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    Daily Digest 1/24 – Peering Over The Abyss, Facebook Is To Democracy What Smoking Is To Health

    by DailyDigest

    Thursday, January 24, 2019, 6:50 AM


Contrarian who called the 2008 housing crash expects a global recession this year (Adam)

One well-known independent economist thinks it will happen even sooner—he’s looking for a global recession to start in 2019. A. Gary Shilling, president of his eponymous consulting firm, made two of the best contrarian calls of recent decades: he saw the mega-bull market in bonds at its very outset in 1981, and in the years before the 2008 financial crisis and Great Recession, warned repeatedly that the housing bubble would turn into a bust and would take the whole economy down with it.

Facebook is to democracy what smoking is to health, say tech experts — who think the cure is breaking up the social network (Thomas R.)

“We believe there are huge issues around addiction, attention, and distraction caused by social-media platforms,” he told Business Insider this week in Davos. “Last year was a tipping-point moment in the relationship between tech and global society.

“The emperor was shown to have no clothes — meaning Facebook. And Facebook and others were exposed for the fact that they committed assaults on our democratic institutions.”

The unusually large drop in home sales has real estate agents baffled (Thomas R.)

“The latest decline is harder to explain. Perhaps it is the decline in consumer confidence that’s been occurring in the latter half of 2018,” said Lawrence Yun, chief economist for the Realtors. “The latest numbers do not reflect the lower, current mortgage rates compared to the November figures, so it’s really harder to explain.”

1 in 3 consumers fear they will max out a credit card (Adam)

“You are not going to be able to pay that off in a timely fashion,” she added, resulting in higher interest payments and damaging your credit score in the long run.

Still, most Americans continue to take on ever-increasing amounts of debt. According to data from the Federal Reserve, the U.S. surpassed $1 trillion in credit card debt — the highest level since the Great Recession.

Peering Over The Abyss (GE Christenson)

Global central banks “printed” about $20 trillion in “funny money” that bailed out banks, levitated stock and bond markets, lowered interest rates to near zero or below, and allowed politicians to spend, spend and spend. But the flow of created dollars, euros, yen and francs is slowing, and projected to go negative in early 2019.

Newark Airport temporarily halted flights after drone sightings (Thomas R.)

In the UK, EasyJet said that the Gatwick closings grounded 1,000 flights, caused 400 flight cancellations and cost it 15 million pounds in passenger compensation, calling the incident a “wake up call” for the industry. Gatwick and Heathrow purchased anti-drone systems after incidents, although police still have not identified anyone behind them after arresting and releasing two people.

Super Rich Americans Are Getting Younger and Multiplying (Adam)

Where is this new money coming from? A new generation of millionaires and billionaires probably owe as much to inheritances as to self-made fortunes. “There may be more Mark Zuckerbergs at the top of the wealth distribution than in the 1960s, but also more Paris Hiltons,” Saez and Zucman wrote. About 172,000 U.S. households have net worths of at least $25 million, Spectrem estimated last year.

Applications for US unemployment aid fall to a 49-year low (Thomas R.)

Weekly applications for jobless aid are a proxy for layoffs. The data suggests employers are confident enough about the economy to hold onto their workers. The Labor Department was funded before the shutdown and is still releasing its weekly report.

EU Smacks Mastercard with $650 Million Fine for Doing What Credit Card Companies Do Best (Thomas R.)

Prior to December 2015, interchange fees in the EEA varied widely between countries. In December 2015, the EU capped interchange fees at a maximum of 0.2 percent of total transaction value and 0.3 percent of transaction value for debit and credit cards respectively. This interchange fee regulation reduced retailers’ costs by a significant margin that reflected in the cost of items.

Iran Looks To Boost Oil, Gas Production Capacity With $1B Deals (Thomas R.)

According to OPEC’s secondary sources, Iran’s crude oil production plunged by 159,000 bpd from November to 2.769 million bpd in December. In the third quarter of 2018, before the U.S. sanctions were re-imposed, Iran’s crude oil production averaged 3.603 million bpd.

