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The New York Times Just Admitted That The West’s Anti-Russian Sanctions Are A Failure

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The New York Times Just Admitted That The West’s Anti-Russian Sanctions Are A Failure

Authored by Andrew Korybko via The Automatic Earth blog,

The “official narrative” surrounding the Ukrainian Conflict has flipped in recent weeks from prematurely celebrating Kiev’s supposedly “inevitable” victory to nowadays seriously warning about its likely loss.

It was therefore expected in hindsight that other dimensions of the information warfare campaign waged by the US-led West’s Golden Billion against Russia would also change. As proof of precisely that, the New York Times (NYT) just admitted that the West’s anti-Russian sanctions are a failure.

In Ana Swanson’s article about how “Russia Sidesteps Western Punishments, With Help From Friends”, she cites Western experts who concluded that “Russia’s imports may have already recovered to prewar levels, or will soon do so, depending on their models.” Even more compelling, she references the IMF’s latest assessment from Monday, which “now expected the Russian economy to grow 0.3 percent this year, a sharp improvement from its previous estimate of a 2.3 percent contraction.”

Neither the NYT, the Western experts that Swanson cites, nor the IMF can credibly be accused of being “Russian-friendly”, let alone so-called “Russian propagandists” or even “Russian agents”, which thus confirms the observation that this dimension of the Golden Billion’s infowar has also decisively shifted. The fact of the matter is that the West’s anti-Russian sanctions failed to catalyze the collapse of that targeted multipolar Great Power’s economy, which continues to remain impressively resilient.

The timing at which this narrative changed is also important because it extends credence to the more widely known new narrative that’s nowadays seriously warning about Kiev’s likely loss in NATO’s proxy war on Russia. After all, if the sanctions achieved the goal that they were supposed to and which the US-led West’s Mainstream Media (MSM) hitherto lied that they supposedly had, then it naturally follows that Kiev would “inevitably” win exactly as they claimed would happen up until mid-January.

With this in mind, the most effective way to “reprogram” the average Westerner after brainwashing them over the past 11 months into expecting Kiev’s supposedly “inevitable” victory is to also decisively change the supplementary narratives that artificially manufactured that aforesaid false conclusion. To that end, the order was given to begin raising the public’s awareness about the failure of the Golden Billion’s anti-Russian sanctions, ergo the NYT’s latest piece and the specific timing thereof.

What’s left unsaid in that article is the “politically incorrect” but nevertheless heavily implied observation that the jointly BRICS– & SCO-led Global South of which Russia is a part has defied the Golden Billion’s demands to “isolate” that multipolar Great Power. No MSM outlet will ever admit it, at least not yet, but their de facto New Cold War bloc has limited sway outside the US’ recently restored “sphere of influence” in Europe, whose countries are the only ones suffering from these sanctions.

The NYT’s latest piece might inadvertently make many members of their public conscious of that, however, and they might therefore increasingly object to their governments scaling up their commitment to NATO’s proxy war on Russia under American pressure. Croatian President Zoran Milanovic recently joined Hungarian Prime Minister Viktor Orban in condemning this campaign and raising wider awareness of just how counterproductive it’s been for Europe’s objective interests.

As Europeans come to realize that they’re the only ones suffering from the anti-Russian sanctions that their American overlord coerced them into imposing and that their sacrifices haven’t adversely affected that targeted multipolar Great Power’s special operation, massive unrest might follow. It’s unlikely to influence their US-controlled leaders into reversing course, remembering that the German Foreign Minister vowed late last year never to do so, but could instead catalyze a violent police crackdown.

The reason behind this pessimistic prediction is that a reversal or at the very least lessening of the presently rigid anti-Russian sanctions regime would represent an unprecedentedly independent move by whichever European state(s) does/do so. Seeing as how that didn’t even happen in the eight years prior to the US’ successful reassertion of its unipolar hegemony all across 2022, the likelihood of that happening nowadays under those much more difficult conditions is practically nil.

The US’ “Lead From Behind” subordinate for “managing” European affairs as part of its new so-called “burden-sharing” strategy, Germany, has more than enough levers of economic, institutional, and political influence to several punish any of those lower-tier American vassals who get out of place. It’s therefore unrealistic to expect any single EU member to unilaterally defy the bloc’s anti-Russian sanctions that their own government previously agreed to.

