http://www.zerohedge.com/fullrss2.xml/feed en "It's The Inverse Of Keynes" - Earnings Season Was Very, Very Bad http://www.zerohedge.com/news/2017-03-24/its-inverse-keynes-earnings-season-was-very-very-bad <p><a href="http://www.alhambrapartners.com/2017/03/24/the-inverse-of-keynes/"><em>Authored by Jeffrey Snider via Alhambra Investment Partners,</em></a></p> <p><span style="color: #000000;"><strong>With nearly all of the S&amp;P 500 companies having reported their Q4 numbers, we can safely claim that it was a very bad earnings season.</strong> It may seem incredulous to categorize the quarter that way given that EPS growth (as reported) was +29%, but even that rate tells us something significant about how there is, actually, a relationship between economy and at least corporate profits. Keynes famously said that we should never worry about the long run for there we will all be dead, but EPS has arrived at the long run and there is still quite a lot of living to do.</span></p> <p><span style="color: #000000;">As late as October, analysts were projecting $29 in earnings for the S&amp;P 500 in Q4 2016. As of the middle of the earnings reports last month, that estimate suddenly dropped to just $26.37. In the month since that time, with the almost all of the rest having now reported, the current figure is just $24.15 &ndash; a decline of over $2 in four weeks. <strong>Therefore, 29% growth is hugely disappointing because it wasn&rsquo;t 55% growth as was projected when the quarter began.</strong></span></p> <p><img class="aligncenter size-full wp-image-43767" src="http://www.alhambrapartners.com/wp-content/uploads/2017/03/ABOOK-Mar-2017-EPS-Q4-2016.png" style="width: 599px; height: 375px;" /></p> <p><span style="color: #000000;"><strong>It is also the timing of the downgrades that is important as it relates to both &ldquo;reflation&rdquo; and the economy meant to support it. </strong>All throughout last year, in the aftermath of the near-recession to start 2016, EPS estimates for Q4 (and beyond) were very stable, unusually so given the recent past. That shows us how analysts, at least, were expecting the economy to go once it got past &ldquo;global turmoil.&rdquo; It was the &ldquo;V&rdquo; shaped rebound typical for past cyclical behavior.</span></p> <p><span style="color: #000000;"><strong>But it wasn&rsquo;t until companies actually started reporting earnings that the belief was tested and then found severely lacking.</strong> With just $24.15 for Q4, total EPS was for the calendar year less than $95, the ninth straight quarter below the $100 level. More importantly, on a trailing-twelve month basis, EPS don&rsquo;t appear to be in any hurry (except in future estimates) to revisit the prior peak of $106 all the way back in Q3 2014.</span></p> <p><img class="aligncenter size-full wp-image-43769" src="http://www.alhambrapartners.com/wp-content/uploads/2017/03/ABOOK-Mar-2017-EPS-2016-Est.png" style="width: 599px; height: 375px;" /></p> <p><img class="aligncenter size-full wp-image-43766" src="http://www.alhambrapartners.com/wp-content/uploads/2017/03/ABOOK-Mar-2017-EPS-FV.png" style="width: 599px; height: 375px;" /></p> <p><span style="color: #000000;">As noted <a href="http://www.alhambrapartners.com/2017/02/21/the-market-is-not-the-economy-but-earnings-are-closer/">last month</a>, <strong>that means a great deal of consistency between earnings and economy.&nbsp;</strong></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #000000;">The recovery in earnings is as lackluster as the recovery in economy, a more constructed relationship where stocks are concerned. That leaves share prices, in general, operating on the far end of the probability spectrum; where everything has to go just right in the near future, including whatever may come out of Trump &ldquo;stimulus&rdquo; and economic policies. EPS, however, suggests, as the calculations for GDP potential, that that would be a very low probability outcome, including a high risk of &ldquo;something&rdquo; going wrong all over again just like it was in 2014.</span></p> </blockquote> <p><span style="color: #000000;"><strong>For shareholders, that leaves them in a precarious position expecting something that just isn&rsquo;t very likely.</strong> Worse, any objective review of economic prospects for years before suggested the very same, meaning that nothing has really changed in terms of the long run except actual reported earnings which are supposed to matter more.</span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #000000;">Again, the primary problem was in fundamentally misreading and misinterpreting what QE was &ndash; it was not money printing no matter how many times the media repeats the assertion supposedly derived from the editorial standards for what constitutes good authority. What should have been considered to a greater degree was how these views on QE amounted to little more than confirmation bias. All the evidence to that point suggested QE wasn&rsquo;t working and hadn&rsquo;t worked, established strictly by the fact that there had already been a second years earlier (and then a third, and then a fourth). From this view, it was far less reasonable to expect EPS for the S&amp;P 500 to ever get near $145.</span></p> </blockquote> <p><span style="color: #000000;"><strong>Therein lies our stock market revisit with the dot-coms, not just in terms of valuations but more so the psychology of them.</strong> Stock investors wanted QE to work just as they wanted to believe in the late 1990&rsquo;s Alan Greenspan was a genius who had engineered a &ldquo;new normal&rdquo; then of unparalleled, low volatility prosperity.</span></p> <p><img class="aligncenter size-full wp-image-43770" src="http://www.alhambrapartners.com/wp-content/uploads/2017/03/ABOOK-Mar-2017-EPS-TTm-Output-Gap.png" style="width: 599px; height: 375px;" /></p> <p><img class="aligncenter size-full wp-image-43768" src="http://www.alhambrapartners.com/wp-content/uploads/2017/03/ABOOK-Mar-2017-EPS-Trajectory.png" style="width: 600px; height: 394px;" /></p> <p><span style="color: #000000;"><strong>In a curious sort of way, overvaluation in this manner actually makes stock prices &ldquo;stickier.&rdquo; </strong>What I mean by that is that when stocks are so greatly and positively diverge from fundamentals it is very human to think and believe that there<em> must</em> be a reason they are that way, even if that reason isn&rsquo;t immediately apparent or so often contradicted. From this standpoint of rationalization, why not QE3 or the maestro? Conversely, if stock prices are questionable then it must be because stocks themselves are rationally questioned.</span></p> <p><u><em><strong><span style="color: #000000;">It is the situation where &ldquo;dumb&rdquo; money makes all the wrong choices, selling at the bottom or near enough to it after having bought hand over fist at the top. Irrationally, when stocks are so stretched in valuation they can appear as the safest place to be.</span></strong></em></u></p> <p><span style="color: #000000;">In fundamental terms of earnings, there is only further confirmation of a lack of growth, both as a matter of the rebound from early 2016 as well as from the global slowdown in 2012. At $94.54, ttm EPS are almost exactly the same now as when QE3 <em>started</em>, and are only <em><strong>6.8%</strong></em> more than Q1 2012 all those years ago! For that lack of growth, the stocks in the index are trading in the aggregate at more than 23 times posted earnings. <strong>It is the inverse of Keynes, where there is no consideration at all <em>except</em> for the long run and how some unknowable magic combination of policies will surely make it such a happy and prosperous place &ndash; even though none so far have come close.</strong></span></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="613" height="374" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170324_EPS.jpg?1490376596" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/its-inverse-keynes-earnings-season-was-very-very-bad#comments Alan Greenspan Business Capitalism Economic history of the Dutch Republic Economy Finance Financial history of the Dutch Republic Fundamental analysis Money New Normal None Recession recovery S&P 500 Stock market Stock selection criterion Stock valuation Valuation Volatility Fri, 24 Mar 2017 23:50:00 +0000 Tyler Durden 591698 at http://www.zerohedge.com The Sad State Of America's Infrastructure In One Infographic http://www.zerohedge.com/news/2017-03-24/sad-state-americas-infrastructure-one-infographic <p><em><strong>Every year, Americans spend a combined 600,000 years stuck in traffic</strong></em>, and <a href="http://www.visualcapitalist.com/state-americas-infrastructure-infographic/">Visual Capitalist&#39;s Jeff Desjardins notes</a>, if you&rsquo;re thinking that time could be spent a little more productively, you&rsquo;re not the only one.</p> <p>In fact, <strong>even politicians are taking notice of aging and insufficient infrastructure in the United States.</strong> Recently, President Trump has started mapping out his $1 trillion plan to rebuild the country&rsquo;s roads, bridges, and airports &ndash; and it is worth mentioning that infrastructure spending was also a key component of Bernie Sanders&rsquo; platform as well.</p> <h2><u>A LOOK AT AMERICA&rsquo;S INFRASTRUCTURE</u></h2> <p>Today&rsquo;s infographic is from&nbsp;<a href="https://htt.io/state-of-american-infrastructure/">HighTide Technologies</a>, and it dives into the infrastructure situation in the United States, including a comparison of federal and state spending.