Category Archives: Cronyism

Is Trump Winning? by Robert Gore

Mainstream analysis has been wrong for so long, why start believing it now?

SLL has run a series of articles (“Plot Holes,” “Trump and Vault 7,” “Calling a Bluff?” “Let’s Connect the Dots,” “Powerball, Part One,” “Powerball, Part Two”) advancing interrelated hypotheses. We’ve asserted that President Trump is far smarter and the powers that be far stupider and weaker than current consensus estimates. Trump’s primary motivation is power. The nonstop vilification campaign against him has little to do with policy differences and instead reflects establishment fears that Trump will investigate, expose, and punish its criminality. The upshot of these hypotheses: Trump is winning and has consolidated his power.

Reader reaction to this non-mainstream and admittedly speculative line of thinking has been mixed and often skeptical. However, we’ll press on, because our hypotheses have yielded testable predictions, most of which have been borne out. From “Powerball, Part Two”:

To answer a question posed in Part One: if Trump has consolidated power both at home and abroad, don’t hold your breath waiting for a swamp draining. The most effective power is often power of which only a few know. Those he has by the short hairs would be most helpful to him—sub rosa—if they’re still in government. If such is the case, don’t be surprised if the Russia probe fades away, Trump’s nominal opposition consigns itself to rote denunciation, the Deep State sits still for his Middle Eastern policy changes, and he gets more of his agenda through than anyone expects.

Even the Washington Post has admitted the Russia probe is “crumbling.”  Trump and Sessions know Special Prosecutor Robert Mueller won’t find much because there’s nothing there, although there may be a sacrificial offering or two to propitiate the investigatory gods. Trump read Sessions the riot act via Twitter and a Wall Street Journal interview about not investigating Hillary Clinton, intelligence community leaks to the press, and Ukrainian efforts to sabotage his presidential campaign. He’s been roundly condemned for publicly criticizing Sessions, but here’s a speculative leap: perhaps publicly criticizing Sessions was not really what Trump was doing.

Perhaps Trump was giving his attorney general political cover to pursue investigations against high-profile Democrats who cannot help Trump, sub rosa or otherwise. Investigations of Hillary Clinton, former Attorney General Loretta Lynch, Susan Rice, Samantha Power, Fusion GPS, and Debbie Wasserman Schultz would demoralize the Democrats, preoccupy and harass key players, expose criminality, and electrify Trump’s base. Providing Sessions further cover, twenty Republican representatives have sent a letter to the Attorney General and Deputy Attorney General Rod Rosenstein demanding the appointment of a second Special Counsel to look into potentially illegal acts by Clinton, Lynch, and former FBI director James Comey.

After recusing himself from the Russiagate investigation, which he knows is pointless, and being “scolded” by Trump, Sessions is now a sympathetic, squeaky-clean figure; even Democrats have expressed support. He has far more latitude to pursue the investigations his boss wants him to pursue. Most of the ensuing criticism will be directed at Trump, which will bother Trump not at all (although there will undoubtedly be answering Twitter blasts).

Trump has quietly (when Trump does anything quietly, take note) made two sea changes in US policy in Syria. At the G20 summit, he negotiated a cease fire with Vladimir Putin for southwest Syria. Last week he ended a CIA program that armed Syrian jihadists fighting Bashar al-Assad’s regime. Both changes are anathema to the US Deep State, the mainstream media, and US allies Saudi Arabia, the Gulf States, Israel, and Turkey, yet other than “rote denunciation,” they have been surprisingly docile. The latter change could presage abandonment of a pillar of US foreign and military policy since President Carter supplied arms and other aid to the mujahideen in Afghanistan during their successful fight against the Soviet Union. The US may be out of the business of arming Islamic insurgents against regimes it seeks to change.

Deft—by this analysis—as Trump has been, his biggest challenge lies ahead. The government is bankrupt, and demographics will push it ever-deeper in the hole. The global economy is struggling under monstrous and unsupportable debt. Fiat money something-for-nothing has a sell-by date, sooner or later the stock market and economy will head south. Historically, there’s been a tight correlation between stocks, the economy, and presidential popularity.

Can Trump dodge this bullet? Here’s another speculative leap: he is already laying the groundwork. He’s claiming credit for the stock market’s rally since he was elected. That may not be as foolish as it seems. When the market and economy falter, he will claim they went up on hopes for his program, and will blame Congress and the Federal Reserve for dashing those hopes.

