Back Stories for the Week
TOPICS: ·National Security Threats·The Fed·Traditional Technical Market Research·U S Dollar
RELEVANCE: ·bad·good·multi·not sure
Authored by Chris Martenson via PeakProsperity.com, The Federal Reserve is now directly monetizing US federal debt. Sure, it’s not admitting to this. And it’s using several technical jinks and jives to offer a pretense that things are otherwise. But it’s not terribly difficult to predict what’s going to happen next: the Federal Reserve will drop the secrecy and start buying US debt openly. At a time, mind you, when […]
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The Federal Reserve is now directly monetizing US federal debt.
But it’s not terribly difficult to predict what’s going to happen next: the Federal Reserve will drop the secrecy and start buying US debt openly.
At a time, mind you, when US fiscal deficits are exploding and foreign buyers are heading for the exits.
How It’s Supposed to Work
Here’s how it’s supposed to work when the US government issues new debt:
If the US Treasury needs to raise new funds, it announces an upcoming auction of US Treasury bills/notes/bonds.
A date for the auction is set.
Various participants bid for those bills/notes/bonds (including ‘regular folks’ like you and me if we’re using the government’s Treasury Direct program).
At a later date, the Fed can buy those US Treasury bills/notes/bonds. The various holders of that debt submit offers to sell, and the Fed (presumably) selects the best offers on the best terms.
The Federal Reserve, under no conditions, buys Treasury paper directly. The Federal Reserve’s own website still maintains that this is the case:
There are two important claims plus one assertion I’ve highlighted in there, each in a different color:
Yellow: Treasury securities may “only be bought and sold in the open market.”
Blue: doing otherwise might compromise the independence of the Fed.
Purple: the Fed mostly buys “old” securities.
So according to the Fed: it’s independent, it follows the rules set forth in the Federal Reserve Act of 1913, and it mostly buys “old” Treasury paper that the market has already properly priced in a free and fair system.
But that’s not really what’s going on…
What’s Actually Happening
It’s now clear that something spooked the Fed badly in September.
We still don’t know what exactly went on, but the Repo market blew up. While this was a clear sign that something big was amiss, the Fed has not yet explained what the cause was, who needed to be bailed out, or why.
And it’s not going to anytime soon. It recently announced that its records on the matter are going to be sealed for at least two years.
While the Fed is ostensibly a public institution, and yes transparency should be extremely important — at least to maintain the appearance that it’s being careful with public monies — the Fed is prioritizing secrecy here.
Whatever’s going on has been serious enough for the Fed to openly lie. And not just in regards to the repo market.
“It’s not QE!” Fed chair Jerome Powell recently declared upon relaunching an asset purchase program that has already expanded the Fed’s balance sheet by hundreds of billion of dollars.
Given all the secrecy, obfuscation and lies, the Fed is now in clear violation of the spirit of the Federal Reserve Act of 1913.
Recall from above that the Fed “only buys Treasury securities in the open market”, meaning from other banks and financial institutions. That’s how the Federal Reserve Act of 1913 is written:
Let’s walk through an example that connects the dots here.
Just know that this is but a single example out of many.
Data point #1
Each and every Treasury offering comes with an identifying number called a “CUSIP” number (referring to the Committee on Uniform Securities Identification Procedures).
On October 31st, 2019 the Treasury Department held an auction for a series of 8-week T-bills with the CUSIP number 912796WL9.
November 5th, 2019 those T-bills were “issued”, meaning that was the actual date that they were to become active. Before that date, nobody had possession of them and nobody was earning interest on them:
It’s worth pointing out that no money changes hands on auction day (Oct 31 in this instance). It only does when the bills are issued (Nov 5 in this case).
Data point #2
Looking at the Federal Reserve’s website, we can see what they bought and when (but not for how much).
There we find that very same T-bill with the CUSIP 912796WL9 showing up as having been purchased by the Fed Nov 5, 2019 — the very date of its issuance:
The Fed bought more than $4 billion of this CUSIP. If these T-bills were out in the “open market” they weren’t there for long. At most, less than a day before the Fed scooped them up.
Does it really matter if a big bank sits ever-so-briefly between the Fed and the Treasury debt it buys?
Maybe to a trial lawyer seeking to get a guilty client off on a technicality. But this certainly doesn’t qualify as “old” paper.
This is the Fed buying huge amounts of very freshly minted – not even a day old! – government paper using the power of its electronic printing press.
What’s the practical difference between the Fed buying this directly from the US government and buying it same day it issues from a big bank?
Virtually nothing — except the big bank probably took home a very hefty paycheck for conducting this “service” as a middleman. Later JP Morgan, et al., can report magnificent “profits” from their ”trading activities”, which amounted to little more than calling the Fed the week before and asking how many $billions of these Treasury bills they wanted.
Just a temporary middleman who, if only skimming a single basis point (1/100 of a percent), would have gotten $400,000 in “trading profits” for holding onto a big pile of government paper for less than a single day, with a guaranteed buyer with infinitely deep pockets already lined up. Great work if you can get it, eh?
But not very fair. Nor even remotely in line with the spirit of the Federal Reserve Act. Or what capital markets are supposed to be about. Or the Fed’s actual mandate.
The summary here is this: the Fed is buying US government paper on the day it’s issued.
The Fed is directly monetizing US debt.
MMT is Already Here!
The debate over whether or not MMT (“Modern Monetary Theory” see here for background and discussion) should or should not happen is now moot.
It’s already here.
Over the past year, the US government has spent ~ $1.3 trillion more than it took in. To cover the shortfall, it had to raid the Social Security piggy bank for (another) $276 billion and tap the “markets” for another $1.1 trillion.
Does it matter if the US government issues it out of thin air, or if the Fed creates the same cash money out of thin air? Does it really matter in the slightest what the precise mechanisms is if the results are identical?
I would argue they don’t matter in the slightest.
All that remains now is to argue over what to spend all that fresh cash on.
Sure, some might like to debate whether we should be doing this or not. But the reality is: there’s little point in arguing over whether something should happen if it’s already happening.
Now all that’s left to debate is how much larger or smaller the Fed’s government debt monetization efforts might be.
Further, we might debate exactly what the government is spending all that money on. Or what the repercussions will be of the dangerous monetary road we’re now careening down.
But I’m not aware of any particular representative of mine even being aware of the situation, let alone concerned.
This is a very serious and extremely important conversation to have. But it’s not being had at all.
During Jay Powell’s last news conference, the Chairman of the Federal Reserve (and defender and champion of the largest wealth transfer to the rich in world history) was not asked a single question on this topic.
Nobody asked anything about the extreme and accelerating wealth and income gaps, both direct outcomes of the Fed’s policies.
Nobody expressed concern about the Fed’s secretive actions, its direct debt monetization, or its violation of the Federal Reserve Act.
The US media is toothless. I assume today’s journalists are simply too afraid of losing their jobs to speak truth to power, and have slipped into quiet acceptance of a mere stenographer’s role.
“Yes, Mr. Powell, you’ve reversed course and have started lowering interest rates again, and have resumed growing the Fed’s balance sheet via new QE. Oh yes, you’re right, it’s ‘not QE’. How silly of me. But despite those emergency measures, the economy is ‘in a good place’ and we all should be super optimistic? Got it. Yes, sir — very inspiring. Anything else?”
You’d think, given the enormous troubles that tend to follow central bank debt monetization that there’d be some curiosity on the topic, but no. No pushback from the media or Congress, direct or tangential.
Meanwhile the Fed has tossed a mind-boggling $285 billion of permanent new money into the “markets” over the past couple of months, and is conducting daily operations that put additional tens of billions of dollars of short-term money into the markets as well.
All while claiming everything is fine.
Sure doesn’t feel that way, does it?
In Part 2: Why The Risk Of A Correction Is So High Right Now, we demonstrate why the faith today’s investors are placing in the Fed’s ability to push prices ever-higher is dangerously overextended.
Stock gains have already zoomed way ahead of the Fed’s recent excess liquidity measures, and it will not take much to topple them.
The thirtieth anniversary of the fall of the Iron Curtain coincides with a popular resurgence of communism and a drift into more socialism. A collective amnesia sees a return of the Soviet Union’s failed policies in a Marxist Labour party in Britain. Increasing socialism is expressed by US Democrats contending for the primaries. This article explains the basic economic fallacies common to both. It clarifies why state ownership of […]
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The thirtieth anniversary of the fall of the Iron Curtain coincides with a popular resurgence of communism and a drift into more socialism. A collective amnesia sees a return of the Soviet Union’s failed policies in a Marxist Labour party in Britain. Increasing socialism is expressed by US Democrats contending for the primaries.
This article explains the basic economic fallacies common to both. It clarifies why state ownership of the means of production does not resolve the problem of economic calculation in a socialist economy. It also explains the errors in socialistic condemnation of free markets.
And finally, it points out that very few of us realise we are more socialist than we think when we endorse government control of possibly our most important common commodity, which is our everyday money. But there is a simple solution: stop accommodating crony capitalists.
This week saw the thirtieth anniversary of the breeching of the Berlin Wall. The elapse of time means most people younger than their mid-forties fail to understand what it was all about. Indeed, many folk older than that will have forgotten that the reason the Berlin Wall fell was because the communist states in eastern Europe and the old Soviet Union were no longer able to suppress their people. And the people were suppressed because suppression of personal freedom is central to communism, the creed that says people must make sacrifices for the common good. Besides the passage of time, the uncomfortable part which makes people want to forget its horrors is that communism is the both the basis and the final destination of modern socialism.
Ever since Lenin and his Bolsheviks obtained power, they forced communism on the Russian population. People lost the rights to their property and their personal freedom, both of which became the property of the state. They were commanded by planners, administrators and bureaucrats as to what they could and could not do. In the absence of personal incentives, the Soviet economy went downhill rapidly, and the bureaucrats faced with allocating economic resources ended up creating surpluses of unusable and unwanted goods, and shortages of what were wanted. In their efforts to correct this mess, the people who communism claimed to free from the yoke of the bourgeoisie were blamed and accused of insubordination and either shot or deported to the gulags. In the USSR alone it is estimated that between twenty and sixty million people died of starvation, in the gulags, or were executed.
People lived in constant fear of the secret police and their informants. It was hardly surprising that the fall of the Berlin Wall was a scene of much rejoicing and the visual manifestation of freedom regained.
The reason we should remember how Marxist and Stalinist communism affected ordinary people is they are being offered a choice to vote for it again. In the UK, hard-line Marxist-Leninists control the main opposition party, and from what one can see from the Eastern side of the Atlantic, various Democratic Party contenders for the presidency are offering a softer version of the same socialist creed to their supporters.
