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I got a freak chart for you that’s stunning, but bear with me here because it requires some background and patience. Most of us are focused on the daily or weekly action and it’s easy to lose sight of big cyclical trends. We don’t think of them as they take a long time to unfold and the daily noise is so much more dominant.
With the advent of permanent central bank intervention sparked by the financial crisis all of us have come accustomed to markets always going up with the occasional correction in between and the timing of corrections have seemingly become shorter and shorter. Big fat bottoms that happen after just a few days of temporary terror. We haven’t seen a true bear market since the financial crisis and even that one lasted barely more than a year as central banks stepped in. The last longer term bear market came after the technology bust in 2000 when markets bottomed in 2002 and 2003 and then proceeded onto the next bull market.
It didn’t always used to be this way. Going back to 1900 there were multiple extended periods of stock markets going nowhere and trading in wide chop ranges:
One could even argue that the period between 2000 and 2012 was such a period before markets finally broke above their 2007 highs.
But looking at this very long term chart we can note consolidation periods that were much longer, most notable the period between the 1960’s and the early 1980’s. No progress whatsoever, but then something happened and the answer should be obvious: The advent of personal computing, the internet and information technology. It changed everything and accelerated the world to never before seen wonders. But it also has come at a cost and we may be seeing the effects of this cost unfold in front of our eyes.
View it from a big macro perspective: Central banks have done their best to lead a global economy back to organic growth coming out of the financial crisis. The promise was full employment and inflation back to 2%. If you look at the official statistics they’ve met their unemployment goal, but they kept missing on the inflation front. Why? Because they are fighting the greatest deflationary force known to man: Technology. Companies like Facebook and Netflix have stamped out massive audience businesses requiring few people to serve them. The scalability of technology is incredible. Hence the economic model has changed and it’s all a bit inefficient for the many, but highly effective for the few. It is no accident that wealth inequality has expanded to the extreme degrees we witness today. It’s no accident that the tech titans are the richest people running around the planet. And given central banks’ desperate actions to ward off these deflationary forces they’ve enabled not only the renewed acceleration of asset bubbles again benefitting the very few, but they’ve also encouraged the taking on of unprecedented government and corporate debt and BBB rated junk debt in the process.
And now it gets interesting. In 2018 we witnessed a global blow-off top following 10 years of central bank intervention and following the US tax cut. Peak artificial liquidity. Global central bank balance sheets peaked in January 2018.
Where did the $DJIA stop? Not at some arbitrary point. No sir, it stopped at a very particular point, a point only a freak chart can suggest.
As many of you know I’m a big fan of trend lines and here it is, the freak chart:
1929 top, 2000 top, 2018 top (if 2018 is a top), but there is little denying the obvious: The $DJIA stopped twice in 2018 at a trend line that dates back to the starting points of 2 major crashes. 1929, and the 2000 technology crash.
The consequences? Immediate doom and gloom? I can’t say, what I can say is that this trend line has been massively relevant and is very much confirmed. Some may dismiss it as a fluke of course, but that would be a hell of a fluke.
Note there is a lower trend line there. This lower trend line has been left in the dustbin of history, untouched since the advent of the technology boom. The world has changed greatly since the 1980s, but the ghosts of historic debt expansion and slowing growth are all around us. If we can’t see massive organic growth with the largest artificial liquidity injection in human history what will it take? I have to ask.
What if it took all this artificial liquidity to barely squeak out 2% growth? That spike in GDP growth in the US last year? Looks very much temporary as the effects of the tax cut barely lasted 9 months.
Here’s the latest global growth forecast by the IMF:
2020 starts in less than 12 months and look at those far right columns.
Nobody wants to predict a recession of course, but these numbers are skirting awfully close to a recession.
1.3% GDP growth for Germany in 2019? 0.5% GDP growth for Japan in 2020? All these places still have negative rates and/or full intervention. US sub 2% in 2020 while the country is running trillion dollar deficits?
That’s the grand result of 10 years of artificial liquidity injections?
