Authored by Mike Shedlock via MishTalk, Every month, pundits comment on average wages. But median wages best explain how the Fed's policies crucify workers. The meme of the day is wage growth is accelerating. I disputed that notion on February 7, in Acceleration in Wage Growth is a Statistical Mirage. On February 16, I reported Congratulations Workers! You Make One Penny More Than a Year Ago. That penny more a year is by hour, in "real" inflation-adjusted terms. The calculation is from the BLS. Nonetheless, the Fed is not happy with wage destruction. Various Fed presidents seek still higher inflation. Inflation Targeting Instead of using an inflation target of 2%, San Francisco Fed President John Williams proposes the Fed use a price-level target, that would allow inflation to run higher during expansions to make up for prior shortfalls. We need that discussion, but in the opposite sense because the Fed’s insistence inflation in a disinflationary world has seriously harmed median and average wage earners. Occupational Employment Statistics (OES) from the BLS supports this view. The following charts are from OES data downloads at the state and national level coupled with additional CPI data from the BLS. Data for these charts are from May 2005 through May 2016. Those are not arbitrary dates. The latest OES data is from May of 2016 and prior to May of 2005, the OES used varying months. Having all yearly data from May allows easy comparison of wages vs. year-over-year CPI measurements. National Hourly Wages Wage Differentials Mean vs. Median Hourly Wages by State Every month, analysts track the monthly jobs report for “average” wage increases. Such analysis is misleading because most of the benefits go to the top tier groups. This behavior is not unexpected, but it makes it very difficult for the bottom half of wage earners who do not own a house, to buy a house. Who Can Afford a Home? The median wage rose from $14.15 in 2005 to $17.81 in 2016, a percentage increase of 25.9%. The median new home price rose from $228,300 in 2005 to $335,400 in 2016, a percentage increase of 46.9%. Rising Tide Lifts All Boats? Some claim that a rising tide lifts all boats but, the median wage earner is falling further and further behind. This contributes to asset price chasing and “better buy now” philosophies as happened in the housing bubble years. Inflation-adjusted charts show the situation is even worse. “Real” Year-Over-Year Percentage Increases The chart shows “real” inflation-adjusted median wages declined in 2007, 2009, 2011, 2012, 2013, 2014, and 2015. Mean inflation-adjusted wages declined “only” in 2007, 2009, 2011, 2012, and 2013. Disturbing Results Congratulations to the top ten percent whose real wages rose 8 times in 11 years. At the 75th percentile level, the score is 6-5. It’s simply too bad for the median and bottom twenty-five percent whose real wages fell seven times in 11 years. Don’t Blame Corporations Many blame “greedy” corporations for wage stagnation. Corporations have a responsibility to do what is best for shareholders, not employees. Sometimes those interests align and sometimes they don’t. Don’t Blame Minimum Wage Laws Minimum wages are also not the problem. There is no reason to expect minimum wages to keep up with home prices. Home prices are not even in the CPI. The Fed ignored rising home prices from 2003-2006 and they did it again recently. Central banks fail to learn from past mistakes. Asset prices are in another massive bubble with plenty of blame to share. Blame the Fed, Congress, Nixon Blame Nixon for closing the gold window in 1972 that allowed Congressional deficit spending at will. Blame the Fed for insisting on 2% inflation in a technological price-deflationary world. Blame Congress for massive fiscal deficits every year. Price Deflation Not a Problem The Fed desperately seeks more inflation but a BIS Study on the Historical Costs of Deflation shows routine price deflation is not a problem. According to the BIS, “Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive.” Counterproductive Fed Policy The Fed’s policies are extremely counterproductive. To produce 2% inflation in a price-deflationary world, the Fed helped inflate asset prices to the extremes seen in 2007, 2000, and 1929. Another Fed-induced asset-price bust is baked in the economic cake. Meanwhile, a debate is taking place why economic growth is so low. Secular Stagnation Thesis In 2014 economist Larry Summers proposed Secular Stagnation is what ails the economy. Summers proposed “It may be very difficult for investment to absorb all saving.” In 2017, Summers doubled down on his secular stagnation thesis. He blames austerity for the lack of inflation. His purported cure is more public investment. Savings Glut Thesis In 2005, former Fed chairman Ben Bernanke proposed economic growth was slow because of a Savings Glut. Bernanke defines the glut as an imbalance between savings in China and consumption in the US. Quick Rebuttal of Bernanke, Summers To Larry Summers I suggest Deficit spending is out of control globally. If more public spending was the answer, Japan would be the shining beacon of global excellence. To Ben Bernanke I say, Let’s not confuse “savings” with monetary printing. In the classic sense, savings = production minus consumption. The bulk of what’s been “produced” is dollars out of thin air, yuan out of thin air, euros out of thin air, and yen out of thin air. In their analysis of “savings” both Summers and Bernanke ignore the massive buildup of debt that has occurred. To the extent there is an imbalance between the wealthy and not wealthy, Fed policy exacerbated the problem. History Lesson The Fed bailed out the banks in 2000. At that time banks were troubled by soured dotcom bubble loans and loans to foreign countries like Argentina. The result was a housing bubble as Greenspan kept interest rates too low, too long. In 2009, the Fed bailed out the banks when the housing bubble burst. Since then, the Fed’s inflationary policies benefited the asset holders, the banks, and the top 90% of wage earners at the expense of everyone else. Current Account Balance Credit Explosion Prior to Prior to Nixon closing the gold window, countries could not run massive fiscal deficits for years on end without hiking interest rates. Summers believes we need still more public spending stimulus. Japan provides convincing evidence that Summers’ thesis is false. Discussion Needed The Fed’s inflation policies are contrary to BIS findings, contrary to common sense, and contrary to the real-life results of median-wage earners falling further and further behind. Please, let’s have a genuine discussion regarding the Fed’s inflation policies. That discussion needs to incorporate ideas outside the Fed’s “group-think” box of more inflation, secular stagnation, and savings glut theories, all of which are easily proven wrong. Discussion Rejected The Wall Street Journal rejected this Op-Ed submission via a robot or a non-thinking person imitating a robot. I know this because I sent in an inquiry to Editorial Features Editor, James Taranto, asking to speak with him about the rejection, and guess what. My short Email request to speak to Taranto, not a submission, received the identical rejection notice. Thank you WSJ! My submission title was "Fed’s Inflation Policy Destroys the Median Wage Earner". It started with the discussion of inflation targeting. The wage acceleration mirage and the BLS penny admission happened after my op-ed submission. At least the WSJ responded. The Financial Times, which claims to get get back within three days didn't bother. Mainstream media does not want to discuss what's happening and why. They already "know". Nearly everyone but the Austrians believes "secular stagnation" is caused by "savings gluts". Besides, criticisms of the Fed, Larry Summers, or Ben Bernanke would ruffle too many feathers to be published.
