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Will The Tory Landslide Accelerate Scottish Independence?

Authored by Jeff Deist via The Mises Institute,



The results from yesterday's general election in the United Kingdom are stark for the Labour Party, which lost 59 seats in Parliament. The Tories picked up 47 seats, leaving Labour with its worst showing since 1935. This "second referendum" on Brexit presents Prime Minister Boris Johnson with clear support for a no-

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deal Brexit, while delivering a stinging rebuke to the London-centric Remain bloc. It also signifies the likely end of Jeremy Corbyn's career, because unlike American politicians their British counterparts at least have the decency to go away after voters reject them.





The more interesting story yesterday was the remarkable and ongoing success of the Scottish Independence Party (SNP), which gained a whopping 13 seats in Parliament. It now represents most of Scotland geographically: Liberal Democrats hold only the northernmost counties and parts of Edinburgh, while Labour clings to a tenuous hold in the southern part of that city. What does it portend when the two primary left-wing parties in the UK no longer represent left-leaning Scotland? 





The 2014 Scottish referendum on independence from the UK revealed many of the same schisms present in the later Brexit referendum and 2016 US presidential election: young vs. old, pensioner vs. worker, country vs. city, and cosmopolitan vs. parochial. But the attendant narrative of nationalist vs. globalist falls apart when it come to the Scots, who are generally far more pro-EU than the UK generally. The pro-independence Yes! vote in 2014 skewed younger, favored left-wing policies across the board, and sought greater connection with Europe and Brussels. In fact, Scots later voted nearly 2-1 against Brexit.



But while Fox-hunting rural Brexiteers and Scottish secessionists may both share the same disdain for London and Westminster, they do so for entirely different reasons. 



Many older Scots worried that independence might threaten their pensions, and the banking community questioned whether Westminster would allow a breakaway Scotland to continue using the British pound. Nobody wanted a rushed transition to the euro, but without a central bank of its own (that pesky sovereignty issue again) Scotland might have been stuck in a vice between two currencies. Independence forces also failed to convince voters that Scotland's vaunted North Sea oil reserves would help fund the new independent county, especially given falling oil prices and potential territorial disputes over revenues.



These economic concerns were enough to squelch the independence vote by a comfortable 55-45% margin. But economics is not everything. Politically, culturally, and socially it was clear the Scots wanted to be part of Europe, not part of an English-dominated UK.



It may be more clear today. Already the Twittersphere buzzes with talk of a renewed Scottish independence campaign, while the SNP yesterday announced its support for another referendum if a "material change in circumstances" arose between Scotland and the greater union. Surely a landslide victory by the Tories - who are widely disliked by the Scots - and a flashing green light for a deeply unpopular Brexit represent exactly such a change. 



Scotland and England are not magically joined at the hip. If the Scots don't want Brexit, don't want Boris Johnson, and don't want the Tories, who says the current political makeup of the UK is forever and unchanging? Political arrangements are not something to impose on reluctant, disbelieving people. If we favor independence and political self-determination only when we like the results, the only liberty on offer is the liberty to agree. But political universalism is an abstraction, and an arrogant one at that.



If Scots choose Holyrood over Westminster, or even Brussels over Holyrood, who are we to object?




Tyler Durden

Sun, 12/15/2019 - 08:10


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 Scientology has a new article from front group CCHR, the Citizens Commission on Human Rights. For years Scientology has courted the United Nations as it fights attempts by governments to tax, regulate, or prosecute the church. In August we reported that a Scientology front group was granted Special Consultative Status by the UN.

Now CCHR [...]

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Democrats rammed Obamacare through without a single Republican vote.
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Media exposed as puppets for the Deep State amid IG report fallout.
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The outgoing Labour leader notes the recent snap vote was centered around Brexit, with the EU divorce agenda being sold as something heavily opposed to the current system and thus deflecting attention away from burning socio-economic issues.
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‘He will not be wearing this hat around here,' says mall manager.
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CEO Of Startup Company Turvo Fired For Expensing $76,120 At Strip Clubs

Paging Lou Pai...



Though likely not on Lou's spending level, the former CEO of startup Turvo Inc., found out the hard way that expensing nearly $80,000 in company funds at a strip club is apparently not OK with the company's board of directors. 



As a result, Scott Lang, the company's new CEO, aims to stress the company's new policy

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: employees are not allowed to entertain clients at strip clubs, according to Bloomberg.



Former CEO Eric Gilmore has been accused by the company's Board of expensing $76,120 at strip clubs over the course of a 3 year span. The Board removed him as CEO in May. Gilmore didn't deny the allegations, but instead turned around and sued the Board of Directors, claiming they didn't follow proper protocol for his termination. Turvo disputes this, saying they settled in September and that all the proper steps were taken.



Lang is a former executive from the energy industry who joined Turvo just before Thanksgiving. The startup, based in Silicon Valley, makes software to help companies track the movement of freight and is backed by about $85 million in Venture Capital. In his first interview as CEO, Lang said he is trying to help the company move past the scandal and, when asked about whether or not he tries to win over clients at strip clubs, he responded: “Never have. Never will.”





The Board's quick reaction at Turvo shows that more and more companies are quietly addressing allegations of misconduct before they become public. The #MeToo movement has already claimed the jobs of many technology executives, like Kris Duggan of Betterworks Systems, and has cost Ken Fisher's firms billions of dollars in assets managed. 



Gilmore started the company in 2014 and was a veteran of Microsoft and Coupons.com. Mubadala Investment Co., the Abu Dhabi-based sovereign wealth fund, led investors with a $60 million injection into the company last year. Soon after, Gilmore hired a new CFO, who discovered the pattern of "unusual charges" from the CEO. 



The strip club related expenses spanned most of the company's life and Gilmore made "no effort to conceal them", according to Bloomberg. More than $125,000 in entertainment charges were flagged by the new CFO during a review of corporate spending: more than half of them were from strip clubs. 



In May, after the board found out, Directors for Mubadala and VC firms Felicis Ventures and Activant Capital, told Gilmore that his time as CEO was over and demanded he sign a separation agreement. Gilmore declined and argued the process violated the company's bylaws because the confrontation wasn't at first presented as a formal board meeting. The board disagreed and Gilmore's lawsuit over the dispute lasted 3 months before settling. 



Gilmore remains on the Board and is the company's largest shareholder. His two co-founders also still hold executive roles at the company.  




Tyler Durden

Sat, 12/14/2019 - 23:00


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Why Is The System Rigged?

Authored by Bruce Yandle via The American Institute for Economic research,



It’s crazy season, that special time on the American calendar when aspiring candidates for the nation’s highest office try to outdo each other in an effort to attract more voters to their platforms.





This time around, background support is provided by a virtua

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l anvil chorus of anti-capitalism clatter. Senator Elizabeth Warren, for example, frequently unleashes criticism of American capitalism by asserting that the “system is rigged,” a complaint that seems to resonate with meaningful populist appeal. It’s an old refrain that has echoed across the years from Karl Marx onward.



Nobel Laureate Robert J. Shiller explains why this may be the case in his new book, “Narrative Economics.” As Shiller points out, when a story is repeated enough, the viral message may be accepted as conventional wisdom, more like an article of belief than a matter of reason.



I’ll also emphasize that for a message to prevail, it helps if its content rests on a preexisting and inherently moral foundation that reflects our tribal instincts as an evolved human species. And what works for a small tribe doesn’t necessarily work so well for a huge industrialized nation.



Consider this: Some may inquire, “Do you believe in capitalism?” almost as if the position one takes is a matter of religion. When answering, we reflect on our tribal preferences, and cooperating and sharing with our family and neighbors is often a key to success. Thus, many people will almost instinctively answer “no,” or at least “yes, but …” followed by some serious caveats and exceptions.



Yes, the beneficial-but-invisible hand of commerce driven by self-interest has never been an instinctually lovable idea. Gains from trade, while well-documented since the days of Adam Smith, can be more elusive than we may first realize. Given the widespread negative views on the subject, politicians’ calls for greater accountability and government intervention may not be welcomed by all, but they’re understandable.



