterdam’s Schiphol airport, is expected to last for months.


In a statement, the Dutch foreign ministry said the government “decided to bring Russia before the European Court of Human Rights for its role in the downing of Flight MH17”. It said that “by taking this course of action the government is offering maximum support” to individual cases already brought against Russia by victims’ families. “Achieving justice for 298 victims of the downing of Flight MH17 is and will remain the government’s highest priority,” said Mr Blok. “By taking this step today… we are moving closer to this goal,” he added.

Now, I have some interest in this, because I was born in Holland and still have the passport. But from what I can see, this is just yet another western intelligence story. I don’t know what happened with MH17, but I’m pretty sure the Dutch government doesn’t know either, or if they do they’re not telling. And my skepticism isn’t even based on pieces like this from Eric Zuesse two weeks ago (but do read it!).

 

Netherlands ‘Justice’ Is Totally Corrupt: MH17 Case as Example

[..] when Ukraine’s Government authorized Holland’s Government to investigate and rule on what caused the MH17 to be shot down, Holland’s Government signed onto a secret agreement with Ukraine’s Government that included a provision allowing Ukraine’s Government to block and prevent any finding from being issued that would implicate Ukraine’s Government in having shot it down. Holland’s Government violates its own Freedom of Information law by refusing to make public what that secret agreement says.


However, at the time when the existence of the agreement slipped through into mention by a Ukrainian news-site on 8 August 2014, that news-report said “As part of the four-party agreement signed on August 8 between Ukraine, the Netherlands, Belgium and Australia [all of which nations are allies of the United States and are cooperating with its new Cold War against Russia], information on the investigation into the disaster Malaysian ‘Boeing-777’ will not be disclosed.”

My skepticism is kind of linked to this, but it’s much older. When the plane was brought down, I noted that then-US VP Joe Biden, as well as the Ukrainian government of newly (US-)installed president Poroshenko, and also Dutch foreign minister Frans Timmermans, who got a plush job in Brussels out of it, all three declared within hours that Russia “was what did it”.

None could know at the time they made the statement. But it was a few months after the west lost Crimea, and thereby the chance to rid Russia of its only warm water port. And some people didn’t like that one bit. Some people were very unhappy about being outsmarted by Putin. Nuland must have been livid. And Hillary Clinton, and McCain.

Then when the investigation started, something odd happened. 2/3 of all victims -298 in total- were from the Netherlands. Yet the Dutch got to lead the inquest. As I wrote at the time: have you ever seen a crime series, or a murder one, or a movie, where the main victim (afflicted party) gets to lead the investigation into what happened? No, what we always see is someone taking the aggrieved detective aside saying: sorry, you’re too close to this.

And then on top of that, Ukraine, certainly one of the main suspects, since it happened in their territory, got to be part of the investigation. And not just part, as you can see in Zuesse’s piece, they could veto both what would be investigated and what could be communicated about the results. While they could well be the perpetrator!

If you go back to the murder series metaphor, a producer or writer would say: no can do, it lacks all credibility. But they did it. And it was then that I knew no matter what the report would say, it would be literally incredible. It’s 6 years later, and it’s going to take many more years, of posturing, name-calling, threats, accusations, you name it. And nothing will be proven, there will be only claims of proof. Just like in all the other cases I mentioned above. It’s how these things are done.

MH17 has become just another tool in the hands of “intelligence”.

 

 

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Weaponizing the Dollar

May 062020
 
 May 6, 2020  Posted by at 6:09 pm Finance, Primers Tagged with: , , , , , , , , , , , ,  14 Responses »


Saul Leiter Phone call c1957

 

Don’t worry, we’re still talking virus, just from a slightly different angle. I was going to do something completely different, but then I saw an article at the South China Morning Post (SCMP) today that made me think “I don’t think that’s true”, realizing that at the same time many people would think it is.

Foreign holdings of US Treasuries are a misty environment for perhaps not just many, but most people. What triggered the SCMP piece is Trump’s threat, if it was ever meant to be one, to default on US dollar-denominated debt owned by China. Which by one estimate consists for about 70% of Treasuries.

And there are entire choirs full of voices willing to tell us that China can simply start dumping the -estimated- $1.2 trillion in Treasuries it holds, and threaten if not end the USD reserve currency status that way, if the US doesn’t “behave”. There’s little doubt that China would want this, but that doesn’t make the idea any more realistic.