Considering this reality, those leaders who want to remain in power or at least not risk the US’ German-driven Hybrid War wrath against their economies are loath restore a semblance of their largely lost sovereignty in such a dramatic manner. Instead, their most pragmatic course of action is to not participate in the military aspect of this proxy war by refusing to dispatch arms to Kiev exactly as the emerging Central European pragmatic bloc of Austria, Croatia, and Hungary have done.

The population of those countries are thus unlikely to protest against the sanctions even after being made aware of the facts contained in the NYT’s latest piece and naturally coming to the conclusion that the anti-Russian sanctions have only harmed their own economies and not that targeted Great Power’s. Folks in France, Germany, and Italy, however, could very well react differently, especially considering their tradition of organizing massive protests.

In such a scenario, their governments are expected to order a violent police crackdown under whatever pretext they concoct, whether it’s falsely accusing the protesters of employing violence first or accusing them all of being so-called “Russian agents”. Regardless of how it happens, the outcome will be the same whereby Western European countries will slide deeper into liberal-totalitarian dictatorship, which will in turn contribute to further radicalizing their population towards uncertain ends.

Returning back to the NYT’s piece, it represents a remarkable reversal of the “official narrative” by frankly admitting that the West’s anti-Russian sanctions are a failure. This coincides with the decisive shift of the larger narrative driven by American and Polish leaders over the past month whereby they’re nowadays seriously warning about Kiev’s likely loss in NATO’s proxy war on Russia.

It remains to be seen what other narratives will change as well, but it’s predicted that more such ones will inevitably do so.

*  *  *

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Tyler Durden
Sun, 02/05/2023 – 23:00

Devastating Footage Emerges After 7.8 Magnitude Earthquake In Turkey

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Devastating Footage Emerges After 7.8 Magnitude Earthquake In Turkey

A magnitude 7.8 earthquake struck southern Turkey at 4:18 a.m. Monday near the city of Nurgadi, which was followed by a powerful 6.7 magnitude aftershock. Devastation spread into northern Syria, and the quake was felt as far away as Tel Aviv and Beirut.

Earthquake rubble in Malatya

Search and rescue teams have been dispatched to the affected areas, with President Erdogan conveying his “best wishes” to citizens via a Monday tweet, adding “We hope that we will get through this disaster together as soon as possible.”

One of the largest cities near the epicenter is Gaziantep, located near the Syrian border. According to Governor Davut Gul, the earthquake was “felt severely” in the city.

Via BBC.com

According to USGS seismologist Susan Hough, the quake risked being particularly dangerous due to its location and shallow depth.

“The world has seen bigger magnitudes than this over the past 10-20 years,” she tweeted. “but quakes close to M8 are not common on shallow strike-slip fault systems, and by virtue of proximity to population centers can be especially deadly.”

Several buildings in the province of Kahramanmaras have collapsed, and a fire has broken out.

130 buildings have reportedly collapsed, including two hotels, in the city of Malatya, according to the governor.

In Osmaniye, a province near the epicenter, five people were killed and 34 buildings collapsed, local media reports.

In the province of Sanliurfa, the earthquake was “severe and long-lasting,” Governor Salih Ayhan tweeted

According to the NY Times, Turkey has asked the European Civil Protection and Humanitarian Aid Operations orgnaization for help. The Turkish army also has two planes ready to carry units to the region. 

Meanwhile, Syria’s Civil Defense declared a state of emergency after the earthquake, saying on Twitter that dozens of people remained trapped in the northwest region of the country on Monday.

Tyler Durden
Sun, 02/05/2023 – 22:30

Innovation Or Attack? Sorting Out The “NFT Big Block” On The Bitcoin Network

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Innovation Or Attack? Sorting Out The “NFT Big Block” On The Bitcoin Network

By Liu Chongyong of WuBlockchain,

On February 1, 2023, Bitcoin Network mined the largest block in history, containing a nearly 4M largest transaction in the history, and the transaction fee is 0…

The big transaction was sent out by indie developer @udiWertheimer’s “Taproot Wizard”, an NFT project on the Bitcoin network. The main data is an NFT, not a hash, but an entire jpg image.