What if that’s the best this new economic reality could achieve under the structural circumstances? What if the technology growth boom is petering out? What’s $AAPL’s next big path to growth? Another iPhone version? Hardly.
No, it may just be that slowing growth globally will force the world to come to terms with the largest debt expansion in history and perhaps all of a sudden all that BBB rated junk debt will become very relevant very quickly:
Who is to say? I suggest nobody knows because the world has never before been in these circumstances.
But if things do indeed turn sour than our freak chart has some potential technical destinations to consider:
I’ve added some fibs to this long term chart and adding to the intrigue is the fact that these fibs line up with major previous market pivot points. Perhaps that’s just another fluke, but is it so unreasonable to presume that a 10 year record liquidity injection and record debt expansion has perhaps caused asset prices to overshoot? Just reversing back to the 2015/2016 area would constitute a .382 fib retrace. A 50% retrace would bring $DJIA back to the 2007 highs. A .618 fib retrace would bring $DJIA back to the 2011 lows and perhaps tag the lower trend line, timing dependent.
In context of a 90 year chart is such a technical retrace to the lows of just 8 years ago unreasonable? I have to ask.
Especially if you realize that 61.8% of the gains in that 90 year $DJIA chart have come in just the last 8 years.
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How did Tesla accelerate from 0-60 mph in such a short period of time?
Today’s five-minute-long animation is presented in association with Global Energy Metals, and it tells you everything you need to know about the history of Tesla, including Elon Musk’s vision for the future of the iconic electric car company.
WATCH THE VIDEO:
The video primarily keys in on Tesla’s successes and the setbacks the company has faced along the way – it also shows that Tesla was able to pass Ford in market value just seven years after the company’s IPO.
THE RISE OF TESLA SERIES
As Visual Capitalist's Jeff Desjardins notes, the above video is the culmination of our Rise of Tesla Series, which also includes three full-length infographics that tell a more in-depth story about the history of Tesla, and what the company aspires to:
1. Tesla’s Origin Story (View infographic)
- What was the vision behind the founding of Tesla?
- Early hurdles faced by the company, including its near escape from the brink of bankruptcy
- Elon Musk’s takeover of the company, and the dramatic actions taken to keep it alive
- A timeline showing the development of the Roadster, and why this first car matters
2. Tesla’s Journey: How it Passed Ford in Value (View Infographic)
- The company’s plan to parlay the Roadster’s success into a viable long-term company strategy
- Introducing the Tesla Model S and Model X
- How the company would use the Gigafactory concept to bring economies of scale to battery production
- Other milestones: Powerwall, Autopilot, and Tesla’s growing Supercharger network
- The announcement of the Model 3
3. Elon Musk’s Vision for the Future of Tesla (View Infographic)
- Detailing Tesla’s ambitions for the future, including how it plans to productize the factory
- Other vehicles Tesla plans to release, including the Tesla Semi and a future ultra low cost model
- How Tesla plans to combine fully autonomous cars with the future sharing economy
- Exploding demand for lithium-ion batteries, and why Tesla is planning on building additional Gigafactories
The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.
I've been commenting on the cancerous disease that's taken control of the Internet-- what Shoshana Zuboff calls Surveillance Capitalism--for many years. Here is a selection of my commentaries:
800 Million Channels of Me (February 21, 2011)
The New Facebook Buttons: Promote, Despise, Abandon (November 1, 2012)
Are Facebook and Google the New Colonial Powers? (September 18, 2017)
Hey Advertisers: The Data-Mining Emperor Has No Clothes (September 15, 2017)
The Blowback Against Facebook, Google and Amazon Is Just Beginning (April 27, 2018)
If you've followed any of my analyses, it will come as no surprise that I've concluded the only way to restore the health of the Internet is to ban all collection of user data. That's right, a 100% total ban on collecting any user data whatsoever.
We need to distinguish between customer/supplier data and user data. If a social media or other corporation wants to collect data from people who pay it money for services rendered, or from suppliers that it pays for services, then that process of data collection should be 100% transparent.