Deutsche: "If Trust In Monetary & Political Stability Were Lost, People Would Turn To Cryptocurencies"
Despite the establishment's ongoing efforts to FUD 'average joes' around the world out of cryptocurrencies and create such negative sentiment that no patriotic-minded citizen should even 'want' to decentralize their wealth away from government (by bank proxy) control, we noted in surprise the frankness of The New York Fed's economists last week, when they admitted... If we lived in a dystopian world without trust, bitcoin might dominate existing payment methods. But in this world, where people do tend to trust financial institutions to handle payments and central banks to maintain the value of money it seems unlikely that bitcoin could ever be as convenient as existing payment means. Which begged the question: what happens when the "trust" dies? The answer, of course, is the very existence of cryptos: to create a world in which not one network is reliant on "trust" and the presence of a master node. Which brings us to the question of a central-bank-issued cryptocurrency - an odd amalgum of distributed ledger and centralized control? Deutsche Bank attempts to answer the question simply - Why would we use crypto-euros? (Spoiler Alert: they're not convinced... at all). The rise of bitcoin and other cryptocurrencies and the decline in cash payments are the background for a new concept: digital cash issued by central banks. An old academic debate about who creates money and how is resurfacing, but what about the user’s perspective? Why would we use crypto euros? Central banks are looking into cryptocurrencies and the underlying distributed ledger technology, as they carry responsibility for issuing physical cash, overseeing and/or providing payment clearing and settlement systems, conducting monetary policy and safeguarding financial stability. In the areas of payments and savings, digital cash would compete against bank deposits, physical cash and private cryptocurrencies to win over consumers. Unless its use was strongly pushed by regulation, digital cash would need to convince users by offering better and more convenient payment solutions than other payment systems. In particular, it would need to match current low fee levels and high safety standards for regulated consumer payments. In an environment of high trust in public institutions, consumers would probably not be concerned if digital cash offered little data privacy. For savings purposes, consumers would simply base their choice between digital cash and bank deposits on the difference in interest rates. However, in times of financial or political uncertainty, people may think beyond convenience and yield. In case of financial turmoil, consumers can use central bank money – physical or digital cash – as a safe haven. However, if fundamental trust in monetary and political stability were lost, people would probably turn away from any form of the sovereign currency in favour of other alternative assets or private cryptocurrencies. Private cryptocurrencies are proving to be more than a short-lived tech gimmick. The rise of bitcoin and questions about the future of cash have been the breeding ground for a new concept: digital cash, issued by a central bank. Indeed, central bank-issued digital cash (or currency) – CBDC – is the focal point of various technical and economic developments. Existing "monies" – cash, bank deposits and private cryptocurrencies – can be characterized by their issuer, form, accessibility and transfer mechanism. This also helps to understand the essence of CBDC. Sovereign currencies like the US dollar, euro or pound sterling are fiat currencies steered by a (supra-) national central bank. And they are largely digital, because most of the money supply is not held in physical cash, but in the form of bank deposits. In the euro area, for instance, bank deposits constitute about 80% of total money. Payments with bank deposits are largely digital, too: card payments, (online) credit transfers and direct debits are processed electronically via bank or card payment systems with a central settlement point. This contrasts with the decentralised payment and record-keeping system of private cryptocurrencies, which was first successfully introduced with the bitcoin protocol. Private cryptocurrencies allow for digital, peer-to-peer transfers of value on the basis of distributed ledger technology. Cash and private cryptocurrencies certainly offer a higher degree of anonymity than bank deposits or CBDC. But for the purpose of everyday retail payments, many consumers value convenience over data privacy. Many households may find it acceptable to use crypto euros even if they are required to register with their true identity, especially if registration is not too cumbersome and payments are convenient. This would help a central bank to design digital cash in a way that meets anti-money laundering requirements. However, Deutsche admits that the degree of anonymity will only matter in specific and exceptional situations - in fact the very situations that the move to crypto was created for in the first place. If a payer has doubts about the trustworthiness of his counterparty, he may not want to reveal much personal information, e.g. to prevent spam advertisement or potential identity theft. In case of a general lack of trust in the government, the legal system of a country or the currency, payers will seek third-party anonymity. They would not want authorities to be able to monitor their payments. In such an extreme case, digital cash issued by the central bank will surely not be the payment type of choice to avoid state surveillance or tight capital controls. Private cryptocurrencies, though, are well positioned to enable citizens to circumvent state-controlled payment systems, as is happening in China, Zimbabwe or Venezuela. So, Deutsche Bank concludes, why would we use crypto euros? There are two possible use cases: for payments and for saving purposes. We would use crypto euros for payments if they offered a higher service level than other payment options at comparable levels of cost and safety. With DLT still in its infancy and competitive private retail payment solutions available, this will hardly be the case. CBDC’s chance of gaining substantial market share by catering to unserved payment needs is low given the popularity of established digital payment means and ongoing innovation by incumbent and new service providers. Moreover, it remains an open question whether DLT can deliver the same level of cost efficiency and safety as existing technical set-ups. For day-to-day use, privacy concerns have proven to be of minor relevance to consumers. So even if CBDC was designed with a high degree of anonymity, this would not be a competitive edge – at least not for legal transactions. Unless the acceptance of CBDC is pushed by regulation, CBDC is not likely to gain sufficient reach to become a competitive payment network. But what about crypto euros for saving purposes? In an environment of popular trust in public institutions and financial stability, digital cash or bank deposits will be the most convenient options for consumers. The biggest difference between these two would be a potential difference in remuneration. The highest yielding digital money will simply be the most attractive. However, in times of financial or political uncertainty, people may think beyond convenience and yield. As long as there is “only” doubt about the liquidity of the banking system, physical and digital central bank money will be perceived as a safe haven until the crisis is resolved. If fundamental trust in monetary and political stability is lost, though, digital cash will simply be sovereign currency. In order to escape it, consumers would have to turn to private cryptocurrencies or other alternative assets. In conclusion, Deutsche Bank concludes, a compelling reason for consumers to switch voluntarily to crypto euros is hard to see – at least for the time being. The Bottom Line is that we now have both private and central banks admitting what is already the biggest selling-point behind Bitcoin and its peers: when the system collapses everyone will turn to crypto!
