Monthly Archives: December 2017

Dec 19 2017

McCabe Today, Ohr Tomorrow, And Deep State Predictably Runs Out Rooster Head For Chaff and Countermeasures…


Re-Posted from The Conservative Tree House on December 19, 2017 by

Asst. FBI Director Andrew McCabe is testifying today behind closed doors to the House Intelligence Committee. Important to note how there have been no leaks; that’s the first indication of coordinated chaff and counter measures deployed by the UniParty enablers of the Deep State institutional government.

Bruce Ohr is scheduled tomorrow; again behind closed doors, this time in the Senate Intelligence Committee setting. Again, dueling intelligence hearings -between House and Senate- (on the same witnesses), indicates the UniParty apparatus has deployed Chaff and Countermeasures and is protecting the administrative state.

Promoting, well, actually the appropriate word is ‘deploying‘, the leveraged and controlled head of the House Oversight/Reform Committee is the tri-fecta in seeing the countermeasures deployed. [Prior: Issa, Chaffetz, now Roosterhead] The Chairman or Chairwoman of the House Oversight Committee is given the responsibility to deflect. In payment for services toward the cause of the UniParty the Chairman gets indulgences.

The oversight “Gang of Eight” appear to have taken over the process to ensure controls are in place. If we had not been watching this exact process play out for the past 8 years, we might not recognize the pattern. Alas, with Fast and Furious, IRS Targeting, Benghazi and more examples of UniParty wagon-circling, we would be naive not to notice the identical replay. The Hezbollah side-show is part of the ‘shiny thing’.

Congressional oversight over FBI, DOJ, CIA and NSA malfeasance has been usurped by the political ideology within the Gang of Eight construct. If a single member breaks ranks they come under fire from the remaining seven and the leadership of both wings of the UniParty. (See: Devin Nunes for the most recent reference)

It is well beyond infuriating.

FUBAR.

Here’s Roosterhead:

The only way we can defeat this DC strategy is to demand open hearings. Period. Why do government officials get to hide behind closed doors when they are being questioned about their official duties as a government official?

If the officials don’t get put in front of cameras PUBLICLY the entire FBI/DOJ scheme will disappear into the ether.

It’s not conspiracy to point out the pattern – any more than it is conspiracy to notice the timing of the Mississippi Civil Rights Museum opening to occur the day before the Alabama Senate election.

Did you really think those thousands of civil rights groups just left Mississippi the day after the opening without sticking around to execute the Alabama operation?

We need a smarter electorate.

It’s not funny how the Haley Barbour/Mitch McConnell and their UniParty schemes always seem to be overlooked by our Right-side “conservative” allies in the media.

I digress.

…Where’s Bill Priestap?

Here’s the way the entire construct looks in simple outline.

Career officials, managers and staff within the DOJ and FBI wanted to help ensure Hillary Clinton won the 2016 election. Those people were ideologically aligned with President Obama, and held the goal of maintaining progressive advances as part of their motive.

A “small group” was formed within the DOJ and FBI to facilitate this goal. The first goal was to remove Clinton from the burden of the FBI email investigation.

Once that goal was achieved, they moved on to Clinton’s 2016 challenger. By the time the 2016 GOP convention drew near, everyone accepted that challenger would be Donald Trump.

As such the FBI “small group” began monitoring candidate Donald Trump in June/July 2016 as part of a plan toward the benefit of candidate Hillary Clinton.

However, the FBI and DOJ officials also needed an actual basis, a legal justification for their behavior and the time they were spending. The plan to justify that behavior was to create an official counterintelligence operation.

To get the counterintelligence operation going, they needed a reasonable basis for creating one. That basis was the formative seeds of claims of Russian connections to the Trump campaign.

To establish the basis the Russian elements needed for the operation; the DNC and Clinton campaign paid Fusion GPS to contract Christopher Steele to write a dossier that would form the legal grounding for the counterintelligence operation.

Fusion GPS hired DOJ Deputy Attorney Bruce Ohr’s wife, Nellie Ohr, who was well versed in counterintelligence operations, CIA operations, and using tradecraft to create illusions.

