Thursday, December 08, 2016

According to The Guard US briefing today: “A group of senior House Democrats has written to the president seeking a classified briefing for colleagues on ‘Russian entities’ hacking of American political organizations; hacking and strategic release of emails from campaign officials; the WikiLeaks disclosures; fake news stories produced and distributed with the intent to mislead American voters; and any other Russian or Russian-related interference or involvement in our recent election.” From my (the blogger’s) point of view, it would have been impossible for Russian hackers to have entered and modified the vote counts at thousands of voting stations all over the US, each using counting methods differing substantially from the other. On the other hand, without question the “fake news stories” have been promulgated by the so-called “mainstream media” …and all these have been aimed at Russia. Why is that? In answering that, I first remark that after WW II Stalin created an “iron curtain” to prevent Russians and their European vassals from discovering that life in the West was superior to that in Communist Russia. My punch line is that today our despicable “mainstream media” has invented an “iron curtain” going in the opposite direction to prevent Americans and their European vassals from learning that Russia is now the most democratic country in the world, and the least inclined to start a nuclear war (which it would win …if any humans survive). While I salute the work of The Real News below, you may notice that at one point moderator Paul Jay sounds as though he has been affected by some of the home-grown ‘main stream fakery’ aimed at Russia. To find out whether Vladimir Putin is a tyrant or a Dwight David Eisenhower please check here:

Dear viewers,

Much has been made through this election cycle about "fake news."

Just last week, the Washington Post reported that much of this fake news "got support from a sophisticated Russian propaganda campaign.” The Post promoted a report by a shadowy group called PropOrNot, which accused hundreds of sites of publishing pro-Russia propaganda - some of which are sites that The Real News believes to be verifiable, independent journalism.

What the Post failed to mention is that corporate news is the biggest fake news of all. Between the failure to report on devastating climate change, the lack of information about the push for regime change (and a potential war) in Iran, and the inadequate coverage of who has been responsible for the economic crisis in the US, it's corporate news that's failed Americans the most.

For more on this, you can watch Paul Jay's interview with journalist Abby Martin.

Independent, fact-based media is needed more than ever. Please consider making a tax deductible donation today. Without you, we can't make Real News.

                               _____________________ ⍐ _______________________

Here below, the blogger has captured the video from the YouTube mentioned on the still shot above. 

Sunday, November 27, 2016

Probably as many as 90% of all Americans believe without questioning everything they hear from the so-called mainstream media, known by members of the 10% as “prestitutes” paid by the military/industrial/security complex to lie about the truth or be fired. Here I list a few passages taken from Paul Craig Roberts’ latest post, beginning with “Russian news services are under attack from the EU and Western presstitutes as purveyors of ‘fake news’.” “As George Orwell predicted, telling the truth is now regarded by Western 'democratic' governments as a hostile act.” And finally “Abiding by its Washington master’s orders, the EU actually passed a resolution against Russian media for not following Washington’s line.” Accordingly, “Russian President Putin said that the resolution is a ‘visible sign of degradation of Western society’s idea of democracy’.” Now the 90% may say “so what”. The answer is that (1) Russia doesn’t want another World War, having lost 20 million civilians and soldiers in the last one, (2) whether or not the US military/industrial complex knows it, Russia has vastly superior weapons, and (3) if Russia is ever forced into a nuclear war, those of us in the west will not survive (though many in Russia may survive due to superior anti-ballistic missiles). Recently, we had a Presidential election and against all bets, Trump was the winner. How did that happen? Well, many are convinced that the elections were rigged ...but by whom? It couldn't have been alleged Russian hacking because such a hack required people with access to every polling place in every State of the Union. Impossible! Personally, I think it was done by members of our own military, who knew that if Hillary had been elected she would have pressed to start a war with Russia, in which case we might all end up dead. Whereas, Trump had made it clear early on that he has no problem working out some kind of a detente with Vladimir Putin’s Russia. Apropos, if you should be thinking of leaving the 90% to join the 10%, please meet Putin here:

The Western War On Truth — Paul Craig Roberts

The Western War On Truth

Paul Craig Roberts

The “war on terror” has simultaneously been a war on truth. For fifteen years—from 9/11 to Saddam Hussein’s “weapons of mass destruction” and “al Qaeda connections,” “Iranian nukes,” “Assad’s use of chemical weapons,” endless lies about Gadaffi, “Russian invasion of Ukraine”—the governments of the so-called Western democracies have found it essential to align themselves firmly with lies in order to pursue their agendas. Now these Western governments are attempting to discredit the truthtellers who challenge their lies.

Russian news services are under attack from the EU and Western presstitutes as purveyors of “fake news.” Abiding by its Washington master’s orders, the EU actually passed a resolution against Russian media for not following Washington’s line. Russian President Putin said that the resolution is a “visible sign of degradation of Western society’s idea of democracy.”

As George Orwell predicted, telling the truth is now regarded by Western “democratic” governments as a hostile act. A brand new website,, has just made its appearance condemning a list of 200 Internet websites that provide news and views at variance with the presstitute media that serves the governments’ agendas. Does’s funding come from the CIA, the National Endowment for Democracy, George Soros?

I am proud to say that is on the list.

What we see here is the West adopting Zionist Israel’s way of dealing with critics. Anyone who objects to Israel’s cruel and inhuman treatment of Palestinians is demonized as “anti-semitic.” In the West those who disagree with the murderous and reckless policies of public officials are demonized as “Russian agents.” The president-elect of the United States himself has been designated a “Russian agent.”

This scheme to redefine truthtellers as propagandists has backfired. The effort to discredit truthtellers has instead produced a catalogue of websites where reliable information can be found, and readers are flocking to the sites on the list. Moreover, the effort to discredit truthtellers shows that Western governments and their presstitutes are intolerant of truth and diverse opinion and are committed to forcing people to accept self-serving government lies as truth.

Clearly, Western governments and Western media have no respect for truth, so how can the West possibly be democratic?

