Tuesday, September 19, 2017

"Your Guide To The Deep State Swamp"

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“America Is Going Broke…and Nobody Cares”

“America Is Going Broke…and Nobody Cares”
by Bill Bonner

"Last week, the plot did not so much thicken as congeal. There’s no changing it now - the cameras are rolling…the costumes are on…and everyone knows his lines. President Trump went further in becoming the first president independent of either major political party in American history.

Open floodgates: After having sided with the Democrats on the debt ceiling, he went back to the swamp to resolve the ‘Dreamer’ issue - the 800,000 children who arrived in the US as undocumented migrants and were allowed to temporarily stay legally in the country. Then, over the weekend, it was reported that the administration wanted to get back on the Paris climate change agreement bandwagon. The White House denies it, but it’s now clear that Mr Trump aims to be a whole lot less disruptive than he promised to be.

And now, with the floodgates open, the US national debt has surged over $20 trillion. Of course, we don’t worry about debt anymore. That is sooo 20th century. This is the 21st century. Debt doesn’t matter. What seems to matter are the more symbolic issues. The Dreamers, for example. It was OK for the president to betray conservatives on the money issues…but let him agree to offer refuge to hundreds of thousands of migrant children…and ‘conservatives’ are up in arms. It is further proof - if any were needed - that this comedy is going to turn into a farce…and end as a tragedy.

We’re going broke…and no one cares. Certainly, here at the Diary, we don’t care. People get what they deserve. Our job is only to try to understand what it is that they deserve…to anticipate it…and make sure we don’t get it, too!

Major crisis: On Friday, we went to Paris to meet with Jim Rickards. The ex-general counsel for hedge fund Long-Term Capital Management, CIA adviser, best-selling financial author, and Wall Street veteran told us that we are too naïve. A major crisis is coming, he says, worse than 2007. It’s coming on its own accord - a natural and inevitable consequence of the feds’ meddling. According to Jim, the authorities are actually looking forward to it…planning for it…and helping to cause it.

On that last point, we have no doubt. Their ham-fisted, pigheaded program is bound to lead to a crisis. Specifically, the problem that caused the crisis of 2007 - too much debt - was not resolved; it was made worse. The Fed, confronted with a debt crisis of its own making, did the only thing it could do - it lowered interest rates to encourage more borrowing. Now, there is more debt than ever. And the same people who caused the crisis are still running the banks, the regulatory agencies, the corporations, and all the other institutions that made the crisis possible.

Why were none of the problems corrected? We attribute this to simple self-interest: The insiders live on debt. Of course, they are always going to want more of it.

Cash ban: But this is more than a matter of chance, imbecility, and swinishness. There’s cupidity, too! The powers that be are setting us up for another big crisis because they want another big crisis. Why? ‘It was no accident that Congress passed that Patriot Act so quickly after 9/11,’ Jim told me. ‘They were waiting for it.’

A crisis is an opportunity. And in the next crisis - which could be days, weeks, or months away - the feds will further tighten the noose around our necks. ‘They’ll ban cash,’ says Jim. Jim knows the insiders. He knows what they know. And he knows what they don’t know. What they don’t know - and don’t want to know - is how to run an economy properly.

But they know they don’t need to know. Because the more they fail and the more crises they cause, the more opportunities they have to grab more power…and more money. That is what they did in 2008, for example.

Corporate profits - which reflect the real earnings of large American businesses - have risen only 2% a year since then. After inflation, they were more or less flat. But stocks have risen 10 times as much. The Dow, for example, is up 200% over the same period. How is that possible? Well, the Fed pumped $3.6 trillion into the capital markets via its QE (‘quantitative easing’) programs. Not into the consumer market. Not into Main Street. Not into the pockets of ordinary citizens. Instead, the money went to the big banks and other rich people.

JPMorgan Chase CEO Jamie Dimon, for example, got a bonus last year of $25 million thanks to this hustle. And he calls bitcoin a ‘fraud’!

As a card-carrying member of the ‘One Percent’, we’d like to pause briefly and offer a word of thanks to the Fed. Since 2008, the wealth of the richest 1% of Americans has soared. As measured by the S&P 500, it’s up more than 230%. Great for us. Thanks. But it’s all very well for the feds to use crises to take more wealth from the lumpenproletariat, and arm the local police with tanks and assault helicopters to keep them in line. Still, every elite eventually goes too far, every empire dies, and, in the final act, every jackass gets what he’s got coming.”

