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Monday, May 29, 2023

2023-05-29

 *** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

2% and going back to the old world – I don’t think it stands a snowball’s chance in hell. Low inflation is over and we’re not going back.




The current bounce in equity markets from October continues to outpace historical rallies in bear markets, bolstering the case that the low may be in for this cycle.
It always pays to remember that the path of least resistance for stock markets is up. Bear markets are the exception, not the rule, but they are, as Thomas Hobbes described life without government, “nasty, brutish and short”.
While the current bear market is longer than most, it is still nonetheless a risk for investors wondering whether the current rally is really the beginning of the end of the downturn, or merely the prelude to a nasty sell-off ahead, with new lows plumbed.
No-one knows for sure of course, but the current rally has remained more robust than perhaps most would have expected. ... As the chart below shows, the S&P is diverging further away from historical bear-market rallies.


Firms that use computers to determine buy and sell signals have been loading up while other investors sit back





The US has its market leading "Big 7 Tech" basket (a play on AI hype but really just an excuse to buy the former market leaders Apple, Microsoft, Google, Amazon, Nvidia, Meta, Tesla), which is trading on 30x PE vs 17x for rest of S&P and is single-handedly responsible for all market gains in 2023; Europe on the other hand, has its "Big 7 European Luxury" aspirational basket  (LVMH, L'Oreal, Hermes, Christian Dior, Richemont, Kering, Ferrari) which is trading at an even more ridiculous 36x vs rest of Stoxx 600 trading on 12x PE.
..... As BofA's Michael Hartnett discussed over the weekend, in the past year this high-flying sector had become to European stocks what Big Tech was to the US: a collection of dominant businesses whose explosive growth was unquestioned even as the economy shrank. But the questions are finally starting to emerge as confidence in that view has been dented ...


Despite the stock market rally so far in 2023, the S&P 500 Index has not come close to regaining its all-time high put in early last year.
What has soared to new highs, however, is the stock/bond ratio.
In fact, its ascent has been so strong that, over the past two decades, the SPY-to-TLT ratio has only been as overbought (as measured by quarterly RSI) as it is today at the 2007 top heading into the GFC.


BAML: The Flow Show - Bonds & Bubbles via PDF from The Bond Beat
...Zeitgeist I: “I mean, if you're going to lose your job and be replaced by AI in the next few years, might as well own some AI as a hedge, no?"
Zeitgeist II: “Bubbles not easy, put plenty of investors out of business. But this one you getting paid by fat yields in cash & bonds to ignore for now. Why no FOMO yet.”
Zeitgeist III: “4% real yields popped internet bubble, 3% popped subprime, crypto crashed on real yield rip from -100bps to 150bps. But market telling you real rates may need to rise another 100-150 bps from here to pop ‘baby bubble’ in AI.”

Brean: ...Recession Signal from Profits Building (also from same PDF)
The yield-curve model developed by a former colleague at the New York Fed has been a reliable indicator that a recession was brewing just over the horizon (with that horizon being about one year) but the model is an indicator model not a causal one. A second indicator for us is the share of profits in GDP (we use the nonfinancial corporate sector for both measures) and we view this as a causal model. Declining profitability causes companies to cut back on hiring and investment to restore profitability and conserve cash but this in turn kicks in the Keynesian multiplier from capital spending to GDP growth and disrupts the circular flow of income—eventually leading to a downturn in consumer spending. Every recession has been preceded by a squeeze in profit margins (technically the 1981-82 recession was not but this was because the path of growth was disrupted by the imposition and then removal of credit controls that induced a short recession in 1980). With the revision to first-quarter GDP, yesterday’s data showed a second consecutive quarterly decline in profit margins. Nonfinancial domestic corporate profit margins have now contracted from a peak of 16.3% in the second quarter of 2021 to 14.6% in the first quarter of this year—a decline that is sufficiently large to constitute a solid signal that a recession is likely looming. 
The one caveat that is worth making is that the nonfinancial corporate GDP data, which are derived from incomes and profits, show a very weak picture of the economy already. Real output for this sector has declined in four of the last five quarters which has never occurred with the economy not already in recession. However, private nonfinancial payrolls have risen at an annualized pace of 3.7% over these same five quarters, which has typically suggested that the economy was still in the expansion phase. Why would companies experiencing declining output volumes grow employment at a fairly rapid clip? We believe it is easier to count heads than measure real output and strong job growth in 2022 was just reaffirmed by the latest QCEW data (which is based on state-level unemployment insurance accounting). Nonetheless, with an inverted yield curve and profit margins declining, the probability of a recession beginning later in 2023 or early 2024 has surely increased.


