The US Is Executing A Global War Plan

Authored by Finian Cunningham via The Strategic Culture Foundation,

Washington is moving inevitably on a global war plan. That’s the grim conclusion one has to draw from three unfolding war scenarios.

Ultimately, it’s about American imperialism trying to assert hegemony over the international order for the benefit of US capitalism. Russia and China are prime targets for this global assault.

The three unfolding war scenarios are seen in Syria, North Korea and Ukraine.

These are not disparate, disassociated conflicts. They are inter-related expressions of the American war plans. War plans which involve the moving of strategic military power into position.

Last week’s massacre of over 100 Syrian government forces by American warplanes near Deir ez-Zor was an audacious overt assault by the US on the Syrian state. The US, along with other NATO allies, have been up to now waging a seven-year proxy war for regime change against Russia’s ally, President Assad. The massacre last week was certainly not the first time that US forces, illegally present in Syria, have attacked the Syrian army. But it seems clearer than ever now that American forces are operating on the overt agenda for regime change. US troops are transparently acting like an occupation army, challenging Russia and its legally mandated support for the Syrian state.

Heightening international concerns are multiple reports that Russian military contractors were among the casualties in the US-led air strike near Deir ez-Zor last week.

Regarding North Korea, Washington is brazenly sabotaging diplomatic efforts underway between the respective Korean leaderships in Pyongyang and Seoul. While this inter-Korean dialogue has been picking up positive momentum, the US has all the while been positioning nuclear-capable B-52 and B-2 bombers in the region, along with at least three aircraft carriers. The B-2s are also reportedly armed with 14-tonne bunker-buster bombs – the largest non-nuclear warhead in the American arsenal, designed to destroy North Korean underground missile silos and “decapitate” the Pyongyang leadership of Kim Jong-un.

American vice-president Mike Pence, while attending the Winter Olympics in South Korea, opening last week, delivered a blunt war message. He said that the recent detente between North Korea and US ally South Korea will come to an end as “soon as the Olympic flame is extinguished” – when the games close later this month. This US policy of belligerence completely upends Russia and China’s efforts to facilitate inter-Korean peace diplomacy.

Meanwhile, the situation in Eastern Ukraine looks decidedly grim for an imminent US-led invasion of the breakaway Donbas region. Pentagon military inspectors have in the past week reportedly arrived along the Contact Zone that separates the US-backed Kiev regime forces and the pro-Russian separatists of the Donetsk and Lugansk People’s Republics. Donetsk’s military commander Eduard Basurin warned that the arrival of Pentagon and other NATO military advisors from Britain and Canada indicate that US-armed Kiev forces are readying for a renewed assault on the Donbas ethnic Russian population.

Even the normally complacent observers of the Organization for Security and Cooperation in Europe (OSCE), charged with monitoring a nominal ceasefire along the Contact Zone, have lately begun reporting serious advancement of heavy weapons by the Kiev forces – in violation of the 2015 Minsk Peace Accord.

If the US-led Kiev forces proceed with the anticipated offensive next month in Donbas there are real fears for extreme civilian casualties. Such “ethnic cleansing” of Russian people by Kiev regime forces that openly espouse Neo-Nazi ideology would mostly likely precipitate a large-scale intervention by Moscow as a matter of humanitarian defense. Perhaps that is what the US planners are wagering on, which can then be portrayed by the dutiful Western news media as “another Russian aggression”.

US-based political analyst Randy Martin says: “It is undeniable that Washington is on a war footing in three global scenarios. Preparation for war is in fact war.”

He added:

“You have to also consider the latest Nuclear Posture Review published by the Pentagon earlier this month. The Pentagon is openly declaring that it views Russia and China as targets, and that it is willing to use nuclear force to contest conventional wars and what the Pentagon deems to be asymmetric aggression.”

Martin says that it is not clear at this stage what Washington wants exactly.

“It is of course all about seeking global domination which is long-consistent with American imperialism as expressed for example in the Wolfowitz Doctrine following the end of the Cold War,” says the analyst.

“But what does Washington want specifically from Russia and China is the question. It is evidently using the threat of war and aggression as a lever.

But it is not clear what would placate Washington.

Perhaps regime change in Russia where President Putin is ousted by a deferential pro-Western figure.

Perhaps Russia and China giving up their plans of Eurasian economic integration and abandoning their plans to drop the American dollar in trade relations.”

One thing, however, seems abundantly clear. The US is embarking on a global war plan, as can be discerned from the grave developments unfolding in Syria, the Korean Peninsula and Ukraine. Each scenario can be understood as a pressure point on Moscow or China to in some way acquiesce to American ambitions for global dominance.

To be sure, Washington is being reckless and criminal in its conduct, violating the UN Charter and countless other international laws. It is brazenly acting like a rogue regime without the slightest hint of shame.

Still, Russia and China are hardly likely to capitulate. Simply because the US ambition of unipolar hegemony is impossible to achieve. The post-Second World Order, which Washington was able to dominate for nearly seven decades, is becoming obsolete as the international order naturally transforms into a multipolar configuration.

When Washington accuses Moscow and Beijing of “trying to alter the international order to their advantage” what the American rulers are tacitly admitting is their anxiety that the days of US hegemony are on the wane. Russia and China are not doing anything illegitimate. It is simply a fact of historical evolution.

So, ultimately, Washington’s war plans are futile in what they are trying to achieve by criminal coercion. Those plans cannot reverse history. But, demonically, those plans could obliterate the future of the planet.

The world is again on a precipice as it was before on the eve of the First and Second World Wars. Capitalism, imperialism and fascism are again center stage.

As analyst Randy Martin puts it:

“The American rulers are coming out of the closet to show their true naked nature of wanting to wage war on the world. Their supremacist, militarist ideology is, incontrovertibly, fascism in action.”

Source: Zerohedge – The US Is Executing A Global War Plan

Peter Thiel's Move To LA Is Inspiring A "Conservative Renaissance" In The City

Peter Thiel isn’t the only conservative to flee the Bay Area over its increasingly systematic repression of ideas and values that are incompatible with the community’s commitment to identity politics, multiculturalism and other liberal economic and social values.

Per the Wall Street Journal, other conservatives in the tech community have said they plan to leave the area because of the proliferation of groupthink and homogeneity, which they feel are making it a worse place to live and work.

Tom McInerney, an angel investors who moved to Los Angeles a decade ago – and is now being followed their by Thiel – said Trump’s election proved how out of touch the Bay Area is.

“I think the politics of San Francisco have gotten a little bit crazy,” said Tom McInerney, an angel investor who moved a decade ago to Los Angeles from the Bay Area.

“The Trump election was super polarizing and it definitely illustrated – and Peter [Thiel] said this – how out of touch Silicon Valley was,” said Mr. McInerney, who describes himself as fiscally conservative, but socially liberal.

Even some people who wouldn’t describe themselves as committed conservatives are finding the atmosphere in the Bay Area hostile. Tim Ferriss, the tech investor and best-selling author of the “4 Hour Workweek,” moved to Austin, Texas, in December, after living in the Bay Area for 17 years for reasons similar to Thiel’s.