Authored by James Howard Kunstler via Kunstler.,com, Remember this one from 1996? Funny, that was the American mainstream media bragging, after the fact, about our own meddling in another nation’s election. WASHINGTON — A team of American political strategists who helped [California] Gov. Pete Wilson with his abortive presidential bid earlier this year said this week that they served as Russian President Boris N. Yeltsin’s secret campaign weapon in his comeback win over a Communist challenge. —The Los Angeles Times, July 9, 1996 The beauty in Robert Mueller’s indictment of thirteen Russian Facebook trolls is that they’ll never face trial, so Mr. Mueller will never have to prove his case. In the new misrule of law made popular by the #Me Too movement, accusations suffice to convict the target of an investigation. Kind of sounds like going medieval to me, but that’s how we roll now in the Land of the Free. Readers know, of course, that I’m not a Trump supporter, that I regard him as a national embarrassment, but I’m much more disturbed by the mindless hysteria ginned up Washington’s permanent bureaucracy in collusion with half a dozen major newspapers and cable news networks, who have run a psy-ops campaign to shove the country into a war mentality. The New York Times published a doozy of a lead story on Saturday, the day after the indictments were announced. The headline said: Trump’s Conspicuous Silence Leaves a Struggle Against Russia Without a Leader. Dean Baquet and his editorial board are apparently seeking an American Napoleon who will mount a white horse and take our legions into Moscow to teach these rascals a lesson — or something like that. I’m surely not the only one to notice how this hysteria is designed to distract the public attention from the documented misconduct among FBI, CIA, NSA, State Department officials and the leaders of the #Resistance itself: the Democratic National Committee, its nominee in the 2016 election, HRC, and Barack Obama’s White House inner circle. You would think that at least some of this mischief would have come to Robert Mueller’s attention, since the paper trail of evidence is as broad and cluttered as the DC Beltway itself. It actually looks like the greatest act of bureaucratic ass-covering in US history. Of course, Deputy Attorney General Rod Rosenstein was quick to qualify the announced indictments by saying that Russian trolling on Facebook had no effect on the 2016 election, and that the Trump campaign was not implicated in it. Maybe the indictments were just a table-setter for something more potent to come out of Mueller’s office. But what if it’s not. What if this is all he has to show for a year and a half of the most scrupulous delving into this “narrative?” Meanwhile, the damage done among America’s former thinking class essentially leaves this polity like the Scarecrow in The Wizard of Oz: without a brain. I doubt they will be satisfied by Mueller’s indictment of the thirteen Russian trolls. Rather, it may tempt them to even more violent hysterics and greater acts of lawlessness. The only thing that will stop this nonsense is Big Trouble in the financial system — which the news media and most of the public are ignoring at their peril. It is coming at us good and hard and it will feel like a two-by-four to nation’s skull when it gets here.
Former Clinton campaign manager and ardent foodie, John Podesta, was caught flat-footed during a heated exchange on CBS's "Face the Nation" Sunday after being asked about the campaign's failure to campaign in so-called "purple states" in 2016. In a discussion of 13 Russian nationals indicted by Special Counsel Robert Mueller, host Nancy Cordes noted that Russian operatives who meddled in the election somehow realized the importance of focusing on those highly contested swing states. “How is it that these Russian operatives knew to focus on purple states like Michigan and Wisconsin and your campaign didn’t?” Nancy Cordes, the host of “Face the Nation,” asked Podesta. A defensive Podesta responded “Of course we spent a lot of time and energy and effort in all those states." Cordes pushed back, something Podesta wasn't prepared for. “Hillary Clinton did not spend much time" in said "purple" states. A flustered Podesta then stammered his way through a series of talking points, noting “We had Tim Kaine was there, Barack Obama and she spent enormous time in Pennsylvania and Michigan.” Lynn de Rothschild had some thoughts on the matter: @johnpodesta this is pathetic;HRC lost because you ran an arrogant out of touch campaign;you have destroyed a great family and are a loser https://t.co/iHLnQTilhj — Lynn de Rothschild (@LdeRothschild) February 22, 2017 Podesta was caught off guard by the same MSM which was literally eating out of his home during propaganda huddles "off-the-record" dinners (no clue what was served over what) - with one of the goals of "Framing the HRC message and framing the race." Sick Hillary gives her marching orders to the sycophant media, and they happily comply. every “journalist” listed is not credible. Ever. pic.twitter.com/dcHstLKEEW — RockPrincess (@Rockprincess818) October 9, 2016 Alas for Podesta, it appears he may not enjoy the same support from the media he once had. Recall a similar heated exchange with Fox's Maria Bartiromo in June 2017 in which she grilled Podesta over his ties to a Kremlin-backed company. “Don’t you find it odd that there’s been so much attention on the Trump Campaign and the Trump associates and potential collusion with the Russians when in fact it’s really the Democrats who have deeper and stronger ties to Russia,” Bartiromo said. “I mean John I have to ask your own situation..” Bartiromo then goes on to break down how Podesta joined the board of the board of a small energy company in 2011 which later received $35 million from a Kremlin-funded entity. Other members of the board of Joule Unlimited included senior Russian official Anatoly Chubais and oligarch Reuben Vardanyan - a Putin appointee to the Russian economic modernization council. Podesta jettisoned his shares before the 2016 election, transferring them to his daughter via a shell corporation.
Authored by Herman Wang via Platt's "The Barrel" blog, OPEC is drafting an agreement to tie Russia into a so-called “super group” of oil producers. Details on the proposal are vague and the Kremlin’s willingness to consider such a betrothal is uncertain, despite some positive vibes between Russia and OPEC kingpin Saudi Arabia at the moment. In trying to formalize a permanent marriage to a powerful but unpredictable partner like Vladimir Putin, OPEC Secretary General Mohammed Barkindo is no doubt aware of the stakes of a divorce. Any end to the production cut pact is likely to be messy with several countries having touted in recent weeks their plans to boost their production capacity in short order. And for Saudi Arabia, it is counting on keeping Russia on side as its highly anticipated public listing of state oil company Aramco looks to be delayed. Talk of the super group “pushes away the conversation that [OPEC] wants to be avoided: what is the exit strategy?” noted veteran OPEC watcher Jamie Webster, senior director at Boston Consulting Group’s Center for Energy Impact. As the oil market has tightened, OPEC and its allies have remained coy on outlining how they plan to exit their output cut deal, save some vague pledges not to open the taps all at once. Rather, they have obfuscated on the matter – first by declaring that their target of drawing down inventories to the five-year average may be changed, and now by announcing that the draft agreement with Russia and the other non-OPEC partners is in the works. Perhaps it’s not a huge surprise, given that OPEC has never defined any exit strategy from previous production cut accords but has merely looked the other way on cheating until talk of the cuts simply faded away. Barkindo has made no secret of his desire to “institutionalize… a permanent framework” of cooperation with non-OPEC, as he said in London last October. The output cut deal, which is scheduled to run through the end of 2018, commits the 24-country OPEC/non-OPEC coalition led by Saudi Arabia and Russia to cutting 1.8 million b/d to help rebalance the market. Deal members initially talked of aiming to get oil inventories held by OECD nations down to the five-year average. But as that goal has neared — the IEA estimates OECD oil stocks were 52 million barrels above that benchmark at the end of December, down from 311 million barrels at the start of the cuts — OPEC is now wavering. Saudi energy minister Khalid al-Falih has suggested that a new metric will be developed at the coalition’s next meeting on June 22, perhaps incorporating regional stock data and consideration of the crude grades held in storage. There is merit to that idea, given that the oil market is a changed one since the deal was negotiated in late 2016, with surging demand and growing supply from the US. Keeping the market guessing on how and when the cuts will end is a way for the bloc to ensure that their efforts to tighten market balances won’t be undone in short order, said Harry Tchilinguirian, global head of commodities markets strategy for BNP Paribas. “My take is that they do not want to tie their hands with the current accord,” he said. Kicking any hard decisions down the road “avoids getting boxed in in terms of policy, giving them options and ultimately reflects forward thinking,” he added. All the better, then, for Saudi Arabia as it tries to keep its handle on the oil market’s rudder in anticipation of the Aramco IPO. The delayed IPO — the pet project of Saudi Crown Prince Mohammed bin Salman — remains very much in flux, and Saudi officials have quietly dropped their target of listing the shares in the second half of this year. An abrupt end to the production cuts would roil the oil market and make it more difficult for Aramco to achieve the kingdom’s desired $2 trillion valuation. In fact, Saudi Arabia has doubled down on its market rebalancing efforts, announcing Tuesday that it would slash March crude production by 100,000 b/d from February levels and hold exports to below 7 million b/d. “Market volatility is a common concern for producers and consumers, and the Kingdom is committed to mitigating this volatility and moderating its negative impacts by responsibly meeting its pledges under the Declaration of Cooperation between OPEC and non-OPEC producers, while proactively working with other producers to stabilize global markets,” the Saudi energy ministry said. Not the most romantic declaration of love for its OPEC/non-OPEC brethren, but an earnest one. Whether it is reciprocated by its main partner remains to be seen.
