http://www.zerohedge.com/fullrss2.xml/BoomBustBlog/BoomBustBlog/BoomBustBlog/BoomBustBlog/article/article/article/article/article/news/article/article/article/article/article/article/article/article/article/guest-post-migration-black-swans en Unclassified Documents Show Obama Intel Agency Secretly Spied On Americans For Years http://www.zerohedge.com/news/2017-05-25/unclassified-documents-show-obama-intel-agency-secretly-spied-americans-years <p><em><a href="http://circa.com/politics/barack-obamas-team-secretly-disclosed-years-of-illegal-nsa-searches-spying-on-americans">Authored by John Solomon and Sara Carter via Circa.com,</a></em></p> <p>The National Security Agency under former President Barack Obama<strong> routinely violated American privacy protections while scouring through overseas intercepts and failed to disclose the extent of the problems </strong>until the final days before Donald Trump was elected president last fall, <strong>according to once top-secret documents </strong>that chronicle some of the most <strong>serious constitutional abuses to date by the U.S. intelligence community.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_obama1.jpg"><em><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_obama1_0.jpg" style="width: 600px; height: 304px;" /></em></a></p> <p><strong>More than 5 percent, or one out of every 20 searches seeking upstream Internet data on Americans inside the NSA&rsquo;s so-called Section 702 database violated the safeguards Obama and his intelligence chiefs vowed to follow in 2011, according to one classified internal report reviewed by Circa.</strong></p> <p>The Obama administration self-disclosed the problems at a closed-door hearing Oct. 26 before the Foreign Intelligence Surveillance Court that set off alarm. Trump was elected less than two weeks later.</p> <div> <p>The normally supportive court censured administration officials, saying the failure to disclose the extent of the violations earlier amounted to an<strong> &ldquo;institutional lack of candor&rdquo; and that the improper searches constituted a &ldquo;very serious Fourth Amendment issue,&rdquo; </strong>according to a recently unsealed court document dated April 26, 2017.</p> <p>The admitted violations undercut one of the primary defenses that the intelligence community and Obama officials have used in recent weeks to justify their snooping into incidental NSA intercepts about Americans.</p> </div> <p><strong>Circa has reported that there was a three-fold increase in NSA data searches about Americans and a rise in the unmasking of U.S. person&rsquo;s identities in intelligence reports after Obama loosened the privacy rules in 2011.</strong></p> <div> <p>Officials like former National Security Adviser Susan Rice have argued their activities were legal&nbsp;under the so-called minimization rule changes Obama made, and that the intelligence agencies were strictly monitored to avoid abuses.</p> </div> <div> <p>The intelligence court and the NSA&rsquo;s own internal watchdog found that not to be true.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Since 2011, NSA&rsquo;s minimization procedures have prohibited use of U.S.-person identifiers to query the results of upstream Internet collections under Section 702,&rdquo; the unsealed court ruling declared.<strong> &ldquo;The Oct. 26, 2016 notice informed the court that NSA analysts had been conducting such queries inviolation of that prohibition, with much greater frequency than had been previously disclosed to the Court.&rdquo;</strong></p> </blockquote> </div> <div> <p>Speaking Wednesday on Fox News, Sen. Rand Paul (R-KY) said there was an apparent effort under the Obama Administration to increase the number of unmaskings of Americans.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;If we determine this to be true, this is an enormous abuse of power,&rdquo; Paul said.&nbsp;&ldquo;This will dwarf all other stories.&rdquo;</em></strong></p> <p>&nbsp;</p> <p>&ldquo;There are hundreds and hundreds of people,&rdquo; Paul added.</p> </blockquote> <p>The American Civil Liberties Union said the newly disclosed violations are some of the most serious to ever be documented and strongly call into question the U.S. intelligence community&rsquo;s ability to police itself and safeguard American&rsquo;s privacy as guaranteed by the Constitution&rsquo;s Fourth Amendment protections against unlawful search and seizure.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;I think what this emphasizes is the shocking lack of oversight of these programs,&rdquo; said Neema Singh Guliani, the ACLU&rsquo;s legislative counsel in Washington.</p> <p>&nbsp;</p> <p>&ldquo;You have these problems going on for years that only come to the attention of the court late in the game and then it takes additional years to change its practices.</p> <p>&nbsp;</p> <p><strong>&ldquo;I think it does call into question all those defenses that we kept hearing, that we always have a robust oversight structure and we have culture of adherence to privacy standards,&rdquo; she added. &ldquo;And the headline now is they actually haven&rsquo;t been in compliacne for years and the FISA court itself says in its opinion is that the NSA suffers from a culture of a lack of candor.&rdquo;</strong></p> </blockquote> </div> <div> <p>The NSA acknowledged it self-disclosed the mass violations to the court last fall and that in April it took the extraordinary step of suspending the type of searches that were violating the rules, even deleting prior collected data on Americans to avoid any further violations.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;NSA will no longer collect certain internet communications that merely mention a foreign intelligence target,&rdquo; the agency said in the statement that was dated April 28 and placed on its Web site without capturing much media or congressional attention.</strong></p> </blockquote> </div> <div> <p>In question is the collection of what is known as upstream &ldquo;about data&rdquo;about an American that is collected even though they were not directly in contact with a foreigner that the NSA was legally allowed to intercept.</p> <p><strong>The NSA said it doesn&rsquo;t have the ability to stop collecting &lsquo;about&rsquo; information on Americans, &ldquo;without losing some other important data. &rdquo;</strong> It, however, said it would stop the practice to &ldquo;reduce the chance that it would acquire communication of U.S. persons or others who are not in&nbsp;direct contact with a foreign intelligence target.&rdquo;</p> </div> <div> <p>The NSA said it also plans to &ldquo;delete the vast majority of its upstream internet data to further protect the privacy of U.S. person communications.&rdquo;</p> <p>Agency officials called the violations &ldquo;inadvertent compliance lapses.&rdquo; But the court and IG documents suggest the NSA had not developed a technological way to comply with the rules they had submitted to the court in 2011.</p> </div> <div> <p>Officials &ldquo;explained that NSA query compliance is largely maintained through a series of manual checks&rdquo; and had not &ldquo;included the proper limiters&rdquo; to prevent unlawful searches, the NSA internal watchdog reported in a top secret report in January that was just declassified. A new system is being developed now, officials said.</p> <p>The NSA conducts thousand of searches a year on data involving Americans and the actual numbers of violations were redacted from the documents Circa reviewed.</p> </div> <div> <p>But a chart in the report showed there three types of violations, the most frequent being 5.2 percent of the time when NSA Section 702 upstream data on U.S. persons was searched.</p> <p><strong>The inspector general also found &nbsp;noncompliance between 0.7 percent and 1.4 percent of the time involving NSA activities in which there was a court order to target an American for spying &nbsp;but the rules were still not followed. Those activities are known as Section 704 and Section 705 spying.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_obama.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_obama.jpg" style="width: 600px; height: 332px;" /></a></p> <p><em>Review |&nbsp;The NSA inspector general&rsquo;s highly redacted chart showing privacy violations.</em></p> </div> <div> <p>The IG report spared few words for the NSA&rsquo;s efforts before the disclosure to ensure it was complying with practices, some that date to rules issued in 2008 in the final days of the Bush administration and others that Obama put into effect in 2011.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;We found that the Agency controls for monitoring query compliance have not been completely developed,&rdquo; the inspector general reported, citing problems ranging from missing requirements for documentation to the failure to complete controls that would ensure &ldquo;query compliance.&rdquo;</strong></p> </blockquote> </div> <div> <p>The NSA&rsquo;s Signal Intelligence Directorate, the nation&rsquo;s main foreign surveillance arm, wrote a letter back to the IG saying it agreed with the findings and that <strong>&ldquo;corrective action plans&rdquo; are in the works.