Shiller adds another dimension to his narrative economics story by using data from Google’s Ngram Viewer. The viewer produces charts based on the frequency of particular words and phrases in Google Books, which include some 8 million downloaded volumes in various languages.



Consider an Ngram we might apply to Senator Warren’s comments. The nearby figure contains one for “system is rigged” that shows the frequency of the phrase’s occurrence from 1940 through 2008, the final year in the database. I have smoothed the data by using a three-year running average:





The data show four viral periods: 1940-1950, 1960-1985, 1990-1998, and 2000-2008.




The first period encompasses World War II, a time of draft, rationing, price controls, defense contracting, and related cronyism that may in some cases have been highly profitable for hand-picked firms.



The second viral period is much longer and encompasses a period including the Vietnam War and related draft, Watergate and significant social unrest.



The third period includes the first Iraq war,



and the fourth contains anti-capitalism protests and budding expressions of concern about income inequality as a version of the economy closer to what we know today took shape.




The Ngram suggests that in seeking to communicate to her base, Senator Warren artfully chose a phrase that had gone viral before—which is to suggest that there may be an embedded tribal norm that reacts during periods when a relatively small number of people are able to build large fortunes or avoid burdens, such as the draft, as a result of government actions and favors.



Oddly enough, Senator Warren and other capitalism critics seldom ask how the system got rigged and what might be done to undo the rigging. But of course, the rigging is done in Washington, sometimes when special interest groups—including corporations—lobby congress for favorable treatment.



And how might that be undone? By trimming away uneven regulation and adopting policies that expose all business firms to the refreshing winds of competition. Put another way, by forcing capitalists to act like capitalists and not lobbyists.




Tyler Durden

Sat, 12/14/2019 - 21:30
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<p>Google probably already knows everywhere you&#x2019;ve been&#x2014;but thanks to this free interactive, you can enjoy that data yourself. </p><br /><p>As we approach the year 2020, we&#x2019;re inevitably reflecting on the last decade of our lives. The music heard, romances had, and the jobs taken. The accomplishments, the regrets, the absurdity. Where did the time go? And where did you, you know, actually go?</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
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New WikiLeaks Bombshell: 20 Inspectors Dissent From Syria Chemical Attack Narrative

Late Saturday WikiLeaks released more documents which contradict the US narrative on Assad's use of chemical weapons, specifically related to the April 7, 2018 Douma incident, which resulted in a major US and allied tomahawk missile and air strike campaign on dozens of targets in Damascus.



The leaked documents, including internal emails of the Or

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ganization for the Prohibition of Chemical Weapons (OPCW) — which investigated the Douma site — reveal mass dissent within the UN-authorized chemical weapons watchdog organization's ranks over conclusions previously reached by the international body which pointed to Syrian government culpability. It's part of a growing avalanche of dissent memos and documents casting the West's push for war in Syria in doubt (which had resulted in two major US and allied attacks on Syria).



This newly released batch, WikiLeaks reports, includes a memo stating 20 inspectors feel that the officially released version of the OPCW's report on Douma “did not reflect the views of the team members that deployed to [Syria]”. This comes amid widespread allegations US officials brought immense pressure to bear on the organization. 




The Daily Mail's Peter Hitchens, who saw the leaked documents just prior to WikiLeaks going public with them had this to say:




Sources stress that the scientists involved are ‘non-political, utterly uninterested in any strategic implications of what they reveal’.



They just ‘feel that the OPCW has a duty to be true to its own science, and not to be influenced by political considerations as they fear it has been’.



An internal memo seen by The Mail on Sunday suggests that as many 20 OPCW staff have expressed private doubts about the suppression of information or the manipulation of evidence.




This suppression of information included key evidence which undermined claims Syrian military helicopters dropped a gas cylinder from the air, which had long been the linchpin in Washington's accusation that "Assad gassed his own people" at Douma.




The leaks also suggest the OPCW possessed scientifically credible evidence showing the victims of the alleged attack had symptoms not consistent with chemical gas exposure (prior OPCW statements pointed to chlorine use), casting further doubt on that aspect of the investigation.




But perhaps the most important leak in the new trove of emails centers on a raging debate among scientists over whether to include in their report the phrase "chlorine containing compounds were detected" and how to qualify it — given it was found only in such trace amounts as to be consistent with common household levels of chlorine-related items.




That final report claimed there were ‘reasonable grounds’ that chlorine gas was used in Douma, but an OPCW whistleblower says only tiny quantities of chlorine were detected in forms possible to find in any household— Daily Mail





This crucial document (among others), which expresses concern that the media would wrongly assume a "chlorine attack" based on common household trace levels is found in the following memo:





And here's another example:





Another stunning OPCW admission heretofore unreleased to the public:





Hitchens continues commenting on the trove of leaked documents as follows:




Alleged casualties shown in videos of the attack were foaming at the mouth in a way that might be expected of victims of sarin, but not by victims of chlorine. Yet all the reports agree that no traces of sarin were found at Douma.



These doubts were confirmed by expert toxicologists consulted by the OPCW investigation team on a visit to Germany in June 2018.



They concluded ‘there was no correlation between symptoms and chlorine exposure’.



In a key passage it adds ‘the team considered two possible explanations for the incongruity.



‘A) The victims were exposed to another highly toxic chemical agent that gave rise to the symptoms observed and has so far gone undetected.



‘B) The fatalities resulted from a non-chemical-related incident.’ In other words, either the victims died from an unknown, undetected gas for which no evidence exists or there never was a chemical attack.




These severe doubts which were expressed internally among scientists, analysts, and technicians were never made public by the OPCW, hence the new leaks, apparently facilitated by frustrated staff who want to make the case to the world about the significant doubts.


Chemical weapons experts taking samples from a prior alleged chemical weapons attack site in Syria, via Reuters.

* * *



14 December, 2019



Today WikiLeaks releases more documents showing internal disagreement within the OPCW about how facts were misrepresented in a redacted version of a report on an alleged chemical attack in Douma, Syria in April 2018.



Amongst these is a memorandum written in protest by one of the scientists sent on a fact finding mission (FFM) to investigate the attack. It is dated 14 March 2019 and is addressed to Fernando Arias, Director General of the organisation. This was exactly two weeks after the organisation published its final report on the Douma investigation.



WikiLeaks is also releasing the original preliminary report for the first time along with the redacted version (that was released by the OPCW) for comparison. Additionally, we are publishing a detailed comparison of the original interim report with the redacted interim report and the final report along with relevant comments from a member of the original fact finding mission. These documents should help clarify the series of changes that the report went through, which skewed the facts and introduced bias according to statements made by the members of the FFM.



The aforementioned memo states that around 20 inspectors have expressed concerns over the final FFM report, which they feel “did not reflect the views of the team members that deployed to Douma”. Only one member of the fact finding team that went to Douma, a paramedic, is said to have contributed to the final version of the report. Apart from that one person, an entirely new team was gathered to assemble the final report, referred to as the “FFM core team”...



* * *



Read the full WikiLeaks press release



See the new batch of leaked documents




Tyler Durden

Sat, 12/14/2019 - 22:00
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Impeaching Trump 'not bipartisan,' says Rep. Jeff Van Drew.
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Repo-Market Turmoil: Are We Staring Into The Financial Abyss?

Authored by Tuomas Malinen via GnSEconomics.com,



One thing has been bothering us for six years. How can so many economists and economic commentators dismiss the ever-increasing market meddling of central banks so lightly?



The first time we warned about this possible threat to financial markets was in December 2013. In the report, we wrote:

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p>


There is a serious possibility that the measures taken by the central banks have already created a situation in which their actions increase rather than decrease financial instability. This is due to the fact that if the actual price of an asset does not meet its marketbased value, the true level of risk is not properly revealed.




The continuing turmoil in the repo-market, first triggered on 16 September, is the most recent and probably the most worrying example of this.



There has been a lot of speculation about its origins. In this post we explain why we consider the repo-problems to be the first sign, a symptom, of the financial calamity we’re about to face.



