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Daily Digest 11/13 - EU Junk Bonds Yield Less Than U.S. Treasuries, The Distribution of Pain

Monday, November 13, 2017, 11:13 AM

Economy

We’ll Look Back At This And Cringe, Part 1: European Junk Bonds Yield Less Than US Treasuries (thc0655)

Today’s bubble will leave some similar marks. But where those previous bubbles were narrowly focused on a single asset class, this one is so broad-based that the hangover is likely to be epic in both scope and cumulative embarrassment.

This series will create a paper trail for the morning after, starting with a truly amazing anomaly: European junk bonds now yield less than US Treasury bonds.

The Distribution of Pain (Nate)

We have engineered society so that we at the upper end of the financial spectrum have little interaction with or knowledge of the people who feel the most pain. I wrote about this chasm between classes last year (see “Life on the Edge”) as the US elections made the split in our nation harder to ignore.

Catalan independence: EU experts detect rise in pro-Kremlin false claims (tmn)

Officials working at the East Stratcom taskforce in Brussels say they have seen an increase in disinformation linked to the Catalan referendum, in line with the explosion of media interest in the story. The unit started work in September 2015 as part of an attempt to debunk fake news and improve understanding of EU policies in eastern Europe.

Warning: 180 Million Smartphone Users Just Hacked (Tiffany D.)

To this day … hundreds of millions of Americans have had their information compromised and more than 12 new people are hacked each second.

We hear about a massive hack almost every week. In fact, one happened recently, which is why this topic has been on my mind.

Paradise Papers Reveal U.S. Selling Russian LNG In Europe (Michael K.)

Meanwhile, Gazprom is showing no concern whatsoever about potential challengers of its market share in Europe. Recently, the executive in charge of Gazprom’s export division, Elena Burmistrova, told media that there is nothing that can get in the way of Gazprom’s supplies of natural gas to the continent, even U.S. LNG, which some European gas consumers have hailed as a much needed alternative to Gazprom gas.

Bankrupt oil companies dump $100 million in clean up costs on Orphan Well Association in under two years (westcoastjan)

Alberta appealed the decision all the way to the Supreme Court out of concern it would lead to more companies stripping off bad assets and handing the bill to the OWA and, potentially, onto taxpayers. The Supreme Court announced Thursday it would hear the appeal.

The list obtained by the Post shows how many assets have been disclaimed since the lower court decision: 12 defunct oil and gas companies have disclaimed responsibility for 1,628 licensed oil and gas sites. The deemed liabilities for those sites exceed $100 million.

Episode 36: Border Militarization and Climate Migration, with Todd Miller (Eric G.)

Todd and Eric talk about what compelled him to bring together inquiries on border militarization and climate migration, relationships between climate-related crises and inequality, and how climate denialism in the Trump administration seems to be a smokescreen to hide the way climate-related planning is happening within the US military, among other things.

Mysterious Radioactive Cloud Over Europe Hints At Accident Farther East (Wendy SD)

Based on the detection from monitoring stations and meteorological data, the mysterious cloud — which has since dissipated — has been traced to somewhere along the Russia-Kazakhstan border, according to Jean-Christophe Gariel, director for health at the IRSN.

"It's somewhere in South Russia," he says, likely between the Volga River and the Ural Mountains.

Gold & Silver

Click to read the PM Daily Market Commentary: 11/1/17

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."

17 Comments

DennisC's picture
DennisC
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Posts: 228
We HAVE a winner!

No doubt, many of you have seen this (also linked at ZH today): https://www.themaven.net/mishtalk/economics/pension-ponzi-bailout-democr...

and this: http://www.zerohedge.com/news/2017-11-08/it-begins-democratic-senator-in...

The bill, which is co-sponsored by another Democrat, Rep. Tim Ryan, also of Ohio, could be introduced as soon as this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. The one, and painfully amusing, restriction for borrowers is "they could not make risky investments", which of course will be promptly circumvented in hopes of generating outsized returns and repaying the Treasury's "bailout" loan, ultimately leading to massive losses on what is effectively a taxpayer-funded pension bailout.

Perhaps we'll be able to "invest" in these via Treasury Direct or perhaps it will be the only investment option for 401K or IRA funds, if that floats your boat.  What was that phrase about "socializing" stuff?  My memory is failing.  Nothing yet at congress dot gov that I could find.

sand_puppy's picture
sand_puppy
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Banning AI Killer Robots

Many have read Neal Stephanson's book Snow Crash.