</p> <div style="clear:both"><a href="http://www.visualcapitalist.com/state-americas-infrastructure-infographic/"><img src="http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2017/03/american-infrastructure.png" style="border-width: 0px; border-style: solid; height: 5613px; width: 600px;" /></a></div> <div><em>Courtesy of: <a href="http://www.visualcapitalist.com">Visual Capitalist</a></em></div> <p>&nbsp;</p> <p>According to the American Society of Civil Engineers, <em><strong>the United States currently has an&nbsp;<a href="http://www.reuters.com/article/us-usa-infrastructure-idUSKCN0Y12K6">&ldquo;infrastructure gap&rdquo;</a>.</strong></em> If the discrepancy is not closed between what needs to be invested in infrastructure and what is actually invested,<strong><em> it could ultimately create a $4 trillion drag on GDP by 2025.</em></strong></p> <p>As a result, between 2016 and 2025, each American household will lose $3,400 in disposable income due to infrastructure inefficiencies.</p> <h2><u>WHAT NEEDS TO BE FIXED?</u></h2> <p><strong><em>Should money go to roadways, airports, water systems, broadband networks, or rail?</em></strong></p> <p>The biggest challenge facing America&rsquo;s infrastructure problem is where to get the biggest ROI from infrastructure investments. Putting a trillion dollars towards problems that don&rsquo;t really exist would be a catastrophic failure to everyone involved, with the exception of any crony capitalists that find a way to profit.</p> <p>One viewpoint on this again comes from the&nbsp;<a href="http://www.thefiscaltimes.com/2016/02/25/Roads-Crumble-Infrastructure-Spending-Hits-30-Year-Low">American Society of Civil Engineers</a>: they figure that by 2020, the U.S. needs to put $1.7 trillion towards roads, bridges and transit, $736 billion to electricity and power grids, $391 billion towards schools, $134 billion to airports, and $131 billion to waterways and related projects.</p> <p>But even with these kinds of targets in place, how the decisions are actually made is another potential issue. Infrastructure investments are notoriously hard to gauge and often run overbudget. They are also capital-intensive, constrained by regulations, and disrupting to daily life at a local level, where the investments are being made.</p> <p>Trump&rsquo;s current plan is to provide $137 billion in tax credits to create incentives for private industry to spend the dough &ndash; but it remains to be seen how this will play out to mitigate the above risks, while solving the most important problems at both state and local levels.</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="812" height="605" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170324_infra.jpg?1490381408" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/sad-state-americas-infrastructure-one-infographic#comments American Society of Civil Engineers Bernie Sanders broadband Business Construction Development fixed Infrastructure Fri, 24 Mar 2017 23:25:00 +0000 Tyler Durden 591704 at http://www.zerohedge.com Trump On What Happens Next: "Obamacare Will Explode" http://www.zerohedge.com/news/2017-03-24/trump-what-happens-next-obamacare-will-explode <p><iframe src="https://www.youtube.com/embed/5925rcYHV50" width="560" height="315" frameborder="0"></iframe></p> <p>After the Republican ObamaCare replacement bill failed to generate enough Republican support to pass a House vote Friday, President Trump announced his planned path forward: "Let ObamaCare&nbsp;explode."&nbsp;</p> <p>Having insisted there is no Plan B in case the bill failed, the White House found itself in a situation with no backup plan now. "We're going to go back and figure out what the next steps are," House Speaker Paul Ryan told reporters at a press conference just minutes after the shocking news that the GOP was pulling the bill hit the wires. Ryan called the failure of his bill "a setback, no two ways about it." Looking forward, Ryan said Obamacare is "going to remain the law of the land until it’s replaced. We didn’t have the votes to replace this law. So yeah, we’re going to be living with ObamaCare for the foreseeable future."</p> <p>A disappointed and embarrassed House Energy and Commerce Committee chairman Greg Walden was blunt with reporters: "This bill's done."</p> <p>In a statement to the media, Trump said that if things get bad enough, Democrats will come aboard the reform effort. At that point, Trump said, it will become possible to pass a bill even better than Ryan's. "They're going to reach out whenever they're ready."</p> <p>Until then, Trump said that "we were very close and it was a very, very tight margin. We had no Democrat support. We had no votes from the Democrats. They weren’t going to give us a single vote so it’s a very difficult thing to do."</p> <p>Putting a positive spin on events, Trump then said that "<strong>I’ve been saying for the last year and a half that the best thing we can do politically speaking is let ObamaCare explode," Trump said of the path forward.&nbsp;"It is exploding right now. </strong>Many states have big problems, almost all states have big problems. I was in Tennessee the other day and they’ve lost half of their state in terms of an insurer. They have no insurer. And that’s happening to many other places."</p> <p>"I was in Kentucky the other day and similar things are happening," he continued. "So, ObamaCare is exploding with no Democrat support. We couldn’t quite get there with just a very small number of votes short in terms of getting our bill passed."</p> <p>"People will see how bad it is and it's getting much worse," Trump added.&nbsp;"I said the other day when President Obama left, '17, he knew he wasn't going to be here. '17 is going to be a very bad year for ObamaCare, very, very bad. You're going to have explosive premium increases and your deductibles are so high people don't even get to use it."</p> <p>"But we’re very, very close," he said.&nbsp;"And, again, I think what will happen is ObamaCare, unfortunately, will explode."</p> <p>Trump also said the losers from Friday's failed vote are Democrats. "The losers are Nancy Pelosi and Chuck Schumer because now they own ObamaCare," <a href="https://news.grabien.com/story-trump-losers-are-nancy-pelosi-and-chuck-schumer">Trump said</a>. "They own it, 100 percent&nbsp;own it. And this is not a Republican health care, this is not anything but a Democrat health care, and they have ObamaCare for a little while longer until it ceases to exist, which it will at some point in the near future."</p> <p>Pelosi did not agree and called today's aborted ObamaCare repeal a "great day for our country."&nbsp; "What happened on the floor," <a href="https://news.grabien.com/story-pelosi-today-great-day-our-country-what-happened-floor-victo">she said</a>, "is a victory for the American people."</p> <p>"I don’t know what else to say other than ObamaCare is the law of the land," <a href="https://news.grabien.com/story-paul-ryan-obamacare-law-land">Ryan told reporters late Friday</a>. "It’s going to remain the law of the land until it’s replaced. We didn’t have the votes to replace this law. So yeah, we’re going to be living with ObamaCare for the foreseeable future."</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="1256" height="692" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/obama%20will%20explode.jpg?1490395942" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/trump-what-happens-next-obamacare-will-explode#comments American people of German descent B+ Climate change skepticism and denial Donald Trump House Energy and Commerce Committee Nancy Pelosi Obamacare Patient Protection and Affordable Care Act Politics Politics of the United States President Obama Republican Party Statutory law The Apprentice United States White House White House WWE Hall of Fame Fri, 24 Mar 2017 23:05:07 +0000 Tyler Durden 591719 at http://www.zerohedge.com What Is CrowdStrike? Firm Hired By DNC Has Ties To Hillary Clinton, A Ukrainian Billionaire, And Google http://www.zerohedge.com/news/2017-03-24/what-crowdstrike-firm-hired-dnc-has-ties-hillary-clinton-ukrainian-billionaire-and-g <p><a href="https://libertyblitzkrieg.com/2017/03/23/what-is-crowdstrike-firm-hired-by-dnc-has-ties-to-hillary-clinton-a-ukrainian-billionaire-and-google/">Authored by Mike Krieger via Liberty Blitzkrieg blog,</a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_crowd.jpg"><img height="181" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_crowd.jpg" width="413" /></a></p> <p>As usual, the rabbit hole gets much deeper the more you look.</p> <p>In yesterday&rsquo;s post,&nbsp;<a href="https://libertyblitzkrieg.com/2017/03/22/credibility-of-cyber-firm-that-claimed-russia-hacked-the-dnc-comes-under-serious-question/" rel="bookmark" target="_blank" title="Permanent Link to Credibility of Cyber Firm that Claimed Russia Hacked the DNC Comes Under Serious Question">Credibility of Cyber Firm that Claimed Russia Hacked the DNC Comes Under Serious Question</a>, I examined how CrowdStrike, the cybersecurity firm hired by the DNC to look into its hacking breach, had been exposed as being completely wrong about a separate attack it claimed originated from the same group it claimed&nbsp;broke into DNC systems, and supposedly works for Russia&rsquo;s military intelligence unit, GRU. Here&rsquo;s some of what we learned:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>An influential British think tank and Ukraine&rsquo;s military are disputing a report that the U.S. cybersecurity firm CrowdStrike has used to buttress its claims of Russian hacking in the presidential election.