Telegram, the messaging app favored by both cryptocurrency enthusiasts and ISIS recruiters, has completed its presale of Gram tokens, raising a stunning $850 million from VIP investors from Silicon Valley and crypto community. That sum alone qualifies it as the largest ICO ever - far surpassing the ~$230 million raised by Tezos, which is now mired in litigation over its failure to keep many of its promises to investors... ...But as Telegram's founders have insisted, the presale is only the beginning: If TechCrunch's calculations are correct, the company could raise close to $2 billion after sales are opened to the public. That's an enormous sum for a company that has no revenue, and that it's founders insist should be kept free to users - and free of ads - for as long as possible. Telegram was founded by CEO Pavel Durov and his brother Nikolai, two of the creators of VKontakt, better known in the US as the "Russian Facebook." Citing a document submitted to the SEC earlier this week that shows the money raised by Telegram is "for the development of the TON Blockchain, the development and maintenance of Telegram Messenger and the other purposes," TechCrunch points out that the Gram tokens are described in the document as "purchase agreements for cryptocurrency." And while it might be reassuring to some that Telegram appears to be complying with the still-vague regulations surrounding ICOs, which were released last summer when the agency released its report on the DAO hack, one Forbes columnist warns that investors who expect their investment - or Telegram - to turn a profit may be sadly mistaken. The reason for the ICO's popularity, Jason Bloomberg explains, is because Telegram is the preferred means of communication for crypto traders and other members of the crypto community. While it's not the only secure messaging app, the decision of the Durov brothers to dedicate much of the $300 million fortune they cashed out of VKontakt to maintaining the app as a free service has helped burnish its appeal. The Durovs fled Russia in 2014 after a "fallout" with some of their former investors. And according to the prospectus cited above, as well as public comments made by the brothers, it appears the Durovs see the ICO as a means of raising more funding for their non-profit project - not as a stepping stone toward profitability, which is something they've scarcely discussed, according to their public statements. Ultimately, Bloomberg believes the ICO is essentially another outsize scam. Founded by Russian entrepreneurs Pavel and Nikolai Durov who cashed out of their social media company VKontakte to the tune of $300 million, Telegram is a secure messaging app that competes with the like of WhatsApp. ‘Compete,’ however, is misleading, because Telegram has no viable business model, as it makes no money – on purpose. In fact, Pavel Durov covers all its expenses out of his own pocket. “Pavel Durov, who shares our vision, supplied Telegram with a generous donation, so we have quite enough money for the time being,” claims the FAQ on the Telegram web site. "If Telegram runs out, we will introduce non-essential paid options to support the infrastructure and finance developer salaries. But making profits will never be an end-goal for Telegram." The ICO, therefore, appears to be a mechanism for Telegram to cover its bills. “With growing user base, he would’ve eventually run out of money,” explains Gregory Klumov, CEO and Founder of STASIS. “Therefore he opted for an ICO as a mechanism to raise funds without getting outside investors into Telegram’s shareholder capital.” Travis Scher, Vice President of Investments at Digital Currency Group echoes this sentiment. “It really felt like it was one of these start-ups that’s burning through cash and needs a way to bring money in to keep funding their operations,” Scher says. “This is how they decided they’re going to do it.” Of course, if investors view their purchases of the Gram tokens as a means of donating to a company that's provided so many useful and free services, then there's nothing wrong with that. But crypto traders who hope to one day turn a profit might want to give the decision to buy Gram tokens a second thought. According to TechCrunch, some of the early buyers are already turning around and selling their tokens at a premium on the secondary market... ...But as with most other ICOs, it's unclear how the company intends to create value...