Some observers claim our collective amnesia on such important matters is due to a cycle of human behaviour, but more likely it is due to an astonishing level of public ignorance, not helped by the poor quality of debate at the political level. The reason Theresa May bodged her general election in 2017 is she did not address the destructive delusions of the Labour Party’s Marxists, which can only be explained by ignorance of why Marxism is so economically disastrous. She will have either forgotten the real reason for those joyous scenes in Berlin thirty years ago or failed to understand the message. While being a paid-up Tory notionally in favour of free markets, in common with many other Tory MPs her politics appear to be those of a controlling Christian socialist, in common with the political mainstream in the EU.
She was not alone, and the entire British political establishment, like a pale imitation of the politburo, had become a managerial class believing more in itself than in democratic accountability. This, not trade, is the central issue behind Brexit. And it is still true of America’s deep state, despite President Trump’s democratic mandate and his attempts to change it. It is a condition that pertains in any government that claims the sacrifice of personal freedom is in the interest of the common good.
The problem with Marx and his half-baked ideas
At its bedrock modern socialism is based on Marxism, which despite all evidence of its viciousness retains widespread support. Not only do university students everywhere have a tendency to support fervent socialism, but in the UK, pollsters estimate a substantial majority of university lecturers prefer a Marxist Labour party compared with the Conservatives. It’s no wonder that for many decades the Soviet KGB so effectively recruited their useful idiots and spies from the UK’s top universities.
It seems extraordinary that in defiance of history and the advance of philosophical knowledge anyone should be so delusional to believe in the politics of Karl Marx, the founder of modern communism and the basis of modern socialism. More than anyone, through wrong-headed ideas he bears responsibility, indirectly admittedly, for the deaths of an estimated one hundred million people in the last century, and at one time the severe suppression though economic and social servitude of fully one third of the world’s population. And if you also include those who have suffered under the yoke of Marxist-inspired modern socialism, the philosophy that says the state is more important than the individual, you could argue nearly the whole world is under Marx’s destructive influence today.
His philosophical stance was comprehensively set out in one of his earlier works, A Contribution to the Critique of Political Economy, published in 1859. The fundamental principle behind Marxism is stated early in the preface, where he defines his deduction from the Hegelian dialectic: “It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.” In other words, social organisation takes precedence over the individual, and it therefore follows that the individual is subordinate to the social organisation.
Marx argued that it followed from this logic that the classes which formed on the back of material interests force members of those classes to think and act in their narrow class interests and not independently in their personal interest, there being no such thing. For Marx, ideologies evolved on class lines, where the interests of the minority, the bourgeoisie, dominated. And as the bourgeoisie profits from the labour of the proletariat, it is in their interest to keep the proletariat suppressed. The accumulation of wealth in the hands of the bourgeoisie was entirely due to the exploitation of the proletariat.
Marx’s world was a black and white one of haves and have-nots, the exploiters and the exploited. As Emmanuel Kant (1724-1804) put it, “If one man has more than necessary, another man has less”. The only way this apparent wrong could be righted would be through the collapse of the capitalist system, which led to these imbalances in the first place. The final solution was a classless society of the proletariat, handing them the means of production administered on their behalf by a revolutionary government. Headed, of course, by Marx himself.
Marxian dogma was and still is riddled with intellectually derived half-baked ideas. Partly, this was due to the state of human knowledge when Marx derived his scheme for world domination, which formed the basis of any dialectical debate. Darwin contemporaneously proposed his evolutionary theory, that Man had evolved from animals and was not a species apart favoured by God. This played neatly into Marxian philosophy and to this day Marxists are atheistic.
It was also before the development of psychology by Sigmund Freud and Josef Breuer. It was previously thought that all human brains were the same, just as we have other internal organs with specific functions within the body. The concept, that humans differed in their intelligence, their acuity, while commonly observed was unexplained by medical science. Even mental illness was believed to be a disorder emanating from the body and not the brain and suicides were routinely dissected to establish which organ was the cause. To Marx, drawing on Hegel’s dialectical approach, it could have seemed logical that we are all the same, and that the obvious social differences are down to our upbringing in one or the other class.
He never defined class, which is too slippery a concept to pin down. Instead, he separated humanity into the exploited majority, the proletariat, and the minority that controls the proletariat, the bourgeoisie. He expected the proletariat to eventually rebel, forcing the bourgeoisie into the lower class, to be ruled over by a socialist administration. He believed that this would happen, because under capitalism, he argued, the impoverishment of the workers was inevitable, leading to a workers’ revolution.
Yet, at the same time, he believed in the iron law of wages, most associated with David Ricardo. According to this law, wages were set by the availability of labour and the payments required to subsist. Higher wages than this basic level would lead to an increase in the availability of labour over time, while lower wages would reduce the labour pool. In this way, the cost of labour was expected to rebalance always at a subsistence level. Labour was regarded as a simple commodity, whose supply was regulated by its demand. However, Marx’s belief in the iron law of wages is at odds with his supposition that the proletariat would be gradually impoverished by the bourgeoisie. You cannot subscribe to both.
Subsequent improvements in economic knowledge and empirical evidence have disproved both theories anyway. Marx’s approach was to arrogantly assume workers are unthinking work-slaves, which they are not. They are individuals with individual aspirations and as their living standards improve those aspirations soar. And as Freud and Breuer showed later, they have brains separate from their physicality, with individual mental abilities that govern their needs and wants. Marx even despised the trade unions of the day, arguing that striking for higher wages was colluding with members of the bourgeoisie by negotiating with them, when instead they should be seeking their destruction.
His thinking had impatiently evolved from the proposition that the destruction of the bourgeoise class would occur naturally in time, to encouraging a violent class revolution to bring it about. Workers going on strike compromised both alternatives, and his personal ambitions of world leadership were threatened.
In some respects, modern ignorance over Marxism is worse than Marx’s own. Classical economics have evolved, thanks mainly to Carl Menger and his followers in the Austrian school, and today we have a greater understanding of the role of the consumer, not just as an end-user but also as an unconscious setter of prices and regulator of demand. And lest we forget, we have the certain knowledge not only that communism fails, but it leads to the impoverishment of the masses.
The economic issues, from which all others flow, need to be laid bare. Why communism of any sort fails and whether the same reasons for its failure apply to the Christian form of socialism predominant in the West are the two principal issues facing the electorates in the UK today and the US next year.
The basis of economic calculation
Fundamental to both Marxism and other forms of socialism is the theory that prices are set by costs, particularly of labour, and that the productive output of labour is an even quantity. Only then can it be assumed we are all equal. In reality, people always value some goods more than others, requiring higher pay to attract the labour required with its specific skills to provide them. The communists would have you believe that if the state deems it necessary, it can command greater quantities of evenly paid, evenly skilled human resources to that end. Alternatively, it can command the consumer not to buy goods in greater than expected demand by the expedient of rationing.
A labour theory of value is also the basis behind less obvious forms of socialism. It is the working assumption behind the provision of all government services and also professed to be the case by businessmen awarded government contracts and subsidies. Therefore, the pricing of services monopolised by governments and their allied providers is almost always supplied on a cost basis.
Consequently, governments and their agencies are poor providers of goods and services because they have no incentive to contain or reduce costs. Why the cost basis of prices is not the principal price determinant was proved by Carl Menger in the 1870s. Instead, he clearly demonstrated that prices are set by consumers exercising personal choice. This has always been resisted by statists, because it denies the possibility that prices can be calculated with certainty in advance.
A consumer’s preferences are the central issue. It is not just a question of price, but of priorities, desires and the satisfaction of a general uneasiness that drive consumer demand for goods and services. These are factors that continually change. Furthermore, price measured in monetary terms is a secondary issue, in this context being no more than a yardstick for comparison to facilitate consumer choices. The fact that consumers choose between goods tells us that goods are in effect priced against each other, with money being the temporary agent not only for transforming a producer’s output in the form of profits or salary into the items he or she wishes to consume, but for facilitating the choice between them as well.
When the true role of money is understood to be that of an agent, firstly as a facilitator for the division of labour and then of choice between consumer items, the impossibility of socialism to calculate prices becomes more obvious, even for the few state planners who understand that the cost basis cannot apply.
It takes great skill, experience and knowledge of specialist markets for a focused entrepreneur to foretell demand in his particular niche profitably. He risks his capital and commits his valuable time to supplying profitably his anticipation of market demand. Alternatively, a state administrator or bureaucrat is always unsuited to taking risks with state resources and cannot act in an entrepreneurial fashion. He has none of the qualifications necessary to get it right for one product, let alone the many the production of which he may be required to oversee.
Socialists counter this proposition by saying there is no reason the successful businessman can perform the same function for the state. In his concluding notes to The General Theory, even Keynes proposed the state should replace the saver as the provider of capital for the businessman. The businessman becomes beholden to the state, with his profit “obtained much cheaper than at present”. Clearly, the principal incentive which drives all successful entrepreneurs ends up under the control of the state, to be chipped away by politicians seeking favour from a proletariat envious of an entrepreneur’s success.
The greater the degree of socialism, the less likely an entrepreneur is likely to cooperate. And when the state owns the means of production, his incentive disappears altogether. Forced into a managerial role by the threat of being dispatched to a gulag or even executed cannot change this simple fact. He becomes a functionary whose interest is pure survival in a dysfunctional state system of production. In any event, he has no basis for estimating the value of his production.
Oskar Lange, a Polish economist of the communist era, accepted the evidence that socialism was unable to calculate consumer prices and proposed that markets be permitted to do so. But where he failed was not understanding that consumer prices in a free market also determine and set the value of their factors of production, which under Lange’s proposal would remain in the possession of the state. Thus, the distribution of productive resources in a socialist state would always lead to failures in the distribution of goods.
Lange’s error is typical of current attempts to find a compromise between capitalism and socialism, a mistake that is ignored or not understood by politicians of all stripes. The vast majority of those that advocate free markets do not do so entirely. And they fail to understand that the distribution of money itself is socialised, with its supply and interest rates being managed by an organ of the state, and not free markets.
The illusion that a compromise between socialism and free markets is possible is facilitated by the adaptability of ordinary people. They don’t fight City Hall; rather they find another way of doing things. It is impossible to track how their choices are affected by economic distortions imposed upon them by the state. But it is possible to demonstrate the counterfactual: that freed from statist intervention and over-bearing regulations an economy improves living standards for everyone considerably more rapidly than a state attempting to achieve it, even with the best intentions.
The complaint against capitalism
The socialist rant against capitalism is rarely a rant against free markets, except for committed socialists arguing that as a matter of principal the state should own the means of production. Most adherents, the Christian socialists, are driven more by a naïve desire for social fairness than a commitment to socialism per se. Theirs is a valid complaint against bankers and other businessmen who enrich themselves through their influence on government or gain government protection from competition through licensing and regulation. Instead of providing the goods and services demanded by consumers, these establishment capitalists prioritise their relationship with the state as a means of protecting and maximising their profits.