</p> <p>&nbsp;</p> <p>The&nbsp;<a class="underline" href="https://www.crowdstrike.com/wp-content/brochures/FancyBearTracksUkrainianArtillery.pdf" target="_blank">CrowdStrike report, released in December</a>, asserted that Russians hacked into a Ukrainian artillery app, resulting in heavy losses of howitzers in Ukraine&rsquo;s war with Russian-backed separatists.</p> <p>&nbsp;</p> <p>But the&nbsp;<a class="underline" href="http://www.iiss.org/" target="_blank">International Institute for Strategic Studies</a>&nbsp;(IISS) told VOA that CrowdStrike erroneously used IISS data as proof of the intrusion.&nbsp;IISS disavowed any connection to the CrowdStrike report. Ukraine&rsquo;s Ministry of Defense also has claimed combat losses and hacking never happened.</p> <p>&nbsp;</p> <p>The challenges to CrowdStrike&rsquo;s credibility are significant because the firm was the first to link last year&rsquo;s hacks of Democratic Party computers to Russian actors, and because CrowdStrike co-founder Dimiti Alperovitch has trumpeted its Ukraine report as more evidence of Russian election tampering.<span id="more-43149"> </span></p> <p>&nbsp;</p> <p>Yaroslav Sherstyuk, maker of the Ukrainian military app in question, called the company&rsquo;s report &ldquo;delusional&rdquo;&nbsp;<a class="underline" href="https://www.facebook.com/sherstyuk.ya.n/posts/1374145112659432" target="_blank">in a Facebook post</a>. CrowdStrike never contacted him before or after its report was published, he told VOA.</p> <p>&nbsp;</p> <p>VOA first contacted IISS in February to verify the alleged artillery losses. Officials there initially were unaware of the CrowdStrike assertions.&nbsp;After investigating, they determined that CrowdStrike misinterpreted their data and hadn&rsquo;t reached out beforehand for comment or clarification.</p> <p>&nbsp;</p> <p>CrowdStrike declined to answer VOA&rsquo;s written questions about the Ukraine report, and Alperovitch canceled a March 15 interview on the topic.&nbsp;In a December statement to VOA&rsquo;s Ukrainian Service, spokeswoman Ilina Dimitrova defended the company&rsquo;s conclusions.</p> </blockquote> <p>Seems like pretty extraordinary incompetence. Either that, or something else was potentially at play; namely, a desire to push the narrative that Russia hacked the DNC, irrespective of the facts.</p> <p>The whole things gets even more disturbing the more you look.</p> <p>For example,&nbsp;<a href="http://www.counterpunch.org/2017/03/23/cybersecurity-firm-that-attributed-dnc-hacks-to-russia-may-have-fabricated-russia-hacking-in-ukraine/" target="_blank">Counterpunch</a> put out a very important article earlier today on the topic, adding several crucial nuggets of information.</p> <p>First there&rsquo;s this:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The investigation methods used to come to the conclusion that the Russian Government led the hacks of the&nbsp;<a href="http://observer.com/2016/07/wikileaks-proves-primary-was-rigged-dnc-undermined-democracy/" target="_blank">DNC</a>,&nbsp;<a href="http://observer.com/2016/11/bernie-sanders-abandons-clinton-in-final-week/" target="_blank">Clinton</a>&nbsp;Campaign Chair John Podesta, and the DCCC were further called into question by a recent BuzzFeed&nbsp;<a href="https://www.buzzfeed.com/jasonaleopold/whats-the-department-of-homeland-security-hiding?utm_term=.broEjvG1r#.bfPmMVZr3" target="_blank">report</a>&nbsp;by Jason Leopold, who has developed a notable reputation from leading several non-partisan Freedom of Information Act lawsuits for investigative journalism purposes. On March 15 that the Department of Homeland Security released just two heavily redacted pages of unclassified information in response to an FOIA request for definitive evidence of Russian election interference allegations. Leopold wrote, &ldquo;what the agency turned over to us and Ryan Shapiro, a PhD candidate at MIT and a research affiliate at Harvard University, is truly bizarre: a two-page intelligence assessment of the incident, dated Aug. 22, 2016, that contains information DHS culled from the internet. It&rsquo;s all unclassified &mdash; yet DHS covered nearly everything in wide swaths of black ink. Why? Not because it would threaten national security, but because it would reveal the methods DHS uses to gather intelligence, methods that may amount to little more than using Google.&rdquo;</p> </blockquote> <p>That&rsquo;s weird enough, but it gets far&nbsp;stranger. For example:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In lieu of substantive evidence provided to the public that the alleged hacks which led to Wikileaks releases of DNC and Clinton Campaign Manager John Podesta&rsquo;s emails were orchestrated by the Russian Government, CrowdStrike&rsquo;s bias has been&nbsp;<a href="https://theintercept.com/2016/12/14/heres-the-public-evidence-russia-hacked-the-dnc-its-not-enough/">cited&nbsp;</a>as undependable in its own assessment, in addition to its skeptical methods and conclusions. The firm&rsquo;s CTO and co-founder, Dmitri Alperovitch, is a<a href="http://www.atlanticcouncil.org/about/experts/list/dmitri-alperovitch">&nbsp;senior fellow</a>&nbsp;at the Atlantic Council, a think tank with openly anti-Russian sentiments that is funded by Ukrainian billionaire Victor Pinchuk, who also happened to donate at least $10 million to the&nbsp;<a href="http://observer.com/2017/01/the-clinton-foundation-shuts-down-clinton-global-initiative/">Clinton Foundation</a>.</p> <p>&nbsp;</p> <p>In 2013, the Atlantic Council&nbsp;<a href="https://hillaryspeeches.com/tag/atlantic-council/">awarded</a>&nbsp;Hillary&nbsp;<a href="http://observer.com/2016/11/obama-blames-clinton-and-her-out-of-touch-campaign-for-losing-election/">Clinton</a>&nbsp;it&rsquo;s Distinguished International Leadership Award. In 2014, the Atlantic Council&nbsp;<a href="http://www.atlanticcouncil.org/events/webcasts/the-future-of-ukraine-leadership-under-siege">hosted</a>&nbsp;one of several events with former Ukrainian Prime Minister&nbsp;<a href="http://www.bbc.com/news/world-europe-36010511">Arseniy Yatsenyuk</a>, who took over after pro-Russian President Viktor Yanukovych was ousted in early 2014, who now lives in exile in Russia.</p> </blockquote> <p>Recall that the FBI was denied access to the DNC servers by the DNC itself, and simply agreed to&nbsp;rely on the results provided by CrowdStrike, which as you can see has ties to all sorts of anti-Russia organizations and individuals. I find it absolutely remarkable that James Comey head of the FBI outsourced his job to CrowdStrike.</p> <p>There remains zero evidence that Russia hacked the DNC. I repeat, there remains zero evidence that Russia hacked the DNC.</p> <p>As cybersecurity expert Jeffrey Carr noted:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Jeffrey Carr<a href="https://medium.com/@jeffreycarr/fbi-dhs-joint-analysis-report-a-fatally-flawed-effort-b6a98fafe2fa#.v9he0lbqn" target="_blank">&nbsp;called</a>&nbsp;the&nbsp;<a href="http://observer.com/2016/07/up-next-for-the-fbi-clinton-foundation-corruption/" target="_blank">FBI</a>/Department of Homeland Security Report, the only alleged evidence released by intelligence officials, released in late December 2016 a &ldquo;fatally flawed effort&rdquo; that provided no evidence to substantiate the claims that the Russian government conducted the hacks, though that&rsquo;s what it was purported to do.</p> </blockquote> <p>Absolutely remarkable, but there&rsquo;s more. As <a href="https://techcrunch.com/2015/07/13/security-company-crowdstrike-scores-100m-led-by-google-capital/" target="_blank">TechCrunch</a> reported back in 2015:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>If you need proof that security is a red hot market these days, how about this morning&rsquo;s announcement that cybersecurity company&nbsp;<a href="https://www.crowdstrike.com/" target="_blank">CrowdStrike</a>&nbsp;landed a $100 million Series C investment round?</p> <p>&nbsp;</p> <p>The round was led by Google Capital with Rackspace, which happens to be one of the company&rsquo;s customers also investing. Existing investors&nbsp;Accel and Warburg Pincus also participated. Today&rsquo;s investment brings the total to-date to $156 million.</p> </blockquote> <p>Why do I find it interesting that Google was a major investor in CrowdStrike? Well for one, we know that Chairman of Alphabet, Inc. (Google&rsquo;s parent company), Eric Schmidt, was actively working to help the Hillary campaign. As I highlighted&nbsp;in the 2015 post,<a href="https://libertyblitzkrieg.com/2015/10/13/meet-groundwork-google-chairman-eric-schmidts-stealth-startup-working-to-make-hillary-clinton-president/" rel="bookmark" title="Permanent Link to Meet “Groundwork” – Google Chairman Eric Schmidt’s Stealth Startup Working to Make Hillary Clinton President">Meet &ldquo;Groundwork&rdquo; &ndash; Google Chairman Eric Schmidt&rsquo;s Stealth Startup Working to Make Hillary Clinton President</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>An under-the-radar startup funded by billionaire Eric Schmidt has become a major technology vendor for Hillary Clinton&rsquo;s presidential campaign, underscoring the bonds between Silicon Valley and Democratic politics.</p> <p>&nbsp;</p> <p>The Groundwork, according to Democratic campaign operatives and technologists, is part of efforts by Schmidt&mdash;the executive chairman of Google parent-company Alphabet&mdash;to ensure that Clinton has the engineering talent needed to win the election. And it is one of a series of quiet investments by Schmidt that recognize how modern political campaigns are run, with data analytics and digital outreach as vital ingredients that allow candidates to find, court, and turn out critical voter blocs.