Most people blame the Republican-controlled Congress, not Trump, for the failure to repeal and replace Obamacare. Trump proposes, but Congress disposes and Trump has made sure everyone knows that Congress is responsible. In the same vein, he signed the veto-proof Russian sanctions bill while at the same time excoriating Congress for passing it. He has an easier job making his case than a President whose party controls Congress normally would. Trump is a Republican in name only and ran just as hard against the Republican establishment as he did against Hillary Clinton.

Look for him to lambast Congress when it botches tax reform and the debt ceiling. He could be hoping for such miscues. Debt ceiling contretemps may set off financial market conniptions. Trump will sigh and tweet: If only Congress had passed my health care and tax reforms and given me a clean debt ceiling increase, none of this would have happened. If the Federal Reserve continues to raise its federal funds target rate and shrinks its balance sheet, he’ll include Janet Yellen in his tweets.

These hypotheses yield testable predictions. Mueller’s investigation will come a cropper, but investigations of high-profile and no sub rosa value leakers and Democrats—up to and perhaps including Hillary Clinton—will lead to indictments and either plea bargained settlements or convictions. Trump will take credit for the stock market until it reverses. He will continue to harshly criticize Congressional failures and blame them when financial markets and the economy head south. This may come to a head if Congress fails to pass a clean debt ceiling increase by the end of September. Trump will also point his finger at the Federal Reserve. This is a high risk strategy, given the longstanding psychological linkage between presidential popularity, the strength of the economy, and stock market indices. It’s probably the only strategy available to Trump. Time will tell if it works.

The war in Syria has crested; ISIS, though still capable of substantial mischief, has lost. The refugee flow has already reversed, an estimated half a million refugees have returned, which, as noted in “Powerball, Part Two,” gives European leaders some breathing room. Assad will stay in power unless Russia, not the US, sees fit to remove him. The embers of conflict will smolder for years, but Trump will not be fanning them by arming anti-Assad groups or escalating US military involvement. He will continue to use shows of force and diplomatic maneuvers to try to resolve other hot spots—North Korea, Iran, the South China Sea, Ukraine, Afghanistan—and will shy away from exclusively military solutions. He is deeply displeased with the war in Afghanistan and is calling for a rethink that may ultimately lead to withdrawal.

All this is speculative, but it continues a line of analysis whose predictions have been for the most part confirmed. However, borrowing from the ubiquitous financial disclaimer: past performance is no guarantee of future accuracy.

YOUR GRANDCHILDREN WILL READ THIS BOOK

AMAZON

KINDLE

NOOK

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Narratives Are Not Truths, by James Howard Kunstler

It used to be that the word “narrative” connoted fiction, unless it was a historical narrative. James Howard Kunstler issues a timely reminder about narratives. From Kunstler at kunstler.com:

The polity is a social organism, of course, meaning that it adds up to more than the sum of its parts, a body of politics, if you will, just as each of us adds up to more than just our bodies. It’s alive as we are alive. We have needs. We have intentions in the service of those needs. Those intentions animate us and turn us in one direction or another to stay alive, and even more than that, to thrive.

The American polity is not thriving. It has been incrementally failing to meet its needs for quite a while now, playing games with itself to pretend that it is okay while its institutional organs and economic operations decay. It turns this way and that way ever more desperately, over-steering like a drunk on the highway. It is drunk on the untruths it tells itself in the service of playing games to avoid meeting its real needs. Narratives are not truths.

Here is a primary question we might ask ourselves: do we want to live in a healthy society? Do we want to thrive? If so, what are the narratives standing in the way of turning us in the direction?

Let’s start with health care, so called, since the failure to do anything about the current disastrous system is so fresh. What’s the narrative there? That “providers” (doctors and hospitals) can team up with banking operations called “insurance companies” to fairly allocate “services” to the broad population with a little help from the government. No, that’s actually not how it works. The three “players” actually engage in a massive racketeering matrix — that is, they extract enormous sums of money dishonestly from the public they pretend to serve and they do it twice: once by extortionary fees and again by taxes paid to subsidize mitigating the effects of the racketeering.

To continue reading: Narratives Are Not Truths

 

$2 Million Bathroom, by John Stossel

The shit isn’t the only thing that stinks about this bathroom. From John Stossel on a guest post at theburningplatform.com:

Did you see the $2 million dollar bathroom? That’s what New York City government spent to build a “comfort station” in a park.

I went to look at it.

There were no gold-plated fixtures. It’s just a little building with four toilets and four sinks.

I asked park users, “What do you think that new bathroom cost?”

A few said $70,000. One said $100,000. One said, “I could build it for $10,000.”

They were shocked when I told them what the city spent.

No park bathroom needs to cost $2 million. An entire six-bedroom house nearby was for sale for $539,000.