A customer pays for a service in cash; a user pays nothing. A company might want to collect data from its paying customers in order to upsell them or serve them better, and corporations who produce goods and services might want to collect data from the suppliers they pay.
Banning the collection of any data from users would of course destroy much of the revenues of companies such as Facebook, Google , Twitter, Instagram et al. It would also destroy the perverse incentives these corporations have institutionalized and excused as "garsh, you can't stop the advance of technology," as if their pursuit of Surveillance Capitalism were somehow an inevitable outcome of the Internet rather than a malign disease that's undermining democracy and the free flow of diverse opinions and dissent that is the foundation of functional democracy.
By banning the collection of any and all user data, the social media/search giants would become quasi-public utilities, providing whatever service they offer for free and collecting revenues from other businesses for services such as display advertising--advertising which cannot be targeted at specific groups of users because there is no data on users to exploit.
If you think this is unrealistic, look at craigslist. Craigslist is free to individual users, and it doesn't collect and sell user data to make billions of dollars. It sells adverts to businesses such as auto dealers and companies placing employment ads. These income streams are more than enough to fund the operational expenses and reap the owners a substantial profit.
Surveillance Capitalism is all about creating the illusion of privacy controls. The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.
Keep it simple: ban all collection of user data--no exceptions. That will be easy to enforce and easy for all participants to understand.
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Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print): Read the first section for free in PDF format. My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF). My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
China's People's Liberation Army (PLA) has announced major changes aimed to transform itself into a modern fighting force taking its focus away from land-based fighting which has defined much of the 20th century since WWII whiling boosting its navy, air force and new strategic units focused on emerging hi-tech threats such as cyberwarfare.
A new report this week in the official Xinhua News Agency has touted the military's "transformational changes" which has seen its infantry and ground operations branch outpaced by the others as part of what's described as a "strategic shift designed to transform the People’s Liberation Army into a comprehensive modern force." The shift is so significant that it's seen the navy, air force, rocket force and a "strategic support force" (responsible for areas like cyberwarefare) climb to over the 50% of total PLA troops, further leaving the total number of officers in the PLA reduced by 30% (as traditionally large ground forces require more officers for those units).
Calling the shift "unprecedented," Xinhua described the reorientation in the PLA's priorities a result of President Xi Jinping's 2015 pledge to downsize the number of personnel by 300,000 in order to rapidly bring the armed forces into the modern era, which has largely left massive infantries and "front" warfare behind.
But regardless of the huge reduction China still has by far the largest military in the world by sheer numbers, with 2 million active servicemen and women, down from 2013, when a defense white paper puts its combined branches at 2.3 million servicemen, with only 235,000 in the Navy and 398,000 in the Air Force. By comparison, the United States claims nearly 1.3 million total active military personnel and another 800,000 in reserves.
With China's army now taking a backseat, Beijing is expected to continue shifting away from mere homeland-based defense to engaging threats by air and sea, increasingly in disputed waters in places like the East and South China China, and in protection of its interests abroad as its "Belt and Road Initiative" continues to take root.
In announcing the strategic shift, state media cited a Shanghai-based military analyst, Ni Lexiong, to say that Beijing is responding to the rapidly transforming battlefield: “The Chinese military used to… operate following the model established in the second world war,” he said. “It had to be reformed and optimized to meet the pressing needs of the changing times and this is the purpose of the overhaul,” continued Ni.
This includes, he explained, the necessity of reducing the redundancy which comes with an oversized infantry and ground operations force: “In the old set-up, the PLA had too many officers. In this overhaul, all these officers must find new positions and adapt or they will be made redundant,” said Ni.
The leaner force aims to prioritize advanced defense technology to bring the PLA up to par with global rivals, such as the United States, which by all accounts has established global military superiority though never having the largest forced based on sheer numbers.
Update: Newark airport has been given the green light to resume normal operations following the drone incident.
Normal #EWR operations have resumed after arrivals were briefly held by the FAA due to reports of drone activity north of the airport earlier this evening. We’re coordinating with the FAA & fully supporting all federal law enforcement authorities as they investigate this incident— Newark Liberty Airport (@EWRairport) January 23, 2019
The Federal Aviation Agency ordered Newark Liberty International Airport to halt flights temporarily after a drone sighting, according to Bloomberg.
