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À partir d’avant-hierLiberty Blitzkrieg

Brief Thoughts on Financial Markets

I rarely discuss financial markets these days. Although I pay attention, it's not in the obsessive manner I did a decade ago. I mainly keep my eyes out for potential big macro turning points, and if I see something interesting in that regard, I try to share it with readers. This means I might not mention markets for months at a time, if not longer. I think the setup right now is unique enough to provide a few thoughts.

The only chart or ratio I really pay attention to is SPY/GLD, which is a proxy for the S&P 500 priced in gold. In my view, a real equity bull market is characterized by equities rising and hitting new highs in gold terms, not just in nominal terms.

Let's take a longer-term look at this ratio.

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Resist the Crazy

Where's evil? It's that large part of every man that wants to hate without limit, that wants to hate with God on its side. It's that part of every man that finds all kinds of ugliness so attractive - it's that part of an imbecile that punishes and vilifies and makes war gladly.

- Kurt Vonnegut, Mother Night

As things felt like they were spiraling out of control last week, as Americans and people around the world were inundated with endless videos of street violence in addition to reactionary calls to deploy the U.S. military to cities across the country, the temptation to lose control of one's mental faculties and basic humanity was heightened.

I saw evidence of this all around me. There was a dark and vicious energy in the air, and it felt contagious.

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What Are You Gonna Do About It?

Tucked into the recent recovery bill was a provision granting the Federal Reserve the right to set up a $450 billion bailout plan without following key provisions of the federal open meetings law, including announcing its meetings or keeping most records about them, according to a POLITICO review of the legislation.

The provision further calls into question the transparency and oversight for the biggest bailout law ever passed by Congress. President Donald Trump has indicated he does not plan to comply with another part of the new law intended to boost Congress’ oversight powers of the bailout funds. And earlier this week, Trump dismissed the government official chosen as the chief watchdog for the stimulus package.

The changes at the central bank – which appear to have been inserted into the 880-page bill by sympathetic senators during the scramble to get it approved -- would address a complaint that the Fed faced during the 2008 financial crisis, when board members couldn’t easily hold group conversations to address the fast-moving economic turmoil.

The provision dispenses with a longstanding accountability rule that the board has to give at least one day’s notice before holding a meeting. Experts say the change could lead to key information about the $450 billion bailout fund, such as which firms might benefit from the program, remaining inaccessible long after the bailout is over.

The new law would absolve the board of the requirement to keep minutes to closed-door meetings as it deliberates on how to set up the $450 billion loan program. That would severely limit the amount of information potentially available to the public on what influenced the board’s decision-making. The board would only have to keep a record of its votes, though they wouldn’t have to be made public during the coronavirus crisis.

A Fed spokesperson did not comment on the changes in the law or whether the Fed would continue keeping records of its meetings.

- Politico: Recovery Law Allows Fed to Rope off Public as It Spends Billions

An era can be said to end when its basic illusions are exhausted.

- Arthur Miller

Before going any further, I want to share a graphic that accurately summarizes my position on the current pandemic affecting the world.

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Question Everything

Crises, like pandemics, don't break things in and of themselves; they show you what's already broken.

- Patrick Wyman

Big macro crises in any form are scary, massively disruptive, and in some cases, literally deadly. This is why governments and entrenched institutions always see such events as opportunities to further consolidate wealth and power.

The current global pandemic is no exception, as I detailed in last week's piece: Power Grab. While it's necessary to be aware of this reality -- and to push back against it wherever possible -- it's equally important to recognize there's a silver lining to all of this.

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Power Grab

I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
'My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!'
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away

- Percy Shelley, Ozymandias

It didn't take long for the most opportunistic, nefarious and corrupt actors in the U.S. to turn a pandemic crisis into another massive power grab attempt. We've seen it before; after 9/11 and also throughout the response to the financial crisis a decade ago. The irredeemable sociopaths who always make the big, important decisions used those crises to consolidate wealth and power. They're going for it again.