Monday, September 18, 2017

"A 'Financial H-Bomb' Has Exploded"

"A 'Financial H-Bomb' Has Exploded"
by Jim Rickards

"Somebody exploded an H-bomb last week, and it wasn’t North Korea. It was the U.S. This was not a kinetic H-bomb, the kind that leaves a mushroom cloud. It was a financial H-bomb. Financial warfare has its weapons, tactics and commanders, the same as kinetic warfare. In financial warfare, the leading commander is the secretary of the Treasury. The weapons include account freezes, sanctions and financial blacklisting of certain individuals and companies.

The financial warfare equivalent of an H-bomb is a complete ban from the U.S. dollar payments system. The U.S. dollar represents 60% of global reserves, 80% of global payments and almost 100% of global oil sales. Cutting off any party from U.S. dollars is like cutting off the oxygen from a patient in intensive care. They won’t last long.

That is exactly what U.S. Secretary of the Treasury Steve Mnuchin threatened to do to China on Sept. 12. He threatened to cut off China’s access to the U.S. dollar payments system if China does not rigorously enforce new U.N. sanctions on North Korea as a means to deter North Korea from pursuing its nuclear weapons and missile development.

The problem is that North Korea will not be deterred. It’s in “breakout” mode, which means it is dashing for the finish line of a nuclear-capable ICBM arsenal. North Korea is not trying to hide its efforts beyond normal operational security, and it’s not using the weapons as a bargaining chip for sanctions relief or other economic benefits. North Korea could have those with a phone call to the U.S. in exchange for stopping its programs and allowing reasonable inspections. They have not picked up the phone. They are hitting the “launch” button.

Likewise, China will not enforce the sanctions beyond superficial compliance. They certainly will not go to the lengths the U.S. expects. China fears a destabilized North Korea that could be reunified on South Korean and U.S. terms. China fears a flood of North Korean refugees entering China. And China views the entire North Korean situation as a U.S. problem, not a Chinese problem (Russia views it the same way).

A war between the U.S. and North Korea is not the worst result for China because it bleeds the U.S., Japan and South Korea, who are rivals for dominance in East Asia. Finally, Chinese behavior is governed by “face.” By the U.S. Treasury making such a public declaration, China cannot back down without losing face. In an age of rising Chinese power, China will not lose face.

But here’s the thing: Cutting China out of U.S. dollar payments means a selective default on U.S. Treasury debt. China has over $1 trillion of U.S. government securities in its reserve position. Those securities are paid at maturity and rolled over through the U.S. dollar payments system run by the U.S. Treasury with the Federal Reserve as fiscal agent. If China is denied access, then China’s Treasury securities portfolio is effectively frozen. China is relying on those liquid dollar reserves both to bail out its insolvent banking system and to defend its currency. The implications of freezing China out of dollar payments are almost incomprehensible.

So the path is set. North Korea is going for the weapons. The U.S. will not allow North Korea to get them. The U.S. is relying on Chinese help, which will not be forthcoming. The end result is a shooting war with North Korea and a financial war with China. Investors should move now to lighten equity exposure, establish selective short equity positions and increase allocations to safe-haven assets such as U.S. 10-year notes, gold, silver and cash.

This war is coming in six–eight months. The time to make your financial moves is now — before it’s too late. Below, I show you why the “logic of war” is making the conflict between the U.S. and North Korea all the more likely. What roles do China and Russia play? Read on."
"Trump Will Soon End the Korean War"
By Jim Rickards

"The potential for war over the Korean Peninsula is as great as ever. The news cycle we live in is a world of 24-hour updates. With what seems more like 24-minutes between when stories come and go it is easy to lose focus on the major stories. The situation in North Korea is absolutely not going away. That’s really important for investors to recognize because this is going to come back again and again.

We have entered the escalatory phase in rhetoric and military preparation. In March of 2003 when the United States invaded Iraq, we could see that coming. The CIA Director, George Tenet was sending warnings, Secretary of State, Colin Powell was speaking at the United Nations and then President Bush declared Saddam Hussein a global threat.

While the CIA bungled the pre-war intelligence, the point is that the orders to invade Iraq were given a year before. The same story is playing out now. While the President can always call off military action, the planning phases for an attack on North Korea are going on now. Orders have been given. Preparations have been made. It is fair to say that contingency plans have been in place since the late 1990s.

The North Korean issue was dumped in Donald Trump’s lap. It is largely attributed to bad diplomacy and faulty leadership through the Clinton, Bush, and Obama administrations. There have been deals with North Korea put in place throughout the years that put hard sanctions on the regime.