The presstitute Washington Post played its assigned role in the claim promoted by Washington that the alternative media consists of Russian agents. Craig Timberg, who appears devoid of integrity or intelligence, and perhaps both, is the WaPo stooge who reported the fake news that “two teams of independent researchers”—none of whom are identified—found that the Russians exploited my gullibility, that of CounterPunch, Professor Michel Chossudosky of Global Researh, Ron Paul, Lew Rockwell, Justin Raimondo and that of 194 other websites to help “an insurgent candidate” (Trump) “claim the White House.”
Note the term applied to Trump—“insurgent candidate.” That tells you all you need to know.
You can read here what passes as “reliable reporting” in the presstitute Washington Post:

See also: 

Glenn Greenwald of The Intercept, which somehow escaped inclusion in The 200, unloads on Timberg and the Washington Post here: 

Western governments are running out of excuses. Since the Clinton regime, the accumulation of war crimes committed by Western governments exceed those of Nazi Germany. Millions of Muslims have been slaughtered, dislocated, and dispossessed in seven countries. Not a single Western war criminal has been held accountable.

The despicable Washington Post is a prime apologist for these war criminals. The entire Western print and TV media is so heavily implicated in the worst war crimes in human history that, if justice ever happens, the presstitutes will stand in the dock with the Clintons, George W. Bush and Dick Cheney, Obama and their neocon operatives or handlers as the case may be.


Friday, November 11, 2016

Dear reader of my blog: By incredibly good luck I have received a life membership of the current day-to-day works of David A Stockman, Ronald Reagan's Director of the Office of Management and Budget. (I also received a free copy of his #1-New-York-Times-best-selling-author publication entitled "Trumped!".) Here I reproduce his latest email. And below is his latest explanation of the US stock market about to implode. So if you have savings in the stock market, read the below and then watch his hours-old video imbedded at the bottom ...and then take heed.

A Sucker's Rally Like No Other

This week has seen a political earthquake followed by a financial eruption. But don't be fooled. The Dow's 500 point surge amounts to a Sucker's Rally like no other; it was just a case of raging robo-machines determined to tag an all-time high on the charts

After all, what happened Tuesday night is that for all practical purposes the US became ungovernable. The ruling establishment pulled out every stop to smash Trump's insurgent candidacy, and, instead, it ended up getting unceremoniously and shockingly fired.

Indeed, yesterday's ceremonial make nice session between Donald Trump and President Obama said everything you need to know. To wit, the two had never even shaken hands before, meaning that the Imperial City is literally being sacked by political outsiders, outlaws and anti-establishment brigands.

In the longer run, of course, that is a very good thing because the addiction of the Wall Street/Washington establishment to war, debt, bubble finance and beltway racketeering would have brought American democracy and capitalism to its knees. This year's political revolt in Flyover America, in fact, purged the nation's two leading crime families---the Clintons and the Bush's----from public life once and for all, and that's an especially good thing.

Yet in the here and now, the great national nightmare has just begun. That's because the smirking incumbent who greeted the Donald in the Oval Office neglected to tell him about the giant stink bomb he and the odious former House Speaker, John Boehner, deposited on the front door of the US Treasury Department back in October 2015.

In a word, the March expiration of the nation's $19.6 trillion debt ceiling will stop Donald Trump's ballyhooed First 100 Days cold in its tracks. The purported giant fiscal "stimulus" and Trump economic revival plan that the headline-sniffing algos got giddy on during the last two days will be DOA.

At some point soon, it will become evident that the parabolic line in the chart below is what will really dominate, fracture and paralyze the Imperial City during the Trump presidency. The irony, of course, is that this $20 trillion fiscal albatross has been almost entirely accumulated since 1981 when Ronald Reagan was forced to request an increase in the debt ceiling to $1 trillion for the first time.

So the ruling establishment that Trump unhorsed at the ballot box is gone, but not done. The dead-hand of 30 years of feckless fiscal profligacy will smoother his best intentions and efforts in a veritable fiscal death trap.

The latter was built brick-by-brick over the decades since 1981 by the beltway's bipartisan establishment. It amounted to a conspiracy of convenience under which the debt ceiling was raised episodically as needed in order to accommodate the cost of multi-trillion wars, giant un-financed tax cuts, Obamacare and entitlement accretion and the beltway pork barrel as usual. In all, it was the product of a moveable feast of political accommodation among the Imperial City's factions and K-Street racketeers.

But having smashed the bipartisan consensus, Trump will soon find himself in a political no-man's land. He will find it impossible to accumulate a Congressional  majority to raise the debt ceiling by the trillions that will be needed to accommodate the soaring built in deficit from pre-Trump policy and the coming recession.

In fact, the de facto public debt today is $35 trillion. That is, there is another $10 trillion built-in from current entitlement, defense, domestic spending and tax policies, according to the CBO, and that's assuming a Rosy Scenario set of economic assumptions and that the US will experience 206 straight months through 2026 without a recession

But that's rank idiocy. The average business cycle expansion since 1950 has been 61 months and the longest was 117 months in the 1990's------an unsustainable aberration that ended in the dotcom crash and ultimately the Great Recession of 2008-2009. Realistic economic assumptions, therefore, including a good dose of pie-in-the-sky growth acceleration from anything Trump might manage to enact, adds another $5 trillion of red ink to the projections.

In short, the job of the next one-term President, and the one after that and the one after that, will be to raise the public debt to $35 trillion or 140% of  realistically projected GDP over the next decade. And that task will shatter whatever capacity for fiscal governance that may be salvaged from the coming political chaos in the Imperial City.

Yet we did not even mention Donald Trump's ballyhooed stimulus program because that would come on top; it would take the national debt to $40 trillion or even more. That is to say, the "growth" part of the equation is already built into the current unachievable Rosy Scenario embedded in the CBO's current 10-year projections.

Trump's fiscal nightmare would therefore require trillions more to fund his promises to slash taxes by $4 trillion, rebuild defense, pump more funding into Veterans programs that already cost $150 billion per year, build the Wall and enforce the borders and launch the biggest infrastructure program in American history.