Thiel, who backed Trump’s presidential campaign but describes himself as a libertarian, will move into the home he already owns in Hollywood and shift Thiel Capital and Thiel Foundation into new headquarters in the City of Angels, as we pointed out last week. It’s also been rumored that Thiel is considering quitting the board of Facebook – a company that represents one of Thiel’s most lucrative investments, though he also reportedly made a killing on the long-vol trade recently.

And as the Guardian adds, Thiel’s decision to leave for LA is rallying the city’s small community of conservatives, who are increasingly seeking to market LA as a hospitable home for conservative media brands.

The Guardian even went so far to declare Thiel’s move the inspiration for a “conservative renaissance” in LA.

Indeed, Thiel is reportedly working to start his own media company – a company that he will eventually build to rival Fox.

Thiel’s decision to move to LA comes at a time when conservatives in the Bay Area are feeling increasingly squeezed by what they perceive to be liberal groupthink. Google’s decision to fire James Damore for publishing a memo arguing against the company’s decision to pursue diversity in hiring was a watershed moment for both Thiel and the small but vibrant conservative contingent within tech.

“Silicon Valley is a one-party state,” said Thiel at Stanford University last month. “That’s when you get in trouble politically in our society, when you’re all in one side.”

The firing of James Damore by Google in August last year amplified conservative fears that Silicon Valley companies had become ideological echo chambers intolerant to their viewpoints.

Thiel’s decision to support Trump was unpopular among many of his progressive peers in the technology industry, with some calling for him to be dumped from the Facebook board. Although the social network’s CEO Mark Zuckerberg disagreed, the Journal reports that Thiel – one of Facebook’s earliest investors – has discussed resigning.

“Silicon Valley has become less tolerant and that’s very troubling,” said Garrett Johnson, co-founder of conservative think tank Lincoln Network. “There’s a trend of monoculture and closed-mindedness.”

Unsurprisingly, few in Silicon Valley are sad to see him leave, with one community “activist” quoted by the Guardian jokingly questioning why Thiel hasn’t retreated all the way to his soon-to-be adopted home of New Zealand.

Maciej Cegłowski, a prominent San Francisco web developer and leader of the grass-roots activist group Tech Solidarity, agreed, but expressed surprise that “in his search for safety” Thiel wasn’t fleeing to his adoptive home of New Zealand.

“They were so eager to make him a citizen, and he’s already got a bunker there,” he said.

“Overall, I believe him leaving the Bay Area is a win. More young blood for the rest of us,” he added, in reference to Thiel’s alleged interest in injecting himself with young people’s blood.

But as anybody who has traveled to LA can attest, there’s plenty of young blood to go around…

Source: Zerohedge – Peter Thiel's Move To LA Is Inspiring A "Conservative Renaissance" In The City

Kim Dotcom: "Let Me Assure You, The DNC Hack Wasn’t Even A Hack"

Kim Dotcom has once again chimed in on the DNC hack, following a Sunday morning tweet from President Trump clarifying his previous comments on Russian meddling in the 2016 election. 

I never said Russia did not meddle in the election, I said “it may be Russia, or China or another country or group, or it may be a 400 pound genius sitting in bed and playing with his computer.” The Russian “hoax” was that the Trump campaign colluded with Russia – it never did!
— Donald J. Trump (@realDonaldTrump) February 18, 2018
In response, Dotcom tweeted “Let me assure you, the DNC hack wasn’t even a hack. It was an insider with a memory stick. I know this because I know who did it and why,” adding “Special Counsel Mueller is not interested in my evidence. My lawyers wrote to him twice. He never replied. 360 pounds!” alluding of course to Trump’s “400 pound genius” comment. 

Let me assure you, the DNC hack wasn’t even a hack. It was an insider with a memory stick. I know this because I know who did it and why. Special Counsel Mueller is not interested in my evidence. My lawyers wrote to him twice. He never replied. 360 pounds!https://t.co/AGRO0sFx7s https://t.co/epXtv0t1uN
— Kim Dotcom (@KimDotcom) February 18, 2018
Dotcom’s assertion is backed up by an analysis done last year by a researcher who goes by the name Forensicator, who determined that the DNC files were copied at 22.6 MB/s – a speed virtually impossible to achieve from halfway around the world, much less over a local network – yet a speed typical of file transfers to a memory stick.

The local transfer theory of course blows the Russian hacking narrative out of the water, lending credibility to the theory that the DNC “hack” was in fact an inside job, potentially implicating late DNC IT staffer, Seth Rich.

John Podesta’s email was allegely successfully “hacked” (he fell victim to a phishing scam) in March 2016, while the DNC reported suspicious activity (the suspected Seth Rich file transfer) in late April, 2016 according to the Washington Post.

On May 18, 2017, Dotcom proposed that if Congress includes the Seth Rich investigation in their Russia probe, he would provide written testimony with evidence that Seth Rich was WikiLeaks’ source.

If Congress includes #SethRich case into their Russia probe I’ll give written testimony with evidence that Seth Rich was @Wikileaks source.
— Kim Dotcom (@KimDotcom) May 19, 2017
On May 19 2017 Dotcom tweeted “I knew Seth Rich. I was involved”

I knew Seth Rich. I know he was the @Wikileaks source. I was involved. https://t.co/MbGQteHhZM
— Kim Dotcom (@KimDotcom) May 20, 2017
Three days later, Dotcom again released a guarded statement saying “I KNOW THAT SETH RICH WAS INVOLVED IN THE DNC LEAK,” adding:

“I have consulted with my lawyers. I accept that my full statement should be provided to the authorities and I am prepared to do that so that there can be a full investigation. My lawyers will speak with the authorities regarding the proper process.

If my evidence is required to be given in the United States I would be prepared to do so if appropriate arrangements are made. I would need a guarantee from Special Counsel Mueller, on behalf of the United States, of safe passage from New Zealand to the United States and back. In the coming days we will be communicating with the appropriate authorities to make the necessary arrangements. In the meantime, I will make no further comment.”

Dotcom knew.

While one could simply write off Dotcom’s claims as an attention seeking stunt, he made several comments and a series of tweets hinting at the upcoming email releases prior to both the WikiLeaks dumps as well as the publication of the hacked DNC emails to a website known as “DCLeaks.” 

In a May 14, 2015 Bloomberg article entitled “Kim Dotcom: Julian Assange Will Be Hillary Clinton’s Worst Nightmare In 2016”: “I have to say it’s probably more Julian,” who threatens Hillary, Dotcom said. “But I’m aware of some of the things that are going to be roadblocks for her.”

Two days later, Dotcom tweeted this: 

Hillary Clinton is raising a mountain of cash for her Presidential bid. I think it might turn into ash. pic.twitter.com/Nh8wnyj5AJ
— Kim Dotcom (@KimDotcom) May 16, 2015
Around two months later, Kim asks a provocative question

Will hackers 0wn the U.S. presidential election and prevent Hillary Clinton? #Wikileaks
— Kim Dotcom (@KimDotcom) July 12, 2016
Two weeks after that, Dotcom then tweeted “Mishandling classified info is a crime. When Hillary’s emails eventually pop up on the internet who’s going to jail?” 