The failed clean-up

The global financial crisis (GFC) or “Panic of 2008” was a shock not just to bankers, but also to economists—not to speak of ordinary citizens. It was a massive failure of risk-hedging in the financial sector, combined with both regulatory failures and dangerous and deeply-embedded incentives. We  summarized the factors leading to the crisis in our blog: 10 years from Lehman and nothing has been fixed.



While the extraordinary measures used to stop the crisis from mutating into a systemic meltdown can be considered appropriate, the fact these measures were continued cannot. In retrospect, the U.S. did recapitalize, merge and permit the failure of some banks, but Europe choose the exact opposite approach:  undercapitalized and ailing banks were left standing.



However, the most crucial mistakes were made after the GFC on both sides of the Atlantic. The hidden virtue of crises and recessions is that they remove both unproductive firms and financial excess, creating space for more productive firms and fresh financial investment. This was not allowed to happen post-GFC. This also explains why the economic recovery from the crisis was so weak.



But the financial sector got the worst treatment.  One major central bank after another enacted zero or negative interest rate policies and started asset purchase (QE) programs run through the commercial banks. In the U.S., the Fed purchased securities from authorized Primary Dealer banks by crediting reserve balances to the Fed accounts associated with each dealer counterparty.



These intermediary banks paid the sellers of bonds (households, funds, banks, etc.) and the Fed compensated the banks with reserves.  In practice, the Fed forced excess reserves onto the balance sheets of banks far beyond levels they would have acquired independently.



Because of the higher supply of reserves system-wide, their marginal benefit decreased, bidding-up the prices of various securities. This led the banks to issue additional and often riskier loans until the balance of the marginal benefits was restored. Also, because QE and low policy rates depressed long-term rates, many of the securities that the commercial banks held had no yield advantage over reserves, making the banks more likely to substitute less-liquid securities with more credit risk.



The Never-Never (financial) land of post-GFC

QE created overdemand for investment-grade assets and excess liquidity in the financial markets by introducing central banks as a persistent buyer. This overdemand led to a relentless hunt for yield, to spread compression, and to artificially-inflated prices across the entire spectrum of the asset universe (see Figure 1).



Quantitative tightening, or QT, attempted globally for the first time from August to November of 2018, created an oversupply of investment-grade bonds which lead to a flight to quality, to spread dispersion and to asset price deflation. It also removed the excess liquidity from the financial markets created by QE by introducing a persistent seller.





Figure 1. The causative channels of quantitative easing (QE) and quantitative tightening (QT) in the macroeconomy and in financial markets. Source: Q-Review 1/2018



In December 2018, it became clear that the financial markets were unable to tolerate a balance sheet run-off by central banks. Markets declined abruptly and forced the PBoC to inject record amounts of liquidity into the markets, and the Fed to make an immediate 180-degree turn in its monetary policy. Yet, overall, global QT essentially continued through the 2019 until the repo-markets broke in September (see Figure 2).



This time around, central bankers learned their lesson with the Fed and ECB returning to QE programs (although the Fed insistently characterized its T-bill purchase program as “Not QE”). In case you have wondered what a central banker’s panic looks like, it can be seen in the latter part of Figure 2.





Figure 2. The combined balance sheet of the BoJ, ECB, Fed and PBoC from January 2018 till October 2019. Source: GnS Economics, BoJ, ECB, Fed, PBoC



The repo-market as a harbinger

On the 16th of September, rates in the repo markets spiked by 248 basis points to more than double of the overnight rate set by the Fed. Panic was imminent, as the over $4 trillion repo-market is used by big institutional investors to satisfy their short-term demand for liquidity. If rates stay elevated for an extended period of time, highly-leveraged institutions start to fail and trust in financial markets and the banking sector is likely to shatter.



So, what happened? There are a lot of theories, but this is what we know.



The interbank market never recovered from the Panic of 2008. Banks demand collateral for their loans to other banks, which has shifted more of the ‘action’ to the repo-market, increasing its role. During 2018 and 2019, the four big banks of the U.S. became the dominant lenders in the repo-markets. So, any change in their ability or willingness to lend to the repo-market will cause an imminent shortage of funding and sky-rocketing interest rates. Banks have also been hoarding Treasuries, shrinking their availability.



Yet, the main issue is likely to be the fact that QE programs fundamentally altered the balance sheets of banks as well as their money-market activity.



QE accustomed banks to holding large amounts of excess reserves, which provided a reliable source of interest income. When QT started to reduce reserves, they replaced them with another reliable source, Treasuries, which acted as a hedge on their balance sheet against riskier lending practices and securities holdings induced by QE programs.  Obtaining a hedge against riskier assets and loans (loan portfolios in particular take a long time to adjust) becomes especially important, if the economic outlook is expected to worsen—as it is presently.



We cannot, of course, be absolutely certain that this is what drove big banks to Treasuries, but it seems plausible. QE has distorted both bank balance sheets specifically and the financial markets more broadly. These factors, combined with decreased money-market activity of banks—explained here in detail by the BIS—has likely made the ‘Big 4’ wary of lending to the repo-market, if even a hint of potential loss exists.



This leads us to another and potentially more worrying development:  increased access to the repo-market by hedge funds to increase their leverage.  They seem to have been getting short-term funding from the repo-market to buy U.S. T-bills, which they have then re-invested in the repo-market to obtain more short-term funding to buy T-bills, etc. Using this “leverage-loop” they have been able amass very high leverage ratios.



The behavior of hedge funds is also the end-result of massive central bank interference in the global capital markets.  When the yields of practically every financial asset class are squeezed to near-zero (or less!) due to artificial liquidity from the central banks, leverage becomes the only way to obtain  yield sufficient for fixed-income investors.



Staring at the financial abyss

When the financial history of this era is written, it is fairly likely that historians will identify the onset of the global economic crisis as 16 September, 2019. It was the first clear sign of the potential for a  violent unwinding of the massive speculative financial positions created by central bank meddling.



Thus, in their efforts to “save” the world economy, central banks have created a monster: a dysfunctional, extremely-speculative and highly-leveraged financial sector. All that is needed for it to unravel are rising rates in an some important, if obscure, corner of the capital markets—just like the repo-markets.



The Fed has been engaged in a desperate battle to avert this through its repo and “Not QE” -programs since September. However, even if successful, it’s very likely that these programs, not to speak of an “actual QE”, will just further aggravate the distortions in the financial markets, until they become unbearable.



Then we’ll be staring into the financial abyss. Beware!




Tyler Durden

Sat, 12/14/2019 - 19:30


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<p>The days of crafting brands without incorporating a CX design mindset are drawing to a close.</p><br /><p>One of the hardest things about design is keeping track of the terminology. There are many words to learn, and definitions frequently overlap. But don&#x2019;t think for a moment that any two terms mean the exact same thing. Distinctions abound. Abbreviations matter.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
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China's "Moment Of Reckoning" Arrives: $38BN State-Owned Giant Announces Largest Dollar Bond Default In Two Decades

Two weeks ago we previewed what we said would soon be a D-Day for China's bond market, as a massive commodities trader and Global 500 state-owned enterprise was set for an "unprecedented" bond default.



As of last week, this historic default is now in the history books after Tewoo, the closely watched Chinese commodities trader, bec

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ame the biggest dollar bond defaulter among the nation’s state-owned companies in two decades, in what Bloomberg called a "moment of reckoning" for Beijing as China struggles to contain credit risk in a weakening economy, as bond defaults hit an all time high and are set to keep rising in the coming years.



Last Wednesday, Tewoo Group announced results of its "unprecedented" debt restructuring, which saw a majority of its investors accepting heavy losses, and which according to rating agencies qualifies as an event of default. As a result of the default, until recently seen as virtually impossible for a state-owned company, investors’ perceptions are undergoing a dramatic U-turn about government-owned borrowers whose state-ownership had for years offered an ironclad sense of security.