There are many examples, but let me list a few:

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A Shaky Foundation

And so castles made of sand fall in the sea, eventually.
- Jimi Hendrix

There's a widespread belief out there that the U.S. and the global economy in general is on much sounder footing ever since the financial crisis of a decade ago. Unfortunately, this false assumption has resulted in widespread complacency and elevated levels of systemic risk as we enter the early part of the 2020s.

All it takes is a cursory amount of research to discover nothing was "reset" or fixed by the government and central bank response to that crisis. Rather, the entire response was just a gigantic coverup of the crimes and irresponsible behavior that occurred, coupled with a bailout designed to enrich and empower those who needed and deserved it least.

Everything was papered over in order to resuscitate a failed paradigm without reforming anything. Since it was all about pretending nothing was structurally wrong with the system, the response was to build more castles of sand on top of old ones that had unceremoniously crumbled. The whole event was a huge warning sign and opportunity to change course, but it was completely ignored. Enter novel coronavirus.

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Zerohedge’s Twitter Account is Permanently Banished

Most of you reading this will be aware that Zerohedge's prolific and highly popular twitter account with over 670,000 followers was on the receiving end of a lifetime ban by the Twitter politburo. This post won't focus on the details of this specific ban, but if you want to read more about it, see the following: Zerohedge Suspended On Twitter.

It's imperative not to overly focus on the individual victims of tech giant bans, and instead zero in on the bigger picture. Rather than debating whether or not you like Zerohedge, or whether you think it crossed a line, I want to highlight the dangerous implications of dominant social media companies wielding permanent bans as a weapon against freedom of speech in practice.

This post will cover three main issues. First, the fact that Twitter and other social media companies have essentially created a caste system when it comes to engagement on their platforms. Second, the question of whether or not a lifetime ban from social media platforms is an ethical concept. Third, the dangers of Twitter essentially throwing the entire timeline of a banished account into the memory hole.

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Another Stupid War

All I wanted to do this week was work on part 2 of my localism series, but circumstances quickly got the best of me. The assassination of Iran's top general Qassem Soleimani was an event of such historical significance, I feel obligated to detail my thoughts on what it means and how things unfold from here, especially given how much of a role geopolitics and questions of empire have played in my writings.

First off, we need to understand the U.S. is now at war with Iran. It's an undeclared, insane and unconstitutional war, but it is war nonetheless. There is no world in which one government intentionally assassinates the top general of another government and that not be warfare. You can argue the U.S. and Iran were already engaged in low-level proxy wars, and that's a fair assessment, but you can't say we aren't currently in a far more serious a state of war. We are.

Soleimani was not only a powerful general, he was a popular figure within Iran. Unlike other blows the U.S. and Iran have inflicted upon one another, this cannot be walked back. There's no deescalation from here, only escalation. Even if you want to pretend this didn't happen and turn back the clock, it's impossible. This is a major event of historical proportions and should be seen as such. Everything has been turned up a notch.

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U.S.-China Relations in the Years Ahead: The Trade War Is a Sideshow

As President Trump has said many times, we rebuilt China over the past 25 years. No truer words were spoken, but those days are over.

The United States now recognizes China as a strategic and economic rival.

- Vice President Mike Pence during a speech last week at the Woodrow Wilson International Center for Scholars

The truth is that China is a strategic competitor at best that uses coercion and corruption as its tools of statecraft. (Applause.) 

We’ve reconvened “the Quad” – the security talks between Japan, Australia, India and the Untied States that had been dormant for nine years. This will prove very important in the efforts ahead, ensuring that China retains only its proper place in the world.

- Secretary of State Mike Pompeo in a speech last week to the Heritage Foundation

I don't take the U.S.-China trade war seriously, because I don't expect a transformative deal to come of it. Specifically, I see the current trade charade as little more than a warmup to a far more serious, unpredictable and dangerous conflict between the U.S. and China in the years ahead.