Mishandling classified info is a crime. When Hillary’s emails eventually pop up on the Internet who’s going to jail? http://t.co/zuUNiq26bR
— Kim Dotcom (@KimDotcom) July 26, 2015
It should thus be fairly obvious to anyone that Dotcom was somehow involved, and therefore any evidence he claims to have, should be taken seriously as part of Mueller’s investigation. Instead, as Dotcom tweeted, “Special Counsel Mueller is not interested in my evidence. My lawyers wrote to him twice. He never replied.”

pic.twitter.com/ZJRReVDq0f
— Kim Dotcom (@KimDotcom) February 18, 2018
 

Source: Zerohedge – Kim Dotcom: "Let Me Assure You, The DNC Hack Wasn’t Even A Hack"

Only 73% OF Americans Are "Likely To Adhere To The Law"

Many factors influence how effectively a government is able to uphold the rule of law and some of them include access to courts, lack of corruption, effective policing and institutional competence.

While some governments are able to combine these efficiently, resulting in strong adherence to the law, Statista’s Niall McCarthy notes that others tend to struggle.

Research from The World Justice Project measured rule of law adherence in 113 countries around the world, focusing on eight factors: constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice, and criminal justice.

You will find more infographics at Statista

Since 2016, 34 percent of countries saw their rule of law decline, 20 percent improved and 37 percent stayed the same.

Western Europe dominates the top of the ranking with Scandinavia first in the world for adherence to the law. Denmark and Norway were top with a score of 0.89, followed by Finland and Sweden with 0.87 and 0.86 respectively.

Outside Europe, New Zealand, Canada and Australia also made the top-10 while the U.S. came 19th with a score of 0.73.

Venezuela is rock bottom of the ranking with a score of 0.29. The bottom-five is rounded off by Cambodia, Afghanistan, Egypt and Cameroon. Since 2016, The Philippines was the biggest mover, falling 19 places to 88th.

The biggest improvers were Burkina Faso, Kazakhstan and Sri Lanka with each nation moving up nine positions since the last edition of the index was published.

Source: Zerohedge – Only 73% OF Americans Are "Likely To Adhere To The Law"

China Threatens To Retaliate If US Imposes Metal Tariffs

It’s not like anyone expected otherwise.

Just hours after the Trump administration received a green light from the Commerce Department to impose steep tariffs on aluminium and steel imports on national security grounds across the board, but especially on China and Russian, China threatened with immediately retaliation in the latest escalation of the growing trade war between the two superpowers.

In an unexpected announcement on Friday, commerce secretary Wilbur Ross recommended a possible global tariff of at least 24% on imports of steel and 7.7% on aluminum after investigations into trade in both metals determined that import surges seen in recent years “threaten to impair [US] national security.”

Responding to the unprecedented Commerce recommendation which many interpreted as the first official salvo in global trade wars, Wang Hejun – chief of the trade remedy and investigation bureau at China’s Ministry of Commerce – said imposing tariffs on such grounds was reckless.

Quoted by the FT,  he said that “The spectrum of national security is very broad and without a clear definition it could easily be abused,” and added that “if the final decision from the US hurts China’s interests, we will certainly take necessary measures to protect our legitimate rights.”

For now the threat of “nuclear” trade war seems to be contained: analysts say Beijing is wary of escalating any trade disputes for fear of damaging its export-dependent economy, and so will focus any retaliation on specific sectors — most likely particular agricultural goods such as soybeans, for which China is the US’ largest export market. Earlier this month, Beijing launched an anti-dumping investigation into US exports of sorghum, an animal feed.

For the moment I think China will just put out harsher rhetoric,” said Bo Zhuang, an economist at consultancy Trusted Sources. “Agricultural sector retaliation is more likely since (China’s) food price inflation is low. The next possible step will be going on further with a soybean and corn investigation.”

Still, expectations of only a “cold” trade war may soon be dashed, as Friday’s action shows that trade hardliners in the Trump administration are eager to take action against China “after months of internal debate” according to the FT.

One option presented by the commerce department on Friday was a targeted tax on steel and aluminium imports from China and other countries like Brazil and Vietnam. A third option would impose quotas to reduce metals imports from all countries to far below the level of 2017.

But the recommendations illustrate how Mr Trump’s desire to hit China, which the US steel industry blames for a collapse in metal prices in recent years, may result in collateral damage for US allies and invite retaliation.

Meanwhile, as China plans its response, European officials in Brussels are already drafting their retaliatory measures aimed at politically sensitive US products like Kentucky bourbon and Wisconsin dairy products, which will be implemented if Trump opts for a global quota or tariff system.

As a reminder, Trump has until April to decide whether to adopt any of the recommendations, Ross said. The long-awaited results of the “Section 232” investigations into aluminium and steel imports caused shares in major US producers to rise sharply on Wall Street on Friday, while companies in the materials sector slumped.

In what appeared to be a jusitification of imminent trade wars, Trump said he was convinced that imposing tariffs would “create a lot of jobs” during a meeting with members of Congress, and dismissed warnings that such measures in the past had hurt more than they had helped by causing higher costs for many companies.

“I want to keep prices down but I also want to make sure that we have a steel industry and an aluminium industry and we do need that for national defence,” Mr Trump said. “If we ever have a conflict we don’t want to be buying steel [from] a country we are fighting.”

In its report, the commerce department stated that Canada is the top supplier of both metals to the US, suggesting the NAFTA member may – ironically – suffer the most from any new protectionist measures. The northern US neighbour has long been treated as part of the US defense industrial base along with countries like the UK and Australia. But whether Canada or any other allies would be exempted from the proposed tariffs remains unclear, according to the FT.

As for China, it was “only” the fourth-largest supplier of aluminum to the US in 2017, and accounted for less than 10% of imports; it was also the 11th-largest steel supplier over the same period, with a roughly 2% share of US imports.

The US commerce department argued that the rapid rise in China’s production of steel and aluminium in recent years — it now produces more than half of global output of both metals — has depressed international prices.

While the threat of a sharp escalation in trade tensions remains low for now, in commentary from SMBC Nikko Securities, the bank said that the proposal to restrict steel imports “could lead to a chain of higher tariffs imposed by other nations” resulting in dramatic imbalances in global commodity trade and prices.

While the brokerage expects direct impact on Japanese steel industry to be limited, it admits it is difficult to gauge the effect on international markets given details yet to be decided, and adds that the risk is that other countries shipping steel to U.S. begin selling cheaply on Japan’s export markets; in effect a sharp escalation to trade wars in which countries not targeted by the US scramble to take away market share from dominant trade partners.

Source: Zerohedge – China Threatens To Retaliate If US Imposes Metal Tariffs

"Now, The Reckoning Comes" – The Media-Created Russia-Collusion Story Collapses

Authored by Lee Smith via TheFederalist.com,

The press has played an active role in the Trump-Russia collusion story since its inception. It helped birth it…

Half the country wants to know why the press won’t cover the growing scandal now implicating the Federal Bureau of Investigation and Department of Justice, and threatening to reach the State Department, Central Intelligence Agency, and perhaps even the Obama White House.

After all, the release last week of a less-redacted version of Sens. Charles Grassley and Lindsey Graham’s January 4 letter showed that the FBI secured a Foreign Intelligence Surveillance Act warrant to search the communications of a Trump campaign adviser based on a piece of opposition research paid for by the Clinton campaign and the Democratic National Committee. The Fourth Amendment rights of an American citizen were violated to allow one political party to spy on another.