</p> <p>&nbsp;</p> <p>There is also another gap in play: The shrinking distance between Google and the Democratic Party. Former Google executive Stephanie Hannon is the Clinton campaign&rsquo;s chief technology officer, and a host of ex-Googlers are currently employed as high-ranking technical staff at the Obama White House. Schmidt, for his part, is one of the most powerful donors in the Democratic Party&mdash;and his influence does not stem only from his wealth,&nbsp;estimated by Forbes&nbsp;at more than $10 billion.</p> <p>&nbsp;</p> <p>According to campaign finance disclosures, Clinton&rsquo;s campaign is the Groundwork&rsquo;s only political client.&nbsp;Its employees are mostly back-end software developers with experience at blue-chip tech firms like Netflix, Dreamhost, and Google.</p> </blockquote> <p><u>Since Democrats seem so obsessed with the saying these days, &ldquo;where there&rsquo;s smoke there&rsquo;s fire,&rdquo; and there&rsquo;s plenty of smoke here.</u></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="413" height="181" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170324_crowd.jpg?1490366974" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/what-crowdstrike-firm-hired-dnc-has-ties-hillary-clinton-ukrainian-billionaire-and-g#comments Atlantic Council Clinton Foundation Computer security CrowdStrike Cyberwarfare Democratic National Committee cyber attacks Democratic Party Department of Homeland Security Department of Homeland Security Report Dmitri Alperovitch Espionage FBI Federal Bureau of Investigation FOIA Freedom of Information Act Google Government Harvard University Hillary Clinton Information sensitivity International Institute for Strategic Studies MIT national security National security Politics Russian government Security Ukraine Ukraine’s military Ukraine’s Ministry of Defense VOA’s Ukrainian Service White House White House WikiLeaks Fri, 24 Mar 2017 23:00:00 +0000 Tyler Durden 591686 at http://www.zerohedge.com Scientists Warn That The Coming California Megaquake Could Plunge Large Portions Of The State Into The Ocean http://www.zerohedge.com/news/2017-03-24/scientists-warn-coming-california-megaquake-could-plunge-large-portions-state-ocean <p><em><a href="http://endoftheamericandream.com/archives/scientists-warn-that-the-coming-california-megaquake-could-plunge-large-portions-of-the-state-into-the-ocean">Authored by Michael Snyder via The End of The American Dream blog,</a></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_quake1.jpg"><img height="325" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_quake1.jpg" width="600" /></a></p> <p>Over the years, many people have been shown that someday a giant earthquake will cause significant portions of California to fall into the ocean. But <strong>up until now, most scientists have disputed the idea that this could ever actually happen</strong>. Well, now all of that has changed. <em><strong>According to a brand new study, a megaquake along the west coast &ldquo;could plunge large parts of California into the sea almost instantly&rdquo;</strong></em>. In fact, the researchers that conducted this study say that it is almost certain to happen eventually. Of course they probably don&rsquo;t believe that such an event is imminent or else they would be moving out of the state&nbsp;<a href="http://theeconomiccollapseblog.com/archives/16-reasons-why-you-shouldnt-live-in-california" target="_blank" title="like so many other people are">like so many other people are</a>.</p> <p>When I came across news stories about this brand new study I was absolutely astounded. Here is a short excerpt&nbsp;<a href="http://www.dailymail.co.uk/sciencetech/article-4336986/Ancient-quakes-point-sinking-risk-California-coast.html" target="_blank" title="from one of them">from one of them</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The Big One may be overdue to hit California, but scientists near LA have found a new risk for the area during a major earthquake.</p> <p>&nbsp;</p> <p>They claim that if a major tremor hits the area,<strong>&nbsp;it could plunge large parts of California into the sea almost instantly.</strong></p> <p>&nbsp;</p> <p>The discovery was made after studying the Newport-Inglewood fault, which has long been believed to be one of Southern California&rsquo;s danger zones.</p> </blockquote> <p>Could you imagine what such a catastrophe would do to our nation and how many lives would be lost if that were to happen today?</p> <p>According to the study, a California megaquake would potentially cause some sections of southern California to suddenly drop by as much as 3 feet, and that could result in<strong> vast stretches of land&nbsp;<a href="http://www.dailymail.co.uk/sciencetech/article-4336986/Ancient-quakes-point-sinking-risk-California-coast.html" target="_blank" title="“ending up at or below sea level”">&ldquo;ending up at or below sea level&rdquo;</a>&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In total three quakes over the last 2,000 years on nearby faults made ground just outside Los Angeles city limits sink as much as 3ft.</p> <p>&nbsp;</p> <p>Today that could result in the area ending up at or below sea level, said Cal State Fullerton professor Matt Kirby, who worked with the paper&acute;s lead author, graduate student Robert Leeper.</p> </blockquote> <p>Wow.</p> <p>And we are not talking about something that would happen over a period of weeks or months. According to these scientists, <strong>it would be a&nbsp;<a href="https://www.rt.com/usa/381691-california-earthquake-sinking-wetlands/" target="_blank" title="“very rapid sinking”">&ldquo;very rapid sinking&rdquo;</a>&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><div id="stcpDiv"><u><em><strong>&ldquo;It&rsquo;s not just a gradual sinking. This is boom &mdash; it would drop. It&rsquo;s very rapid sinking,&rdquo;&nbsp;</strong></em></u>Robert Leeper, lead author of a new study published in Nature, carried out with the help of the US Geological Survey, told the LA Times.</div> </blockquote> <p>So could a substantial portion of southern California someday actually slide into the ocean like we see in the movies?</p> <p>The scientists that were involved in this study say&nbsp;<a href="http://www.trunews.com/article/earthquake-could-cause-california-to-instantaneously-sink" target="_blank" title="that the answer is yes">that<strong> the answer is yes</strong></a><strong>&hellip;</strong></p> <div id="stcpDiv"> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p>Cal State Fullerton professor Matt Kirby, who worked with the Leeper on the study, said the sinking would occur quickly and<strong>&nbsp;likely result in part of California being covered by the sea.</strong></p> <p>&nbsp;</p> <p>&ldquo;It&rsquo;s something that would happen relatively instantaneously,&rdquo; Prof Kirby said.<strong>&nbsp;&ldquo;Probably today if it happened, you would see seawater rushing in.&rdquo;</strong></p> </blockquote> </div> <p><strong>Let us hope that we have as much time as possible before anything like this actually happens. </strong>But scientists are also telling us that a tremendous amount of seismic tension has built up in southern California, and that this tension could cause a major earthquake at any time. In fact, in my recent article about&nbsp;<a href="http://theeconomiccollapseblog.com/archives/16-reasons-why-you-shouldnt-live-in-california" target="_blank" title="why people are moving out of California">why people are moving out of California</a>, I included a quote&nbsp;<a href="http://abc7.com/science/usgs-study-says-major-earthquake-in-grapevine-way-overdue/1789999/" target="_blank" title="“is way overdue”">from an ABC Los Angeles story</a>&nbsp;about how <strong>researchers are warning that a major earthquake in southern California is &ldquo;way overdue&rdquo;&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>A recently published study reveals new evidence that a major earthquake is way overdue on a 100 mile stretch of the San Andreas Fault</strong>&nbsp;from the Antelope Valley to the Tejon Pass and beyond.</p> <p>&nbsp;</p> <p>Researchers with the U.S. Geological Survey released the results of the years-long study warning a major earthquake&nbsp;could strike soon.</p> </blockquote> <p>Today, more than 38 million people live in the state of California, and as a population density map of the state&nbsp;<a href="https://commons.wikimedia.org/wiki/File:California_population_map.png" target="_blank" title="shows">shows</a>, <strong>much of the population is concentrated along the coastline&hellip;</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_quake.jpg"><img height="595" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_quake.jpg" width="600" /></a></p> <p><strong><em>So if large sections of the California coast did end up plunging into the ocean, what would the death toll be?</em></strong></p> <p><strong><em>Would it be in the millions?</em></strong></p> <p><strong><em>And what would such a disaster mean for the rest of the country?</em></strong></p> <p>The west coast of the United States sits along &ldquo;the Ring of Fire&rdquo;. Roughly encircling the Pacific Ocean, this vast seismic zone contains approximately 75 percent of the active volcanoes in the world and it produces more than 80 percent of all major earthquakes.</p> <p>In other words, anyone that lives near the Ring of Fire would be foolish to assume that they are immune from massive natural disasters.</p> <p>In 2011, a major earthquake along the Ring of Fire on the other side of the Pacific Ocean caused a massive tsunami to wash inland in Japan for many, many miles.