</strong></p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="980" height="497" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_obama1.jpg?1495716384" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/unclassified-documents-show-obama-intel-agency-secretly-spied-americans-years#comments American Civil Liberties Union Barack Obama Bush Administration Donald Trump Espionage FISA court Foreign Intelligence Surveillance Act Foreign Intelligence Surveillance Act of 1978 Amendments Act Foreign Intelligence Surveillance Court Fox News Global surveillance Government Mass surveillance national security National security National Security Agency National Security Agency NSA’s Signal Intelligence Directorate Obama Administration Obama administration Privacy of telecommunications Signals intelligence U.S. intelligence UN Court United States Foreign Intelligence Surveillance Court Thu, 25 May 2017 23:45:00 +0000 Tyler Durden 596620 at http://www.zerohedge.com Another shoe drops in the FX fraud manipulation conspiracy http://www.zerohedge.com/news/2017-05-25/another-shoe-drops-fx-fraud-manipulation-conspiracy <p>FX is quite literally, a rigged game. &nbsp;Not like the stock market, well not exactly. &nbsp;FX has been, a game of 'how many numbers am I holding behind my back?' and the guess is always wrong! <a href="http://www.splittingpennies.com">&nbsp;As we explain in Splitting Pennies Understanding Forex - FX is rigged.</a> &nbsp;But that doesn't mean there isn't opportunity! &nbsp;One just needs to understand it.</p> <p><a href="https://www.law360.com/articles/928038/bnp-paribas-pays-350m-to-settle-ny-currency-probe">From Law 360:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p class="MsoNormal"><em><span style="font-size: 11.5pt; font-family: &quot;Arial&quot;,sans-serif; color: #444444;">French bank&nbsp;</span><a href="https://www.law360.com/companies/bnp-paribas" target="_blank" style="box-sizing: border-box; outline: 0px;"><span style="font-size: 11.5pt; font-family: Arial, sans-serif; color: #00427f;">BNP Paribas</span></a><span style="font-size: 11.5pt; font-family: &quot;Arial&quot;,sans-serif; color: #444444;">&nbsp;was fined $350 million by the&nbsp;</span><a href="https://www.law360.com/agencies/new-york-state-department-of-financial-services" target="_blank" style="box-sizing: border-box; outline: 0px;"><span style="font-size: 11.5pt; font-family: Arial, sans-serif; color: #00427f;">New York State Department of<br /> Financial Services</span></a><span style="font-size: 11.5pt; font-family: &quot;Arial&quot;,sans-serif; color: #444444;">&nbsp;for lax oversight in its foreign-exchange business that<br /> allowed “nearly unfettered misconduct” by more than a dozen employees involved<br /> in exchange rate manipulation, officials announced Wednesday.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> From 2007 through 2013, a trader on the bank’s New York desk, identified in the<br /> consent order as Jason Katz, ran a number of schemes with more than a dozen<br /> BNPP traders and salespeople on key foreign exchange trading desks to<br /> manipulate prices and spreads in several currencies, including the South<br /> African rand, Hungarian forint and Turkish lira, officials said.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> He called his group of traders a "cartel" and they communicated in a<br /> chat room called "ZAR Domination," a reference to the rand’s trading<br /> symbol, according to the consent order. The group would push up the price of<br /> the illiquid rand during New York business hours when the South African market<br /> was closed, moving the currency in whichever way they chose, and thus<br /> depressing competition, officials said.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> Katz also enlisted colleagues at other banks to widen spreads for orders in<br /> rands, increasing bank profits and limiting competition at the customer’<br /> expense, the order says. Some of the traders engaged in illegal coordination<br /> and shared confidential customer information, officials said. As part of a<br /> cooperation agreement with prosecutors, Katz&nbsp;<strong style="box-sizing: border-box; outline: 0px;"><span style="padding: 0in; border: 1pt none windowtext;"><a href="https://www.law360.com/articles/877494" target="_blank" style="box-sizing: border-box; outline: 0px;"><span style="color: #00427f;">pled guilty</span></a></span></strong>&nbsp;in Manhattan federal court in<br /> January to one count of conspiracy to restrain trade in violation of the<br /> Sherman Act.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> “Participants in the foreign exchange market rely on a transparent and fair<br /> market to ensure competitive prices for their trades for all participants,”<br /> Financial Services Superintendent Maria T. Vullo said in a statement. “Here the<br /> bank paid little or no attention to the supervision of its foreign exchange<br /> trading business, allowing BNPP traders and others to violate New York state<br /> law over the course of many years and repeatedly abused the trust of their<br /> customers."<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> BNP Paribas, which employs nearly 190,000 people and has total assets of more<br /> than €2.1 trillion (approximately $2.36 trillion), said in a statement that the<br /> $350 million fine will be covered by existing provisions. It said it had<br /> implemented a group-wide remediation initiative and cooperated fully in the<br /> investigation.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> “The conduct which led to this settlement occurred during the period from 2007<br /> to 2013. Since this time, BNP Paribas has proactively implemented extensive<br /> measures to strengthen its systems of control and compliance,” the bank said in<br /> its statement. “The group has increased resources and staff dedicated to these<br /> functions, conducted extensive staff training and launched a new code of<br /> conduct which applies to all staff.”<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> Three BNPP employees were fired, seven more resigned and several others were<br /> disciplined for misconduct or supervisory shortcomings in relation to the<br /> probe, the order says.<br style="box-sizing: border-box;" /><br /> <br style="box-sizing: border-box;" /><br /> Katz’s attorney, Michael Tremonte of&nbsp;</span><a href="https://www.law360.com/firms/sher-tremonte-llp" target="_blank" style="box-sizing: border-box; outline: 0px;"><span style="font-size: 11.5pt; font-family: Arial, sans-serif; color: #00427f;">Sher Tremonte LLP</span></a><span style="font-size: 11.5pt; font-family: &quot;Arial&quot;,sans-serif; color: #444444;">, did not respond Wednesday to a call seeking<br /> comment.</span></em></p> </blockquote> <p><span style="font-size: 13.008px;">But really, what's another $350 Million in the grand scheme of things for BNP? &nbsp;Just another day's profits in the FX market.</span></p> <p><span style="font-size: 13.008px;">This probe isn't new; regulators have been looking into FX rigging for years. &nbsp;And practically, the fine won't make any customers whole - it will just shore up the coffers for the NY State department of financial services. &nbsp;With inflation out of control, they need the money. &nbsp;</span></p> <p><span style="font-size: 13.008px;">For a detailed breakdown of this virtual monopoly 'they' have on the global financial system, checkout <a href="http://www.splittingpennies.com">Splitting Pennies Understanding Forex.</a></span></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1000" height="750" alt="" src="http://www.zerohedge.com/sites/default/files/images/user157767/imageroot/EES_ForexExchangephoto_2.jpg?1495755838" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/another-shoe-drops-fx-fraud-manipulation-conspiracy#comments Banks BNP Paribas BNPP Business CAC 40 Finance Financial services Foreign exchange companies Foreign exchange market Investment banks New York State New York State Department NY State department Primary dealers Thu, 25 May 2017 23:43:58 +0000 globalintelhub 596675 at http://www.zerohedge.com 3 Events, All Tied. Can You See The Trends? http://www.zerohedge.com/news/2017-05-25/3-events-all-tied-can-you-see-trends <h3><em style="line-height: 20.8px;"><span style="color: #800000;">By Chris at&nbsp;<a href="https://capitalistexploits.at/signup/">www.CapitalistExploits.at</a></span></em></h3> <h3><span style="color: #339966;"><strong>Well done!</strong></span></h3> <p> To the Donald...</p> <p style="text-align: center;"> </p><p><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/trump.jpg" width="450" height="237" class="aligncenter wp-image-16858" /></p> <p>Too true Donald. These guys are filthy&nbsp;rich. In fact, if Justin Bieber lived out there, they'd put him on income support.</p> <p style="text-align: center;"> </p><p><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/Trump-Saudi-Oil-Tweet.jpg" width="450" height="228" class="aligncenter wp-image-16861" /></p> <p style="text-align: left;">Fighting words those. Bow wow, woof, woof. Grrrr!</p> <p style="text-align: center;"><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/donald-trump-bow-tweet.jpg" width="450" height="227" style="font-size: 13.008px; display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16860" /></p> <p>Disgraceful... this bowing thing. Elect me, and I'll show 'em. </p> <p> Aaaand.... tamed!</p> <p style="text-align: center;"><em><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/bow-1024x512.jpg" width="450" height="225" style="font-size: 13.008px;" class="wp-image-16859" /><span style="font-size: 13.008px;"> </span></em></p> <p style="text-align: center;"><em><span style="font-size: 13.008px;">POTUS caught curtseying.</span></em></p> <p><span style="font-size: 13.008px;">Is that Trump or Hillary bowing? They use the same hair dye, and increasingly there seems little to distinguish them apart.&nbsp;The man is as steely, resolute, and determined as a bowl of yoghurt.<br /> </span></p> <p><span style="font-size: 13.008px;"><br /> In his Saudi speech the Donald refused to utter the words</span><em style="font-size: 13.008px;"> “radical Islamic terrorism”</em><span style="font-size: 13.008px;">. You'll recall that this was a term&nbsp;he had endlessly berated President Obama for failing to use. He&nbsp;went as far as&nbsp;to&nbsp;call Islam </span><em style="font-size: 13.008px;">“one of the world’s great faiths”.