No more: The fact that a state-owned enterprise such as Tewoo has now defaulted on repaying its dollar bonds in full, confirms that Beijing will no longer bail out troubled SOEs, let alone private firms, perhaps due to the strains imposed by the economy which while growing at just below 6%, is slowing the most in three decades. It also raises concerns over the Chinese province of Tianjin, where Tewoo is based, following a series of rating downgrades and financing difficulties suffered by some of the city’s state-run firms. The metropolis near Beijing also has the highest ratio of local government financing vehicle bonds to GDP in China.



As a reminder, Tewoo ranked 132 in 2018’s Fortune Global 500 list, higher than many other conglomerates including service carrier China Telecommunications Corp. and financial titan Citic Group Corp. It had an annual revenue of $66.6 billion, profits of about $122 million, assets worth $38.3 billion, and more than 17,000 employees as of 2017, according to Fortune’s website. Tewoo is owned by the Tianjin government and operates in a number of industries including infrastructure, logistics, mining, autos and ports, according to its website. It also has footprints in countries including the U.S., Germany, Japan and Singapore.



Putting last week's "unprecedented" event in context, since the first SOE bond default emerged in China’s domestic market four years ago, 22 such firms have failed to make good on a combined 48.4 billion yuan ($6.9 billion) onshore bonds as of the end of October, according to Guosheng Securities. However, despite periodic scares such as late repayment, Chinese SOEs had yet to suffer any high-profile default in the dollar bond market since the collapse of Guangdong International Trust and Investment Corp. in 1998.



Tewoo is precisely that default.



Furthermore, Tewoo's exchange offer, which has bondholders accepting a major haircut on their bonds, is seen as a road-map for resolving similar debt crises in the future as the prospect of more failures by state-backed firms looms. 2019 has already seen over 20 billion in SOE bond defaults, nearly triple 2018's total and the highest on record.





Specifically, the former Fortune Global 500 company from the northern port city of Tianjin said dollar bond investors representing 57% of the the total $1.25 billion have agreed to be paid just 37 to 67 cents on the dollar, depending on the maturity of the bonds. Additionally, bondholders representing 22.6% of these bonds voted to exchange their debt for new bonds with sharply lower coupons to be issued by Tewoo’s offshore debt manager, a state asset manager from Tianjin.



"This is one form of default based on our definition," said Moody's analyst Ivan Chung, pointing out that the debt restructuring has resulted in losses for investors.



The distressed exchange offer which concluded hastily last week represents a "first of its kind" debt restructuring plan for the relatively immature Chinese bond market and for a state-run enterprise in the dollar bond market. It was rushed ahead of $300 million dollar bond maturity on Dec. 16, one of the four notes covered by Tewoo’s debt restructuring plan.



To be sure, the market was not surprised: late last month, Tianjin State-owned Capital Investment and Management, Tewoo's offshore debt manager, said on an investor call that Tewoo is very likely to default on this paper. That explains why Tewoo's bond prices were largely unchanged after the exchange offer.





Meanwhile, investors who turned down the company's forced exchanges face even steeper losses; their dollar bonds will be grouped into a comprehensive debt plan involving Tewoo’s onshore debt, according to Tianjin State-owned Capital.



Tewoo said settlement of the debt restructuring offers are expected to be on or about Dec. 17.



As Bloomberg summarizes, "Tewoo’s failure in the dollar bond market, the biggest for a Chinese SOE since the collapse of Guangdong International Trust and Investment Corp. in 1998, is a sign that the worst economic slowdown in three decades is limiting Beijing’s capacity to bail out its weaker state firms. As a result, the authorities appear increasingly willing to use a more market-oriented approach to clean up the mess."



"Tewoo’s default is a landmark case, and demonstrates a growing tolerance for defaults by distressed SOEs,” Cindy Huang, an S&P Global Ratings credit analyst said in a note.



Needless to say, Tewoo’s crisis comes as a wake-up call for investors, many of whom had expected to never incur losses in China's offshore (dollar) bond market where until now, moral hazard had been the only game in town. Alas, that game is now changing.



“This is a poor outcome for investors that bought the bonds at par. That said, there is now some track record as to the severity of loss for an SOE-related entity,” said Charles Macgregor, head of Asia at Lucror Analytics. "Hopefully, these types of restructures will bring more discipline to the market and result in investors properly pricing for the apparent risk," he added hopefully, although with developed nation central banks engaging in precisely the kind of moral hazard boosting activity that China is now desperately seeking to distance itself from, we doubt that any investors will learn any lessons, and if anything, creditors will only demand even bigger bailouts in the future.



* * *



What is perhaps just as concerning is that as we noted last month, the Tewoo default is a harbinger of the crisis facing China's insovent local governments themselves. Tianjin “is not an exception” and other local governments with deteriorating fiscal conditions might also see eroding support for their less competitive SOEs, S&P warned.



It all started with the bankruptcy of Bohai Steel Group in 2018 which triggered systemic risk in Tianjin’s financial market. The incident involved a large number of local companies and financial institutions, which recorded huge amounts of bad debt. Financial institutions became more conservative in their lending standards, and this resulted in liquidity issues for a number of Tianjin enterprises.



At the same time, Beijing’s deleveraging and capacity reduction reforms made it difficult for a traditionally highly-leveraged company like Tewoo to raise financing. The default in May 2018 by Hsin Chong Group Holdings Limited, a company controlled by Tewoo, showed further signs of financial problems at Tewoo Group.



While normally such a critical company as Tewoo would be quietly bailed out by either Beijing or the local province, investors told Bloomberg that the company's excessive debt levels would limit Tianjin authorities’ ability to lend support to the city’s troubled firms. They were right, and in July, Tianjin Binhai New Area Construction & Investment Group postponed plans to sell a three-year dollar bond offering amid such concern.



Tewoo’s debt issues that had surfaced from its current crisis may be only the tip of the iceberg. Tianjin’s economic growth has slowed down sharply since the beginning of 2016. GDP growth dropped to 1.9% in the first quarter of 2018. Even as it started to rebound thereafter, the outlook is still pessimistic, with GDP growth in 2018 less than 4%, which ranked last in the country according to iFast.





On the other hand, according to a 2016 report released by ratings agency Moody’s, state-owned enterprises in Tianjin recorded an aggregate liability-to-fiscal revenue ratio of more than 600%, which was the highest in the country.



At the same time, as shown in Tianjin municipal government’s most recent three-year revenue and debt data, Tianjin government’s fiscal revenue has declined significantly since 2017. Fiscal revenue fell by close to RMB40 billion in 2017, while government borrowings rose rapidly. By the end of 2018, debt owed by the Tianjin government was almost double its fiscal revenue.





The bankruptcy of Bohai Steel, a Tianjin SOE, in 2018 may also be a sign that the Tianjin government has lost control over the local debt crisis. Other than Bohai Steel and Tewoo, there have been a number of state-owned companies in Tianjin that are fighting to stave off insolvencies, such as Tianjin Real Estate Group Co. Limited, which owes RMB200 billion in debt. From the above observations, we think that in the event of a default by Tewoo, the company is likely to go into bankruptcy reorganization in a similar way as Bohai Steel, which has brought in capital from the private sector for its corporate restructuring. But for bondholders, recovery of their investments may be difficult, and potential loss heavy.



With Tianjin failing - or simply unable to step up, in the aftermath of Tewoo’s debt restructuring which confirms that Beijing will no longer bail out even SOEs, investors’ skepticism about state support for such state-linked firms will collapse, and the default will have wide, and dire,  implications on how investors assess and price their bonds in the future, said Judy Kwok-Cheung, director of fixed-income research at Bank of Singapore. It will certainly have a chilling effect on demand for Chinese bond issuers as investors will actually have to perform due diligence to find out just what they are buying.



"Investors would be going back to basics in assessing credit risk in that the company’s stand-alone ability to repay is the first line of defense when it comes to non-repayment risk," said Kwok-Cheung.



In short, "investors" would be reacquainted with a thing called "fundamentals." The horror, the horror.



