Monthly Archives: July 2016

Hillary Clinton and Her Hawks, by Gareth Porter

Posted on July 30, 2016 | Leave a comment

Not much mystery what kind of foreign policy a President Hillary Clinton would pursue: neoconservatism with a Democratic face. From Gareth Porter at antiwar.com:

Focusing on domestic issues, Hillary Clinton’s acceptance speech sidestepped the deep concerns antiwar Democrats have about her hawkish foreign policy, which is already taking shape in the shadows

As Hillary Clinton begins her final charge for the White House, her advisers are already recommending air strikes and other new military measures against the Assad regime in Syria.

The clear signals of Clinton’s readiness to go to war appears to be aimed at influencing the course of the war in Syria as well as U.S. policy over the remaining six months of the Obama administration. (She also may be hoping to corral the votes of Republican neoconservatives concerned about Donald Trump’s “America First” foreign policy.)

Last month, the think tank run by Michele Flournoy, the former Defense Department official considered to be most likely to be Clinton’s choice to be Secretary of Defense, explicitly called for “limited military strikes” against the Assad regime.

And earlier this month Leon Panetta, former Defense Secretary and CIA Director, who has been advising candidate Clinton, declared in an interview that the next president would have to increase the number of Special Forces and carry out air strikes to help “moderate” groups against President Bashal al-Assad. (When Panetta gave a belligerent speech at the Democratic National Convention on Wednesday night, he was interrupted by chants from the delegates on the floor of “no more war!”

Flournoy co-founded the Center for New American Security (CNAS) in 2007 to promote support for US war policies in Iraq and Afghanistan, and then became Under Secretary of Defense for Policy in the Obama administration in 2009.

Flournoy left her Pentagon position in 2012 and returned to CNAS as Chief Executive Officer. She has been described by ultimate insider journalist David Ignatius of the Washington Post, as being on a “short, short list” for the job Secretary of Defense in a Clinton administration.

Last month, CNAS published a report of a “Study Group” on military policy in Syria on the eve of the organization’s annual conference. Ostensibly focused on how to defeat the Islamic State, the report recommends new US military actions against the Assad regime.

Flournoy chaired the task force, along with CNAS president Richard Fontaine, and publicly embraced its main policy recommendation in remarks at the conference.

She called for “using limited military coercion” to help support the forces seeking to force President Assad from power, in part by creating a “no bombing” zone over those areas in which the opposition groups backed by the United States could operate safely.

In an interview with Defense One, Flournoy described the no-bomb zone as saying to the Russian and Syrian governments, “If you bomb the folks we support, we will retaliate using standoff means to destroy [Russian] proxy forces, or, in this case, Syrian assets.” That would “stop the bombing of certain civilian populations,” Flournoy said.

In a letter to the editor of Defense One, Flournoy denied having advocated “putting US combat troops on the ground to take territory from Assad’s forces or remove Assad from power,” which she said the title and content of the article had suggested.

But she confirmed that she had argued that “the US should under some circumstances consider using limited military coercion – primarily strikes using standoff weapons – to retaliate against Syrian military targets” for attacks on civilian or opposition groups “and to set more favorable conditions on the ground for a negotiated political settlement.”

To continue reading:  Hillary Clinton and Her Hawks

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Get ready for America’s new $29 trillion debt, by Simon Black

Posted on July 30, 2016 | 1 comment

The ideas that debt must someday be repaid, and that it can’t keep growing faster than the underlying income that will service it, are quaint notions that have no relevance it this day of brilliant central bankers and economic planners. From Simon Black at sovereignman.com:

According to Jacques Necker, everything was just fine.

The year was 1781, and Necker, France’s finance minister, had just published a report called Compte Rendu au Roi, an accounting of French public finances.

Necker’s report showed that, despite extraordinary public services and military spending, France had a net credit position of +10 million livres.

In other words, the country was in perfect fiscal health.