Before the sanctions, Iran was OPEC’s third-largest producer after Saudi Arabia and Iraq, while in December, as per OPEC’s sources, the Islamic Republic was only fifth, after Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Kuwait.

Warning Signs Flash For U.S. Shale (Michael S.)

Schlumberger’s chief executive also warned that the shale industry could see other problems going forward that could be even more significant. Shale drilling suffers from a precipitous decline in output soon after a well is completed. After an initial burst in output, wells see a rapid decline in production. This is not news; it has characterized shale drilling for years.

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil (Michael S.)

Saudi Arabia—which has just announced that its huge oil reserves are slightly higher than previously estimated—looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/23/19

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the “3 Es.”

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  • Thu, Jan 24, 2019 - 7:17am


    Chris Martenson

    Status Platinum Member (Offline)

    Joined: Jun 07 2007

    Posts: 4647

    Wilber Ross Explains the Yellow Vests

    One of the defining features of end-of-empire times is the complete isolation of the ruling/protected classes from the lower classes.
    The so-called “elites” (who are anything but once you get to meet them) live in a near-complete bubble of social isolation that prevents them from connecting with the people whom they harvest sliver by sliver to create the mountain tops of priviledge upon which they sit.
    Today’s “let them eat cake!” moment comes to us courtesy of US Commerce Secretary Wilber Ross, (accompanied by my snarky response):

    Meanwhile the US is busy ramping up its activity in meddling in Venezuela where the CIA has presumably been operating a while to create opposition to Maduro.  To be clear, I am no fan of Maduro at all, but the idea of Trump “recognizing” his US-selected opposition partner is really silly if you reverse the action.
    As Wikileaks asked today on Twitter,:

    Should Turkey, Venezuela, Mexico, Russia, China and other nations unilaterally declare Nanci Pelosi to be the interim president of the United States given controversies surrounding President Trump?

    Seems kind of ridiculous when it’s turned around, doesn’t it?
    Meanwhile Russia has said “back off” on VZ, so we’re going to keep an eye on that potential flash point going forward.
    The US press has already weighed in providing ample coverage of the VZ protests and begun noting the police force excesses, which they have studiously avoided for the Yellow Vest movement.
    Interesting times…

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  • Thu, Jan 24, 2019 - 7:36am

    Reply to #1


    Status Diamond Member (Offline)

    Joined: Sep 03 2008

    Posts: 3150

    VZ: rules for rulers

    As long as Maduro keeps funneling the skim from the take to his Keys to Power, its gonna be tough to dislodge him.
    Tax Collection
    Oil Industry

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  • Thu, Jan 24, 2019 - 8:03am



    Status Member (Offline)

    Joined: Feb 06 2013

    Posts: 505

    Gonna be "that guy"...

    So, I hate to be that guy by pointing it out, but there’s zero historical evidence (and many esteemed professors of that revolution have weighed in on this) that Marie Antionette ever actually said “Let them eat cake.” Her attitude certainly came across that way, though, so it’s a valid way to express the absolute distance between the elite class and everyone else, and the disdain most nobility had towards the comman people. As a history teacher, I just cringe whenever I hear it. I’ll live, though. =P
    Someone here at PP, and I forget offhand who, called this Venezuela thing being the next international red herring. Seems like Russia won’t just let us get away with it, though, which is good. I’m kind of tired of living in the nation that is the neighborhood bully.

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  • Thu, Jan 24, 2019 - 8:34am

    Reply to #1


    Status Platinum Member (Offline)

    Joined: Apr 27 2010

    Posts: 1466

    Disconnected and clueless to the bitter end

    “Wealth, in even the most improbable cases, manages to convey the aspect of intelligence. Wealth is the relentless enemy of understanding. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves. None rebukes them.
    People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right.”
    John Kenneth Galbraith

    But “the day of the little guy” is coming:

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  • Thu, Jan 24, 2019 - 8:47am



    Status Bronze Member (Offline)

    Joined: May 03 2014

    Posts: 524

    Time for a glorious revolution?

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  • Thu, Jan 24, 2019 - 10:33am



    Status Bronze Member (Offline)

    Joined: Mar 19 2011

    Posts: 101

    Ya think?