Nellie Ohr worked with retired British MI6 Agent Christopher Steele to manufacture the Steele Dossier. The dossier would take innocuous connections between Trump and Russian people, enhance them, fabricate some nefarious appearance, and then be turned over to Bruce Ohr’s counterintelligence buddy in the FBI Peter Strzok.

In essence, the Clinton’s created the Russian “angle” out of thin air; and the FBI and DOJ used that creation as the legal underpinning for the counterintelligence operation.

The cointel op was always just a ruse for wiretapping, surveillance and monitoring of Donald Trump campaign officials.

The FBI (Strzok) and DOJ (Ohr) dressed up the Steele Dossier to apply for a FISA warrant (FBI Attorney Lisa Page). The surveillance was happening with or without the FISA approval; but the FISA warrant would make the surveillance legal.

The initial application to the FISA Court was so sketchy (June/July 2016) is was actually denied. Denials rarely happen. One-in-a-thousand.

The Steele Dossier was dressed up some more. More stuff added, thanks to Christopher Steele and Nellie Ohr, to the second FISA application in Sept./October. That FISA application again submitted by Bruce Ohr, Peter Strzok, and Lisa Page. That warrant was approved.

If Hillary was elected, the entire counterintelligence operation just disappears into the ether. No-one would ever know about it.

But Hillary didn’t win.

Trump did.

Subsequently, the entire Trump Counterintelligence Operation was likely to be exposed. So the team behind the CoIntel scheme, again “the small group”, had to make up the “Russian Interference in The Election” narrative, a larger narrative, to cover their tracks.

The manufactured basis for the FISA warrant, ‘Muh Russia’ now needed to become real; or at least have the appearance of being real or justified.

That’s why the goofy “Joint Analysis Report on Russian Interference” was created. Brennan (CIA), Clapper (ODNI), and Comey (FBI), and to a much lesser extent the outsider Mike Rogers (NSA). This became the “17 intelligence agencies” blah.. blah… blah.

It was never 17 intel agencies. It was four. Only three pushed it. Mike Rogers said he had low/moderate confidence in the underlying intelligence within the report. The report was created as evidence to enhance the cover. Nothing more.

[My hunch is if you put the Steele Dossier together with the Joint Analysis Report, you will find 90% of the FISA application documentation.]

Additionally, the entire crew, from the Obama Administration and current career people within the DOJ, FBI, etc., who understood the larger scheme, needed ongoing people to continue ensuring the story was maintained.

That drove the need for a Special Counsel investigation. Mueller’s investigation was really just another way the players within the original scheme could keep a lid on the events in 2016.

That’s why many of the FBI/DOJ “small group”, the crew who cleared Hillary in the email investigation, were also assigned to the Mueller investigation. Controls were needed.

Inside Mueller’s crew, the “small group” essentially works to watch over what information the Trump officials or congress could possibly be discovering…. under the auspices of investigating ‘Muh Russia’ etc. If the “small group” comes across a risky trail being followed, they work to impede, block, delay or deflect anyone from that trail.

That’s the ‘high-level’ summary of the way things look from a researched perspective.

There’s one guy at the heart of this operation who can blow the lid off EVERYTHING.

His name is Bill Priestap.

Priestap’s position in 2016 was Director of Counterintelligence for the FBI.

Start asking about him.

The BIG UGLY

.

RESOURCES:

IG Stimulated Releases of Information:

♦Release #1 was the FBI Agent Strzok and Attorney Lisa Page story; and the repercussions from discovering their politically motivated bias in the 2015/2016 Clinton email investigation and 2016/2017 Russian Election investigation.

♦Release #2 outlined the depth of FBI Agent Strzok and FBI Attorney Page’s specific history in the 2016 investigation into Hillary Clinton to include the changing of the wording [“grossly negligent” to “extremely careless”] of the probe outcome delivered by FBI Director James Comey.