The civilian drone was spotted just north of the New Jersey hub flying at an altitude of 3,500 feet according to FAA spokesman Greg Martin on Tuesday.
The grounding comes one week after the Trump administration announced a long-awaited set of proposals allowing drones to fly at night and over populated areas without a waiver, while also tightening security for industries seeking to expand into robotic aerial deliveries.
Under the proposed rule change, the FAA would require drone operators to have "an anti-collision light illuminated and visible for at least 3 statute miles." Those weighing under 0.55 pounds could fly over populated areas without additional restrictions. Manufacturers of drones weighing more than that would have to prove to the FAA that if their product "crashed into a person, the resulting injury would be below a certain severity threshold."
In recent weeks, London's Gatwick and Heathrow airports had drone incidents which resulted in major travel disruptions. Last week, 38-year-old George Rusu was charged with flying a drone near Heathrow on Christmas Eve - just days after a scare at Gatwick grounded over 1,000 flights.
Usually, when you seek to take over something, you try not destroy it in the process of acquiring it. For example, if you’re trying to rise up the ranks of an organization, you don’t want to discredit the organization in the process. What’s the point of rising up the ranks, if the post you finally attain has been made worthless? This “conservative” instinct becomes stronger once you have gained control of whatever it was you were after. Now it is yours and you do what you must to protect and increase its value.
For example, when the Left took over the institutions of the American ruling elite, they were careful to not destroy them in the process. They destroyed the people in their way, for sure, but they were careful to avoid damaging the institutions too much. In fact, they worked to increase the power of the government, the schools and the colleges once they gained power over them. Today, logic says the Left should be extremely conservative, not wanting to alter anything, for fear of diminishing the power of what they have.
That’s the curious thing about what we are seeing from the Left. They have a firm grip on all of the institutions of the empire. They control the mass media. They control the administrative state and the education system. Global corporations are now run by people deeply invested in virtue signaling. The days of the Left having to pressure big business to do their bidding are long over. Big business is the vanguard of the Left now. Despite this, the Left is running around trying to scramble all of the rules.
When you’re in charge, the rules are your friend. After all, you get to write the rules, pick the people who enforce the rules and pick the people who interpret the rules. That is one of the best perks of being in control of the institutions. The people in charge of the empire should be the great defenders of law and order, as the rules work in their favor. Instead, everywhere you look, the Left is trying to destroy the authority and legitimacy of the things they control. It’s as if they are trying to burn down their own house to spite us.
A good example is the two big fake news stories this past week.
The first one was an obvious put up job by some hack political operators. There was no way it could hold up under scrutiny. Left-wing media should have attacked it in order to maintain what little credibility they have on these issues. Similarly, they fell for the story about the teenagers and the Indian protester. Official media should have been all over debunking that story, as that would have made them look responsible and humane.
Instead, they helped egg on the feeding frenzy. Even if the facts were as originally presented, normal people will always take the side of a kid over an adult in a situation like this. It’s not as if the kids were a gang of blacks attacking an old man in the subway. They just stood their ground and peacefully protested on behalf of their issue. More people were red pilled by that story than by all the alt-right internet memes combined. The media frenzy was suicidal, self-destructive and avoidable.
Now, it could simply be the case where their fanatics on social media make it impossible to put the brakes on these feeding frenzies. A left-wing idiot posts fake news on Twitter and within hours it is retweeted a million times by other left-wing idiots. The speed of the process makes it impossible for the more sober minded media operations to react in a timely fashion. Before they can react, the fake news has rocketed around the internet and the debunking of it is well under way.
That’s not the case in other areas where you see the Left damaging their own cause. For example, they are undermining the law in an effort to swat at flies. Two years after Charlottesville, left-wing lesbian lawyer Roberta Kaplan is asking the court to manipulate Federal law so she can harass alt-right activists. Her scheme relies on reinterpreting old laws aimed at the KKK to terrorize people who attended the rally. Kaplan is a billionaire and she is suing people who don’t have two nickels to rub together.
