Tag Archives: BREXIT

Mar 26 2017

Your Pension Will Be At The Center Of America’s Next Financial Crisis


Tyler Durden's picture
by Tyler Durden
Re-Posted From ZERO HEDGE Mar 26, 2017 5:20 PM

Authored by Jeff Reeves via The Hill

I’m not a fan of the “greed is good” mentality of Wall Street investment firms. But the next financial crisis that rocks America won’t be driven by bankers behaving badly. It will in fact be driven by pension funds that cannot pay out what they promised to retirees. According to one pension advocacy organization, nearly 1 million working and retired Americans are covered by pension plans at the risk of collapse.

The looming pension crisis is not limited by geography or economic focus. These including former public employees, such as members of South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — and is a staggering $24.1 billion in the red. These include former blue collar workers such as roughly 100,000 coal miners who face serious cuts in pension payments and health coverage thanks to a nearly $6 billion shortfall in the plan for the United Mine Workers of America. And when the bill comes due, we will all be in very big trouble.

It’s bad enough to consider the philosophical fallout here, with reneging on the promise of a pension and thus causing even more distrust of bankers and retirement planners. But I’m speaking about a cold, numbers-based perspective that causes a drag on many parts of the American economy. Consider the following.

Pensioners have no flexibility

According to a Bureau of Labor Statistics report from 2015, the average household income of someone older than age 75 is $34,097 and their average expenses exceed that slightly, at $34,382. It is not an exaggeration, then, to say that even a modest reduction in retirement income makes the typical budget of a 75-year-old unsustainable — even when the average budget is far from luxurious at current levels. This inflexibility is a hard financial reality of someone who is no longer able to work and is reliant on means other than labor to make ends meet.

Social Security is in a tight spot

So who will step up to support these former pensioners? Perhaps the government, via Social Security, except that program itself is in crisis and will see its trust fund go to zero just 17 years from now, in 2034, based on the current structure of the program. If millions of pensions go bust and retirees have no other savings to fall back on, it will be nigh impossible to cut benefits or reduce the drag on this program. But won’t a pension collapse mean we desperately need Social Security, even in an imperfect form, well beyond 2034?

Pensions

The guaranty is no solution

There is an organization, the Pension Benefit Guaranty Corporation (PBGC), which is meant to insure pensions against failure. However, it was created in 1974 as part of a host of financial reforms and is far from a perfect solution, primarily because it is funded by premiums from defined-benefit plan sponsors and assets seized from former plan sponsors that have entered bankruptcy.

What happens when a handful of troubled pension funds turns into dozens or hundreds? Remember, the PBGC guarantees a certain amount that is decidedly lower than your full pension — as members of the Road Carriers 707 pension fund learned when the group “protected” their pensions by helping to pay benefits, which had been reduced from $1,313 per month to $570. That’s better than zero, but hardly encouraging.

This is not about helping Baby Boomers fund an annual cruise to the Caribbean. Older, low-income pensioners are not saving their money. Instead, they’re spending it on necessities such as food, housing, healthcare and transportation. That means every penny you reduce from their budget means a penny in spending that is removed from the U.S. economy.

Anyone who has taken Econ 101 knows about the “multiplier effect” where $1 in extra spending can produce a much larger amount of economic activity as that dollar circulates around businesses, consumers and banks … or in this case, how $1 less in spending causes a an equally powerful cascade of negative consequences.

By helping ward against a pension crisis, America will be protecting its economy for everyone — plain and simple. But that requires some tough decisions on all sides. For instance, the U.S. Treasury denied a cut to New York Teamsters’ pension plan that was proposed last year. But now the fund is on the brink of collapse, and its recipients are facing benefits that are in some cases one-third what they were 15 years ago.

Like Social Security, current workers can’t contribute enough to offset the big obligations owed to retirees. And as with the flagship entitlement program, it’s up to regulators and legislators to step in — even when it may not be easy — in order to keep the system from collapsing. Let’s hope they make both pension reform and Social Security reform a priority in the near futu

Mar 26 2017

This Is The Nightmare Scenario For The GOP: A $2 Trillion Funding “Hole”


Tyler Durden's picture
by Tyler Durden
Mar 26, 2017 3:49 PM

When one strips away the partisan rhetoric and posturing, the practical impact of Friday’s GOP failure to repeal Obamacare has a specific monetary impact: approximately $1 trillion.

Since the ObamaCare repeal bill would have eliminated most of the 2010 health law’s taxes, this would have lowered by a similar amount the revenue baseline for tax reform. Essentially, with the ObamaCare taxes gone, it would have been easier to pay for lowering tax rates. Now, if Republicans want to eliminate the ObamaCare taxes as part of tax reform and ensure the bill does not add to the deficit – which they need to do to assure Trump’s reform process continues under Reconciliation, avoiding the need for 60 votes in the Senate – they will have to raise almost $1 trillion in revenue.

In other words that – all else equal – is how much less tax cuts Trumps and the republicans will be able to pursue unless of course they somehow find a source of $1 trillion in tax revenue (or otherwise simply add to the budget deficit) to offset the Obamacare overhang.

Considering Paul Ryan’s statement on Friday, it appears that at least for the time being, Republicans would leave the ObamaCare taxes in place.  “That just means the ObamaCare taxes stay with ObamaCare,” he said. “We’re going to go fix the rest of the tax code.”

Ryan also pushed back on the idea that the setback on healthcare previews difficulties with other items on the legislative agenda  “I don’t think this is prologue to other future things, because members realize there are other parts of our agenda that people have even more agreement on what to achieve,” he said. “We have even more agreement on the need and the nature of tax reform, on funding the government, on rebuilding the military, on securing the border.”

While the failure to pass the healthcare bill makes tax reform harder, “it does not in any way make it impossible,” Ryan said. “We will proceed with tax reform, we will continue with tax reform.” Earlier in the week, Treasury Secretary Steven Mnuchin said that the administration has been working on tax reform for two months and plans to release a plan in the near future. House Ways and Means Committee Chairman Kevin Brady added in a statement that Republicans on his panel “are moving full speed ahead with President Trump on the first pro-growth tax reform in a generation.”

Still, quick action on legislation is unlikely; in fact while the market narrative changed on a dime last Friday, with traders now convincing themselves the delay of Obamacare means tax reform passes quicker, this is not the case. As Larry Lindsey, a former economic adviser for George W. Bush, told CNBC’s “Power Lunch” last Friday, one of the “silliest” things he’s heard from people is that the health-care proposal not passing will be good for Trump’s tax reform. “Absolutely not,” he added.