............ It is important not to be Pollyannish about the economy’s near-term prospects. Under almost any scenario, they will be difficult. GDP growth will halt, employment gains will come to a standstill, and unemployment will push higher. However, while history suggests that high inflation and an aggressive Fed mean recession is a serious threat, this time is different enough for the economy that a recession is avoidable. In my more than 30 years as a professional economist, I have never seen such recession pessimism. But I have also never seen such a resilient economy. Something has to give. I suspect it will be the pessimists.


In the FOMC's efforts to bring down inflation, the Committee has not been shy about the need for policy to turn restrictive. Determining the level of interest rates which adequately weighs on activity and thereby inflation without causing untoward damage to the economy is by no means easy, but is important when the effects of policy changes are not immediately felt across the economy. 
One guidepost policymakers use in this endeavor is the natural rate of interest, or r-star. R-star can be thought of as the real short-term interest rate that prevails when the economy is expanding at its potential rate and inflation is stable. In cannot be directly measured, but is rather inferred from how other parts of the economy act in relation to each other. As relationships between real GDP, inflation and the federal funds rate change, so do estimates of r-star. For example, after vacillating from about 2.5%-4.0% from the mid-1980s to early 2000s, the estimated natural rate of interest fell to less than 1% following the 2008 financial crisis (chart). 
The extreme volatility in data following the economy's abrupt shutdowns in 2020 and subsequent reopening made it particularly difficult to extract r-star. The most widely-followed estimates, published by the New York Fed, were temporarily halted while researchers made adjustments to the models after such extraordinary shocks but have resumed this month.
Since the COVID-19 pandemic, r-star seems to have been little changed. Over the past four quarters, the Holston-LaubachWilliams model estimated the U.S. natural rate of interest averaged 0.76%, nearly spot on the pre-pandemic five-year average of 0.77%. In other words, it appears that through all the tumult of the past few years, the era of a low natural rate of interest is ongoing. That may seem surprising given the recent degree of inflation, but comes as potential output is estimated to have been reduced by a whopping 4% relative to its pre-pandemic projection. 
The prevailing low rate of r-star suggests that the FOMC does not have to raise the nominal fed funds rate as far above inflation to rein in price growth as in prior cycles when the natural rate of interest was higher. However, even when accounting for the current environment's low rate of r-star, policy still has yet to clearly become restrictive, given the underlying strength of inflation (chart). That does not necessarily entail that the FOMC hikes further from here, but it does suggest that if Fed officials do indeed believe policy needs to be restrictive for a time, inflation needs to ease very soon.


The economy continues to decelerate, and the most recent data adds significant evidence to the possibility the economy entered a recession last year or at the start of this year. While a recession may already be underway, the deterioration in the labor market has not proven sufficient for the Federal Reserve to soften its continued hawkish policy stance.
In this update, we’ll review the changes and revisions to coincident economic data and zoom in on the initial jobless claims data, which will be our most real-time and reliable labor market measure.
The Bureau of Economic Analysis recently reported the April update for Personal Income and Personal Consumption. The BEA significantly revised the Personal Income data from September 2022 through March 2023.

Real personal income less transfer payments, our preferred income metric, only posted a 0.1% gain since September of last year compared to a previously thought 1.0%. .......

This is extremely common at the start of recessions, which is why the data today looks clear cut like a recession is starting to get underway.
Real retail sales and industrial production hold an average growth rate of 0.1% at recession starts, compared to nonfarm employment and broad personal consumption, which hold an average growth rate of 1.4% at recession starts.
In fact, there has never been a recession in the past where real retail sales and industrial production didn’t have a lower average growth rate than employment and broad personal consumption.
In addition to the six monthly coincident indicators, when dating recessionary periods, the NBER looks at one quarterly series. That quarterly series is actually not real GDP but rather the average of Real GDP and Real GDI, gross domestic income.
Because the income side of the economy is much weaker than previously thought, contrary to the strong wage narrative, real GDI has started to contract, and the average of real GDP and real GDI has been negative in four of the last five quarters. .....
In real-time, the monthly BLS jobs report will offer, at best, a fictitious reading on the current state of labor market gains. This chart shows the 12-month rolling payroll revisions, which clearly demonstrates that the BLS data does not work in real-time as the revisions are completely cyclical.