We’ve been down this road before. Every time North Korea engages in dangerous behavior, the international community and the United States places pressure on them. It has worked where both sides have agreed to terms, but the North Koreans continuously break their promises and escalate programs. For the eight years under the Obama administration nearly nothing was done and the issue was largely ignored. It’s hard to point blame at Trump, and while he has dialed up the rhetoric, this has been going on for decades.

This is where the logic of war comes in. The French call it, La Logique de la Guerre. The logic of war is different than the logic of diplomacy. It refers to the dynamic of how wars begin despite the fact that the war itself will be horrendous, counterproductive, and possibly end in complete defeat. Under the logic of war, there’s an escalatory logic that leads to war even when no one thinks it’s a good idea.

There is a theory that Kim Jong-Un is mentally unstable, but in many ways the situation is even more complex because he is extremely isolated and exists in his own dangerous bubble. There are very few that have told the North Korean leader that he is going down the wrong path. Even if there are talks going on currently behind the scenes with the Russians and Chinese, he’s not someone who is getting much independent advice.

The United States has to come to a decision on whether it can live in that world where it can be threatened by North Korean nuclear weapons and missile programs. If the U.S. were to attack, it would not just hit weapon systems. The aim would be to have regime change and greater stability that replaces it. For Kim Jong-Un looking at that outcome, it appears that he believes the United States is bluffing. North Korea is looking at the case in Syria a few years ago where a “red line” was given but no action was taken.

That’s why the logic of war is important. Kim Jong-Un is able to operate with a logic of his own. His logic pushes him away from verifiable cessation of the arms testing and into some version of normalization with relief of sanctions. It moves him away from diplomatic channels and in the direction of pushing his missile programs as far as he can.

That’s where a breakout happens. It is a dash for the finish line where a country aims for an objective without even pretending it is operating with peaceful purposes. Actions are taken regardless of negotiations or critical pressure

In a breakout, there is an increase in the probability of attack but it drastically decreases the decision-making time and the window in which your enemy, in Kim Jong-Un’s perspective the United States, can actually attack you. That’s where the U.S. is right now. He is in breakout mode. He’s testing his missiles at rapid pace. He’s testing his weapons and putting all the pieces together. This decision has forced the United States to think hard about war and is providing very little time to act. It could be a matter of months before North Korea has this capability.

The North Korean regime is also aiming to launch a missile from a submarine. The capacity that they have is nothing like the U.S. Trident submarines, or a more sophisticated system, but they do have a submarine. The worst case scenario is facing a submarine that can be maneuvered in the Pacific Ocean. While it might be able to be tracked, it allows for a threat to be closer to U.S. territory and the missile range to be greatly diminished.

When that happens, that’s going to change the equation enormously. The United States then has two choices. It can acquiesce, allowing a nuclear armed North Korea to exist. That would cause Japan and South Korea to weaponize nuclear technology which is unstable in itself and will increase the probabilities of war. The second option is that the U.S. will not acquiesce in this, and will go to war to put a stop it.

The first Korean War fighting began in June 1950 and lasted until July 1953. There was no peace treaty but an agreement in an armistice where shooting stopped. The war was never technically over. It is a fight that could restart at any time. My expectation is that it will restart but this will be the end of the first Korean War.

Before and after any conflict there would, in theory, be a lot of communication with China and Russia because they share borders with North Korea. China’s interests are involved and any action with North Korea has the potential for a wider war. The actors involved could include Japan, South Korea. China, North Korea, Russia and the United States. It is also worth recalling that Russia borders North Korea and has connected railroads and roadways to the region. What that means is that even if China were to cut off North Korea completely, they could still have weapons access from Russia.

In the best case scenario for the war there would be regime change and China would be given assurances that fighting would not be within range of the border at the Yalu River. Under a new regime any leader would have to be more stable than Kim Jong-un and acceptable to China. The big winner in a regional conflict is Russia. In different ways the US, China, North Korea, and South Korea all lose. Russia is well positioned to sit on the sidelines during of destabilization of East Asia, while the U.S. goes deeper in debt. All of this will happen in stages but there will eventually be a wakeup call that we are headed for war."

Musical Interlude: Kevin Kern, "Out of the Darkness, Into the Light"

Kevin Kern, "Out of the Darkness, Into the Light"

"A Look to the Heavens"

"Why were the statues on Easter Island built? No one is sure. What is sure is that over 800 large stone statues exist there. The Easter Island statues, stand, on the average, over twice as tall as a person and have over 200 times as much mass. Few specifics are known about the history or meaning of the unusual rock sculptures, but many believe that they were created about 700 years ago in the images of local leaders of a lost civilization. 
Click image for larger size.
Featured here, one of the ancient Moai sculptures was imaged in 2016 before the constellation of Orion, including the famous line of three belt stars and brilliant stars Betelgeuse (far left in red) and Rigel (upper center). The stone giant appears, however, to be inspecting the brightest star in the night sky (far right): Sirius."