What should give that away is, how easy can we make it for you, that it hasn’t done so yet. And now a conflict over the origin of a virus would trigger this? On a side note: if that origin is somewhere in China, even if it’s unintentional, how could Beijing possibly “admit” to it? How could it ever settle the lawsuits that would ensue?

No, the US cannot default on China’s holdings of its Treasuries. That alone would be a larger threat to the reserve currency status than anything anybody else could do, other then nuclear war. But at the same time, China cannot dump its Treasury holdings. because that would hurt … China.

And don’t forget that China and the US are in a symbiotic relationship of chief seller and chief buyer. Drastic changes in that relationship would -almost- certainly lead to consequences that neither can fully oversee, and that could hurt either or both tremendously.

Where are the US going to buy what they now buy from China? Who is China going to sell to what they today sell to the US? The countries are for all intents and purposes Siamese twins. Whatever can change, can only do so gradually. And even then.

No matter how much I read about it (a lot), this particular field is still not my expertise. But when I read the SCMP piece, it reminded me right off the bat of something that Michael Pettis, professor of finance at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets, wrote on May 28 2019, in an update of an article he wrote in January 2018 (all pre-virustime).

I liked Michael’s take from the moment it was published, because I learned a lot. I think you might too. I can’t do this without some elaborate quotes, but at least that will make me shut up a little. Please bear with me. I don’t find the SCMP piece all that interesting, but it’s good as a failing counterweight to Pettis.

With all that in mind, let’s take the SCMP piece first:

 

China Could Cut US Debt Holdings In Response To White House COVID19 Compensation Threats

[..] White House officials have debated several measures to offset the cost of the coronavirus outbreak, including cancelling some or all of the nearly US$1.1 trillion debt that the United States government owes China. While analysts added that the US was highly unlikely to take the “nuclear option”, the mere fact that the idea has been discussed could well prompt Beijing to seek to insulate itself from the risk by reducing its US government debt holdings.

That, in turn, could spell trouble for the US government bond market at a time when Washington is significantly ramping up new issuance to pay for a series of programmes to combat the pandemic and the economic damage it is causing. “It’s such a crazy idea that anyone who has made it should really have their fitness for office reconsidered,” said Cliff Tan, East Asian head of global markets research at MUFG Bank. “We view this as largely a political ploy for [Donald Trump’s] re-election and a cynical one because it would destroy the financing of the US federal budget deficit.”

[..] any move to cancel the debt owed to China – effectively defaulting on it – would be counterproductive to US interests because it would likely destroy investors’ faith in the trustworthiness of the US government to pay its bills [..] The US Treasury two-year yield continued to trade near record low levels this week, suggesting market traders and fund managers are largely shrugging off what is widely seen as a far-fetched idea that the US could cancel some or all of China’s debt.

The whole idea that the US would default on its own Treasury debt is nonsensical. Why write about it? Is that only because you don’t understand what’s involved? And your editor doesn’t either?

Nevertheless, the news that the idea was discussed by top US officials is likely to raise concerns among Chinese leaders about the growing risks of holding a large amount of US government debt at a time when relations appear to be deteriorating rapidly, analysts said. Iris Pang, Greater China chief economist at ING Bank, said unless it had no choice, China would want to avoid quickly offloading its US government debt without first considering other punitive measures against the US.


[..] China could trigger a crash in the US dollar and financial markets by flooding the market with US Treasuries for sale, which would push down US bond prices and cause yields to spike. But that would also ignite a global financial catastrophe, hurting China as well. Instead, China could cut back or stop buying new US Treasury issues, which would gradually reduce its holdings of US government securities as old ones expire and are not replaced. “In the coming months, [China could] halt its Treasury purchases to send a clear signal of its intentions,” said Pang. “If it decides to do that, it could make actual sales [of its other holdings] at a later date.”

This is my central point here. The article says: “China could trigger a crash in the US dollar and financial markets by flooding the market with US Treasuries..”, and I don’t think that’s true. Yeah, they can do tariffs or buy less US soybeans, but then again, those have been linked by Trump to US purchases from China.

In the meantime, China may consider imposing tariffs of its own, or reducing its US agricultural purchases. China has agreed to buy an additional US$200 billion worth of US products and services over the next two years compared to 2017 levels as part of the phase one trade deal signed in January. [..] There have always been calls for China to diversify its US$3 trillion in foreign exchange reserve holdings, around one-third of which are held in US Treasuries. According to the latest US Treasury Department report, China’s holdings slipped to US$1.09 trillion in February from a peak of US$1.32 trillion in November 2013.