A replacement for Obamacare “was necessary for budgetary reasons, for tax reform, because it was a revenue gainer,” said Lindsey. Trump’s goals for economic growth should also be questioned now, he warned.

“They might move on to [tax reform] next, but when you have a president who can’t deliver his own caucus, then the president’s position will be weakened on all issues,” Lindsey said. “If you’re in Congress and you don’t like something, you now have an example of how you can ‘roll’ the president.”

* * *

But wait, there’s more.

While the GOP will be hard pressed to find $1 trilion in offsetting savings or revenues, their headaches could be doubled if the proposed border adjustment tax fails to pass next. As a reminder, BAT is expected to generate as much as $1.18 trillion in offsetting revenues; should BAT no be DOA, that’s another $1.2 trillion in potential government revenues that is gone.

According to James Pethokoukis of the American Enterprise Institute of Economic Policy, the fact that the Republicans failed to pass a health-care reform bill makes the odds that they will pass a border adjustment provision much smaller, and “the odds of getting a bigger stimulus plan will drop, too”, he told CNBC on Friday. Investors “won’t get to see cuts to a 15 to 20 percent tax rate” in corporate and marginal tax rates such as those Trump has proposed, Pethokoukis added. Instead, it will likely be closer to what Obama worked toward — something closer to a 30 percent tax rate, he said. It raised the specter of more discontent among Trump’s longtime supporters, considering he campaigned on that specific promise.

Echoing this sentiment, Jared Bernstein, a senior fellow from the Center on Budget and Policy Priorities, said in an interview that tax reform and the health-care proposal were “intimately connected for precise reasons. Trump once suggested achieving growth of 2 to 4 percent, but this might look more like 1 to 2 percent now because of budgetary constraints, he added. Now, the government has less money available to hit “high revenue targets,” Bernstein said.

Summarizing the above, as a result of Friday’s failure, the tax revenue “hole” Republicans have to fill now is at least $1 trillion bigger, and perhaps as large as $2.2 trillion.

* * *

But wait, there’s even more.

As the WSJ writes overnight, in theory rewriting the tax code could be easier than revamping the whole health-care industry. Republicans pride themselves on ideological unity in favor of lower tax rates. And the stakes appear lower for Americans — paperwork and money are far different than matters of life and death. “Tax reform is less visceral,” said Rep. David Schweikert (R., Ariz.) “I can pull up a calculator and say ‘it’s this or this’…it’s hard legislating to anecdotes and stories.”

But scratch deeper, and the GOP quest for a full overhaul of the tax code is fraught with squabbles, procedural hurdles and difficult trade-offs. The party’s failure on health care – after having seven years to prepare – shows how hard it is for Republicans to write complex legislation that attracts support from their moderate and conservative wings. “It’s just a reminder of how incredibly hard transformational legislation is,” said John Gimigliano, a former GOP congressional tax aide now at KPMG LLP.

As the WSJ adds, to succeed, Republicans need to bridge at least three big gaps.

  • First, they need to balance competing desires to cut tax rates sharply and to slow the rise of national debt. Republican leaders in Congress say they want a revenue-neutral plan – one that brings in about as much money as today’s tax system. Faster economic growth might help, but it doesn’t fully bridge the divide. To accomplish revenue neutrality while sharply lowering rates, they will attempt to whack popular tax breaks, such as business deductions of interest on debt and individual state and local tax deductions. They will meet resistance from groups that want to protect those breaks.
  • Second, they have to reconcile alternate visions of what they are setting out to accomplish and who will benefit. Mr. Trump has said his priority is middle-class tax cuts for individuals. “Not the top 1%,” said Mr. Mnuchin. House Speaker Paul Ryan (R., Wis.) and Ways and Means Chairman Kevin Brady (R., Texas) want an overhaul primarily focused on promoting economic growth, even if that means tax cuts that favor the very top of the income scale.
  • The plans they all campaigned on are tilted to the top, according to independent analyses. Third, the party is at odds over the Ryan-Brady plan for border adjustment – taxing imports and exempting exports. The Trump administration has been ambivalent and sometimes critical of the idea. Senate Republicans are outright cold to it. Messrs. Ryan and Brady say it’s crucial because it provides about $1 trillion to offset corporate-tax-rate cuts and it discourages companies from shifting profits abroad.

None of those divisions inside the GOP have been resolved yet, and dozens more are lurking, including debates over tax breaks for renewable energy, credits that aid low-income households, and the treatment of carried interest income for private-equity managers.

“The notion that tax is easier than health is not borne out by the facts, ” a Senate GOP aide told the WSJ. “Having discussed health care for seven years, Republicans were 75% in agreement on the policy. On tax, none of the foundational questions have been answered.”

In short, the market is about to be significantly – perhaps “tremendously” – disappointed once again, and quite soon.

Mar 26 2017

Obamacare Survives thanks to Corruption as Usual


Armstrong Economics Blog/Corruption

Re-Posted Mar 26, 2017 by Martin Armstrong

Obamacare

COMMENT: With all the talk of the failed healthcare bill, doesn’t people realize the medical and pharma are the biggest lobbyist to Washington? That’s why Ryan didn’t pass the bill.

N

REPLY: The media will never expose reality. I believe the only way to fix all this mess is to repeal Obamcare in its entirety. Mandate that all insurance must go back to where it was. I know mine would drop by 50%. Then anyone who cannot get coverage goes to Medicaid. Obama just tried to convert healthcare to a TAX which is why the Supreme Court sustained it. It was a tax plain and simple. Any attempt to keep Obamacare and tinker with it will fail. It is 7 feet tall. Here is the original Social Security Act of 1935. (Social Security Act 1935)

Whenever a politician labels and act to pretend it is the greatest thing since sliced bread, you better look closer. The “Afforable Care Act” did not make health insurance affordable for anyone other than those who could not get it and belonged on government systems. The rest of us paid more, not less. Healthcare is a total mess and it has risen to such a high consumption level within the entire GDP, it reduces disposable income of the average household and that acts simply as an economic depressant.

We will simply have to  be pushed to the total point of collapse as healthcare keeps growing faster than anything else in the economy except government. U.S. health care spending grew 5.8% in 2015, reaching $3.2 trillion or $9,990 per person. The per capita income for the overall population in 2008 was $26,964. As a share of the nation’s Gross Domestic Product, health spending accounted for 17.8%. Healthcare is bankrupting the entire economy.