Even The Wall Street Journal's op-ed pages have realized that American Universities, and their tenured ivory-tower-protagonists' "free speech" arguments, have sent the Spinal Tap hypocrisy amplifier to 11.. Authored by Tunku Varadajaran, op-ed via The Wall Street Journal, Chicago Snow carpets the ground at the University of Chicago, and footfalls everywhere are soft, giving the place a hushed serenity. Serene, too, is Robert Zimmer, the university’s 70-year-old president, as he talks about a speaking invitation that could turn his campus turbulent. Steve Bannon is scheduled to talk at the school early next month - there’s no confirmed date - and Mr. Zimmer is taking criticism for the imminent appearance of Donald Trump’s former right-hand man, a paladin of alt-robust conservatives. Mr. Bannon is precisely the sort of figure who is anathema on American campuses, yet Mr. Zimmer is unfazed by the prospect of his visit, confident that it will pass with no great fuss. “It’s been quite interesting to watch this because, as you can imagine, there are many people who are opposed to Steve Bannon and wish that he hadn’t been invited,” Mr. Zimmer says. Nonetheless, “the students have been remarkable. The student government had a ‘town hall’ with the faculty member who invited Bannon.” The students ran the event, “and they were very clear that there was to be no disruption, that they wanted to have a conversation.” But at American universities, it isn’t just the students you need to worry about. More than 100 Chicago professors have signed an open letter to Mr. Zimmer objecting to Mr. Bannon’s invitation: “The university should model inclusion for a country that is reeling from the consequences of racism, xenophobia, and hate.” They propose to “model inclusion” by excluding viewpoints they find objectionable: “We believe that Bannon should not be afforded the platform and opportunity to air his hate speech on this campus.” Mr. Zimmer says most Chicago faculty support free speech, and the letter’s signers are exceptions. “What we see among our faculty is that only a few of those who dislike what they view Bannon as representing have asked that he be disinvited.” Most of their colleagues have instead “talked about counterprogramming, and have talked about protests—nondisruptive protests—which, of course, is totally fine.” He sums up their strategy: “It’s ‘How are we going to effectively argue with this guy?’, not ‘How are we going to prevent him from coming to campus?’ ” Mr. Bannon was invited to the university by Luigi Zingales, a finance professor. Would Mr. Zimmer ever contemplate having a quiet word with the prof and asking him to withdraw his invitation to Mr. Bannon? “I wouldn’t even think of it,” Mr. Zimmer answers, in a mildly but unmistakably indignant tone. And no, he won’t be attending the Bannon event. “We have many, many talks,” he says. “I’m really pretty busy.” Mr. Zingales’s attitude is consistent with the norm Mr. Zimmer seeks to uphold. When I asked the professor by email why he extended the invitation, he replied that Mr. Bannon “was able to interpret a broad dissatisfaction in the electorate that most academics had missed. Remember the shock on November 9, 2016? Regardless of what you think about his political positions, there is something faculty and students can learn from a discussion with him.” Mr. Zingales, too, welcomed peaceable protests as a healthy exercise of free speech. “I admire the way our students have conducted their protests,” he wrote. “It speaks very well to the values that our university shares.” The University of Chicago has long enjoyed a reputation for tough, even remorseless, intellectual inquiry. Its world-famous economics faculty, for instance, is not a place where faint-hearted academics go to road-test their research. In recent years, as colleges across America have censored unfashionable views, Chicago has also come to be known for setting the gold standard for free expression on campus. Mr. Zimmer, who became president in 2006, deserves much credit. He has been outspoken in defense of free speech and in 2014 even set up a committee—under the constitutional law scholar Geoffrey Stone —that produced the Chicago Principles, the clearest statement by any American university in defense of uninhibited debate. Mr. Zimmer, a mathematician, says Chicago’s intellectual and moral strengths are “totally tied together.” He’s also quick to point out that its commitment to free debate precedes him, naming virtually every one of his predecessors as a guardian of openness. Mr. Zimmer created the Stone committee, he says, after watching free-speech struggles at other schools: “People were starting to be disinvited from campuses—speakers of some stature, in fact. You started to see this pattern.” A nadir came in 2013. That year the Foundation for Individual Rights in Education (FIRE) counted 34 “disinvitation attempts”—a record. The University of Pennsylvania canceled a keynote from the future prime minister of India, Narendra Modi, for fear of “potential polarizing reactions.” At Brown, New York’s then police commissioner, Ray Kelly, was shouted down by students holding signs like “Ray(cist) Kelly.” FIRE reports that the 2013 record was exceeded three years later, when the group counted 42 incidents. Mr. Zimmer attributes this campus intolerance to “the national mood,” as well as a change in “the ambient environment” in which universities exist. He describes a sort of national attention-deficit disorder: “How much is the national environment amenable to long-term thinking and investment, versus just responding to particular issues, particular needs?” The importance of education and research, he says, “has certainly come under question” in recent years, in part because “the entire tone of the country has shifted toward people being more focused on the immediate and the short-term.” Mr. Zimmer shames this age of ours by pointing to the Morrill Act of 1862, one of his favorite examples of investing in the long term: “In the middle of the greatest single crisis in the history of the country—the Civil War—the Congress passed, and President Lincoln signed, this act which essentially established the land-grant university system.” The foresight was there then, he says. It isn’t now. Two examples: budget cuts that are starving state universities of the money they need to grow, and “the nature of our immigration policies.” Mr. Zimmer takes a particular interest in the latter: “Even just in the last two decades, if you look at Nobel Prizes awarded to Americans in the sciences, something like 40% are immigrants. And this doesn’t include those whose parents may have migrated to the United States.” Mr. Zimmer laments that Americans no longer seem to recognize fully “the unbelievable power that being attractive to the most talented people in the world has brought to the capacity of this country.” Trying to imagine the scientific and technological output of the U.S. over the past century without immigration, he says, is “simply inconceivable.” But America, Mr. Zimmer believes, is “getting less attractive than other places,” so much so that it is in peril of “discarding this huge comparative advantage.” The problem, he says, precedes Donald Trump’s presidency: “It’s been exacerbated, but it’s not a new problem. Trump has obviously taken a position more pronounced than others, but it’s been a problem for some time.” Specifically, foreign students who come to the U.S. and earn doctorates face a lot of obstacles “to be able to work here, to have a spouse who can work here.” Ultimately, he says, people are going to look for other places to go—to America’s detriment. Although conflict on campuses “is not a new thing,” Mr. Zimmer does think that “right now, we’re in a particular period of moral fervor,” with people believing that there’s “a sense of urgency about the rightness of what they’re doing.” Mr. Zimmer was an undergraduate in the 1960s, so he’s no stranger to political ferment. The activists then, however, were motivated by two issues, civil rights and the Vietnam War: “There was a huge amount of focus on what the laws were, and what rights people had under them. And the Vietnam War was very much a matter of government policy.” The 1960s protests “may have had cultural roots,” Mr. Zimmer says, “but there was a lot of focus on what actions the government should be taking.” Today’s campus indignation is “a bit more broad-based. Yes, what should the government be doing—but it’s also focused on corporations and NGOs, and what communities and universities should be doing.” One could argue, perhaps paradoxically, that today’s campus activists are much more atomized as well. Identity groups push for their own particular agendas, often in absolutist terms: It matters to me more than anything else in the world that you call me “they,” not “she.” That’s not exactly a broad-based concern. When I put this argument to Mr. Zimmer, he gently deflects: “Again, I’d go to the point that the main issue is—whether everybody is focused on one thing, or whether there are multiple groups focused on multiple things—that you get the same . . . kind of fervor, which says certain ideas should not be discussed and thought about. And that’s what the problem is.” Mr. Zimmer has his eye on the future of free speech in another, innovative way. As president of a university, he sees himself as a stakeholder in America’s high schools. “High schools prepare students to take more advanced mathematics, and they prepare them to write history papers, and so on,” he says. But “how are high schools doing in preparing students to be students in a college of open discourse and free argumentation? I’ve started thinking about this.” The free-speech president, as some of his colleagues call him, is going on a free-speech roadshow. Mr. Zimmer invited six high-school principals—including from his alma mater, Lower Manhattan’s Stuyvesant High—to dinner in New York City to talk about this question last month. He plans two similar dinners in Chicago, followed by more in other cities. The initiative is still embryonic, and although Mr. Zimmer insists he’s “not going to pretend to tell high schools how to prepare people,” he does consider it “an important question for high schools to confront.” Mr. Zimmer says, optimistically, that even universities that “may not have been talking about issues of free expression two years ago” are at least “trying to confront them, at least recognizing that maybe there’s a problem.” In the same vein, it would be very healthy, he thinks, for high-school teachers “to actually be thinking about this in a kind of systematic way.” He’s observed that “a lot of students are not prepared for this environment.” Some of that is inevitable, Mr. Zimmer believes, because “free expression doesn’t come naturally for most people. It’s not an instinctive response.” Young people need “to be taught it”—and it’s better if universities don’t have to start from scratch.