If the press did its job and reported the facts, the argument goes, then it wouldn’t just be Republicans and Trump supporters demanding accountability and justice. Americans across the political spectrum would understand the nature and extent of the abuses and crimes touching not just on one political party and its presidential candidate but the rights of every American.

That’s all true, but irrelevant. The reasons the press won’t cover the story are suggested in the Graham-Grassley letter itself.

Steele Was a Media Informant

The letter details how Christopher Steele, the former British spy who allegedly authored the documents claiming ties between the Trump campaign and Russia, told the FBI he wasn’t talking to the press about his investigation. In a British court, however, Steele acknowledged briefing several media organizations on the material in his dossier.

According to the British court documents, Steele briefed the New York Times, Washington Post, Yahoo! News, The New Yorker, and CNN. In October, he talked to Mother Jones reporter David Corn by Skype. It was Corn’s October 31 article anonymously sourced to Steele that alerted the FBI their informant was speaking to the press. Grassley and Graham referred Steele to the Department of Justice for a criminal investigation because he lied to the FBI.

The list of media outfits and journalists made aware of Steele’s investigations is extensive. Reuters reported that it, too, was briefed on the dossier, and while it refrained from reporting on it before the election, its national security reporter Mark Hosenball became an advocate of the dossier’s findings after November 2016.

BBC’s Paul Wood wrote in January 2017 that he was briefed on the dossier a week before the election. Newsweek’s Kurt Eichenwald likely saw Steele’s work around the same time, because he published an article days before the election based on a “Western intelligence” source (i.e., Steele) who cited names and data points that could only come from the DNC- and Clinton-funded opposition research.

A line from the Grassley-Graham letter points to an even larger circle of media outfits that appear to have been in contact with either Steele or Fusion GPS, the Washington DC firm that contracted him for the opposition research the Clinton campaign and Democratic National Committee commissioned. “During the summer of 2016,” the Grassley-Graham letter reads, “reports of some of the dossier allegations began circulating among reporters and people involved in Russian issues.”

Planting the Carter Page Story

Indeed, it looks like Steele and Fusion GPS founder Glenn Simpson may have persuaded a number of major foreign policy and national security writers in Washington and New York that Trump and his team were in league with Russian President Vladimir Putin. Those journalists include New Yorker editor David Remnick, Atlantic editor Jeffrey Goldberg, former New Republic editor Franklin Foer, and Washington Post columnist Anne Applebaum.

A Foer story published in Slate on July 4, 2016 appears to be central. Titled “Putin’s Puppet,” Foer’s piece argues the Trump campaign was overly Russia-friendly. Foer discusses Trump’s team, including campaign convention manager Paul Manafort, who worked with former Ukrainian president Victor Yanukovich, a Putin ally; and Carter Page, who, Foer wrote, “advised the state-controlled natural gas giant Gazprom and helped it attract Western investors.”

That’s how Page described himself in a March 2016 Bloomberg interview. But as Julia Ioffe reported in a September 23, 2016 Politico article, Page was a mid-level executive at Merrill Lynch in Moscow who played no role in any of the big deals he boasted about. As Ioffe shows, almost no one in Moscow remembered Page. Until Trump read his name off a piece of paper handed to him during a March interview with the Washington Post, almost no one in the Washington foreign policy world had heard of Page either.

So what got Foer interested in Page? Were Steele and Simpson already briefing reporters on their opposition research into the Trump campaign? (Another Foer story for Slate, an October 31, 2016 article about the Trump organization’s computer servers “pinging” a Russian bank, was reportedly “pushed” to him by Fusion GPS.) Page and Manafort are the protagonists of the Steele dossier, the former one of the latter’s intermediaries with Russian officials and associates of Putin. Page’s July 7 speech in Moscow attracted wide U.S. media coverage, but Foer’s article published several days earlier.

The Slate article, then, looks like the predicate for allegations against Page made in the dossier after his July Russia trip. For instance, according to Steele’s investigations, Page was offered a 19 percent stake in Rosneft, one of the world’s energy giants, in exchange for help repealing sanctions related to Russia’s 2014 incursion into Ukraine.

Building an Echo Chamber of Opposition Research

Many have noted the absurdity that the FISA warrant on Page was chiefly based, according to a House intelligence committee memo, on the dossier and Michael Isikoff’s September 23, 2016 news story also based on the dossier. But much of the Russiagate campaign was conducted in this circular manner. Steele and Simpson built an echo chamber with their opposition research, parts of the law enforcement and intelligence communities, and the press all reinforcing one another. Plant an item in the open air and watch it grow—like Page’s role in the Trump campaign.

Why else was Foer or anyone so interested in Page? Why was Page’s Moscow speech so closely watched and widely covered? According to the Washington Post, Page “chided” American policymakers for an “often-hypocritical focus on democratization, inequality, corruption and regime change” in its dealings with Russia, China, and Central Asia.

As peculiar as it may have sounded for a graduate of the Naval Academy to cast a skeptical eye on American exceptionalism, Page’s speech could hardly have struck the policy establishment as shocking, or even novel. They’d been hearing versions of it for the last eight years from the president of the United States.

In President Obama’s first speech before the United Nations General Assembly (UNGA), on September 23, 2009, he insisted that no country, least of all America, has the right to tell other countries how to organize their political lives. “Democracy cannot be imposed on any nation from the outside,” said Obama. “Each society must search for its own path, and no path is perfect. Each country will pursue a path rooted in the culture of its people and in its past traditions.”

Obama sounded even more wary of American leadership on his way out of office eight years later. In his 2016 UNGA speech, the 2009 Nobel laureate said: “I do not think that America can — or should — impose our system of government on other countries.” Obama was addressing not just foreign nations but perhaps more pointedly his domestic political rivals.

In 2008 Obama campaigned against the Iraq War and the Republican policymakers who toppled Saddam Hussein to remake Iraq as a democracy. All during his presidency, Obama rebuffed critics who petitioned the administration to send arms or troops to advance U.S. interests and values abroad, most notably in Ukraine and Syria.

In 2016, it was Trump who ran against the Republican foreign policy establishment—which is why hundreds of GOP policymakers and foreign policy intellectuals signed two letters distancing themselves from the party’s candidate. The thin Republican bench of foreign policy experts available to Trump is a big reason why he named the virtually unknown Page to his team. So why was it any surprise that Page sounded like the Republican candidate, who sounded like the Democratic president?

Why Didn’t the Left Like Obama’s Ideas from a Republican?

On the Right, many national security and foreign policy writers like me heard and were worried by the clear echoes of Obama’s policies in the Trump campaign’s proposals. Did those writing from the left side of the political spectrum not see the continuities?

Writing in the Washington Post July 21, 2016, Applebaum explained how a “Trump presidency could destabilize Europe.” The issue, she explained, was Trump’s positive attitude toward Putin. “The extent of the Trump-Russia business connection has already been laid out, by Franklin Foer at Slate,” wrote Applebaum. She named Page and his “long-standing connections to Russian companies.”

Even more suggestive to Applebaum is that just a few days before her article was published, “Trump’s campaign team helped alter the Republican party platform to remove support for Ukraine” from the Republican National Committee’s platform. Maybe, she hinted, that was because of Trump aide Manafort’s ties to Yanukovich.