[..] “There’s a strong urge for countries like China, and Russia, to move away from US dollar settlements. This is simply because the US dollar can be weaponised by the US government,” said Xu Sitao, chief economist at Deloitte China, referring to the recent practise by the US government of cutting off foreign individuals, companies and governments from the global US dollar financial transaction settlement system, greatly complicating their ability to conduct business. “Clearly there’s more willingness for certain countries just to diversify and move away from US dollar settlements.”

Sure, but that’s old stuff, as old as the petrodollar. Still, the article supposedly deals with -life-during-and-after-COVID19. Has nothing changed? Well, perhaps not. But then why the article?

[..] David Chin, the founder of Basis Point Consulting, said China could be forced to toughen up its act if it no longer earned US dollars from its exports to the US because of a significant US-China decoupling. If that were to happen, China could sell its US Treasury holdings for yuan, seeking to engineer a collapse in the US dollar to end its status as the ruling currency. “Its ‘I die, you die harder’,” Chin said. “With no US export market, China would go the other way and rely on internal consumption, trade with Belt and Road countries and the rest of the world in their local currencies, and prepare to ‘eat bitter’ as local conditions worsen.”

If China doesn’t have the US as an export market, both go down, so I’m not sure why a news outlet would want to discuss this without providing the proper news “environment”. And anyway, it’s just not true. Here’s Michael Pettis very methodically putting the final nail in that coffin, and showing why the whole notion is just a load of crock.

 

China Cannot Weaponize Its US Treasury Bonds

China cannot sell off its holdings of U.S. government bonds because Chinese purchases were not made to accommodate U.S. needs. Rather, China made these purchases to accommodate a domestic demand deficiency in China: Chinese capital exports are simply the flip side of the country’s current account surplus, and without the former, they could not hold down the currency enough to permit the latter.

To see why any Chinese threat to retaliate against U.S. trade intervention would actually undermine China’s own position in the trade negotiations, consider all the ways in which Beijing can reduce its purchases of U.S. government bonds:

1) Beijing could buy fewer U.S. government bonds and more other U.S. assets, so that net capital flows from China to the United States would remain unchanged.

2) Beijing could buy fewer U.S. government and other U.S. assets, but other Chinese entities could then in turn buy more U.S. assets , so that net capital flows from China to the United States would stay unchanged.

3) Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developed countries , so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developedcountries would increase by the same amount.

4) Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developing countries , so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developing countries Beijing and other Chinese entities could buy fewer U.S. assets and not replace them by purchasing an equivalently larger amount of assets from other countries, so that net capital flows from China to the United States and to the world would be reduced.

These five paths cover every possible way Beijing can reduce official purchases of U.S. government bonds: China can buy other U.S. assets, other developed-country assets, other developing-country assets, or domestic assets. No other option is possible. The first two ways would change nothing for either China or the United States. The second two ways would change nothing for China but would cause the U.S. trade deficit to decline, either in ways that would reduce U.S. unemployment or in ways that would reduce U.S. debt.

Finally, the fifth way would also cause the U.S. trade deficit to decline in ways that would likely either reduce U.S. unemployment or reduce U.S. debt; but this would come at the expense of causing the Chinese trade surplus to decline in ways that would either increase Chinese unemployment or increase Chinese debt. By purchasing fewer U.S. government bonds, in other words, Beijing would leave the United States either unchanged or better off, while doing so would also leave China either unchanged or worse off. This doesn’t strike me as a policy Beijing is likely to pursue hotly, and Washington would certainly not be opposed to it.

I always thought this was a crystal clear explanation of what lies behind the threats that are continually uttered from both sides. One half of a Siamese twin can stab or poison the other, but what would be the outcome of that? And Pettis has more, and then much more at the link.

[..] Even if Beijing forced institutions like the People’s Bank of China to purchase fewer U.S. government bonds, such a step cannot credibly be seen as meaningful retaliation against rising trade protectionism in the United States. As I have showed, Beijing’s decision would have no impact at all on the U.S. balance of payments, or it would have a positive impact.

It would have almost no impact on U.S. interest rates, except to the extent perhaps of a slight narrowing of credit spreads to balance a slight increase in riskless rates. It would also have no impact on the Chinese balance of payments in the case that it leaves the U.S. balance of payments unaffected. To the extent that it would result in a narrower U.S. trade deficit, there are only three possible ways this might affect the Chinese balance.