An apt description of this arrangement between the state and big business is crony capitalism. So long as there is a socialising political class, there will be businessmen seeking their share of the distributed cake. When a government hands out regional employment subsidies, a businessman will build a factory in a location to maximise the subsidy. Proximity to markets and other commercial factors become secondary considerations. Once the subsidised investment is made, he can then blackmail future politicians for more subsidies and government contracts by threatening to lay off workers if they don’t materialise. More subtly, he can advise politicians on industrial policy and regulation with the hidden objective of disadvantaging smaller competitors.
As the saying goes, an honest politician is one who, when he is bought, stays bought. And as long as the state is involved, a businessman can collude with his competitors to rig markets without fear of anti-trust litigation. In truth, the only valid complaint about capitalism is not about free markets, but about their corruption facilitated by the state.
The greatest corruption of free markets is through the socialisation of money. In a genuine free market, it is up to individual actors to decide their medium of exchange, and it is for this reason money in metallic form emerged to replace barter. Instead, since the first half of the twentieth century governments have taken for themselves the monopoly of money. Besides instances in war time, the first step in this global direction was when dollar convertibility into gold was suspended for Americans in 1933. Today, central banks abuse this monopoly by issuing it in whatever quantities they can get away with. Without their citizens’ knowledge or understanding central banks transfer wealth from them to itself, its government and their favoured cronies.
Monetary inflation is the precondition for financing the advancement of socialism. The inflationary argument is socialistic to the core, increasing the supply of money for the alleged common benefit while keeping quiet about the wealth transfer effect. The euthanasia of ordinary savers and their replacement as funding for investment by the state was a wish expressed by Keynes in his General Theory.[v] But it is pure socialism, already achieved through the destruction of personal savings, notably in America, the UK, most of Europe and by the damage through interest rate suppression to collective savings schemes such as pension funds.
And when the general level of prices rises, which is actually the manifestation of a currency’s loss of purchasing power, socialising governments justify their actions saying it stimulates us to consume. If prices rise so quickly as to expose this specious argument to the lowest intellects, it is then blamed on greedy profit-seeking capitalists.
Banks are licensed to create credit, which is simply another source of money, out of thin air, making bankers rich as a class and further stoking the public envy upon which socialism thrives. Despite this, the entire bureaucratic and administrative class of central planners have been taught that the socialisation of money is fully justified to address the shortfalls of capitalism, and by implication free markets. We are informed by its description that an uncontrollable cycle of business activity is proof that left to themselves free markets are economically destructive.
The truth is the economic destruction comes from a cycle of credit expansion emanating from the banks, augmented and encouraged by a central bank issuing base currency and suppressing interest rates. The financing of an economy is subverted by the imperative to finance government spending. Without the manipulation of money and credit and their replacement by sound money the cycle of credit and the symptoms suffered in the productive economy would simply cease.
These are problems created by socialism itself, but rarely found is the politician who fully understands it and is elected to address them. President Trump was mandated by a silent majority fed up with the federal socialising system, yet he calls for more credit creation and lower interest rates. His heart may have been in the right place, but he fails to understand that even the dollar is socialised.
The origin of the socialisation of money was born out of crony capitalism in banking, but it has been fully exploited by the socialists. Through the debasement of their currencies, it allows both Jeremy Corbyn and President Trump alike to advance their policies and proposals while concealing the hidden costs imposed on everyone.
The logical solution
The destination of socialism-lite is a continuing loss of freedom, both economic and personal. Ordinary people should count themselves lucky if the drift is contained, and more extreme versions towards communism prevented.
It is a fact of life that nearly the whole world is now socialistic to a greater or lesser degree. So ingrained is socialist redistribution that no politician can get elected on a mandate to reverse it. But a start can be made by attacking crony capitalism, which is the one justification above all others that persuades ordinary Christian democrats, the useful idiots recruited by Marxist fallacies, to abandon personal freedom in favour of a ruling state. It is the emotional justification for Marx’s division of the classes into the exploiters and the exploited, which if successfully addressed collapses the argument.
There is hope the point is understood by Britain’s current Prime Minister, when in June 2018 as Foreign Secretary he was reported at a private dinner to have said, “F--- business”, when questioned about his view of major businesses lobbying to prevent Brexit by threatening jobs and investment. It was interpreted differently by a socialistic media.
If Johnson is re-elected, and if this was not a purely Brexit-related comment, there is some hope this course of action will be undertaken. It would address the monopolistic tendencies of big business to disadvantage their smaller competitors. Small and medium size businesses generally make up a Pareto eighty per cent of any economy, so a policy of allowing them to secure the benefits of freer markets should turn out to be immensely popular. Only then can socialistic tendencies begin to be reversed, and the big prize tackled, the socialisation of money.
Summary Preface: This article compares coming stock price expectations of well informed market professionals. No technological or industry competitive insights will be discussed, only insights on securities’ market price influences. Buyer-seller negotiations over large-volume blocks of thousands of stocks each US market day produce market-maker forecasts of their likely coming price ranges, including these stocks. We rank them all based on past price performance subsequent to prior forecasts with […]
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Preface: This article compares coming stock price expectations of well informed market professionals. No technological or industry competitive insights will be discussed, only insights on securities’ market price influences.
Buyer-seller negotiations over large-volume blocks of thousands of stocks each US market day produce market-maker forecasts of their likely coming price ranges, including these stocks.
We rank them all based on past price performance subsequent to prior forecasts with balances between upside-to-downside price change proportions like those seen this day.
Rankings consider odds for profitable buys, accomplishment credibility of reaching target prices, typical size of captured gains and interim price drawdowns encountered, and holding periods required. These all contribute.
The investment thesis of this article is that an important reason for investing in any stock is its potential for portfolio wealth-building and that requires informed forecasts of its likely future price. Apple, Inc. (NASDAQ:AAPL) now scores better than all other DJIA stocks with odds-on near prior gain experiences. And it is competitive with the top 20 ranked Market-Maker near-price forecasts.
Why Read This Report?
This is an analysis of how the prices of specific securities are likely to change in the next 3-4 months, based on the way major investment organizations ("institutional investors" or "big-money") have perceived those prospects and made multi-million-dollar trade changes of holdings in their multi-billion-dollar portfolios. That rationale is explained further in my SA blog’s article “Why Read This Report?”
It is not a study of years-plus effects of economics, technology, politics, or competitive use of resources on earnings per share of securities. Such studies by others are embedded in the big-money forecasts, prompting their volume-trade transaction orders.
This is a comparison of present-day opportunities for capital gain among many related alternative choices for wealth accumulation as seen by investors with the capital and human resources sufficient to cause such price changes.
Portfolio wealth-building not an interest? Then spend your reading time elsewhere.
The price-forecaster’s foe is uncertainty. Another too-big-to-die industry leader is being seriously challenged. How quickly it can adapt to operations approaching the potential of prior attraction for investors is at this point in time uncertain. But the haze likely will clear only over many coming months, and investment decisions need actions right now.
We suggest that the best time horizons for wealth-building decisions be a few months at a time, with actions taken incrementally as the picture changes, not in long-term buy & forget strategies. Expect surprises.
Market professionals are alert to the evolving developments, supported by thousands of 24x7 worldwide employee situation-observers and competition-evaluators. They can be useful guides, not only for their employers, but for us as individual investors – in the way they influence the thinking of the market pros.
Best Stock Selection Requires Clear Comparisons
Readers familiar with our work may want to skip to the Comparing Details heading below.
This article rewards investors who choose to direct their investments of time and capital to those alternatives with the highest likelihood of successful rates of return among ones compared under identical important measures.
- What alternative choices are available?
- Which have the best trade-offs between forecast-able reward and risk?
- How big a reward is realistic to expect? Why?
- How often may price-risk disappointment occur?
- How much time and capital may disappointment involve?
- How frequently may the expected rewards be compounded?
These are questions often neither asked nor answered by many investment analysis reports. The commonplace approach is to present those aspects of one investment which may set it apart from others, but fail to make the essential decision-supporting step of comparing alternatives on an equal-measure basis.
Instead, look to demonstrated human-nature behavior of self-protection. “When the oxygen masks come down, be sure to put yours in place before attempting to help others”.
That is the perpetual work environment of investing Market-Makers [MMs] whose role is to aid buyers and sellers find a point of price balance right now in multi-million-dollar block trades. A balance which usually requires them to put a part of their own firm’s capital temporarily at the risk of changing market attitudes and prices.
They won’t do it without the oxygen of price-change protection. That insurance comes from separate hedging deals in derivative securities where the operating leverage of the limited-life legal contracts involved makes deals practical.
What must be paid for the protection, and the way it is provided tells just how far those (sufficiently) in the know realistically expect prices may go. As buyers and sellers of the "insurance," they all have real-money bets being made. Price range forecasts over time periods defined by the derivatives contract lives are involved.
Such forecasts are constantly being refined every moment investment markets are operating, and are made part of every market-day’s closing records. They provide an historical record (in subsequent market price actions) of how well the “smart money” can make useful forecasts – for specific stocks, ETFs, and indexes.
To get answers we look to the best-informed market participants – the Market-Makers [MMs]. These are the dozen to two dozen firms providing price quotations to exchanges and transaction systems as a result of their extensive 24x7 worldwide information collection systems and evaluation resources. It is a community of perhaps 100,000 employees. The largest, Goldman Sachs, employs over 35,000 full-time.
Present-day markets are driven by major investing organizations commanding multi-billion-dollar portfolios with stock contents which can only be adjusted by negotiated volume (block) trades between peers, not by “open auction” in lots of 100 shares - or less. Such big trades set and move public posted prices.
The individual investor typically is merely along for the ride. He/she needs to have a sense of where the negotiators are likely to head, price-wise.
Conventional analysis often provides superficial descriptions and little linkage between operating minutia and price forecasts. As an example here is how Yahoo Finance reports on AAPL:
Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and other Apple-branded and third-party accessories. It also provides digital content stores and streaming services; AppleCare support services; and iCloud, a cloud service, which stores music, photos, contacts, calendars, mail, documents, and others. In addition, the company offers various service, such as Apple Arcade, a game subscription service; Apple Card, a co-branded credit card; Apple News+, a subscription news and magazine service; and Apple Pay, a cashless payment service, as well as licenses its intellectual property, and provides other related services. The company serves consumers, and small and mid-sized businesses; and the education, enterprise, and government markets. It sells and delivers third-party applications for its products through the App Store, Mac App Store, and Watch App Store. The company also sells its products through its retail and online stores, and direct sales force; and third-party cellular network carriers, wholesalers, retailers, and resellers. Apple Inc. was founded in 1977 and is headquartered in Cupertino, California.