Key Takeaways:
  • Both longer-term Treasury yields and short-term Treasury yields tend to decline during recessions, but the effect is larger and more consistent with short-term Treasuries.
  • Over the last eight recessions, the median maximum yield decline for the 3-month Treasury was 2.82% and 1.14% for the 10-year Treasury.
  • With an attractive yield compared to recent history and prospects of price appreciation if there were a recession, intermediate maturity Treasuries have a reasonable outlook on top of their potential diversification benefits if we were to see a downturn.
  • The prospect of a decline in yields makes shorter maturity Treasuries less attractive, as investors may need to reinvest at much lower rates when bonds mature.



Bassman: Moral Hazard
...................... I am a UChicago trained monetarist, and I have been an inflation hawk since the start of ZIRP and QE. I will also say that if Bernanke had not chickened out (a technical term) in 2013 during the infamous “Taper Tantrum”, we would not be in this mess at all. But I will confess I too loosened the reins on risk when Powell pounded the table about holding rates at zero until 2023. I would have dialed back on Mortgage REITs if I foresaw ZIRP to 5.25% in barely a year. ...
Not to say “I told you so”, but much of my “Open Letter to the FED” – July 26, 2021 has been prescient. Here I suggested:
1) Reduce MBS and TIPs purchases;
2) Steepen the Yield Curve;
3) Shorten “Forward Guidance” to reduce Moral Hazard.
The most pressing need now is to steepen the Yield Curve, which means we need longer-term rates to be higher than shorter-term rates.
Western civilization, for good or ill, operates on a fractional reserve (leveraged) financial system where banks are the plumbing for the entire system; a steep Yield Curve is paramount for their good health. Perhaps never intended, but banks are now a utility as much as Consolidated Edison; they are a natural monopoly that needs to be more tightly regulated.
.. Finally, the big “surprise” will be sourced from the battle between the Yield Curve and the Stock market; I promise an ugly denouement for one.


Despite decades of research, there remains substantial uncertainty about the quantitative effects of monetary policy. Different models produce conflicting predictions, and these predictions lack precision. This article discusses some reasons for these issues. ....






....... Perhaps the biggest threat to inflation is artificial intelligence (AI)
AI has been predicted to destroy up to 300 million jobs in the coming years. Possibly a doomsday scenario, perhaps not.
.........An employment earthquake could be on the near horizon. Mass unemployment is certainly not a recipe for rampant inflation. There may, however, be unchecked profits for those companies that benefit from AI and a cost-cutting drive. Not a bright outlook for the man on the street. How will we all survive while on the unemployment scrap heap? If such drastic change is upon us, we must rethink everything we know about economics and how society functions









 
Regular readers will know that I have spent quite a lot of time reading the literature in social psychology trying to understand how groups of scholars become crippled with the patterned behaviour that Irving Janis identified as Groupthink in his ground breaking study published in 1972. I feel that my own profession is dominated by this catastrophic syndrome, which has biased the policy scene towards destructive outcomes. However, even after some major calamities, which the mainstream economists were blind too (such as the GFC), the Groupthink is so entrenched and powerful that academic economists actively engage in purges of what they consider to be ‘fringe ideas’, which they dismiss as the equivalent of homeopathy (that is, witchcraft in their eyes). I read an example of this behaviour this week which indicates to me that we are a long way from seeing fundamental change in the academy which might restore the credibility of my profession in the public milieu. My advice to parents – keep your children away from studying economics!

Catastrophic Groupthink

The early Groupthink reference is Janis, I.L. (1972) Victims of Groupthink, New York, Houghton Mifflin.

He found that some communities of scholars develop a dominant culture, which provides its members which a sense of belonging and joint purpose but also renders them oblivious and hostile to new and superior ways of thinking.