♦Release #3 was the information about DOJ Deputy Bruce Ohr being in contact with Fusion GPS at the same time as the FISA application was submitted and granted by the FISA court; which authorized surveillance and wiretapping of candidate Donald Trump; that release also attached Bruce Ohr and Agent Strzok directly to the Steele Dossier.

♦Release #4 was information that Deputy Bruce Ohr’s wife, Nellie Ohr, was an actual contract employee of Fusion GPS, and was hired by F-GPS specifically to work on opposition research against candidate Donald Trump. Both Bruce Ohr and Nellie Ohr are attached to the origin of the Christopher Steele Russian Dossier.

♦Release #5 was the specific communication between FBI Agent Strzok and FBI Attorney Page. The 10,000 text messages that included evidence of them both meeting with Asst. FBI Director Andrew McCabe to discuss the “insurance policy” against candidate Donald Trump in August of 2016.

Dec 19 2017

Freedom of Religion under Attack?


Armstrong Economics Blog/Religion

Re-Posted Dec 19, 2017 by Martin Armstrong

 

The attack upon religion in Australia is not what one would call a direct assault. It is also not unique to just Australia. This is simply the way prosecutors expand the envelope of power. They look at a single issue and seek to address that issue alone. They rarely look at the implications beyond their immediate objective.

Take FACTA in the USA. The objective is to catch people avoiding taxes by putting their profits offshore. They begin with that assumption and ignore the fact that NOT everyone doing business offshore is to hide taxes. They then obstruct businesses from expanding globally. In my own case, despite the fact that we do business around the globe, because I am an American, I cannot open an account anywhere outside the USA because nobody wants to deal with the FACTA reporting back to the USA. My only solution is to go public since an American citizen can no longer own and operate a multinational business privately. Here we have a law designed to get tax evaders, but it blocks the legitimate business from operating. The only exception is the multinational corporation.

This is the entire problem with regulation. In the case of Australia, they may have a noble goal and demand that religion should abolish celibacy and report child abuse crimes confessed to priests to be able to punish people. But such noble goals end up altering the entire structure of a faith. Once you make one exception, you open the door for all crimes.

The same thing with the Muslim secs that demand women wear the full burka. Yes, on the one hand, anyone could put on a burka and hide from the public. So how do you deal with this? The Australian Senator Pauline Hanson entered the Senate in a burka to demonstrate the point. You can outlaw a burka and effectively tell them to leave your country or go to jail. Is that what you tell Christians if they do not report specific crimes to the State? Once you take that first step for one specific crime, you have taken it for all crimes. There is NEVER a line in the sand that remains uncrossed.

This is a very complex and touchy issue. How do we address religion that clashes with the State?

Dec 19 2017

The World as it Turns in 2018


Armstrong Economics Blog/Reports and DVDs

Re-Posted Dec 19, 2017 by Martin Armstrong

QUESTION: Marty; Will you put out a report on what to expect in 2018 as you did in 2017?

Thanks for all you do. It is amazing you do not spam us with emails or try to tell us to hand over our savings to you. Your WEC is the only event I have ever attended where there was no solicitation. Thank you so much. When you said we are all in this together and that’s why you do this, I have to tell you, you really brought tears to many eyes.

Keep up the good work

PJ

ANSWER: Yes, of course, I will put out the 2018 report as soon as 2017 closes. We are all in this together. Hopefully, when the crash and burn comes, the more of us that stand up and demand change in the right direction will hopefully save the day. If not, I fear for my own posterity. They will never know the freedom I grew up in and the politicians grab more and more power to keep control.

As I warned, 2018 is the start of a brand-new trend of volatility. So this report will be very important. Probably more so than usual

Dec 19 2017

Did US Interfere in the Russian Elections in 1999?


Armstrong Economics Blog/Russia

Re-Posted Dec 19, 2017 by Martin Armstrong

COMMENT: Mr. Armstrong, It appears obvious why your film the Forecaster was banned in the USA by Netflix and others. Besides showing the corruption in the American Justice system by Judge Castel, Owen, and Kenan, and the corruption of protecting than bankers, the film exposes the plain fact that the United States interfered in the Russian elections back in 1999. They were the very reason Putin got into power.