The stock price forecast data used in Figure 1 comes from the hedging actions of MMs. These are the stocks most used by institutional investors.
They are substantial capitalization stocks which institutional investment organizations’ researchers and portfolio managers watch closely, as do individual investors. Note columns [U] and [V] of Figure 3 when it is presented.
Most individual investors in their personal transactions will not impact the market to the same extent as the institutions. But we do share in the benefits (and risks) of the institutions’ presence in securities’ market quotes.
Figure 1 compares how the MMs translate their big-money clients’ appetites into upside-to-downside price change prospects, and what that has meant in the past regarding price drawdown exposure on the way to the upside target.
This map locates securities at the intersection of prospective price gains (green horizontal scale) and potential price drawdowns (red vertical scale) based on forecasts from market-maker hedging behavior to protect their necessary endangerment of firm capital as they enable volume trades. Desirable conditions are located down and to the right.
Our particular interest is in AAPL at location , but also McDonald’s Corporation (NYSE:MCD) at , Microsoft Corporation (MSFT) at , Johnson & Johnson (JNJ) at , JPMorgan Chase & Co. (JPM) at  and Boeing Company (BA) at . Location  encloses the market index SPDR S&P 500 Trust ETF (SPY) as well as AAPL.
The severe limits of the Figure 1 tradeoff proposition deny much of any reasoning to answer the question of WHY we see what we do. To further enrich the understanding of recent trends in MM forecasts for AAPL, consider Figure 2:
The vertical lines in this picture are not actual past market prices like those seen in “technical analysis charts”. Instead, they are forecasts of likely future ranges of market stock prices implied as probable in coming weeks and near months. The heavy dot in each vertical is the market close price on the day of the forecast. It splits the forecast range into upside and downside price change prospects.
The imbalances between up and down potentials are what are useful in estimating both coming price direction and extent of change. Their proportions are measured by the Range Index [RI]. Its measurement quantity is the percentage of the whole forecast range which lies below the current market quote. A 20 RI has 4 times as much upside prospect (the other 80%) as down. A 33 RI has only 2 times as much upside potential as downside.
Segregating past MM implied forecasts by their RIs produces clues to how market prices have reacted to the conditions seen by the MM community at various points in time. We use a 5-year sliding window to count how many prior forecasts (the sample size) have been like the current Range Index.
The small “thumbnail” picture in Figure 2 shows how these RIs have been distributed daily over the past 5 years. AAPL’s current level of a 43 RI is approaching equal prospects for upside and downside price changes in coming weeks and months.
So, why highlight AAPL as a great opportunity?
The essence of valuation is in comparison, which requires that the compared measures be as close to identical as possible. To that end, we place all of our valuations in a carefully defined set of measures, and describe them in as parallel set of comparisons as is possible.
To do so often presents what many readers recognize as text and ideas they have encountered before, as they have in our just-published comparison between Microsoft and Boeing. The use of the heading for this section of the article as an accelerant to reading provides for experienced readers an economy of time and effort, while leaving for the newly-initiated the opportunity for an important introduction.
What is important to us in this analysis is how big a price gain is in prospect, column [E], and how likely is today’s RI forecast to produce a profit [H] as a proportion of the [L] sample of such forecasts. AAPL’s loss-free experience is a stand-out in column [H].
That combination result appears in the [ I ] %payoff which includes loser prior forecasts as well as the percentage gains of winners. The size of [ I ] relative to [E] is a measure of [E]’s credibility in [N]. Again, AAPL’s performance (at this level of its RI) is an advantage in this element of the investing contest for commitment of portfolio capital.
Time required [J] to accomplish the payoff is another important dimension for any investment mission. The retirement, tuition, or health emergency clock won’t patiently wait for “long-term-trend” investments to be “sure” (like Eastman Kodak (KODK), General Motors (GM), General Electric (GE), or others) of their “passive investment” buy&hold strategy results. Compound Annual Gain Rates [CAGR] are the essential measures [K]. Figure 3’s rows are ranked by the historical results (of today’s RI) statistic.
One additional complication of being time-efficient in an investment strategy is that the score-keeping can’t be easily sliced up into uniform time periods. That is not what happens to holdings in an active investment strategy. Gains (and losses) occur in irregular lumps of time, and we need to evaluate likely prospects in the way they may be accumulated.
What is done in proper financial analysis of any capital commitment is to anticipate the RATE of gain or cost in units of change per time of involvement. The most commonly used measure is basis points per day, where a basis point is 1/100th of a percent.
That’s a tiny unit, but is what works best. Put together and maintained each day for a year, 19 of them would double your investment. They can be powerful.
In Figure 3, we use the Odds of gain [H] as a weight for the average prior payoffs [I], and take the complement of [H] (100 – H) as a weight for the risk prospect [F]. Put together as [O] + [P] in [Q], we have an odds-weighted net outcome of each row’s prior MM RI forecast sample [L]. Then by converting those [Q] nets into bp/day in [R] we have a guide to making investment selection decisions across a broader array of alternatives.
Using [R] as an integrated measure of wealth-building desirability places AAPL in first place by a wide margin among most other Dow Jones Index stocks. Its 26.5 bp/day score is far above what the most widely of interest stock in the group, Microsoft Corporation offers, 12.1. The market index ETF, SPY, at this time produces a -5 bp/d prospect.
Part of AAPL’s appeal comes from its high Realized Payoffs from prior forecasts at the Range Index of 42. The payoff experiences of most stocks are not linear to their Range Index values, and do not have highly uniform characteristics. A look back at the Figure 2 small-picture of AAPL’s Range Index distribution over the past 5 years is revealing.
It shows that AAPL’s RI frequency peaks at around 30, typical of many stocks, and rarely gets above 50. What happens between its now 42 and those few remaining higher RIs is rising prices, often (here usually) reaching the top-of-forecast ranges of those 42 RI forecasts. Consider it momentum, perhaps. But it has occurred in all 29 of the AAPL cases of prior 42 RIs. And the %Payoffs actually achieved, on average, in the 29 cases was higher (+10.6%) than the forecasted average of +9%.
But the nature of momentum plays reinforces the reality of their temporary nature. Thus, once a sell target is achieved, the position should be liquidated.
Winning all 29 of the prior RI 42 forecasts places its Realized Payoff average at +10.6%, better than most others. When that Win Odds ratio of 100 no degredation occurs and the odds-weighted net of +10.6% is well above that of SPY, at -0.5%. Their differences in CAGRs of +89 and +7% without odds weighting are significant.
AAPL now competes effectively in the broad population of MM forecasts for 2700 stocks, ETFs and market indexes. Its 26.5 bp/day falls only slightly short of the best-20 ranked of that large set of securities which averages 30 bp/day.
Within the DJ stocks a comparison of AAPL on the basis of its current RI forecast odds of profitable outcome and the prior average size of those outcomes is dramatic. Please see Figure 4. Again, as in Figure 1, the favorable directions of the map are down and to the right.
The map includes SPY as a “market index average” at . AAPL is a clear-cut favorite at its current reward-risk balance among the Win Odds and net Payoffs of all the DJIA Index stocks at their current reward~risk expectations.
Nothing requires market experiences of the past to be repeated, but they form an auditable prices record to be referenced. Referenced in the same way, regardless of the varied underlying specifics of the corporate competitions going on. What matters on the portfolio scorecard is told by the ongoing aggregate prices of what is, and has been, held.
Apple Inc. is an attractive near-term capital-gain buy with a realistic +9% upside target attainable in as little time as eight to ten weeks. It may prove to be a better interim speculative holding vehicle than any other DJ stock or the market index ETF SPY in the next 2-3 months.
There are a number of better-ranked prospects in our MM forecast population than any in this group at present. For additional information check my SA blog.
Disclaimer: Peter Way and generations of the Way Family are long-term providers of perspective information, earlier helping professional investors and now individual investors, discriminate between wealth-building opportunities in individual stocks and ETFs. We do not manage money for others outside of the family but do provide pro bono consulting for a limited number of not-for-profit organizations.
We firmly believe investors need to maintain skin in their game by actively initiating commitment choices of capital and time investments in their personal portfolios. So, our information presents for D-I-Y investor guidance what the arguably best-informed professional investors are thinking. Their insights, revealed through their own self-protective hedging actions, tell what they believe is most likely to happen to the prices of specific issues in coming weeks and months. Evidences of how such prior forecasts have worked out are routinely provided in the SA blog of my name.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Donald Trump’s long-time adviser, Roger Stone, convicted on seven charges, including witness tamperingNovember 15, 2019 · · Topic: National Security Threats · Relevance: bad
Roger Stone officially left Donald Trump’s campaign in 2015, but stayed around as an adviser of sorts. President Donald Trump’s former adviser, Roger Stone, has been convicted on seven charges including obstruction, witness tampering and lying to the US Congress. Roger Stone was convicted on one count of obstruction, one count of witness tampering and five counts of lying to Congress Stone worked on Donald Trump’s presidential campaign in […]
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President Donald Trump's former adviser, Roger Stone, has been convicted on seven charges including obstruction, witness tampering and lying to the US Congress.
- Roger Stone was convicted on one count of obstruction, one count of witness tampering and five counts of lying to Congress
- Stone worked on Donald Trump's presidential campaign in 2015 and continued as an adviser for some time after that
- Mr Trump said Stone's conviction was an example of an unprecedented "double standard" because his political foes have not been convicted
During the trial, prosecutors pressed their case that Stone lied to lawmakers about reaching out to WikiLeaks — the website that disclosed many hacked Democratic emails ahead of the 2016 US election that proved embarrassing to Democratic opponent Hillary Clinton.
They said he did so to protect Mr Trump from looking bad.
The verdict, in a trial arising from former special counsel Robert Mueller's investigation that detailed extensive Russian interference in that election renews scrutiny on Mr Trump's actions as a candidate, even as he endures an impeachment inquiry that threatens his presidency.
When the verdict was read in the Federal Court and was pronounced guilty, the 67-year-old faced the jury of nine women and three men and showed no outward signs of emotion.
Mr Trump fumed after the conviction of Stone, a long-time friend of his who was once described by then-head of the Democratic National Committee Terry McAuliffe as a "dirty trickster".
"So they now convict Roger Stone of lying and want to jail him for many years to come," Mr Trump wrote on Twitter, asking why his adversaries, including Ms Clinton and Mr Mueller, had not faced the same fate.
"A double standard like never seen before in the history of our Country?" he wrote.
US District Judge Amy Berman Jackson set a sentencing date of February 6 and rejected a prosecution bid to have Stone jailed until then.