These communities develop what Irving Janis identified in 1972 to be ‘Groupthink’, which drives the ‘mob-rule’ that maintains discipline within paradigms.

Groupthink is a “mode of thinking people engage in when they are deeply involved in a cohesive in-group, when the members striving for unanimity override their motivation to realistically appraise alternative courses of action” (Janus, 1982: 9) and “requires each member to avoid raising controversial issues” (Janis, 1982: 12).

It has also been defined as “a pattern of thought characterized by self-deception, forced manufacture of consent, and conformity to group values and ethics” (Merriam-Webster on-line dictionary).

Groupthink becomes apparent to the outside world when there is a crisis or in Janis’s words a ‘fiasco’.

In this blog post – Fake surveys and Groupthink in the economics profession (March 19, 2019) – I considered how the mainstream profession reinforce their mob rule through the misuse of survey data.

An academic discipline that falls into Groupthink becomes degenerative (in the terminology of Imre Lakatos) in that it systematically fails to match its theoretical and predictive framework with the reality around us.

It systematically fails to provide meaningful knowledge but hangs onto dominance through control of the narrative, through the power of the senior professors, through the control of research funding, control of publication editorial positions, control of promotion processes within the academy and control of who enters the academic hierarchy. That control is insidious and powerful and mostly filters out aberrant voices. .......



Quotes of the Week:

Furman: New data out indicates that the economy contracted at a -0.5% annual rate in Q1, the fourth quarter of the last five with negative growth. This is based on average of GDP (+1.3% in Q1) and GDI (-2.3%) which is generally more reliable than either one individually.


Smith: Just like the Internet bubble in 2000, from an investment standpoint, we the think biggest threat from AI is to investors in the abundance of hyped-up overvalued technology businesses that are all perceived to be big future winners.




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(not just) for the ESG crowd:

A US$20 billion case over Quebec’s cancelled liquefied natural gas facility is just one example of foreign investors suing governments for ‘lost future profits’ from fossil fuels













.......... The optics at the G7 meeting couldn’t be more stark. Meeting in the one city that is the ultimate symbol of Western madness, Hiroshima, the symbolism was very clear. We are united in our self-righteousness and if you don’t like it, remember what happened to Japan.

We will destroy the planet in order to save it. Indivisible European/Asian security is a euphemism for global war.

No amount of failure seems to dissuade these people. Because failure is simply not an option.

........... It is exactly what I expected them to do at the outset of the war (here, here, and here) failing a swift victory over Ukraine; continue their war of attrition across all theaters against the West until they either 1) sue for peace or 2) collapse under the weight of their own hubris.

Former British Prime Minister Boris Johnson (Who else?), put the kibosh on any early negotiated settlement between Russia and Ukraine.

To Crooke’s point, the West’s investment in Ukraine was simply too big to give up that easily. Believing the ultimate sanctions package would overthrow Putin and destabilize Russia, both Davos and the Anglo-neocons bet too heavily on this working. As my dad used to say about pro athletes, “he spends too much time reading his press clippings…”



Other Fare:

When most people in the English-speaking world hear the word “propaganda”, they tend to think of something that’s done by foreign nations who have governments that are so totalitarian they won’t even let people know what’s true or think for themselves.

Others understand that propaganda is something that happens in their own nation, but think it only happens to other people in other political parties. If they think of themselves as left-leaning they see those to their right as propagandized by right wing media, and if they think of themselves as right-leaning they see those to their left as propagandized by left wing media.

A few understand that propaganda is administered in their own nation by their own media, and understand that it’s administered across partisan lines, but they think of it in terms of really egregious lies like weapons of mass destruction in Iraq or babies being taken from incubators in Kuwait.

In reality, all are inaccurate understandings of what propaganda is and how it works in western society. Propaganda is administered in western nations, by western nations, across the political spectrum — and the really blatant and well-known examples of its existence make up only a small sliver of the propaganda that our civilization is continuously marinating in.

The most common articles of propaganda — and by far the most consequential — are not the glaring, memorable instances that live in infamy among the critically minded. They’re the mundane messages, distortions and lies-by-omission that people are fed day in and day out to normalize the status quo and lay the foundation for more propaganda to be administered in the future. ....