Needless to say, its not going to happen. This week's raging  robo-traders will soon see that the letter of the day is not "S" for stimulus, but a giant "G" for gridlock of an insuperable variety.

Or perhaps an even bigger triple letter called FCA or Fiscal Catastrophe Ahead.

 In the days ahead we will be reviewing the facts and figures behind the dire outlook described above.  Meanwhile, here is the summary of what lies ahead as I explained on Fox Business last evening.

Saturday, October 29, 2016

Hillary Clinton has described Russian President Vladimir Putin as “the new Hitler” …yet a few days ago Germany reported their plan to send their best tanks to the border between Lithuania and Russia to augment the armies of other NATO countries now abutting Russia, since the US had long ago reneged on its promise NOT to move NATO forces to the boundary. Given that Hitler’s Germany attacked Russia (not the other way around) and that Russian casualties in World War II were the highest of any other country (over 20 million!!!), doesn’t it seem that Hillary and the US “mainstream media” are inviting WW III …presumably on the false supposition that Russia is weak? When I was in grade school the “Cold War” was on, and the media constantly told us to crawl under of desks if a Russian attack was imminent. However, that was back when nuclear weapons were in their infancy, so the thought of monster weapons that could kill us all was not yet possible. So why are Hillary, her neocon compadres in Washington, and the collaborating “prestitute” media drumming up a nuclear war with Russia …without saying a word about the grave danger that such a war would be to the American people? The short answer is that they are all insane. However, if you read this article, you will see that Vladimir Putin and his country have not been sleeping. Instead they have been secretly creating superior weapons, regular as well a nuclear, light years ahead of the incompetent US “military/industrial complex,” whose incompetence I learned first-hand in my last decade (1990 – 2001) working as a materials scientist in a US Government laboratory.

OpEdNews Op Eds

Russia Calls the War Party's Bluff

Headlined to H2 10/28/16

Snowden/Obama -- Double Focus Prism

Cold War 2.0 has reached unprecedented hysterical levels. And yet a hot war is not about to break out -- before or after the November 8 US presidential election.

From the Clinton (cash) machine -- supported by a neocon/neoliberalcon think tank/media complex -- to the British establishment and its corporate media mouthpieces, the Anglo-American, self-appointed "leaders of the free world" are racking up demonization of Russia and "Putinism" to pure incandescence.

And yet a hot war is not about to break out -- before or after the November 8 US presidential election. So many layers of fear and loathing in fact veil no more than a bluff.

Let's start with the Russian naval task force in Syria, led by the officially designated "heavy aircraft-carrying cruiser" Admiral Kuznetsov, which will be stationed in the eastern Mediterranean at least until February 2017, supporting operations against all strands of Salafi-jihadism.

The Admiral Kuznetsov is fully equipped with anti-ship, air defense, artillery and anti-submarine warfare systems -- and can defend itself against a vast array of threats, unlike NATO vessels.

Predictably, NATO is spinning with alarm that "all of the Northern Fleet," along with the Baltic Fleet, is on the way to the Mediterranean. Wrong; it's only part of the Northern Fleet, and the Baltic Fleet ships are not going anywhere. The heart of the matter is that when the capabilities of this Russian naval task force are matched with the S-300/S-400 missile systems already deployed in Syria, Russia is now de facto rivaling the firepower of the US Sixth Fleet.

To top it off, as this comprehensive military analysis makes clear, Russia has "basically made their own no-fly zone over Syria"; and a US no-fly zone, viscerally promoted by Hillary Clinton, "is now impossible to achieve." That should be more than enough to put into perspective the impotence transmuted into outright anger exhibited by the Pentagon and its neocon/neoliberalcon vassals.

Add to it the outright war between the Pentagon and the CIA in the Syrian war theater, where the Pentagon backs the YPG Kurds, who are not necessarily in favor of regime change in Damascus, while the CIA backs further weaponizing of "moderate," as in al-Qaeda-linked and/or infiltrated, "rebels."

Compounding the trademark Obama administration Three Stooges school of foreign policy, American threats have flown more liberally than Negan's skull-crushing bloody baton in the new season of The Walking Dead.

Pentagon head Ash Carter, a certified neocon, has threatened "consequences," as in "potential" strikes against Syrian Arab Army (SAA) forces to "punish the regime" after the Pentagon itself broke the Kerry-Lavrov ceasefire.

President Obama took some time off weighing his options. And in the end, he backed off. So it will be up for the virtually elected -- by the whole US establishment -- Hillary Clinton to make the fateful decision. She won't be able to go for a no-fly zone -- because Russia is already doing it. And if she decides to "punish the regime," Moscow already telegraphed, via Russia's Defense Ministry spokesman Major-General Igor Konashenkov, there will definitely be "consequences" for imposing a "shadow" hot war.

Sun Tzu doesn't do first-strike.  Washington, of course, reserves for itself a "first-strike" nuclear capability, which Hillary Clinton fully supports (Donald Trump does not, and for that he's also demonized).  If we allow the current hysteria to literally go nuclear, then we must consider the matter of the S-500 anti-missile system -- which effectively seals Russia's air space; Moscow won't admit it on the record because that would unleash a relentless arms race.