No wonder nobody will address this issue. The front-page story in the Washington Post Friday that claimed America’s security is at risk because President Trump refuses to accept findings of U.S. intelligence agencies that Russia interfered in our 2016 presidential election is shocking. Why won’t the press ever report your story? They are too busy trying to overthrow Trump.

KD

REPLY: If the Forecaster appeared on American TV as it has in Canada, Europe, and Asia, then the press would have to face the fact that the Russian elections were the target to try to take over that country forcing Yeltsin to step down. They steered the $7 billion wire through Bank of New York to blackmail Yeltsin to prevent him from running for election in Russia in 2000.

The question has always been was it simply the bankers trying to take over Russia, or was the US government also involved? The bankers at Bank of New York pleaded guilty and got 6 months house arrest with of course no jail time.

The Court Transcript in the Bank of New York case reads:

“Ultimately, as alleged in the information, a total of more than $7 billion of funds was deposited in and transmitted through the Benex, BECS and Lowland accounts at the Bank of 16 New York.”

Lucy Edwards plea transcript id/pg 34 of 84

Dec 19 2017

Government Power & the Inversion Delusion


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Dec 19, 2017 by Martin Armstrong

COMMENT: The Trump Tax Cut,…
Having read your blog now for a couple years, it seems that the problem is squarely upon “why” we have or need Government. To that end, it all hinges on the relationship of Person to Government. What we have now is: People are subservient to Government. There will be no solution to the human condition until the opposite is true: Government must always be subservient to the People. Bad Government leads to crash and burn.

This inversion of priorities is readily seen in the entire tax “reform” effort. It is all about maintaining Government revenue streams. Slavery of the People is acceptable. Until the enslavement of man is terminated, there is no change in the trajectory of civilization. If we start from a different premise, say No Person Can be Obligated to pay more than 10% of income in taxes (of any form: Federal, State, Local, etc.), only then will the control freaks be tamed. A look at history reveals that mentally ill people gravitate to power. It indicates a soulless existence.

Sadly, foolish people have been allowed to manipulate the judicial leg of Government, to up-end the whole point of a US Constitution:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

There is a reason “Posterity” is capitalized, and “ourselves” is but a lowly pronoun.

REPLY: You are absolutely correct. Thomas Paine recognized this inversion process and opens his Common Sense with it. He explained that government believes it is the country and not the people. Once that takes place you see the results. They put Martha Stewart in prison for lying to an FBI agent. Yet government can lie to us all the time and that presents no crime because they view us and the ruled, not the ruler.

Government always begins as a benevolent entity to further the common good. The problem emerges with a Republican form of government. Once you politically elect a “representative” of the people, the system is doomed. A true Democracy, as in Athens, took the form that the head of the household was the person who voted “representing” everyone in that household from the wife and children to the servants and slaves. They distorted this to say women had no right to vote. They really did not need such a right BEFORE socialism since there was nothing the state could do to them. Once we introduced income taxes and socialism, then every person was taxed, not just the household, and regulation began to control the behavior of every individual. Everything was inverted.

The only type of government I would like to see is a return to Democracy where we call can vote from home on a bill and each bill must stand alone with no covert attachments. Income Tax is no longer necessary since the government never pays off the debt anyhow. Rome lasted for 500 years with minimal inflation just creating new money to pay their own bills.

Dec 18 2017

Super-MAGA-nomics: American Economic Optimism Soars, Main Street is Back…


Re-Posted from The Conservative Tree House on December 18, 2017 by

Last Friday the New York Federal Reserve raised its estimate of U.S. GDP growth for the fourth quarter of 2017 to four percent.  That’s officially the unattainable, impossible magic-wand-level of GDP growth all the ‘experts’ said was impossible.  Why did they make that ‘unexpected upward’ re-re-re-revision?  Because the underlying economic activity represents facts that cannot be denied. The economy is on-the-move.