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Monday, May 22, 2023

2023-05-22

 *** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

Fed chair says banking strains could mean rates don’t have to rise as much to tame inflation

............ Earlier, New York Fed President John Williams presented research at the conference showing the Covid-19 pandemic didn’t change estimates of a “neutral” interest rate that neither stimulates nor restricts demand, a finding with important implications for how high officials may raise rates to slow the economy.

Between the 2008 financial crisis and the 2020 pandemic, Fed officials and economists had concluded the neutral rate of interest—or the level that balances supply and demand when the economy is operating at full strength—had declined sharply. That, together with weak growth following the crisis, ushered in a period of historically low interest rates.

Williams said a widely followed model used to estimate the inflation-adjusted neutral rate of interest showed “there is no evidence that the era of very low natural rates of interest has ended.” ........


As the bond rally runs out of steam, the case for shorting Treasuries is becoming increasingly compelling.
The bond market that US political advisor James Carville wanted to be reincarnated as is about to get intimidating again.
The rally off last October’s lows is fading, and there are now a litany of reasons why longer-term Treasuries are likely to soon fall in price, taking yields higher and supporting the yield curve:
  • Global financial conditions are easing
  • Excess liquidity is rising
  • Inflation is becoming entrenched
  • An increasingly precarious fiscal situation
  • Declining overseas demand for USTs
  • An expected jump in issuance when the debt-ceiling is resolved
First of all, let’s get the debt-ceiling elephant out of the way.
In the two previous debt-ceiling episodes in 2011 and 2013, bond yields mostly fell. Perversely, in a risk-off environment Treasuries were the only safe-haven asset, even if they were at the center of why risk was elevated in the first place.
We may get the same knee-jerk reaction this time, but that’s just a selling opportunity ....








.............. In all, it’s now been over seven months since the S&P 500 hit its lows back in October—that tends to mean the lows are in, and it also tends to bode well for future returns. When the S&P 500 has made it seven months or more without a new low in the past, it’s been higher 86% of the time over the following year. 


The world-changing narrative around AI has hooked up with the Fed’s determination to provide liquidity, even during a rate-raising cycle.


Wilson: Great Expectations, in PDF via The Bond Beat
… Last week’s price action showed signs of panic buying by investors who are afraid they’ll miss the next bull market. We believe this will prove to be a head fake rally like last summer’s, for many reasons. First, valuations are not attractive, and it’s not just the top 10-20 stocks that are expensive. The S&P 500 median stock forward P/E is 18.3x (in the top 15% of historical levels back to the mid-1990s), the S&P 500 ex-tech median P/E is 18.0x (also within the top 15% of historical levels) and the equity risk premium is only 200bp. Second, a very healthy re-acceleration is baked into 2H consensus earnings estimates (mid-to-high single-digit growth for both the overall index and the index ex-tech). This flies directly in the face of our forecasts, which continue to point materially lower. We remain highly confident in our model given how accurate it has been over time and recently. We first started talking about the coming earnings recession a year ago and received very strong pushback, just like today. However, our model proved quite prescient based on the results and is now projecting a much more dire outcome than consensus. Given its historical and more recent track record, we think consensus estimates are off by as much as 20% for this year.

Other reasons we are wary of the current rally:
● The equity market is now pricing in Fed cuts before year-end without any material implications for growth. Yet, Morgan Stanley economists believe the Fed will only cut rates if we definitively enter a recession, or if stresses in the banking system increase and/or credit markets deteriorate significantly. What’s more, the Fed cuts currently in the price implicitly assume that inflation will fall to at least 3%. That is possible, but not without significant growth implications.
● There’s also a presumption that the banking situation will not worsen and become systemic. While we don’t think this is 2008-09, we do think it will accelerate the credit crunch that was already likely to begin by year-end, based on loan officer surveys from January. 
....