Six of the criminal counts each carry a maximum sentence of five years in prison and the seventh carries a maximum term of 20 years. However, as a first-time non-violent offender Stone is likely to get far less time behind bars.
Stone was one of several former Trump aides to have been charged in Mr Mueller's investigation and one of only two who went to trial rather than plead guilty.
The other was former campaign chairman Paul Manafort, Stone's one-time business partner in a lobbying firm, who was convicted by a jury last year in Virginia of tax and bank fraud and is serving a prison sentence of seven-and-a-half years.
Stone, who has labelled himself an "agent provocateur" and famously has the face of former president Richard Nixon tattooed between his shoulders, was charged with obstructing an investigation, witness tampering and lying to the US House of Representatives' Intelligence Committee five times during its investigation into Russian election interference.
That panel is now leading the impeachment inquiry.
'A good day for the rule of law'
The chair of the Intelligence Committee, Democrat Adam Schiff, labelled the conviction "a good day for the rule of law".
Chuck Schumer, the top Senate Democrat, said Stone's conviction "sends a powerful and timely message to President Trump and all House and Senate witnesses — past, present, and future — that lying to Congress, witness tampering, and obstruction of Congress are crimes and those who commit crimes do so at their own peril".
Former Trump campaign manager Corey Lewandowski mocked Stone after the verdict, writing on Twitter: "Reunited and it feels so go (sic). Stone and Manafort to re-open new 'consulting' firm behind bars."
Stone and his lawyers, who remain under a court-imposed gag order, had no immediate comment.
Prosecutors also did not comment.
Opening statements in the colourful trial came on November 6. The trial featured references to the film The Godfather Part II, an impression of Senator Bernie Sanders by a prosecution witness, and testimony by political heavyweights, including former Trump campaign boss Steve Bannon and former deputy campaign chairman Rick Gates.
Those witnesses said they believed Stone had inside information about when WikiLeaks might release more damaging emails about Clinton.
Prosecutors accused Stone of telling politicians five different lies related to WikiLeaks and its founder Julian Assange.
Some of those lies related to the existence of texts or emails. Others pertained to Stone's conversations with Trump campaign officials and a supposed "intermediary" with WikiLeaks in August 2016, whom Stone identified to lawmakers as being comedian Randy Credico.
Authored by Ryan McMaken via The Mises Institute, One of the best side effects of the Trump presidency has been the hostility of the so-called "deep state" or "intelligence community" directed at the president. This, in turn, has led many Americans to realize that America’s powerful, un-elected secret police agencies serve an agenda all their own . Consequently, polls show one’s views of the CIA and the FBI depend […]
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One of the best side effects of the Trump presidency has been the hostility of the so-called "deep state" or "intelligence community" directed at the president.
This, in turn, has led many Americans to realize that America's powerful, un-elected secret police agencies serve an agenda all their own. Consequently, polls show one's views of the CIA and the FBI depend largely on one's ideological bent. Polls from Fox News and NBC news in recent years show that as various government bureaucracies have ratcheted up their hostility to Trump, more Democrats and Hillary Clinton voters have said they trust the CIA and the FBI.
Why the president and this deep state should be at odds has never been obvious to casual observers. Last month, however, in an article titled "Trump’s War on the ‘Deep State’ Turns Against Him," The New York Times last explained that there is indeed very real enmity between Trump and agencies such as the CIA and the FBI. The Times contends that Trump "went to war with the professional staff" of the intelligence agencies and the State Department.
The Times notes Trump has condemned "deep state bureaucrats," and claims Trump's "hostility toward government was strong from the start. He blamed the leak of the so-called Steele dossier of unverified allegations against him on intelligence agencies and never trusted their conclusion that Russia intervened in the 2016 election on his behalf."
Trump was right to be defensive, of course. But that controversy over Russia was never really about what the Russians were up to. The focus was always largely about how much Trump colluded with the Russians to win the 2016 election.
Ultimately, the evidence was so non-existent, that after a nearly-three-year investigation, Robert Mueller was unable to establish evidence of collusion between Trump and the Russians. As Glenn Greenwald has noted : "not a single American – whether with the Trump campaign or otherwise – was charged or indicted on the core question of whether there was any conspiracy or coordination with Russia over the election."
But this lack of evidence did not stop John Brennan, for example, from claiming for months that he had special secret knowledge of the matter, and that Trump — or at least many around him — were going to be indicted for colluding with the Russians.
Although Brennan is a "former" CIA director, he nonetheless clearly remains well ensconced within the world of his fellow spooks, and he is, as ABC News correspondent Terry Moran put it, "cloaked with CIA authority." Brennan even insisted that he ought to retain his security clearance, presumably forever, and even though he is accountable to no one. Such is the mindset of the deep state bureaucrat. They live in a world where they deserve special privileges just for being government employees .
Moreover, Brennan has been joined in his attacks on the president by other former high-ranking members of the deep state, including former FBI chief James Comey and former Director of National Intelligence James Clapper.
Current deep state operatives have joined the anti-Trump campaign as well. Much of the current campaign against Trump is being orchestrated by CIA agents, and according to Sen. Rand Paul on Wednesday, CIA analyst Eric Ciaramella is supplying much of the prosecution's information. Alexander Vindman, an Army officer and bureaucrat with the National Security Council, has testified to Congress in order to fuel impeachment efforts against the president as well.
Fêting Deep-State Bureaucrats as Heroes
None of this is to say the Trump administration lacks any taint of corruption. Like all presidents, it is likely the Trump administration expects favors for favors. The only thing different about Trump is he is not skilled at keeping the everyday corruption of the White House a secret.
But what is especially problematic for him is the fact that so many of his critics coming out of the bureaucratic woodwork are from intelligence agencies and from the military.
Unfortunately, in the United States there is a well established bias in favor of employees from national security agencies. Even the very language used by the media speaks to this favoritism. In the Times piece, for example, the authors speak of one of Trump's critics, one "William B. Taylor Jr., a military officer and diplomat who has served his country for 50 years." Note the implied selflessness of Taylor's work. An equally accurate description of Taylor wold be "he was employed by government agencies for fifty years" of "the taxpayers paid his bills for fifty years." Instead, we're told he "served his country." The propaganda value of the media's pro-military bias is not lost on the officers themselves, and it's no surprise Vindman, a Lt. Colonel, testified to Congress in his military uniform.
Other examples can be found every time Trump fires a lifelong bureaucrat from the upper echelons of the various "national security" agencies. For example, last summer, when Trump fired director of national intelligence Dan Coats, the Atlantic portrayed Coats as a principled idealist who "spoke truth to power. " Coats, was fired, the author tells us, because of his devotion to the truth, even if it undermined Trump's agenda. The best proof of Coats' honest determination, we're told, was the fact he "won praise from former intelligence officials."
In real life, of course, Coats is a lifelong politician and bureaucrat who prior to his dismissal had collected a government paycheck for four decades. As a politician he lobbied for gun control and supported the disastrous 2003 Iraq War. The idea that his post-Congressional career was marked by dogged devotion to the truth ought to strike one as rather fanciful.
But even The New York Times is no longer pretending that the deep state doesn't exist, and that it doesn't have its own political agenda. In fact, as noted by Robert Merry at The American Conservative, the Times article even "portray[s] the current impeachment drama as the likely denouement of a struggle between the outsider Trump and the insider administrative forces of government." This is especially significant since it is also increasingly clear that, "American foreign policy has become the almost exclusive domain of unelected bureaucrats impervious to the views of elected officials — even presidents — who may harbor outlooks different from their own." Merry concludes the past three years of investigations of the president, conducted by government bureaucrats, is "the story of entrenched government bureaucrats and a president who sought to curb their power. Or, put another way, the story of a president who sought to rein in the deep state and a deep state that sought to destroy his presidency."
Some of these deep state agents even admit their willingness to subvert the official chain of command to suit their own purposes. Vindman, for example, told the impeachment committee he actively sought to subvert Trump administration relations with the Ukrainian government not out of concerns about criminality, but to serve Vindman's own vision for American policy. In the mind of this mid-level bureaucrat, American foreign policy is set not by elected officials in Washington DC, but by the bureaucrats themselves.
Why Take the Administration's Side?
Back in 2017, the battle lines between Trump and the deep state were already being drawn, and at the time I wrote:
This isn't to say that Trump is the "good guy" here. As with the US military establishment overall, the deep state is by no means monolithic. Like any group of self-serving institutions, there are competing factions. Trump clearly has allies within some areas of the deep state, as can be reflected in Trump's attempts to massively expand military spending at the expense of the taxpayer.
But the fact he's considered an outsider in Washington by so many should suggest there are reasons to support him over the entrenched bureaucracy.
Indeed, as Greenwald pointed out in a 2017 interview, it's not a coincidence that former and current members of the deep state clearly preferred Clinton to Trump during the campaign. The deep state bureaucrats preferred the insider Clinton to the outsider trump who might actually shine some light on the deep state's lack of accountability and virtually untrammeled autonomy.
It's not difficult to understand why even a leftist like Greenwald prefers the relative transparency of the current White House.
After all, deep-state agencies face virtually no scrutiny of — and even less real opposition to — their many misdeeds. These, of course, are so numerous as to be impossible to list. But just for starters we might refer to a 2017 article by Sharyl Attkisson in The Hill titled "10 times the intel community violated the trust of US citizens, lawmakers and allies." It's a laundry list of illegal, immoral, and blatantly unconstitutional acts which well illustrate the near total impunity with which these agencies operate. Abuse of spying powers is so rampant within the FBI, for example, that even the lopsidedly pro-spying FISA court was forced to conclude the FBI routinely overstepped the bounds of legal surveillance. And, of course, without the heroic whistleblowing of Edward Snowden, the NSA would still be falsely insisting that it doesn't routinely spy on virtually all Americans, whenever and however it likes.
One might insist "but presidents lie a lot and break laws too!" That's true, but the difference between presidents and deep-state bureaucrats is well illustrated by the current impeachment controversy. It's the president who's facing indictments, public attacks, and the prospect of removal. On the other hand, the deep-state bureaucrats who oversee many counts of corruption, illegal spying, and leaking, remain safely hidden from public view. Those who routinely lie, deceive, and abuse their power often go on doing so for decades. As the years pass, they become ever more entrenched in the federal bureaucracy, invisible to the public, and — as we are now seeing — often answerable to no one.
Presidents come and go, and they often face fierce opposition from the other party or from the media. The deep state, meanwhile, it said to be full of national heroes who "serve their country" and "speak truth to power."
It should be easy to see, in the battle between the president and the deep state, which side is the most dangerous.