In FY 2017, total US government spending, federal, state, and local, is “guesstimated” to be $7.04 trillion. The annualy GDP is estimated at $18.855 trillion. Therefore the total cost of government is 37.3% of GDP. Adding healthcare, this means that non-productive forces have now reached 55.1% of the economy which produces NOTHING but simply consumes. When this crossed 60%, it appears we are in for the collapse of an empire in a true Byzantine manner.

Mar 26 2017

OPEC, Non-OPEC Oil Producers Recommend Extending Production Cuts By Six Months


Tyler Durden's picture
by Tyler Durden
Re-Posted From ZERO HEDGE Mar 26, 2017 8:05 AM

Having failed to “rebalance” the oil market in the first six months following the implementation of the Vienna production cut agreement, with crude inventories in the US hitting all time highs in the interim…

… OPEC and non-OPEC oil producers found themselves in the unpleasant position of scrambling for solutions at this weekend’s Kuwait meeting – in which Saudi Arabia was conspicuously missing – where just two things were discussed: deal compliance, which OPEC paradoxically claims is more than satisfactory despite the relentless climb in inventories, and whether to extend the production cuts by another six month.

And as the Kuwait meeting in which OPEC and rival N-OPEC producing countries met to review progress with their pact to cut supplies drew to a close, a joint committee of ministers from OPEC and non-OPEC oil producers recommended extending by six months the global deal to reduce oil output by 1.8 million barrels, a draft press release from their meeting on Sunday showed.

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The oil ministerial committee “expressed its satisfaction with the progress made toward full conformity with the voluntary production adjustments and encouraged all participating countries to press on toward 100 percent conformity,” said the draft, seen by Reuters.

The December accord, aimed at supporting the oil market, has lifted crude LCOc1 to more than $50 a barrel. But the price gain has encouraged U.S. shale oil producers, which are not part of the pact, to boost output.

In its statement, the committee said that “certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have led to a further increase in crude oil stocks. At the same time, the liquidation of positions by financial players in the market was also observed.”  In other words, the committee blamed everything, including “evil selling speculators” except non-compliance with the deal, of course as that would crush what little credibility OPEC had.

Oil inventories are high because of low U.S. demand and higher supply, and the market should re-balance in the second half of the year, OPEC Secretary-General Mohammad Barkindo told reporters in Kuwait. Inventories in countries in the Organisation for Economic Co-operation and Development are currently 282 million barrels higher than their five-year average, he said at the meeting on Sunday.

It also left on a positive note: “However, the end of the refinery maintenance season and noticeable slowdown in U.S. stock build as well as the reduction in floating storage will support the positive efforts undertaken to achieve stability in the market,” it said.

“Oddly”, there was no mention of US shale production, which has soared in recent months, happy to grab market share from OPEC which has allegedly cut production by nearly 2 million barrels daily, and whose output continues to ramp higher in line with the resurgence in US oil rigs.

Before the meeting, Iraqi Oil Minister Jabar Ali al-Luaibi told reporters there were some encouraging elements that suggested the oil market was improving, and that if all OPEC members agreed measures to help price stability, Iraq would support such steps. “Any decisions taken unanimously by members of OPEC … Iraq will be part of the decision and will not be deviating from this,” Luaibi said quoted by Reuters.

Iraq’s oil production is running at 4.312 million bpd this month, Luaibi said, adding that his country had cut its oil exports by 187,000 bpd so far and would reach 210,000 bpd in a few days. Compliance with the supply-cut deal was 94 percent in February among OPEC and non-OPEC oil producers combined, Russian Energy Minister Alexander Novak said.

Russia is committed to cuts of 300,000 bpd by the end of April, Novak said, adding that a deal extension could be discussed on Sunday. “For today, obviously, this is within the sphere of our questions,” Novak said and added that he expects global oil stockpiles to decrease in the second quarter of this year. “The dynamics are positive here, I believe,” Novak said, adding that inventories in the United States and other industrialized countries had risen by less than in the past.

OPEC’s compliance rate was 106% in February, and non-OPEC nations, including Russia, have reached compliance of 64 percent, Kuwait’s Almarzooq said Sunday. The combined compliance rate of both was 94 percent, he said.

Kuwaiti Oil Minister Essam al-Marzouq said the oil market may return to balance by the third quarter of this year if producers comply fully with their production targets.

“More has to be done. We need to see conformity across the board. We assured ourselves and the world that we would reach our adjustment to 100 percent conformity,” Marzouq said.

The biggest question, however, how OPEC plans to deal with the rising shale threat, which as Goldman noted last week has become the global oil price setter, was unanswered.

This is how Goldman explained the dramatic change in the global oil cost curve over the past three years:

Shale’s short time to market and ongoing productivity improvements have provided an efficient answer to the industry’s decade-long search for incremental hydrocarbon resources in technically challenging, high cost areas and has kicked off a competition amongst oil producing countries to offer attractive enough contracts and tax terms to attract incremental capital. This is instigating a structural deflationary change in the oil cost curve, as shown in Exhibit 2. This shift has driven low cost OPEC producers to respond by focusing on market share, ramping up production where possible, using their own domestic resources or incentivizing higher activity from the international oil companies through more attractive contract structures and tax regimes. In the rest of the world, projects and countries have to compete for capital, trying to drive costs down to become competitive through deflation, FX and potentially lower tax rates.

The implications of this curve shift are major, all of which are very adverse to the Saudis, who have been relegated from the post of long-term price setter to inventory manager, and thus the loss of leverage. Here are some further thoughts from Goldman:

  • OPEC role: from price setter to inventory manager In the New Oil Order, we believe OPEC’s role has structurally changed from long-term price setter to inventory manager. In the past, large-scale developments required seven years+ from FID to peak production, giving OPEC long-term control over oil prices. US shale oil currently offers large-scale development opportunities with 6-9 months to peak production. This short-cycle opportunity has structurally changed the cost dynamics, eliminating the need for high cost frontier developments and instigating a competition for capital amongst oil producing countries that is lowering and flattening the cost curve through improved contract terms and taxes.
  • OPEC’s November decision had unintended consequences: OPEC’s decision to cut production was rational and fit into the inventory management role. Inventory builds led to an extreme contango in the Brent forward curve, with 2-year fwd Brent trading at a US$5.5/bl (11%) premium to spot. As OPEC countries sell spot, but US E&Ps sell 30%+ of their production forward, this was giving the E&Ps a competitive advantage. Within one month of the OPEC announcement, the contango declined to US$1.1/bl (2%), achieving the cartel’s purpose. However, the unintended consequence was to underwrite shale activity through the credit market.
  • Stability and credit fuel overconfidence and strong activity: A period of stability (1% Brent Coefficient of Variation ytd vs. 6% 3-year average) has allowed E&Ps to hedge (35% of 2017 oil production vs. 21% in November) and access the credit market, with high yield reopen after a 10- month closure (largest issuance in 4Q16 since 3Q14). Successful cost repositioning and abundant funding are boosting a short-cycle revival, with c.85% of oil companies under our coverage increasing capex in 2017.