A US intel source with close connections to the Masters of the Universe but at the same time opposed to Cold War 2.0 as "counter-productive," adds the necessary nuance: "The United States has lost the arms race, indulging in trillions of dollars of worthless and endless wars in Afghanistan, Iraq, Syria, Libya, and now is no longer a global power as it cannot defend itself with its obsolete missiles, THAAD, Patriot and Aegis Land Based Ballistic Defense System, against Russian ICBMs, even as the Russians have sealed their airspace. The Russians may be as much as four generations ahead of the US."
Moreover, in the deep recesses of shadow war planning, the Pentagon knows, and the Russian Defense Ministry also knows, that in the event some Dr. Strangelove launched a nuclear preemptive strike against Russia, the Russian population would be protected by their defensive missile systems -- as well as nuclear bomb shelters in major cities. Warnings on Russian television have not been idle; the population would know where to go in the -- terrifying -- event of nuclear war breaking out.
Needless to add, the ghastly possibility of US nuclear first-strike turns all these WWII-style NATO war games in Eastern Europe into a pile of meaningless propaganda stunts.
So how did Moscow plan for it all? According to the US intel source, "they took out almost all the military budget from their stated federal budget, lulling the West into thinking that Russia could not afford a massive military buildup and there was nothing to fear from Russia as they were finished as a world power. The [stated] military budget was next to nothing, so there was nothing to worry about as far as the CIA was concerned. If Putin showed publicly his gigantic military buildup, the West could have taken immediate remedial actions as they did in 2014 by crashing the oil price."
The bottom line then would reveal the Pentagon as totally unprepared for a hot war -- even as it threatens and bluffs Russia now on a daily basis; "As Brzezinski has pointed out, if this is the case it means the US has ceased to be a global power. The US may continue to bluff, but those that ally with them will have nowhere to go if that bluff is called, as it is being now called in Syria."
The US intel source is adamant that "one of the greatest military buildups in history has taken place right under the nose of the Russian Central Bank head Elvira Nabiullina and the Russian Ministry of Finance while the CIA awaits what they think will be the inevitable Russia collapse.

The CIA will be waiting forever and eternity for Russia to collapse. This MGB maneuver is sheer genius. And demonstrates that the CIA, which is so drowned by data inputs that they cannot connect the dots on anything, must be completely reorganized.

In addition, the entire procurement system of the United States military must also be reorganized as it cannot ever keep up if new weapon programs as the F-35 take 20 years to develop and then are found obsolete before they even enter service.

The Russians have a five-year development program for each new weapons system and they are far ahead of us in every key area.... If this analysis is correct, it goes against even the best and most precise Russian estimates, according to which military potential may be strong, asymmetrically, but still much inferior to US military might.

Well-informed Western analysts know that Moscow never brags about military buildups -- and has mastered to a fault the element of surprise. Much more than calling a bluff, it's Moscow's Sun Tzu tactics that are really rattling loudmouth Washington. 

Friday, October 21, 2016

David Stockman was Ronald Reagan's top economist ...and possibly the best of all times. And he says that: "The fact is, the stock market is priced far more irrationally at the moment than at either the dotcom bubble peak or the October 2007 pre-crisis high." and "The only possible outcome is to be carried down in a crash far more severe and violent than the previous two meltdowns since the turn of the century." He created his 'Contra Corner' to explain the best way to survive it. You can join Contra Corner and get his new book free (but for the cost of shipping). If you are wealty, he will charge you something for the best ways to protect your wealth.

Chop, Chop, Choppin' In Harm's Way

By David Stockman. Posted On Wednesday, October 19th, 2016
The stock market has been chopping sideways for the last 100 days, but it's not evidence of a pause that refreshes. What is actually happening is that the smart money is getting out of dodge---even as the clueless day traders and headline-stalking algos keep the bubble inflated on purely speculative fumes.

The fact is, the stock market is priced far more irrationally at the moment than at either the dotcom bubble peak or the October 2007 pre-crisis high. Reported earnings for the September LTM are now estimated at $90.59 per share, meaning that the S&P 500 was valued at 23.6X at Tuesday's close.
But here's the thing.  Reported LTM earnings way back in September 2014 came in at $106 per share at a time when the S&P 500 was at 1950.  Thus, earnings are down by nearly 15%, while the S&P 500 index has gained 10%.

Needless to say, that's multiple expansion with a vengeance----since back at the September 2014 peak the PE multiples stood at just 18.4X.  As a matter of reality, the latter wasn't all that plausible, either. But more than 5 points of multiple expansion in today's tenuous global economic and financial environment is just plain nuts.

The robo-machines and gamblers left in the casino, therefore, are truly chopping away in harm's way. The only possible outcome is to be carried down in a crash far more severe and violent than the previous two meltdowns since the turn of the century.

Yet they dither on the edge of the gathering storm owing to a wholly misplaced confidence in the Fed and other central banks. In fact, our monetary politburo is utterly clueless about the rampant speculation it has encouraged throughout the warp and woof of the entire financial system. 

So when the black swan arrives once again, the Fed  will be caught even more flat-footed than in September 2008, and with virtually no dry powder to smoother the blaze as Bernanke did last time around.

That our monetary central planners are leading the casino into catastrophe was made evident again earlier this week in the blather delivered by vice-chairman Stanley Fischer to the New York Economic  Club:
And the third concern is that low interest rates may also threaten financial stability as some investors reach for yield and compressed net interest margins make it harder for some financial institutions to build up capital buffers. I should say that while this is a reason for concern and bears continual monitoring, the evidence so far does not suggest a heightened threat of financial instability in the post-financial-crisis United States stemming from ultralow interest rates.
Exactly what planet does this man live on? The entire financial system has been falsified by the massive and continuous intrusion of the central banks. These artificially inflated bond and stock prices have, in turn, triggered a manic process of collateralization in which inflated financial assets are hocked to obtain  more financing, which then begets even higher bids from the proceeds and then even more rounds of rinse and repeat.

In short, the end product of massive interest rate repression by central bankers is always and everywhere the same. That is, an explosion of debt fueled speculation, destruction of market stabilizing forces like short-sellers and expensive hedging insurance and one-way markets that inflate to lunatic heights before they inexorably rollover, crash and burn.
Indeed, the silver lining in the coming traumatic implosion of the global financial bubble is that the academic snobs like Fischer will be unmasked as the Keynesian knuckleheads that they actually are.

Last time our monetary central bankers escaped blame because they fooled the world into believing that they had saved the system from Great Depression 2.0 by doubling down on what had already been reckless monetary expansion. But this time they won't be able to generate a phony financial asset reflation to cover their tracks after the coming crash.
Instead, like Stanley Fischer at the New York Economics Club, they will be all over the record insisting that the financial system was fixed and there was nary a bubble or instability risk in sight.