Did those talking points come from Steele’s opposition research? Manafort’s relationship with Yanukovich had been widely reported in the U.S. press long before he signed on with the Trump campaign. In fact, in 2007 Glenn Simpson was one of the first to write about their shady dealings while he was still working at the Wall Street Journal. The corrupt nature of the Manafort-Yanukovich relationship is an important part of the dossier. So is the claim that in exchange for Russia releasing the DNC emails, “the TRUMP team had agreed to sideline Russian intervention in Ukraine as a campaign issue.”

The reality, however, is that the Trump campaign team never removed support for Ukraine from the party platform. In a March 18, 2017 Washington Examiner article, Byron York interviewed the convention delegate who pushed for tougher language on Russia, and got it.

“In the end, the platform, already fairly strong on the Russia-Ukraine issue,” wrote York, “was strengthened, not weakened.” Maybe Applebaum just picked it up from her own paper’s mis-reporting.

For Applebaum, it was hard to understand why Trump would express skepticism about the North Atlantic Treaty Organization, except to appease Putin. She referred to a recent interview in which Trump “cast doubt on the fundamental basis of transatlantic stability, NATO’s Article 5 guarantee: If Russia invades, he said, he’d have to think first before defending U.S. allies.”

The Echoes Pick Up

In an article published the very same day in the Atlantic, Jeffrey Goldberg made many of the very same observations. Titled “It’s Official: Hillary Clinton is Running Against Vladimir Putin,” the article opens: “The Republican nominee for president, Donald J. Trump, has chosen this week to unmask himself as a de facto agent of Russian President Vladimir Putin.” What was the evidence? Well, for one, Page’s business interests.

Trump’s expressed admiration for Putin and other “equivocating, mercenary statements,” wrote Goldberg, are “unprecedented in the history of Republican foreign policymaking.” However, insofar as Trump’s fundamental aim was to find some common ground with Putin, it’s a goal that, for better or worse, has been a 25-year U.S. policy constant, across party lines. Starting with George W.H. Bush, every American commander-in-chief since the end of the Cold War sought to “reset” relations with Russia.

But Trump, according to Goldberg, was different. “Trump’s understanding of America’s role in the world aligns with Russia’s geostrategic interests.” Here Goldberg rang the same bells as Applebaum—the Trump campaign “watered down” the RNC’s platform on Ukraine; the GOP nominee “questioned whether the U.S., under his leadership, would keep its [NATO] commitments,” including Article 5. Thus, Goldberg concluded: “Donald Trump, should he be elected president, would bring an end to the postwar international order.”

That last bit sounds very bad. Coincidentally, it’s similar to a claim made in the very first paragraph of the Steele dossier — the “Russian regime,” claims one of Steele’s unnamed sources, has been cultivating Trump to “encourage splits and divisions in the western alliance.”

The West won the Cold War because the United States kept it unified. David Remnick saw it up close. Assigned to the Washington Post’s Moscow bureau in 1988, Remnick witnessed the end of the Soviet Union, which he documented in his award-winning book, “Lenin’s Tomb.” So it’s hardly surprising that in his August 3, 2016 New Yorker article, “Trump and Putin: A Love Story,” Remnick sounded alarms concerning the Republican presidential candidate’s manifest affection for the Russian president.

Citing the “original reporting” of Foer’s seminal Slate article, the New Yorker editor contended “that one reason for Trump’s attitude has to do with his business ambitions.” As Remnick elaborated, “one of Trump’s foreign-policy advisers, has longstanding ties to Gazprom, a pillar of Russia’s energy industry.” Who could that be? Right—Carter Page. With Applebaum and Goldberg, Remnick was worried about Trump’s lack of support for Ukraine and the fact that Trump “has declared NATO ‘obsolete’ and has suggested that he might do away with Article 5.”

Where Did All These Echoes Come From?

This brings us to the fundamental question: Is it possible that these top national security and foreign policy journalists were focused on something else during Obama’s two terms in office, something that had nothing to do with foreign policy or national security? It seems we must even entertain the possibility they slept for eight years because nearly everything that frightened them about the prospects of a Trump presidency had already transpired under Obama.

The Trump team wanted to stop short of having the RNC platform promise lethal support to Ukraine—which was in keeping with official U.S. policy. Obama didn’t want to arm the Ukrainians. He ignored numerous congressional efforts to get him to change his mind. “There has been a strong bipartisan well of support for quite some time for providing lethal support,” said California Rep. Adam Schiff. But Obama refused.

As for the western alliance or international order or however you want to put it, it was under the Obama administration that Russia set up shop on NATO’s southern border. With the Syrian conflict, Moscow re-established its foothold in the Middle East after 40 years of American policy designed to keep it from meddling in U.S. spheres of influence. Under Obama, Russia’s enhanced regional position threatened three U.S. allies: Israel, Jordan, and NATO member Turkey.

In 2012, Moscow’s Syrian client brought down a Turkish air force reconnaissance plane. According to a 2013 Wall Street Journal article, “Turkish Prime Minister Recep Tayyip Erdogan raised alarms in the U.S. by suggesting that Turkey might invoke NATO’s Article V.” However, according to the Journal, “neither the U.S. nor NATO was interested in rushing to Article V… NATO was so wary of getting pulled into Syria that top alliance officials balked at even contingency planning for an intervention force to protect Syrian civilians. ‘For better or worse, [Syrian president Bashar al- Assad] feels he can count on NATO not to intervene right now,’ a senior Western official said.”

Whatever one thinks of Obama’s foreign policy, it is hardly arguable that he—wisely, cautiously, in the most educated and creative ways, or unwisely, stupidly, cravenly, the choice of adjectives is yours—ceded American interests and those of key allies in Europe and the Middle East in an effort to avoid conflict with Russia.

When Russia occupied Crimea and the eastern portion of Ukraine, there was little pushback from the White House. The Obama administration blinked even when Putin’s escalation of forces in Syria sent millions more refugees fleeing abroad, including Europe.

Was Anyone Paying Attention When This Happened?

Surely it couldn’t have escaped Applebaum’s notice that Obama’s posture toward Russia made Europe vulnerable. She’s a specialist in Europe and Russia—she’s written books on both. Her husband is the former foreign minister of Poland. So how, after eight years of Obama’s appeasement of a Russia that threatened to withhold natural gas supplies from the continent, did the Trump team pose a unique threat to European stability?

What about Goldberg? Is it possible that he’d never bothered to research the foreign policy priorities of a president he interviewed five times between 2008 and 2016? In the last interview, from March 2016, Obama told him he was “very proud” of the moment in 2013 when he declined to attack Assad for deploying chemical weapons. As Obama put it, that’s when he broke with the “Washington playbook.” He chose diplomacy instead. He made a deal with Russia over Assad’s conventional arsenal—which Syria continued to use against civilians throughout Obama’s term.

Again, regardless of how you feel about Obama’s decisions, the fact is that he struck an agreement with Moscow that ensured the continued reign of its Syrian ally, who gassed little children. Yet only four months later, Goldberg worried that a Trump presidency would “liberate dictators, first and foremost his ally Vladimir Putin, to advance their own interests.”