The drip-drip-drip death spiral of what was once the world's most systemically dangerous bank continues as Bloomberg reports Deutsche Bank has started cutting at least another 250 jobs at its corporate and investment bank units. These new firings, which could widen to more than 500, according to Bloomberg's sources, comes after bonus payments that Chief Executive Officer John Cryan said were on the “generous” side, helped push the business in the red. Cryan is trying to motivate and retain top investment banking staff, while keeping a lid on costs following three straight years of losses. But with revenue at a seven-year low, even a relatively small increase in compensation can cause losses at the securities unit. Chief Financial Officer James von Moltke has urged a return to more disciplined cost management after the lender scrapped a target for this year. And these "generous" bonuses follow a 27% collapse in trading revenues and the disastrous debacle surrounding China's HNA liquidating its holdings of the giant German bank. Imagine how "generous" these bonuses would have been if things were really bad? As Michael Huenseler at Assenagon noted previously: "The results are disappointing again and we don’t see anything encouraging in them, reinforcing our doubts in the bank’s strategy and management...There’s no silver lining." Bloomberg notes that bank officials declined to comment. For context, Deutsche Bank’s corporate and investment bank employed 17,251 front office full-time staff at the end of last year. While Deutsche's share price continues to languish, the last week or so has seen a more concerning re-ignition of short-term counterparty risks as Deutsch Bank's 1Y Sub CDS spreads have blown out... Or does someone know something about a short-vol position that DB may be holding? And even more worrying for the bank itself is the total decoupling of short-term default risk from Germany's systemic risk... In other words - you're on your own Mr. Cryan.
Judging by how urgently Goldman's research department is trying to get the bank's clients to sell treasuries, Goldman's prop traders must have a desperate bid for duration in anticipation of what probably will be a historic deflationary shock. It started a month ago when Goldman calculated that the US debt supply will more than double from $488bn to $1,030bn in 2018. Then last Friday, Goldman revised its 10-year bond yield forecasts by around 20bp across the board - in part due to revised growth and inflation expectations - and now projects 3.25% for US Treasuries, 1.0% for Bunds, 2.0% for Gilts and 10bp for JGBs (the bank kept the peak level of Treasury yields in this cycle unchanged at 3.5-3.75%). Its full old vs new projection matrix is shown below: Now, in yet another note meant to prompt selling of Treasurys (and buying of stocks that Goldman's co-head of equities admitted last week he is all too willing to sell), overnight Goldman's economist team wrote that "Federal fiscal policy is entering uncharted territory" after Congress "voted twice in the last two months to substantially expand the budget deficit despite an already elevated debt level and an economy that shows no need for additional fiscal stimulus." As a result of this historic expansion in U.S. borrowing during a period of economic growth, alongside rising bond yields, Goldman predicts a surge in the cost of servicing American debt, and goes so far as to warn that the current US fiscal trajectory would lead to catastrophe: "the continued growth of public debt raises eventual sustainability questions if left unchecked." * * * What has so spooked Goldman, which rhetorically asks "what's wrong with Fiscal Policy?" is that "US fiscal policy is on an unusual course. As shown in the left panel of Exhibit 1, we expect the budget deficit to widen over the next few years, as a result of prior imbalances and recently enacted policies, which should lead to a federal debt/GDP ratio of around 85% of GDP by 2021." "This stands in contrast to the typical relationship between the economic cycle and the budget balance, as shown in Exhibit 2. The result is a cyclically adjusted budget balance that we project to be wider over the next few years than at any time over the last 50 years with the exception of the 2009-2012 period following the financial crisis. In our view, this gap is driven by a combination of longer-term factors described below as well as the recently enacted tax cuts and spending increases. For the non-fiscal conservatives, Goldman conveniently highlight the following: the US deficit should be small and shrinking, not large and growing. The reason for this is that while revenues look likely to remain at the lower end of their historical range (over the last 50 years, revenues have fluctuated between around 15% and 20% of GDP, averaging about 17.5%), mandatory spending continues to grow. According to Goldman, and as shown in Exhibit 3, federal primary spending is at the higher end of the historical range, but looks likely to continue to increase as a share of GDP absent further policy changes. Projected increases in mandatory spending—this includes Social Security, Medicare, Medicaid, and income support programs—are primarily responsible for this rise. Additionally, "health spending has continued to rise. While health care price inflation has remained subdued for several years, enrollment in federally subsidized health benefits has increased and recently released estimates by the Centers for Medicare & Medicaid Services Actuary anticipate an increase in spending growth in 2018-2020 due to an expected increase in the volume of care and an uptick in healthcare inflation." Then there is the biggest wildcard of all: interest expense, which is set to surge, surpassing $1 trillion in the next few years. Here's Goldman: We expect rising interest rates and a rising debt level to lead to a meaningful increase in interest expense. On our current projections, federal interest expense will rise to 2.3% of GDP by 2021. Extending our budget projections using CBO’s June 2017 baseline combined with recently enacted policy changes and an assumed extension of those and other policies through 2027 suggests interest expense will reach around 3.5% of GDP by that year (Exhibit 6). As US deficit surges, and the debt load explodes higher, there is a silver - if sadly brief - lining: the Treasury continues to borrow at low rates and it should be able to do so for a while even if market rates move higher in our view, thanks to a nearly 6-year average maturity of outstanding debt. As long as the Treasury can borrow at a nominal interest rate below the rate of nominal GDP growth, which we will be the case for several more years, the US can run a small primary deficit while maintaining a roughly stable debt-to-GDP ratio. The US has historically benefited from a negative rate-growth differential, which has allowed the federal government to run a modest primary deficit on average without increasing the debt/GDP ratio (Exhibit 7). Assuming trend growth of 1.75% and a real interest rate of 1.5% over the long-term, the US should continue to enjoy some benefit from this differential. More importantly in the near-term, the Treasury’s average borrowing rate should remain well below the growth rate for the next few years, even with a rise in spot interest rates, in light of the nearly 6-year average maturity on outstanding debt In the long run, however, this divergence eventually becomes unsustainable, as "fiscal policy appears unusually disconnected from the economic cycle." Which brings us back to Goldman's core assessment: the US now finds itself in uncharted territory, because as Jan Hatzius and team explain, "we are unaware of any period in the last several decades when the US cyclically adjusted primary deficit expanded as we expect it to at the same time that the debt load had already been growing, as appears likely now, except for periods in or near recessions." Which is not to say there are no examples of this kind of