First, China could export more capital to developed countries, in which case the decision would have no immediate impact on China’s overall balance of payments, but it would run the risk of angering its trade partners and inviting retaliation. Second, China could export more capital to developing countries, in which case the decision would have no immediate impact on China’s overall balance of payments, but it would run the very high risk of increasing its investment losses abroad. Or third, China could simply reduce its capital exports abroad, in which case it would be forced into running a lower trade surplus, which could only be countered, in China’s case, with higher unemployment or a much faster increase in debt.

The US cannot default on its debt because its reserve currency status would be shot. Trump knows that and still throws it out there. So what do you do as a serious journalist? Repeat that without as much as a question mark?

In the same vein, China cannot sell its USD-denominated assets, or at least not at any meaningful kind of pace. So what do you do as a serious journalist? You claim that it can?

 

 

 

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The Peak

Apr 212020
 
 April 21, 2020  Posted by at 6:07 pm Finance, Primers Tagged with: , , , , , , , , , , , , ,  21 Responses »


Gordon Parks Muhammad Ali in training 1966

 

There are times when you think: now things must be easy to comprehend, but as it turns out, they are still not. Let me try once more. See, I was thinking it must have become much easier to gauge the impact in the US of COVID19 when I published the graph below from TheNewAtlantis.com a few days ago. That the stories about seasonal flu etc. at least should be dead and buried, because, well, just look at the graph.

No such “luck”. That warped comparison keeps on rearing its head. The graph is plenty clear about it, however. In a period of about 3 weeks, COVID19 obliterated all other causes of death far behind.

 


click to enlarge in new tab

 

 

I have followed the progress of the virus since early January, so plenty of graphs are available. Below are those from Worldometer and SCMP, starting February 20.

On February 2, the US had 5 cases and zero deaths. Then we get to the graphs.

On February 20, there were 75,750 global cases, 74,500 of which were in China. There were 2,130 deaths, of which just maybe 10 were outside China.

The US had fewer than 15 cases and zero deaths.

 


 

 

One month later, things had changed quite dramatically, or so it seemed.

On March 20, there were 250,000 global cases and over 10,000 deaths. Cases had tripled, deaths had almost quintupled. Italy had overtaken China in most fatalities, from zero a month earlier.

The US had emerged “on the forefront”. It now had 10,400 cases and 150 deaths. Yes, that is just one month ago, 32 days to be exact.

 


 

 

Today, on April 21 2020, you would hardly recognize the situation as it was on February 20 or March 20.

There are now over 2,500,000 cases and over 172,000 deaths.

The US has become the frontrunner, and by a very large margin. It has over 800,000 cases and over 43,000 deaths.

From those 10,400 cases and 150 deaths 32 days ago.

Moreover, of those 43,000 deaths, almost half, 20,000, died in just the past 7 days.

And it’s at this point that people want to call the peak.

 


 

Investor John Hussman developed a model from early February which he’s been updating ever since. His model followed (or actually, predicted) actual numbers quite well:

Apr 15 (637,716 cases, 30,826 deaths): Assuming sustained containment efforts, the “optimistic” projection (my adaptive model) suggests that U.S. daily new cases may have peaked. This does NOT mean these efforts can now be abandoned. Most U.S. fatalities are still ahead, and we still lack capacity to test/track/trace.

 

 

But 5 days ago, John started getting worried:

Apr 16 (667,801, 32,917): This isn’t good. U.S. fatalities just jumped off book. We shouldn’t see 31,000 yet.

Apr 18 (735,076, 38,903): So much for the optimistic scenario. We’re way off book. I had hoped this was just a one-time adjustment. Understand this:

PEAK daily new cases in a containment scenario is also PEAK infectivity if containment is abandoned at that moment.

 

 

 

I’ve long said that people are social animals, and you cannot -and shouldn’t- keep them apart for too long. But at the same time, containment measures in case of epidemics go back a very long way in history. And it’s very well for people to develop models that appear to show that the virus will do whatever it can until it no longer does, and it will soon disappear even if we didn’t do anything to prevent it from spreading.

But those are still just models, just like the one John Hussman developed. And until they are proven, which takes time, the actual numbers we have now speak loudly. Globally, we went from 250,000 to 2,500,000 cases in one month, and from 10,000 fatalities to 172.000. In the US in that same month we went from 10,400 cases to over 800,000 and from 150 deaths to 43,000.

“PEAK daily new cases in a containment scenario is also PEAK infectivity if containment is abandoned at that moment”, says Hussman. Of course everybody wants their freedom back. But at what price? If you don’t, because you can’t, know what the price will be, are you still willing to pay that price?