Everything costs more when government builds it.

“Government always pays above-average prices for below-average work,” says my friend who makes a living privatizing government activities.

–Obamacare’s website was supposed to cost $464 million. It cost $834 million and still crashed.

–Washington, D.C.’s Visitor Center rose in cost from $265 million to $621 million.

–The Veterans Affairs medical center being built near Denver was projected to cost $590 million. Now they estimate $1.7 billion.

Government spends more because every decision is tied up in endless rules. Rigid specs. Affirmative action. Minority outreach. Wheelchair access. “The process is designed to prevent any human from using judgment, or adapting to unforeseen circumstances,” says Philip Howard of the government reform group Common Good, adding, “The idea of a commercial relationship, based on norms of reasonableness and reciprocity, is anathema.”

But New York City’s bureaucrats are unapologetic about their $2 million toilet. The Parks Department even put out a statement saying, “Our current estimate to build a new comfort station with minimal site work is $3 million.”

“$3 million?!” I said to New York City Parks Commissioner Mitchell Silver, incredulously.

“New York City is the most expensive place to build,” he replied. As a result, “$2 million was a good deal.”

I pointed out that entire homes sell for less. He said, “We built these comfort stations to last. … (L)ook at the material we use compared to that of a home. These are very, very durable materials.”

To continue reading: $2 Million Bathroom

How the Elites Betrayed Working-Class America, by Bill Bonner

Perhaps the saddest part of the working class’s plight in America is that most don’t know how badly they’ve been betrayed by the elite. From Bill Bonner at internationalman.com:

Win-win deals get people more of what they want. Win-lose deals – usually imposed by government – bring them less. The few (the insiders) use government to exploit the many (the rest of us).

Win-lose deals also depress economic progress for everybody. Partly, this happens for an obvious reason.

Dropping the atom bomb on Hiroshima was a technical milestone, but not the kind of progress we’re talking about. Progress only makes sense if it means that people are able to get more of what they want.

By definition, when a person is forced into a bad deal, he gets less of what he wants.

Progress is also a learning process. You try something. You see what works and what doesn’t. As people experiment in this way, they learn… and the economy accumulates knowledge and wealth.

They learn to get to work in the morning, for example… to say please and thank you… to save their money… and to invest it wisely.

Win-lose deals interrupt the learning process. That’s why welfare programs fail: People get money without learning.

Temptation to Cheat

That is the real reason the Soviet Union failed, too.

Consumers were forced to buy whatever shoddy products were made available to them; producers had no way to learn how to make good ones.

Toward the end, products available for purchase in the Soviet Union were worth less than the raw materials and labor that went into them.

What do you need for win-win deals?

Three things:

1) People must be free to make choices with their time and money.

2) They must have money they can trust.

3) They must trust each other to respect their rights and property.

These things don’t happen smoothly and without interruption.

Progress is cyclical. Win-win deals add wealth and move society forward. But they depend on trust. And as trust increases, so does the temptation to cheat. When everyone leaves his liquor cabinet open, for example, who can resist having a drink?

Then trust declines. Barriers go up. Costs increase. Win-win gives way to win-lose. Progress goes into reverse.

To continue reading: How the Elites Betrayed Working-Class America

Is California Bailing Out Tesla through the Backdoor? by Wolf Richter

Knowing California and knowing Tesla, it’s not even a spoiler to say the answer to the title questions is: Sure looks like it. From Wolf Richter at wolf street.com:

Tesla will lose federal subsidies; so something big needs to be done.

The California state Assembly passed a $3-billion subsidy program for electric vehicles, dwarfing the existing program. The bill is now in the state Senate. If passed, it will head to Governor Jerry Brown, who has not yet indicated if he’d sign what is ostensibly an effort to put EV sales into high gear, but below the surface appears to be a Tesla bailout.

Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero.

Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins. A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. No other EV manufacturer is anywhere near their 200,000 limit. Their customers are going to benefit from the subsidy; Tesla buyers won’t.

This could crush Tesla sales. Many car buyers are sensitive to these subsidies. For example, after Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero. The good people of Hong Kong will likely start buying Teslas again, but it shows that subsidies have a devastating impact when they’re pulled.

That’s what Tesla is facing next year in the US.

In California, the largest EV market in the US, 2.7% of new vehicles sold in the first quarter were EVs, up from 0.4% in 2012, according to the California New Dealers Association. California is Tesla’s largest market. Something big needs to be done to help the Bay Area company, which has lost money every single year of its ten years of existence. And taxpayers are going to be shanghaied into doing it.