    Wouldn’t it seem that streamlining the tax code and filing processes would help with .gov bloat?

    There are already indications, though, that the IRS’s employee recalls designed to mitigate the effects of the shutdown are not going as planned. Some IRS workers are staying home because, without a paycheck, they can’t afford things like paying someone to watch their children while they work.
    “After a month with no pay, real hardship does exist for federal employees, including not having the money needed to get back and forth to work or to pay for the child care necessary to return to work,” said Tony Reardon, head of the National Treasury Employees Union.
    Even if everyone did show up for work, the IRS says it will still only have 57 percent of its workforce on the job at its busiest time of the year, which some say is already inadequate.
    “I don’t think the machinery can run effectively at half staff,” said Christy Mistr, a former congressional tax aide who founded a financial consulting firm. “It takes a lot of people and a lot of manpower to process everything.”

    Nah, probably never happen.  As CHS recently pointed out, possibly a victim of the “rachet effect” (  Maybe they should be looking at operating the “machinery” at half staff.

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  • Thu, Jan 24, 2019 - 2:01pm

    Reply to #2


    Status Bronze Member (Offline)

    Joined: Apr 29 2009

    Posts: 224

    In Marie-A's defence

    Snydeman wrote,

    Her attitude certainly came across that way

    Maybe, maybe not. Remember that the winners get to write the histories.
    I have read somewhere that “Let them eat cake” was the invention of the revolutionaries. Apparently, when Marie Antoinette heard of the extent of the famine, she was actually concerned for the people and offered to distribute food from the Palace. It wouldn’t help the cause of la Révolution Glorieuse to have the evil monarch’s wife trying to help the people, now would it, and so her willingness to help was twisted into sneering disdain by the propagandists.
    True? False? Can’t say.
    The élites in the 1700s lived in quite a different cognitive environment to us today. For the ruling classes, the kings and princes and dukes and archbishops, there was no concept of fatherland, of “Patrie”, of nation state. The European sovereigns made up a big family. The family resemblances could be striking: compare photos of George V and Nicholas II. By 1914, most of the crowned heads of Europe had come from the Danish royal family. In terms of rulership, Prince Phillip may have been Phillip of Greece, but in terms of genetics he was Phillip of Denmark. Ditto Russia, Bulgaria, Belgium, etc.
    Further, to them their territories were their private property. (This belief reached its dizzy limit where the entire country now called Zaïre was the private property of Leopold II of Belgium and dedicated to his enrichment; the territory was horribly, brutally mismanaged.) In modern terms, how would you like it if friends and acquaintances, living together with you on your very own land, rose up and sought by violent means to throw you off that land?
    I suspect that the modern élites live in somewhat the same cognitive environment as their pre-1914 European counterparts.

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  • Thu, Jan 24, 2019 - 7:06pm



    Status Bronze Member (Offline)