Chet Raymo, "Dust"

by Chet Raymo

"In Chekhov's play "The Three Sisters" sister Masha refuses "to live and not know why the cranes fly, why children are born, why the stars are in the sky. Either you know and you're alive or its all nonsense, all dust in the wind." Why? Why? The striving to know is what frees us from the bonds of self, said Einstein. It's the striving, rather than our knowledge - which is always tentative and partial - that is important.

I've been living with grandchildren for the past few weeks. They seem to me to spend an inordinate amount of time with smart phones, iPads, and computers. In this, I'm sure, they are like most of their contemporaries, immersed in virtual realities, flickering pixels. I sometimes feel the urge to drag them outside for some reality reality. Let them see an eclipsed moon rising in the east, a pink pearl. Let them stand in a morning dawn and watch a slip of comet fling its tail around the Sun. Let them admire the stars of Orion on a sparkling winter evening - red Betelgeuse, blue Rigel - and shiver in the thrall of cold and beauty.

Ah, yes, I know. Kids are kids and they'll turn out OK. They'll probably end up in a better place than I find myself at 81. I suppose I spent an equal amount of time sitting next to the radio listening to Tom Mix and Sky King. Still, it's as Masha says: "Either you know and you're alive or its all nonsense, all dust in the wind." So let the children know. Let them know that nothing they will find in the virtual worlds of e-games, television or the internet matters half so much as a glitter of stars on an inky sky, drawing our attention into the incomprehensible mystery of why the universe is here at all, and why we are here to observe it. The summer Milky Way arches across the sky, a hundred billion individually invisible points of light, a hundred billion revelations of the Ultimate Mystery, conferring on the watcher a dignity, a blessedness, that confounds the dull humdrum of the commonplace and opens a window to infinity.”

"We Would Rather..."

 "We would rather be ruined than changed; 
We would rather die in our dread,
Than climb the cross of the moment 
And let our illusions die."
~ W.H. Auden

The Poet: Robert Graves, “Warning to Children”

“Warning To Children”

“Children, if you dare to think
Of the greatness, rareness, muchness
Fewness of this precious only
Endless world in which you say
You live, you think of things like this:
Blocks of slate enclosing dappled
Red and green, enclosing tawny
Yellow nets, enclosing white
And black acres of dominoes,
Where a neat brown paper parcel
Tempts you to untie the string.
In the parcel a small island,
On the island a large tree,
On the tree a husky fruit.
Strip the husk and pare the rind off:
In the kernel you will see
Blocks of slate enclosed by dappled
Red and green, enclosed by tawny
Yellow nets, enclosed by white
And black acres of dominoes,
Where the same brown paper parcel -
Children, leave the string alone!
For who dares undo the parcel
Finds himself at once inside it,
On the island, in the fruit,
Blocks of slate about his head,
Finds himself enclosed by dappled
Green and red, enclosed by yellow
Tawny nets, enclosed by black
And white acres of dominoes,
With the same brown paper parcel
Still untied upon his knee.
And, if he then should dare to think
Of the fewness, muchness, rareness,
Greatness of this endless only
Precious world in which he says
he lives - he then unties the string.”
- Robert Graves

“Warning to Children” 
recited by Robert Graves

The Daily "Near You?"

Villahermosa, Tabasco, Mexico. Thanks for stopping by!

"The Idiot"

"The Idiot"
The Zman

"'The Idiot' is a novel by Fyodor Dostoyevsky.* Like most Russian literature, it is a big book full of complicated characters, with funny names. The central character of the novel, Prince Myshkin, is a young man whose good intentions and decency are taken to be stupidity by the worldly characters of the novel. The title is intended to be ironic. His naivete is assumed to be due to stupidity. The novel is a study of what happens when such a person is put in a world populated by people lacking basic decency and morality.

Our cultural elites use something similar to promote the values of the ruling classes through movies and television. The movie "Mr. Smith Goes To Washington" is the classic example. The twist our betters put on it is the innocent adventurer taking on the corrupt system holds all of the values cherished by our actual ruling class. Meanwhile, the fictional villains are always people who sound like the critics of managerial state democracy. Even so, the basic theme is the same. We have the naif versus the cabal of the cynical.