It turns out that Necker had cooked the books.

Rather than being 10 million on the positive side, France had racked up 520 million livres worth of debt and could no longer afford to pay interest.

France had spent decades accumulating prodigious debts. They built monuments, parks, and splendid cities that still inspire awe today.

They explored the world and expanded their empire. They engaged in almost constant military conquest in far-away lands.

This all came at great cost. But it never seemed to matter.

The French government knew they were the world’s dominant superpower, and they overspent their national income as if it were their divine privilege to do so.

As William Olphus describes in his book Immoderate Greatness: Why Civilizations Fail, the French “tended to see the natural world as cornucopian– that is, as a banquet on which they were free to gorge without limit.”

Nearly all superpowers see the world in this way. ‘We’re #1 therefore we no longer have to be fiscally prudent.’

Sir John Glubb, having seen his own British Empire fade as the world’s superpower throughout the 20th century, wrote The Fate of Empires in 1978.

Glubb argues that great civilizations start with an Age of Pioneers– those who work hard and build wealth.

It then progress rapidly through an Age of Commercial Expansion, Affluence, and Intellect, before decaying in an Age of Decadence in which the entire society feels entitled to a level of wealth that they neither earned nor can longer afford.

Even when faced with obvious fiscal realities, they make no changes.

Only when a crisis erupts does the society demand action. And of course, at that point, it’s too late.

Such was the case of France in the late 1700s– a situation so desperate that the finance minister resorted to all-out lies in order to conceal their true condition.

Most of the West is in this position today– summed up by Jean-Claude Junker’s (former President of the European Council) explanation of the Greek debt crisis in 2011: “When it gets serious, you have to lie.”

Over in the United States, the Congressional Budget Office (CBO) recently published its own projections for America’s grim public finances.

Bear in mind that US debt is already $19+ trillion and climbing. The CBO sees at least another $10 trillion in debt in the coming years, and projects that the US budget deficit will increase every single year.

The evidence is already so clear.

Military retirement spending rose by 8.7% last year. Medicare costs were up 10%. Certain government employee benefit programs rose by 17%.

Overall mandatory outlays rose on average by 6.6%, three times faster than US GDP.

So essentially the US government’s spending growth is far outpacing US economic growth.

It doesn’t take a rocket scientist to see how dangerous this is.

To continue reading: Get ready for America’s new $29 trillion debt

 

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No One Can Stop Her… And She Knows It: “This Election Won’t Be Fair” by Mac Slavo

Posted on July 30, 2016 | 2 comments

Will the coming election be aboveboard and honest? Probably not. How bad will the cheating get? Maybe enough to swing the election from Trump to Clinton. From Mac Slavo at shtfplan.com:

In a fair election, my best estimate is that Donald Trump would win in a landslide.

But this election will not be fair. In fact, few of them are.

For Trump’s part, there is no doubt that he has been this year’s sensation. A newcomer to politics, he has thrown out all the conventional rules, played by his own, and found a captivated country hanging onto his every word. Love him, hate him, or somewhere in between… no one can look away from the spectacle.

After a war within the party and the convenient disposal of 16 conventional GOP contenders, Trump is now the official Republican candidate and he is in a strong position. Coming out of the relatively calm Republican National Convention and going into the tumultuous DNC, Trump has enjoyed soaring poll numbers while Hillary has been losing ground fast to the scandals and corruption revealed by Wikileaks and other related mouthpieces.

But the fat lady has not sung.

Hijacking the Party, Keeping Dissent Under Wraps

Hillary’s coronation last night as she formally accepted her party’s nomination could hardly have been more forced. The entire Democratic convention has been staged managed to downplay the overwhelming noise from Bernie supporter who are outraged and feel betrayed by Hillary.

The entire convention has had a certain air to it, a quality that reveals the desperation for power, and the crisp sense of danger that brings with it.