Many central bank officials have been trying all sorts of conditioning narratives to convince us that their interest rate hikes have been justified. Now they are actually defying the information presented in the official data to simply make things up. Last Wednesday (May 17, 2023), the Bank of England governor gave a speech to the British Chamber of Commerce – Getting inflation back to the 2% target − speech by Andrew Bailey. It came after the Bank raised the bank rate by a further 25 points to 4.5 per cent the week before. In that speech, he admitted inflation was declining and the main supply-side drivers were abating. But he said the rate rises were justified and unemployment had to rise because there was now persistent inflationary pressures coming from a “wage-price spiral”. The problem with this claim is that there is no data to support it. .......




Michael Steinhardt: "The only analytic tool that mattered was an intellectually advantaged disparate view. This included knowing more and perceiving the situation better than others did."


Many investors are occasionally tempted to speculate. It is important to avoid confusing speculation with investment operations.

Benjamin Graham believed that an investment operation must promise safety of principal and an adequate return with the investor basing the decision on thorough analysis. If these conditions do not hold, the decision is inherently speculative. In Graham’s view, it is critical for investors to know the difference between investing and speculation and to avoid fooling themselves into thinking they are investing when they are really speculating. This advice sounds simple but is actually quite challenging to implement if the investor does not have a firm grasp of his circle of competence.



.... The tl;dr version is that Congress has a power to make binding commitments for the United States and the President is constitutionally obligated to perform those commitments. If the Treasury lacks the funds, then the President must borrow. No specific authorization is needed. Instead, it is implicit every time Congress appropriates funds to perform a binding commitment. ......


Levitin: Debunking Debt Ceiling Myths



Earnings Fare:



Shalett: "More than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points."
Zandi: "Lots more price declines are coming." 


Mac10: The debt ceiling is not priced in, it's priced out. 
Further rate hikes are not priced in, they are priced out.
Recession is not priced in, it's priced out. 
How do we know? Because the most overvalued sector is now deemed a "safe haven" from risk. You can't make this shit up



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(not just) for the ESG crowd:



Global warming not only increases ocean temperatures, it triggers a cascade of effects that are stripping the seas of oxygen. Fish are already moving to new waters in search of oxygen, and scientists are warning of the long-term threat to fish species and marine ecosystems.








A corporate document reveals why Toyota will focus more on hybrids over EVs




Media Matters:

Western News Media Exist To Administer Propaganda

The single most overlooked and under-appreciated aspect of our society is the way domestic propaganda is used to shape the way mainstream westerners perceive and think about their world.

Typically the only time you’ll ever hear the word “propaganda” mentioned in mainstream discourse is in reference to things other countries do to their own citizenry or as part of foreign influence operations, despite the fact that the overwhelming majority of the times we’ve encountered propaganda in our day to day lives, the call was coming from inside the house. .....



Western media are feeding us bullshit. It is so strong that even western politicians, like the public, seem to believe in it. The reason is that it is increasingly difficult to detect the bullshit because there is just too much of it. .................



Our ruling class will use any means necessary—no matter how lawless, vicious, or brazen—to preserve its power and privilege. And it will seemingly never pay a price for its corruption and criminality. That is the ultimate lesson conveyed in the more than three hundred pages of gory details about the republic-eroding scandal that is Russiagate, comprising Special Counsel John Durham's final report. .....

Russiagate’s aim from the jump was to delegitimize, destabilize, and destroy Donald Trump’s presidency. Hatched by the Hillary Clinton campaign, this would be her revenge for losing to Trump—an attempt to make his victory a Pyrrhic one. This would be the deep state’s way to sabotage and subvert a commander in chief who threatened to upend its agenda, and that of the entire political establishment. Neither fidelity to the law and truth, nor any sense of shame, nor any fear of consequences could temper the zealous would-be vanquishers of the “bad orange man.” We know this because, as Durham’s report spells out, and as even casual observers have long been aware, the story of Trump-Russia collusion was a farce from the very beginning and in virtually every respect.

It was born of hearsay, ludicrous innuendo, and laughable inferences. Its sources were biased, unscrupulous, and shady. The investigators acted corruptly, lawlessly, and violated basic practices and time-honored norms in pursuing a probe of the highest stakes. They could not corroborate the key pillars on which they “built” their “case” and covered their eyes and ears in the face of exculpatory evidence at every turn. The lack of due diligence and carelessness is staggering—if you were to assume the FBI and Justice Department were operating in good faith. Despite the glaring deficiencies in their case and the blatant violation of the rights of innocent Americans, including among them true patriots, nothing would slow them down.