Whether as propaganda or psychological study, the central question is whether a corrupt and malignant system can be changed or defeated by a morally good person. The Hollywood version will on occasion have the white hat defeated, for the purpose of reinforcing some element of the one true faith. Usually though, the the good guy triumphs over the system. This propaganda has been so effective, most American truly think that by assiduously obeying every rule they will one day have their country back.

One of those Americans seems to be President Trump. The back story to his run is that he was motivated to run, after being disrespected by various on-line propagandists like Jonah Goldberg. Trump could not understand why a billionaire like him was mocked, by guys like Goldberg, who are nothing more than servants to rich men like Trump. To Trump, this made no sense. He was motivated to run in order to prove to these people that he could do anything they can do, but even better. There’s nothing bigger than President.

Since his victory, Trump has been searching around for some way to be accepted by the political class. He assumed that winning the election would also win him the respect of official Washington. Instead, they locked shields to oppose him, even installing a special prosecutor to dig around in his life for a way to impeach him. Unable to figure out why he is treated like a skunk at the picnic, he has flailed around looking for something to give away in order to get the respect he craves.

Now, he is willing to fink on his voters by breaking every promise he made during the campaign. That’s why he is dealing with Chuck Schumer. The sole reason for Schumer to exist in Washington is to guide troublesome Republicans through the process of committing political suicide. In the case of Trump, that means going for amnesty, abandoning the wall and supporting candidates who hate him. It is not enough that Trump fink on his voters. He must humiliate himself in front of them as well.

This is not to say that Trump is just a craven liar. He is one of the few people in the financial elite who embraces those old ideas of civic responsibility and fair play that used to define the American elite. Trump is from an age when it was your duty to uphold the rules and be a good example to others. He naively thinks that is how things still work. They don’t, which is why the ruling elite looks at him as odious interloper. They don’t hate him as much as they hate what he represents. They also think he is an idiot because of it.

One of the main critiques, from the Dissident Right, of Buckley Conservatives, is that they naively cling to ideas that are no longer applicable. Waving around the Constitution, for example, when the document is now interpreted to mean the opposite of what the Founders intended, is idiotic. The foolish embrace of principal, when it means sure defeat, is proof that the alleged opposition to the managerial state is either composed of fools, or traitors sent to subvert any real opposition to the status quo.

Now, much of what comes from the alt-right is ignorant chanting that is not based in anything but frustration with their fringe status. Even so, they are not wrong to point out that the Civic Nationalists and the alt-lite are naive and foolish to think they can talk the other side into turning away from their suicidal course. Every attempt to affect change within the system, is bound to fail, as the rules of the system are designed to protect and perpetuate the status quo. The people in charge are not going to quit on their stool.

“We’re not voting our way out of this” is a popular way of making this point. That’s not entirely true, but it is a useful way to put it. Simply electing people who say the right things is not changing a system that has been corrupted to defend the interests of the two percent. The system, as it stands, must be subverted and destabilized. That does not happen at the ballot box. That’s what we’re seeing with Trump. He is being swallowed up by a system designed for that purpose. You don’t beat it by playing by the rules.

It is hard to know if Trump will pull out of his death spiral. He has shown a willingness to reverse course if he feels he has made an error. It’s also possible that he fears Mueller has something on him or his kids and he is hoping to trade away your future for his dignity and freedom. Maybe it all just part of the chaos that Trump seems to enjoy. Regardless, it is another reminder that the people putting their trust in the system are idiots. The system is not the solution to out problems as a society. The system is the problem.”
* Freely download "The Idiot", by Fyodor Dostoyevsky, here:

"Only The Small Secrets..."

"Only the small secrets need be protected. 
The big ones will be kept secret by public incredulity." 
~ Marshall McLuhan

X22 Report, “The Cabal's Desperation Level Is Off The Charts, What's Next?”

X22 Report, “The Cabal's Desperation Level Is Off The Charts, What's Next?”
Related followup report:
X22 Report, 
“The US Pushes Trade War With China Threatening The World's Trading System”

"How It Really Is"


by James Howard Kunstler

“A very brave law professor at the University of Pennsylvania, named Amy Wax has published the astounding argument that human beings in America would benefit from adopting “bourgeois values” and behaving accordingly. Bourgeois (Boozh-wah, for the underspeeched) may be an unfortunate term-of-art, since it came to be used as a pejorative back in the old hippie days - something that Ms. Wax might remember, since she is a Baby Boomer - but what else might you call this bundle of traditional values: honesty, fidelity, thrift, temperance, punctuality, fortitude, gratitude, dedication, kindness, loyalty, et cetera?

