In Reality, War Will Bring An End to the Petrodollar, and Impose Hardship on the Average American ...

“Economics is haunted by more fallacies than any other study known to man.” – Henry Hazlitt, Economics In One Lesson. The great Henry Hazlitt’s wise words came to mind while reading a recent New York Times post by George Mason economist Tyler Cowen who strangely observed that “The world just hasn’t had that much warfare lately, at least not by historical standards,” and “Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely.” As Forbes' John Tamny lambasts, "They’re ultimately only words, but Cowen’s about war theoretically boosting animal spirits are pretty disturbing ones..."

Just weeks before Blackwater guards fatally shot 17 civilians at Baghdad’s Nisour Square in 2007, The NY Times reports that the State Department began investigating the security contractor’s operations in Iraq. However, as James Risen (who himself faces jail time thanks to the White House) reports, a senior official of the notorious private security firm allegedly threatened to kill a government investigator leading the probe into the firm’s Iraqi operation. Stunningly (or not), the US embassy sided with him and forced the inspector to cut the visit short. “Blackwater contractors saw themselves as above the law,” Richter added; now we wonder what gave them that idea?

Long before 1984 gave us the adjective “Orwellian” to describe the political corruption of language and thought, Thucydides observed how factional struggles for power make words their first victims, "Words had to change their ordinary meaning and to take that which was now given them." Orwell later explained the reason for such degradation of language, "Political speech and writing are largely the defense of the indefensible." The bottom-line is that tyrannical power and its abuses comprise the "indefensible" that must be verbally disguised; which seems to have never been more appropriate than now in the stream of 'disguised' words we are fed every day...

It's been a busy day for President Obama and he needs a win... a bright shiny PR moment, surrounded with immigrant children explaining how he is the Pied Piper that will save them all from the despotic servitude they come from. In an unplanned press conference President Obama will address his immigration reform at 1450ET through executive action. No lesser man than Cantor-buster Dave Brat opined that the President's policies "sound nice", like "the Kids’ Act, the DREAM Act, the ENLIST Act," but did little to address the growing influx of children. “The reason we have those thousands crossing the border is because of poor policy in the first place,” Brat added. We are sure Obama disagrees - besides, this has to be good for GDP, right? - The Broken Border Fallacy.

U.S. Relies On Law of Non-Constitutional Countries

The VA scandal was just the beginning. According to Internal documents obtained by New York Times, US military healthcare is "a system in which scrutiny is sporadic and avoidable errors are chronic." As the NYT reports In Military Care, a Pattern of Errors but Not Scrutiny, "the military system has consistently had higher than expected rates of harm and complications in two central parts of its business — maternity care and surgery."

• The Kerry Konfusion Kontinues: Kerry urges Kurds to save Iraq from collapse (Reuters)
• Abe Unveils Japan’s New Growth Strategy (WSJ)
• Because the recovery: Avon to Cut 600 Jobs as CEO McCoy Seeks to Trim Expenses (BBG)
• Iraqi Parties Pressure Prime Minister Nouri al-Maliki to Step Down (WSJ)
• Ukraine Rebels Call Cease-Fire to Match Government Truce (BBG)
• IRS accused of obstruction over lost emails in Tea Party affair (Reuters)
• IRS chief scorched as 'liar' (WND)
• Big Investors Missed Stock Rally (WSJ)
• U.K. Jury Finds Coulson Guilty of Conspiracy to Intercept Phone Voice-Mail Messages (WSJ)
• HSBC to halve countries served by private bank, sells assets (Reuters)
• Bond Market Has $900 Billion Mom-and-Pop Problem When Rates Rise (BBG)

Judging by the surprising reversal in futures overnight, which certainly can not be attributed to the latest data miss out of Europe in the form of the June German IFO Business Climate report (print 109.7, Exp. 110.3, Last 110.4) as it would be naive to assume that centrally-planned markets have finally started to respond as they should to macro data, it appears that algos, with their usual 24 hour delay, have finally discovered Dubai on the map. The same Dubai, which as we showed yesterday had just entered a bear market in a few short weeks after going turbo parabolic in early 2014. It is this Dubai which crashed another 8% just today, as fears that leveraged traders are liquidating positions, have surfaced and are spreading, adversely (because in the new normal this needs to be clarified) to other risk assets, while at the same time pushing gold and silver to breakout highs. Recall that it was Dubai where the global sovereign crisis started in the fall of 2009 - will Dubai also be the place where the first domino of the global credit bubble topples and takes down the best laid plans of central-planners and men?

The popular story is that America was built by immigrants and that therefore everything about immigration is good and leads to a more successful society. However, in the 21st century, The USA is no longer sparsely populated, except in the regions that are typically hostile to settlement anywhere else in the world — places where there is no water, or too hot, or too cold, or too swampy. Currently, progressive America is pretending that the conditions of the 19th century still prevail here - boundless material resources and land for the taking - and that we can happily accommodate the overflow from our equally overpopulated neighbors, Mexico and the countries of Central America, any way they can manage to get here. It’s rather funny that the presumptive Democratic nominee for president in 2016 titled her current book Hard Choices, because that is the chief pretense of the party she represents. The last thing Hillary wants to do is take a stand on anything, other than her entitlement to live in the White House.

Ghandi was once asked, "What do you think about Western Civilization?" to which he famously replied "I think it's a good idea." He may as well have been talking about free market capitalism. Capital in the 21st Century has hit the world like a new teen idol sensation. Everybody is drinking the Kool-Aid and it's being held up as the most important book ever written on the subject of how runaway capitalism leads to wealth inequality. Paul Krugman of course, loves it. As does every head of state and political hack in the (formerly) free world. So let's do something different here and accept a core premise of Capital, and say that wealth inequality is increasing, and that it's a bad thing. Where the point is completely missed is in what causes it (ostensibly "free market capitalism") and what to do about it (increase government control, induce more inflation and raise taxes). The point of this essay is to assert that it is not unchecked capital or runaway free markets that cause increasing wealth inequality, but rather that the underlying monetary system itself is hard-coded by an inner temple of ruling elites in a way which creates that inequality.

The world is a very complicated place, and the Middle East is a particularly difficult region to try to get your head around. Between decades of colonialism, gigantic oil reserves, governments that are essentially feudal kingdoms, and the never-ending and always shifting Western government propaganda that often changes the targets of demonization on a whim, it’s no wonder people are so confused. The following provides a perspective based on what we have seen so far, and more importantly, ask readers to ask their own set of questions. What is happening is very bad, and it is the direct result of the idiotic children calling the foreign policy shots in Washington D.C. Ever since 9/11, everything about the status quo’s decision making has been irrational and dangerous.

In the rapidly unfolding events and chaos in Iraq, leaders of the semi-autonomous region of Kurdistan have capitalized on the situation to gain further leverage over the central government in Baghdad.

For the moment, it is hard to see how anything can be salvaged in Iraq. You can be sure that Obama will be blamed both for pulling out in 2011 and then not going back to war, to protect our two trillion dollar previous investment. We have to imagine that distrust for civilian control of the US military by a corps of rising officers will reach never-before-seen depths. It may not be expressed right away, but the knock-on effects of political breakdown in the Middle East could go long and far in upsetting US politics. The defeat of Eric Cantor is just the beginning of what could be the unraveling of the federal system.