</em><span style="font-size: 13.008px;"> Trump supporters' heads must have&nbsp;exploded.<br /> </span></p> <p><span style="font-size: 13.008px;"><br /> For everyone else... the brilliance coming from Washington never ceases to disappoint.</span></p> <h3><span style="color: #339966;">Ramifications?</span></h3> <p> For the stock market... here's&nbsp;the iShares US Aerospace &amp; Defence ETF: </p> <p> <img src="https://capitalistexploits.at/wp-content/uploads/2017/05/Screenshot-2017-05-24-15.02.58-1024x562.png" width="600" height="330" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16862" /> </p> <p> A&nbsp;$110 billion weapons deal worth over $350 billion over 10 years which&nbsp;<del>Hillary</del> Trump just signed will have that effect. The establishment rice bowls will be filled after all. Whew! Rumsfeld and Cheney must&nbsp;be relieved. </p> <p> As for the electorates faith in the political system...</p> <p>Well, let's see... $350 billion in advanced weaponry to the barbaric, medieval regime that chops of more heads than ISIS. </p> <p> You tell me. </p> <h3><span style="color: #339966;"><strong>Intricately Tied to&nbsp;It</strong></span></h3> <p> Over in Manchester, a Libyan refugee Salman Abedi, after having read a&nbsp;poorly written medieval science fiction book and thus under the delusion of paradise and 40 virgins, blew himself to smithereens, taking&nbsp;with him 22 innocent people who were out&nbsp;enjoying a night's music. </p> <p> How is this intricately tied? </p> <p> Last year, I <a href="https://capitalistexploits.at/2016/08/easiest-short-history/" target="_blank" rel="noopener noreferrer">explained the actions and consequences</a> to&nbsp;this question: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p class="v2-processed"><em>"According to a group of human rights organisations, the body count from the wars in Pakistan, Afghanistan, and Iraq – all part of the ridiculously named “war on terror” – stands at over 2 million.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>Let’s think about this for a minute. Consider how many close friends and family you have. Let’s put the number at an even 50.&nbsp;Remember also that culturally Muslims have an average of 4 children rather than the European 1.5 average and factor in that a good portion of this group practice polygamy – taking 4 wives and having 16 rather than 4 children – and this number is likely pretty conservative.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>For every person killed (and this can be directly or simply as a result of Western intervention) we have therefore&nbsp;a further 50 friends and family. So now we have 2 million multiplied by 50 which is 100 million people. <strong>What percentage of those 100 million people blame the West for the death of a loved one?</strong> It’s higher than zero, that much I know.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>Now some portion of those 100 million people have been invited with open arms into Europe, and we’re&nbsp;not even mentioning soldiers who’ve fought against any of the Western-led military campaigns. Many of them too have made their way into the homelands of the “infidels”.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>Imagine for a minute being invited to a party at the home of someone who you believe had a hand in the slaughter of your family. That is unfortunately how many feel. We don’t need to imagine this, we know it&nbsp;because they have&nbsp;told us this.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>I’m not making a judgement call here just pointing out the obvious.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>European politicians seem to have a shockingly dim understanding of this dynamic, which on it’s own shows a naivety befitting a 5 year old schoolgirl.</em></p> <p class="v2-processed"><em><br /></em></p> <p class="v2-processed"><em>You cannot directly, or indirectly, kill two million people, invite their relatives&nbsp;home and expect no blowback. <strong>That’s beyond stupid. It’s suicidal."</strong></em></p> </blockquote> <p> And then only a month ago, I wrote&nbsp;<a href="https://capitalistexploits.at/2017/04/silent-majority-heres-theyre-saying/" target="_blank" rel="noopener noreferrer">about what the silent majority is really saying:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>"While&nbsp;afraid to say so&nbsp;publicly how many in private think: is it&nbsp;not time to bring in the military, round them all up, put them on a&nbsp;ship with a jammed rudder and aim it at North Africa?"</em></p></blockquote> <p> This number grows each day, and today - just days after this Manchester&nbsp;attack - the number of people thinking these thoughts&nbsp;is exponentially higher than it was at the beginning of the week. <strong>This is how trends and consensus form.</strong> Ignore it at your peril!</p> <p>And while I've been explaining behavioural economics and this social dynamic in my little&nbsp;corner&nbsp;of the web, I've been arguing that it will increasingly become mainstream with profound ramifications.</p> <p>And here we have one such case. It doesn't get much more mainstream than Morrissey himself. Read it carefully.</p> <p><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/Screenshot-2017-05-24-15.51.13.png" width="550" height="540" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16863" /> </p> <p> On a more positive note, I sure hope you're following this. </p> <h3><span style="color: #339966;">The Belt and Road</span></h3> <p> A week&nbsp;before Chairman Trump&nbsp;and Salman bin Abdulaziz Al Saud sat down to&nbsp;lobster bisque, roast swan stuffed with oysters, and sautéed slave&nbsp;to&nbsp;discuss how many Yemenis could&nbsp;be wiped out with the brand spanking new US bombs, President Xi hosted leaders from around the world pushing ahead with China's ambitious OBOR project.</p> <p><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/obor.jpg" width="450" height="253" class="aligncenter wp-image-16864" /></p> <p><span style="font-size: 13.008px;">One can conquer by force or by trade - a point worth remembering.</span></p> <p> <img src="https://capitalistexploits.at/wp-content/uploads/2017/05/obor1.png" width="600" height="338" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16865" /> </p> <p> With trade comes influence - political, economic, and social. </p> <p> Consider what's happened in just 40 years.</p> <p>Forty&nbsp;years ago, China was a backwater - nothing of a place inhabited by little brown&nbsp;people in straw hats rummaging&nbsp;around in garbage cans&nbsp;wearing&nbsp;clothing&nbsp;that looked like they'd&nbsp;been nicked from&nbsp;the film set of Schindler's List.</p> <p>If you were lucky, you'd spot a moped but it had probably run out of fuel because nobody could afford anything more than soup. And since nobody had invented a moped that ran on soup, it wasn't going anywhere.</p> <p>Today, not only does China produce an avalanche of goods&nbsp;but they are rapidly becoming a formidable consumer themselves. In terms of influence consider that they are now: </p> <ul> <li>Asia's largest trading partner</li> <li>US largest trading partner</li> <li>Germany's largest trading partner</li> <li>Australia's largest trading partner</li> <li>Russia's second largest trading partner (after Germany)</li> <li>Africas largest trading partner</li> <li>South America's largest trading partner</li> </ul> <p> China has, over this 40 odd years, built up some impressive things. Among them a&nbsp;<a href="https://capitalistexploits.at/2017/05/crisis-meet-china-china-meet-crisis/" target="_blank" rel="noopener noreferrer">credit bubble,</a>&nbsp;which will need to be dealt with but&nbsp;also substantial foreign exchange reserves, most of them held in US government debt securities. Trading those securities&nbsp;for influence, and dare I say it inflation protection, will translate into revenues to the Middle Kingdom. This is the plan... and it isn't a bad one.</p> <p>They sure could do worse. They could sell bombs to the most hated family in the Middle East, and when the inevitable backlash takes place, then turn around and say with a straight face.</p> <p><img src="https://capitalistexploits.at/wp-content/uploads/2017/05/Screenshot-2017-05-24-19.47.40-1024x844.png" width="450" height="371" class="aligncenter wp-image-16866" /></p> <h3><span style="color: #339966;">Question</span></h3> <p><a href="https://capitalistexploits.at/2017/05/world-whack-3-events-tied-can-see-trends/"><img src="http://www.zerohedge.com/sites/default/files/images/user118858/imageroot/2017/05/25/wow-poll-20170524.png" alt="Washington Poll" width="400" height="243" /></a><br /> </p><p style="text-align: center;"><em><a href="https://capitalistexploits.at/2017/05/world-whack-3-events-tied-can-see-trends/">Cast your vote here</a> and also see what others think is going on</em></p> <p>- Chris </p> <p> <em>"The supreme art of war is to subdue the enemy without fighting."</em> — Sun Tzu, Chinese</p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> <p style="text-align: center;">Liked this article?&nbsp;<a href="https://capitalistexploits.at/signup/">Don't miss our future missives and podcasts, and</a></p> <p style="text-align: center;"><a href="https://capitalistexploits.at/signup/">get access</a>&nbsp;<a href="https://capitalistexploits.at/signup/" style="line-height: 20.8px; font-size: 1em;">to free subscriber-only content here.