</p> <p>If such a thing were to happen in Los Angeles or San Francisco, the death and destruction would be on a scale that would be absolutely unimaginable.</p> <p><strong>When the big Hollywood film entitled &ldquo;San Andreas&rdquo; came out in 2015, a lot of people mocked the idea that the things portrayed in that film could ever happen in real life.</strong></p> <p><u><em><strong>But now scientists are telling us that a megaquake could cause large portions of California to plunge into the ocean and that it is quite likely that this will actually happen someday.</strong></em></u></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="563" height="305" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170324_quake1.jpg?1490390776" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/scientists-warn-coming-california-megaquake-could-plunge-large-portions-state-ocean#comments California Disaster Earthquake Environment Geography of California Japan Salton Trough San Andreas Fault San Francisco earthquake Seismology Southern California Tsunami West Coast Fri, 24 Mar 2017 22:10:00 +0000 Tyler Durden 591716 at http://www.zerohedge.com Here Are The Reasons Why Today's Republican Debacle Makes Tax Reform Less Likely http://www.zerohedge.com/news/2017-03-24/why-todays-republican-debacle-makes-tax-reform-less-likely <p>With Americans now "<a href="http://www.mcclatchydc.com/news/politics-government/article140617133.html">stuck with Obamacare for the foreseeable future</a>", attention shifts to Trump's next agenda item: tax reform.</p> <p> This was confirmed by none other than the President himself who moments ago said that "Republicans will <strong>probably </strong>work on tax reform now." To be sure, following today's embarrassing fiasco, Trump will be eager to move on to a law which will be easier to pass, and according to market consensus, tax reform is precisely that. Alas, consensus may once again be wrong. </p> <p>Ignoring the fact that work on tax reform in earnest won't start for 6-8 weeks as House Ways and Means member Merchant said moments ago, and may not even take place until fiscal 2018 (after August), the reality is that since Obamacare and tax reform are both parts of the Reconciliation process, as a result of <em>not freeing up hundreds of billions </em>from the deficit that the CBO estimated repealing Obamacare would do, it means that Trump's tax cuts have been hobbled - by as much as $500 billion - before even starting. </p> <p>Furthermore, with the Freedom Caucus flexing its muscle and openly defying Trump, another major headache for Trump's tax reform is that the Bordere Adjustment Tax - an aspect of the reform that the Caucus has been vocally against - is likely off the table. And since BAT was expected to generate over $1 trillion in government revenues, it means that a matched amount in tax cuts is also now off the table.</p> <p>In summary, between Obamacare repeal and BAT being scrapped, roughly $1.5 trillion in budget "buffers" are wiped out. </p> <p>And yet, when news hit that Obamacare repeal has failed, stocks surged, arguably on traders' belief that this will accelerate tax reform. Alas, in addition to the above, <a href="https://www.axios.com/4-reasons-healthcare-reform-failure-threatens-tax-reform-2328416506.html">Axios </a>lists another four reasons why today's healthcare debacle spells trouble for tax reform.</p> <ul> <li>We now know that <strong>Congressional Republicans are willing to buck Trump and leadership on big-ticket legislative items</strong>.</li> <li>Republicans will need to keep working on healthcare reform, even though Trump says that he's done with it. <strong>They've campaigned for years on killing Obamacare, and can't head into the mid-terms without giving it another go</strong>. Particularly when they keep insisting that the current scheme is collapsing?</li> <li>CBO said that the Republican healthcare bill would shrink long-term budget deficits by hundreds of billions of dollars. <strong>Without it, filling the tax revenue hole becomes harder.</strong></li> <li>Sean Spicer today said repeatedly that Trump had talked to "everyone" and listened to "all" ideas, which reflects zero consideration of Congressional Democrats. If such sentiment persists ? it just raises the degree of difficulty for tax reform, <strong>particularly if the White House doesn't change its position on keeping corporate tax reform tied to personal tax reform.</strong></li> </ul> <p>Finally, here is Goldman's persepctive. Despite the realities above, Jan Hatzius is his typically optimistic self about the potential for Trump's agenda.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Preliminary discussions on tax reform could begin soon but <strong>we do not expect legislative action on tax reform until June</strong>. This week’s events do not change our expectation that tax legislation will be enacted within the next year and actually suggest that <strong>enactment could come slightly sooner than we previously expected</strong>.</p> <p>&nbsp;</p> <p>1. The American Health Care Act (AHCA) has no path forward for now. House Republicans appear unable to reach a consensus on any bill to repeal the Affordable Care Act (ACA, or “Obamacare”); we believe reaching a consensus among Senate Republicans would have been even more difficult in any case. This would appear to signal an end to the Republican effort to repeal the Affordable Care Act (ACA). That said, <strong>addressing health care in some way will be politically necessary, so we do expect health legislation to be considered again at some point later this year or next year</strong>.</p> <p>&nbsp;</p> <p>2.<strong> Other issues must be addressed before Republican leaders can shift their full focus to tax legislation</strong>. The Senate is expected to consider the nomination of Judge Neil Gorsuch to the Supreme Court the week of April 3, which raises the risk of a Democratic filibuster, which Republicans might counter with a controversial rules change (the so-called “nuclear option” for Supreme Court nominations). Following a two-week recess, Congress will return the week of April 24 to consider extending spending authority, which expires April 28; inclusion of funding for the President’s proposed border wall would raise the risk of a government shutdown. </p> <p>&nbsp;</p> <p>3. <strong>Congress will also need to address the FY18 budget resolution before it can act on tax reform</strong>. This is necessary to provide the “reconciliation instructions” that allow Republicans to pass tax legislation with only 51 votes in the Senate (and therefore no Democratic support). As we have noted before, reaching an agreement on the FY budget resolution will not be easy; in the past, conservatives have demanded a balanced budget within ten years but this would require endorsing spending cuts (in non-binding form) that some centrist Republicans might oppose.</p> <p>&nbsp;</p> <p>4. <strong>Tax reform will probably not begin to move through the legislative process until June</strong>. In light of the other issues described above, we would not expect the House Ways and Means Committee to vote on a tax reform bill until late May (less likely) or June (more likely). The Committee is unlikely to release a detailed proposal until they are ready to vote, so details regarding the House proposal may not be known for at least another two months or so.</p> <p>&nbsp;</p> <p>5. <strong>Enactment of tax legislation looks just as likely as it did before this week.</strong> The health bill faced much different challenges than tax legislation will face. While the health bill would have reduced benefits (tax credits and Medicaid eligibility) and the deficit, the tax bill is likely to provide new benefits (tax cuts) and will probably increase the deficit. Ultimately, we believe that there will be broad support among Republicans in Congress for legislation that reduces the corporate tax rate and cuts personal taxes modestly.</p> <p>&nbsp;</p> <p>6. However, the defeat of the health bill indicates that<span style="text-decoration: underline;"><strong> complex and controversial tax reforms are likely to be difficult to pass and we note that the “Freedom Caucus” that opposed the health bill also opposes some of the most controversial aspects of the House Republican tax blueprint, </strong></span>like the border-adjusted tax (BAT). This suggests congressional Republicans might scale back their ambitions on tax reform, and pursue a simpler tax cut that includes selected reform elements (e.g. changes to the taxation of foreign profits of US multinationals and profit repatriation).</p> <p>&nbsp;</p> <p>7. <strong>The timing on tax legislation might be pulled slightly forward.</strong> Compared to our prior expectation that a tax bill would not be enacted before Q4 2017 and could easily slip to early 2018, <strong>with the health issue no longer in play, our central expectation remains that it will be enacted in Q4 2017</strong>. However, the risk to that timing now appears more evenly balanced, since there no longer appears to be a risk that the health debate will drag out for several more months.