This is not strictly an American issue. In Canada, two left-wing professors are suing a student, because the student shared a Jordan Peterson video. This video was so upsetting and triggering to the professors, they went on a crazy rant about Peterson on social media. They now fear he may sue them, so they are suing the student in an effort to shift the blame onto her. That sounds insane, but given the state of the courts in Canada, it is not out of the question that the student loses the case.
The only possible outcome of this sort of lawfare is to convince people that the law is a fraud. The only way a legal system can function is if the people think the law is both rational and predictable. Even if people don’t like the laws, they will obey them as long as the law is predictable. If left-wing lawyers manage to subvert the law by getting left-wing judges to sign off on what amounts to state terrorism, the law becomes the enemy of the people. The value of controlling the law and the courts declines.
Even if you want to put this sort of stuff aside as the actions of rogue individuals and mindless idiots on-line, think about some of the policies the Left is championing. One big item on their list is the normalization of open borders by debasing the value of things like driver’s licenses. States with left-wing government are in a rush to issue driver’s licences to illegals. This will result in so much fraud that the picture ID will lose its value. All levels of government count on those ID’s being mostly accurate.
It’s not just for the benefit of foreigners. New York State is now offering a third option for biological sex. A big part of how the state keeps tabs on the citizenry is having their personal information, usually through the driver’s license process. How long before the body dysmorphics start demanding they can describe themselves as they feel they should be described, rather than their actual description? Cops will be looking for people claiming to be dinosaurs, having licenses with pictures of a T-Rex on them.
When you start to tabulate the radical agenda and the ad hoc activity of the Left, the most obvious conclusion is there is little coordination. The people at the top have lost control of the monster they created. They dream of creating a coalition of non-whiles, over which they will preside, so they can control the empire. The trouble is their coalition is always reminding the other side that such an arrangement will be a catastrophe. Again, the Left is mostly just radicalizing white people now.
The other conclusion is the radicalism of the Left has no limiting principle, so it has to spiral out of control. Like the Khmer Rouge, the logical end of this new radicalism is an orgy of self-destructive violence. That means it will not burn out on its own as happened in the 1970’s with student radicalism. This round of radicalism is for keeps and the Left will not stop until they are stopped. That’s going to put an end to civic nationalism and any thoughts of restoration. Whatever comes next comes after the final conflict.
Is the government shutdown also Vladimir Putin's fault? Following a report released Tuesday by the FBI, we imagine it's only a matter of time before Rachel Maddow and the rest of the left-leaning cable news commentariat come to that conclusion.
In a 72-page-report and press conference, the FBI on Tuesday attacked President Trump for allowing the shutdown (now in its 32nd day) to continue and listed all the ways that break in funding for the DOJ (where the FBI is housed) has impacted its ongoing investigations (though it's worth noting that, according to media reports, the Mueller probe has continued without much of an interruption). Among the functions that have been interrupted: The US attorneys office can't issue grand jury subpoenas, ongoing investigations have been interrupted, agents are struggling to work without pay, and efforts to thwart sex trafficking and anti-gang operations (including investigations into MS-13) have been delayed.
The FBI shared a summary of these gripes in a twitter thread published by the FBI Agents Association. Though agents are still working cases, some agents are struggling to feed their families. All of this culminated with Agents Association President Tom O'Connor calling on lawmakers to pass legislation funding the FBI.