The developer and project have not been named, but the incident has caused a huge shock to the Bitcoin ecosystem, with Blockstream CEO Adam Back (@adam3us), Bitcoin Core developer @LukeDashjr and others calling it an attack on Bitcoin.

See CoinDesk’s report:https://www.coindesk.com/tech/2023/02/02/giant-bitcoin-taproot-wizard-nft-minted-in-collaboration-with-luxor-mining-pool/

However, @udiWertheimer stresses that this is an innovation based on “Ordinals” proposed by former Bitcoin core developer Casey Rodarmor.

Ordinals Doc:https://docs.ordinals.com/introduction.html

@udiWertheimer and Casey Rodarmor claim that the theory can tag every basic unit of bitcoin: satoshi, and can be transferred. NFT is just one of many ways to enable more functionality on the Bitcoin network without the need for a hard and soft fork upgrade.

Rodarmor claims that Ordinals came up because Bitcoin lacks a stable public identity. Bitcoin addresses tend to be single-use, wallet accounts are local, and ownership of public and private keys is not transferable. So, by marking each satoshi in each output, Ordinals creates a transferable account or identity for Bitcoin.

For technical details see:https://github.com/casey/ord/blob/master/bip.mediawiki

Specifically, in the NFT project “Taproot Wizard”, the publisher is supposed to use a specific satoshi to refer to jpg images to implement the identification and circulation of the NFT. I haven’t fully understood how this is done.

It’s an interesting experiment in innovation, but bitcoin core doesn’t like it for a couple of reasons:

  1. Blockchain size inflation: This will result in the rapid expansion of bitcoin blockchain size, greatly increased requirements for devices running full-node, resulting in the reduction of full-node of the whole network and the decline of anti-censorship. This was the main reason for rejecting Vitalik’s smart contract in OP_RETURN in 2014, and rejecting hard fork expansion in 2017.

  2. Ecological impact: Big transactions and Big blocks exceeding expectations impact wallet, mining pool, browser and other ecological facilities, resulting in some facilities abnormal, such as the transaction of btc.com browser failed to parse properly.

  3. Reduce security: In order to reduce the time of synchronization and verification of big transactions and blocks, the mining pool or miners may choose not to download and release blocks without verifying the transactions and blocks, which brings security risks.

In the expansion debate in 2017, Bitcoin core refused to expand by means of hard fork to increase the block limit, and chose to use segwit to bring the verification information outside the block on the premise of avoiding hard fork, so as to bypass the 1M block limit and achieve partial expansion. However, there was no restriction on the length of the verification message. Hard choices now have to be made:

  1. Do nothing and allow applications to enter the Bitcoin blockchain in this way, making the debate about limiting OP_RETURN and expanding capacity meaningless;

  2. Hard fork upgrade, write the size limit of the data witnessed in isolation into the consensus. This is also difficult. The impact of hard fork is great and all nodes need to be updated, which is also the main reason for rejecting the New York Consensus upgrade to 2M in 2017.

  3. Reach a partial consensus on major pools and reject big blocks and big tx. This is very bad. It opens the door to manual block review, loses the sense of decentralization, and is operationally difficult for all pools to comply with.

Overall, option 1 is more likely because option 3 is difficult to achieve, and the Bitcoin ecosystem is already very large, making it difficult to smoothly hard fork.

Relevant data:

Block height: 774628

Block size: 3,955,272 bytes

Transaction ID

0301e0480b374b32851a9462db29dc19fe830a7f7d7a88b81612b9d42099c0ae

Transaction size: 3,938,383 bytes

Transaction type: segwit

Transaction fee: 0

Block miner: “Luxor Mining”

Sending address of transaction:

bc1pscu742m5eyt6vwzl62fjugy9mj5yq8pgk674qc2x44892t3zjqfs3ca78z

Note: I have not yet sorted out all the technical details, such as how Ordinals implemented NFT, the structure of the isolated witness data and related restrictions, etc. Corrections or additions are welcome.