Remnick wrote a 2010 biography of Obama, but did he, too, pay no attention to the policies of the man he interviewed frequently over nearly a decade? How is this possible? Did some of America’s top journalists really sleepwalk through Obama’s two terms in office, only to wake in 2016 and find Donald Trump and his campaign becoming dangerously cozy with a historical American adversary?

All’s Fair in War and Politics

Of course not. They enlisted their bylines in a political campaign on behalf of the Democratic candidate for president and rehearsed the talking points Steele later documented. But weren’t the authors of these articles, big-name journalists, embarrassed to be seen reading from a single script and publishing the same article with similar titles within the space of two weeks? Weren’t they worried it would look like they were taking opposition research, from the same source?

No, not really. In a sense, these stories weren’t actually meant to be read. They existed for the purpose of validating the ensuing social media messaging. The stories were written around the headlines, which were written for Twitter: “Putin’s Puppet”; “It’s Official: Hillary Clinton is Running Against Vladimir Putin”; “Trump and Putin: A Love Story”; “The Kremlin’s Candidate.” The stories were vessels built only to launch thousands of 140-character salvos to then sink into the memory hole.

Since everyone took Clinton’s victory for granted, journalists assumed extravagant claims alleging an American presidential candidate’s illicit ties to an adversarial power would fade just as the fireworks punctuating Hillary’s acceptance speech would vanish in the cool November evening. And the sooner the stories were forgotten the better, since they frankly sounded kooky, conspiratorial, as if the heirs to the Algonquin round table sported tin-foil hats while tossing back martinis and trading saucy limericks.

Yes, the Trump-Russia collusion media campaign really was delusional and deranged; it really was a conspiracy theory. So after the unexpected happened, after Trump won the election, the Russiagate campaign morphed into something more urgent, something twisted and delirious.

Quick, Pin Our Garbage Story on Someone

When CNN broke the story – co-written by Evan Perez, a former colleague and friend of Fusion GPS principals—that the Obama administration’s intelligence chiefs had briefed Trump on the existence of the dossier, it not only cleared the way for BuzzFeed to publish the document, it also signaled the press that the intelligence community was on side. This completed the echo chamber, binding one American institution chartered to steal and keep secrets to another embodying our right to free speech. We know which ethic prevailed.

Now Russiagate was no longer part of a political campaign directed at Trump, it was a disinformation operation pointed at the American public, as the pre-election media offensive resonated more fully with the dossier now in the open. You see, said the press: everything we published about Trump and Putin is really true—there’s a document proving it. What the press corps neglected to add is that they’d been reporting talking points from the same opposition research since before the election, and were now showcasing “evidence” to prove it was all true.

The reason the media will not report on the scandal now unfolding before the country, how the Obama administration and Clinton campaign used the resources of the federal government to spy on the party out of power, is not because the press is partisan. No, it is because the press has played an active role in the Trump-Russia collusion story since its inception. It helped birth it.

To report how the dossier was made and marketed, and how it was used to violate the privacy rights of an American citizen – Page – would require admitting complicity in manufacturing Russiagate. Against conventional Washington wisdom, the cover-up in this case is not worse than the crime: Both weigh equally in a scandal signaling that the institution where American citizens are supposed to discuss and debate the choices about how we live with each other has been turned against a large part of the public to delegitimize their political choices.

This Isn’t the 27-Year-Olds’ Fault

I’ve argued over the last year that the phony collusion narrative is a symptom of the structural problems with the press. The rise of the Internet, then social media, and gross corporate mismanagement damaged traditional media institutions. As newspapers and magazines around the country went bankrupt when ownership couldn’t figure out how to make money off the new digital advertising model, an entire generation of journalistic experience, expertise, and ethics was lost. It was replaced, as one Obama White House official famously explained, by 27-year-olds who “literally know nothing.”

But the first vehicles of the Russiagate campaign were not bloggers or recent J-school grads lacking wisdom or guidance to wave off a piece of patent nonsense. They were journalists at the top of their profession – editors-in-chief, columnists, specialists in precisely the subjects that the dossier alleges to treat: foreign policy and national security. They didn’t get fooled. They volunteered their reputations to perpetrate a hoax on the American public.

That’s why, after a year of thousands of furious allegations, all of which concerning Trump are unsubstantiated, the press will not report the real scandal, in which it plays a leading role. When the reckoning comes, Russiagate is likely to be seen not as a symptom of the collapse of the American press, but as one of the causes for it.

Source: Zerohedge – "Now, The Reckoning Comes" – The Media-Created Russia-Collusion Story Collapses

Waymo's "Uber-Killer" Robo-Taxi Set For Arizona Rollout

Waymo, a unit of Alphabet, is set to launch a ride-sharing service similar to Uber, but with no human driver behind the wheel. Officials in Arizona granted Waymo a permit to operate as a transportation network company (TNC) across the state on Janurary 24, following the company’s initial application on Janurary 12, Bloomberg  reported.

The imminent release of a robotic fleet of fully autonomous Chrysler Pacifica minivans could be flooding the highways of Arizona, causing major headaches for Uber.

Since April of last year, Waymo has been experimenting with its self-driving fleet on the human guinea pigs of Phoenix, offering residents 24/7 access to the free ridesharing service. TNC status is a significant step for Waymo, because it now authorizes the company to start charging its passengers.

Waymo’s vehicles in the Phoenix area have driven more than 4 million miles on public roads. In November, the company said a portion of its cars in the Phoenix area were operating in fully autonomous mode, what’s known in industry parlance as level four autonomy.

“A fully self-driving fleet can offer new and improved forms of sharing,” Waymo said at the time, adding that in coming months it would invite members of the public to ride in the fully autonomous vehicles, beginning with those already in the early rider program.

“As we continue to test drive our fleet of vehicles in greater Phoenix, we’re taking all the steps necessary to launch our commercial service this year,” a Waymo spokesman said in an emailed statement.

As Quartz notes, driverless cars are widely believed to be the “silver bullet” that will make ride-hailing profitable by eliminating the main cost: wages paid to human drivers.

In the fourth quarter of 2017, Uber paid about $8 billion to drivers in earnings and bonuses, or about 72% of its gross revenue for the quarter. As a result, Uber lost $4.5 billion last year on $7.5BN in net revenue ($37BN gross revenue).

 

Waymo has yet to discuss driving rates for the Phoenix area, let alone provide plans to operate across other cities in the United States.

The threat from Google could prove existential to Uber: none other than former Uber CEO and co-founder Travis Kalanick said that the evolutionary process of ridesharing will ultimately transition to fully autonomous vehicles.

“The minute it was clear that Google was getting into the ride-sharing space, we realized we needed to make sure there was an alternative, because if there is not, we will be out of business,” Kalanick told Bloomberg in 2016.

As has been widely publicized, the fierce competition between Waymo and Uber to be the first to launch driverless ridesharing grew so intense, that Waymo sued Uber for stealing its trade secrets. On February 9, court found Uber guilty, ruling it would have to pay Waymo hundreds of millions of dollars for trade secrets theft, along with promising not to use the technology in any of its autonomous vehicles.