</a></p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> http://www.zerohedge.com/news/2017-05-25/3-events-all-tied-can-you-see-trends#comments Afghanistan American people of German descent China Climate change skepticism and denial Donald Trump Germany Iraq Middle East Middle East North Africa Politics of the United States President Obama The Apprentice United States US government WWE Hall of Fame Thu, 25 May 2017 23:27:36 +0000 Capitalist Exploits 596674 at http://www.zerohedge.com Pelosi Vows To Get A Bunch Of Teenagers Fired If Democrats Win Congress http://www.zerohedge.com/news/2017-05-25/pelosi-vows-get-bunch-teenagers-fired-if-democrats-win-congress <p>Top congressional Democrats, including Senate Minority Leader Chuck Schumer, House Minority Leader Nancy Pelosi, House Minority Whip Steny Hoyer and Bernie Sanders, held a press conference earlier today to officially introduce their "Fight For $15" minimum wage legislation, dubbed the <a href="https://www.sanders.senate.gov/download/15-minimum-wage-fact-sheet-2017?inline=file">Raise the Wage Act</a>.&nbsp; <strong>Among other things, the bill primarily serves to more than double the federal minimum wage from it's current level of $7.25 to $15 by 2024.&nbsp; </strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The Raise the Wage Act would raise the minimum wage to $15 per hour by 2024 and would be indexed to the median wage growth thereafter.</strong> These increases would restore the minimum wage to 1968 levels, when the value was at its peak. The bill would also gradually increase the tipped minimum wage, which has been fixed at $2.13 per hour since 1991, bringing it to parity with the regular minimum wage. <strong>Moreover, it would also phase out the youth minimum wage, that allows employers to pay workers under 20 years old a lower wage for the first 90 calendar days of work.</strong> This legislation would give more than 41 million low-wage workers a raise, increasing the wages of almost 30 percent of the wage-earning workforce in the United States.</p> <p>&nbsp;</p> <p>The Raise the Wage Act is front loaded to provide the biggest impact to workers. Upon enactment, the federal minimum wage would be increased from $7.25 to $9.25.&nbsp; The following increases are: <strong>$10.10 (2018); $11 (2019); $12 (2020); $13 (2012); $13.50 (2013); $14.20 (2023); $15.00 (2024).</strong></p> </blockquote> <p>Meanwhile, foreshadowing the Democrats' key campaign promise in 2018, undoubtedly designed to win back working class voters of the Midwest who abandoned them 'yugely' in 2016, <strong>Nancy Pelosi vowed her party would pass a $15 per hour minimum wage within the first 100 hours if they manage to recapture Congress</strong> during the next election cycle.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"We're willing to fight for $15, and I'll tell you one thing for sure, we win the election and in the first 100 hours we will pass a $15 per hour minimum wage."</strong></p> <p>&nbsp;</p> <p>"We'd rather have it now.&nbsp; We'd rather win on the issue than worry about the election."</p> </blockquote> <p><iframe src="https://www.youtube.com/embed/YJdXzsbH4pk?ecver=2" width="600" height="337" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>Of course, seemingly no amount of empirical evidence will ever convince progressives that raising minimum wages to artificially elevated levels is a bad idea.&nbsp; Somehow the basic idea that raising the cost of a good ultimately results in lower consumption of that good just doesn't compute.&nbsp; </p> <p>So while it will undoubtedly fall on deaf ears, we would once again point Ms. Pelosi to a recent study from the <a href="https://www.americanactionforum.org/research/job-wage-implications-state-minimum-wage-increases-2017-beyond/">American Action Forum</a> (AAF) which estimated that <strong>2.6 million jobs will be lost around the country over the next several years</strong> as states phase-in minimum wage hikes that have already been passed (see "<a href="http://www.zerohedge.com/news/2017-02-02/state-minimum-wage-hikes-already-passed-law-expected-cost-26-million-jobs-new-study-">State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds</a>").&nbsp; Shockingly, and only after running a lot of really complicated math using complex equations that most of us stupid people just wouldn't understand, <strong>AAF ultimately concluded the whole elasticity of demand thing actually works (a.k.a. 'the higher shit is priced the less people will buy of it')</strong>.</p> <p>Moreover, as Dunkin' Donuts' CEO recently pointed out, a significant number of Americans working for minimum wage are teenagers and not the "older, blue-collar workers" that Bernie and Nancy say they want to help.&nbsp; Which, of course, means that to the extent they get to keep their jobs a fair portion of the minimum wage increases will simply flow to teenagers who may already be a part of affluent families. </p> <p><iframe src="https://www.youtube.com/embed/vRM7X91Buqw?ecver=2" width="600" height="337" frameborder="0"></iframe></p> <p>&nbsp;</p> <p><strong>But goodluck with the crusade, Nancy and Bernie!</strong>&nbsp; If you get hungry along the way, we highly recommend you try out a sandwich from this new<strong> "Big Mac ATM"</strong> which comes with McDonald's special sauce and all the fixin's <strong>but requires exactly 0 of your minimum wage workers to prepare.</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/02/02/2017.02.02%20-%20Big%20Mac_0.JPG" alt="Minimum Wage" width="600" height="470" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="557" height="327" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Pelosi%202.JPG?1495737482" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/pelosi-vows-get-bunch-teenagers-fired-if-democrats-win-congress#comments ATM Bernie Sanders Congress Economy fixed Labor Labour law Law Minimum wage Minimum wage in the United States Minimum wage law Nancy Pelosi Nancy Pelosi Politics Social Issues Socialism Steny Hoyer Wage Thu, 25 May 2017 23:20:00 +0000 Tyler Durden 596657 at http://www.zerohedge.com Discoverer Of DNA's Double-Helix Banned From U of I For "Failing Test Of Decency" http://www.zerohedge.com/news/2017-05-25/discoverer-dnas-double-helix-banned-u-i-failing-test-decency <p><strong>The University of Illinois has capitulated to faculty complaints and rescinded a speaking invitation to Nobel Laureate James Watson, who has ruffled feathers with past comments about race.</strong></p> <p>Watson is<strong> famous for co-discovering the double-helix structure of DNA</strong>, but even a preemptive email stating that he would be giving a<strong><em> &quot;narrowly focused scientific talk&quot;</em></strong> failed to assuage faculty concerns.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_DNA1.jpg"><img height="335" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_DNA1_0.jpg" width="600" /></a></p> <p><strong>The issue is that outside of the research lab, Watson isn&#39;t the same admirable figure: He has made all manner of offensive and racist comments</strong>. <em>In a 2007 interview he said he was &quot;gloomy about the prospect of Africa&quot; because &quot;our social policies are based on the fact that their intelligence is the same as ours &mdash; whereas all the testing says not really.&quot; He also said he hopes everyone is equal but &quot;people who have to deal with black employees find this not true.&quot; He apologized but has made other tasteless, sexist comments that call into question his character and judgment &mdash; but not his scientific expertise.</em></p> <p><a href="http://www.campusreform.org/?ID=9222">As CampusReform.org&#39;s Adam Sabes reports, </a>Watson is known primarily for co-discovering the double-helix structure of DNA along with Francis Crick, but had offered to give a &ldquo;narrowly focused scientific talk&rdquo; at the school&rsquo;s Institute for Genomic Biology about his recent cancer research,<strong> Institute Director Gene Robinson&nbsp;<a href="http://www.news-gazette.com/news/local/2017-05-16/nobel-laureates-talk-ui-canceled-after-faculty-backlash.html">told&nbsp;The News-Gazette of Champaign-Urbana</a>, adding that he considered the offer &ldquo;carefully&rdquo; before deciding to accept</strong>.</p> <p>Robinson said he had anticipated potential objections to Watson&rsquo;s lecture, and attempted to head them off with an email making explicitly clear that the invitation was not an endorsement of Watson&rsquo;s past comments.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;We tried to consider this very carefully in going forward, and different perspectives on the possibilities of him giving a science-based lecture,&rdquo; Robinson explained. <strong>&quot;With respect to his past, the email that I sent out stated very clearly that we didn&#39;t condone any of his past comments, racist comments and sexist comments. And we noted that he had apologized and thought about all those very carefully.&rdquo;</strong></p> <p>&nbsp;</p> <p>&quot;We support Dr. Watson for his discovery and work, and believe that his remorse and subsequent apology to those groups he spoke against are genuine,&rdquo; the email stated, &ldquo;but the IGP&#39;s stance is unchanged&mdash;we do not condone discrimination of any form, and the respect that we give to each individual in our community is paramount.&quot;</p> </blockquote> <p>Robinson&rsquo;s outreach did not assuage the concerns of many faculty members, however, particularly<strong> biological anthropology professor Kate Clancy, who drew the Institute&rsquo;s attention with a series of tweets proposing to organize a protest against Watson&rsquo;s talk.</strong> Less than an hour after she began tweeting, the Institute replied announcing that it had decided to cancel the lecture in response to her complaints.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;In hearing the faculty&#39;s concerns, we decided that the right thing to do was not to have the lecture,&quot; Robinson said, adding that while he respects the principle of free speech, &quot;I really respect the perspectives of the faculty who raised the concern. It was a tough call either way.