….And today, the Bureau of Economic Analysis reported that growth in the fourth quarter was a measly 1.9%. That was down from 3.5% in the third quarter, a spurt that had once again given rise to the now gutted hopes that the US economy would finally emerge from its stall speed. But instead it has slowed down. For the year 2016, the growth rate dropped to 1.6%. It was worse even than 2013, when GDP growth tottered along at 1.7%. And it matched the growth rate in 2011. Both 2016 and 2011 were the worst since 2009 when the US was in the middle of the Great Recession.
Nearly three years ago, Morgan Stanley may have jumped the shark (a little) when its strategists Cyril Moulle-Berteaux and Sergei Parmenov declared that China’s Minsky Moment has arrived. While that may have been partially true, the fact that China managed to incur an additional $12 trillion in total debt in the interim period, suggests that Beijing at least managed to postpone the inevitable. And since in the 3 years since little has changed, questions about how much longer the Chinese debt-fueled growth “farce” can continue have once again emerged, in their latest incarnation courtesy of UBS, whose economist Tao Wang asks “How long can debt continue to grow before a Minsky moment or systemic debt crisis?”
Critics and media are slamming the institution’s monetary stance — set to support not just Germany but the entire 19-nation region — as mainstream parties struggle to contain a surge in populism ahead of national elections. Finance Minister Wolfgang Schaeuble has warned that higher inflation could cause “political problems,” and German monetary officials are urging their peers to start devising an exit strategy from unconventional stimulus.
Trump Continues Bomber Barry’s Middle East Mayhem—Yemen Drone Strike Target Sunni and Shiite (Houthi)
The United States is not formally at war with Yemen but strikes the country with drones whenever it feels like it. The U.S. also maintains a naval blockade of Yemen, contributing to near-famine in the region’s poorest country, which has never been able to produce enough food to feed its 25 million people. And since March 2015, the U.S. has supported and participated in the undeclared, illegal war of aggression launched by Saudi Arabia and its allies with U.S. blessings.
……The latest being the Crony Capitalist King’s suck-up to President Trump to impose carbon taxes… which would just happen to hugely benefit . . . Elon Musk. Who already milks the cow (that’s us) via a handsome-sounding rip-off called “carbon credits” – which are just a tax by another name (like Social Security “contributions”) shifted from one place to another but ultimately landing squarely in our laps…..Musk gets a state – California, for example – to pass a fatwa requiring any company selling cars within the state to sell “x” number of “zero emissions” cars each year in order to be allowed to sell any cars at all. Most car companies don’t have many “zero emissions” cars to sell….Elon does. It is all he sells. If you want to use that word. Which is editorial abuse, or should be so regarded. Elon gives away cars – heavily subsidized – to affluent fools and tools, who like to preen “green” while hemorrhaging it. Unless you think that spending $70,000 (the least expensive Tesla available) to “save gas” makes economic sense.
My focus – one that the world now largely neglects – is on unsound global finance. It’s such an extraordinary backdrop – in all things monetary, in politics, geopolitics and the markets. Yet it is anything but a new experience for speculative markets to disregard latent financial fragilities. And we’ve witnessed in past episodes the capricious nature of market psychology. There’s something to glean from each one.
Cheap credit–newly issued money that can be borrowed at low rates of interest–is presented as the savior of our economic system, but in reality, it’s why our system is broken. The conventional economic pitch goes like this: cheap credit enables consumers to buy more goods and services (and since the system needs growth or it implodes, that’s good)……The first thing we observe is those closest to the central bank credit spigot get the lowest rates and nearly unlimited lines of credit. J.Q. Citizen may be thrilled to get a 4% annual-rate mortgage, but the mega-millionaire closer to the credit spigot can borrow 10 times as much as J.Q. can, and at half the rate of interest.
The eastern part of Galicia had belonged to Poland since the fourteenth century, but became Austrian at the first Polish partition in 1772, and it was returned to Poland in 1918. It is important to realize all this in order to understand Mises’s cultural as well as psychological upbringing, and the roots of his life-philosophy. His Jewish roots, his Polish culture, his Austrian political frame and allegiance are all intertwined. Variety was the keynote of his background, and by the time he was twelve years old, he knew the Germanic, the Latin, the Cyrillic, the Greek, and the Hebraic script. As to languages, he spoke German, Polish, and French, and understood Ukrainian. The year he was born his grandfather — head of the Israeli Cult Community — was ennobled with the title Edler, which means The Noble, a distinction not so rare for Jews in the Austro-Hungarian Empire. His father, a very well-to-do railroad enterpriser, made sure Ludwig got the very best classical education…..
There’s no point in wasting time over the obvious: that America has bombed, directly or indirectly, five of the seven nations on Trump’s banned list. Sudan just escapes, but the US blew a packed Iranian passenger airliner out of the sky in 1988 and has raised no objections to Israel’s bombing of Iranian personnel in Syria. So that makes six. There’s nothing to be gained by reiterating that the four countries whose citizens participated in the international crimes against humanity of 9/11 – Saudi Arabia, Egypt, the Emirates and Lebanon – do not feature on the list. For the Saudis must be loved, cosseted, fawned over, approved, even when they chop off heads and when their citizens funnel cash to the murderers of Isis. Egypt is ruled by Trump’s “fantastic guy” anti-‘terrorist’ president al-Sisi. The glisteningly wealthy Emirates won’t be touched. Nor will Lebanon, although its tens of thousands of dual-national Syrians may have a tough time in the future.
That would send NATO a message. It would let them know that Trump will no longer honor the blank check that the NATO treaty handed over to Western European military commanders. I think this would finish NATO. I don’t think anyone running for President in 2020 would recommit to backing up NATO, no matter what. The treaty was made in 1949, the year that the USSR exploded its first nuclear weapon. The USSR is long gone. The nuclear weapons are not. The best way to avoid nuclear war is for the President of the United States to tell NATO that America’s blank check is hereby revoked. As Commander-in-Chief, President Trump can let NATO know that the blank check is void.