Tyler Durden
Sun, 02/05/2023 – 22:00

Hedge Fund CIO: “China’s Helium Balloon Is A Distraction: The Real Risks Are Off The Radar”

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Hedge Fund CIO: “China’s Helium Balloon Is A Distraction: The Real Risks Are Off The Radar”

By Eric Peters, CIO of One River Asset Management

“You take something off the table here,” barked Biggie Too.

“Feels like we’re somewhere in peak Goldilocks,” continued the Global Chief Strategist for one of Wall Street’s Too-Big-To-Fail affairs.

“At some point you get a challenge to Goldilocks – Biggie sees things and it’s coming,” he bellowed, most comfortable in 3rd person.

“Maybe the dollar resumes its rally. Conviction trades roll over – investment grade, emerging markets. Not yet. Biggie feels a little back and forth first.”

Overall

“I ordered the Pentagon to shoot it down on Wednesday as soon as possible,” said President Biden, caving to the cries of the crowd.

“They decided – without doing damage to anyone on the ground – they decided that the best time to do that was when it got over water,” added America’s Commander-in-Chief, acknowledging that of the many terrific uses for F-22s, engineering soft landings is not one.

“Within the 12-mile limit, they successfully took it down, and I want to compliment our aviators who did it.”

The media sure loved it all.

Clicks, conspiracies, coverups.

And presumably some Americans felt safer knowing a nation that landed a rover on the dark side of the moon and tested encrypted satellite communications using quantum entanglement technology, is no longer floating a helium balloon overhead.

It reminded us that what we fear need not make much sense.

The real risks, of course, are most often off the radar.

One such risk is that the nation with the world’s most important economy and mightiest military is becoming increasingly difficult to responsibly govern.

China’s helium balloon illustrated this disturbing fact for all those tuned in to its faint signal.

But the much larger object floating overhead is the Federal Reserve’s unfathomably bloated balance sheet, which is both impossible to photograph and even more difficult to explain to the nation’s distracted citizenry.

“We’ve raised rates four and a half percentage points, and we’re talking about a couple of more rate hikes to get to that level we think is appropriately restrictive,” said Chairman Powell, at the press conference. “Why do we think that’s probably necessary? We think because inflation is still running very hot,” he added. But the yield curve remained steeply inverted, dismissing Powell’s guidance, as the bond market fears sustained rate hikes when combined with the ongoing quantitative tightening campaign will precipitate a hard landing.

Tyler Durden
Sun, 02/05/2023 – 21:00

US Ban On Pot Users Owning Guns Ruled Unconstitutional

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US Ban On Pot Users Owning Guns Ruled Unconstitutional

Another week, another defeat for the gun-grabbers: A federal law barring marijuana users from owning and possessing firearms has been ruled unconstitutional.  

In a 54-page ruling in favor of Jared Harrison handed down Friday in Oklahoma, U.S. District Judge Patrick Wyrick said the government cannot claim that Harrison’s “mere status as a user of marijuana justifies stripping him of his fundamental right to possess a firearm.”

It’s the latest of many rulings against gun restrictions that are following in the widening wake of last June’s watershed U.S. Supreme Court ruling in New York State Rifle & Pistol Association v. Bruen.

U.S. District Judge Patrick Wyrick (AP/ Sue Ogrocki via The Journal Record

That case established a test that judges across the country must now apply when evaluating gun control laws: Such laws must be “consistent with the nation’s historical tradition of firearm ownership.” 

“The mere use of marijuana carries none of the characteristics that the Nation’s history and tradition of firearms regulation supports,” wrote Wyrick. Further, “the United States has not identified a single historical law that is ‘distinctly similar'” to the one barring marijuana users from possessing firearms. 

The DOJ tried to relate the general firearms ban against marijuana users to laws that targeted intoxicated people. Wyrick, a Trump appointee, wasn’t having it: 

“The restrictions imposed by each law only applied while an individual was actively intoxicated or using intoxicants. Under these laws, no one’s right to armed self-defense was restricted based on the mere fact that he or she was a user of intoxicants…

Where the seven [DOJ-cited] laws took a scalpel to the right of armed self-defense, [this marijuana-gun law] takes a sledgehammer to the right.” 

Harrison’s public defender, Laura Deskin, called the ruling a “step in the right direction for a large number of Americans who deserve the right to bear arms and protect their homes just like any other American.” The federal goverment is expected to appeal the decision. 