One big takeaway is that small mechanized 'bots released in swarms can hunt down and kill selected targets.  This kind of nightmare scenario is approached with drone assassinations and could really be enabled with small "personal assassination" tasked bots.

A warning here contains a short 1:28 film, and here a 7 minute (longer) film:

saxplayer00o1's picture
saxplayer00o1
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...and the excuse for doing just the opposite

 

Matt Holbert's picture
Matt Holbert
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If I'm not mistaken...

the link to the short film is the same as the embedded youtube. SP, I had a weird experience this fall. I was cycling here in Spokane. I stopped in an isolated spot down by the river and sat on a log for some hydration and to enjoy the solitude of the spot. Within minutes a drone swoops down and literally gets right in my face, maybe 10-20 feet away. Disconcerting to say the least. I immediately gave them a signal that I was not happy with the invasion of privacy. (BTW, the cyclist flipping off the presidential convoy should not have lost her job. It was simply freedom of expression and we should all be concerned that the employer is insidiously taking that right away. If she were causing physical harm that is another matter.) After several seconds, the drone left the area. The next big thing will be ways to protect yourself from this sort of invasion. 

DennisC's picture
DennisC
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Posts: 228
Cork Hat, et al

My brain trust is already sketching out some potential prototypes.  We're thinking of something along the lines of this: https://en.wikipedia.org/wiki/Cork_hat , combined with a proprietary, protective mesh and reinforced (as in projectile resistant) liner material for the actual head gear (i.e. hat) section.  We're thinking something along the line of bee-keeper garb but perhaps a little more fashionable for when you're out on the trail biking or hiking.  We are short on the Aussie beer, sorry to say, so it's been tough to get in gear on this one, but we have thongs up the wazoo (oops, wrong thong...thong, thung blue, everybody owns one).  Wait, that's not right, is it?

Tycer's picture
Tycer
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Posts: 594
Matt

I’m pretty sure she gloated about it on her Facebook page and that violated her employment contract with a government contractor. 

davefairtex's picture
davefairtex
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Posts: 4774
killer bots

I've been waiting for this.  Not eagerly.

Great video though.

I'm guessing we'll ban them in the hands of private citizens.  It will end up being military & intel services (and terrorist) technology.

One way to protect yourself against an attacking bot swarm is by employing a swarm of defensive bots.

And hope you have enough.

Uncletommy's picture
Uncletommy
Status: Gold Member (Offline)
Joined: May 3 2014
Posts: 426
Am I missing something, again?

If Congress is serious about protecting pensions, does the proposed Pension Rehabilitation Administration really make any sense? Or is this just another way of kicking the can farther down the road. Borrowing against the future has been a standard operating procedure for decades, thanks to cheap energy and our need to make stuff. But to borrow funds to invest in the market only makes sense in a world where printing money is the norm. When the economy begins to contract and oil hits $120/bbl, what maintains cash flow; bank dividends? Oh, and they can't make risky investments!

There are over 200,000 retirees backed by 60,000 or so employees contributing to the plan. Moreover, the plan assumes 6% returns at a time when 10-year treasuries 2.4%.

This is a Ponzi scheme about to go bust.

Leverage

The only way demographically-challenged plans can achieve the necessary returns is via leverage. That is precisely what Democrats Brown and Ryan propose, perhaps without realizing it, perhaps not caring.

Regardless, borrowing money to invest in stocks is the equivalent of using margin.

If the stock market heads lower, losses will be massive, requiring more and more funding. Margin funding can backfire unless there is an infinite pool of money available to borrow.

 

Stan Robertson's picture
Stan Robertson
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Posts: 649
davefairtex wrote: I've been
davefairtex wrote:

I've been waiting for this.  Not eagerly.

Great video though.

I'm guessing we'll ban them in the hands of private citizens.  It will end up being military & intel services (and terrorist) technology.

One way to protect yourself against an attacking bot swarm is by employing a swarm of defensive bots.

And hope you have enough.

This idea has already flown the coop. The world is full of folks with the ability to make these things. Some of my grandkids could do these if so inclined.