…”Hold on to your economic britches peeps – throw dem ju-ju bones out the windows – grab hold of the young-un’s, squeeze em tight and introduce them to ‘capitalism unchained’. We are in uncharted MAGA territory now. Q4 will be well beyond 3.2% 3.8%  3.9% 4.0%… Well Beyond.”…

The actual economic activity noted in virtually every region in the U.S. is so strong the polling measures of economic optimism are reaching new records.  Today, as an example, for the first time in their 11 year CNBC All-American Economic Survey  more than half of all Americans responding to the questions rate the economy as good or excellent.  Additionally, nearly 41 percent of Americans say they expect the economy to be better a year from now. These represent the most optimistic results CNBC has ever recorded.

We would be remiss if we didn’t note a specific choice of words used to describe the economic conditions being measured:

…”We’re not measuring a marginal change in the economy, we’re measuring a different economy.”…

Sound familiar?

It should….

…And it’s and entirely accurate way to describe what is happening.  When we reviewed the President Trump 2015 strategic economic plan, that included trade shifts and Main Street policy, we called it a “new dimension in American economics“.

For 30+ years U.S. economic political policy has been driven by Wall Street interests. STOP. Main Street, the middle-class and the American worker have suffered. STOP. The successful election of Donald Trump, and the execution of his “main street” economic policy agenda, has sledgehammered the prior economic machine into a full seizure an halt. FULL STOP.

It was Albert Einstein who aptly stated:

“The significant problems we have cannot be solved at the same level of thinking with which we created them.”

The same basic principle applies to those who are trying to understand and evaluate current economic activity yet failing to disengage themselves from their historic economic frames of reference.

Minds framed around thirty years of financial political policy, intended to influence the U.S. economy and created by vested interests who were building out the legislative priorities based on Wall Streets’ best interests, will struggle to understand the new landscape which is entirely formulated to benefit Main Street.

The two economic engines are entirely divergent and detached. Time, along with focus only on Wall Street interests, has pushed those two economic engines further apart. The same policies which worked in the immediate past will not work in the immediate future.

The two economic engines are now in reverse level of importance.  Trump economics focuses on Main Street’s economic engine.  The Fed is stuck focusing on the economy through the prism of Wall Street’s economic engine.

We are now in the economic space between both engines. The traditional cause and effect (Fed) is now uncoupled.  The administrators of the economy are perplexed; this is unfamiliar terrain.

• Wage rates will be driven up by inflation in ‘non-measured’ high-turn, domestic  consumable goods: food, fuel, energy.  The Fed does not measure this segment for inflation.

• Inflation, from the perspective of the Fed will appear artificially low because prices on the measured segment will be static: non-domestic durable goods, housing etc.  Durable good prices will remain static, and in the short to mid-term fall surreptitiously, seemingly unattached to the larger expanding economy.

Until the two economies gain parity -sometime late in 2018- any fed activity, taken as a consequence to their familiar traditional measurements (interest rates etc.), will have minimal to negligible impact on Main Street. (March 2017 Discussion)

Dec 18 2017

Release of National Security Strategy – Statement From Secretary Rex Tillerson…


Re-Posted from The Conservative Tree House on December 18, 2017 by

From the State Department:

“The United States faces a 21st century global environment that presents unconventional threats from non-state actors, as well as challenges to our economic and national security from traditional state actors. Whether the threats are rogue nations seeking nuclear weapons, terrorists plotting to attack our homeland, or malicious cyber actors seeking to damage and destabilize our critical systems and infrastructure, we must remain vigilant against those who would do harm to our people and our way of life.”

“President Trump’s new National Security Strategy brings to bear all elements of American power to protect our people, generate new economic opportunities, and advance our interests and democratic principles. The State Department will work closely with other federal agencies and our allies and partners around the world to implement this strategy. ”

~ Secretary of State Rex Tillerson

From the White House:

The publication of the National Security Strategy (NSS) is a milestone for any presidency. A statutorily mandated document, the NSS explains to the American people, U.S. allies and partners, and federal agencies how the President intends to put his national security vision into practice on behalf of fellow citizens.

