The consequences and patterns of war, whether by one nation against another or by a government against the citizenry, rarely change. However, the methods of war have evolved vastly in modern times. Wars by elites against populations are often so subtle that many people might not even recognize that they are under attack until it is too late. Any defense the American people might muster against elitist dismantling of constitutional liberties would inevitably turn to "insurgency". So using CFR member Boot’s views on counterinsurgency as a guideline, here is how the elites will most likely wage open war on those within the American population who have the will to fight back.
"China conducted trial runs for the planned launch of a yuan-denominated gold fix last month, in a sign the world's second-biggest bullion consumer was moving closer to creating a benchmark price," Reuters says, in yet another example of Beijing's rapidly expanding global influence.
The good news is that there will be no 25-year recession. Nor will there be a depression that will last the rest of our lifetimes.
The bad news: It will be much worse than that.
"If you want to hear the details of the Trans-Pacific Partnership trade deal the Obama administration is hoping to pass, you’ve got to be a member of Congress, and you’ve got to go to classified briefings and leave your staff and cellphone at the door. If you’re a member who wants to read the text, you’ve got to go to a room in the basement of the Capitol Visitor Center and be handed it one section at a time, watched over as you read, and forced to hand over any notes you make before leaving. And no matter what, you can’t discuss the details of what you’ve read."
As a result of constant jawboning that the PBOC may not only cut rates even more but proceed to launch QE (which it will ultimately, just not for a while), both the Shanghai Composite has been trading at multi-year highs and oil has found a bid strong enough that in the past two months it has surged by some 50% on hopes that Chinese demand will finally come back once the local economy is so weak it leaves the PBOC no other choice. However, two things suggest that the great "reflation" trade is ending.
Since 2012, there’s been an unprecedented call from foreign nations to repatriate their gold from Federal Reserve vaults in the U.S. This is an incredible development given many countries’ 71-year reliance on the Fed as a custodian for their bullion. Something huge must of happened in the last few years to prompt such action. That something may be a break in foreign gold holders’ trust in the Fed as a custodian of their precious metals.
Here is more insight to the recent USD rally... And why nothing looks like it seems!
China, the world’s largest gold producer and buyer, feels its market weight should entitle it to be a price setter for gold bullion. It is asserting itself at a time when the established benchmark, the century-old London ‘gold fix’, is under scrutiny because of long-running allegations of price manipulation.
- ‘Flash Crash’ Overhaul Is Snarled in Red Tape (WSJ)
- ECB Considers Tighter Noose on Greek Banks (BBG)
- Dollar Falls as U.S. Data Cast Doubt on Fed Policy Tightening (BBG)
- Market U-Turn Rams Hedge Funds (WSJ)
- Greece makes 200 million euro IMF payment due Wednesday (Reuters)
- Greek unemployment was 25.4 percent in February (Reuters)
- J.P. Morgan’s Barista-Turned-Banker Sees Good Things Brewing (WSJ)
This is how DB summarizes what has been the primary feature of capital markets this week - the huge move in European bond yields: "On April 17th, 10-year Bunds traded below 0.05% intra-day. Two and a half weeks later and yesterday saw bunds close around 1000% higher than those yield lows at 0.516% after rising +6.2bps on the day." Right out of the European open today, the government bond selloff accelerated with the 10Y Bund reaching as wide as 0.595% with the periphery following closely behind when at 9:30am CET sharp, just as the selloff seemed to be getting out of control, it reversed and out of nowhere and a furious buying wave pushed the Bund and most peripheral bonds unchanged or tighter on the day! Strange, to say the least. Also, illiquid.
"If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream," Steve Wynn says, underscoring not only the weakness in gaming revenue from the Vegas strip to Macau, but also the fact that there simply is no economic recovery in the US.
And the 'incidents' just keep coming for Japan. Lax safety checks at Kwai Chung container terminal - the only sea entry point for food from overseas - have allowed banned imports from Japan to enter Hong Kong, according to Democratic Party lawmaker Helena Wong Pik-wan. As The South China Morning Post reports, radioactive contaminated food may have been entering the city unnoticed for years because of deficiencies in safety controls on fresh produce since the ban following the Fukushima nuclear power plant incident in 2011.
China is faced with a new reality wherein the very conditions that have supported the country's rapid economic growth may now be set for a wholesale reversal, as the "migrant miracle" gives way to a consumer-driven economy characterized by rising wages, decreased savings and investment, and falling export competitiveness. Meanwhile, what was once a "demographic dividend" is quickly becoming a "demographic deficit" as the number of working-age Chinese begins to decline. Beijing's response to this new reality will go a long way towards shaping the country's economic future.
Wall Street's Council on Foreign Relations has issued a major report, alleging that China must be defeated because it threatens to become a bigger power in the world than the U.S. This report urges: "The United States should invest in defense capabilities and capacity specifically to defeat China’s emerging anti-access capabilities and permit successful U.S. power projection even against concerted opposition from Beijing. … Congress should remove sequestration caps and substantially increase the U.S. defense budget.” In other words: the Government should spiral upward the U.S. debt even more vertically (which is good for Wall Street), and, in order to enable the increased ‘defense’ expenditures, only ‘defense’ expenditures should be freed from spending-caps.
"I am not very optimistic about the fate of mankind as while our problems tend to evolve in exponential ways, our attempts at solving them move in linear fashion. That is true as much for the problems we ourselves create as it is for those that – seem to – ‘simply happen’. I think it would be very beneficial for us if we were to admit to our limits when it comes to solving large scale issues, because that might change the behavior we exhibit when creating these issues. The human capacity for denial and deceit plays a formidable role in this. We’re simply not smart enough to acknowledge our own limitations. Therefore, as Meadows says: "we are going to evolve through crisis, not through proactive change.""