Harrison was pulled over in Lawton, Oklahoma in May 2022 for failing to stop at a red light. The officer smelled marijuana, and a subsequent search of the vehicle produced a loaded revolver on the driver-side floor. At the time, Harrison was on probation for aggravated assault.

A federal grand jury indicted him for possessing a firearm with knowledge that he was an unlawful user of marijuana. The aggravated assault charge had no bearing on the prosecution: In Wyrick’s words, the federal case had the government arguing that, “Harrison’s mere status as a user of marijuana justified stripping him of his fundamental right to possess a firearm.” 

Expect the Bruen test to continue hacking away at America’s thicket of gun law that infringe on a fundamental human right. 

Tyler Durden
Sun, 02/05/2023 – 20:30

“Confidential Letters”: FTX Demands Politicians Return Millions In SBF Donations

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“Confidential Letters”: FTX Demands Politicians Return Millions In SBF Donations

Just when you thought the FTX travesty couldn’t get any more bizarre, the now bankrupt company is trying to claw back political donations and other spending that took place at the direction of former CEO Sam Bankman-Fried. 

A press release made its way out mid-day Sunday that FTX’s debtors and the company had sent “confidential messages to political figures, political action funds, and other recipients of contributions or other payments that were made by or at the direction of the FTX Debtors, Samuel Bankman-Fried or other officers or principals of the FTX Debtors” requesting the funds back. 

These recipients are requested to return such funds to the FTX Debtors by February 28, 2023,” the release states. 

It continues: “The messages follow the December 19, 2022, announcement by the FTX Debtors that they have established arrangements for such recipients to return funds voluntarily by contacting (FTXrepay@ftx.us).”

Then, the release threatens legal action to those who are unwilling to return funds: “To the extent such payments are not returned voluntarily, the FTX Debtors reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced.”

“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee,” the release says. 

We noted back in December that $73 million in political donations were now at risk as a result of the bankruptcy. SBF also donated to Democratic Rep. Ritchie Torres of New York, who last year was one of 8 members of Congress who lobbied against regulating crypto.

“Nobody ends up looking great in this,” said University of Rochester political science professor, David Primo, at the time. 

While there’s precedent for forcing political entities to return contributions in cases of fraud, recovery prospects are unclear in FTX’s case. Recouping campaign funds as part of the bankruptcy proceedings is a complicated and lengthy process, and the scope of the total funds eligible for clawback depends on myriad federal and state laws. It is also subject to the bankruptcy lawyers’ judgment on what money, which may be long spent by the time the FTX trustees try to go after it, is worth the effort.

Bankman-Fried is facing additional scrutiny for recently saying he gave equally to Republicans and Democrats, but funded conservatives through  “dark money” groups that don’t identify donors. The claim is almost impossible to verify unless the recipients voluntarily disclose they received money from him. -Bloomberg

One factor noted in the debate over clawbacks is whether the bankruptcy court determines there was fraud or fraudulent intent involved in the collapse of FTX, according to Ilan Nieuchowicz, a litigator for law firm Carlton Fields. If that’s the case, nearly all donations tied to FTX could be a recovery target. If not, then only those made within the 90-day period prior to FTX’s insolvency, or around $8.1 million, would potentially be subject to recapture.

Meanwhile, $26.6 million of FTX-linked contributions went directly to large super PACs, including those who gave money to House and Senate leadership of both parties (and of course, the proportion isn’t mentioned). 

Recall, we reminded readers back in December that SBF was being heralded as “one of the people most responsible” for Biden’s 2020 win.

Somebody better flip over Hunter Biden and see how much change falls out of his pockets…

Tyler Durden
Sun, 02/05/2023 – 19:30

Mission Accomplished!

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Mission Accomplished!

Authored by MN Gordon via EconomicPrism.com,

About the time the most trusted man in America, Walter Cronkite, signed off from the CBS Evening News for the last time, something momentous happened in the U.S. credit market.  Few people, apart from Bill Gross and A. Gary Shilling, understood what was going on.

Hindsight is always 20/20.  And looking at a chart of U.S. interest rates several decades later it all seems so obvious.  Specifically, that the rising part of the interest rate cycle peaked out in 1981.