To a casual observer, things might look typical enough, with a few sore losers and pipe dreamers wishing for an ideal country run by decent and fair people that either don’t exist or haven’t figured out how to win an election. But things are not typical – the paradigm is shifting. Politics realigns every 30 years or so, or at least that is the maxim that has held in political science. Only, the last shift has been 30 or 40 years overdue.

There is a reason for that, and the establishment has been fighting to stop the change for the past generation. They have faked out the cycle and kept the population under their thumb (when was the last time you saw a “real” presidential election that wasn’t a means to keeping the status quo?)

But delaying the inevitable won’t hold.

Why Trump Should Win…

As Michael Moore argued, Trump has been preaching the gospel of restoring America’s manufacturing, and is working to woo and turn to “red” the “blue” Rust Belt states where Americans once had strong middle class jobs, especially in Michigan, Ohio, Pennsylvania and Wisconsin. According to Moore’s numbers (which are cited to motivate support for Hillary and opposition to Trump), if Trump captures those key states in addition to the red states that Mitt Romney, a weak candidate, won in 2012, then Trump should win the electoral college:

I believe Trump is going to focus much of his attention on the four blue states in the rustbelt of the upper Great Lakes – Michigan, Ohio, Pennsylvania and Wisconsin. Four traditionally Democratic states – but each of them have elected a Republican governor since 2010 (only Pennsylvania has now finally elected a Democrat). In the Michigan primary in March, more Michiganders came out to vote for the Republicans (1.32 million) that the Democrats (1.19 million). Trump is ahead of Hillary in the latest polls in Pennsylvania and tied with her in Ohio. Tied? How can the race be this close after everything Trump has said and done? Well maybe it’s because he’s said (correctly) that the Clintons’ support of NAFTA helped to destroy the industrial states of the Upper Midwest.

To continue reading: No One Can Stop Her… And She Knows It: “This Election Won’t Be Fair”

 

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He Said That? 7/29/16

Posted on July 29, 2016 | 1 comment

Washington once again proves that self-satisfied, self-absorbed, self-important, self-reverential, pompous preening peacocks and peahens  are utterly incapable of getting a joke. After the uproar his recent remarks about potential Russian hacking of DNC emails caused, yesterday Donald Trump noted during a Fox News interview what should have been obvious to all:

Of course, I’m being sarcastic.

The Wall Street Journal, “Trump says Russia Remarks ‘Sarcastic'”, 7/29/16

People may have been surprised because New Yorkers are never sarcastic.

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The Car Bubble … and Cash for Clunkers II? by Eric Peters

Posted on July 29, 2016 | 1 comment

The credit-fueled auto “boom” is rolling over. From Eric Peters on a guest post at theburningplatform.com:

A guy who smokes meth can pull a week of 15 hour days. But come next week…

That’s how artifical “incentives” work on the economy. On the macro level, it is the Boom – and Bust – business cycle, whose unnatural peaks and valleys are caused by manipulation of money and credit, which causes excessive and unwarranted “investment” that – inevitably – leads to a downturn (or even a crash) when the artificially induced supply is disproportionate to demand. The housing bubble of the early 2000s is an obvious example of this.

Cash for Clunkers (same era) is another – and its unfortunate effects are just now beginning to become obvious.

As with housing in the early 2000s, the federal government decided it would be a good idea to “stimulate” new car sales by enacting a program that paid people to throw away perfectly good used cars. The idea being that they would then buy new cars to replace the ones thrown away.

Many (but not all, bear with) did so. This created a boom in new cars sales. Not only because there were fewer good used cars available, but also because the ones that remained had gone up considerably in price due to (wait for it) limited supply. This artificial scarcity in turn became the artificial incentive to buy a new car.

Actually, to take out a loan on a new car.

The remaining used cars that survived Cash for Clunkers were still less expensive than a new car. But they were now expensive enough that few people could afford to plunk down cash for one. That meant financing – and the interest rates on a loan for a used car tend to be much higher while interest rates on a new car loan were (and still are) much lower.