Actually, you don't have to get many paragraphs into the text of Fischer recent speech to realize that he really is an academic knucklehead. Thus, the whole speech, which is a pretentious rumination about the cause of very low interest rates,  begins with this assertion:
To explain why interest rates are low, we look for factors that are boosting saving, depressing investment, or both.
He then goes on to finger low productivity, aging demographics, weak investment and slowing foreign economic growth. But that's not just specious nonsense-----it self-evidently ignores the monetary elephant crowding the entire room.

To wit, the Big Fat Bid of the central banks is what has caused interest rates to be so low for so long. As we showed in the Chart of the Day recently, the balance sheet of the top 10 central banks has soared fr0m $6 trillion in 2006 to more than $21 trillion at present. Compared to just $2 trillion less than two decades ago, the combined footings of the world's central banks have experienced an incredible 11X expansion.

Apparently, no one has explained to the good professor that despite their best efforts, central bankers have not yet abolished the law of supply and demand.  It is they, and they alone, who have crushed the yields on sovereign debt by buying it and its near substitutes hand-over fist; and not with savings from current production, but with printing press credits conjured from thin air.

This rampant sequestering of sovereign debt and its official cousins in the vaults of central banks to the tune of more than $20 trillion, in turn, has caused sheer desperation among the bond and investment fund managers of the world, thereby driving prices on even risky sub-investment grade securities skywards and  taking their yields to rock bottom levels.

As merely one example of the financial instability caused by the systemic price falsification, consider the $300 billion plus of junk bonds issued by companies in the shale patch. Upwards of $100 billion of actual and mark-to-market loses have already been incurred by holders of those high yield bonds; and the big losses from another leg down in the global oil price which will be triggered by the next recession have not even happened yet.

So there are financial bubbles in plain sight everywhere. The busted shale bonds, the lunatic valuations of momentum stocks like the FANGs (Facebook, Amazon, Netflix and Google), white hot commercial real estate markets in Silicon Valley and New York, rampant frauds like Tesla and Valeant and vastly excessive PEs in the broader stock markets are just a few examples.

Yet ignoring all of these consequences of central bank interest rate repression, professor Fischer instructed his audience to dust off their economics 101 textbooks and look elsewhere for the cause of ultralow interest rates.
For those of you lucky enough to remember the economics you learned many years ago, we are looking at a point that is on the IS curve--the investment-equals-saving curve. And because we are considering the long-run equilibrium interest rate, we are looking at the interest rate that equilibrates investment and saving when the economy is at full employment...
As I said, the man is an outright knucklehead, yet he is supposedly the intellectual leader not only of the Fed, but Keynesian central bankers on a worldwide basis. After all, he even supervised Ben Bernanke's PhD dissertation at MIT during the 1970s.

In any event, are we to actually believe that the $21 trillion of fiat credit that has now been manufactured by the world's central banks does not impact the price of debt and therefore the vaunted IS curve?

Yep. According to professor Fischer the cause of low interest rates is not monetary falsification----which, by the way, is exactly what they say they are doing to stimulate more borrowing and spending---but too much savings and too little opportunity for profitable investment.

That's complete rubbish, of course, oozing out of an intellectual time warp. Before the era of massive central bank bond purchases there surely was an interest rate on the I/S curve that reflected the balance between true savings out of current income and demand for debt and other investment funding. But that world is long gone owing to the full throttle monetary central planning that Fischer himself is engaged in.

But never mind. Fischer claimed that the real culprit behind low interest rates is the sharp deceleration of productivity growth from more than 2% annually prior to the turn of the century to just o.5% in the last five years. That has resulted in lower trend economic growth owing to the obvious fact that by definition real output growth comes from more labor hours and/or higher productivity.

By Fischer's lights, however, this non-explanatory truism has far more ominous implications. To wit, it means that the invisible, arbitrary and made-up economic realm called "potential GDP" has experienced a  sharp slowdown from a purported historical norm of about 3.0% to exactly 1.75% annually.

In turn, this unmeasurable and unproveable slowdown in the theoretical full employment economy, according to the Fed's FRB/US model, as cited by Fischer:
 ".....would trim 120 basis points from the longer-run equilibrium federal funds rate".
Say what?

Well, reduced "potential GDP" growth is supposed to adversely affect the balance between savings and weakened investment demand, thereby lowering the equilibrium interest rate. But here's another idea. Lower income growth means lower aggregate savings at any given savings rate. So  there would be no impact at all from lower economic growth on the market clearing interest rate unless the savings rate changes.

But on that very point is where Fischer really veers off into economic crazy town. A reduced rate of theoretical GDP growth purportedly causes consumers to "save" too much:
Lower productivity growth also reduces the future income prospects of households, lowering their consumption spending today and boosting their demand for savings. Thus, slower productivity growth implies both lower investment and higher savings, both of which tend to push down interest rates.
That's right!  More than half of US households have saved less than $1,000 and most of them are so busy keeping up with the Kardashians that they don't even think about saving for the long haul. Yet the vice-suzerain of out monetary system claims they are actually discounting their income streams into the distant future, and upping their lifetime savings rates accordingly!

Anyone who stays in the casino based on confidence in the likes of Stanley Fischer deserves to have their head handed to them on a platter.

Besides that, Fischer's ruminations about people upping their savings rate is not remotely true empirically. Interest rates have been pushed steadily lower for decades by the Fed and other central banks, but the household savings rate in the US has steadily fallen, not risen as Fischer claims.

Indeed, Japan is the test bed for Fischer's theorizing about high savings causing low interest rates. The BOJ has had the money market rate on the zero bound for the entirety of this century so far, and is on the verge of pushing all of Japan monumental government debt into subzero land.  Yet Japan's once vaunted household savings rate has now disappeared entirely.

Indeed, even a knucklehead could see that a surplus of savings is not why the Japanese economy is stumbling toward national bankruptcy on the zero bound.

But that's not the extent of the rubbish emanating from the Eccles Building. The monetary central planners domiciled there are so ensnared in group think that they actually claim to scientifically ascertain the otherwise invisible "natural rate of interest" which is compatible with full employment in the current macroeconomic setting.

And since that benchmark is asserted to be exceedingly low owing to the type of spurious reasoning contained in Fischer's speech, they conclude they have no choice except to keep interest rates pinned close to the zero bound.