A glance at Amy Wax’s credentials might induce a head-snap. “Amy Laura Wax received a B.S. summa cum laude in molecular biophysics and biochemistry from Yale in 1975. She was then a Marshall Scholar in Philosophy, Physiology, and Psychology at Somerville College at Oxford University. She earned an M.D. from Harvard Medical School in 1981, training as a neurologist, and received a J.D. from Columbia in 1987, where she was an editor of the Law Review. She was a Law Clerk to the Honorable Abner J. Mikva, U.S. Court of Appeals for the District of Columbia Circuit from 1987-88. From 1988-94, she served as Assistant to the Office of the Solicitor General in the U.S. Department of Justice, where she argued 15 cases before the United States Supreme Court. Wax was a member of the Legal Affairs Committee, American Academy of Neurology from 1986-1992. In 1994, she joined the faculty of UVA [U. of Virginia]. She taught courses in civil procedure, labor law, and poverty law and welfare policy. She became Class of 1948 Professor of Scholarly Research in Law from 2000-01. After becoming a visiting professor to Penn Law School in 2000, she joined its faculty in 2001.”

By some miracle, she didn’t end up a professor of Intersectional Gender Justice. Of course, the Social Justice commissars around the country regard her as just another neo-Nazi punk committing violence-through-speech against the ethno-sexual minorities who seek to throw off the shackles of Cis-White Privilege oppression. In an op-ed essay in the Philadelphia Inquirer (co-authored with Larry Alexander of the University of San Diego School of Law) titled “Paying the Price for Breakdown of the Country’s Bourgeois Culture”, Wax argued that “the single-parent, anti-social habits, prevalent among some working-class whites, the anti ‘acting white’ rap culture of inner-city blacks” and the “anti-assimilation ideas gaining ground among some Hispanic immigrants” is not suited to a First-World 21st Century Environment.

The casual observer (from Mars) might take all that as self-evident, but it’s a hard sell nowadays, especially in Ivory Towerville, where, supposedly, the rectified essences of abiding human intelligence are said to dwell. That super-refined scholarly nation-within–a-nation is also mostly walled off from the more unappetizing realities of what an American-style First-World 21st Century Environment actually is. In fact, that very “environment” is mostly characterized by a breakdown of just about everything that might promote the formerly eternal verities. It has been accompanied move-for-move by a breakdown in economic relations that leaves a big chunk of the national demographic peon-ized, bereft of work that is either meaningful or pays enough to support a family, and places them at the mercy (actually, there is no mercy) of gigantic, dishonest, avaricious companies and public institutions driven by stupid crypto-religious ideologies.

Oddly, the personal economic calamity represented by that trend is mirrored on the Ivy League campuses where a tiny elite cadre of tenured professors enjoys immunity from both impoverishment and real critical thinking, while an ever-expanding corps of serf-like adjunct teachers does all the heavy-lifting in the classrooms and struggles to pay the light bill - and a new breed of diversity deans and other administrative hierophants feeds gluttonously at the trough of the college loan racket.

The main criticism of Amy Wax’s prescription for cultural improvement is simply that it’s not possible to go back to the economically stable world of the 1950s that supported the roster of human virtues she wants to bring back online. It may be so, alas, but that still doesn’t obviate the basic value of behavioral norms. And deep down in their dark Gnostic hearts, the Social Justice Commissariat must agree. Otherwise, why would they be promoting so strenuously the exemplary earnest behavior of the DACA “Dreamers.”

Amy Wax was hammered by her colleagues at the Penn Law School for daring to express these ideas. More than half of the law faculty signed an “open letter” of censorious opprobrium against her. They “categorically rejected” her arguments without offering any counter-arguments. The law school’s chapter of the Lawyer’s Guild is maneuvering to get her fired from her teaching duties. That’s how we roll now in Witch Hunt Nation. I think Amy Wax has the fortitude to get through this. But will the universities ever recover?”

'It's Just... Life"

"Bad things don't happen to people because they deserve for them to happen. It just doesn't work that way. It's just… life. And no matter who we are, we have to take the hand we're dealt, crappy though it may be, and try our very best to move forward anyway, to love anyway, to have hope anyway, to have faith that there's a purpose to the journey we're on."
- Mia Sheridan

The Economy: “Doom Index Issues ‘Extreme Warning’”

“Doom Index Issues ‘Extreme Warning’”
by Bill Bonner

"First, the news. Cryptocurrencies took a beating after Jamie Dimon - the CEO of JPMorgan Chase, a bank that makes billions from today’s fake-money system - called bitcoin a ‘fraud’. Bitcoin - the leading cryptocurrency by market value - is down to $3,143 at this writing. That’s about 36% lower than its all-time high of $4,911, set on 1 September of this year.