Another artificial incentive to “stimulate” the sale of the new over the used.

But even with low interest financing, the cost of a new car is higher than ever. So high, in fact, that most people have to take out a six or even seven year loan – the new normal – in order to make the monthly payments manageable.

The cost of new cars is high – the average new car sold for more than $30k last year – because of two factors, and they are in a very real way additional artificial “incentives” that have distorted the car market to the point of absurdity.

One, government keeps piling on mandates – safety and emissions – which add parts or require new designs, none of which comes free and often comes very expensive. The VW Diesel Debacle is a case in point. We know now that the cost per car to make the “cheating” diesels meet Uncle’s mandates amounts to several thousand dollar per car – an amount so high that the cars are not worth “fixing” and so will be thrown away instead. And because the cost to make Uncle-compliant diesels is so high, VW has decided to make them no longer (see here).

Two, buyers want gadgets.

Even “economy” cars now come with or offer LCD touchscreens and power pretty much everything.

Which is fine – except people can’t really afford this. Or the mandated-by-Uncle equipment. Debt is necessary to make it all feasible… temporarily.

Very much like early 2000s McMansions with granite countertops, faux stone exteriors and vaulted ceilings.

To continue reading: The Car Bubble … and Cash for Clunkers II?

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Over Past 50 Years This Big Of Earnings Recession Has Always Triggered A Bear Market, by Jesse Felder

Posted on July 29, 2016 | 1 comment

Earnings are plummeting. US equity markets to follow? From Jesse Felder at davidstockmanscontracorner.com:

It’s earnings season once again and it looks as if, as a group, corporate America still can’t find the end of its earnings decline since profits peaked over a year ago. What’s more analysts, renowned for their Pollyannish expectations, can’t seem to find it, either.

So I thought it might be interesting to look at what the stock market has done in the past during earnings recessions comparable to the current one. And it’s pretty eye-opening. Over the past half-century, we have never seen a decline in earnings of this magnitude without at least a 20% fall in stock prices, a hurdle many use to define a bear market.

In other words, buying the new highs in the S&P 500 today means you believe “this time is different.” It could turn out that way but history shows that sort of thinking to be very dangerous to your financial wellbeing.

http://davidstockmanscontracorner.com/over-past-50-years-this-big-of-earnings-recession-has-always-triggered-a-bear-market/

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Full List of Hillary’s Planned Tax Hikes, by Americans for Tax Reform

Posted on July 29, 2016 | 1 comment

If you draw a paycheck and it’s not from the government, if Hillary gets elected, you’ll get fleeced. Her “fair share surcharge” just ominously like the Fair Share Tax in Atlas Shrugged. From Americans for Tax Reform via theburningplatform.com:

Hillary Clinton has made clear she intends to dramatically raise taxes on the American people if elected. She has proposed an income tax increase, a business tax increase, a death tax increase, a capital gains tax increase, a tax on stock trading, an “Exit Tax” and more (see below). Her planned net tax increase on the American people is at least $1 trillion over ten years, based on her campaign’s own figures.

Hillary has endorsed several tax increases on middle income Americans, despite her pledge not to raise taxes on any American making less than $250,000. She has said she would be fine with a payroll tax hike on all Americans, she has endorsed a steep soda tax, endorsed a 25% national gun tax, and most recently, her campaign manager John Podesta said she would be open to a carbon tax. It’s no wonder that when asked by ABC’s George Stephanopoulos if her pledge was a “rock-solid” promise, she slipped and said the pledge was merely a “goal.” In other words, she’s going to raise taxes on middle income Americans.

Hillary’s formally proposed $1 trillion net tax increase consists of the following:

Income Tax Increase – $350 Billion: Clinton has proposed a $350 billion income tax hike in the form of a 28 percent cap on itemized deductions.