</p> </blockquote> <p>However, if today's events are any indication (and weighting item 6 above more heavily than Goldman), don't hold your breath for a law being concluded this calendar year. </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="1910" height="1000" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/IRS%20teaser.jpg?1490389158" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/why-todays-republican-debacle-makes-tax-reform-less-likely#comments 115th United States Congress American Health Care Act American people of German descent Climate change skepticism and denial Congress Donald Trump Economic policy of Donald Trump Internal Revenue Code Jan Hatzius Means Nomination None Obamacare Patient Protection and Affordable Care Act Political debates about the United States federal budget Politics Presidency of Barack Obama Reality Senate Social Issues Statutory law Supreme Court Tax Revenue The Apprentice United States Ways and Means Committee White House White House WWE Hall of Fame Fri, 24 Mar 2017 22:08:10 +0000 Tyler Durden 591714 at http://www.zerohedge.com The Useful And The Useless http://www.zerohedge.com/news/2017-03-24/useful-and-useless <p><a href="https://straightlinelogic.com/2017/03/23/the-useful-and-the-useless-by-robert-gore/"><em>Authored by Robert Gore via Straight Line Logic blog,</em></a></p> <p><strong>The battle lines are forming.</strong></p> <p><strong><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_useful.jpg"><img height="210" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170324_useful_0.jpg" width="600" /></a></strong></p> <p><em>You&rsquo;re standing on the prow of an ocean liner cutting through the icy waters of the North Atlantic. A huge iceberg looms dead ahead. You&rsquo;ve seen it for some time, but now it&rsquo;s too close, and the liner too big and fast, to avoid the collision. You quietly make your way to the lifeboats, knowing they&rsquo;re the only chance for saving yourself and your loved ones. Below decks, an orchestra plays a waltz and oblivious revelers dance.</em></p> <p><strong>Most people don&rsquo;t foresee the world&rsquo;s inevitable collision with the iceberg of unsustainable fantasy. </strong>When it happens, they&rsquo;ll respond predictably, with panic and cowardice. Those who&rsquo;ve seen it coming and moved to the lifeboats will experience their own roiling emotions, attenuated by recognition of the logic behind the disaster. While the forewarned have dreaded impact, many will also welcome it, in the way one welcomes an unpleasant medical procedure: let&rsquo;s get it over with. The motive is not malice, but conviction born&nbsp;of experience that actions have consequences and there&rsquo;s no escaping them. After seemingly inexplicable and interminable delay, consequences shall arrive, amplified by the tawdry stratagems that promoted delay.</p> <p>It will come as a surprise to many, but <strong>governments cannot suspend reality.</strong> Their arsenal, when things break down, comes down to their arsenal: the capacity to coerce. Violence or its threat enables governments to exact compliance. Proponents of government power invariably see themselves exercising it. Once the ship hits the iceberg, it will be obvious that governments&rsquo; guns are not wands, freeing citizens from the necessity of producing as much or more than they consume. They cannot compel innovators to innovate or producers to produce. While coercive power comes from one end of a gun, none of the powers that produce progress (and the gun) magically materialize at the other end.</p> <p><strong>It is said that America is a society divided. True enough, but the important question is: along what lines?</strong> Crisis and social breakdown will provide clarification: <u><strong>it&rsquo;s governments and their beneficiaries versus producers. In other words, those who don&rsquo;t do useful things versus those who do.</strong></u></p> <p>Huge shifts in social mood and direction are presaged. <strong>President Trump&rsquo;s election presages the coming division.</strong> Among the analyses of the election, few noted an obvious dividing line. Trump&rsquo;s supporters by and large do useful things, or are angry because they&rsquo;re prevented from doing useful things. They build, engineer, manufacture, plant, grow, operate, maintain, repair, transport, and sell the things we find useful or essential. When we ram the iceberg, their skills, brains, and adaptability will be sorely needed.</p> <p>Politicians and bureaucrats and the millions dependent on them for their fake jobs, income, food, shelter, transportation, and medical care will find little demand for their skills, such as they are.<strong> The useful may well conclude that keeping them alive is more trouble than it&rsquo;s worth. </strong>There will be those who are too young, old, or infirm to produce, but whom the useful will support out of friendship or kinship. However, it would be surprising if they felt anything but contempt for the faceless hordes demanding that someone, anyone, take care of them.</p> <p><strong>Take away the undeserved from the undeserving and you get a tantrum. Steal the earned from those who earned it and you get righteous rage. One&rsquo;s a firecracker, the other a volcano. </strong>The game has been to impress upon the useful a moral obligation to support the useless, but the volcano&rsquo;s about to blow, burying that obscene morality in lava and ash. Given the staggering levels of accumulated debt and promises, the useful know their talents, skills, hard work, productivity and futures have been mortgaged for the useless. This is the salient and intractable social division. No reconciliation is possible between the useful and those who believe themselves entitled to their enslavement. The Trump fissure will become a yawning chasm when the Good Ship Profligate Government collides with the iceberg.</p> <p><strong>Centralization serves the needs of government and its dependents. </strong>Honest production and exchange require little government, perhaps none at all. Those who believe current arrangements should persist have to believe that the useful who support those arrangements will provide more and more while receiving less and less. The implicit premise has to be that when it all finally breaks down, the useful can be brutally subjugated&mdash;but kept producing&mdash;while receiving nothing more than their subsistence. <strong>Slavery cannot support the police state necessary to impose it, much less a modern economy.</strong> Those who believe any outcomes other than destruction and death are possible are delusional. If those are the outcomes they anticipate and desire, they&rsquo;re homicidally and suicidally psychopathic.</p> <p><strong>Governments will have their surveillance apparatuses, police, militaries, prisons, torture chambers, concentration camps, killing fields, and the like. The useful will have their minds.</strong> Totalitarian accounting is daunting. All that money going out for suppression, so little coming in from a populace whose best and brightest have been imprisoned or murdered, or who produce the minimum necessary to survive. The day comes when the policeman, soldiers, and guards can&rsquo;t be paid with anything of value and all hell breaks loose. Or, less colloquially, centralization gives way to decentralization.</p> <p>To what depths governments will descend and how long they will survive as agents of repression is unknowable, but their dissolution is foreordained. They cannot commandeer the resources necessary to sustain the current level of tyranny. <strong>The useful will vote with their feet and if that&rsquo;s not possible, bullets will be their ballots. </strong>They will establish enclaves and protect themselves from the tantrums, chaos, and depredations of the useless. (Useful in such a context may require nothing more than a willingness to work hard.) The useless depend on the useful, who of course don&rsquo;t need them at all. The useful will eventually triumph, if the species survives (not a sure thing). Tragically, the butcher&rsquo;s bill is likely to be exorbitant.</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="776" height="271" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170324_useful.jpg?1490377739" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/useful-and-useless#comments Decentralization Good Ship Profligate Government None North Atlantic Organizational theory Reality Salient Social Mood Fri, 24 Mar 2017 21:45:00 +0000 Tyler Durden 591701 at http://www.zerohedge.com Wall Street Explains What Today's Failure To Repeal Obamacare Means For Markets http://www.zerohedge.com/news/2017-03-24/wall-street-explains-what-todays-faillure-repeal-obamacare-means-markets <p>Following today's Republican fiasco, where the GOP was unable to gather enough votes to even repeal Obamacare in the House (let alone the Senate) forcing the Republican party to withdraw their healthcare bill, stocks suddenly spiked - if only briefly - on expectations today's bad news is actually good news for Trump's tax reform. As we explained <a href="http://www.zerohedge.com/news/2017-03-24/why-todays-republican-debacle-makes-tax-reform-less-likely">moments ago, </a>that will unlikely be the case far various reasons. But what do others think? </p> <p><em>Below, <a href="http://www.reuters.com/article/us-usa-economy-instant-idUSKBN16V2P7">courtesy of Reuters</a>, is a breakdown of select sellside analyst reactions to today's events:</em></p> <p><span style="text-decoration: underline;"><strong>DANIEL MORGAN, SENIOR PORTFOLIO MANAGER, SYNOVUS TRUST COMPANY, ATLANTA, GEORGIA:</strong></span></p> <p>"There's a bit of a relief rally. There were worries going into it... but it's a mixed bag.</p> <p>"It does now open the door for maybe they table the whole thing and just move on, and I would think the next thing on the docket would have to be tax reform. The market, to me, is more interested in tax reform than it is in changing Obamacare.</p> <p>"In a way, for me, sitting on $600 million worth of investments, I think it's great. Let's move and get into tax reform, and then get into the infrastructure bill."