    Joined: Aug 20 2011

    Posts: 252

    the Real Game of Missing Money
    By Catherine Austin Fitts
    My efforts to achieve honest accounts for the federal government started in 1989 when I was Assistant Secretary of Housing – Federal Housing Commissioner. The mortgage insurance operation had experienced explosive losses and a breakdown of financial controls during the S&L crisis and Iran Contra scandals. The patterns of fraud were simply astonishing. Indeed the Secretary of the Treasury had warned me not to accept the position, saying “You can’t go to HUD. HUD is a sewer.”
    My team and I drafted a reform proposal and persuaded the Secretary of Housing and Urban Development (HUD) and the Office of Management and Budget (OMB) to support legislation to create a office of Chief Financial Officer, audited financial statements and reporting of credit and liability programs on an accrual basis (with actuarial reports) for the department and its mortgage insurance and securities operations and funds – a model that OMB and Congress then introduced governmentwide.
    I then helped the federal government implement these changes as president of Hamilton Securities Group – lead financial advisor and portfolio strategist to the FHA mortgage insurance operations. I did so until the honest officials and my company were forced out by phony scandals rigged by the Department of Justice and the HUD Inspector General with the help of then HUD Secretary Andrew Cuomo and other members of the Clinton administration. A decision had been made to engineer a housing bubble and to empty out government accounts.
    I decided to fight – taking on the real scandal. While doing so in 2000, my team realized that billions of dollars were going missing from HUD and that the official excuses were unmistakably false. It became clear that honest people were forced out in order to shift trillions of dollars in assets out of government accounts and to flood the mortgage market with fraudulent mortgage paper. As the president of CalPers, the largest pension fund in the United States, had warned me in April of 1997, “They have given up on the country – they are moving all the money out starting in the fall.”
    Starting Solari, our team worked with a series of reporters to help investigate and warn global investors and US citizens that government coffers were being emptied and that the housing bubble was threatening the financial health of millions of investors and citizens around the world. We called it the “financial coup d’état”.
    The missing money story is not really just about money. It is about who rules. Who gets to decide? Who gets to decide whether your pension is funded? Who gets to decide if you can find a job? Who gets to decide if your mortgage is foreclosed? Who gets to decide if you must go into debt to get an education? Who decides if you live a long life or a short one?
    I once had an acquaintance who told me that she had no interest in the missing money. She said that peace was her issue and that she was not interested in missing money – that was my issue.
    I tried to explain that the missing money really was her issue. If a few people could print as much money as they want and steal as much money as they want then they could choose between war or peace. Historically, they have chosen war. If we want to stop war, we must cut off funding to the people who engineer wars. We must create a system where an open and transparent process determines who rules.
    Crime that pays is crime that stays. Now the financial coup d’état” is blossoming into a legal coup d’état” a fundamental reengineering of our governance model – with the development of FASAB Statement 56 and the secret operations it helps to fund. This process will not be privatization. This process will be massive corporate welfare and “PIRATE-ization.
    These obscure accounting policies will allow your funds to purchase Treasury securities (or allow the purchases of your pension fund, your bank and your insurance company) to be be used to pay mercenary armies to seize your property and turn it over to private investors and corporations.
    If your pension funds buy Treasuries with your savings, those savings may simply disappear out the back door into private hands, and your pension fund will get an IOU backed by – guess who? – yourself. What stands behind the bond of a sovereign government that has lost its information and financial sovereignty and its assets? You do. If you are a US citizen, you are exchanging an asset for a liability.
    You might say – “well I live in Europe or Asia, why should I care?” You should care because the credit of your investments – your pension fund, your sovereign wealth fund, and your banks and insurance companies- is being debased as well. In addition, your national security umbrella is probably also threatened.
    All of us – no matter on which continent we reside – are shut out from the secrets of those who rule the world. We are funding a rich flow of tax dollars and investments that finance private investors’ secret ownership and control of the most powerful technologies in the world to build a breakaway civilization. We provide the financing, but we get no say in what happens and we get “left behind.”
    Why are we funding a fascist takeover of our government, our economy and our culture? One reason is that we cannot see our personal, intimate role in the coup clearly. Another is that we do not understand the growing risks of investing in securities financing this machinery. We have always considered them safe. However, something has changed. Are they still safe?
    No matter where you live, the fraudulent nature of the US federal accounts has increasingly impacted your life and finances. It will have an explosive impact in your future, as the compounding of the US debt and interest expense grows.
    The time has come to understand the real game of missing money. Circumstances have put you on the game board in 2019. Whatever you think now, this issue of missing money will decide every other issue – including the ones you care about most.
    Will it be Mr. Global who decides? Or has the time come to bring transparency and to stop funding Mr. Global’s secret sauce?
    Join me next Thursday for the theme of the 2018 Annual Wrap Up – The Real Game of Missing Money.
    In Money & Markets this week I will discuss the latest in financial and geopolitical news. E-mail your questions to Ask Catherine or post them at the Money & Markets commentary here.
    In Let’s Go to the Movies, I will review All the Queen’s Horses. The documentary tells the story of the city comptroller of Dixon, IL (pop. 15,733) — Rita Crundwell, who stole $53 million from public funds ($3,369 per Dixon resident) over 20 years––making her the perpetrator of the largest public case of municipal fraud in American history. For 20 years, the town mayor, CPA and bank claim they did not notice. Does that sound like other politicians, accountants and bankers we know?


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