* * *



It gets worse: should Tewoo's default spread to provincial-backed debt, an already ugly situation could quickly turn catastrophic as Tianjin has the highest debt burden among mega-cities and provinces in China according to S&P. Earlier this year, Fitch cut ratings on several government-related entities from the city, which is reliant on heavy industry and commodities trading. As a result of having the highest debt, Tianjin also has to slowest growth - Tianjin’s local economy grew by just 3.6% last year, the slowest in China; at the end of last year, Tianjin’s government had 407.9 billion yuan worth of debt outstanding, or about 22% of the size of its economy, said the Chinese credit risk assessor.



And just in case the Tewoo default isn't troubling enough, Moody's said that it expected the number of Chinese defaults to jump further in 2020 as economic growth sputters and the government attempts to rein in support to indebted companies. Specifically, Moody's expects 40-50 new defaults in 2020, up from 35 this year, according to Ivan Chung, which will make next year another all time high.





“The regulators’ intention is to reduce moral hazard” while at the same time ensuring any defaults “won’t undermine socioeconomic stability or trigger systemic risks,” Chung said on Wednesday, who added that whereas state support may be available for companies engaged in social welfare projects, for those that are more commercial in nature, "government support may not be so forthcoming," he said.



So what happens next?



Now that a Tewoo event of default is in the history books, the next question is what will bondholders of China's other SOE's - those who bought bonds on the assumption that China will always bail them out - do next? A flurry of aggressively selling may be just the catalyst that cracks the market if it emerges in the extremely illiquid days just before Christmas.




Tyler Durden

Sat, 12/14/2019 - 20:00


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Can We Impeach The FBI Now?

Authored by Peter van Buren via TheAmericanConservative.com,



The release of Justice Department Inspector General Michael Horowitz’s report, which shows that the Democrats, media, and FBI lied about not interfering in an election, will be a historian’s marker for how a decent nation fooled itself into self-harm. Forget about foreigners influencing our elections; it was us.



Th

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e Horowitz Report is being played by the media for its conclusion: that the FBI’s intel op run against the Trump campaign was not politically motivated and thus “legal.”





That covers one page of the 476-page document, but because it fits with the Democratic/mainstream media narrative that Trump is a liar, the rest has been ignored.



“The rest,” of course, is a detailed description of America’s domestic intelligence apparatus, aided by its overseas intelligence apparatus, and assisted by its Five Eyes allies’ intelligence apparatuses. And the conclusion is that they unleashed a full-spectrum spying campaign against a presidential candidate in order to influence an election, and when that failed, they tried to delegitimize a president.





We learn from the Horowitz Report that it was an Australian diplomat, Alexander Downer, a man with ties to his own nation’s intel services and the Clinton Foundation, who set up a meeting with Trump staffer George Papadopoulos, creating the necessary first bit of info to set the plan in motion. We find the FBI exaggerating, falsifying, and committing wicked sins of omission to buffalo the Foreign Intelligence Surveillance Act (FISA) courts into approving electronic surveillance on Team Trump to overtly or inadvertently monitor the communications of Paul Manafort, Michael Cohen, Jared Kushner, Michael Flynn, Jeff Sessions, Steve Bannon, Rick Gates, Trump transition staffers, and likely Trump himself. Trump officials were also monitored by British GCHQ, the information shared with their NSA partners, a piece of all this still not fully public.



We learn that the FBI greedily consumed the Steele Dossier, opposition “research” bought by the Clinton campaign to smear Trump with allegations of sex parties and pee tapes. Most notoriously, the dossier claims he was a Russian plant, a Manchurian Candidate, owned by Kremlin intelligence through a combination of treats (land deals in Moscow) and threats (kompromat over Trump’s evil sexual appetites). The Horowitz Report makes clear the FBI knew the Dossier was bunk, hid that conclusion from the FISA court, and purposefully lied to the FISA court in claiming that the Dossier was backed up by investigative news reports, which themselves were secretly based on the Dossier. The FBI knew Steele had created a classic intel officer’s information loop, secretly becoming his own corroborating source, and gleefully looked the other way because it supported his goals.



Horowitz contradicts media claims that the Dossier was a small part of the case presented to the FISA court. He finds that it was “central and essential.” And it was garbage: “factual assertions relied upon in the first [FISA] application targeting Carter Page were inaccurate, incomplete, or unsupported by appropriate documentation, based upon information the FBI had in its possession at the time the application was filed.” One of Steele’s primary sources, tracked down by FBI, said Steele had misreported several of the most troubling allegations of potential Trump blackmail and campaign collusion.



We find human dangles, what Lisa Page referred to as “our OCONUS lures” (OCONUS is spook-speak for Outside CONtinental US) in the form of a shady Maltese academic, Joseph Mifsud, who himself has deep ties to multiple U.S. intel agencies and the Pentagon, paying Trump staffers for nothing speeches to buy access to them. We find a female FBI undercover agent inserted into social situations with a Trump staffer (pillow talk is always a spy’s best friend). It becomes clear the FBI sought to manufacture a foreign counterintelligence threat as an excuse to unleash its surveillance tools against the Trump campaign.



We learn that Trump staffer Carter Page, while under FBI surveillance, was actually working for the CIA in Russia. The FBI was told this repeatedly, yet it never reported it to the FISA court while seeking approval for its secret investigation of Page. An FBI lawyer even doctored an email to hide the fact that Page was working for the Agency and not the Russians; it was that weak a case. The Horowitz Report went on to find “at least 17 significant errors or omissions” concerning FBI efforts to obtain FISA warrants against Page alone. California Congressman Devin Nunes raised these points almost two years ago in a memo the MSM widely discredited, even though we now know it was basically true and profoundly prescient.



Page was a nobody with nothing, but the FBI needed him. Horowitz explains that agents “believed at the time they approached the decision point on a second FISA renewal that, based upon the evidence already collected, Carter Page was a distraction in the investigation, not a key player in the Trump campaign, and was not critical to the overarching investigation.” They renewed the warrants anyway, three times, largely due to their value under the “two hop” rule. The FBI can extend surveillance two hops from its target, so if Carter Page called Michael Flynn who called Trump, all of those calls are legally open to monitoring. Page was a handy little bug.



Carter Page was never charged with any crime. He was blown into a big deal only by the fictional Steele Dossier, an excuse for the FBI to electronically surveil the Trump campaign.



When Trump was elected, the uber-lie that he was dirty with Russia was leaked to the press most likely by James Comey and John Brennan in January 2017 (not covered in the Horowitz Report), and a process, which is still ongoing, tying the president to a foreign power, began. “With Trump, All Roads Lead to Moscow,” writes the New York Times even today, long after both the Mueller Report and now the Horowitz Report say unambiguously otherwise. “Monday’s congressional hearing and the inspector general’s report tell a similar story,” bleats the Times, when in fact the long read of both says precisely the opposite.



Michael Horowitz, the author of this current report, should be a familiar name. In January 2017, he opened his probe into the FBI’s Clinton email investigation. In a damning passage, that 568-page report found it “extraordinary and insubordinate for Comey to conceal his intentions from his superiors…for the admitted purpose of preventing them from telling him not to make the statement, and to instruct his subordinates in the FBI to do the same. By departing so clearly and dramatically from FBI and department norms, the decisions negatively impacted the perception of the FBI and the department as fair administrators of justice.”



Horowitz’s Clinton report also criticizes FBI agents and illicit lovers Peter Strzok and Lisa Page, who exchanged texts disparaging Trump before moving from the Clinton email probe to the Russiagate investigation. Those texts “brought discredit” to the FBI and sowed public doubt. They included one exchange reading, “Page: “[Trump’s] not ever going to become president, right? Strzok: “No. No he’s not. We’ll stop it.”



If after reading the Horowitz Report you want to focus only on its page one statement that the FBI did not act illegally, you must in turn focus on what is “legal” in America. If you want to follow the headlines saying Trump was proven wrong when he claimed his campaign was spied upon, you really do need to look up that word in a dictionary and compare it to the tangle of surveillance, foreign government agents, undercover operatives, and payoffs that Horowitz details.