Last December, in a piece titled Is U.S. Geopolitical Strategy Experiencing a Monumental Shift?, I explained how the U.S. was repositioning its foreign policy to focus on China, and how this would set off a long-lasting and enormously consequential feud between the dominant empire and the emerging power. The post concluded with the following thought:

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Agents of Empire

The corporate revolution will collapse if we refuse to buy what they are selling – their ideas, their version of history, their wars, their weapons, their notion of inevitability.

- Arundhati Roy

Last week, Hillary Clinton called Tulsi Gabbard (and Jill Stein) Russian assets on a podcast. More specifically:

“I’m not making any predictions, but I think they’ve got their eye on someone who’s currently in the Democratic primary and are grooming her to be the third-party candidate. She’s the favorite of the Russians,” said Clinton, apparently referring to Rep. Gabbard, who’s been accused of receiving support from Russian bots and the Russian news media. “They have a bunch of sites and bots and other ways of supporting her so far.” She added: “That’s assuming Jill Stein will give it up, which she might not because she’s also a Russian asset. Yeah, she’s a Russian asset—I mean, totally. They know they can’t win without a third-party candidate. So I don’t know who it’s going to be, but I will guarantee you they will have a vigorous third-party challenge in the key states that they most needed.”

Tulsi subsequently responded to this slanderous accusation with a series of devastating blows.

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William Barr Wants to Kill Privacy and Security…’For the Children’

U.S. Attorney General William Barr, along with co-conspirators in the UK and Australia, recently wrote a letter to Mark Zuckerberg requesting he not move forward with a plan to implement end-to-end encryption across Facebook's messaging services. A draft of the letter was published earlier this month by Buzzfeed, and it's worth examining in some detail.

What immediately strikes you is the letter's emphasis on "protecting the children," a talking point universally used by authoritarians throughout history to justify both a reduction of public liberty and a transfer of increased power to the state. Though this tactic is transparent and well understood by those paying attention, it's nevertheless disturbing to observe Barr's disingenuous and shameless use of it (the words 'child' and 'children' appear 17 times in the course of this brief letter).

Here's just one example from the letter:

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The Tech Giants Are a Conduit for Fascism

A second former Amazon employee would spark more controversy. Deap Ubhi, a former AWS employee who worked for Lynch, was tasked with gathering marketing information to make the case for a single cloud inside the DOD. Around the same time that he started working on JEDI, Ubhi began talking with AWS about rejoining the company. As his work on JEDI deepened, so did his job negotiations. Six days after he received a formal offer from Amazon, Ubhi recused himself from JEDI, fabricating a story that Amazon had expressed an interest in buying a startup company he owned. A contracting officer who investigated found enough evidence that Ubhi’s conduct violated conflict of interest rules to refer the matter to the inspector general, but concluded that his conduct did not corrupt the process. (Ubhi, who now works in AWS’ commercial division, declined comment through a company spokesperson.)

Ubhi worsened the impression by making ill-advised public statements while still employed by the DOD. In a tweet, he described himself as “once an Amazonian, always an Amazonian.”

- From the must read ProPublica expose: How Amazon and Silicon Valley Seduced the Pentagon

That U.S. tech giants are willing participants in facilitating mass government surveillance has been widely known for a while, particularly since whistleblower Edward Snowden risked his life and liberty to tell us about it six years ago. We also know what happens to executives who don't play ball.

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Let’s Talk About Saudi Arabia

All wars require casus belli, ostensible justifications. After all, despite humanity’s long history of vicious warfare, interstate combat often requires a government distant from its working class to motivate its people to kill and die for distant institutions and esoteric ideologies. That said, Washington doesn’t exactly have a strong track record of honesty regarding its rationales for war. Few Americans know or care much for their own history...

- Maj. Danny Sjursen, USA (ret.)

One of the most horrible features of war is that all the war-propaganda, all the screaming and lies and hatred, comes invariably from people who are not fighting…It is the same in all wars; the soldiers do the fighting, the journalists do the shouting.