Finally, with Saudi Arabia absent, the Kuwait meeting was largely moot. Khalid Al-Falih, the Saudi energy minister said in a Bloomberg Television interview on March 17 that the deal will be maintained if oil stockpiles are still above their five-year average.

In summary: It’s too early to decide on an extension of the output cuts, and OPEC will take up the issue in May, Barkindo said at Sunday’s meeting, during which ministers will monitor compliance with the targeted reductions.

* * *

For those curious, here is the full blast of Bloomberg overnight headlines covering the Kuwait meeting

KUWAIT OIL MINISTER OPEC COMPLIANCE IN FEB BETTER THAN JAN
KUWAIT: WE ARE ASKING COUNTRIES TO INCREASE COMPLIANCE
KUWAIT: WE SHOULD SEE MARKET REBALANCE END OF YEAR
KUWAIT: WE SHOULD SEE OIL STOCKS DRAWDOWN IN 3Q
KUWAIT OIL MINISTER: INDUSTRY NEEDS TO ADDRESS CHALLENGES
KUWAIT: SAUDI ARABIA, ANGOLA EXCEEDED COMMITMENTS TO CUT OUTPUT
KUWAIT: OIL MARKET WILL BE IN BALANCE IN 3Q IF COMPLIANCE 100%
KUWAIT: OIL COMMITEE REPORTS HIGH LEVEL OF CONFORMITY
KUWAIT: OPEC IS STUDYING EXTENSION OF CUTS DEAL FOR SIX MONTHS
KUWAIT MINISTER: OPEC, NON-OPEC COMPLIANCE WITH CUTS IS AT 94%
KUWAIT: COMMITTEE CALLS FOR OPEC TO MAKE RECOMMENDATION ON CUTS

RUSSIA’S ENERGY MINISTER: MINISTERS DISCUSS EXTENDING CUTS DEAL
RUSSIA’S NOVAK: OPEC/NON OPEC COMPLIANCE 94% AS OF END OF FEB
RUSSIA’S NOVAK: OPEC, NON-OPEC DISCUSS EXTENDING OIL-CUTS DEAL
RUSSIA: OPEC, NON-OPEC COOPERATING AT `VERY HIGH LEVEL’

IRAQ TO SUPPORT EXTENDING OIL CUTS IF OTHERS IN OPEC AGREE
IRAQ PRODUCED 4.312M B/D OF OIL IN MARCH: MINISTER
IRAQ’S MARCH OIL EXPORTS IN AGREED RANGE: MINISTER
IRAQ CUT OIL OUTPUT BY 187M B/D UNDER OPEC DEAL: LUAIBI
IRAQ TO CUT 210K B/D OF OIL OUTPUT IN FEW DAYS: LUAIBI

OPEC CHIEF SEES MARKET REBALANCE IN SECOND HALF OF 2017
OPEC: PRODUCERS REACHED HIGH LEVEL OF COMPLIANCE WITH CUTS
OPEC HOPES FOR HIGHER LEVEL OF COMPLIANCE WITH OUTPUT CUTS
OPEC CHIEF: TOO EARLY TO DECIDE ON EXTENSION OF OIL CUTS DEAL
OPEC CHIEF: OIL MARKET OPTIMISM IMPROVED ON OUTPUT CUTS
OPEC: OIL STOCKS ARE HIGH ON LOW U.S. DEMAND, RISING SUPPLY
OPEC: OIL STOCKS TO DECREASE IN SECOND HALF OF THIS YEAR

OMAN OIL MINISTER SAYS MAKES SENSE TO EXTEND OUTPUT CUTS 6 MOS
OMAN SUPPORTS OIL OUTPUT CUTS UNTIL END OF YEAR: MINISTER

VENEZUELA OIL MIN: WE ARE READY TO BACK EXTENDING OUPTUT CUTS

OPEC, NON-OPEC COMMITTEE SAID TO RECOMMEND OIL-CUTS EXTENSION
BARKINDO: OPEC TO DECIDE ON EXTENSION OF OIL CUTS DEAL IN MAY

Mar 26 2017

The Media Has Always Been Biased?


Armstrong Economics Blog/Media

Re-Posted Mar 26, 2017 by Martin Armstrong

Livermore

COMMENT: Marty; I managed to get a copy of your Greatest Bull Market in History at an auction. You do know they bring $3,000+ I presume? But what stunned me in there is that you wrote how the Wall Street Journal falsely accused Jesse Livermore of trying to influence the presidential election by saying the stock market was going to rally. When it did do what he said, the press refused to quote him again because they were wrong.

They will not quote you yet you have been the only one who has called this bull market from the very bottom. It looks like mainstream media is doing to you what they did to Livermore. History does repeat.

REPLY: You may be right. But that is a good thing. It is better to keep the info in real hands rather than just plastered around for hype. Exclusive is better. The majority would never listen anyway.

Mar 26 2017

The Financial Crisis 1992-1993


Armstrong Economics Blog/BRITAIN

Re-Posted Mar 26, 2017 by Martin Armstrong

Major John

QUESTION: Marty, it is well known here in Britain that you advised Thatcher of course, but it was John Major you advised and even wrote what he said during the pound crisis and the Soros attack. Would you ever like to comment on that in public about what really happened during that crisis. The press will never report anything you say. There are those of us who would like to hear from the source.

Thank you for what you do.

PJ

British Pound Sept 1992 Soros

ANSWER: For those who do not know, Sir John Major was the Prime Minister of Britain 1990-1997. One of the biggest BS stories is how they blame or credit such events to one person. Each of these market “manipulations” or attacks, are typically characterized with one member of “the Club” taking the front position. In this case it was George Soros. He was given the personal face of that event that broke the pound. It was by no means just Soros. He did not get that trade correct out of thin air. Everyone in the trading community saw it coming. It was similar to the Greek crisis in 2010. Once one member is in trouble, traders look around ans see who is next.