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:</strong></span></p> <p>"The market is relieved it's not going to go down to a defeat, and it's hopeful they'll come to some sort of agreement over the weekend. The market is hoping for an agreement as a stepping stone to additional agreements."</p> <p>"News report suggested that the likely outcome was they were going to lose. I would think the expectations are that they're pulling it so they can work on it."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>MAZEN ISSA, SENIOR FX STRATEGIST, TD SECURITIES, NEW YORK:</strong></span></p> <p>"The last few days, market has sort of traded on the back foot on anticipation of the vote that would happen at some point this week. Generally, risk sentiment has been undermined off of that, especially with this steady drip of news that indicated lacking support for the bill. And now, I think, it sort of lifted that uncertainty, at least temporarily, for the rest of the day. Maybe just lifting the uncertainty premium has markets breathing a sigh of relief for now."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>PARESH UPADHYAYA, DIRECTOR OF CURRENCY STRATEGY, PIONEER INVESTMENTS, BOSTON:</strong></span></p> <p>"The initial market interpretation is a positive sign. It seems like it is taking that Trump wants to instead of sinking it, he wants to give it another shot. It seems like they think he is working to get something on his agenda to be passed by Congress. Or perhaps it's a sign that if healthcare reform is shelved, Trump will focus on tax reform. It's more a knee jerk reaction.</p> <p>"There are still a lot of hard questions regardless to tax reform. He can't force people to change their vote on social media. Good old fashion politicking is needed to build consensus.</p> <p>"If this stronger dollar has legs, it depends on the next step. If there is a pivot to taxes from healthcare, the market has to see the plan."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>RAHUL SHAH, CHIEF EXECUTIVE, IDEAL ASSET MANAGEMENT, NEW YORK:</strong></span></p> <p>"From an investor viewpoint, it shows that Trump will not be able to easily pass his agenda. That being said, healthcare is more difficult to pass than tax cuts and the infrastructure bill that he's proposing.</p> <p>"In one sense that's a negative, but on the other hand it also might give some relief to investors who are concerned about some of Trump's more controversial proposals like increased tariffs and a border adjustment tax.</p> <p>"You could see this as a glass half empty or a glass half-full, gridlock is not something that's unheard of on Wall Street, so I think stocks should be OK going forward."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO:</strong></span></p> <p>"I think the most important thing is that this changes the perception of the relationship between Trump and Congress. For the last few months the assumption has been that Congress would do whatever the Trump plan called for, and that apparently is not going to be the case."<br /><strong><br /><span style="text-decoration: underline;">PETER KENNY, SENIOR MARKET STRATEGIST, GLOBAL MARKETS ADVISORY GROUP, NEW YORK:</span></strong></p> <p>"I don't think it's going to have a huge impact on equities, although it may have more of an impact on biotech and healthcare.</p> <p>"This is now an indication that the president's agenda is probably going to be more ambitious than Congress can manage. It is probably going to mean that equity markets are going to have to factor in a degree of dysfunction that investors were hoping they wouldn't have to. Which means it will likely have a muted impact on equity performance moving forward.</p> <p>"There is very little on the horizon as of right now, as a result of this thing being pulled, that is going to fuel a significant move higher in prices. This is largely going to homogenize any sort of volatility moving forward and is probably going to be a cap on any near-term performance in terms of the upside.</p> <p>"The fact this bill, which the President has said flat-out he will make it work for all Americans in general, can't pass is an indication this agenda is going to be more ambitious than this Congress can work with. This doesn't even include the Democrats. It is not just divided between Democrats and Republicans, it is divided between progressives, Democrats, Republicans and Libertarians. It is an indication that investors should not expect the kind of velocity in terms of agenda accomplishments they were expecting when he was elected."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>MARGARET PATEL, SENIOR PORTFOLIO MANAGER, WELLS FARGO ASSET MANAGEMENT, BOSTON:</strong></span></p> <p>"It looked like the market was worried that the Trump agenda would get completely bogged down in the healthcare issue, and now that they've taken the healthcare issue off the table, I think the market is more optimistic that they can do other things that are more doable that are not so complicated, such as regulatory reform and lowering taxes. It does seem like a positive move to shelve an issue that's so complex and very expensive no matter what the plan, move on to something that is a little bit easier, which would be lowering taxes."<br /><strong></strong></p> <p><span style="text-decoration: underline;"><strong>BRIAN BATTLE, DIRECTOR OF TRADING, PERFORMANCE TRUST CAPITAL PARTNERS, CHICAGO:</strong></span></p> <p>"It didn't pass and it didn't fail so any conjecture about the ultimate meaning is premature. President Trump is getting a lesson in varsity Washington politics."</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="460" height="272" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/traders%20looking_21.jpg?1490391051" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-24/wall-street-explains-what-todays-faillure-repeal-obamacare-means-markets#comments American people of German descent Business Climate change skepticism and denial Congress Donald Trump Donald Trump presidential campaign DRW Trading Economic policy of Donald Trump Equity Markets Fail Illinois Obamacare Patient Protection and Affordable Care Act Politics Politics of the United States Republican Party Reuters Senate The Apprentice United States Volatility Wells Fargo WWE Hall of Fame Fri, 24 Mar 2017 21:32:04 +0000 Tyler Durden 591718 at http://www.zerohedge.com US Ambassador to USSR: “The Whole Brou-Ha-Ha Over Contacts with Russian Diplomats Has Taken On All The Earmarks of a Witch Hunt" http://www.zerohedge.com/news/2017-03-24/us-ambassador-ussr-%E2%80%9C-whole-brou-ha-ha-over-contacts-russian-diplomats-has-taken-all- <p><em>By <a href="https://en.wikipedia.org/wiki/Jack_F._Matlock_Jr." target="_blank" title="Jack Matlock">Jack Matlock</a>, the 4-year U.S. Ambassador to the Soviet Union from 1987-1991, at the time that the USSR fell.&nbsp;&nbsp; Before that, Matlock </em><em>served as the Director of Soviet Affairs in the State Department, the U.S. Ambassador to Czechoslovakia, and the Special Assistant to the President for National Security Affairs and Senior Director for European and Soviet Affairs on the National Security Council Staff.&nbsp; Originally posted at <a href="http://jackmatlock.com/2017/03/contacts-with-russian-embassy/" target="_blank" title="JackMatlock.com">JackMatlock.com</a>. Posted with permission of the author.</em></p> <p><em><a href="http://www.washingtonsblog.com/2014/09/former-u-s-ambassador-ussr-u-s-nato-provoking-ukrainian-crisis.html">Click here to see who Matlock is and what he&#39;s said in the past about U.S.-Russia relations</a>.</em></p> <p>Our press seems to be in a feeding frenzy regarding contacts that President Trump&rsquo;s supporters had with Russian Ambassador Sergei Kislyak and with other Russian diplomats. The assumption seems to be that there was something sinister about these contacts, just because they were with Russian diplomats. <strong>As one who spent a 35-year diplomatic career working to open up the Soviet Union and to make communication between our diplomats and ordinary citizens a normal practice, I find the attitude of much of our political establishment and of some of our once respected media outlets quite incomprehensible. What in the world is wrong with consulting a foreign embassy about ways to improve relations? Anyone who aspires to advise an American president should do just that.</strong></p> <p>Yesterday I received four rather curious questions from Mariana Rambaldi of Univision Digital. I reproduce below the questions and the answers I have given.</p> <p><strong>Question 1</strong>: Seeing the case of Michael Flynn, that has to resign after it emerged that he spoke with the Russian ambassador about sanctions against Russia before Trump took office, and now Jeff Sessions is in a similar situation. Why is so toxic to talk with Sergey Kislyak?</p> <p><strong>Answer:</strong> Ambassador Kislyak is a distinguished and very able diplomat. Anyone interested in improving relations with Russia and avoiding another nuclear arms race&mdash;which is a vital interest of the United States&mdash;should discuss current issues with him and members of his staff. To consider him &ldquo;toxic&rdquo; is ridiculous. I understand that Michael Flynn resigned because he failed to inform the vice president of the full content of his conversation. I have no idea why that happened, but see <strong>nothing wrong with his contact with Ambassador Kislyak so long as it was authorized by the president-elect</strong>. Certainly, Ambassador Kislyak did nothing wrong.</p> <p><strong>Question 2</strong>: According to your experience, are Russians ambassadors under the sight of the Russian intelligence or they work together?