What I mean is, everyone’s trying to call a peak, but for most that’s merely because they want there to be a peak. The numbers don’t really say that; they may seem to do, but that’s just over 1,2 or 3 days at best. While half of all US fatalities have been over the past 7 days.

If the peak has really already occurred, we will not know it until about 10-14 days from now. So the only thing we can do is to wait that long. Perhaps it would be a good idea to listen to what those have to say who are so enthusiastically labeled “heroes” all over the globe, the doctors, nurses and other frontline caretakers.

If they are indeed your heroes, and that’s not just some empty phrase, listen to what they have to say about the pressure on them, on the system they work in, on the numbers of cases and deaths they see themselves confronted with.

But also listen when they say things you may not like to hear. If anybody deserves a relaxation of a lockdown, and of pressure overall, surely it must be them, before you.

Guess it’s too much to ask that perhaps you may have learned some lessons lately, about things that you don’t need to do but that you always did. Or to ask you if you heard the birds singing louder in the bluer skies this morning.

Just out of curiosity: Did you know that Anne Frank spent 2 whole years locked down behind a wall?

 

 

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BREAKING: Virus Kills Easter Bunny

Mar 242020
 
 March 24, 2020  Posted by at 7:41 pm Finance Tagged with: , , , , , , , , , , , ,  15 Responses »


James Proudfoot Sun on a House, Dieppe 1937

 

 

Famous last words?!

“I would love to have it open by Easter,” Trump said in an interview Tuesday with Fox News. “I would love to have it opened up and just raring to go by Easter.” “A lot of people agree with me. Our country is not built to built to shut down. Our people are full of vim and vigor and energy. They don’t want to be locked into a house or an apartment, it’s not for our country”

Note that Trump covered himself by framing it as “I would love to…” Still, Easter is April 12, 19 days from now. I think the US is highly unlikely to even have reached its peak in infections by then, and the country will be awash in misery, sickness, death and heartbreaking stories, not uplifting ones of a roaring economy.

The US death toll is still very low compared to its active cases, but that is because the epidemic in the country is relatively new, and there are still hospital beds and ventilators available. Those days will soon be over, try the end of next week if not sooner, and the death toll will be going going gone out of there.

And remember, half of all US corona cases are still in New York State alone. There are 49 other states to go, that just about all still have open borders with each other. New York today, New Jersey, Pennsylvania, Connecticut etc. tomorrow.

If Governor Andrew Cuomo was not exaggerating too much earlier today when he said he asked FEMA for 30,000 ventilators and got only 400, the ominous path forward is beginning to look like a very eery version of a Yellow Brick Road to nowhere, with the Wizard sipping banana daiquiries on his private yacht in the Caribbean.

Our friend Mike Mish Shedlock did a bit of math on Sunday with data from the Covid Tracking Project, and came up with this:

How Long to 1 Million US Cases?

Inquiring minds are investigating a relatively new data feed from the Covid Tracking Project. I plot four data series for the US: Negative tests, positive tests, hospitalized, and deaths. Arguably, hospitalizations are the most significant column but the project only has two days worth of data. Once I have another dfats point or two, I will plot a trendline manually.


Trendlines At the current pace, the number of positive coronavirus cases would hit 100,000 on March 26, and 1,000,000 on April 3. At the current pace, the number of coronavirus deaths would hit 1,000 on March 26, and 10,000 on April 5. Those are not my projections, those are observations of what would happen if the current trends last that long at the same pace.

At that point, the US had 32,000 cases. On Monday that had become 42,000. As I write this, it’s 52,000 and the day is far from over. And remember what I said yesterday, that on March 8, just 16 days ago, the US reported 409 cases.

When I posted Mish’s numbers, I questioned his prediction of 100,000 cases by Thursday, but that’s really just details. If not Thursday, it will be Friday. Yes, that’s a doubling in 2 or 3 days. Early next week, if not his weekend, it’ll be 200,000. And so on. Mish says 1 million in 10 days from now. I see no reason to doubt him.

Either tomorrow or Thursday, March 25 or 26, the US will overtake China for the no. 1 global position in total cases -which is some 81,000 now-. With very flawed to non-existent testing procedures, with ongoing endless political bickering, and with a looming huge shortage in hospital beds and ventilators; this is beginning to look like a very bad movie.

By Easter, much of US industrial production in many parts of the country will have to be shut down, the same way China’s was -and still is-, and Italy’s is. You can’t successfully run a factory -or an office for that matter-, if your employees get sick, stay home, end up in hospital or worse. Even in the US, one single case should be enough to close the entire facility down.