You may accept the opening lines of the Horowitz Report that the FBI did not act with political bias over the course of its investigation. Or you can find a clearer understanding in Attorney General William Barr’s summary of the Report: “that the FBI launched an intrusive investigation of a U.S. presidential campaign on the thinnest of suspicions.” You will need to reconcile the grotesque use the information the FBI gathered was put to after Trump was elected, the fuel for the Mueller investigation, and years’ worth of media picking at the Russian scab.



The current Horowitz Report, read alongside his previous report on how the FBI played inside the 2016 election vis-a-vis Clinton, should leave no doubt that the Bureau tried to influence the election of a president and then delegitimize him when he won. It wasn’t the Russians; it was us. And if you walk away concluding that the FBI fumbled things, acted amateurishly, failed to do what some claim they set out to do, well, just wait until next time.



On a personal note, if any of this is news to you, you may want to ask why you are only learning about it now. The American Conservative has been one of the few outlets that’s consistently exposed the Steele Dossier as part of an information op nearly since it was unveiled, and which has explained how the FISA court was manipulated, and which has steadily raised the question of political interference in our last election by American intelligence services. We claim no magical powers or inside information. To those of us who have been on the fringes of intelligence work, what was obvious just from the publicly available information was, well, obvious. 



If you are reading any of this for the first time, or know people who are reading bastardized MSM versions of it for the first time, you might ask yourself why those outlets went along with Steele, et al. Their journalists are no dumber or smarter than ours. They do, however, write with a different agenda. Keep that in mind as we flip the calendar page to 2020.



*  *  *



Peter Van Buren, a 24-year State Department veteran, is the author of We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People,Hooper’s War: A Novel of WWII Japan, and Ghosts of Tom Joad: A Story of the #99 Percent.




Tyler Durden

Sat, 12/14/2019 - 17:30


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Politics

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Big thanks to all the patriots who participated -- you are the resistance!
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<p>The classic red, white, and blue symbol has been around since 1908. It&#x2019;s time for a tune-up.</p><br /><br /><br /><p>London&#x2019;s underground transit system, known as &#x201C;The London Underground&#x201D; or &#x201C;The Tube,&#x201D; started running in 1863. Its iconic symbol, a patriotically colored bar-and-circle roundel, was first plastered on the city&#x2019;s subterranean walls in 1908 and has gone through several iterations since. Until now, each new draft of the logo has been a variation on the same theme&
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#x2014;all solidly red and blue, with only slight changes to the proportions and weight of the letters. Recently, however, British-Ghanaian artist Larry Achiampong has reimagined the traditional transit symbol to reflect the rich and diverse African diaspora that makes up roughly 44%&#xA0;of London&#x2019;s population.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
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Hong Kong Police Report Second Bomb Plot Foiled

With the Hong Kong protests showing no sign of letting up, a new narrative has emerged; that anti-government activists are "sliding into terrorism with home-made bombs" designed to inflict mass casualties.



On Sunday, Hong Kong police reported that they foiled a second bomb plot in under a week - arresting three men who were allegedly testing home-made devices and chemicals in a sec

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luded area, according to SCMP.


One of the suspects is brought to a Tuen Mun school as part of police investigations. Photo: Winson Wong (via SCMP)



According to Superintendent Suryanto Chin-chiu from the bomb squad, officers found a transmitter and a receiver at the scene and believed the devices were used to detonate the bombs at short-range using a low frequency. -SCMP




Police seized a transmitter and a receiver. Photo: Handout


"The amount [of explosives] was not a lot. But intelligence showed there were two purposes behind the plot – one was to upgrade the power of the bombs, and the other to launch attacks at future assemblies or rallies," said Senior Superintendent Steve Li Kwai-wah. 




Acting on intelligence, officers from the organised crime and triad bureau ambushed the trio in scrubland off Siu Lang Shui Road in Tuen Mun in the early hours as they carried out tests.



...




In the Tuen Mun operation, officers also seized a radio-controlled detonation device and protective gear, including shields, bulletproof vests, a steel plate and gas masks at the scene. The tools were believed to have been used during the tests.-SCMP





Earlier in the week two home-made bombs were defused in Wan Chai, according to reports.




Adding to the case for home-grown terror, SCMP notes that the alleged bomb plots come as "police said three men and two women, aged 15 to 18,  had been arrested  in suspected connection with the  death of a 70-year-old man who was hit by a brick during a fight between masked protesters and Sheung Shui residents last month."



Police on Saturday added that they have recovered 34 petrol bombs, 20 smoke bombs, 12 corrosive bombs and a bunch of easily flammable items following calls from City University staff regarding potentially dangerous items on their Kowloon campus. University officials also reported the discovery of dangerous chemicals which were disposed of by police.



Accompanying SCMP's Saturday report is an Op-Ed, titled "Hong Kong’s revolution is sliding into terrorism with home-made bombs primed to kill and maim."




While this great revolution of our times has removed Hong Kong’s bragging rights as one of the safest cities in the world, the security situation has not been deemed alarming enough for people to have to be dragged through metal detectors and frisked by security guards when entering shopping centres, cinema halls, train stations and other vulnerable public venues.



In the past I have often contemplated how easy it would be for the terroristically inclined to set off bombs pretty much anywhere, in such a trusting and open society, but always perished the thought. Not in Hong Kong. Not by Hongkongers.



I hate to report I’m not so sure any more these days, now that the revolutionaries have taken to building home-made bombs packed with high explosives and shrapnel. Just this week, the police bomb squad defused two improvised explosive devices found on school grounds by chance.





If this keeps up, China will be virtually forced to shut down the protests - all in the name of fighting terrorism.




Tyler Durden

Sat, 12/14/2019 - 18:00


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War Conflict

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Bernie Rescinds Endorsement Of Dem Candidate After "Legalize Bestiality" Video Resurfaces

Popular progressive political commentator Cenk Uygur is running for Democratic California Rep. Katie Hill’s seat, who resigned amid scandal in October after allegations she slept with a congressional staffer and a campaign staffer, and nude photographs of her surfaced.



But "The Young Turks" star founder is already finding himself at the center of bizarre co

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ntroversy involving past statements he made over bestiality during a live program, causing Sen. Bernie Sanders to retract his highly sought after endorsement a mere day after announcing it.



In a Young Turks segment from 2013, he talks about how “hot” women from the Dominican are in somewhat typical remarks of his over the years that fellow progressives have lambasted him as sexist for. But then the segment took an insane turn. “Here comes the controversial part I shouldn’t say,” Uygur said, according to the resurfaced video. “I believe that if I were the benevolent dictator of the world, I would legalize bestiality where you are giving, you are pleasuring the animal.”




Sanders had endorsed Uygur on Thursday, calling him "a voice that we desperately need in Congress"  but a mere 24 hours later had this to say:




“As I said yesterday, Cenk has been a longtime fighter against the corrupt forces in our politics,” Sanders said in a statement. “However, our movement is bigger than any one person. I hear my grassroots supporters who were frustrated and understand their concerns. Cenk today said he is rejecting all endorsements for his campaign, and I retract my endorsement.”




Uygur blamed “corporations, lobbyists, and special interest groups” for the avalanche of push back Sanders faced over his endorsement. “That’s why I have decided that I will not be accepting any endorsements… The only endorsements I'll be accepting going forward is that of the voters,” he said in a statement.



The popular left wing media host had long been source of controversy over statements made about women, the Huffpost previously reported.




In 2017 he was fired from progressive political action committee the Justice Democrats over past blog posts and columns degrading to women, some of which were as follows:




“Obviously, the genes of women are flawed,” Uygur wrote in a 1999 post lamenting the inadequate amount of sex he was having while living in Miami, Florida. “They are poorly designed creatures who do not want to have sex nearly as often as needed for the human race to get along peaceably and fruitfully.”



In a 2002 entry in which Uygur described the “rules of dating,” he specified that “there must be orgasm by the fifth date.” And in a 2003 column, he described drunken revelry at Mardi Gras in New Orleans, Louisiana, where he “kissed over 23 different women, saw and felt countless breasts.”