This one thing, in essence, changed everything.  Over the next 39 years interest rates fell as mega-asset bubbles were puffed up and floated across the land.

The relationship between interest rates and asset prices isn’t complicated.  Tight credit generally produces lower asset prices.  Loose credit generally produces higher asset prices.

When credit is cheap and plentiful, individuals and businesses increase their borrowing to buy assets they otherwise couldn’t afford.  As cheap credit flows into various assets, it balloons their prices in kind.

For example, individuals may use cheap credit to take on massive jumbo loans.  This allows them to bid up house prices.  Businesses, flush with a seemingly endless supply of cheap credit, may borrow money and use it to buy back shares of company stock.  This has the effect of inflating share prices, and the value of executive stock options.

When credit is tight, the opposite happens.  Borrowing is reserved for activities that promise a high rate of return; one that exceeds the high rate of interest.  This has the effect of deflating the price of financial assets.

More Pain to Come

In 1981, following a great wave of Federal Reserve manufactured inflation, credit was expensive.  At the same time, stocks, bonds, and real estate were cheap.  For example, in 1981, the interest rate on a 30-year fixed mortgage reached the unimaginable high of 18.45 percent.  That year, the median sales price for a U.S. house was about $70,000.

By comparison, in December 2020, the 30-year fixed mortgage rate dropped to a historical low of 2.68 percent.  Rates remained below 3 percent for most of 2021.  This allowed many borrowers to refinance or buy houses at extreme low rates.

Thus, the median sales price for a U.S. house peaked at $468,000 in Q3 2022.  Along the Country’s east and west coasts prices inflated much higher.

In 2022, as the Fed commenced hiking the federal funds rate in an attempt to contain the raging consumer price inflation of its making, the 30-year fixed rate mortgage spiked up to over 6.5 percent.  Consequently, U.S. house prices are now deflating and likely have much further to fall to complete this boom-and-bust cycle.

Similarly, the Dow Jones Industrial Average (DJIA) was roughly 900 points in 1981.  Then, on January 4, 2022, the DJIA hit its all-time closing high of 36,799.  That comes to over a 3,988 percent increase.  Since then, however, as interest rates have increased, the DJIA has started deflating to its recent close of 34,053.  Like house prices, we believe the DJIA also has much further to fall.

Without question, the 39-year run of cheaper and cheaper credit had something to do with ballooning stock and real estate prices.  Asset prices and other financialized costs, like college tuition, have been grossly distorted and deformed by nearly four decades of falling interest rates.

The gap between high asset prices and low borrowing costs have positioned the world for a great reckoning.  Certainly, 2022 was a difficult year for stock and bond investors.  Nonetheless, there is plenty more pain to come.

Only 37 More Years to Go

The Fed has strong influence over credit markets through its open market operations.  But it is not the credit market’s ultimate master.  The fact is, Fed credit market intervention plays second fiddle to the overall rise and fall of the interest rate cycle.

From a historical perspective, today’s 10-Year Treasury note yield of 3.39 is still extraordinarily low.  But if you consider just the last two years, it’s extraordinarily high.

The yield on the 10-Year Treasury note bottomed out around just 0.62 percent in July 2020.  At 3.39 percent today, the yield his increased dramatically.  In fact, the yield on the 10-Year Treasury note has increased over 446 percent over the last 31 months.  Quite frankly, it’s amazing there hasn’t been a major blow up of a major investment fund – yet.

The last time the interest rate cycle bottomed out was during the early-1940s.  The low inflection point for the 10-Year Treasury note at that time was a yield somewhere around 2 percent.  After that, interest rates generally rose for the next 40 years.

No one can predict the future.  But looking to past interest rate cycles for guidance provides a startling realization.  We may be less than three years into a 40-year period of rising interest rates.  In other words, everything the world has come to know and love about financial markets since 1981 has been stood on its head.

Between 1981 and 2020, each time the economy went cold, the Fed cut interest rates to juice financial markets.  In this disinflationary environment, asset prices increased while incomes stagnated.  Moreover, aided by an abundance of cheaply made goods from China, increases to consumer prices over this period were moderate.