To make this more palatable, you have to dress this up as something where others benefit too, though the biggest beneficiary would be Tesla because these California subsidies would replace the federal subsidies when they’re phased out.

To continue reading: Is California Bailing Out Tesla through the Backdoor?

Has Super Mario Met His Match? by Don Quijones

Anybody who thinks central bankers don’t dole out tips to favored financial insiders—mostly at investment banks that give central bankers huge speakers’ fees and lucrative jobs after they leave central banking—has led a sheltered life indeed. From Don Quijones at wolfstreet.com:

Cozy relations between central bankers and financial firms get unwanted attention.

ECB President Mario Draghi wields more power than just about any other public official in Europe, perhaps even including Angela Merkel. The organization he heads not only controls the monetary policy levers of the entire Eurozone, it also supervises the region’s 130 biggest banks. As we’ve seen in recent weeks, it even has the power to decide which of Europe’s struggling banks get to live and which don’t.

Yet it is answerable to virtually no one. Until now.

Emily O‘Reilly, the EU Ombudsman, an arbiter for the public’s complaints about EU-institutions, has just sent Draghi a letter asking him to explain his role in the potentially compromising Group of Thirty (G30) and how he makes sure that he does not divulge insider information or runs into conflicts of interest. The tenor, tone and direction of O’Reilly’s inquiries make it clear that she means business.

The Washington-based G30 was founded in the late seventies at the initiative of the Rockefeller Foundation, which also provided start-up funding for the organization. Its current membershipreads like a Who’s Who of the world of global finance. It includes current and former central bankers, many of whom now work or worked in the past for major financial corporations, such as:

  • Mario Draghi (ECB, Bank of Italy, Goldman Sachs)
  • Ben Bernanke (former Chairman of the Federal Reserve)
  • William Dudley (New York Fed, Goldman Sachs)
  • Timothy Geithner (Warburg Pincus, former US Treasury Secretary, New York Fed)
  • Mark Carney (Bank of England, Bank of Canada, Goldman Sachs)
  • Axel Weber (UBS, ECB, Bundesbank)
  • Haruhiko Kuroda (Bank of Japan)
  • Christian Noyer (Bank for International Settlements, Bank of France)
  • Jaime Caruana (Bank for International Settlements)
  • Jacob Frenkel (JP Morgan Chase, Bank of Israel)
  • Philipp Hildebrand (BlackRock, Swiss National Bank)

To continue reading: Has Super Mario Met His Match?

How America’s Wealth Is Drained, by Bill Bonner

You don’t really need to look too hard to find the reasons why the American, and indeed the global economy, are sputtering. From Bill Bonner at bonnerandpartners.com:

POITOU, FRANCE – What does our Doom Index tell us now?

Here’s a quick update from Joe Withrow in the Bonner & Partners research department:

We are still waiting for second-quarter data to come in before we can update the index for the new quarter. But I have the monthly metrics updated… and there was one interesting change. The Fed quietly restated bank loan growth for Q1 2017. It was originally reported as 1.5%. It is now reported as NEGATIVE 0.6%.

Credit growth going negative bumps the index up to a 6 – which is our warning level. There have been a number of instances where the index hit this level and then cooled back off. So we aren’t definitely in dangerous territory yet. But this makes the second-quarter data especially interesting for us.

If doom is coming for a visit, the stock market is unprepared.

The music is still turned up loud. Investors are still partying. Stocks are still selling near peak prices despite a bit of nervousness in the tech sector.

But just because you don’t see an unwelcome visitor coming doesn’t mean you shouldn’t tidy up and put away the empty liquor bottles.

Sometimes, guests show up unannounced.

Steady Creep

Meanwhile, the media is abuzz over President Trump’s meeting with Russian President Vladimir Putin… and Donald Trump Jr.’s previously undisclosed meeting with a Russian lawyer who offered to give him dirt on Hillary.

Information is valuable only when it surprises you; nothing in the foregoing is at all surprising or interesting.

The only newsworthy thing to come out of Trump’s European tour was in a speech in Poland. Mr. Trump took aim at the “steady creep of government bureaucracy that drains the vitality and wealth of the people.”

“He’s right about that,” says our gardener. “Here in France, you can’t even [go to the bathroom] without filling out a lot of paperwork.”

But the creeps go far beyond the federal bureaucracy; they infest the cronies’ world, too… and the whole economy.

It’s not just the GS-1-through-GS-15 civil servants who drain the wealth and vitality of the people. Add the sectors of the economy that are under the feds’ control, and you have about 60% of the U.S. economy.

To continue reading: How America’s Wealth Is Drained