&quot;</p> </blockquote> <p><em>The Chicago Tribune</em>, however, questioned Robinson&rsquo;s judgment on that front in <a href="http://www.chicagotribune.com/news/opinion/editorials/ct-edit-speech-watson-ilinois-genome-dna-edit-0519-jm-20170518-story.html">an editorial</a>,<strong> arguing that Watson&rsquo;s &ldquo;tasteless, sexist comments&rdquo; do not detract from his &ldquo;scientific expertise,&rdquo; and that cancelling the talk is an example of the &ldquo;reflex on college campuses to shut down offensive or controversial speech as an affront to the community.&rdquo;</strong></p> <p>:Watson&#39;s nixed appearance at the U. of I., not intended as a venue for his repugnant opinions, could have been acceptable as a narrowly focused science talk, since the research institute was clear in repudiating his personal views,&rdquo; the editorial concluded.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em><u>&ldquo;Watson isn&#39;t the only expert in some specific field who otherwise fails tests of decency. Attendees would have come away enlightened by his science lecture.&rdquo;</u></em></strong></p> </blockquote> <p>Student Jacqueline Moffat, conversely, told <em>Campus Reform</em> that she <strong>supports the decision to cancel the speech, saying the Institute can just find another &ldquo;smart&rdquo; person who has not engendered past controversy.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The school should not be promoting someone like that,&rdquo; she asserted. &ldquo;There are plenty of other smart people that we can hear from.&rdquo;</p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="889" height="459" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_DNA.jpg?1495742885" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/discoverer-dnas-double-helix-banned-u-i-failing-test-decency#comments American atheists Biology British people Fellows of the Royal Society Francis Crick Illinois James Watson Molecular biologists Nobel Laureate Science and technology Sigma Xi Tribune University of Illinois Thu, 25 May 2017 22:55:00 +0000 Tyler Durden 596660 at http://www.zerohedge.com Jared Kushner "Under FBI Scrutiny" In Russia Probe: NBC http://www.zerohedge.com/news/2017-05-25/jared-kushner-under-fbi-scrutiny-russia-probe-nbc <p><span style="text-decoration: underline;"><strong>Update: <span style="font-family: mceinline;">&nbsp;</span></strong></span>Just like last week's bombshells, the <a href="https://www.washingtonpost.com/world/national-security/jared-kushner-now-a-focus-in-russia-investigation/2017/05/25/f078db74-40c7-11e7-8c25-44d09ff5a4a8_story.html?tid=sm_tw&amp;utm_term=.e83670e2007c">Washington Post</a> managed to publish an almost identical confirmation of NBC's story within minutes...almost like they coordinated...</p> <p>And, just like NBC, the <strong>Washington Post was careful to hedge their salacious title</strong> (though multiple paragraphs down in the body of the article) <strong>by pointing out that Kushner is not technically a "target" in any investigation and has not been accused of any wrongdoing.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Post has not been told that Kushner is a target — or the central focus — of the investigation, and he has not been accused of any wrongdoing. Target is a word that generally refers to someone who is the main suspect of investigators’ attention, though prosecutors can and do bring charges against people who are not marked with that distinction.</p> </blockquote> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Breaking: Jared Kushner now a focus in Russia investigation <a href="https://t.co/h3WiyrIkC6">https://t.co/h3WiyrIkC6</a></p> <p>— Washington Post (@washingtonpost) <a href="https://twitter.com/washingtonpost/status/867872076706795520">May 25, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>* * * </p> <p>Last week when the Washington Post first reported that a senior White House adviser and "someone close to the president" was under scrutiny by investigators looking into possible coordination between Russia and the Trump campaign, <strong>we noted speculation from the Twittersphere suggesting that that "someone" might be Jared Kushner</strong> (see "<a href="http://www.zerohedge.com/news/2017-05-19/current-wh-official-significant-person-interest-russia-probe-wapo">Unnamed White House Official Under FBI Investigation In Russia Probe</a>")<strong>.</strong>&nbsp; Now, at least according to <a href="http://www.nbcnews.com/news/us-news/jared-kushner-now-under-fbi-scrutiny-russia-probe-say-officials-n764826">NBC</a>, and information garnered from more anonymous sources, it seems that speculation may have been accurate.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Jared Kushner, the president's son-in-law and one of his senior advisers, has come under FBI scrutiny in the Russia investigation, multiple U.S. officials told NBC News.</strong></p> <p>&nbsp;</p> <p>Investigators believe Kushner has significant information relevant to their inquiry, officials said. <strong>That does not mean they suspect him of a crime or intend to charge him.</strong></p> <p>&nbsp;</p> <p>The FBI's scrutiny of Kushner places the bureau's sprawling counterintelligence and criminal investigation not only on the doorstep of the White House, but on the cusp of the Trump family circle. The Washington Post first reported last week that a senior White House official close to Trump was a "person of interest," but did not name the person.</p> </blockquote> <p>Not surprisingly, NBC's report is lacking on actual facts on why Kushner may be a "person of interest" in the FBI's inquiry but is long on innuendo as they point out that he met at least once in December with the Russian ambassador, Sergey Kislyak, and he also met last year with a Russian banker, Sergey Gorkov.</p> <p>Meanwhile, Kushner's lawyer told NBC that he expects to cooperate if contacted in regards to any inquiry.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"Mr. Kushner previously volunteered to share with Congress what he knows about these meetings," Kushner's lawyer, Jamie Gorelick, told NBC News. "He will do the same if he is contacted in connection with any other inquiry.</p> </blockquote> <p>Of course, despite the sensational headline, NBC's report still offers no facts to support their larger thesis of collusion between Russia and the Trump campaign...but it does help advance the provocative narrative just a bit further...</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="728" height="461" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Kushner%202_2.JPG?1495751614" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/jared-kushner-under-fbi-scrutiny-russia-probe-nbc#comments Business Charles Kushner Congress Donald Trump FBI Federal Bureau of Investigation Federal Bureau of Investigation Jamie Gorelick Jared Kushner Kushner NBC Politics Russian interference in the 2016 United States elections Sergey Kislyak Trump family United States White House White House Thu, 25 May 2017 22:49:30 +0000 Tyler Durden 596672 at http://www.zerohedge.com Did The Trump Administration Benefit From Venezuela's Illegal Syrian Oil Sales? http://www.zerohedge.com/news/2017-05-25/trump-may-have-taken-money-illegal-syrian-oil-sales-bbg <p>In the latest bombshell to hit President Trump, <a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market">Bloomberg</a> <strong>reports his administration may have inadvertently taken money from an enemy of the U.S. -&nbsp; but this time it&#39;s the Syrian government of President Bashar al-Assad... via Venezuela.</strong></p> <p>In<a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market"> a report published Thursday</a>, Bloomberg alleges that Citgo officials were involved in a plot to illegally disguise Syrian crude and sell it at gas stations in the U.S..</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Citgo, the U.S. arm of Petroleos de Venezuela, the country&#39;s state-owned oil firm, controversially made a $500,000 donation to Trump&#39;s inauguration fund, which Bloomberg noted was larger than donations from other U.S. corporations. </strong></p> </blockquote> <p>With oil production in Venezuela <strong><a href="http://www.zerohedge.com/news/2017-05-18/venezuelas-oil-production-brink-collapse">seemingly on the brink of collapse,</a></strong> Venezeulan officials allegedly entered into a conspiracy to help disguise the source of Syrian crude, allowing the troubled Socialist &quot;republic&quot; to sell the oil below market price and reap higher profits. The plot was allegedly organized by <strong>a Venezuelan oil trader who was Bloomberg&#39;s main source for the story. </strong></p> <p>Wilmer Ruperti, the trader in question, acknowledged his participation in the scheme during a phone interview, <a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market">Bloomberg reported.</a> Ruperti said he no longer has a role in the scheme, and Bloomberg reported that it&rsquo;s unclear whether the operation is ongoing. Ruperti says Syrian officials approached him in early 2012 during a party at the Syrian Club of Caracas.</p> <p><span style="text-decoration: underline;"><strong>Unsurprisingly, there&#39;s a Russian angle to the story, too. </strong></span></p> <p>With Venezuela&rsquo;s government bleeding revenue, Petroleos de Venezuela year used just under half of its Citgo shares as collateral for a loan from Rosneft, according to a Nov. 30 financial statement filed in Delaware. <strong>A group of U.S. senators recently noted that, thanks to Rosneft&rsquo;s recent purchase of bonds for the troubled oil company on the open market, the Russian oil giant could wind up controlling Citgo should Petroleos de Venezuela default. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/venezuela.JPG"><strong><img src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/venezuela_0.JPG" style="width: 561px; height: 333px;" /></strong></a></p> <p>After agreeing to participate in the scheme, Ruperti had begun renting a guest house on Aruba&rsquo;s northern coast to scout out a refinery when he met a local realtor, Oscar Helmeyer, who played a small role. With Helmeyer&#39;s help, Ruperti tried to arrange the purchase of a massive oil refinery that had been recently shuttered by San-Antonio based Valero Energy Corp. Helmeyer told Bloomberg that Ruperti also met with top Aruban officials, including Prime Minister Mike Eman.</p> <p>The refinery was eventually leased by Petroleos de Venezuela.</p> <p>Ruperti detailed some of the alleged plot in a letter to then-Syrian ambassador to Venezuela Ghassan Abbas. In the letter, Ruperti <strong>suggested forming a business group called &ldquo;Sirius Venezuela&rdquo; and recommended a five-year contract to supply 50,000 to 200,000 barrels a day of Syrian crude, as well as storage capacity for another 6 million Syrian barrels.</strong></p> <p>Beneath his signature, Ruperti included the slogan:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;Socialist fatherland, we will win and we will live.&rdquo;</strong></p> </blockquote> <p><a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market"><em>According to Bloomberg,</em></a> the scheme eventually involved a &ldquo;chain of communication&rdquo; between Syrian and Venezuelan officials that included several executives of Houston-based Citgo Petroleum Corp., the U.S. based subsidiary of Venezuela&rsquo;s state-owned oil company.</p> <p>In a September 2012 letter to Syria&rsquo;s then-ambassador to Venezuela, Ghassan Abbas, Ruperti said the<strong> point of the scheme would be to:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;avoid the boycott that has been implemented by United States of America and the European Community.&rdquo;</p> </blockquote> <p>Though he later told <a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market">Bloomberg </a>that the <strong>purpose of the scheme would be &ldquo;to make a lot of money.&rdquo;</strong></p> <p>For Venezuela, <a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market">Bloomberg asserted </a>that the<strong> plot forms part of an international agenda initiated by the late socialist President Hugo Chavez that has made the country an ally of Iran and Cuba.</strong></p> <p>But politics aside, it&rsquo;s clear why South America&rsquo;s largest oil exporter jumped at the deal: <a href="https://www.bloomberg.com/politics/articles/2017-05-25/venezuela-s-secret-plot-to-sell-banned-syrian-oil-in-u-s-market">As Bloomberg reports,</a> Venezuela is desperate for cash <strong>after years of government mismanagement drove oil output to a three-decade low, plunged the economy into a depression and fueled weeks of deadly nationwide protests.</strong></p> <p><iframe frameborder="0" height="315" src="https://www.bloomberg.com/api/embed/iframe?id=f763cd59-ce52-4b71-a693-3180d5f4cee9" width="560"></iframe></p> <p>As of April, oil production stood at 1.956 million barrels per day (mb/d), down 10 percent from last year, and down more than 17 percent from 2015 levels - and output continues to trend downward. James Williams, energy economist at WTRG Economics, <a href="http://www.marketwatch.com/story/venezuelan-oil-production-may-tumble-20-by-the-end-of-2017-2017-03-02">told MarketWatch in March</a> <strong>that he expects Venezuela to lose another 200,000 to 300,000 bpd this year, another 10 to 15 percent decline from 1Q2017 levels.</strong></p> <p>Venezuela&#39;s precarious situation has been made even more exasperating due to the drop in crude oil prices that followed Thursday&#39;s announcement of a nine-month production cut deal extension, an attempt to bring the global oil market back into equilibrium. <strong>Unfortunately, the market was disappointed that certain non-OPEC producers (U.S. shale) won&#39;t be a party to the deal. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/crudeproduction.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/crudeproduction_0.JPG" style="width: 560px; height: 299px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1356" height="805" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/venezuela.JPG?1495731080" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/trump-may-have-taken-money-illegal-syrian-oil-sales-bbg#comments Americas Bashar al-Assad BP Business Business Citgo Crude Crude Oil default Economy Iran Organization of Petroleum-Exporting Countries PDVSA Politics Syrian Club of Caracas Syrian government Trump Administration Venezuela Venezuela’s government Wilmer Ruperti Thu, 25 May 2017 22:35:00 +0000 Tyler Durden 596644 at http://www.zerohedge.com Trump Will Appeal Travel Ban To Supreme Court http://www.zerohedge.com/news/2017-05-25/trump-will-appeal-travel-ban-supreme-court <p>Well, Trump did warn he would appeal the travel ban all the way to the Supreme Court if he had to, and that's precisely what he plans on doing.</p> <p>On Thursday afternoon, shortly after the 4th U.S. Circuit Court of Appeals, in a 10-3 vote that Trump's travel ban likely violates the constitution and ruled against the executive order, <strong>Attorney General Jeff Sessions said the Justice Department will ask the Supreme Court to review the appeals court ruling. </strong>The 4th Circuit (based in Richmond, Va) is the first appeals court to rule on the revised travel ban unveiled in March. A second appeals court, the 9th U.S. Circuit based in San Francisco, is also weighing the revised travel ban after a federal judge in Hawaii blocked it. </p> <p>The first travel ban issued Jan. 27 was aimed at seven countries and triggered chaos and protests across the country as travelers were stopped from boarding international flights and detained at airports for hours. Trump tweaked the order after the 9th U.S. Circuit Court of Appeals refused to reinstate the ban. Following the revision, Trump's administration had hoped it would avoid the legal problems that the first version from January encountered, but it was not meant to be. </p> <p>The new version made it clear the 90-day ban covering those six countries doesn't apply to those who already have valid visas. It got rid of language that would give priority to religious minorities and removed Iraq from the list of banned countries. But critics said the changes don't erase the legal problems with the ban.</p> <p>As described previously, a core question in the case before the 4th Circuit was whether courts should consider Trump's public statements about wanting to bar Muslims from entering the country as evidence that the policy was primarily motivated by the religion. Trump's administration argued the court should not look beyond the text of the executive order, which doesn't mention religion. The countries were not chosen because they are predominantly Muslim but because they present terrorism risks, the administration said.</p> <p>But Chief Judge Roger L. Gregory wrote that the government's "<strong>asserted national security interest ... appears to be a post hoc, secondary justification for an executive action rooted in religious animus and intended to bar Muslims from this country.</strong>" </p> <p>President Donald Trump's revised travel ban "speaks with vague words of national security, but in context drips with religious intolerance, animus and discrimination," the appeals court also said Thursday in ruling against the executive order.</p> <p>To this, Jeff Sessions responded that the court's ruling blocks Trump's "efforts to strengthen this country's national security" adding that Trump is not required to admit people from "countries that sponsor or shelter terrorism until he determines that they can be properly vetted" and don't pose a security threat.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The three dissenting judges, all appointed by Republican presidents, said the majority was wrong to look beyond the text of the order. Calling the executive order a "modest action," Judge Paul V. Niemeyer wrote that Supreme Court precedent required the court to consider the order "on its face." Looked at that way, the executive order "is entirely without constitutional fault," he wrote.</p> </blockquote> <p>As for SCOTUS, <a href="http://hosted.ap.org/dynamic/stories/U/US_TRAVEL_BAN_LAWSUITS?SITE=AP&amp;SECTION=HOME&amp;TEMPLATE=DEFAULT&amp;CTIME=2017-05-25-17-49-47">according to AP, </a>the Supreme Court would likely step into the case if asked as the justices almost always have the final say when a lower court strikes down a federal law or presidential action. Trump could try to persuade the Supreme Court to allow the policy to take effect, even while the justices weigh whether to hear the case, by arguing that the court orders blocking the ban make the country less safe. If the administration does ask the court to step in, the justices' first vote could signal the court's ultimate decision.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Ilya Somin, a law professor at George Mason University, said if the Supreme Court follows a partisan divide, the Trump administration may fare better since five of the nine are Republican nominees. Still, he said, it's difficult to make a confident prediction because "Supreme Court justices don't always vote in ideological lockstep."</p> </blockquote> <p>Critics of Trump's order were delighted with the outcome: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The case ruled on by the 4th Circuit was originally brought in Maryland by the American Civil Liberties Union and the National Immigration Law Center on behalf of organizations as well as people who live in the U.S. and fear the executive order will prevent them from being reunited with family members from the banned countries.