Authored by Paul Craig Roberts, The fake “whistleblower’s name – Eric Ciamerella – has been known for a long time, but not officially. Now it is official. Senator Rand Paul has officially released his name. Funny, isn’t it, that only the Republicans want Ciamerella to testify. The Democrats won’t hear of it. If the American people are paying attention, the Democrats are in trouble. When Russiagate fizzled out on […]
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The fake “whistleblower’s name - Eric Ciamerella - has been known for a long time, but not officially. Now it is official. Senator Rand Paul has officially released his name. Funny, isn’t it, that only the Republicans want Ciamerella to testify. The Democrats won’t hear of it.
If the American people are paying attention, the Democrats are in trouble. When Russiagate fizzled out on them, Adam Schiff (D,CA) orchestrated a fake “whistleblower” who the Democrats cannot risk putting on the stand to testify. The Democrats’ focus shifted to sleazy State Department types who could offer nothing but second or third hand hearsay followed by a hearsay second telephone call that cannot be confirmed.
Why are the Democrats out on a limb like this? They can rely on the presstitutes to cover up for them in every respect and to continue to repeat endlessly without any verification their charges against Trump, but after going through the hoax of Russiagate are the American people stupid enough to fall for the replacement hoax?
Some analysts believe that the House Democrats are using the so-called impeachment not to produce any evidence, as they have none, but to gin up hatred of Trump especially among the youth who are known to want to be included in whatever is cool. The Democrats’ project is to make hating Trump cool and to convince young people to base their vote on being cool and hating Trump.
I recently asked where are Attorney General Barr’s indictments of Obama regime officials for the attempted Russiagate coup against Trump. Some Republicans explained that Barr is waiting until closer to the election in order to get maximum impact on the voting public. If so, this is a mistake. The longer Barr waits, the longer the presstitutes and Democrats have to discredit the indictments in advance as Trump’s effort to produce a countervailing news story. The longer Barr waits, the more of Trump’s presidency is given up to the impeachment circus. The longer Barr waits, the longer Republicans have to become demoralized by the complete absence of integrity among the American media and House Democrats. It is really very disgusting for anyone not caught up in the emotion of hating Trump at all costs. Honest people with integrity don’t want to be associated with such dirty business.
There actually are a lot of Americans who have been conditioned to hate Trump so completely that they would accept his removal by a coup. They are so emotional that they are unable to think about the consequences for democracy of a coup. This is the slippery slope the Romans went down. Once an emperor was removed by a coup, every emperor could be, and often was, removed by a coup. The subsequent internal disorder contributed greatly to the fall of Rome.
Democrats could challenge Trump for the coup against Bolivian President Morales. They could challenge Trump for dismantling environmental protections and for permitting mining and energy companies to loot national monuments and wildlife refuges. They could challenge Trump for persecuting Julian Assange for practicing traditional journalism. They could challenge Trump for serving Israeli instead of American foreign policy interests. These and other issues would make a real campaign, one worthy of a democracy. Instead, we get hoax scandals.
What this tells us is that there is not enough integrity in the Democratic Party and American media for democracy to survive. When the political process consists of nothing but lies and hatred, democracy is not possible.
Why are the House Democrats and the American media destroying democracy?
Via Doug Casey’s International Man, International Man : There is a growing homeless crisis in liberal West Coast cities, including San Francisco, Portland, Seattle, and many others. People living on the street are overrunning these cities. Residents must deal with human feces, syringes, disease, and filth every day. In some areas, it’s worse than the dirtiest slums of Brazil, Kenya, and India. How did this happen? Doug Casey: Well, […]
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International Man: There is a growing homeless crisis in liberal West Coast cities, including San Francisco, Portland, Seattle, and many others. People living on the street are overrunning these cities.
Residents must deal with human feces, syringes, disease, and filth every day. In some areas, it’s worse than the dirtiest slums of Brazil, Kenya, and India.
How did this happen?
The West has always been distinguished relative to the rest of the world by its order, its cleanliness, its respect for property rights. These things are all going by the wayside. We were a middle class society with “bourgeois” values, essentially Boy Scout virtues. But these things are now held in contempt, even while the middle class is being squeezed. “Ground between the millstones of taxation and inflation,” as the phrase attributed to Lenin puts it.
Some members of the lower and middle classes are still moving up, but it’s easier to fall than to rise. Most of the homeless are whites who are headed down. We haven’t seen this since the 1930s.
This epidemic is concentrated in so-called sanctuary cities, which go out of their way to bring in people who are unwilling or unable to support themselves. But most of the newly minted “street people” aren’t migrants. They seem to mostly be failed ex-members of the middle class.
It’s quite novel to see people in camping tents on city sidewalks. It’s different from the occasional bum sleeping under newspapers on a park bench. A tent implies a measure of permanency. It stakes out a property right.
Let me pause over my use of the word “bum.”
I learned a few things when I went on a couple of adventures “riding the rails.” There were three classes of people you’d meet in and around the railyard, on the “wrong side of the tracks”: hobos, tramps, and bums. They were all “homeless people,” but that term wasn’t used. Hobos were people there for the lifestyle; often well-read, dropouts with wanderlust. Tramps were people down on their luck; they rode the rails to get someplace there might be work or where they had a friend. Bums were those with terminally bad habits: lazy, dirty, usually dishonest.
The distinction between hobos, tramps, and bums appears to have been lost. None of the new breed of street people are hobos, I promise you. They’re tramps at best, but mostly bums. But it’s now fashionable to call them “the homeless,” because the PC world likes euphemisms. Not so long ago, these people used to be called “derelicts” or “vagrants.”
Part of the Orwellian PC trend in language is that you can no longer call something what it is. You have to make up a softer and less accurate description of who or what they are. You’re not allowed to offend bums, derelicts, or vagrants. Even though they are, by their very nature, offensive.
Why is this happening? It’s no longer just the occasional lowlife just passing through, but whole communities of people who take over sections of cities and camp out on public sidewalks.
What’s caused that? The media says it’s because of alcohol, drugs, and mental problems. But as usual, the brain-dead and blow-dried media is wrong.
Where were these lowlifes before? And what’s drawn them out of the woodwork where they were apparently hiding? I question whether junkies and crazy people are the cause; I suspect they’re an effect.
In other words, it’s quite possible that the hard times that started in 2008 drove a lot of people, who were already psychologically unstable, into full-fledged psychosis. And caused others to take up alcohol and drugs as a way of hiding from an unpleasant reality.
On the largest scale, I blame it on government action. Which shocks most people, because they see the government as the solution, not the cause. They see a real or imagined problem, and they want the State, because it has a lot of power, to “do something.” In fact, the only way the State can solve a problem is by undoing things that it’s already done, not doing more.
Even though it’s said that we have all-time low unemployment, these are mostly minimum-wage jobs. And the numbers are further disguised by the fact a lot of people who’d like to work as something other than a fast-food clerk or a Walmart greeter are what are called “discouraged workers.” They’re not counted as unemployed if they’ve stopped looking for work. I suspect that very few of the street people are counted as unemployed.
International Man: Cities like San Francisco spend tens of millions of dollars each year trying to keep the streets clean to no avail. Within hours, freshly cleaned streets are again covered in filth. Many people seem to think the city needs to throw more money at the problem.
What do you think? How should they address the problem?
Doug Casey: Cleaning up after these people isn’t a solution. It’s cosmetic, at best.
What we have are thousands on the streets who produce nothing, and only consume. They survive on food stamps, various welfare programs, handouts, petty theft, and the like. In other words, they’re not an asset either to themselves or to society. They’re an active liability, and they’re actually encouraged by being allowed to group together on other people’s property.
Will cleaning up after them solve the problem? No, it aggravates it.
It’s now an epidemic. It started in 2008 when lots of middle-class people lost their houses. And oddly, the trend toward people living on the street has been growing over the last 10 years of artificial boom.
We’re going to have a very real bust very soon. The high levels of debt that we have today have allowed the whole country to live above its means. When the economy adjusts to lower levels of consumption, a new avalanche of people will lose their jobs, and they’ll have no savings to fall back on. However, their debts will remain and keep them from getting back up.
Not so long ago, Americans saved up and bought their cars for cash. Your car was a small asset, but it was an asset. Then came two-year, then three-year, five-year, and now seven-year financing. In fact, most now lease their cars, because they can’t afford to buy them, even with seven-year financing. The things have gone from being a small asset into a major liability. With simple pickup trucks selling for upwards of $50,000, many are going to lose their transportation. Then they can’t get to their job, can’t pay their rent or mortgage, and they’re out on the street. It’s easy to see how an ex-member of the middle class could become mentally unbalanced and start doing drugs.
People could lose houses they bought with mortgages they can’t afford but think they can because of today’s very low floating interest rates. Just like back in 2008 and 2009. Plus, real estate taxes keep going up—partly because local governments are in good measure responsible for supporting lowlifes forced to live on the street, ironically due to high real estate taxes.
Utilities are going to go up because commodities are very, very low now. They’re going higher—good for commodity speculators; not good for Joe and Jane Consumer.
So, you’re going to see more people moving onto the streets. And let me reemphasize this: They’re not—now—necessarily junkies or mentally disabled. But they may be, once they lose everything they thought they had. Their numbers are going to grow as the economy goes downhill.
This is an explosive problem. These are people who will have nothing to lose. They’re going to be overcome by envy of and resentment against the rich. You can count on them to vote Democratic in 2020. There’s no question the state of the economy will be by far the biggest influence in the election.
All the while, because of the financialization of the economy, the rich are getting richer. This isn’t just unfair—it’s dangerous. Incidentally, “unfair” is a word I hate to use, because it often implies a whole set of assumptions. But that’s another topic. Anyway, the situation is setting up the United States for class warfare, the haves against the have-nots. Middle class societies are stable; we’re becoming less middle class.
International Man: The Fed has reflated the housing bubble with years of easy money. It has distorted the housing market and artificially increased real estate prices. How does the Fed relate to the homeless crisis?
Doug Casey: One indirect and delayed consequence of their creating all this money out of nothing—in order to keep the big banks, brokers, and insurers from failing during the crisis that began in 2007—is the creation of bubbles. The biggest bubble is in tech stocks. But the real estate bubble that busted in ’08 and ’09 has been re-inflating, at least until the last year.
International Man: California politicians have implemented rent controls and more regulations in the hope of solving the problem. The situation has only gotten worse, and the calls for the government to “do something!” only grow stronger.
If the inclination is to ask for more government, what do you expect the outcome to be?
Doug Casey: Rent control, like other forms of wage and price controls, seems logical to someone who doesn’t understand economics. It always sounds good to politicians—they like “bold action” to keep prices down, appear to help the little guy, and punish rich landlords all at once. What’s not to like?