Quercus bicolor's picture
Quercus bicolor
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Posts: 448
Defense against autonomous drones

If such a drone becomes reality, it could probably kill you with a hit to the chest or back (go for the heart), neck, or abdomen (go for a major artery), thigh (femoral artery).  Certainly hitting two or more of these sites with the intent to kill by blood loss would be effective.  So you'd need lots of armor.  Maybe the best strategy is to walk around with your own swarm of defensive drones.  A much smaller charge of explosive (< 1 g probably) would be enough to take out an attack drone.  It just needs to set off the attacker's charge to destroy it.   I imagine there would be all sorts of measures and countermeasures in this escalating war of drones including possibly projectiles, hacking the attacker or defender, creating confusion with jamming, smoke, etc., defenders posing as attackers, etc.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
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Posts: 4774
drone sensors

Well if you know the model, maybe you can blind, trick, or overload the sensors in some way.  Maybe an electrical pulse or electrically-charged high voltage net or mesh to short out the electronics.  And if they have an external mechanism of communication, perhaps that could be hijacked/hacked in some way.  Imagine if the assassin drone had a zero-day bug in it ...

I like the anti-robot robots concept best.

Of course a man on his own would be totally outclassed...effectively bringing a sharp pencil to a tank-fight.

 

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 722
I am not a fan of cattle prods but...

But for the civilian sized drones it seems like it might be handy to short out the mechanism.  But then you'd probably have video footage convicting you of vandlism :(

thc0655's picture
thc0655
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Posts: 1468
Drone defense

#7 birdshot in a 12 gauge shotgun.

Large butterfly net.

Electronic countermeasures protecting a small area capable of being carried in a pocket and activated by the push of a button.  Something like cell phone blockers that keep any nearby phones from sending or receiving any signals.  These are illegal to use in the US, though who would care about that after the first killbot swarm incident: https://www.thesignaljammer.com

Disguise yourself so the drone wouldn't recognize you as you, or wouldn't even recognize you as a human being.  You'd have to be reasonably sure the drones would be out hunting in order to go this far, as you'd attract a lot of unwanted human attention.

But, really, if swarms of weaponized drones are released on civilian populations then Skynet will probably be very close to the final solution (especially if robots can build and program the drones with little to no human input).

Matt Holbert's picture
Matt Holbert
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Posts: 77
thc0655, I think that you are on the right track...

#7 birdshot in a 12 gauge shotgun

However, when cycling it may not be practical to carry a shotgun. I was thinking that maybe a wrist rocket slingshot loaded with soybeans might be the ticket. The problem is that the drones are getting so small that they will be difficult to spot.

Quercus bicolor's picture
Quercus bicolor
Status: Gold Member (Offline)
Joined: Mar 19 2008
Posts: 448
minimum drone size

There is a limit to how small they can get.  The amount of battery energy that can be carried on board is roughly proportional to size.  However the aerodynamic drag to size ratio climbs steeply as the device gets smaller - increasing the energy per unit of weight required to travel a certain distance.  So very small drones will have a very limited range.  I'm not sure how propeller efficiency is effected by size, but I bet it works against small drones too.

Snydeman's picture
Snydeman
Status: Gold Member (Offline)
Joined: Feb 6 2013
Posts: 376
You know...

I play softball and have a very strong and accurate throw. So, rocks.

Time2help's picture
Time2help
Status: Diamond Member (Online)
Joined: Jun 9 2011
Posts: 2720
Throwing rocks

An interesting read on the topic.

Military AI as a Convergent Goal of Self-Improving AI (Alexey Turchin, Science for Life Extension Foundation)

Quote:

Abstract

Better instruments to predict the future evolution of artificial intelligence (AI) are needed, as the destiny of our civilization depends on it.

One of the ways to such prediction is the analysis of the convergent drives of any future AI, started by Omohundro. We show that one of the convergent drives of AI is a militarization drive, arising from AI’s need to wage a war against its potential rivals by either physical or software means, or to increase its bargaining power.

This militarization trend increases global catastrophic risk or even existential risk during AI takeoff, which includes the use of nuclear weapons against rival AIs, blackmail by the threat of creating a global catastrophe, and the consequences of a war between two AIs. As a result, even benevolent AI may evolve into potentially dangerous military AI. The type and intensity of militarization drive depend on the relative speed of the AI takeoff and the number of potential rivals.

We show that AI militarization drive and evolution of national defense will merge, as a superintelligence created in the defense environment will have quicker takeoff speeds, but a distorted value system. We conclude with peaceful alternatives.

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