President Trump put another knife into Republicans. According to press reports, he agreed to not only give the ‘Dreamers’ refuge, but also to forget about building ‘The Wall’. And the US national debt rose over $20 trillion, thanks to last week’s debt ceiling suspension. Meanwhile…

Apparent ‘prosperity’: Our hypothesis is simple: Real money represents real resources. Phony money - such as credit created out of nothing by the Fed - is counterfeit; there’s nothing behind it. If you could create real prosperity by flooding the economy with fake money, Zimbabwe would be the richest country on Earth. It printed gazillions of Zimbabwean dollars to stimulate the economy. Then, when there was no one left with any real money…and nothing left to buy with it anyway…the Zimbabwe feds gave up. They brought in US dollars.

When criticized by foreign economists for his role in this disaster, Gideon Gono, the governor of Zimbabwe’s central bank, had a good answer: ‘Hey, I didn’t do anything you’re not doing.’ He was right. But what Gono did quick, Janet Yellen, Mario Draghi, et al. are now doing in slo-mo.

Any boom - fast or slow, big or little - financed with fake money must eventually turn into a bust. And every dollar of apparent ‘prosperity’ - wrought by the counterfeit money - must go back whence it came. Classical economists in the 18th and 19th centuries showed why this was so. The demonstration tends to be longer and more tedious than we can stomach here. Instead, we resort to an intuitive proof. You pretend to be rich; a Russian model marries you. Then she discovers you are penniless; how is that likely to work out?

2008 redux: This year, total household debt in the US rose to $12.7 trillion - surpassing its 2008 peak. That’s the amount of stuff consumed, credit cards maxed out, and vacations enjoyed - on credit above and beyond savings.

You may say, ‘Well, so what? We’re able to carry the debt. We’re all right so far.’ Our grandfather, who lived through the Great Depression, used to joke about it. He said he was on the 11th floor of the First National Bank building in Baltimore, in 1931, when he saw someone through the window who had just jumped off the roof. ‘I’m all right so far,’ yelled the man.

And yes…we are all right so far. We can carry the debt. But look at what happens: Today’s wages and asset prices - which we depend on to shoulder that debt load - themselves depend on increasing debt. That is, as we saw yesterday, the typical consumer has to keep borrowing. If he stops, sales will go down… profits will go down… wages will go down… and it will be impossible to pay the interest on the current level of debt.

In other words, there is no such thing as a stable debt-fuelled expansion. Instead, it is boom, and then bust. There’s no standing still. You are either taking on more debt to keep the debt bubble inflated…or the whole shebang is losing air. And what makes today’s financial world so exciting is that there is so much air to lose - $13 trillion in America alone. So…what’s that hissing noise?

Doom Index update: We turn to the Bonner & Partners research department, led by Joe Withrow, for an update: ‘The Doom Index is still at a reading of 7 - our “extreme warning” level - as we enter the final month of the third quarter. Credit growth is just above negative…but less than 1%. Corporate bond downgrades continue to outweigh upgrades. Stock valuations press ever higher. Margin debt [money stock market investors borrow from their brokers using shares in their accounts as collateral] continues to grow.

‘But the ISM Manufacturing Index - a key gauge of the health of the manufacturing sector - continues to hold strong. And junk bonds refuse to crack. But remember, our backtests are based on quarterly data. Any major swings this month could push the Doom Index to a reading of 8 - signaling a return of the old and tattered Crash Alert flag. Until then, we remain extremely cautious…’

We used to run our Crash Alert flag up the pole on instinct alone. After so many years of watching the stock market, we thought we’d developed a sixth sense for when it was getting ready to collapse. And sometimes we were right! At the end of the 1990s, for example. And again in 2008. But we were wrong sometimes, too.

Since 2009, we’ve raised the flag several times, and still no crash! The poor black-and-blue standard was tattered by the wind, bleached by the sun, and drenched by the rain. Finally, we had pity on it, blew taps, and hauled it down, wrapping it with white gloves and putting it away until the day it comes out again. And now, our Doom Index is just a fraction of a point away. We’re ready, Joe. Tell us when to raise the flag.”