The Fed, while conflating apparent success with luck, thought it had somehow tamed the business cycle.  Congress also discovered it could spend printing press money without consequences.  These takeaways couldn’t be further from the truth.

Your Broker Has No Clue

Not many people are still alive who remember how drastically different the effects of the Fed’s policy adjustments are during the rising part of the interest rate cycle than during the falling part of the interest rate cycle.

During the rising part of the interest rate cycle, as demonstrated in the 1970s, after the U.S. defaulted on the Bretton Woods Agreement, Fed interest rate policy became increasingly damaging.  Fed policy makers demonstrated they are politically incapable of staying out in front of rising consumer prices.  Their efforts to hold the federal funds rate artificially low, to boost the economy, no longer had the desired effect.

In this scenario, monetary inflation brought about consumer price inflation.  Fed policies were policies of disaster.

In July 2020, roughly 39 years after it last peaked, the credit market finally bottomed out. Yields are rising again.  In truth, they may rise for the next three to four decades.

This means the price of credit will increasingly become more and more expensive well into the mid-21st century.  Hence, the world of perpetually falling interest rates – the world we’ve known since the early days of the Reagan administration – is over.

This is something most politicians, consumers, and investors have little comprehension of.  Your broker also likely has no clue what has happened.

Many investors, having little experience beyond two decades, let alone four decades, are enamored with the vaunted salvation of a forthcoming Fed pivot.  This limited focus will compel them into strategic mistakes.  They may unwittingly put their hard-earned savings and wealth in a place of great danger.

Mission Accomplished?

Fed Chair Jay Powell has studied the on again off again inflation of the 1970s.  He knows how quickly consumer price inflation can flare-up if the Fed does not fully snuff it out.  He recognizes the dangers of taking his foot off the break too soon.  He doesn’t want a repeat of another decade of high consumer price inflation.

Still, Powell is human just like you.  He’s subject to influence.  Specifically, political influence.

After this week’s 25 basis points rate hike, the federal funds rate is now at a range of 4.5 percent to 4.75 percent.  Another 25-basis point rate hike in March will take the top end of the federal funds rate to 5 percent for the first time in 17-years.

Will that be the end of it?  Will it be mission accomplished?  Will the Fed then pause?  Will it then pivot?

Investors, the foolish ones, seem to think so.  This week, following the Fed’s rate hike and subsequent press conference, investors went all in on a variety of companies.  On Thursday, Grainger jumped over 30 percent, followed by Align Technology (up over 27 percent), Coinbase (up nearly 24 percent), and Meta (up over 23 percent).

What gives?

The U.S. economy appears to be slipping and sliding into a recession.  Consumers are tapped out.  They’ve maxed out their credit cards.  Technology workers are getting massively RIFed.  The depth and intensity of the economic contraction will test the Fed’s courage to act.

The political pressure applied to Powell may become too much to resist.  The Fed may, in fact, cut rates later this year.  This is what the fools are banking on.  Though the result may not be what they expect.

Because the Fed will be cutting the federal funds rate in an environment of rising interest rates.  The last time the Fed tried this, in the 1970s, the results were disastrous.

Certainly, yields on Treasury notes may periodically fall during periods of recession.  For example, they could fall over the coming months.  However, the long-term trend is up.

The experience of 2022 will repeat several times per decade until the cycle has concluded.  By our estimation, that will be sometime around 2060 – give or take a few years.

Investment decisions should be made accordingly.

*  *  *

Hoping for a Fed pivot to bailout your retirement is a fool’s strategy.  At this point in the credit cycle, the deck’s stacked against you.  But are things you can do.  If you’re interested in discovering several ideas, take a look at my Financial First Aid Kit.  Inside, you’ll find everything you need to know to prosper and protect your privacy as the global economy slips into a worldwide depression.

Tyler Durden
Sun, 02/05/2023 – 19:00

Iranian-Designed Drone Production Site To Be Built Inside Russia

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Iranian-Designed Drone Production Site To Be Built Inside Russia

Russia and Iran plan to establish a joint drone manufacturing facility inside Russia, according to a weekend Wall Street Journal report, which comes following US and European efforts to target Iranian-made drones going to Russia with sanctions.