In addition, a 2004 post by Koller described teenage girls that he and Uygur met near a gas station in Pennsylvania as “whores in training, literally looking for boys to pick them up.”




During the newly resurfaced bestiality segment, his female co-host was clearly uncomfortable with his exploring "legalizing" sex with animals because it would be "pleasuring the animal". She vocalizes here extreme discomfort with the subject multiple times. 





Audible gasps and cries of "What!?" are heard coming from his own producers, but that didn't dissuade him from continuing the bizarre discussion. "It's the dumbest thing I said?" Cenk questions. His co-host replies, visibly shocked and wanting to move on: "It really is the dumbest thing you've said."



He actually continues to explore the topic in lurid detail over whether a horse would appreciate such an 'encounter' or not. "Who got harmed?" Cenk asks in a moment of seriously attempting to persuade his listeners of his argument, implying that the horse was just fine.




Tyler Durden

Sat, 12/14/2019 - 16:00
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Alex Jones first exposed occult practices by the elite at this secluded retreat in 2000.
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<p>It&#x2019;s not just about being a good time manager if you&#x2019;re not sharing space with your teammates and supervisors. Here are the things you must do to be most productive.</p><br /><p>With more and more people working remotely at least some of the time, more employees are experiencing that things change when there&#x2019;s no office.&#xA0;Dynamics, habits, and workflows change in a remote organization. Some changes are obvious, but others are subtle.</p><p>Read Full Story</p><div class="feedflare"><br />
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California Schools Sued Over Use Of "Culturally-Biased" Standardized Testing For Admissions

America was once a nation of meritocracy, that shamed the lazy and encouraged hard work; but now, as Millennials increasingly support a "we are all equal" socialist state with leftist politicians villifying the successful, a new wave of anti-meritocratic policies are sweeping across much of academia.





The latest incarnation of this is 

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trong>a much-anticipated lawsuit, filed by a group of students and community organizations, against the University of California, alleging that the university system discriminates against low-income students, racial minorities and others by requiring SAT or ACT admissions tests.



The Wall Street Journal reports that the suit was filed Tuesday in California state court on behalf of a high-school sophomore, two seniors, and a first-year student at Pasadena City College (several California social-justice nonprofits are also plaintiffs in the suit), all of whom it says would be strong candidates for more selective UC campuses except for their test scores.



Aside from this sounding like the standard parent unable to admit their child is not the next Einstein, the plaintiffs seek to bar the UC system from requiring applicants to submit SAT or ACT scores, and from using scores in admission decisions.




“These discriminatory tests irreparably taint UC’s ostensibly ‘holistic’ admissions process,” the lawsuit says, adding that the tests “act as a proxy for wealth and race and thus concentrate privilege on UC campuses.”




Earlier this year,  under relentless pressure from the racial-preferences lobby, the Board caved to the anti-meritocratic ideology of “diversity.”  Colleges, it was suggested, could use this adversity index to boost the admissions ranking of allegedly disadvantaged students who otherwise would score too poorly to be considered for admission.



 





But, as we reported previously, this gap has persisted for decades. It is not explained by socioeconomic disparities. 




The Journal of Blacks in Higher Education reported in 1998 that white students from households with incomes of $10,000 or less score better on the SAT than black students from households with incomes of $80,000 to $100,000. In 2015, students with family incomes of $20,000 or less (a category that includes all racial groups) scored higher on average on the math SAT than the average math score of black students from all income levels. The University of California has calculated that race predicts SAT scores better than class.



Those who rail against “white privilege” as a determinant of academic achievement have a nagging problem: Asians. 



Asian students outscore white students on the SAT by 100 points; they outscore blacks by 277 points. It is not Asian families’ economic capital that vaults them to the top of the academic totem pole; it is their emphasis on scholarly effort and self-discipline. Every year in New York City, Asian elementary school students vastly outperform every other racial and ethnic group on the admissions test for the city’s competitive public high schools, even though a disproportionate number of them come from poor immigrant families.




The 'adversity score' idea was eventually dismissed after significant backlash as defenders of the tests maintain that students with high scores tend to fare well in college and beyond. The standardized tests have been considered by many as an equalizer, allowing colleges to identify talent from high schools with which they are not familiar.




“The notion that the SAT is discriminatory is false,” said a spokesman for the College Board.



“Any objective measure of student achievement will shine a light on inequalities in our education system. Our focus, with our members and partners, is combating these longstanding inequalities.”




Furthermore, many on the left argue that the tests are elitist because 'only the wealthy can afford test preparation' but this is entirely false as there are many test-prep aids that are entirely free on the web, such as Khan Academy.



Quite frankly, given our own experience of seeing two young women through the SAT/ACT prep and admissions debacle that California schools now undertake - and having seen so many of their friends succeed by working hard - we would like to see a comprehensive analysis of average hours studied by each group, perhaps as a 'great equalizer' of this racist, elitists bias that supposedly exists.



In its March 2018 issue, Freddie deBoer, who works in the Office of Academic Assessment at Brooklyn College, makes a series of significant points in “The Progressive Case for the SAT.” DeBoer argued:




"It’s important to acknowledge that yes, SAT results reflect inequalities in race and social class. Black and Hispanic students and poor students do not perform as well on these tests as their white and affluent counterparts."



But, he continued, “this reflects a symptom of larger inequality, not a biased test.”




DeBoer acknowledged the argument that affluent parents can invest in special training and can hire coaches to raise their children’s scores. But he pointed to a major 2013 study that showed that the “effect of coaching on a 1600 point scale was about 20 points.”



Furthermore, turning to high school grades instead of test results for college admission decisions poses similar problems, deBoer writes, as grade inflation has resulted in a huge increase in the number of applicants with perfect, 4.0, averages.





Specifically, for the last several years, we have been covering the grade-changing scandal in Baltimore City Public Schools (BCPS). Administrators, teachers, and parents continue to come forward about the widespread fraud that allows children to graduate, even though they've missed school or failed classes. 




"If they can't read and you're not giving them a type of trade or skill, and you're pushing them through the system, where will that leave them at once they graduate or get the certificate from the school, in life? Like how will they survive?"



"The diploma is getting devalued," said the teacher who claims to have witnessed grades being changed. "So, the diploma value is not worth a lot."




We give the final word to DeBoer, who, while admitting that the SAT and ACT aren't perfect:




"But much of the folk wisdom about them and their deficiencies is wrong, and though critics mean well, they actually risk deepening inequality by attacking these tests."



“Students who labor under racial and economic disadvantage have very few ways to distinguish themselves from the rest of the pack,” deBoer continues.



“A stellar SAT score is potentially one of the most powerful. We should take care not to rob them of that tool in a misguided push for equality.”




All this constant confusion of correlation with causation (or results spun to fit a progressive narrative) is perhaps why Chinese students are 4 grade levels of US students in math.





As Michael Snyder raged recently, we were once a great light to the rest of the world, but today a large chunk of our population can barely read, write, speak or function in society.  Just consider the following numbers…




#1 One recent survey found that 74 percent of Americans don’t even know how many amendments are in the Bill of Rights.



#2 An earlier survey discovered that 37 percent of Americans cannot name a single right protected by the First Amendment.



#3 Shockingly, only 26 percent of Americans can name all three branches of government.



#4 During the 2016 election, more than 40 percent of Americans did not know who was running for vice-president from either of the major parties.



#5 North Carolina is considering passing a law which would “mean only scores lower than 39 percent would qualify for an F grade” in North Carolina public schools.



#6 30 years ago, the United States awarded more high school diplomas than anyone in the world. Today, we have fallen to 36th place.



#7 According to the Pentagon, 71 percent of our young adults are ineligible to serve in the U.S. military because they are either too dumb, too fat or have a criminal background.



#8 For the very first time, Americans are more likely to die from an opioid overdose than they are in a car accident.



#9 One study discovered that one-third of all American teenagers haven’t read a single book in the past year.