PlazaAccord-1

The 1992/1993 collapse of the European Exchange Rate Mechanism (ERM) was a system introduced by the European Economic Community on March 13th, 1979, to which Thatcher was against. It was part of the European Monetary System (EMS), intended to reduce exchange rate variability and achieve monetary stability in Europe in the aftermath of the collapse of Bretton Woods in 1971. Only after the Plaza Accord in 1985, did the EMS prepare for Economic and Monetary Union of Europe which gave birth to the introduction of a single currency, the euro, which took place on January 1st, 1999. The collapse of Bretton Woods, the ERM, and the coming Euro all have the same flawed understanding of economics. Governments think they can by law or regulation nullify their own failures. All three systems could never survive under the socialistic/military establishment for the politicians do whatever they want to sustain power, not to manage the economy in any meaningful manner.

china-100-yuan

Clearly, the tension within the ERM began to build up from mid-July 1992, concentrating initially on the Italian lira, then on sterling and then on a variety of other currencies. However, what was also overlooked was the fact that July 1992 was also when the Russian Ruble began trading for the first time. Meanwhile, the Bank of China required foreign visitors to China to conduct transactions with Foreign Exchange Certificates that were issued by the Bank of China between 1979 and 1994. Effectively, this was a two-tier monetary system – domestic v international. Following the ERM Crisis, this two-tier system in China was abolished, and all transactions then took place in Renminbi. The entire global foreign exchange system was changing. The biggest mistake people make looking at the British pound crisis of 1992, has been to look at it through a myopic perspective of isolation.

The pressure on the Finnish Markka was so strong at that time it was forced to abandon its peg with the ECU. Italy raised its interest rates to try to support its currency, but still the lira weakened repeatedly. The Bundesbank did not cut its interest rates enough fearing inflation and speculation would continue, which put pressures on other states. It was on September 13th, 1992 when the Italian decision to devalue Italian Lira by 7% took place (other currencies revalue of 3.5%: Lira devalues 3.5%). The pressures on lira led traders to look around and saw that the British pound was also overvalued all relative to Germany.

Hence, the pound sterling became the next target just as did Portugal after Greece in 2010.  It was Black Wednesday, September 16th, 1992, when the British Conservative government of John Major was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM) after it was unable to keep the pound above its agreed lower limit in the ERM. Yes, I was being called during this crisis. The first call from Britain asked me what our model was forecasting. I warned that the pound had to be devalued and that the ERM was collapsing exactly as did Bretton Woods. I was told John Major could not devalue the pound for that was his campaign promise. I thought about the crisis and called back. I wrote down the words to say that he would allow the pound to float and seek its own level. This was slightly different from a devaluation which would have still been a fixed exchange rate peg. Allowing the pound to float would let the market make the decision, rather than the politicians. Therefore, Major did not violate his promise and did not officially devalue the pound – he let it float to seek its own level.

The day after the British crisis ended with effectively withdrawing from ERM, it in turn flipped the pressure back upon Italy. Thus, the following day, the 17th of September 1992, Italy also withdrew from ERM. Once again, attempts to politically fix currencies produced a total and utter failure as was the case with Bretton Woods and of course the more recent Swiss Peg collapse. We will see the same end result with the Euro.

Deutsche Mark Sept 1992-MThe Deutsche mark was sent to significant highs even against the dollar in September 1992. The foreign exchange markets remained disturbed for the rest of that year, with a renewed outbreak of speculative pressures leading to the abandonment of Sweden’s peg to the ECU, devaluation of both the Portuguese escudo and the Spanish peseta came in November 1992 and the abandonment of Norway’s ECU-peg in December 1992. By January 1993, Ireland witnessed economic pressure due to the sterling devaluation by the UK, and this then compelled Ireland to devalue by 10%. Germany finally reduced its interest rates in February, March and April of 1993, trying to ease the economic pressure within the currencies that had not yet been realigned. The entire crisis of 1992-1994 was a prelude to the ultimate crisis that would hit the euro for similar reasons and Germany’s fear of inflation that would impose austerity on the rest of Europe. It was Germany’s high interest rates in 1992/1993 that broke the back of the ERM.

Indeed, then France presented a problem for the politicians that made clear of their commitment to the ‘franc fort’ policy, that was keeping the franc at its existing parity. France also wanted lower interest rates to relieve the recession, and it appeared willing to challenge the German economic authorities publicly, who were concerned about inflation, so they kept interest rates high out of austerity. On June 18th, the French money market intervention rate was pushed below the German rates. This was received with skepticism in the markets. Consequently, speculative pressures within the ERM continued to build. This time, those pressures turned against the French franc during July 1993. The Banque de France was forced to raise its interest rate to prevent the franc from falling through its ERM lower band. However, the Bundesbank did not lower its discount rate, and massive sales of the French franc, Belgian franc, Danish krone, Spanish peseta and Portuguese escudo took place in response. Once again, Germany’s obsession with the Hyperinflation of the 1920s dictates their response. Today, we have seen the price of German austerity upon the entire economic condition of Europe. While the ERM broke, today there is a full federalized government in Brussels attempting to maintain austerity and the same philosophies that broke the ERM during the 1992/1993 Crisis.

At this point in time, the ERM was in total crisis within Europe. One would think they learned from Bretton Woods, but politicians are blinded by their self-interest, which always comes before that of the people or country. Massive intervention was necessary to keep these currencies just above their ERM floor. On the 2nd of August 1993, the EC monetary officials and finance ministers finally agreed that the ERM bands should be widened from 2.25% to 15% (except for the Dutch-German one). With the wider bands, the system would be less vulnerable to speculation.

At the core of all of this was German’s complete misunderstanding of the Hyperinflation and their attempt to impose austerity upon all of Europe, which is deflationary and anti-economic growth.

Thailand Share-Y 3-22-2017

The ERM Crisis of 1992/1993, made George Soros famous, yes, but it awakened international hedge fund traders to the currencies markets. Traders then turned to the peripheral markets – Russia next and then South East Asia, which saw its share market peak in January 1994 and bottom in September 1998 (56 months).