dynamic - an advanced economy experiencing positive, sequential growth; a negative, deteriorating primary budget balance; and a relatively high and growing stock of debt - in the international arena: two scenarios that come to mind are Italy in the late 1980s and Japan in the mid-1990s (neither instance had a happy ending): Italy, late 1980s. Throughout the 1980s Italy ran a substantial primary deficit despite a rising debt/GDP ratio. Interest expense grew to 10% by 1990 from 5% a decade earlier. The primary balance returned to surplus in the early 1990s due in part to pressure to do so for admission to the European Monetary System, but the debt/GDP ratio continued to grow for another few years, as a result of substantial interest expense. Japan, mid-1990s.While growth boomed in the 1980s, Japan ran large primary surpluses and the debt level remained stable as a share of GDP. However, after growth stalled in the early 1990s, Japan began to run substantial primary deficits. Unlike the European examples just noted and similar to the potential US experience, interest expense remained relatively low, at around 3% of GDP, owing to Japan’s high domestic saving rate and trade surplus. Nevertheless, the debt/GDP ratio continued to grow substantially over the following two decades, as Japan frequently expanded its primary deficit to address economic downturns and was never able to return to a primary surplus. Going back to the topic of surging interest expense, Goldman next warns that "the US also appears to be headed into uncharted territory—at least for US fiscal policy—regarding the relationship between interest expense and the debt level." As shown in Exhibit 11, interest expense considerably exceeded the current level during the late 1980s and early 1990s, though the debt level was moderate. By contrast, the debt level was slightly higher during and just after World War II than it is today, while the level of interest expense was similar. However, we project that, if Congress continues to extend existing policies, including the recently enacted tax and spending legislation, federal debt will slightly exceed 100% of GDP and interest expense will rise to around 3.5% of GDP, putting the US in a worse fiscal position than the experience of the 1940s or 1990s. To be sure, this entire analysis would be moot if the tsunami of new debt issuance also results in a sizable - and permanent - new growth impulse. The problem is that according to Goldman this won't happen, and after an initial fiscal boost in 2018 and 2019, the growth impulse is set to fade in 2020, resulting in a modest headwind to growth: We recently increased our estimate of the growth effect from fiscal policy in 2018 and 2019, as a result of the recent spending agreement, which added to the stimulus provided by the tax reform legislation enacted in late 2017. Overall, we now expect fiscal policy to boost growth by 0.7pp in 2018 and 0.6pp in 2019 on a Q4/Q4 basis. However, as Exhibit 12 shows, we anticipate that the growth effects will fade later in 2019 and turn slightly negative by 2020. There is just one condition under which the fiscal-boost could persist: if the deficit increased even more. According to Hatzius "since the growth effect from fiscal policy depends on the change in the deficit, not the level, Congress would need to vote by late next year to expand the deficit even further in 2020 to continue the growth effect we expect in 2018-2019 into 2020." This, however, seems unlikely, for three reasons: First, a portion of the tax cut over the next couple of years relates to depreciation policies and other timing changes which will have less of an effect on deficits in the future, even if Congress continues to extend them. Likewise, on the spending side, the boost to growth from federal spending that we expect in 2018 and 2019 seems unlikely to be repeated, as the large increase this year more than reversed the cuts imposed under “sequestration” several years ago. While further increases in real discretionary spending are certainly possible, we doubt the annual change would be nearly as large as the boost Congress just agreed to. Second, although congressional leaders and the President have been willing to support deficit expansion to date, it is unlikely in our view that there will be as much political support for further expansions once the effects have been felt, particularly in 2019 when we expect the nominal deficit to climb above the psychologically important $1 trillion level. The next major test could come in late 2019, when Congress would need to vote to raise the spending caps for FY2020 and FY2021. If they do not, real discretionary spending would decline by about 0.5% of GDP and would fall slightly further in 2021. We expect that Congress is likely to hold spending roughly flat, which would result in a neutral fiscal effect but this would nevertheless represent a reduction in stimulus compared with 2018-2019. Third, there is a good chance that control of Congress could change hands after the midterm election this November, as we laid out in a recent US Economics Analyst. Republican polling has improved somewhat over the last several weeks, as measured by the generic ballot and the presidential approval rating. Nevertheless, while we believe Republicans are more likely to maintain control in the Senate given the disproportionate number of Democratic seats up for reelection in Republican-leaning states, the House continues to look quite competitive and the Democrats appear to have a narrow advantage based on public opinion polling. We believe a divided control of Congress ahead of the presidential election would likely lead to a passive narrowing of the budget deficit as some policies are allowed to lapse or are only partially extended. While it is possible under such a scenario that a bipartisan agreement could be reached on infrastructure, for example, even if this occurred we expect it would still lead to less of a fiscal boost than we expect in 2018 and 2019 and would probably involve at least partially offsetting tax increases or spending cuts. What does that mean for the future? Goldman concludes that as a result of the above, "the probability of meaningful fiscal reform in the next few years appears low. In 2018, congressional Republicans appear likely to skip the annual budget resolution process, without which the budget reconciliation process is unavailable. If so, bipartisan support would be needed for any fiscal legislation, which appears very unlikely in the current political environment in our view... this suggests that the primary deficit is unlikely to widen much further from here absent an economic downturn but that it is unlikely to shrink substantially for the next few years." In other words, two years from now, the economic boost from the fiscal stimulus - which according to Trump's own budget forecast will leave the US saddled with $30 trillion in debt by 2028... ... will be gone, and the only thing the US will have to show for it will be well over $1 trillion in annual interest expense (not to mention a stock market in which most companies will have partially LBOed themselves with trillions in future stock buybacks). But Goldman's most startling admission, by far, is the following: "the continued growth of public debt raises eventual sustainability questions if left unchecked." The irony, of course, is that while one Goldman employee warns that the US is now on collision course with debt sustainability, it was another former Goldman employee - former COO Gary Cohn - who transformed this blueprint for catastrophe into reality. Needless to say, the culmination and outcome of these processes is a fiscal - and sovereign debt - crisis... unless the Fed proceeds to monetize the deficit once again as it did in 2009-2015, sending yields plunging as the next and final episode of QE is unveiled. Which, of course, is precisely what will happen, and is also why Goldman is already starting to load up on all Treasuries it can buy.