#10 A recent survey found that 45 percent of U.S. teenagers are online “almost constantly”.



#11 Today, the average American spends 86 hours a month using a smartphone.



#12 Overall, the average U.S. adult “logs 6 hours, 43 minutes of total screen time daily”.



#13 In more than half of all U.S. states, the highest paid public employee in the state is a football coach.



#14 During one seven day period last summer, a total of 16,000 official complaints about human feces were submitted to the city of San Francisco. And apparently the problem is very real because one investigation found 300 piles of human feces on the streets of downtown San Francisco.



#15 Every 24 hours, more than a third of all Americans eat fast food.



#16 Less than half of all Americans know which country used atomic bombs at the end of World War II.



#17 Even though we fought a war in Iraq for eight long years, 6 out of 10 young adults cannot find Iraq on a map of the Middle East. And that same survey found that 75 percent of our young adults cannot locate Israel.



#18 Today, the average college freshman in the United States reads at a 7th grade level.




Educating our children properly is one of the most basic things that needs to be addressed, but unfortunately the left has total control of our public schools now, and that means that there is no hope of a major turnaround any time soon. However, of course, all of this will be dismissed as racist (or elitist) by the leftists as excuse after excuse is made for poor performance.




Tyler Durden

Sat, 12/14/2019 - 15:00


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Education
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<p>A more careful study of the self-reported pay data in a spreadsheet called &#x201C;Real Media Salaries&#x201D; revealed some surprising facts.</p><br /><p>When a company stays mum on the topic of pay equity, often, employees fill the void by crowdsourcing and sharing their own pay. This well-intentioned but misguided effort is dangerous because it often highlights issues that are not legitimate while masking the real problems.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
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Viral 'Bloomberg Ad' Mocking Awkward Buttigeig Dance Revealed As Parody

A viral campaign ad for Mike Bloomberg mocking Democratic presidential candidate Pete Buttigeig's cringe-factory 'dance' phenomenon was revealed to be a hoax - but not before several prominent influencers took the bait.





On Thursday night, a pair of Los Angeles comedians uploaded a video purporting to be Bloomberg supporters performing an awkward dance rout

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ine to Maroon 5's "Moves Like Jagger."



Comedian Nick Ciarelli - who became internet famous for spoofing major brands with his buddy Brad Evans, changed his Twitter bio to "communications intern" for Bloomberg's 2020 campaign, before posting the video with the caption "Mike Bloomberg rally in Beverly Hills."



The video has over 5 million views less than 48 hours later.





For comparison, here's Team Buttigeig's completely serious dance routine, complete with "Boot Edge Edge" pronunciation guide poster in the background so that people will stop calling him "Booty Judge."




The Bloomberg campaign took the parody in stride, tweeting "To clarify, @NickCiarelli is not an intern for our campaign. And he does not have moves like Bloomberg," before offering him a job.



Nick, still in character, tweets back "Wait are you firing me?"




Given the lengths Democratic candidates have gone to emulate Trump's charisma and his social media team's command of meme magic, it's easy to see the genius behind Ciarelli and Evans' Bloomberg hoax; it's believable.



One can picture Bloomberg's team resorting to such a stunt to compete with Buttigeig's viral dance, or that Mayor killjoy would pay a bunch of idiots to film that. After all, the 77-year-old billionaire is trying desperately to appear 'regular' amid sagging polls.


"Is this how you hold an umbrella?"




Tyler Durden

Sat, 12/14/2019 - 14:00


Tags

Human Interest
Politics

233
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Rubino Exposes The Central Planners: Desperate Acts By Clueless People

Authored by John Rubino via DollarCollapse.com,



It’s been obvious for a while that the next phase of global monetary madness would be both spectacular and very different from the previous phase. The question was whether the difference would be in degree or kind.



Now the answer is looking like “both.”



Let’s

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start with “yield curve control,” in which central banks, instead of just pushing down interest rates, intervene to maintain the relationship between short and long-term rates.



In a recent interview, Federal Reserve Governor Lael Brainard said the following:




“I have been interested in exploring approaches that expand the space for targeting interest rates in a more continuous fashion as an extension of our conventional policy space and in a way that reinforces forward guidance on the policy rate. In particular, there may be advantages to an approach that caps interest rates on Treasury securities at the short-to-medium range of the maturity spectrum — yield curve caps — in tandem with forward guidance that conditions liftoff from the [effective lower bound] on employment and inflation outcomes.



To be specific, once the policy rate declines to the ELB, this approach would smoothly move to capping interest rates on the short-to-medium segment of the yield curve. The yield curve ceilings would transmit additional accommodation through the longer rates that are relevant for households and businesses in a manner that is more continuous than quantitative asset purchases.”




She sounds a bit like Alan Greenspan back in his peak obscurity days, so here’s a quick translation:




In the next recession, the Fed will promise to keep short rates at or below zero for a long time and also promise to hold longer-term rates a pre-set distance from short rates, thus freezing the slope of the yield curve in place.




As with so much of New Age monetary policy, this sounds like a fairly benign technical tweak – until you remember that interest rates, as the price of credit, actually have a crucial role in the functioning of a capitalist economy. The movements of long and short rates, both in absolute terms and in relationship to each other, tell businesses whether, where and how to allocate capital. Freeze the yield curve in place and the signal goes dark. Investors are left flying blind, with two results:




1) A lot less investment takes place because wise (that is to say risk-averse) capitalists recognize that they have no idea what they’re doing and choose to hoard their cash and refrain from borrowing more.



2) The deals that do get done feature a bigger percentage of mistakes — “malinvestment” in economist-speak — which means the aggregate resulting cash flow is lower and the number of high-profile failures larger, resulting in a society that’s both less rich and more unstable.




Since this will be happening in a world where capital has already been misallocated on a vast scale (think share repurchases and shale oil), increasing the outstanding amount of bad paper just takes us that much closer to the point of systemic failure.



Click here for the DollarCollapse.com Welcome To The Third World series.



Massive ADDITIONAL fiscal deficits

Meanwhile, countries with the most extreme monetary policy – defined as negative interest rates across the yield curve – are finding that beyond a certain point negative rates cause more problems than they solve. So their central banks are calling for “fiscal stimulus” – i.e., bigger deficits. In Japan:




Abe preparing $120 billion stimulus package to bolster fragile economy

(Reuters) – Japan is preparing an economic stimulus package worth $120 billion to support fragile growth, two government officials with direct knowledge of the matter said on Tuesday, and complicating government efforts to fix public finances.



The spending would be earmarked in a supplementary budget for this fiscal year to next March and an annual budget for the coming fiscal year from April. Both budgets will be compiled later this month, the sources told Reuters, declining to be identified because the package has not been finalised.



The package would come to around 13 trillion yen ($120 billion), but that would rise to 25 trillion yen ($230 billion) when private-sector and other spending are included.



Japan’s economic growth slumped to its weakest in a year in the third quarter as soft global demand and the Sino-U.S. trade war hit exports, stoking fears of a recession. Some analysts also worry that a sales tax hike to 10% in October could cool private consumption which has helped cushion weak exports.



Such spending could strain Japan’s coffers – the industrial world’s heaviest public debt burden, which tops more than twice the size of its $5 trillion economy.




Two takeaways here:




First, pushing interest rates into negative territory and not getting an epic debt-driven boom screams “end of the interest rate road.” If paying people to borrow doesn’t induce them to do so, then paying them more probably won’t generate much new action.



Second, running massive deficits and then raising sales taxes to offset the stimulus is the kind of policy mix that’s too stupid to bother discussing.




Desperate acts by clueless people

It was a surprise that QE and NIRP “worked” by staving off collapse for the past decade. It will be absolutely shocking if the coming, even more extreme experiments do the same. So expect the above and a lot more when things get really crazy, including central bank equity purchases, capital controls, wealth taxes, and maybe even price controls. Everything will be on the table and none of it will work.




Tyler Durden

Sat, 12/14/2019 - 11:30


Tags

Business Finance

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