First and foremost, President Donald J. Trump’s NSS is a reflection of his belief that putting America first is the duty of our government and the foundation for effective U.S. leadership in the world. It builds on the 11 months of Presidential action thus far to renew confidence in America both at home and abroad.

Four vital, national interests—organized as the strategy’s four pillars—form the backbone of this commitment:

  1. Protect the homeland, the American people, and the American way of life
  2. Promote American prosperity
  3. Preserve peace through strength
  4. Advance American influence

This NSS and its four themes are guided by a return to principled realism.

The strategy is realist because it is clear-eyed about global competition: It acknowledges the central role of power in world affairs, affirms that sovereign states are the best hope for a peaceful world, and clearly defines our national interests. It is principled because it is grounded in the knowledge that promoting American values is key to spreading peace and prosperity around the globe.

President Trump’s ultimate goal is to leave our children and grandchildren a Nation that is stronger, better, freer, prouder, and greater than ever before.

♦Read the Summary of the President Trump National Security Policy HERE.

♦The Full NSS Report is available for download HERE.

Dec 18 2017

FBI Damage Control and Justification Part II – CoIntel Agent Peter Strzok’s Turn…


Re-Posted from The Conservative Tree House on December 18, 2017 by

The previous effort at justification and damage control over the FBI counterintelligence operation to spy on presidential candidate Donald Trump was likely courtesy of FBI Asst. Director of Counterintelligence E.W. “Bill” Priestap.

The latest effort at justification comes directly from anti-Trump FBI Counterintelligence Agent Peter Strzok; claiming the ‘insurance policy’ statement was to protect candidate Donald Trump, not to defend the republic against him.  :::insert eyeroll here:::

WASHINGTON DC – An FBI agent’s text message that referred to “an insurance policy” and has been cited as evidence of bias against President Trump reportedly alluded to the investigation into Russia’s election interference and any potential ties between Trump’s campaign and Moscow.

The Wall Street Journal, citing individuals familiar Peter Strzok’s message, said the agent did not mean to indicate that there was a plan to damage Trump. Strzok’s message, instead, was intended to mean that Trump could win the election, and therefore the probe “couldn’t afford to take a more measured approach,” the newspaper said.  (read more)

…“I want to believe the path you threw out for consideration in Andy’s office—that there’s no way he gets elected—but I’m afraid we can’t take that risk. It’s like an insurance policy in the unlikely event you die before you’re 40″…

The rush to justify the actions of the 2016 Counterintelligence Operation against candidate Donald Trump is transparently motivated by congress beginning to question each of the participants.

The demoted DOJ Deputy Attorney Bruce Ohr is being questioned today, and FBI Assistant Director Andrew “Andy” McCabe is scheduled for questioning tomorrow.

Notice how the demotion of Ohr doesn’t align with the justification provided by Strzok. If there was no issue of malicious ‘intent’ against Trump, then why was Bruce Ohr -a central figure in the overall plan- disciplined for meeting with leadership of Fusion GPS Glenn Simpson before and after the election; only AFTER those connections were revealed to the public.

 

The BIG UGLY

.

RESOURCES:

IG Stimulated Releases of Information:

♦Release #1 was the FBI Agent Strzok and Attorney Lisa Page story; and the repercussions from discovering their politically motivated bias in the 2015/2016 Clinton email investigation and 2016/2017 Russian Election investigation.

♦Release #2 outlined the depth of FBI Agent Strzok and FBI Attorney Page’s specific history in the 2016 investigation into Hillary Clinton to include the changing of the wording [“grossly negligent” to “extremely careless”] of the probe outcome delivered by FBI Director James Comey.

♦Release #3 was the information about DOJ Deputy Bruce Ohr being in contact with Fusion GPS at the same time as the FISA application was submitted and granted by the FISA court; which authorized surveillance and wiretapping of candidate Donald Trump; that release also attached Bruce Ohr and Agent Strzok directly to the Steele Dossier.

♦Release #4 was information that Deputy Bruce Ohr’s wife, Nellie Ohr, was an actual contract employee of Fusion GPS, and was hired by F-GPS specifically to work on opposition research against candidate Donald Trump. Both Bruce Ohr and Nellie Ohr are attached to the origin of the Christopher Steele Russian Dossier.