Business Tax Increase — $275 Billion: Clinton has called for a tax hike of at least $275 billion through undefined business tax reform, as described in a Clinton campaign document.

“Fairness” Tax Increase — $400 Billion: According to her published plan, Clinton has called for a tax increase of “between $400 and $500 billion” by “restoring basic fairness to our tax code.” These proposals include a “fair share surcharge,” the taxing of carried interest capital gains as ordinary income, and a hike in the Death Tax.

But there are even more Clinton tax hike proposals not included in the tally above. Her campaign has failed to release specific details for many of her proposals. The true Clinton net tax hike figure is likely much higher than $1 trillion.

For instance:

Capital Gains Tax Increase — Clinton has proposed an increase in the capital gains tax to counter the “tyranny of today’s earnings report.” Her plan calls for a byzantine capital gains tax regime with six rates. Her campaign has not put a dollar amount on this tax increase.

Tax on Stock Trading — Clinton has proposed a new tax on stock trading. Costs associated with this new tax will be borne by millions of American families that hold 401(k)s, IRAs and other savings accounts. The tax increase would only further burden markets by discouraging trading and investment. Again, no dollar figure for this tax hike has been released by the Clinton campaign.

“Exit Tax” – Rather than reduce the extremely high, uncompetitive corporate tax rate, Clinton has proposed a series of measures aimed at inversions including an “exit tax” on income earned overseas. The term “exit tax” is used by the campaign itself. Her campaign document describing this proposal says it will raise $80 billion in tax revenue, but claims some of the $80 billion will be plowed into tax relief. How much? The campaign doesn’t say.

To continue reading: Full List of Hillary’s Planned Tax Hikes

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Central Bankers are Driving Us All Into the Dirt, by Harry Dent

Posted on July 29, 2016 | Leave a comment

SLL is not the only one saying the US is in a recession. From Harry Dent at wolfstreet.com:

The Great Unwind has started.

One of the major triggers I’ve been warning about is already happening, even before we understand and/or admit that we are in a recession.

Global corporate debt now sits at a record $51 trillion and is poised to hit $75 trillion by 2020 – just four years away. If interest rates rise and the economy slows, it will be very hard for companies to roll these bonds over – and then we get what S&P Global Ratings is calling “Crexit.”

The bond markets dry up for corporate lending, especially higher-yield junk bonds. This would set off a chain of corporate defaults and bankruptcies that would cause central banks to start to lose control of the economy, as they did in 2008 forward.

The simplest depiction of where we’re at comes from the chart below:

At the worst of the recession in 2009, we saw around 180 total corporate bond or loan defaults. As of the first half of 2016 alone, we just hit 100. That means 200+ by year-end… and we’re just at the beginning of the next financial crisis. Note that most of the 2009 defaults were in the U.S., as is the case again due to the energy “frackers.” But Europe has a bigger flurry coming this time.

The next chart shows how that crisis is likely to progress:

We’re now nearing 5% default rates, as opposed to heights of 16% in 2009. Hence, we have a long way to go here – 300%+ or more, and I fully expect the next crisis to be much deeper than 2008/2009. After hitting $154 billion this year, we will see $100’s of billions of additional defaults in the years ahead.

S&P Global ratings consider a credit market correction inevitable; it’s just a matter of when.

So, how did this occur? It’s another product and cost of ZIRP and QE policies that appear to create something for nothing. Corporations lever up at such low rates and use that money to buy back stock and engineer mergers and acquisitions – all just re-arranging the pie, not growing it.

The entire fracking industry was a hugely bad investment in technologies that were not lower-cost, but higher. Only QE that pumped oil prices back up temporarily, and super-low-cost junk bond financing, made this industry viable. But no longer, with oil at sub $50 for years now… and many more to come, by my estimates.

When the economy slows and/or interest rates rise to reflect default risks, then we get a negative spiral of more and more defaults. As I predicted, the (ex) frackers are leading this first round of defaults and we’ll see much more to come.