In addition to their crime of initiating force, stealing, and destroying the moral tenor of society, they’re looking only at the immediate and direct consequences, not the delayed and indirect ones. Namely that nobody will build new buildings or even maintain old ones if they can’t make money doing so.
Rent controls result in housing shortages, run-down neighborhoods, and an atmosphere of class warfare. Rent controls are usually a consequence of money printing, which is actually the root cause of homelessness. But government is prone to disguise symptoms, not cure the disease itself—which they cause. Nobody learns anything. It’s why historians tend to be pessimistic.
International Man: Elizabeth Warren and other notable Democrats have called affordable housing a “basic human right.” They suggest that the federal government should make housing affordable or even free. It seems this will be a new plank for the party. What do you make of this?
Doug Casey: The only real human right is the right to be left alone.
You don’t have a right to free housing or free medical or free education or free food or a guaranteed income. You don’t have a right to any of these things because the question is: At whose expense? You’ve got zero right to make anybody give you things or do things for you. Warren’s policies will turn the US into a dog-eat-dog nightmare.
What’s going on today will overturn the foundations that made the progress we’ve had in the US possible. Once you start thinking like a Third World or Soviet country, you’re going to get their results.
The fact that the US still has a lot of wealth means nothing. That wealth can be destroyed very quickly. Practically overnight, as happened in places like Venezuela and Zimbabwe. I’ve spent time in both, and they used to be quite nice. Now they’re full of people sleeping on the streets, under bridges, and in cardboard shacks. For exactly the same reasons we’re seeing this in the US.
International Man: The homeless crisis is a trend in motion. It’s picking up momentum and spreading to new cities. What do you think happens next?
Doug Casey: One of the best definitions of a depression is a period of time when most people’s standard of living drops significantly.
As the Greater Depression deepens, for the reasons we mentioned earlier, you’re going to see more people living on the street.
What’s going to be done about it?
It can’t be solved by the government pushing them off the streets. Where are they going to go—outside the city limits to empty lots and fields? Actually, that’s just what Austin, Texas, did a few weeks ago. They set aside a five-acre plot near downtown where people can camp. Vagrants and their possessions were forcibly relocated to it.
Of course that temporarily solves the esthetics problem of bums camping on the street. But this is exactly how what are called “favelas” in Brazil and “ranchos” in Venezuela got started. The indigent move to state property, start out by camping, then start building informal houses out of trash and stolen building materials.
It’s an unsolvable problem, unless the country returns to prosperity. Will the government bulldoze the camps and then build high rise ghettos like they did for blacks in all the big US cities? That didn’t work really well… You only make the problem worse by putting these people in what amounts to zoos.
The interesting twist here is that today’s street people are mostly whites who’ve lost their middle class status—not blacks, not Latino migrants. This is a huge straw in the wind. So much for White Privilege…
International Man: What are the bigger implications of the homeless crisis for the future of the US economy and political system?
Doug Casey: It’s going to be very hard for everybody, especially as the government inflates more, taxes more, and regulates more. They’ll do massive amounts of all three. The situation will necessarily get worse for most people. The people who are benefiting from this one way or another—the rich and politically well-connected—will increasingly be in barrio cerrados (gated communities) to protect themselves.
It’s another sign that the state of civilization in the United States is changing radically. So far it’s been a slow slide down. But when the economy falls apart this time, it’s going to look like we’ve fallen off a cliff. We’re going to have to adjust to a whole new reality politically, socially, and economically. I’m not looking forward to it.
* * *
The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now.
Who will lead the wool industry through drought, a US-China trade war and pressure from animal activists? Accusations of dirty tricks, letters from the Agriculture Minister and questions about animal welfare — this is wool industry politics in the lead-up to an election which will help shape the sector’s future. Australian Wool Innovation has implemented 58 per cent of Ernst and Young’s recommendations on improving transparency and governance At […]
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Accusations of dirty tricks, letters from the Agriculture Minister and questions about animal welfare — this is wool industry politics in the lead-up to an election which will help shape the sector's future.
- Australian Wool Innovation has implemented 58 per cent of Ernst and Young's recommendations on improving transparency and governance
- At the AGM on November 22, woolgrowers will vote on whether to limit the board members' tenure to 10 years
- Familiar faces — Wal Merriman and David Webster — would not be eligible to stand if this was already adopted
Traditionally, board elections for agricultural research and development body organisations do not attract much interest. But this vote is anything but normal.
Parts of the wool industry are pitted against each other, as woolgrowers prepare to vote for those who will best serve their interests on the board of Australian Wool Innovation (AWI).
AWI conducts research, development and marketing for the wool industry and is funded through compulsory grower levies and government contributions.
The vote continues the battle among wool producers for control of the most powerful organisation they own.
Eight candidates are standing for three positions on the board, which will be voted on at the Annual General Meeting on November 22.
As an elected board member, they will be among the few with the power to control millions of dollars of woolgrower funds.
Even the Federal Agriculture Minister Bridget McKenzie has recognised the importance of this election.
"I think this will be a real display of leadership at AWI to bring some confidence that this body will actually work for its levy payers," she said in an interview with the ABC in August.
Controversy and AWI
The organisation is no stranger to controversy.
In 2017 — its then chairman and now board member — Wal Merriman was caught secretly watching a focus group of leading sheep breeders, without their knowledge, from behind a mirror.
Farmers in the focus group had been told their comments would be anonymous.
The chairman then told an ABC reporter to F*** off when questioned about the so-called, "man in the mirror" scandal.
Mr Merriman later apologised to woolgrowers for the remark: "The language I used was more fitting for a shearing shed ... I'm from the bush and I need a lot more polish to operate in these surroundings."
The incident led to a scathing Senate Estimates hearing, when it was revealed that as chairman, Mr Merriman controlled up to one-fifth of proxy votes at the last board election and could cast them as he saw fit.
"How do you expect me to stop them [farmers] from giving them to me?" Mr Merriman remarked whilst telling senators he had been given 20,000 of the 90,000 shareholder votes for the election.
It was these incidents and questions of transparency that prompted the Federal Government to pay $900,000 for a review by Ernst and Young into performance and governance at AWI.
Greater transparency recommended
The Ernst and Young (EY) report made 82 recommendations to improve transparency.
The report recognised "an amount of stakeholder distrust that is not in line with good governance behaviours", and its recommendations included the introduction of a 10-year limit of board tenure, some limiting of the chair's power and better communication with growers.
The then federal agriculture minister David Littleproud told the ABC in 2018 that it was a "clear pathway for the modernisation of AWI".
"My expectation is that the board of AWI will embrace it and lead it," he said.
He then warned he would consider an "Armageddon approach", with legislation to enforce the adoption of the recommendations, if AWI failed to implement them all.
In the lead up to AWIs board elections this is interesting. @senbmckenzie’s please explain letter to Aust Wool Innovation over its failure to implement governance changes recommended in the $900k review of the wool body (funded by the govt). This was tabled after Sen Estimates pic.twitter.com/5tammYVcCA— Emma Field (@SaysEmmaField) November 8, 2019
Australian Wool Innovation has implemented 58 per cent of the recommendations — 48 out of a total 82.
The 10-year term cap has been a sticking point in governance reform, with AWI initially wanting to take it to a vote of shareholders along with four other changes.
But this plan was cancelled after AWI revealed it had negotiated outcomes with peak lobby group WoolProducers Australia (WPA) for all the outstanding governance issues, except board tenure.
WPA chief executive Jo Hall said they were frustrated that AWI's board term has not been sorted.
"If the recommendation was put to shareholders as written ... there was no way the 75 per cent of shareholder support would have been obtained, so nothing would have changed," she said.
At the AGM, shareholders will be able to vote on a number of proposed changes including introducing a 10-year board term limit, as recommended in the EY report.
Minister unhappy with AWI's slow progress
The Federal Agriculture Minister Bridget McKenzie was also unhappy with AWI's progress with the recommendations and has sent a "please explain" letter to the wool body.
"I have been disappointed to hear the dissatisfaction expressed to me by levy payers about AWI's implementation progress, and the spirit in which it has gone about delivering the recommendations," the letter said.
The letter came after the Federal Government announced in September that it was reviewing all research and development organisations — a move that has raised concern about mergers.
Senator McKenzie's letter demanded "a greater level of transparency" to levy payers and a detailed update on AWI's progress.
AWI said it has implemented 76 per cent of the governance changes but WoolProducers Australia's Jo Hall said AWI's self-reporting was "suspect".
Some in the industry want stronger oversight from Government.
Growers and taxpayers pay for AWI: The Government contributes $20.8 million to the company while levies from farmers make up $68 million.
Growers showed their dissatisfaction with AWI this year, taking the unprecedented step of voting to drop the compulsory levy from 2 per cent to 1.5 per cent of their wool income.
It meant AWI lost a quarter of the wool levy revenue at the same time as the global price for wool slumped, affected by the US-China trade war.
Brutal board election
Eight candidates are standing for three board positions.
They are: Paul Cocking, George Falkiner, Noel Henderson, Janelle Hocking Edwards, Philip Holmes, Michelle Humphries and current AWI directors Wal Merriman and David Webster.
Both Mr Merriman and Mr Webster, who have been on the board since 2004 and 2008 respectively, would be ruled ineligible to stand if the proposed 10-year term limit from the Ernst and Young report was in place.
"The culture needs to change and that won't change without three new directors," Mr Cocking said.
"I think its appalling that in the midst of gripping drought, the fact AWI are willing to use company resources, to push back on the EY recommendation of 10-year terms.
With governance and board terms a hot topic for the wool industry ahead of the vote, many growers were outraged when an endorsement for board candidates was released by AWI from a Board Nomination Committee set up to independently assess board candidates.
The committee endorsed four candidates for the three positions: Mr Merriman, Mr Webster, Ms Humphries and Mr Henderson.
Mr Webster said if he were re-elected it would be his final term and he cannot understand the criticism of his endorsement.
Wal Merriman declined an interview with ABC Rural.
"If they've been there for 10 years or more that doesn't matter to me, the priority is to have the best people on the board," Ms Humphries said.
Concerns with election process
Meanwhile another candidate, George Falkiner believed the company needed to improve communications with woolgrowers and the election process was part of the problem.
"There are only 21,000 or so AWI shareholders and 61,000 levy payers: So that's only one in three that are actually taking part and having a say in the company's future.
"The fact you need 100 signatures from shareholders to be eligible to stand is counterproductive."
WA Farmers spokesman Steve McGuire agreed.
"It's up to each levy payer to make the effort to register and that's where it's falling down.
"It's a shame because half of the wool growers will not get a chance to vote at this election."
There has also been a number of campaigns from individuals and grower groups asking farmers registered to vote to not give proxies to the chair (who can use them as she sees fit) and vote for themselves.