Russia Ruble-Y 3-22-2017It was on October 11th, 1994, when the ruble tumbled in the Moscow interbank market by over 20% against the U.S. dollar. “Black Tuesday” became the first currency crisis in post-communist Russia also caused by politicians. From July 1992, when the ruble first could be legally exchanged for United States dollars, to October 1995, the rate of exchange between the ruble and the dollar declined from 144 rubles per US$1 to around 5,000 per US$1. It was the float of the Ruble in July 1992 that started the shift in global capital flows and currency markets. Politicians, for pride, artificially set the Ruble’s value too high against the dollar reflecting past glories, which was the exact same mistake of the British entering the ERM. Rapid changes in the nominal rate of the Russian economy reflected the overall macroeconomic instability. After the ERM crisis, traders then turned to emerging markets targeting Russia. This was the Black Tuesday with a 27% collapse in the ruble’s value against the dollar. Eventually, in July 1995, the Russian Central Bank announced its intention to maintain the ruble within a band of 4,300 to 4,900 per US$1 through October 1995. They later extended the period to June 1996. They attempted a “crawling band” exchange rate which they introduced to allow the ruble to depreciate gradually through the end of 1996, This led to a further collapse from 5,000 to 6,100.

ft-1998After the Russian introduction of the “crawling band”, traders turned their attention to the emerging market in Southeast Asia with more concerted force. This eventually manifested in the 1997 Asian Currency Crisis. Then traders turned back to Russia. I have stated many times how I was invited to the IMF dinner put on by Edmond Safra in Washington. I was being pitched then to join “the Club” and buy into Russia for they had the IMF in their pocket. The IMF would continue to guarantee Russian debt so you could buy debt and earn 5 times the amount of interest otherwise. The IMF would eliminate the risk. I said “No way, my computer warned Russia would collapse.”

Ruble 1998 - DOf course, this eventually led to the collapse in 1998, which in turn set in motion the Lehman and Bear Stearns collapse thanks to Long Term Capital Management collapse who lost on the Russian bond market.

It was all set in motion by politicians trying to fix currencies that they cannot fix.

Mar 25 2017

THERE WILL BE THOSE WHO PERISH IN THE NEXT CRISIS, AND THOSE “WHO SURVIVE IN UNDERGROUND LUXURY”


If it does go nuclear more than just a handful of bomb’s few few will survive and the tech will fail in those shelters before the radiations drops to safe levels. Keep in mind the a target might be a Nuclear power plant — 🙂

Mar 24 2017

In Stunning Defeat, House Republicans Abandon Obamacare Repeal Effort


Tyler Durden's picture
by Tyler Durden
Re-Posted From ZERO HEDGE Mar 24, 2017 3:40 PM

To summarize today’s latest Congressional rollercoaster, the pundits and the White House were wrong, and the online betting markets were right.

Following a day of drama in Congress yesterday, Friday was another nail-biter until the last moment, and after Trump’s Thursday ultimatum failed to yield more “yes” votes, the embattled bill seeking to replace major parts of Obamacare was yanked Friday from the floor of the House.

As a result, Trump suffered a second consecutive blow as opposition from within his own party forced Republican leaders to cancel a vote on healthcare reform for the second time, casting doubt on the president’s ability to deliver on other priorities.

The withdrawal pointed to Trump’s failure to charm republicans in the last minute, raising questions about whether he could unify Republicans behind his pro-growth legislative goals of tax reform and infrastructure spending.

NBC News reported that the President Donald Trump asked House Speaker Paul Ryan, R-Wisc., to pull the bill. A source told NBC that Ryan during visit to Trump at the White House earlier Friday afternoon had “pleaded to pull” the bill after telling the president that the GOP leaders had failed to convince enough House Republicans to support the bill.

Trump personally told Washington Post reporter Robert Costa about the move to avoid an embarrassing loss in the House during a phone call, Costa tweeted. “We just pulled it,” Trump reportedly said to Costa.

A large number of GOP House members had declared their opposition to the bill since Thursday night. It was the second time in less than 30 hours that Republicans postponed a scheduled House vote on the American Health Care Act. Republicans could afford to lose at most 22 members of their caucus in the vote. But as of Friday afternoon, there were 34 GOP House member publicly opposing the bill.

Ryan visited Donald Trump at the White House at around 1 p.m. to inform him of the shortfall in support.

The second delay was another humiliating setback for GOP leaders and Trump, who had thrown his weight behind the bill.

Trump on Thursday night demanded that the House vote on the plan on Friday, and said he would not agree to change the bill further than he already had in an effort to persuade wavering Republicans to back it.

Shortly after the president drew that line in the sand, GOP leaders amended the bill further to allow states, as opposed to the federal government, to mandate what essential health benefits have to be part of all insurance plans.

But as was the case on Thursday, GOP leaders knew Friday that if the vote occurred as scheduled, the bill would be defeated. The problem those leaders face is not from Democrats, who hold a minority of 193 seats in the House, and who were all expected to vote against the bill.

Ultimately, and this may be the real take home message, the Freedom Caucus demonstrated it is more powerful than Trump as of this moment. Which, incidentally, means it is time to start getting very nervous about the upcoming debt ceiling negotiation, in which the Freedom Caucus will likely get its way.

Finally, with over half a trillion in budget cuts now out of the picture, Trump may be able to proceed to his tax reform, but he will have about $500 billion in potential tax cuts to work with now that repeal of Obamacare is indefinitely delayed.

As for the humiliated Paul Ryan, he just wants to move on… for obvious reasons.

Update 7:  Finally, Trump capped off the failed process with the following comments to the press saying, among other things, that the best thing Republcans can do now is simply pursue tax reform while Obamacare implodes naturally.

  • TRUMP SAYS IN END WOULD’VE BEEN 10 VOTES SHORT, MAYBE CLOSER
  • TRUMP TO NYT:WHEN OBAMACARE `EXPLODES’ DEMS MAY BE OPEN TO DEAL
  • TRUMP SAYS BEST THING WE CAN DO IS LET OBAMACARE EXPLODE
  • TRUMP: WOULD BE `TOTALLY OPEN’ TO DEM HELP ON NEW HEALTH BILL
  • TRUMP: NOW GOING FOR TAX REFORM, WHICH I’VE ALWAYS LIKED
  • TRUMP: I’M NOT BETRAYED, I’M DISAPPOINTED, IT WAS IN OUR GRASP
  • TRUMP: SPEAKER PAUL RYAN WORKED VERY HARD

Update 6: Trump bluffed… and failed, and moments ago House Republicans unable to find enough votes in support of the bill, have pulled today’s vote:

  • TRUMP ASKED U.S. HOUSE LEADERS TO CANCEL VOTE ON REPUBLICAN HEALTHCARE BILL – HOUSE LEADERSHIP AIDE 
  • TRUMP SAID TO TELL WASH. POST JUST PULLED HEALTH CARE BILL
  • TRUMP SAYS “WE JUST PULLED IT”- WASHINGTON POST REPORTER IN TWEET
  • REPUBLICAN LEADERS POSTPONE VOTE ON HEALTHCARE BILL
  • TRUMP SAID TO TELL WASH. POST `I DON’T BLAME PAUL’ RYAN

Update 5: With the health bill vote set to take place around 4pm, moments ago NBC reported that ahead of the vote the Republican conference will hold a closed-door meeting, perhaps to try and cobble together a last minute deal even as most whip count show at least 30 republicans voting against the deal.