"The Equifax Hack Is The Most Disastrous Data Breach In History Because Now Hackers Have The Credit Information Of 143 Million Americans"

"The Equifax Hack Is The Most Disastrous Data Breach In History Because
 Now Hackers Have The Credit Information Of 143 Million Americans"
by Michael Snyder

"Talk about a nightmare. It is being reported that criminals were able to hack into Equifax and make off with the credit information of 143 million Americans. We are talking about names, Social Security numbers, dates of birth, home addresses and even driver’s license numbers. If this data breach was an earthquake, we would be talking about a magnitude-10.0 on the identity theft scale. We have never seen anything like this before, and to say that this will be “disastrous” for the credit industry would be a massive understatement.

What really disturbed me about this story is that this hack reportedly occurred between “mid-May and July of this year”: "Credit monitoring company Equifax has been hit by a high-tech heist that exposed the Social Security numbers and other sensitive information about 143 million Americans. Now the unwitting victims have to worry about the threat of having their identities stolen. The Atlanta-based company, one of three major U.S. credit bureaus, said Thursday that “criminals” exploited a U.S. website application to access files between mid-May and July of this year."

So why didn’t we learn about this until September? Somebody out there really needs to answer that question for us. And even though the “143 million” number is being thrown around constantly, according to USA Today we may never know the true number of victims: "When asked if there’s a way to quantify how many people have been harmed, John Ulzheimer, a credit expert and former employee at Equifax and credit score firm FICO, said: “There’s no way to know, and there may never be a way to know.”

Personally, I don’t see how Equifax can possibly survive after this. Their stock price is already crashing, and now it has come out that they had put a “music major” in charge of data security: "When Congress hauls in Equifax CEO Richard Smith to grill him, it can start by asking why he put someone with degrees in music in charge of the company’s data security. And then they might also ask him if anyone at the company has been involved in efforts to cover up Susan Mauldin’s lack of educational qualifications since the data breach became public."

It would be fascinating to hear Smith try to explain both of those extraordinary items. Also, we are now finding out that Equifax has not just had security problems here in the United States. According to the New York Post, data breaches have been taking place all over the globe: "Hackers had access to the names, dates of birth and e-mail addresses of nearly 400,000 people in the United Kingdom, said Equifax’s British subsidiary in a statement last week. In Canada, sensitive data belonging to 10,000 consumers may have been hacked in the breach, said a statement from the Canadian Automobile Association. In Argentina, one of the company’s portals was so easily accessible that it allowed quick exposure to the personal information of more than 14,000 people."

As noted above, the public didn’t learn about any of this until September. But once top Equifax officials learned what had happened, some of them started dumping their shares of Equifax very rapidly: "Three Equifax executives - not the ones who are departing - sold shares worth a combined $1.8 million just a few days after the company discovered the breach, according to documents filed with securities regulators. Equifax shares have lost a third of their value since it announced the breach."

Needless to say, the SEC is going to be looking into this very closely. As we move forward, there is a tremendous amount of concern as to how much this data breach will affect the U.S. economy. Only time will tell, but without a doubt it will have an impact.  For example, according to Bloomberg this data breach could potentially have an absolutely disastrous impact on store-branded credit cards: "Equifax Inc.’s massive data breach could make an already tough market outlook even more daunting for the firms behind Gap Inc.’s and Ann Taylor’s store-branded credit cards.

Those retailers’ banking partners, including Synchrony Financial and Alliance Data Systems Corp., could see fewer account originations as more consumers freeze their credit to avoid hack-related fraud. Consumers have to take extra steps - including calling the credit bureau, going online or paying fees - to lift a block and get a new card.

“If people are defaulting to credit freezes, then if you’re a Macy’s retailer trying to sell credit cards, you can’t get that done at the point of sale,” said Vincent Caintic, an analyst at Stephens Inc. “It could become a regular thing, these freezes. It does slow down the origination process and it’s probably going to increase acquisition costs.”

If you believe that your data may have been compromised in this breach, there are some things that you can do right away to help protect against identity theft. You can sign up for 24 hour a day credit monitoring, you can request fraud alerts, you can enable “two factor authentication” and beyond all of that you could go as far as to freeze your credit. But if everybody in America suddenly started freezing their credit, that would slow down economic activity dramatically. So needless to say authorities are hoping that does not happen.

In this case, Equifax needs to step up and do the right thing. They need to inform all of the victims (even if that means reaching out to 143 million different people), and they should automatically provide free credit monitoring for all of those that were affected. I seriously doubt that Equifax will take these measures, and I also seriously doubt that Equifax will be able to survive much longer.

When you bungle something as badly as Equifax has done, it is nearly impossible to restore faith in an organization. The credit information of 143 million Americans is now in the hands of criminals, and the potential damage that could be done is absolutely off the charts.”