For example, Fischer claims that the aging of the labor force alone causes the real rate of interest to be 75 basis points lower than in the 1980s.

Really?  The massive retirement wave of baby boomers is liquidating its savings and will be doing so at an accelerating rate as the retirement wave crests a decade from now. All other things being equal, therefore,  US demographic trends would tend to raise interest rates in an honest financial market. That is, one cleared by the law of supply and demand rather than the whim of Stanley Fischer and his coterie of monetary central planners.

And the nonsense just kept coming in Fischer's speech. He claimed, for example, that another 60 basis points may be attributable to under-investment.

Here's an alternative idea. During the last 10 years US businesses have borrowed like there is no tomorrow, but they channeled the overwhelming share of proceeds into financial engineering, not productive investment. In fact, more than $10 trillion was spent on stock buybacks, M&A deals and leveraged buyouts and recaps during that period.

Needless to say, this massive channeling of capital into the casino would not have happened on the free market. It is the direct result of the Bubble Finance policies of the nation's central bank.

At the same time, the resulting drastic inflation of financial asset values was not harmless, and not just because it showered stupendous amounts of unearned riches on speculators and the elites who own most of the financial assets.

Bubble Finance also turned the C-suites of corporate American into stock trading rooms and financial engineering parlors. In pursuits of unspeakably large stock option gains, like the $100 million plus recently pocketed by John Stumpf,  the balance sheets of companies have been strip-mined and investments in long-range growth and competitive enhancement have been starved.

The numbers speak the truth. After inflation and current consumption of fixed assets (i.e. depreciation and amortization), the rate of real net investment in productive business assets is today 22% lower than it was in the year 2000.

There is no mystery, therefore, as to why productivity has vanished. Stanley Fischer and his posse of money printers have been the culprits all along.

Indeed, the above chart puts you in mind of the young boy who killed both of his parents and then threw himself upon the mercy of the court on the grounds that he was an orphan!

At the end of the day, the financial markets have morphed into dangerous, unstable casinos owing to the kind of Keynesian central banking now practiced by Fischer and the Fed. Among the many resulting ills is the fact that the link between financial asset prices and the real main street economy has been totally severed.

This weeks "incoming" data provided yet another piece of evidence. Industrial production posted lower on a Y/Y basis for the 13th straight quarter, and now stands 2.3% below its November 2014 peak.

More importantly, it is also below the pre-crisis peak and at a level first crossed nearly 10 years ago.

That's right. The S&P 500 is up by 55% from early 2007, yet US industrial production----which represents nearly two-thirds of GDP----is stuck on the flat-line, even as the US economy slides toward the next recession.

As we said, the corporals' guard of day traders and robo-machines left in the casino are indeed chop, chop, choppin' in harm's way. But their troubles will soon be over.

Saturday, October 15, 2016

No wonder! Janet Yellen's repeated assertion that there is full employment is believed implicitly by the mavens of the stock markets. However, smarter people know that (1) 23% of working-age Americans have given up looking for a job, because there are virtually none to be had, whereas (2) Yellen treats those 23% as though dead. However, the not so bright mavens of industry and the stock market read her claim of full employment as a signal that there are millions of Americans out there who can and will buy their products. Wrong! Because of their stupidity the mavens of the stock market push their stocks ever higher. In the meanwhile those with common sense know that the deepest stock market crash of all times will soon take place. Corrolary: The silver and gold presently being depressed will skyrockt when the crash arrives.

The stock market is turning into a sloppy, ugly mess—and it could get worse

Published: Oct 14, 2016 5:06 p.m. ET

Dow industrials on pace for longest streak of monthly losses in 5 years. Here are some of the reasons behind the slide

It is rough out there.

 It is getting dicey out there for Wall Street investors, although stocks eked out a modest rise on Friday.

U.S. equities have been bouncing around lately. And the trend has been predominantly lower. Although it hasn’t been the sort of dizzying tumble for equities that would elicit an instant spike in fear, it has been, however, the kind of plodding descent that has the Dow Jones Industrial Average DJIA, +0.22%  down nearly 300 points since the end of July.
In fact, the Dow and the S&P 500 index SPX, +0.02%  are on the verge of tallying three straight months of declines, with October shaping up to be the ugliest monthly fall since January—the month after the Federal Reserve raised rates for the first time in a decade. (Friday’s jump on better bank earnings will have to be factored after the close.)

But, if the Dow posts a loss in October it would be the first time the blue-chip index logged three consecutive monthly declines since the period ended in September 2011. The S&P 500 notched three consecutive monthly loses earlier this year, ended February.

On Friday, stocks ended nearly flat, with only the Dow posting a significant gain buoyed by a rise in the banking sector’s Goldman Sachs Group GS, +1.85% Friday’s wobbly moves, where stocks started off sharply higher before fading, has characterized a market that appears to be increasingly on tenterhooks. Here’s what may be contributing to the recent spike in Wall Street anxiety levels:

1. October trade
Ryan Detrick, senior market strategist at LPL Financial, points out that October is inherently a volatile month for stocks. “October has a reputation as a month you better buckle your seat belts for a reason. Nearly all the volatility records seem to take place during this month,” Detrick said in a recent research note.
Read: Will October kill yet another bull market?

Detrick points out that 10 of the largest one-day drops were in October, dating back to 1928 (as the following table shows):

2. Ominous charts point to a crash (a la October 1987)
A number of analysts are pointing to the possibility of a big selloff in stocks, citing bearish technical patterns. Murray Gunn, technical analyst at HSBC, in a Wednesday note said investors should look out below if the S&P 500 closes between 2,116-1,991 and if the Dow industrials breach the 17,992-17,063 level. The thinking behind that call is those levels represent recent lows that may trigger buying by computer-driven traders and other investors. In other words, those levels then tend to act as so-called support. But slipping below them can mean a painful dip into darkness.

Other market statisticians, including Carter Braxton Worth of Cornerstone Macro, have pointed out that although stocks have been hovering around all-time records, their recent crawl lower is a bad sign and suggests that equities are gradually breaking down.