Quartz describes the fierce competition between Waymo and Uber to launch driverless ridesharing vehicles across the United States:

Arizona granted the TNC permit a week and a half before Waymo commenced its trade secrets trial against Uber in San Francisco, alleging Uber stole Waymo’s knowledge on how to build self-driving cars. The two companies reached a settlement on Feb. 9, five days into the trial, which includes Uber paying Waymo a 0.34% equity stake and agreeing not to incorporate Waymo’s confidential information into its software or hardware. But nothing prevents Waymo from competing in the ride-hailing arena.  

Uber’s worst nightmare is almost here.

While Saudi Arabia’s Council of Economic and Development Affairs (CEDA)’s Public Investment Fund (PIF) might have top-ticked the top in Uber’s valuation back in 2016, Waymo’s imminent rollout of its driverless cars for commercial use in Arizona could prick Uber’s valuation and send it into a sharp contraction.

In its rush to preserve market share, Uber will now be forced to roll out driverless vehicles of its own. This could trigger Uber to unleash a tech-induced surge of driver unemployment leading into the Presidential elections of 2020.

Two days ago, we reported a big rollout of burger-flipping robots in California is set to hit 50 locations by 2019; next it could be the part-time driver’s turn. And so, as millennials praise the tech leaders in Silicon Valley, they do not realize that AI-controlled robots are coming for their jobs.

Source: Zerohedge – Waymo's "Uber-Killer" Robo-Taxi Set For Arizona Rollout

A Key Inflation Indicator To Watch, Part 1

Authored by Daniel Nevins via FFWiley.com,

“Inflation is always and everywhere a monetary phenomenon.”
—Milton Friedman

Have you ever questioned Milton Friedman’s famous claim about inflation?

Ever heard anyone else question it?

Unless you read obscure stuff written for the academic community, you’re probably not used to Friedman’s quote being challenged. And that’s despite a lousy forecasting record by economists who bought into his Monetarist methods.

Consider the following:

When Friedman’s strict Monetarism fizzled in the 1980s, it was doomed partly by his own forecasts. Instead of the disinflation the decade delivered, he expected inflation to reach 1970s levels, publicizing that prediction in 1983 and then again in 1984, 1985 and 1986. Of course, years earlier he foresaw the 1970s jump in inflation, but the errant forecasts that came later left him wide open to a “clock twice a day” dismissal.

Monetarists suffered an even harsher blow in 2012, when the Conference Board finally threw in the towel on Friedman’s favorite indicator, removing M2 from its Leading Economic Index (LEI). Generally speaking, forecasters who put M2 in their models are like bachelors who put “live with mom” in their dating profiles—they haven’t been successful.

The many economists who expected quantitative easing (QE) to wreak havoc on inflation are, of course, on the defensive. Nine years after QE began, core inflation remains below the Fed’s 2% target, defying their Monetarist beliefs.

When it comes to explaining inflation, Monetarism hasn’t exactly nailed it. Then again, neither has Keynesianism, whose Phillips Curve confounds those who rely on it. You can toss inflation onto the bonfire of major events that mainstream theories fail to explain.

But I’ll argue there might be a better way.

In three articles, I’ll try to convince you that we can develop a better theory by interpreting Friedman’s research differently than he did. Maybe you’ll like the theory, or maybe you won’t, but I promise this: the indicator that falls from it has a better record predicting major inflation trends than any other serious indicator I’ve studied. It’s not the only way to think about inflation, but it’s realistic and practical, and I’m interested in the reader reaction.

They Said, Hey Sugar…

Let’s get started with a walk on the wild side – we’ll walk with the renegades in economics who acknowledge the true role commercial banks play in the monetary system, that of creating money from nothing in the process of making loans. By our choice of company, we’re rejecting mainstream economics, including Monetarism and Keynesianism, which call for banks to be mere conduits in the money creation process. I discussed this topic last year in “Learning from the 1980s,” and I’ll summarize the key points below:

When Friedman and his coauthor Anna Schwartz published their famous research showing a strong correlation between money growth and GDP growth, they and their followers failed to appreciate the importance of money-creating bank loans.

Instead of allowing that bank lending might explain the historical correlation to GDP, they assumed that the intrinsic characteristics of money—liquidity, stability, and value as a medium of exchange—explained their results, leading them to embrace measures such as M1 and M2.

But in fact, their seminal research had little to do with M1 and M2, because that data didn’t exist over the full period they studied. Instead, they used a measure that was almost exactly equal to the amount of money banks create when they make loans and buy securities.

Loan and behold, when the various measures diverged in the 1980s, M1 and M2 lost their correlations to GDP, whereas the original measure studied by Friedman and Schwartz did not.

Confusing?

I’ll say it again in one sentence:

The money measures economists discuss and follow (M1 and M2, primarily) are empirically inferior to the measure they ignore (bank-created money), even though the measure they ignore is responsible for getting them interested in “money” in the first place.

For anyone my age, think Gilda Radner’s creations Emily Litella and Roseanne Roseannadanna, the spoof newscasters who argued passionately about topics that didn’t match the topics given. After being told of the mistake, Litella would end her rant with a simple “nevermind,” whereas Roseannadanna would just keep on talking. The economics profession is more Roseannadanna than Litella (you’ll never hear a “nevermind”), but my recommendation is to forget what you’ve been told about the monetary aggregates and focus instead on bank-created money.

Do Stop Believing

So I’ve channeled iconic characters from both economics and Saturday Night Live, but I haven’t yet drilled down to the inflation rate. In fact, I’ll use this article to expand on the empirical result noted above, which, to my knowledge, isn’t widely known. Once you see how the alternative approach to money works, and how it differs from mainstream economics, I can break out inflation in the next article. But we’ll also need some terminology.

In the past, I used the name “MDuh” for bank-created money, “Duh” referring to the result that the best indicator is the measure Friedman and Schwartz studied, not the measures they popularized. For this article, though, I’ll use “M63,” referring to the year they published their work. We should credit the original monetary maestros for their extensive research, notwithstanding my alternative interpretation, and “M63” should check that box. (Not only that, but “MDuh,” like a Journey song, sounded catchy at first but wore me down after repeated use.)

To choose M63 components, I ask a single question: Is a potential component initiated by a private entity with the legal authority to create money, meaning either a commercial bank or a similar deposit-taking institution? If the answer is yes, I include the component in M63. Otherwise, I don’t. By using only that criterion, I’m estimating the amount of new money banks pump into the economy when they make loans and buy securities. Not surprisingly, M63 correlates almost perfectly with net bank lending—the correlation between 1959 and 2016 was 0.97.

So, M63 growth and net bank lending both correlate with GDP growth, but why?

I would say it’s because banks are the only institutions that create money from nothing when they make loans, meaning their loans inject purchasing power directly into the economy. For loans that aren’t made by banks, purchasing power flows from one party to another without increasing the total (lenders that don’t hold bank charters have to give up their own purchasing power when they deliver loan proceeds). But for bank loans, net purchasing power increases, because banks can make loans without requiring prior saving. Apart from a small allocation of bank capital, banks conjure loan proceeds from thin air—that’s the crux of what their charters allow them to do.

In other words, bank loans are additive to the amount of spending that’s already occurring, and therefore, flow directly into GDP. They might boost real growth or inflation, or both, depending on a variety of factors including how the loan money is spent. But it’s important to remember that the money–GDP correlation is merely a byproduct of a lending–GDP correlation. Bank lending, not money, is the driving force.