- George Orwell, Homage to Catalonia

It's fall 2019, and nearly twenty years into a series of disastrous and murderous forever wars sold to the public as a necessary response to 9/11, we're being instructed to prepare for another one. Replace the Q with an N at the end of IRA and you know what I'm talking about. Of course, this shouldn't surprise anyone considering much of the U.S. foreign policy establishment has been actively scheming for some invented justification to take out Iran (and many others) for decades.

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Humans Are Creating Their Own Narratives

Somewhere between the arrest of Jeffrey Epstein and his extremely suspicious death in a Department of Justice operated prison, the public learned that an FBI intelligence bulletin published by the bureau’s Phoenix field office mentioned for the first time that conspiracy theories pose a domestic terrorism threat. This was followed up last week by a Bloomberg article discussing a new project by the U.S. military (DARPA) to identify fake news and disinformation.

We learned:

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Insiders Don’t Criticize Other Insiders

Since leaving office President Obama has drawn widespread criticism for accepting a $400,000 speaking fee from the Wall Street investment firm Cantor Fitzgerald, including from Senators Bernie Sanders and Elizabeth Warren. Only a few months out of office, the move has been viewed as emblematic of the cozy relationship between the financial sector and political elites.

But as the President’s critics have voiced outrage over the decision many have been reluctant to criticize the record-setting $65 million book deal that Barack and Michelle Obama landed jointly this February with Penguin Random House (PRH)...

While the Obamas’ deal is unique for the amount of money involved, outsized book contracts between politicians and industries they’ve benefitted has precedent. In a recent report issued by the Roosevelt Institute, the study’s authors, Thomas Ferguson, Paul Jorgensen, and Jie Chen, argue that the mainstream approach to money in politics fails to recognize major sources of political spending. Among the least appreciated avenues for political money, they argue, are payments to political figures in the form of director’s fees, speaking fees, and book contracts.

From the 2017 Naked Capitalism piece: The “Market Forces” Behind the Obamas’ Record-Setting Book Deal

Back in 2009, when the Obama administration was busy ensuring the nation's financiers would become larger, more powerful and never serve a day in jail despite their historic crime spree, Larry Summers had dinner with Elizabeth Warren. During the course of that meal, he instructed her about how power really functions in the U.S.:

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Believing Jeffrey Epstein Committed Suicide is the Real Conspiracy Theory

Is a murder committed more heinous than a suicide allowed? In its act, sure. In this context? NO.

An “unlucky accident” like this is the ONE THING that a non-corrupt State must prevent. It’s the non-corrupt State’s ONE JOB to keep Epstein alive for trial, and everyone knows that everyone knows this is their ONE JOB.

It is impossible to violate this common knowledge without premeditation and malice, without conspiracy and criminality aforethought. It is impossible to have an “unlucky accident” like this in a non-corrupt State.

- Ben Hunt, I’m a Superstitious Man

It's entirely fitting that the death of Jeffrey Epstein is as disturbing, shady, bizarre and seemingly inexplicable as the rest of his life. It seems as if one could research this wretched man's time on earth for years and still come up with more questions than answers. An unfortunate reality complicated by the fact we don't have a mass media particularly interested in asking any of the big questions, such as:

  • Where is Ghislaine Maxwell? Why isn't she in custody and was she a Mossad spy like her late father Robert Maxwell?
  • Explain the details of the relationship between Leslie Wexner and Jeffrey Epstein? Why does it seem as if Wexner helped set Epstein up with the appearance of extraordinary wealth, yet no one seems to know how Epstein actually came into all his money?

It appears sexually abusing children and accumulating associated blackmail on the rich and powerful was a full-time job for Epstein, so who was actually bankrolling/overseeing this operation? Was it Wexner, somebody else, or was it an intelligence agency as Alex Acosta claims he was told? Seems kind of important to get to the bottom of this.

I could go on and on, but then this would become a book. Rather, the purpose of this post is to highlight the outlandishness surrounding many of the details (or lack thereof) surrounding Epstein's death a week ago in a Department of Justice operated New York City prison.