Here’s a chart of important levels for the S&P 500 put together by MarketWatch’s Tomi Kilgore:

On Thursday, the S&P 500 hit a low of 2,114 before bouncing back, while the Dow’s Thursday low was 17,959, before rebounding somewhat. Still, Murray said “the possibility of a severe fall in the stock market is now very high,” and compared recent moves in stocks with those that preceded the 1987 stock-market crash.

3. Weak corporate earnings
Alcoa Inc. AA, -1.16% delivered weak third-quarter results to unofficially kick off earnings season. S&P Global Market Intelligence warned that earnings season is turning out to be a story of tepid growth, down 1.2% for the third quarter. S&P said particular attention needs to be paid to the consumer-discretionary sector, which includes brands like Nike Inc. NKE, -0.79% Ford Motor Co. F, +0.00% and Staples Inc. SPLS, -1.18% and is on track to report its lowest quarterly results since 2012 (as the chart below shows):

Why is this bad? Weak earnings can mean there is not a lot of fundamental justification to buy stocks, which are considered risky compared with, say, the U.S. 10-year Treasury note TMUBMUSD10Y, +0.00% Better earnings from stocks mean that investors are getting good value for their buck. Weak or stagnant earnings suggest that investors are overpaying. And there have been a raft of market participants pointing to bubbles forming in the market, citing things like price-to-earnings ratios.

Indeed, S&P 500 companies are expected to post their sixth straight quarter of declining earnings, according to FactSet data. And although it is still early in the season, several corporations have issued profit and/or sales warnings over the past few weeks. That all implies that there is still weakness in the economy, despite a labor market that has been chugging along. Tepid earnings are a big reason the market is bound to sink, or, at the very least, can’t go much higher, some industry experts argue.

4. Biotech woes
The biotech market can be a canary in the coal mine as a measure of risk-taking. And it is starting to lose steam after a nice run, trading below both its 50-day and 200-day moving averages, as gauged by the iShares Nasdaq Biotechnology ETF IBB, -1.86% Falling below or trading above a moving average is usually interpreted as a measure of momentum.
Problems in biotech are multiple, but the primary forces could be centered on a scaling back of general risk appetite, as the sector is a proxy for bullish bets on U.S. stocks, and as a bet on the outcome of the U.S. presidential election. Democratic candidate Hillary Clinton has been critical of biotech companies, which can pressure the sector if investors believe she’s likely to win the race for the White House.

5. The pound and the dollar
The pound GBPUSD, -0.5386% which has been battered by intensifying talk of the U.K.’s plan to exit from the European Union, is hovering around its trade-weighted low, while the dollar has been creeping higher.
The dollar DXY, +0.55% has been a headwind for stocks and its abrupt surges higher on shifting views of a rate increase by the Federal Reserve have been disruptive to markets of late. A stronger buck means reduced sales for U.S. multinationals when money is repatriated into dollars. And a sustained rise could cause companies to lower their earnings outlooks for future quarters. The dollar has surged almost 3% so far in October.

Meanwhile, the pound’s steady drop has been a cause for worry because it is unclear how the U.K.’s economy will fare amid the tumbling currency, despite the benefits it offers the FTSE 100 UKX, +0.62% which is comprised predominantly of multinational companies that profit from exporting goods. Uncertainty in Europe is a problem that can cause jitters for the U.S., because it hints at broader global problems.

6. China
Concerns about China’s economy have resurfaced. Lackluster export data on Thursday reminded investors of the view that the world’s second-largest economy is petering. In August 2015, it was China’s stock-market woes and its sluggish economy that sent global markets into a tailspin.

7. U.S. presidential election
Like the market, Trump has been on a losing streak.
Republican candidate Donald Trump’s recent debacles have begun to lead some strategists to believe that a victory for Clinton isn't just assured, but that Democrats might see sufficient gains during the November elections to gain control of the House. That is not viewed as a categorical good thing for the market—financials KBE, +0.48% XLF, +0.47%  and the aforementioned biotech sector have been wobbly

To be sure, there is plenty of time to right the stock-market ship. Earnings could surprise to the upside and calm may set in after the election, pushing the S&P 500 and the Dow to fresh records, but right now it is looking a bit iffy.

Market columnist Mark Hulbert says the market is setting up for a monster rally and points out that the Dow has gained an average of 6.8% from its lowest point in October through the end of that same year.

Saturday, October 08, 2016

You won't learn this from the so-called mainstream media. "Russia has a sufficient nuclear arsenal capable of inflicting a deadly blow on the United States. Washington recognizes this as well." "the State Department’s statement was immediately followed by the Pentagon's announcement that it is ready to launch a preventative nuclear strike on Russia." Thank goodness that Putin does not want a war with the US. But "we don’t know what choice Washington will make."

Following the president of the Russian Federation’s decree on suspending Russia’s compliance with agreements with the US on the disposal of weapons-grade plutonium and the submission of the corresponding bill to the State Duma, disputes have begun in the media on whether this is connected to the rupture of the Syria deal. The second stumbling block is a question: Why is Russia, having known that the US has not fulfilled its part of the deal, only reacted now after a few years?

Some nuclear experts argue that the deal was objectively beneficial for Russia. Maybe. I’m not an expert in this sphere and it’s difficult for me to say how objective they are. Moreover, that which is beneficial from the standpoint of the nuclear industry might be disadvantageous from the point of view of security.

In principle, I think that there were no particular security problems. Russia has a sufficient nuclear arsenal capable of inflicting a deadly blow on the United States. Washington recognizes this as well. There was also more than enough material for the production of new warheads. In the event of full-scale nuclear strike exchanges, the production of another batch of weapons would already be redundant and, indeed, physically impossible. The real problem would be physically preserving the remains of civilization at least at the level of the stone age.

As for the Syria, this is not the first time, and not only in Syria, that the US concludes agreements only to disrupt their fulfillment and then conclude them again. The form of the Russian reaction is clearly not comparable to Washington’s public rejection of cooperation which, in fact, it has yet to do.