The Iranian kamikaze drones which have for many months now been pummeling Ukraine’s energy infrastructure, such as the Shahed-136 drones, cost as little as $20,000 to make. According the WSJ a plant established on Russian soil to ramp up Iranian-designed drone production would result in an additional 6,000 of them rolling of the line, for deployment by Russian forces in Ukraine.

Source: IRNA

Reportedly the agreement to establish manufacturing operations in Russia was inked with Iran back in November, when the Iranian drones and their devastating attacks in Ukraine were focus of international media attention and condemnation.

But the new plans for a drone factory could result in new, more effective UAVs, reports WSJ further. “As part of their emerging military alliance, the officials said, a high-level Iranian delegation flew to Russia in early January to visit the planned site for the factory and hammer out details to get the project up-and-running,” according to the report.

“The two countries are aiming to build a faster drone that could pose new challenges for Ukrainian air defenses, the officials said.”

It’s also an effort to sidestep what the US administration called its plans to “choke off Iran’s ability to manufacture the drones” as US forces help “Ukraine’s military to target the sites where the drones are being prepared for launch,” according to prior statements from officials in The New York Times.

Ukrainian forces regularly announce that their anti-air defenses intercept inbound Iranian drones. This has possibly happened many dozens or perhaps hundreds of times, and yet it remains that the anti-air systems needed for such intercepts are many times more expensive than the relatively cheap but effective drones by comparison.

Tyler Durden
Sun, 02/05/2023 – 18:30

Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off

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Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off

The fake meat industry appears to be in a death-spiral as sales at plant-based ‘meat’ companies Impossible Foods and Beyond Meat have imploded.

As Axios reports, “after years of hype, the tide is turning against the first generation of plant-based protein makers.”

Last year, both companies were riding high – with prime placement on supermarket shelves, and Burger King even adding an Impossible Whopper to its menu.

Impossible Meat even began to branch out – looking to expand offerings to highly processed meats such as chicken nuggets and sausages.

Sales have collapsed, however, which according to a recent Bloomberg report, has resulted in Impossible Foods planning to lay off around 20% of its workers.

Impossible Foods Inc., the maker of meatless burgers and sausages, is preparing to cut about 20% of its staff, according to a person familiar with the matter.

The Redwood City, California-based company currently employs about 700 workers. The new round of dismissals could reduce that amount by more than 100. 

Impossible Foods also offered voluntary separation payments and benefits to employees at the end of 2022, said the person, who asked not to be named discussing private information. An internal document viewed by Bloomberg confirmed the separation packages being offered. The company previously reduced headcount in October, cutting about 6% of its workforce at the time. -Bloomberg

Beyond Meat’s sales fell over 22% in the third quarter of 2022, as the company is preparing to similarly cut 20% of its workers. The company has also lost several executives.

According to the report, supermarket sales fell by 15% y/y as of Jan. 1, according to market-research firm IRI, while orders in restaurants dropped 9% in the12 months ended in November, according to NPD Group. 

Meanwhile, data from consumer-experience strategy firm HundredX suggests waning interest in general – as the percentage of shoppers polled who have eaten Impossible products and say they won’t do it again has risen.

Beyond Meat stock is also down around 67% vs. one year ago.

Tyler Durden
Sun, 02/05/2023 – 17:45

Update To ‘Sims’ Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars

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Update To ‘Sims’ Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars

Authored by Steve Watson via Summit News,

A new update to the popular “Sims” video game, where the player controls communities of simulated characters, now features transgender characters replete with chest binders and scars from having their breasts surgically removed.

The Update was recently announced by EA Games:

The game, which is aimed at children from age 12, also enables players to place ‘packing’ or ‘tucking’ underwear’ on their sims, garments that give or hide the appearance of male genitalia.

Rebel News editor Ian Miles Cheong notes:

The “Create a Sim” character creator now has a “Top Surgery Scar” subcategory, which can be added to male Sims characters aged Teen or older. Furthermore, chest binders can be found under the “Tanks” subcategory in the “Tops” section, while “tucking underwear” can be situated under “Bottoms” in the “underwear” subcategory.

In a statement, “The Sims 4” producer John Faciane called the update “a step in the direction of a more inclusive experience for Simmers.” 

It’s just a simulation though right?

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Tyler Durden
Sun, 02/05/2023 – 17:00