  • HOUSE REPUBLICANS TO HOLD CLOSED-DOOR MEETING SOON: NBC

* * *

Update 4:  After a series of conflicting headlines earlier, CNN is now reporting that Paul Ryan has made the trip to the White House to inform Trump: “We don’t have the votes.”

Update 3:  Moments ago new headlines surfaced that Paul Ryan was headed to the White House to brief President Trump on where the Healthcare legislation currently stands.  And, in an exact repeat of the mass confusion that dominated the press yesterday, headlines continue to be completely contradictory and only serve to further the chaos.

On the one side, Bloomberg is reporting that GOP leaders are not confident they have the votes with one House aide even admitted that Republican discussions have morphed from trying to whip votes to trying to figure out what to do after the bill fails.

GOP LEADERS NOT CONFIDENT THEY HAVE VOTES TO PASS HEALTH BILL

HOUSE LEADERS MULLING NEXT STEPS IF HEALTH BILL FAILS: AIDE

And Rep. Gohmert tweeted there’s a “good chance vote may be postponed.”

That said, Reuters subsequently released a statement from Rep. Mullin
saying that things are looking up for the late afternoon healthcare
vote.

REP MULLIN: “WE’RE TRENDING YES ON THE VOTE”: RTRS

Meanwhile, The Hill’s latest whip list suggests that the number of Republican ‘no’ votes is actually growing rather than shrinking and currently stands at 34.

In reality, despite all the jawboning, we suspect that no one will really know how this thing is going play out until the votes are counted later today.

Update 2:  The House has just passed a procedural vote by a margin of 230 – 194 which now clears the path for 4 hours of floor debate on the healthcare bill which will be followed by a vote later this afternoon on the legislation.  Update per The Hill:

Six Republicans voted against the rule, an unusually high number. Lawmakers typically do not break ranks on procedural votes, which are viewed as a referendum on how leadership is managing the floor.

Among the Republicans who voted against the rule were Reps. Justin Amash (Mich.), Thomas Massie (Ky.) and Walter Jones (N.C.). All three voted Thursday night against invoking what is known as “martial law” rule to speed the legislation to the floor.

Lawmakers typically stick with their party on the rules votes even if they plan to vote against the underlying legislation.

The rule stipulates that floor debate on the healthcare legislation will last four hours, with time equally divided between Republicans and Democrats.

That sets up a likely vote around 4 p.m. or 5 p.m.

Vote

Meanwhile, The Hill’s latest whip list still shows around 30 Republicans planning to vote against the bill which is more than the maximum of 22 defections GOP leaders can afford and have the bill still pass. 

Finally, we would be remiss if we didn’t share this apparent nervous break down from Rosa DeLauro during the procedural debate:

Update 1:  As largely expected, the House Rules Committee has just signed off on the GOP’s ObamaCare repeal plan, with a 9-3 vote, which clears the path for a showdown vote later today.  The panel was the bill’s final stop before heading for a floor vote.

As of now, the plan is to begin debate on the healthcare bill at 10AM EST.  There is expected to be a 1 hour debate on rules and then 4 hours of general debate which sets the House up for a procedural vote around 11:15 am EST and a final vote expected around 4.45 pm.

* * *

Yesterday was undoubtedly a debacle of a day for Republicans which ultimately culminated with the failure of the Trump administration and Paul Ryan to secure a sufficient number of votes from the House Freedom Caucus to pass their healthcare bill (we covered the chaos here).  And after the day of misery, team Trump decided that they would rather not continue the political charade in perpetuity and instead decided to offer conservatives in the House an ultimatum: vote tomorrow (i.e. today) or “I’m done with healthcare.”

Which, of course, would seem to be a negotiating tactic taken directly for The Art of the Deal 101:

Meanwhile, the Associated Press seemed to sum up the gravity of today’s vote the best, referring to it simply as a “gamble with monumental political stakes.”

“In a gamble with monumental political stakes, Republicans set course for a climactic House vote on their health care overhaul after President Donald Trump claimed he was finished negotiating with GOP holdouts and determined to pursue the rest of his agenda, win or lose.”

With all that said, per Fox News, after a few procedural moves, the House will likely vote on Trumpcare sometime in the mid-to-late afternoon with House Majority Leader Kevin McCarthy (R-CA) predicting that the vote will wrap up by 4:30 or 5 p.m. ET. 

As we pointed out yesterday, the TrumpCare vote is the first high-stakes political battle of Trump’s Presidency and pits Trump against the more conservative elements of the Republican Party.  For Trump, failure to pass healthcare reform would be a major blow as it was a signature component of his campaign and could signal that he will face an uphill battle against the Freedom Caucus to implement other policy initiatives.  For conservatives, they must choose between supporting their party and a bill that has been dubbed “Obamacare-lite” at the risk of alienating powerful conservative funders, like the Koch Brothers and their various Super PACs, which got them elected in the first place. 

Meanwhile, “round-the-clock” negotiations continue as the White House and mainstream Republicans attempt to sway some last minute votes.

Meanwhile, Trump met inside the Cabinet room with the Freedom caucus to try and rally conservatives to the cause. He also tweeted, urging supporters to call their representatives to back the bill.

A senior administration official told Fox News after the meeting with Trump and the conservative group that there was a deal in the works, but that it was not yet finalized. A source from the Freedom Caucus later said there wasn’t yet a deal.

“I would say progress is being made, and that progress should be applauded with the efforts by the White House to deliver on a campaign promise, and to lower premiums for every American from coast to coast and in between,” Meadows said. He also called Trump’s involvement “unparalleled in the history of our country.”

And while it’s almost impossible to predict how today’s vote will turn out, Goldman Sachs is pegging the chances of success at 60%.

The House vote on the American Health Care Act (AHCA) has been delayed due to a lack of support. Our subjective odds of passage in the House before the upcoming two-week congressional recess, which begins April 7, are 60%. This is slightly lower than our last estimate, in part because there appears to be somewhat greater-than-expected opposition among centrist Republicans, in addition to the well-known opposition among members of the conservative “Freedom Caucus”

Meanwhile, Trump started his lobbying efforts early on twitter.