In the past, there have been similar campaigns, which have failed to significantly lower the proxy vote at previous AWI elections.
After the recent vote to lower the wool levy, growers will get another chance to vote either against the current regime, or endorse it, that it may continue in its current form, albeit with lower funding.
Animal welfare and the board election
The debate about how the industry tackles the issue of mulesing has been fraught for many years, but over the past year the debate has focussed on pain relief for lambs.
Mulesing involves cutting wrinkles of skin away from a lamb's backside to prevent the build-up of faeces, which can attract blowflies that lay maggots.
Animal activists and fashion houses have long lobbied Australia to phase out the practice, comparing it with New Zealand and South Africa.
Victoria could become the first state to make it mandatory for pain relief after mulesing, under proposed animal welfare laws by its State Government.
Industry groups are split on the move, and so are the AWI board candidates.
Mr Cocking, a woolgrower in southern NSW, wants to see more money for researching alternatives.
Board candidate and sheep breeder Mr Falkiner backs mandatory pain relief, but does not want to see mulesing banned without a viable alternative for growers.
Michelle Humphries is a veterinarian and supporter of former chairman Wal Merriman but differs on some key policy areas, particularly on the use of genetic testing to breed sheep that do not require mulesing (genomics).
"The thing with Wal and me, I'm pushing this genomics thing and he hasn't done that in the past," Ms Humphries said.
"What he [Merriman] recognises is that's my skill set.
Battle nearly over
The battle for the board will be decided at the Australian Wool Innovation AGM in Sydney on November 22.
Individuals and growers groups have been running campaigns asking growers not to give their proxy votes to the chair, and instead vote for the candidate they prefer.
These styles of campaigns have failed in the past.
Whatever the outcome, this election will decide the short term future of the most powerful organisation in the wool industry.
Will the industry endorse its current leadership to manage it through a period of declining incomes or ask someone new to take on the task?
Summary International data is modestly soft. There was little US data this week. But what we did get was positive. For a third week in a row, the markets closed on a high note. International Economic Data China/Japan/Australia China Industrial production +4.7% Y/Y Retail Sales +7.2% Investment +5.2% Y/Y Auto sales down 4% Y/Y Japan GDP +1.3% Y/Y Industrial production +1.3% Y/Y Australia Unemployment +5.3% UK/EU UK Retail sales […]
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International data is modestly soft.
There was little US data this week. But what we did get was positive.
For a third week in a row, the markets closed on a high note.
- Unemployment +5.3%
Key International Central Bank Decisions
Key US Data
The BLS released the CPI report this week. Prices remain a non-issue (emphasis added):
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis after being unchanged in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.
Here's a chart of the data:
Overall CPI (in blue) is trending right below the Fed's 2% symmetrical target while the core SPI (in red) is slightly above that number. During the last five years, core CPI has fluctuated around the Fed's 2% target.
On Friday, the Census released the latest retail sales data (emphasis added):
Advance estimates of U.S. retail and food services sales for October2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $526.5 billion, an increase of 0.3 percent (±0.4percent)* from the previous month, and 3.1 percent (±0.7 percent) above October 2018. Total sales for the August 2019 through October 2019 period were up 3.8 percent (±0.5percent) from the same period a year ago. The August 2019 to September 2019 percent change was unrevised from down 0.3 percent(±0.2percent).
This is a very volatile data series. To remove that randomness, let's look at the data from two different perspectives, starting with the Y/Y percentage change:
After declining at the end of last year, the Y/Y percentage started to increase at the beginning of 2019. It's moved a touch lower over the last few months but is still printing at a solid rate.
US Markets Week in Review
Let's look at this week's performance tables.
The Treasuries led the gains this week, with the long end of the bond market rallying a little over 2%. The DIA was the best performing equity index; it was up 1.2%. After that, the performance falls off a bit. Only two equity indexes were down for the week, but not by much.
Sector performance was decidedly bearish, with defensive sectors holding the top three positions. However, only two sectors were down -- financials and energy. And neither of those was off by much.
Let's turn to the charts, focusing on the 30-day time frame. Let's start with the indexes:
The SPY remains in a solid rally. There are two uptrends: the first occurred from October 16-31. Then, prices gapped higher on two days when the chart started to form a rising wedge pattern. Today, prices pushed through resistance and closed the week on a high note.
There's an overall similarity on the QQQ chart, except that prices formed a rounding top pattern for the last few weeks. Today, prices moved through resistance as well.
The IWM, in contrast, is still consolidating lower. Prices are bumping up against resistance but still haven't broken through.
Despite the defensive orientation of this week's sector performance table, the 30-minute sector charts are bullish.
Today, the tech sector broke through resistance and printed a 30-day high. The chart has been in an uptrend since the end of October.
Industrials have been in a rally for the last month. Today, they also broke through resistance, bit trended lower during the session. Still, they're up.
Financials have rallied as the yield curve spread has widened. After consolidating in a modest downtrend all week, prices broke through resistance today.
Finally, communications services also came very close to printing a 30-day high today.
This is the third week in a row when the market has closed on a high note. Best of all, the underlying sector trends are supporting the move higher, meaning we will likely have more to come.
Have a good weekend.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
November 12, the Supreme Court will hear arguments on the Trump Administration’s attempt to terminate DACA click to learn mor An employee’s complaints about his pay to coworkers was protected concerted activity under the National Labor Relations Act (NLRA), even though the employee was unsuccessful in enlisting any other employees to support his complaints, the Advice Division of the National Labor Relations Board’s (NLRB) Office of the General Counsel […]
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An employee’s complaints about his pay to coworkers was protected concerted activity under the National Labor Relations Act (NLRA), even though the employee was unsuccessful in enlisting any other employees to support his complaints, the Advice Division of the National Labor Relations Board’s (NLRB) Office of the General Counsel has decided.
Therefore, the NLRB found the employee’s termination for his wage complaints violated the NLRA and instructed the Regional Director for Region 14 to issue an unfair labor practice complaint on the employee’s unfair labor practice charge. Gallup, Inc., 14-CA-234530 (July 24, 2019, released Oct. 18, 2019).
The employee was a quality assurance (QA) coordinator. When Gallup reclassified its QA employees from “exempt” to “non-exempt,” the employer reduced their base salary by $7,000 because the reclassified QA employees were newly entitled to overtime pay. The employer informed the employees that if they worked the same hours they had been working before, their overtime pay would make up for the lower base and equal the same amount they had earned as exempt employees.
Unhappy about the change, the employee raised the issue on several occasions with his QA coworkers and supervisors. Some employees agreed with the employee, but most responded that the new pay structure could be an improvement. Some who agreed with the employee later left the company or transferred to different teams.
Following a November companywide meeting, the employee raised the pay issue with the employer’s management. They informed the employee that a coworker had told them about the employee’s pay complaints to coworkers. They told the employee that he “need[ed] to be accepting of his pay and that he shouldn’t complain about not being paid enough.”
The employee asked employees in other departments about available jobs. The employee’s manager questioned why he was talking to employees on other teams. When the employee objected to the question, his manager emphasized that he wished the employee had come to him first, that the company was not for everyone, and that it would be okay if the employee went to work somewhere else if the employee was unhappy.
The employee subsequently was terminated and was told, “[W]e know you are not happy here. You’re disengaged. You’re not happy and you’ve been talking about your pay to other people. Today will be your last day.”
The employee filed an unfair labor practice charge with the NLRB’s Region 14 office alleging the termination and the supervisors’ statements violated the NLRA. The Region 14 Regional Director referred the allegations to the Advice Division for assistance in deciding whether the allegations set forth violations of the NLRA.
Advice Division Decision
The Advice Division decided the termination violated the NLRA. Citing the “test” under the Board’s Meyers Industries decisions for determining whether activity is concerted, the Advice Division explained, “In general, to find an employee’s activity to be ‘concerted,’ we shall require that it be engaged in with or on the authority of other employees, and not solely by and on behalf of the employee himself.” It also explained that individual employees act concertedly where they “seek to initiate or to induce or to prepare for group action.” Meyers Industries, 268 NLRB 493 (1984); Meyers Industries, 281 NLRB 882 (1986).
The Advice Division distinguished the facts in the case from those in Alstate Maintenance, 367 NLRB No. 68 (Jan. 11, 2019). The Alstate employee’s complaints about a customer’s tip practices was not protected activity and, therefore, his termination for making those complaints did not violate the NLRA. There, the NLRB held that a single statement about one customer’s tip history, although said in the presence of other employees (in a meeting), was a mere gripe not intended to induce group action about a workplace concern. The tip comment also was not for the purpose of “mutual aid or protection” (a necessary element for a finding of protected concerted activity), because the employer had no control over the customer’s tip practice (and, therefore, could not remedy the employee’s complaint).
Unlike in Alstate, the employee’s conduct in the present case was for mutual aid or protection because it concerned the pay structure, pay amount, and hours of work requirements maintained by the employer and over which it had full control.
The Advice Division wrote:
Although the Charging Party was met with at most only passive agreement from coworkers rather than willingness to join him in seeking concrete action, the lack of “fruition” in his campaign to solicit employees’ support for his complaints against a new system d[id] not nullify the concertedness of the conduct.
Finally, the Advice Division found that it was clear the employee’s protected concerted discussions about pay and hours contributed to the termination decision; the employer specifically listed “talking about his pay to other people” as a reason for discharge.
The Advice Division concluded, “[N]otwithstanding the lack of success, the employee’s ongoing complaints to fellow employees about their pay was protected concerted activity and thus the employee’s discharge for that conduct violated Section 8(a)(1) of the Act.”
Regarding the statements, the directive to the employee to stop discussing his pay also was a violation of the NLRA, the Advice Division found. The statement that the employee should leave the company if he was not happy was not a violation, however, because that statement was made in response to the employee’s complaints about his own pay. Even assuming that statement may be taken as a veiled threat, the Advice Division explained, it was not unlawful because it was not in response to protected concerted activity and did not direct the employee to stop engaging in protected concerted activity.
In a footnote, the Advice Division urged the NLRB to overturn a line of cases arguably conflicted with the Meyers standard and in which the Board deemed statements about certain subjects “inherently” concerted. The NLRB previously has indicated its interest in revisiting this concept, but it has not yet been presented with a case in which the inherently concerted issue is raised. Citing Alstate, the General Counsel advised the Regional Director not to follow this “inherently concerted” theory of a violation of the NLRA.
This Advice Memorandum illustrates that proper identification of protected concerted activity requires a detailed and fact-specific analysis. Employers are well-advised to weigh employment decisions that may involve more than one employee and protected topics carefully and to consult experienced labor counsel when necessary