♦Release #5 was the specific communication between FBI Agent Strzok and FBI Attorney Page. The 10,000 text messages that included evidence of them both meeting with Asst. FBI Director Andrew McCabe to discuss the “insurance policy” against candidate Donald Trump in August of 2016.

Dec 18 2017

President Trump National Security Strategy Speech – 2:00pm Livestream…


Re-Posted from The Conservative Tree House on December 18, 2017 by

Today, President Donald Trump is delivering a speech outlining the administrations’ larger national security strategy. The remarks are much anticipated as President Trump is expected to give the general electorate their first understanding of the Trump Doctrine: using economic leverage to achieve national security objectives.

CTH readers have spent the past year discussing examples of how President Trump uses economic leverage as the core element of his geopolitical strategy. However, it is not discussed, nor has it been accepted/recognized, by MSM or the broader electorate.

The speech is anticipated to begin at 2:00pm EST:

UPDATE: Video Added

WH Livestream Link – GST Livestream Link – Alternate Livestream Link

Dec 18 2017

Trump Tax Plan to Allow Small Business to Expand


Armstrong Economics Blog/Technology

Re-Posted Dec 18, 2017 by Martin Armstrong

QUESTION: Hello. You mentioned that the tax cut will allow many companies to expand and hire more staff. At a WSJ forum, Gary Cohen asked a group of CEO’s if they would expand or hire more workers with the corporate tax cut and less than a dozen raised their hands. Some have commented that the savings will be used for stock buybacks and bigger bonuses instead. Which do you think will happen?

Thank you for your blog, it is very helpful.

JS

ANSWER: The businesses that Cohen put that question to were big public business. The big public businesses only employ about 38% of the private sector workforce while small businesses employ 53% of the workforce. Indeed, over 99% of employing organizations are small businesses and more than 95% of these businesses have fewer than 10 employees.

I have probably advised more of the biggest corporations in the world than anyone. The bigger the business grows, the more it becomes like government. The boards are taken over by lawyers, accountants, and political tokens. The original entrepreneurs are usually expelled from boards because they are far too innovative than corporate America.

I had a front-row seat in Radio Corporation of America, where I began my career in computer engineering (software & hardware). Most people are unaware that RCA was a leader in computers. The board of directors thought the computer would be like the radio, which made the company. Everyone during the Great Depression wanted a radio to listen to FDR’s Fireside Chats. Then, RCA had all the government contracts for World War II.

By the 1960s, RCA had the main-frames tied up. They had installed their machines around the world in government installations. They wanted me to go to the most remote outpost and the tour of duty was 1-year and one-day. Thule was top secret back then. The location was the frigid northwestern coast of Greenland and was the U.S. military’s most isolated base. This was the home to one of the Pentagon’s primary tools for keeping an eye out for intercontinental ballistic missile launches from Russia. I turned down the post and that ended my career in computers at RCA.

RCA sold its computer division to IBM and Univac. They kept the servicing contracts of these big installations. However, they thought the computer would decline in price like the radio into crystal sets so they believed they were being smart and sold what they thought was the peak. RCA is now just a subsidiary and no longer a leader in the computer sector. Oh, how the mighty fall.

Why do big companies buy small start-ups? Because the bigger the company becomes, the less innovation they possess. They have to go out and buy start-up to expand. All expansion of technology comes from the bottom moving up. It does not come in the other direction.

The big companies will bring back their cash and some will take-over small companies. Others will use the cash to buy back their stock. It is also like funds management. Give me $100 million and it is easy to produce 50%+ returns annually. Give me $10 billion, the sheer size cannot be traded efficiently as a small amount of money and performance will collapse to a normal level and sometimes 5-8%.

Small companies do the bulk of the hiring, while the big companies contract and impose all sorts of restrictions. The economic growth comes predominantly from small business – not big corporates. So the response Cohen got is absolutely normal. The big contract and the small are the entrepreneurs.