The victim will have to be quarantined, as must his/her entire family, everyone (s)he worked with must be tested, and so on. It works like that everywhere, and the US is no exception. It can’t be, the risk is too high.

Brace yourself. Don’t take my word for anything, look at the numbers and draw your own conclusions. My idea is Easter is going to be different from usual this year.

 

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Assange Is The Only One To Abide By The Law

Oct 232019
 
 October 23, 2019  Posted by at 12:31 pm Finance, Primers Tagged with: , , , , , , , , , , ,  5 Responses »


Salvador Dali Self portrait 1921

 

On October 21 2019, Brexit became an entirely irrelevant issue. Or perhaps we should say it had already become that, but on that date it was exposed for all to see that it was. The parading into a courtroom of Julian Assange in London was all the evidence one could need that the UK government breaks its own laws as well as numerous international laws, with impunity. But that is not how the media reported on it, if it did at all.

And so, the core issue behind Brexit, i.e. who makes Britain’s laws, turned to nothing. If your government breaks its own laws all the time, what does it matter where those laws are made? They are meaningless anyway. Whether they come from Brussels or London make no difference if the government and judicial system don’t abide by them. Those million men marches for a Final Say look totally ridiculous once that reality sinks in.

I can’t get the picture of Julian Assange as he looked on Monday out of my head. I’ve written so much about him, tried so hard to find support for him, and now to see him withered away and perhaps not strong enough to see the end of his own extradition hearing is heartbreaking. So let’s go through the whole thing again; it’s not like I could write about anything else right now. I was thinking again yesterday about a song I used in an earlier article about Julian, I Fought the Law.

 

 

That is how the vast majority of people will see his case, that he fought the law and the law caught up with him. But that’s not at all what’s been happening. He doesn’t fight the law, he fights the lawless posing as the law. The only person who’s abided by the law the entire time this epic tragedy has now lasted has been Julian Assange (and his lawyers, and others who work with him, and former Ecuador president Correa). All the other players, the people who’ve been chasing, torturing and now murdering him have all broken the law consistently, one after the other, and in coordinated fashion. But they have the media on their side, and that’s how the story got turned upside down. Propaganda wins.

In 2010, Swedish police invented a rape allegation out of thin air and against the expressed wishes of the alleged victim. There’s the Swedish prosecutor who overruled his own peer who had ruled that the rape allegation was annulled and Assange was free to go the UK. Then the British prosecutor who released Assange on bail citing that fake Swedish allegation and then called him in without either country wanting to guarantee extradition to the US was off, subsequently keeping him locked in the Ecuador embassy for 7 years because of that same fake allegation without allowing him to travel to the country he’d been granted asylum in.

This was followed (after 7 years!) by the new Ecuador government that violated any and all international law by rescinding Julian’s asylum, but only after hiring a Spanish “security” company that recorded all of his -and all of his visitors’ – talks and phones etc., including client-lawyer and doctor-patient conversations that we all know are confidential -and for good reason- and up to and including Julian’s talks with his psychologist and swipes of everyone’s DNA, including his children. They even (live-) streamed all this confidential information to the CIA.

Next, the UK police arrested him inside another country’s embassy. And now he’s in a super high security prison for no apparent reason at all, after a judge (where do they find these judges in the UK, so eager to break their own laws?) said he was a risk to “abscond”. Even if that were true, how is that a reason for worse treatment than an A-level crazy terrorist, inflicted upon someone who’s never harmed a fly? And then Monday in court, a British court, it was a bunch of Americans who openly decided what should happen, as per Craig Murray who was there, and both the prosecutor and the judge complied.

 

What Assange practiced when he published “US war files” is called journalism. Which thank god is perfectly legal. Much of what those files reveal is not. What he did when he allegedly “skipped bail” in the UK is called requesting asylum. Also perfectly legal, a basic human right. He never broke a law. And that of course is why the Espionage Act was dusted off and applied to his case in a proverbial round peg/square hole fashion: they couldn’t find anything else to charge him with. And after so many laws have already been broken, what difference does one more make?

If you live in Britain and you think Brexit is a more important issue than Assange, you’re delusional. Nothing is more important to anyone in a society than a government torturing a man to death in broad daylight, a man who moreover has not broken a single law. We don’t even torture mass murderers, terrorists or child rapists to death anymore, at least not at home. But Julian Assange IS treated that way. And whether the UK will be a part of Europe or not, that is the country it has become. A lawless medieval banana republic.

 

 


 

 

 

 

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