It did not have to be this way. Were American journalists at our nation’s most storied publications adversaries of the ruling class rather than its stenographers—had they even a modicum of skepticism, curiosity, or intellectual honesty, they could have stepped in to defend our republic. They could have exposed one of the greatest scandals in American history: that our national security and law enforcement apparatus effectively sought to halt the transfer of power to a president they feared and loathed by pursuing him as a traitor, based on crackpot conspiracy theories borne of his political opponent’s research. Consider Gen. Michael Flynn’s purported Logan Act violations; George Papadopoulos’ comments to an Australian diplomat; Carter Page’s supposed Russian ties; the contents of the Steele dossier; Sergei Millian’s significance; the secret Alfa Bank back channel to Russia. The list of shoddy stories pertaining to purported Russian collusion is virtually endless, and as the Durham Report shows—as did reporting from independent, contrarian journalists at the time—such stories would fall apart under the slightest scrutiny. .........



War Fare:

On the global stage, US can only barely keep up the pretense that it is not losing its mind.


Signers say the conflict will be ‘our undoing’ if we don’t ‘dedicate ourselves to forging a diplomatic settlement that stops the killing.’



The recent letter published in the New York Times from a collection of former national security advisors (they include Jack Matlock and Jeffrey Sachs) calls for a US strategic diplomacy (in the absence of any diplomacy at all) that is adult enough to recognize that opponents are rational and have real interests that are as every bit important to them as ours is [are] to us. It then immediately stumbles at the first gate namely, by blaming Russia for its Special Military Operation (SMO) in Ukraine.

This inability to dig beneath cliche superficiality on the single most important principle that underlines the war is shocking testimony to the stubborn determination to be wrong that is manifested by practically ever western expert on this issue who enjoys any crumb of mainstream status. They believe that a system of international law that is essentially the product of imperial powers, that is infused with agents of those same powers, educated and propagandized by them, a system that is not set up to even recognize the tool of war most commonly wielded by those powers namely, regime change, is the immutable word of God.

Putin launched the SMO precisely because he was intelligent enough to confront and defy the reality that the west was relentlessly working towards just such a conflict and that, as Machiavelli once observed, the longer he refrained from acting then the more disadvantageous his ultimate military plight. Not just that, not just the fact that the fount of inspiration for the US military industrial complex, RAND, had in 2019 explained precisely how it would seek to dismember Russia through manipulation of its Ukrainian proxy, not just western disregard for over thirty years of strident Russian attempts to articulate its concerns over NATO’s purposeless drift to the east (purposeless, that is say, unless the intention was indeed dismemberment of Russia) and acknowledgment from responsible western diplomats like Jack Matlock and, at that time, William Burns, that Russia’s concerns might indeed provoke conflict….Not just these considerations, I say, but that Ukraine, under the leadership; of NATO’s unscrupulous and duplicitous protege, and heir to the US-instigated coup d’etat of 2014, Zelenskiy, did everything it possibly could to bring about a war: sabotaging the Minsk agreements, currying favor with NATO at every turn, begging for admission, being so very helpful to NATO in staging aggressive wargames along Russian borders, talking about having nuclear weapons, building up fortifications over eight years in preparation for war, with NATO aid, assistance and weapons, killing more and more of its Russian-speaking citizens in the Donbass, augmenting the size of Ukrainian armed forces along the border with the people’s republics, and not just in numbers but in the variety of Nazi brigades that they incorporated.

This culturally-determined mental defect (exhibited, as I say, in the letter to the New York Times) constitutes the reason first, why Russia and now the Global South which, with China, have lined up on the side of Russia, will not accept any compromise in this conflict that fails to address, head-on, what are the objectives of Russia: Ukrainian neutrality, De-militarization, De-Nazification, and integration of the Donbass into Russia which is where it always should have remained. It continues to make sense to respect Russia’s term for its actions of February 24, 2022 precisely because the SMO is not a war in the conventional sense. If it was a war in the conventional sense then the SMO would not have confined itself to the mainly pro-Russian oblasts of the Donbass and would not have fought a slow grinding war of attrition over many months even while it is obvious that Russia has all along had the means to obliterate and overrun all major power centers in Ukraine with a million man army, artillery and air force, with or without the intervention of western weapons. .......