Suspected Marjory Tillman High School shooter Nikolas Cruz was often abusive to his adoptive mother, Lynda Cruz, eliciting no fewer than 39 '911 calls' to report violent and disturbing behavior at this former home before Lynda succumbed to pneumonia in November. During one incident, he reportedly assaulted Lynda and hurled violent threats in response to her taking away his X-box privileges. But according to the Snead family, which took Cruz and his younger brother in following the death of their adoptive mother, Cruz was quiet, grateful, respectful and obedient during his multi-month stay with the family, according to the Wall Street Journal. In fact, despite Cruz's recent family tragedy, James Snead, the father of a school fried of Cruz's, said the boy had recently told him that he had never felt better, emotionally and physically. The Sneads said they took the Cruz brothers in, but made them obey their house rules, which included pitching in for food, and storing the elder Cruz's guns, which had been legally purchased, in a gun safe to which Snead believed he had the only key. Two weeks earlier, “he told me this is the best he’s ever felt in his life,” Mr. Snead, 48, said. Mr. Cruz had lived with the Snead family for only a few months. Mr. Snead and his wife had invited Mr. Cruz, a friend of their son, to move in after his mother died in November. Mr. Snead, a gun owner, said he required Mr. Cruz to follow house rules. He told Mr. Cruz that he would need his own gun safe for his firearms in order to live with the Sneads. Mr. Cruz owned “five or six guns,” as well as pellet guns, and they were all bought legally, Mr. Snead said. “He followed [the rules] to the T,” Mr. Snead said. Mr. Snead had what he thought was the only key to the safe, he said. After Wednesday’s shootings, he realized Mr. Cruz had an extra key. Snead said he didn't realize that Nikolas Cruz had mislead him about having a key to the gun safe until after the shooting. "He definitely had a key to the gun safe I didn’t know about," Mr. Snead said. While Cruz was well-mannered and respectful during his time living with the family, the Sneads said he was almost completely helpless when it came to taking care of himself. “He would come out of his room and say ‘Is there food?’ I’m like, ‘Man, you’re 19 years old, I’ve got two refrigerators, you better find food,’” Mr. Snead said. “We had to teach him how to use the microwave, teach him how to cook, teach him how to do laundry.” Before Mr. Snead let Mr. Cruz move in, Mr. Cruz slept over with the Sneads’ son and another friend before a hunting trip. “He was great. He followed the rules. He was polite,” Mr. Snead said. James Snead said he last saw Cruz Tuesday night, when he watched TV with the family. Kimberly Snead said she last saw Cruz Wednesday morning - just hours before the shooting - when he informed her he wouldn't be going to school that day because he didn't go to school on Valentine's Day - instead, he said he was going to see a movie. When news spread that the school was on lockdown, the Sneads received a call from the FBI asking if they knew Cruz's whereabouts. Even then, they didn't believe he could be the one behind the shooting. The next time Mr. Snead called his son, they thought Mr. Cruz might be the suspect. Even then, Mr. Snead said, it was hard to believe. “We kind of realized it at the same time,” he said. “We were like, ‘nah.’” Cruz has been charged with 17 counts of premeditated murder. He is being tried as an adult, and prosecutors are already reportedly seeking the death penalty.
US Equity futures traded higher overnight (most of Asia closed for new years) into the European open and then started fading. However, at 0930ET, it appears the machines went about their usual 'stop-hunting' business as those dumb humans forgot to tell them that markets are closed... And there are still people out there that believe we have stock 'markets' and that 'humans' are involved? Volume is not tiny either. We suspect the modest strength in the Dollar did not help maintain any risk-on bounce in stocks.
Authored by Uzay Bulut via The Gatestone Institute, In an incident that took place less than two weeks after the Greek Defense Ministry announced that Turkey had violated Greek airspace 138 times in a single day, a Turkish coast guard patrol boat on February 13 rammed a Greek coast guard vessel off the shore of Imia, one of many Greek islands over which Turkey claims sovereignty. Most of the areas within modern Greece's current borders were under the occupation of the Ottoman Empire from the mid-15th century until the Greek War of Independence in 1821 and the establishment of the modern Greek state in 1832. The islands, however, like the rest of Greece, are legally and historically Greek, as their names indicate. Turkey's ruling Justice and Development Party (AKP), however, and even much of the opposition seem intent on, if not obsessed with, invading and conquering these Greek islands, on the grounds that they are actually Turkish territory. In December, for instance, Kemal Kılıçdaroğlu, the leader of the main Turkish opposition CHP party, stated that when he wins the election in 2019, he will "invade and take over 18 Greek islands in the Aegean Sea, just as former Turkish PM Bulent Ecevit invaded Cyprus in 1974." He said that there is "no document" proving that those islands belong to Greece. Meral Akşener, the head of the newly established opposition "Good Party," has also called for an invasion and conquest of the islands. "What is required must be done," she tweeted on January 13. The most garish muscle-flexing has come from Turkish President Recep Tayyip Erdoğan, of course, who seems emboldened by his military invasion of the Afrin region in northern Syria having gone virtually unchallenged. "We warn those who have crossed the line in the Aegean and Cyprus," Erdoğan declared, continuing: "Their courage persists only until they see our army, our ships and our planes... Whatever Afrin is to us, our rights in the Aegean and Cyprus are the same. Do not ever think that the natural gas exploration in the waters of Cyprus and the opportunistic attempts in the Aegean Sea drop off our radar. "Just as we disrupt the plots [in the region] through Operation Euphrates Shield and Operation Olive Branch [on Syria], and soon in Manbij and other regions, we can and we will disrupt the plots of those who engage in miscalculations on our southern border... Our warships and air forces are keeping an eye on the area closely to intervene in every way when required." Referring to the days of the Ottoman Empire, Erdoğan went on: "Those who think that we have erased from our hearts the lands from which we withdrew in tears a hundred years ago are wrong. "We say at every opportunity we have that Syria, Iraq and other places in the geography [map] in our hearts are no different from our own homeland. We are struggling so that a foreign flag will not be waved anywhere where adhan [Islamic call to prayer in mosques] is recited. "The things we have done so far [pale in comparison to the] even greater attempts and attacks [we are planning for] the coming days, inshallah [Allah willing]." Turkish President Recep Tayyip Erdoğan recently said: "We warn those who have crossed the line in the Aegean and Cyprus... Their courage persists only until they see our army, our ships and our planes." (Photo by Elif Sogut/Getty Images) The Ottoman dynasty and empire was established by a nomadic Turkmen chief sometime around the year 1300. During the more than 600 years of the Ottoman period, the Ottoman Turks, who also represented the Islamic Caliphate, regularly launched wars of jihad, invading and occupying lands across five continents. Neo-Ottomanists in Turkey still proudly embrace the concept of jihad (Islamic holy war) against the kafirs (infidels). The head of the state-funded Directorate of Religious Affairs, the Diyanet, has openly described Turkey's recent military invasion of Afrin as "jihad." This designation makes sense when one considers that Muslim Turks owe their demographic majority in Asia Minor to centuries of Turkish Muslim persecution and discrimination against the Christian, Yazidi and Jewish inhabitants of the area. In the 11th century, Turkic jihadists from Central Asia invaded and conquered the Greek-speaking, Christian Byzantine Empire, paving the way for the gradual Turkification and Islamization of the region through methods such as murder, kidnapping, rape and forced conversions. The greatest 20th century Turkish assault against Christians took place in the 1914-1923 genocide of Greeks, Armenians and Assyrians (Syriacs/Chaldeans) in Ottoman Turkey. This did not prevent Turkey, which continues to deny the genocide, from becoming a member of NATO in 1952. The assault also did not stop Turkey, three years after joining NATO, from committing a savage anti-Greek pogrom in Istanbul or from forcibly expelling the remaining Greeks from Turkey in 1964. It is precisely because the Turks have never been held accountable for their criminal actions and aggression that they continue to threaten the security and sovereignty of their neighbors. It is high time for the West wake up and take Ankara to task.