Bondholders and stockholders will lose, employees will lose, companies will disappear and we’ll face a deeper recession from not facing the last debt bubble… that’s the cost: you pathetic, douchebag, academic central bankers!

And don’t even ask about pension funds’ and municipalities’ growing unfunded liabilities, with such low returns on their investments since 2008 and QE. To deal with unfunded pensions, some Chicago homeowners are seeing property tax increases of up to 300%… Holy crap Batman!

To continue reading: Central Bankers are Driving Us All Into the Dirt

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Trump’s Trump Card, from Townhall

Posted on July 29, 2016 | Leave a comment

http://www.theburningplatform.com/2016/07/29/trumps-trump-card/

 

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Who Hacked the DNC? by Justin Raimondo

Posted on July 29, 2016 | Leave a comment

A much more plausible answer to the question in the title than the Russians is someone inside the DNC. From Justin Raimondo at antiwar.com:

We haven’t seen this kind of hysteria since the darkest days of the cold war: a spy scare that is being utilized by one political party against another in a national election, with charges of disloyalty and even “treason” being hurled by one side against the other. The publication of the Democratic National Committee’s emails by WikiLeaks has caused a storm of spin and counter-spin that threatens to throw the entire election discourse off balance – not that it was all that centered to begin with – and cause an international incident with perilous consequences for us all.

The media, one and all, have decided that the DNC hack was the work of the Russian government, and the Democrats have taken this one step further and declared that Moscow is pushing the candidacy of Donald Trump due to his oft-stated hope to “get along” with Vladimir Putin. And US government officials have added their voices to this chorus, with the New York Times reporting that unnamed members of the “intelligence community” believe “with high confidence” that the Russian state is behind the hack.

This is impressive, at least in Washington, D.C., where the pronouncements of government officials are taken as holy writ. For the rest of us, however, who remember that this same “intelligence community” declared with certainty that Saddam Hussein had “weapons of mass destruction,” this assertion should be taken with a very large grain of salt. Indeed, one might almost be tempted to write this conclusion off as quite obviously erroneous and self-serving, given the record of the people who are making it.

Indeed, the whole narrative reeks of confirmation bias in the context of what preceded it: a systematic campaign by cold war liberals and Democratic party hacks (or do I repeat myself?) tagging Trump as “Putin’s puppet,” “Putin’s poodle,” not to mention “Putin’s pawn.” Aside from the rhyming scheme, what all these smears have in common is the simple assertion that anyone who doesn’t want to start World War III over who shall rule over the ramshackle mess that is Ukraine, and who questions in any way our commitment to an obsolete and increasingly expensive alliance, is quite obviously a Manchurian candidate controlled by the Kremlin.

So when the DNC hack made headlines, the anti-Trump media – i.e. the entire “mainstream” media – pushed the Kremlin conspiracy narrative hard. But what is the technical evidence for such a charge? As it turns out, it is thin-to-nonexistent.

Jeffrey Carr, author of Inside Cyber Warfare, who runs Taia Global, a cybersecurity firm, and founded the “Suits and Spooks” annual cyber-warfare conference, shows that the identification of the hacker groups – dubbed “Cozy Bear” and “Fancy Bear” – as Russian state actors is based on arbitrary definitions that exclude all exculpatory evidence.

Journalists covering the political and foreign policy scene are not usually conversant with the technical details of computer science: and this is a real handicap when dealing with the question of attributing a hacking to a state or nonstate actor. The issues are complex, impossibly nerdy, and go against the popular conception of “science” as identical with precision and even a kind of omniscience. Because, when it comes to attribution in these cases, there is no such thing as certainty. As Carr puts it:

“It’s important to know that the process of attributing an attack by a cybersecurity company has nothing to do with the scientific method. Claims of attribution aren’t testable or repeatable because the hypothesis is never proven right or wrong.”

To continue reading: Who Hacked the DNC?

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