So, grab your popcorn and flip on C-SPAN…should be a fun Friday.

Mar 24 2017

Russophobia – Symptom Of US Implosion


Tyler Durden's picture
by Tyler Durden
Re-Posted from ZERO HEDGE Mar 24, 2017 9:05 PM

Authored by Finian Cunningha, via The Strategic Culture Foundation,

There was a time when Russophobia served as an effective form of population control – used by the American ruling class in particular to command the general US population into patriotic loyalty. Not any longer. Now, Russophobia is a sign of weakness, of desperate implosion among the US ruling class from their own rotten, internal decay.

This propaganda technique worked adequately well during the Cold War decades when the former Soviet Union could be easily demonized as «godless communism» and an «evil empire». Such stereotypes, no matter how false, could be sustained largely because of the monopoly control of Western media by governments and official regulators.

The Soviet Union passed away more than a quarter of a century ago, but Russophobia among the US political class is more virulent than ever.

This week it was evident from Congressional hearings in Washington into alleged Russian interference in US politics that large sections of American government and establishment media are fixated by Russophobia and a belief that Russia is a malign foreign adversary.

However, the power of the Russophobia propaganda technique over the wider population seems to have greatly diminished from its Cold War heyday. This is partly due to more diverse global communications which challenge the previous Western monopoly for controlling narrative and perception. Contemporary Russophobia – demonizing Russian President Vladimir Putin or Russian military forces – does not have the same potency for scaring the Western public. Indeed, due to greater diversity in global news media sources, it is fair to say that «official» Western depictions of Russia as an enemy, for example allegedly about to invade Europe or allegedly interfering in electoral politics, are met with a healthy skepticism – if not ridicule by many Western citizens.

What is increasingly apparent here is a gaping chasm between the political class and the wider public on the matter of Russophobia. This is true for Western countries generally, but especially in the US. The political class – the lawmakers in Washington and the mainstream news media – are frenzied by claims that Russia interfered in the US presidential elections and that Russia has some kind of sinister leverage on the presidency of Donald Trump.

But this frenzy of Russophobia is not reflected among the wider public of ordinary American citizens. Rabid accusations that Russia hacked the computers of Trump’s Democrat rival Hillary Clinton to spread damaging information about her; that this alleged sabotage of American democracy was an «act of war»; that President Trump is guilty of «treason» by «colluding» with a «Russian influence campaign» – all of these sensational claims seem to be only a preoccupation of the privileged political class. Most ordinary Americans, concerned about making a living in a crumbling society, either don’t buy the claims or view them as idle chatter.

Kremlin spokesman Dmitry Peskov this week dismissed the Congressional hearings into alleged Russian interference in US politics. He aptly said that US lawmakers and the corporate media have become «entangled» in their own fabrications. «They are trying to find evidence for conclusions that they have already made», said Peskov.

Other suitable imagery is that the US political class are tilting at windmills, chasing their own tails, or running from their own shadows. There seems to be a collective delusional mindset.

Unable to accept the reality that the governing structure of the US has lost legitimacy in the eyes of the people, that the people rebelled by electing an outsider in the form of business mogul-turned-politician Donald Trump, that the collapse of American traditional politics is due to the atrophy of its bankrupt capitalist economy over several decades – the ruling class have fabricated their own excuse for demise by blaming it all on Russia.

The American ruling class cannot accept, or come to terms, with the fact of systemic failure in their own political system. The election of Trump is a symptom of this failure and the widespread disillusionment among voters towards the two-party train wreck of Republicans and Democrats. That is why the specter of Russian interference in the US political system had to be conjured up, by necessity, as a way of «explaining» the abject failure and the ensuing popular revolt.

Russophobia was rehabilitated from the Cold War closet by the American political establishment to distract from the glaring internal collapse of American politics.

The corrosive, self-destruction seems to know no bounds. James Comey, the head of the Federal Bureau of Investigation, told Congress this week that the White House is being probed for illicit contacts with Russia. This dramatic notice served by Comey was greeted with general approval by political opponents of the Trump administration, as well as by news media outlets.

The New York Times said the FBI was in effect holding a «criminal investigation at the doorstep of the White House».

Other news outlets are openly airing discussions on the probability of President Trump being impeached from office.

The toxic political atmosphere of Russophobia in Washington is unprecedented. The Trump administration is being crippled at every turn from conducting normal political business under a toxic cloud of suspicion that it is guilty of treason from colluding with Russia.

President Trump has run afoul with Republicans in Congress over his planned healthcare reforms because many Republicans are taking issue instead over the vaunted Russian probe.

When Trump’s Secretary of State Rex Tillerson was reported to be skipping a NATO summit next month but was planning to visit Moscow later in the same month, the itinerary was interpreted as a sign of untoward Russian influence.

What makes the spectacle of political infighting so unprecedented is that there is such little evidence to back up allegations of Trump-Russia collusion. It is preponderantly based on innuendo and anonymous leaks to the media, which are then recycled as «evidence».

Devin Nunes, the ranking Republican on the House Intelligence Committee, said earlier this week that he has seen no actual evidence among classified documents indicating any collusion between the Trump campaign team and the Russian government.

Even former senior intelligence officials, James Clapper and Michael Morell who are no friends of Trump, have lately admitted in media interviews that there is no such evidence.

Yet, FBI chief James Comey told Congress that his agency was pursuing a potentially criminal investigation into the Trump administration, while at the same time not confirming or denying the existence of any evidence.

And, as already noted, this declaration of open-ended snooping by Comey on the White House was met with avid approval by political opponents of Trump, both on Capitol Hill and in the corporate media.

Let’s just assume for a moment that the whole Trump-Russia collusion story is indeed fake. That it is groundless, a figment of imagination. There are solid reasons to believe that is the case. But let’s just assume here that it is fake for the sake of argument.

That then means that the Washington seat of government and the US presidency are tearing themselves apart in a futile civil war.

The real war here is a power struggle within the US in the context of ruling parties no longer having legitimacy to govern.

This is an American implosion. An historic Made-in-America meltdown. And Russophobia is but a symptom of the internal decay at the heart of US politics.

Mar 24 2017

The FBI’s Conspiracy Theory of a Trump/Putin Collusion Has No Clothes 


The only ones that trump can trust in Washington are his kids and personal friends.