&nbsp; </p> <p>&nbsp;</p> <p>"President Trump's Muslim ban violates the Constitution, as this decision strongly reaffirms," said Omar Jadwat, director of the ACLU's Immigrants' Rights Project, who argued the case. "The Constitution's prohibition on actions disfavoring or condemning any religion is a fundamental protection for all of us, and we can all be glad that the court today rejected the government's request to set that principle aside."</p> </blockquote> <p>And now it will be up to the Supreme Court to rule once again on this issue, hopefully finally making it go away. Travel ban aside, the upcoming case will be a litmus test of just what (and how strong) the ideological leanings of the revised SCOTUS bench are, now that Gorsuch is in town.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="500" height="220" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/supreme%20court_0.jpg?1495751191" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/trump-will-appeal-travel-ban-supreme-court#comments 4th U.S. Circuit Court of Appeals 9th U.S. Circuit Court of Appeals American Civil Liberties Union American Civil Liberties Union Department of Justice Donald Trump Executive Order 13769 Foreign relations of the United States George Mason University International relations Iran–United States relations Iraq Iraq–United States relations Law Libya–United States relations National Immigration Law Center national security Politics Presidency of Donald Trump SCOTUS Sudan–United States relations Supreme Court Supreme Court of the United States Syria–United States relations Trump Administration Trump's administration UN Court Thu, 25 May 2017 22:31:56 +0000 Tyler Durden 596670 at http://www.zerohedge.com Cryptocurency Chaos: Bitcoin Bounces Back After Crashing As Asian Fever Re-Emerges http://www.zerohedge.com/news/2017-05-25/cryptocurency-chaos-bitcoin-bounces-back-after-crashing-asian-fever-re-emerges <p>After <strong>crashing $500 from its intraday highs</strong> today, Bitcoin has bounced back $300 off its intraday lows extending gains into what is likely to be another<strong> frenetic Asian session</strong>. While there are numerous drivers of the recent action, <strong>&#39;scaling&#39; and &#39;asian fever&#39; are the greatest factors</strong> with Japanese and Korean premia exploding.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc1.jpg"><img height="401" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Of course in context today&#39;s intraday drop is de minimus...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc2_0.jpg" style="width: 600px; height: 475px;" /></a></p> <p>&nbsp;</p> <p><a href="https://www.cryptocompare.com/"><em>But as CryptoCompare.com&#39;s founder Charles Hayter explains, </em></a>while a lot of news outlets are reporting on the extraordinary rise in Bitcoin (Bitcoin has risen 160% over the last three months to reach a capitalisation of $45bn according to the CryptoCompare BTC/USD Index, Ethereum too has seen its market capitalisation jump 330% in the past three months to reach $20bn according to the CryptoCompare BTC/ETH Index), <u><strong>it is Japan, Korea and Asian interest that is causing the price to rise and dragging up Western prices on the back of regulatory moves as well as scaling.</strong></u></p> <p><strong>This is a bubble but also a rerating </strong>- the question is the level of speculation as media begets more price rises and triggers more exposure and buying. The ICO phenomenon is contributing too as traders wash in and out of the major cryptos chasing and pumping the next ten bagger.</p> <p><strong><em>The party will end as Asian premia come back into line with Western markets or even drag them down as panic selling takes hold. The exact trigger is yet to be seen although last time it was Mt Gox.&nbsp; </em></strong></p> <h2><u>Summary - Scaling &amp; Asian Fever</u></h2> <p>The Bitcoin and Ethereum markets have seen global dislocation as price premia have appeared specifically on the JPY and KRW markets - Asian and more specifically Korean fever is taking hold. Coupled with this a tentative agreement on scaling has been announced from the Consensus Scaling conference in New York that should put to bed Bitcoin&#39;s civil war on how to evolve the network and stop the backlog of transactions.</p> <p><strong>So its a mixture of factors driving the price </strong>- the scaling solution is removing the negativity that surrounded bitcoin in the Western world but the Asian markets with their premia are dragging the price higher with their irrational exuberance.&nbsp;</p> <ul> <li>the scaling debate has been haunting bitcoin for the past 2 years - with clear water from a political standpoint it looks like bitcoin can move forward and scale to become a global payments network. That said we have been in this situation before where worries were mollified.</li> <li>Korean markets are buying Bitcoin at over $4000 - a $1400 premium or 50% premium to the USD price. Korean volumes hold 11% of total bitcoin trading.</li> <li>Ethereum is also trading at $316 dollars on Korean markets where the pair dominates trading witha 31% market share.</li> <li>Bitcoin Trading in Japan is occurring at a &nbsp;$3100 where the BTC-JPYaccounts for 31% of th global market.</li> <li>Ethereum is also trading at a 10% premium in Japan in comparison to the JPY markets.</li> </ul> <h3>Scaling</h3> <p>After putting out a draft a few days ago which was to be known as the &ldquo;Barry Sillbert agreement&rdquo;, the Digital Currency Group (DCG) has issued its official proposal, revealing that miners and businesses came to a consensus to solve bitcoin&rsquo;s underlying scaling issue.</p> <p>The agreement was signed by a group of companies representing the bitcoin industry and community with 83.3 percent of hashing power, 20.5 million bitcoin wallets and 5.1 billion on-chain transaction volume, agreed to the activation of Segregated Witness (Segwit) and a 2MB hard fork&nbsp;within six months&nbsp;thereafter.</p> <p>While this seems like a conclusion to the current scaling issues, many have raised technical concerns regarding the signalling of segwit which at bit 4 and is incompatible with the current segwit activation from core. According to the proposal SegWit would be activated at an 80% threshold, signaling at bit 4.</p> <p>The prospect of having an hard fork implemented&nbsp;in six months&nbsp;has also alarmed some users who believe that this is not enough time to code, test and deploy said hard fork to increase the block size limit to 2 MB.</p> <p>Nevertheless, several companies have committed to provide technical and engineering support to test and support the upgrade software, as well as to assist companies with preparing for the upgrades, including Abra, BitClub Netwowrk, Bitcoin.com, BitFury, BitGo, Bitmain, BitPay, Bloq, Circle, RSK Labs and Xapo.</p> <p>While it is still unclear if the agreement can be implemented, politically speaking it solves all the current issues found in the scaling debate and brings back the essence of the Hong Kong agreement. Companies and pools that have opposed SegWit to support the BU protocol, like Bitcoin.com and Bitmain, have agreed to this compromise which means that we are definitely moving in the right direction.</p> <h3>Korea Premia</h3> <p>Korea have caught the bitcoin and ethereum bug and are buying up large quantities of the Crypto Currency.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto1_1.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto1_1_0.png" style="width: 600px; height: 309px;" /></a></p> <p>Perhaps key has been the level of Korean Chaebol uptake in the latest round of the Enterprise Ethereum Alliance.</p> <p>The Enterprise Ethereum Alliance has more than tripled in size, with the group announcing 86 new members, including South Korean telecom Samsung, pharmaceuticals giant Merck, automaker Toyota, investor communications platform Broadridge, financial markets firm DTCC, and the Illinois Department of Financial and Professional Regulation, which oversees licensed businesses in the state.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto1.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto1_0.png" style="width: 600px; height: 309px;" /></a></p> <p>The Korean market share of Bitcoin buying has risen from 5%-15% over the past month.Their share of ETH fiat flow has risen to 31%.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc3_0.jpg" style="width: 600px; height: 359px;" /></a></p> <p><em><a href="http://cryptocompare.us15.list-manage2.com/track/click?u=9fa4e1aea43b8e6a60a7eb765&amp;id=c75ab1acbb&amp;e=984e7fd9a5" target="_blank">https://www.cryptocompare.com/coins/eth/an</a><a href="http://cryptocompare.us15.list-manage.com/track/click?u=9fa4e1aea43b8e6a60a7eb765&amp;id=aae4916ffa&amp;e=984e7fd9a5" target="_blank">alysis/USD</a></em></p> <h3>Japan and JPY Premia</h3> <p>The Japanese have given bitcoin the greenlight as a currency and are looking to increase the rigour that their exchanges are subject too - all in all positive for the industry as it moves more mainstream.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto3.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto3_0.png" style="width: 600px; height: 309px;" /></a></p> <p>Alongside you are seeing Chinese exchanges switching bank online after the PBoC halted withdrawals due to AML and KYC concerns in January this year. <strong>These exchanges have been trading at a steep discount for the past couple of months as money has essentially been trapped by the PBoC&#39;s diktats.&nbsp;</strong></p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_Crypto4_0.png" style="width: 600px; height: 309px;" /></p> <p>Coupled with this you also have various large conglomerates looking at the space with a raft of industry moving in the direction of bitcoin and offering it as a payment method.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_btc4_0.jpg" style="width: 600px; height: 356px;" /></a></p> <p>*&nbsp; *&nbsp; *</p> <p><strong>This news is the latest bit of good news for the cryptocurrency.