Round, Round, Get Around

In pictures, we can compare the traditional, mainstream view to the alternative approach by sketching a “circular flow” between spending and income. Here’s an example I’ve simplified from charts that appear in my recently published book, Economics for Independent Thinkers, which covers the topic in more detail:

The upper panel shows that the people on the left—both consumers and businesses—are spending, and because a dollar spent equals a dollar earned, the exact amount that’s spent flows back to consumers and businesses to be spent once again. So money cycles from spending to income and back to spending in a circular flow, and that’s exactly how money works in mainstream theory.

The problem, though, is that mainstream theory assumes the role played by banks to be mostly irrelevant, whereas banks have a giant effect on the circular flow in the real world. In the real world, banks create deposits or cashier’s checks or some other form of money purchasing power to deliver loan proceeds. And by creating money from nothing, they increase spending above and beyond the amount of income that feeds in from the bottom of the loop. The circular flow expands, as in the lower panel.

Even more importantly, these bank loan effects cumulative over time. If we say the chart above is the current time period or period 1, then the next chart (below) shows that period 1’s new bank credit (or at least a portion of it) is now part of the circular flow, and then it gets joined by period 2’s new bank credit. And then periods 1 and 2 join period 3’s new bank credit and the flow gets fatter and fatter.

Pictures Telling Stories

If every picture tells a story, the pictures above tell a story of economists building a discipline (mainstream macro) on a false premise so significant it can’t be corrected without starting over. Core theories in every mainstream school rely on the foundational assumption that money is independent of bank lending, all forms of lending believed equivalent and banks believed to be mere intermediaries. Mainstream macro restricts the circular flow to the picture in the first chart’s upper panel—it doesn’t allow private banks to expand the flow endogenously as in the other diagrams.

Of course, some mainstreamers claim to have improved their theories, and almost all of them would rather you didn’t listen to troublemakers like me. According to a typical defense, economists have now figured out how to stuff a hypothetical financial economy into a mainstream, real-economy wrapper, making my criticisms invalid. Anyone who says otherwise just isn’t in-the-know, as the story goes.

I shouldn’t have to write this, but those claims are as hollow as they are self-serving. Every paper I’ve read that purports to fix mainstream theory either still ignores the realities of bank lending or blends in other wildly unrealistic assumptions. (To pick a few notable examples, see Ben Bernanke’s financial accelerator model, similar papers on the same topic or Paul Krugman’s work on the financial economy.) Again, mainstreamers wove false assumptions into the theoretical fabric, and you can’t fix that without shredding the fabric and starting over. And once you’re committed to starting over, as I am, you might borrow from more realistic theories that sit well outside the mainstream.

Too much information?

I digress because certain economists respond predictably to my way of thinking, and it seems a good idea to address the most common response before moving to the next step. If you’re willing to entertain that those economists might be blowing smoke, and I might be onto something, stick with the series for another article.

In Part 2, I’ll extend the charts above to consider other flows relevant to inflation. We’ll need to paint the whole picture before I can present the logic behind my suggested inflation predictor, which, again, has an excellent historical record. Its historical performance might even lead you to question whether inflation really is “always and everywhere” a monetary phenomenon.

Source: Zerohedge – A Key Inflation Indicator To Watch, Part 1

TFH 2/18 | Ten Urgently Needed Structural Reforms of the American Foreclosure System Completely Out of Service

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL) ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET . . Sunday – February 18, 2018  ——————— Ten Urgently Needed Structural Reforms of the American Foreclosure System Completely […]

Source: Stopforeclosurefraud – TFH 2/18 | Ten Urgently Needed Structural Reforms of the American Foreclosure System Completely Out of Service

"Automatic-Bidding" Is Fueling Bubbles In The Hottest Housing Markets

It has been a year-and-a-half since US home prices surpassed their previous peak from July 2006, and they’ve only continued to move higher since. Earlier this week, we reported that home prices in two-thirds of US cities climbed to record highs during the fourth quarter, according to data from the National Association of Realtors.

This advance has continued even as prices in the ultra-high end of the market – where homes go for $10 million or more – have climbed to such elevated levels that buyers are beginning to disappear.

And today, at a time when investors are worried that rising 10-year yields and the affects of the Trump tax plan could trigger a shakeout in the housing market, the Wall Street Journal highlighted a practice that is being widely embraced in some of the US’s hottest housing markets, like Seattle and San Francisco.

Essentially, these clauses are attached to offers, and stipulate that the buyer will increase his or her offer by a given incremental amount if the seller can prove that a higher, verifiable bid has been made.

Typically, this tactic is employed for homes in the middle-level of the market – because if a buyer is bidding on an ultra-high end home, the increments would be so large they would warrant review by a human.

And as one professor pointed out, some buyers see it as a way to have their cake and eat it to: That is, a way to ensure that the price they would pay should they win the bid is the lowest possible in their price range.

However, there are obvious concerns that, in our view, make this a terrible tactic.

“A buyer can think of an escalation clause as a ‘have your cake and eat it, too’ clause,” says David Reiss, a Brooklyn Law School professor who specializes in real estate. “But in real estate, as with cake, it is hard to have it all.”

One concern is that the buyer is tipping his hand to the seller by using an escalation clause, Prof. Reiss says.

By indicating the maximum amount he will pay for the house, a buyer is revealing important information—that he’s willing to pay more. For example: Seller lists the house for $1 million. The buyer bids $950,000 with an escalation up to $975,000. The seller can counteroffer at $975,000, knowing that the buyer can both afford it at that price and is willing to pay it.

“Sellers get more money than they ever thought they would have,” says Carrie DeBuys, a real-estate agent with Realogics Sotheby’s Realty in Seattle. In her market, it isn’t uncommon for a seller to receive “10, 15 or 20 offers on a property.”

On the flip side, an escalation clause may not be in the seller’s best interest, explains Prof. Reiss.

Say a house is listed for $1 million, and there are three bidders. Buyer A offers $950,000. Buyer B offers $975,000 with an escalation clause that could go up to $1 million in $5,000 increments. Buyer C offers $980,000. In this scenario, the seller would get $985,000 from Buyer B after the initial offer escalates over Buyer C’s offer. But, had the seller not relied on the escalation clause and instead asked the bidders for their best and final offer, he might have sold the house for $1 million. “We know that the buyer was willing and able to go up that high,” Mr. Reiss says. “Thus, the seller is likely getting $15,000 less in the escalation-clause scenario.”

Since a seller would know that an escalation clause has been attached to an offer, they could easily orchestrate “verifiable” bids by coaxing a third party to make a dummy offer, knowing with certainty that it will not be filled. Automating the process of price discovery is, as every flash crash and blowup in equity, bond or currency markets has demonstrated, fraught with risk that many of the parties involved don’t fully understand.

Whether the use of these clauses has had a material impact on prices would be difficult to confirm. Already, mortgage applications are tumbling as mortgage rates spike to their highest levels in more than four years. The real question is, how long after demand evaporates will sellers be able to abuse these “escalation clauses” to ensure they sell at the highest price possible.

 

Source: Zerohedge – "Automatic-Bidding" Is Fueling Bubbles In The Hottest Housing Markets