I think that in order to understand the scale of this incident, it is necessary to pay attention to the fact that Putin has not simply taken Russia out of a contract. He has announced the possibility of returning to it, but he has furnished certain conditions.

Let’s look at these conditions:

(1) the US must lift all sanctions against Russia;
(2) compensation should be paid not only for the losses from American sanctions, but also for the losses incurred by Russian counter-sanctions;
(3) the Magnitsky Act should be repealed;
(4) the US’ military presence in Eastern Europe should be sharply reduced; and
(5) the US should abandon its policy of confrontation with Moscow.
Only one word fits in determining the essence of Putin’s demands: “ultimatum.”

As far as a I remember, the last time that Washington was given an ultimatum was by the United Kingdom over the Trent vessel incident. And that was in 1861 during the American Civil War. Even then, in extremely difficult conditions, America agreed to partially meet British demands.

It should be noted that the British demands in  1861 did not contain anything humiliating for the US. The captain of a US Navy ship had indeed broken international law, arrested people on a neutral (British) ship, and thereby encroached upon the sovereignty of the UK, nearly provoking a war. Then America disavowed the actions of its captain and freed the prisoners, albeit refusing to apologize.

But Putin is not demanding any apologies or the release of a few prisoners, but for all of American policy to be changed, and still more for Russia to be compensated for losses due to the US’ sanctions. This is an unmeetable, humiliating demand. This demand essentially means complete and unconditional surrender in the hybrid war which Washington does not consider to be irreversibly lost. And there’s still all those indemnities payments and reparations.

Something similar was demanded from the US by the British Crown before the end of the war for independence, when the Americans were still King George III’s rebellious subjects. For the last 100 years no one has even imagined talking with Washington in such a tone.

And so, the first conclusion is: Putin has deliberately and demonstratively humiliated the US. He has shown that it is possible to talk tough to the US, even tougher than the US itself has gotten used to talking down to the rest of the world. 

How was this done? What did Putin actually react to? Did he actually think that the US would fulfill the Kerry-Lavrov deal and is now upset over what happened? Russia also knew that Washington has not been observing the plutonium deal for years, but Moscow has extracted serious profit from this for its nuclear industry by nearly becoming a global monopoly and is clearly not perturbed by the US’ technological backwardness preventing them from disposing of weapons-grade plutonium as stipulated in the agreement.  

Russia’s tough and almost immediate reaction followed the statements of the US Secretary of State’s spokesperson to the effect that Russia will have to start sending its troops home from Syria in body bags, is going to start losing planes, and that terrorist attacks will begin to plague Russian cities.

In addition, the State Department’s statement was immediately followed by the Pentagon's announcement that it is ready to launch a preventative nuclear strike on Russia. The Russian Ministry of Foreign Affairs also reported that Moscow knows about the US’ intention to launch an air war against Syrian government forces, which also means against the Russian contingent legally stationed in Syria. 

What else formed the background for Putin’s ultimatum?: The exercises from six months ago involving air and missile defense and strategic missile systems which practiced repelling a nuclear attack on Russia and then launching a responsive counter strike. Add to this the other day's emergency exercises involving up to 40 million Russian citizens that inspected the readiness of infrastructure and civil defense structures for a nuclear war and provided additional information to citizens on the plan of action in the cause of “X hour.”

If we take all of this together, then we can see that the US has long since informally frightened Russia with a nuclear conflict, and Moscow has regularly hinted that it is ready for such a turn of events and is not going to back down.

However, given the end of Obama’s rule and lacking absolute confidence in a Hillary Clinton victory in presidential elections, the Washington hawks have decided to raise their bets once again. And now things have reached an extremely dangerous limit in which conflict begins to reach the stage of developing independently. At this stage, nuclear Armageddon could begin over any kind of incident, including due to the incompetence of some senior Pentagon officials or White House administrators. 

At this precise moment, Moscow has seized the initiative and upped the ante, but by moving the confrontation onto another plane. Unlike America, Russia is not threatening war. It is simply demonstrating its capability of giving a harsh political and economic response which can, in the event of further inappropriate behavior by the US, realize just the opposite of Obama’s dream: tearing apart Washington’s economy and financial system.

In addition, with these actions, Russia has seriously undermined the international prestige of the US by showing the whole world that America can be beaten with its own weapons. The boomerang has come back. Given such dynamics and turn of events, we might see hundreds of representatives of the American elite at the dock in the Hague not only in our lifetime, but even before the next American president serves their first four-year term in the White House.

The US has been given a choice. Either it will carry through with its threats and start a nuclear war, or it will accept the fact that the world is no longer unipolar, and begin to integrate into the new format.

We don’t know what choice Washington will make. The American political establishment has a sufficient number of ideologically-blinded, incompetent figures who are ready to burn up in a nuclear fire with the rest of a humanity rather than recognize the end of US world hegemony, which has turned out to be short-lived, senseless, and criminal. But they have to make a choice, because the longer that Washington pretends that nothing has happened, the greater the number of its vassals (who are called their allies, but have long since been bogged down in dependency) will openly and explicitly ignore American ambitions and cross over to the other side of the new perspectives of global power arrangement.

In the end, the US could be faced with the status of one of the centers of the multipolar world no longer being available for it. Not only Africans, Asians, and Latin Americans, but also Europeans will gladly take revenge against the former hegemon for their former humiliation. And they are not so humane and peace-loving as Russia.

Finally, Putin’s ultimatum is a response to all of those who were outraged that Russian tanks didn’t take Kiev, Lvov, Warsaw, and Paris in 2014 and pondered over what Putin’s plan could possibly be. 

I can only repeat what I wrote back then. If you are going to confront the global hegemon, then you have to be sure that you will be capable of responding to any of its actions. The economy, army, society, and state and administrative structures should all be ready. If everything is not fully ready, then one needs to buy time and build muscle.

Now things are ready and the cards have been put on the table. Let us see what the US will respond with. But the geopolitical reality will never be the same. The world has already changed. The US has had the gauntlet publicly thrown down before it and they have not dared to pick it up right away.