Today at 11:30 am, members of FBIAA's National Executive Board gather for a press conference to discuss the current and lasting impacts of the #GovernmentShutdown on FBI operations and national security. Updates will be shared on this thread. pic.twitter.com/hkmcIX5Jfi— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
Opening statement from FBIAA President @tfoconnor83: "I want to make one point clear: Agents were working cases yesterday, are working cases today, and will be working cases tomorrow. They are doing so without pay and under increasingly challenging conditions." pic.twitter.com/gpKYVkA8MJ— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
"Last night I delivered food to our office break room for those in the office who are in need. The FBI family always comes together in times of crisis, but it's truly sad that we must resort to this."— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
"As we said in our petition to elected leaders warning that the failure to fund the FBI could undermine important work on January 10, this is not about politics for Special Agents. For the FBI, financial security IS national security."— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
"The failure to fund the FBI undermines essential FBI operations, such as those designated to combat crimes against children, drug and gang crime, and terrorism."— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
The FBIAA has compiled stories from active FBI Special Agents about the #GovernmentShutdown's impacts on their work in a report titled "Voices from the Field." Below are some excerpts on FBI operations. The full document can be downloaded at https://t.co/X9MwpvFCIq. pic.twitter.com/UKqS586f2V— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
Regarding the future of the FBI, @tfoconnor83 says, "The failure to fund the FBI is creating long-term problems by making it more difficult to recruit and retain skilled and experienced Special Agents." Below are excerpts from Voices from the Field on this topic. pic.twitter.com/PMOFBqMJXR— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
"Our leaders must listen to the voices of the men and women who are committed to protecting our country. We ask our leaders to listen to the Voices from the Field. There is no time for delay - fund the FBI now." pic.twitter.com/54ppJ3EsZy— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019
Some of the anecdotes included in the report offered more details about how the shutdown has affected investigations.
"I have been working a long-term MS-13 investigation for over three years," one FBI employee wrote in the report. "We have indicted 23 MS-13 gang members for racketeering, murder in aid of racketeering, extortion, money laundering and weapons offenses. ... Since the shutdown, I have not had a Spanish speaker in the division. We have several Spanish speaking informants. We are only able to communicate using a three-way call with a linguist in another division."
Several agents claimed that, because the FBI currently cannot pay confidential informants, efforts to curb narcotics trafficking have fallen by the wayside because the bureau is "unable to do undercover" or confidential human source operations that require purchases of guns or drugs from dealers on the street.
In other words, Trump is using the shutdown to exact his revenge on the FBI...and he doesn't care whether it hampers investigations into gangs and drug traffickers.
Read the full report here.
An Arizona Republican thinks she can get Trump’s wall built by imposing a tax on folks who look at porn on the web.
Republican state Rep. Gail Griffin, R-Hereford, wants to charge you $20 to look at pornography on the internet.
House Bill 2444 would require companies that make or sell electronic devices in Arizona to install software that blocks porn.
To remove the block, all you’d have to do is prove you are 18 and plunk down $20, payable to the Arizona Commerce Authority.
The money would go into a newly created account called the John McCain Human Trafficking and Child Exploitation Fund, with the proceeds to be used for one of 10 things.
Don’t be fooled by the title. The legislation is merely another revenue generation scam by the state. It has nothing to do with human trafficking or child exploitation.
But wait a minute. Maybe AOC (socialist darling Alexandria Occasion-Cortez) should propose a similar idea to pay for her list of free goodies, including the budget-busting idea everybody should be on Medicare and college should be free (an idea that will certainly rile up the loan sharks feeding off student loans).
Despite her inability to grasp simple economic concepts - seemingly a common problem among the Millennial Generation - AOC might embrace the concept of heavily taxing folks for what they view in the privacy of their own homes. In fact, it can fit comfortably within the context of the Me Too movement. All aspects of “toxic masculinity” are to be eradicated.
By why stop at porn?
Billionaire Michael Bloomberg, the former mayor of New York, blazed a path with his sugary drink tax. Last year, he put together a task force to look at expanding revenue generation by taxing all manner of unhealthy “lifestyle choices,” including the use of tobacco and alcohol.
AOC is apparently oblivious to the fact no number of new taxes, including her proposed 70 percent tax rate on millionaires, will satiate the desire for “free things” which are, of course, not free. Billionaires, however, are smart—they invariably come up with ways to avoid the long reach of the tax man, thus leaving the monetary burden to you and me, the little people.