Indeed, what you'd have to believe in order to think this was a simple suicide is the actual conspiracy theory. 

Let's begin with the initial attack, which happened three weeks before his death.

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A Few Thoughts on Jeffrey Epstein’s ‘Suicide’

Did you wear a black armband
When they shot the man
Who said "peace could last forever"
And in my first memories
They shot Kennedy
I went numb when I learned to see
So I never fell for Vietnam
We got the wall of D.C. to remind us all
That you can't trust freedom
When it's not in your hands
When everybody's fightin'
For their promised land

Guns N' Roses, Civil War

You know things are getting really weird when news of Jeffrey Epstein's death in a New York City prison operated by the U.S. Department of Justice is the least surprising part of the whole story. Countless people, including myself, assumed this exact sort of thing would happen. Then, just like that, he's gone.

I continue to think the players involved with Epstein in what appears to have been an intelligence-linked blackmail operation, as well as those at risk of being exposed in more detail, are simply too powerful and connected to the institutions that run this country (and others) for us to ever get real answers. It's cynical and depressing, but based on what I've seen over the past couple of decades, it's the most likely outcome.

Rule of law in America? Don't be ridiculous. There are rulers and the ruled. Which bucket do you think you're in?

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Things Fall Apart

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

- Charles Dickens, A Tale of Two Cities

You're not losing your mind, everybody else is. Things are crazy and getting crazier. Something must be done. Somebody, please do something.

If paying attention to global events overwhelms and results in a combined sense of dread, concern and bewilderment, you're not alone. It's not simply because humans have more access to more information than ever before that you feel this way, there does appear to be a quickening in the pace of the unfolding of humanity's latest chapter. Things are genuinely falling apart, but things are always falling apart. Likewise, things are always being built and created. Governments come and governments go, as do global empires and monetary systems. Everything is dying and being born all at once, constantly and forever. This will not change.

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Take a Deep Breath

Today's post revolves around a subject I've been thinking about since early 2017, when I noticed much of the population separating into pro-Trump or anti-Trump factions that were becoming increasingly tribal, vitriolic and hostile. I wrote about it in the piece, Lost in the Political Wilderness, and things haven't improved much since. Fortunately, around the same time I came across the theory of Spiral Dynamics which provided me with a useful framework through which to understand consciousness and the importance of guarding your mind and emotional state in a world that encourages fear, tribalism and anger.

Though we live in a time where more diverse information is available at our fingertips than at any other period in human history, we're still presented with news and narratives via specific channels; whether that be an alternative media figure, a mass media outlet or a tech giant algorithm. The news and commentary that somehow gets in front of us on a daily basis shapes our view of the world just as it always has, and this in turn triggers certain emotions - joy, sadness, anger, fear, inspiration, etc. There's space for all that in a human life, but the ones I'm most interested in for the purposes of this piece are fear and anger.

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The Jeffrey Epstein Rabbit Hole Goes a Lot Deeper Than You Think

Like many of you, I've been following the Jeffrey Epstein story with horror, disgust and open eyes for several years. While it's always been a creepy, twisted and completely bizarre saga, I was unaware of just how inexplicable and strange it is until I did some more digging earlier today.

I put a bunch of information together in a Twitter thread, and rather than reinvent the wheel, here it is:

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U.S. Stock Market Hits a New Record High, but What’s Really Going On?

As Americans head off to Independence Day celebrations, they'll be greeted with a plethora of headlines about record highs in the U.S. stock market. What I find most interesting about the latest bout of exuberance is the fact that priced in gold, stocks remain far below last fall's peak.

From my perspective, a real equity bull market is one where the stock market, in this case the S&P500, consistently hits new highs relative to what's historically been the world's politically-neutral monetary asset, gold; and the U.S. stock market did exactly that from August 2011 until September 2018. Though equities in nominal terms bottomed in March 2009, we didn't really get the all clear in my view until equities started rallying versus gold in late summer 2011.

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