...... There, crisp suits and sharp dresses belied the utter deficit of wisdom in this motley crew, the empty vessels of a materialistic, corporate-fashioned, privileged and know-nothing elite whose main contributions to the sickness of their world is a simplistic and self-serving ideology of neoliberalism, cultivated air of self-righteousnes and self-importance, deference to fossil fuel, permanent enrichment of the arms industry, reckless disregard for nuclear danger, and massive extension of wealth inequality between nations, races and social classes. ......



..... What sounded like a great idea to a certain claque of so-called neo-cons in our country — to use Ukraine as a bear trap — has instead rather suddenly revealed Europe’s and America’s manifold bankruptcies and revolted the whole rest of the world outside of Western Civ. Oh, the wonder and nausea!

     Try to imagine Mr. Zelensky’s predicament. Mighty America and redoubtable Europe conned the former comedian to thinking that if he went along with a genius scheme to ruin Russia and knock Vlad Putin off the global gameboard, his sad-sack country would be transformed into something like Ukro-Disneyworld, while he, Mr. Z, would be lionized and made rich beyond his wildest imaginings. His backup was the greatest hegemonic power the world has ever seen. The game was called Let’s You and Him Fight.

     The poor schlemiel fell for it. He let NATO (that is, the USA) set-up, equip, and train the largest army in Europe, including battalions of bad-ass, hard-core Ukro-Nazis — who had previously been so useful in the American-sponsored 2014 Maidan “color revolution.” Mr. Z followed the US State Department’s orders to rain down rockets and artillery on Russian-speakers who lived in his own eastern provinces. He formally applied for membership in the NATO club. His country received billions of US dollars without audit oversight, just screaming to be creamed off by Ukraine’s leadership — who, after all, deserved a little something for all these goings-along. What could go wrong?

     Thus, Western Civ kicked off Europe’s biggest hot war since the 1940s. So, in February, 2022, Mr. Putin had enough of the monkey business on his “front porch” and sent in a clean-up crew. Game on! The US neo-cons were ready to feed countless Ukrainian troops into a meat grinder that would, theoretically, exhaust the will and resources of the execrable bear and yield countless benefits reinforcing our dominant position in the world. Our hapless NATO “partners” went along with the program, despite being asked to commit economic suicide for the greater good of the alliance (or something like that). Anyway, they didn’t need that filthy Russian nat-gas. They were going “green” (Klaus Schwab said so, didn’t he?)

     Meanwhile, the citizens of our country were groomed to perfection by the US Propaganda-Industrial Complex screaming “Russia, Russia, Russia,” .......



.................. The US plotted a coup and moved NATO’s borders east, and Russia reacted exactly how they said they would. No nukes, no nazis, no NATO. They got the last two, and know they can expect the first too. But still the west maintains Russia’s special operation was entirely unprovoked. Look, they’re not even listening anymore. They would like to negotiate and end all this, but negotiate about what? Putting AZOV back on the borders of the Donbass, so they can kill more Russians there? Not going to happen.

It’s not only about weaponry, though that plays a major role: the hegemon can no longer make its demands based on military might. It’s been surpassed. Nor can it make demands based on the dollar’s reserve currency status, and it caused that itself. Weaponization of the currency has backfired to the extent that de-dollarization has become a process that can no longer be halted.

The moment that Saudi prince MbS turned his back on “Joe Biden” is a milestone. Because once he did that, it was obvious many would follow. .....

............. Ukraine had perhaps the best boots on the ground force in Europe, financed and trained since 2014 by NATO, and they lost to a caterer and a loose group of hired hands. You’re not going to win that. Your only option is long distance weapons, missiles, planes, you name it. But NATO has no advantage in that over Russia. To put it mildly.

The sole thing that’s in your favor is that Russia doesn’t seek to destroy you. They want to live in peace and trade with you. Same thing for China. NATO equals unipolar. But the world has moved towards multipolar. Ergo, NATO is obsolete. Ukraine will never reconquer its “lost” territories, and Zelensky will move to some property in Italy or Florida, never to be heard from again, unless perhaps in his obituary. ........








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