</strong><a href="http://www.businessinsider.com/bitcoin-price-scaling-agreement-2017-5"> </a></p> <p>At the beginning of April, <strong>Japan </strong>announced bitcoin had become a&nbsp;<a href="http://www.businessinsider.com/bitcoin-price-spikes-as-japan-recognizes-it-as-a-legal-payment-method-2017-4">legal payment method</a>&nbsp;in the country.</p> <p>Additionally, Ulmart, <strong>Russia</strong>&#39;s largest online retailer, said it would&nbsp;<a href="http://www.businessinsider.com/bitcoin-price-shoots-past-1800-for-the-first-time2017-5">begin accepting bitcoin</a>&nbsp;even though Russia had said it wouldn&#39;t explore the cryptocurrency until 2018.</p> <p>The gains also seem to be boosted by speculation the US Securities and Exchange Commission could overturn its&nbsp;<a href="http://www.businessinsider.com/bitcoin-price-is-getting-close-to-its-all-time-high-2017-4">ruling on the Winklevoss twins&#39; <strong>bitcoin exchange-traded fund</strong></a><strong>.</strong></p> <p>And most recently,<a href="http://www.zerohedge.com/news/2017-05-23/fidelity-mining-bitcoin-abigail-johnson-says"> Fidelity&#39;s CEO Abigail Johnson lending some credibility to the crypto-currency, </a>explaning how her firm was mining Bitcoin, and accepting payments in the virtual currency.</p> <p>And finally, as a reminder, it appears Bitcoin is one of the only (un-rigged) assets in the world that is reflective of global policy and geopolitical uncertainty...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170520_BTC1.jpg"><img height="323" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170520_BTC1_0.jpg" width="600" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1291" height="862" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_btc1.jpg?1495748050" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/cryptocurency-chaos-bitcoin-bounces-back-after-crashing-asian-fever-re-emerges#comments Bitcoin Bitcoin BitPay BTC/ETH BTC/USD BU protocol Business Coincheck Cryptocurrencies Digital currency exchange Digital Currency Group Enterprise Ethereum Alliance Ethereum Finance Greenlight Hong Kong Illinois Illinois Department of Financial and Professional Regulation Irrational Exuberance Japan Legality of bitcoin by country or territory Market Share Money Mt. Gox People's Bank of China Securities and Exchange Commission Toyota U.S. Securities and Exchange Commission Thu, 25 May 2017 22:05:00 +0000 Tyler Durden 596665 at http://www.zerohedge.com JPMorgan: US Debt Is Never Going Down Again http://www.zerohedge.com/news/2017-05-25/jpm-us-debt-never-doing-down-again <p>After yesterday Goldman mocked Trump's budget (ironic as it was Trump's ex-Goldman Chief Economic Advisor who conceived it) and said it had zero chance of being implemented, today it was JPM's turn to share some purely philosophical thoughts on the shape of future US income and spending, which as we learned yesterday could balance only if the US grows for 10 years at a 3% growth rate, something it has never done, while slashing nearly $4 trillion in in spending, something else it has never done.</p> <p>What caught our attention in the note by JPM's Jesse Edgerton was his discussion on the thorniest issue surrounding the US: its unprecedented debt addition, what America's debt/GDP will look like over the next 30 years, and whether there is any chance it could decline as conservatives in government hope will happen. </p> <p>The answer to the final point according to JPMorgan, is a very resounding <strong>no</strong>, or as the bank politely puts it, "<span style="text-decoration: underline;"><strong>Despite this week’s budget proposal, legislative changes that would reverse debt growth look unlikely to us</strong></span>." Translated: <em>US debt is never going down again.</em> </p> <p>Here's why:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>As the US population ages in the coming decades, federal government spending on Social Security and Medicare are set to grow as a fraction of US GDP. Meanwhile, our current tax system is expected to collect a roughly constant fraction of GDP in revenues. Thus, deficits and debt will likely grow over time. <strong>The Congressional Budget Office (CBO) currently projects that the ratio of debt to GDP would reach an&nbsp; unprecedented 150% within 30 years under current law </strong>(Figure 1). </p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20debt%20cbo%20forecast.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20debt%20cbo%20forecast_0.jpg" width="500" height="315" /></a></p> <p>Figure 1 shows the CBO's central projection for the ratio of federal debt held by the public to GDP under current law. (Debt “held by the public” excludes government trust fund holdings, includes foreign and Federal Reserve holdings, and is currently about $14.4 trillion.) The 2016 level of 77% is the highest in history outside of the World War II era. This debt ratio is projected to reach a new all-time high of 107% by 2035 and 150% by the end of the 30-year forecast horizon in 2047.</p> </blockquote> <p>An interesting aside from Edgerton: is it worth even worrying about debt:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>It is debatable how much these projections should cause immediate concern. Many (though not all) economists would agree that it can be appropriate for borrowing and debt to increase when the economy is weak to provide offsetting fiscal stimulus. Once the debt is on the books, <strong>there may be no inherent reason it cannot be serviced in perpetuity and never paid back. </strong>Even the extent to which we should be concerned about the debt placing a burden on future generations is unclear— if the debt is largely internal to the US, servicing or repayment ultimately involves some future Americans writing checks to other future Americans. <strong>And if future generations will be richer than we are due to economic growth, perhaps it makes sense to try to get them to pay for our retirement</strong>.</p> </blockquote> <p>Once this rhetorical musing is past however, JPM shares is a rare admission for a bank that a record debt load may actually be a bad thing.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>To be sure, it is debatable how large a problem this debt growth represents, and long-run debt projections are highly uncertain. <strong>But, in our view, large deficits and debt likely place some burden on future generations, reduce capital formation, and create some small risk of financial crisis</strong>. Thus, there are solid arguments why we should aim to reduce debt ratios from current high levels when the economy is at full employment, as we believe it is now. </p> </blockquote> <p>Such somber evaluation of the nation's debt crisis: our compliments. Unfortunately, it is what JPM says next that is worse, because it too is spot on: the reason why debt will never again decline.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Although the administration’s budget proposal purports to reduce debt growth, <strong>we currently see little appetite in Washington for the tax increases or spending cuts that could achieve this outcome</strong>. Our baseline forecast still includes a modest deficit-financed tax cut that would push in the opposite direction.</p> </blockquote> <p>JPM's dour conclusion:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>With the unemployment rate now at 4.4%, solidly below our 5% estimate of its natural rate, we see no reason for fiscal policy to try to boost the economy right now—in fact, it would make more sense to slow it down. And we do tend to think that high borrowing and debt levels have long run costs: <strong>they likely reduce national saving, burdening future generations with external debt, and compete with the private sector for funds, reducing capital formation. </strong>Plus, <strong>an ever-growing debt ratio brings at least some small risk that investors would eventually grow concerned about the safety and soundness of US debt, feasibly triggering a rapid and destabilizing repricing.</strong></p> </blockquote> <p>We don't know if JPM's gloomy assessment is right, but one thing we are certain of: the last bolded sentence is one which nobody will think twice about, until it is far too late to do anything to prevent it from happening. Here's why:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>What could this look like in practice? Well, simple arithmetic shows that reducing deficits requires either higher revenues or lower spending. Higher revenues could come from either increasing tax rates or boosting incomes through channels like labor force participation, productivity growth, or immigration. (We note that we do not see any evidence that reducing tax rates would induce enough additional income growth to increase tax revenues.) And lower spending could similarly come from direct cuts or from other channels like reducing demand for safety net spending or slowing growth in medical costs. But as&nbsp; discussed above, <strong>the chance of changes like these being enacted in the coming years looks low to us.</strong></p> </blockquote> <p>. . .</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="763" height="481" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/jpm%20debt%20cbo%20forecast.jpg?1495749111" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/jpm-us-debt-never-doing-down-again#comments Business Capital Formation Congressional Budget Office Congressional Budget Office Debt Debt-to-GDP ratio Economy Economy of the United States External debt Federal Reserve Finance Fiscal policy Government budget balance Macroeconomics Medicare Medicare National debt of the United States Political debates about the United States federal budget Unemployment United States fiscal cliff US Federal Reserve Thu, 25 May 2017 22:02:13 +0000 Tyler Durden 596666 at http://www.zerohedge.com