</p> <p><strong>Answer:</strong> This is a strange question. Intelligence operations are normal at most embassies in the world. In the case of the United States, ambassadors must be informed of intelligence operations within the countries to which they are accredited and can veto operations that they consider unwise or too risky, or contrary to policy. In the Soviet Union, during the Cold War, Soviet ambassadors did not have direct control over intelligence operations. Those operations were controlled directly from Moscow. I do not know what Russian Federation procedures are today. Nevertheless, whether controlled by the ambassador or not, all members of an embassy or consulate work for their host government. During the Cold War, at least, we sometimes used Soviet intelligence officers to get messages direct to the Soviet leadership. For example, during the Cuban missile crisis, President Kennedy used a &ldquo;channel&rdquo; through the KGB resident in Washington to work out the understanding under which Soviet nuclear missiles were withdrawn from Cuba.</p> <p><strong>Question 3</strong>. How common (and ethic) is that a person related with a presidential campaign in the US has contact with the Russian embassy?</p> <p><strong>Answer</strong>: Why are you singling out the Russian embassy?<strong> If you want to understand the policy of another country, you need to consult that country&rsquo;s representatives. It is quite common for foreign diplomats to cultivate candidates and their staffs. That is part of their job. If Americans plan to advise the president on policy issues, they would be wise to maintain contact with the foreign embassy in question to understand that country&rsquo;s attitude toward the issues involved.</strong> Certainly, both Democrats and Republicans would contact Soviet Ambassador Dobrynin during the Cold War and discuss the issues with him. As the person in charge of our embassy in Moscow during several political campaigns, I would often set up meetings of candidates and their staffs with Soviet officials. <strong>Such contacts are certainly ethical so long as they do not involve disclosure of classified information or attempts to negotiate specific issues. In fact, I would say that any person who presumes to advise an incoming president on vital policy issues needs to understand the approach of the country in question and therefore is remiss if he or she does not consult with the embassy in question.</strong></p> <p><strong>Question 4</strong>: In a few words, What&rsquo;s your point of view about Sessions-Kislyak case? Is possible that Sessions finally resigns?</p> <p><strong>Answer</strong>: I don&rsquo;t know whether Attorney General Sessions will resign or not. It would seem that his recusal from any investigation on the subject would be adequate. He would not have been my candidate for attorney general and if I had been in the Senate I most likely would not have voted in favor of his confirmation. Nevertheless, I have no problem with the fact that he occasionally exchanged words with Ambassador Kislyak.</p> <p>In fact, I believe it is wrong to assume that such conversations are somehow suspect. When I was ambassador to the USSR and Gorbachev finally allowed competitive elections, we in the U.S. embassy talked to everyone. I made a special point to keep personal relations with Boris Yeltsin when he in effect led the opposition. That was not to help get him elected (we favored Gorbachev), but to understand his tactics and policies and to make sure he understood ours.</p> <p><strong>The whole brou-ha-ha over contacts with Russian diplomats has taken on all the earmarks of a witch hunt. President Trump is right to make that charge.</strong> If there was any violation of U.S. law by any of his supporters&mdash;for example disclosure of classified information to unauthorized persons&mdash;then the Department of Justice should seek an indictment and if they obtain one, prosecute the case. Until then, there should be no public accusations. Also, I have been taught that in a democracy with the rule of law, the accused are entitled to a presumption of innocence until convicted. But <strong>we have leaks that imply that any conversation with a Russian embassy official is suspect. That is the attitude of a police state, and leaking such allegations violates every normal rule regarding FBI investigations. President Trump is right to be upset</strong>, though it is not helpful for him to lash out at the media in general.</p> <p>Finding a way to improve relations with Russia is in the vital interest of the United States. Nuclear weapons constitute an existential threat to our nation, and indeed to humanity. We are on the brink of another nuclear arms race which would be not only dangerous in itself, but would make cooperation with Russia on many other important issues virtually impossible. <strong>Those who are trying to find a way to improve relations with Russia should be praised, not scapegoated.</strong></p> http://www.zerohedge.com/news/2017-03-24/us-ambassador-ussr-%E2%80%9C-whole-brou-ha-ha-over-contacts-russian-diplomats-has-taken-all-#comments Central Intelligence Agency Department of Justice Department of Justice Department of State Draft:Timeline of the Trump-Russia Scandal FBI Federal Bureau of Investigation Foreign relations of Russia Foreign relations of the United States International relations Jack F. Matlock Jr. Jeff Sessions KGB national security National Security Council Politics Russian embassy Russian intelligence Russian interference in the 2016 United States elections Russia–United States relations Sergey Kislyak Univision US Embassy Fri, 24 Mar 2017 21:02:38 +0000 George Washington 591715 at http://www.zerohedge.com Over Half Of American Cities Are Now Dominated By Renters http://www.zerohedge.com/news/2017-03-23/renters <p>During his 1928 election campaign, President Herbert Hoover defined the 'American Dream' as <strong>"a chicken in every pot and a car in every garage."</strong>&nbsp; And while the chickens and cars (courtesy of a <a href="http://www.zerohedge.com/news/2017-02-16/auto-bubble-burst-begins-subprime-delinquencies-soar-2009-levels">massive subprime auto loan bubble</a>) don't seem to be much of a problem these days, for Americans in over half of the largest cities in the country, owning a home is.</p> <p>According to a new report from <a href="https://www.bloomberg.com/news/articles/2017-03-23/renters-now-rule-half-of-u-s-cities">Bloomberg</a>, 52 of the 100 largest U.S. cities were majority-renter in 2015 with 21 of those cities having shifted from majority-owner markets since the 'great recession' resulted in a wave of foreclosures starting in 2009.&nbsp; These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/23/2017.03.23%20-%20Renters.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/23/2017.03.23%20-%20Renters_0.JPG" alt="Renters" width="600" height="444" /></a></p> <p>&nbsp;</p> <p>And while a report from the "Urban Institute" implies that the sudden lack of home ownership in the U.S. is directly attributable to "demographic trends," we're fairly certain there may be other dynamics at play...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.</strong></p> <p>&nbsp;</p> <p>Those shifts are likely to present new challenges for cities unequipped to handle high rental populations. Detroit Future City, a nonprofit that highlighted Detroit’s shift in a report earlier this month, argues that the city needs an intentional strategy for dealing with the rising population of such households.</p> <p>&nbsp;</p> <p>That could include providing new protections for renters or creating resources to help landlords keep properties in good repair. On a grander scale, the Center for Budget Policy &amp; Priorities, a Washington-based research institute, published a proposal this month calling for a new tax credit for low-wage workers, seniors, and people for disabilities.</p> <p>&nbsp;</p> <p>Most low-income families don’t rent by choice, said Nela Richardson, chief economist at Redfin. And plenty of higher-income households rent because they can’t afford to buy. <strong>“We don’t have enough affordable supply in either rental or for-sale markets,”</strong> said Richardson, adding that cities interested in promoting renter-friendly policies can rethink their zoning policies to encourage more construction. </p> </blockquote> <p>...like maybe the fact that millions of people just suffered a foreclosure on their credit report and aren't even eligible for an FHA loan for at least 3 years.&nbsp; Or, perhaps that silly little rule whereby banks are now requiring a cash down payment when purchasing a home is tripping some folk up...fascists.</p> <p>Or, maybe Americans finally just realized that owning a home was never "The American Dream" in the first place after, at least for many folks, it wiped out their entire life savings.&nbsp; </p> <p><iframe src="https://www.bloomberg.com/api/embed/iframe?id=a035a2be-42bf-45f1-84cc-108c3870bb66" width="600" height="337" frameborder="0"></iframe></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="642" height="306" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.03.23%20-%20Am%20Dream.JPG?1490314215" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-23/renters#comments Baseball Hall of Fame balloting Business Center for Budget Policy & Priorities Detroit Economy Education Finance Foreclosure Foreclosures Money Mortgage Politics Real estate Real estate economics Renting Social Issues United States housing bubble Urban decay Urban Institute Vacant Homes Fri, 24 Mar 2017 20:50:35 +0000 Tyler Durden 591645 at http://www.zerohedge.com