Maybe I’m not giving this lady a fair shake. It’s possible she realizes no amount of taxation - short of total confiscation of all wealth by the state - will pay for the list of free things she promises habitually gullible citizens.
It’s possible she understands the only way to pay for free things is to borrow the money and play a few ledger book tricks at the Federal Reserve.
Far too many Americans are oblivious to a massive debt picking up steam like a runaway train descending a 45 degree trajectory. AOC’s supporters - mostly of the clueless socialist stripe - are milling about on the tracks. They are deaf, blind, and dumb to the impending disaster.
After the smashup, they’ll be out for blood.
The only companies who have been hurt more by the astounding flop of Apple's latest crop of smartphones have been Apple's suppliers. And following a beat-down in the shares of companies that produce displays, casing and internal components for the phones as Apple has now twice scaled back production guidance in a two month period, perhaps it was inevitable that some of these companies would need to seek some form of financial relief, due to their heavily reliance on the relationship with Apple.
And while so far the headlines relating to Apple's suppliers have focused mostly on layoffs and retrenchment at the companies' factories, for the first time on Tuesday, the Wall Street Journal reported that Japan Display, which manufactures the liquid-crystal displays used in the iPhone XR, is in advanced talks to secure outside funding from Taiwan’s TPK Holdings and the Chinese state-owned Silk Road Fund for a stake as large as 30% (which could give the companies control of a firm that was once deemed a strategic national asset by Tokyo).
And just like that, the first iPhone bailout is one step closer to becoming a reality.
Japan Display Inc. is in advanced talks with Taiwan’s TPK Holdings Co. and Chinese state-owned Silk Road Fund about an investment that would include a stake of about 30% with the possibility of greater control later, people familiar with the matter said. The size of the investment isn’t decided but could reach around ¥60 billion (around $550 million) or more, the people said.
That Japan Display is the first supplier to struggle in the wake of Apple's guidance cut is hardly surprising: The company relied on Apple for roughly half of its revenue during the fiscal year ending in March 2018.
Also, aside from the liquid crystal display used in the iPhone XR, many of the other display products once manufactured by Japan Display have become commoditized - meaning that phone manufacturers can buy similar products more cheaply from producers in China and South Korea. And what's worse for JD, Apple is expected to drop those displays altogether in its batch of phones set to debut in 2020, which are expected to feature an "organic" light-emitting diode display.
Though it's days of being a cutting edge producer of display technology are far behind it, WSJ says Japan Display might still have some value for an Asian producer looking to leverage its ability to mass-produce low-density polysilicon sheets. The deal reported by WSJ hasn't been finalized, but it's looking increasingly likely that TPK and the Silk Road fund will purchase a slug of convertible JD bonds which they can then convert into stock.
TPK of Taiwan makes the touch-panel portion of displays for many smartphones including the iPhone. The Chinese investors are interested in building display factories in China using Japan Display’s technology, people familiar with the plans said. A TPK spokeswoman declined to comment, and Silk Road Fund didn’t respond to a request for comment.
Under the deal being discussed, the investor group wouldn’t initially take a majority stake and some of its money would go to purchase Japan Display bonds convertible into stock, paving the way for fuller control in the future, said people involved in the deal. INCJ, the Japanese government-backed fund, would hold on to its shares for now but might sell its stake in coming years, they said. INCJ currently owns 25% of Japan Display.
Japan Display plans to use the invested money for day-to-day operations and hopes to announce a deal as soon as mid-February, when it reports quarterly earnings, said people familiar with the deal. The investor group is likely to take up the majority of the company’s board, they said.
Final terms haven’t been set, and the deal could still fall apart. Other Chinese companies including display maker BOE Technology Group Co. and touch-panel maker O-Film Tech Co. at one point considered investing in Japan Display but dropped the idea, said people involved in the talks. Representatives of BOE Technology and O-Film Tech didn’t respond to requests for comment.
With Japan Display on the chopping block, we wonder if Apple's other suppliers will come to their senses and start lobbying the iPhone maker to at least consider cutting prices as sales stall and the relative strength in the US dollar makes its phones increasingly unaffordable abroad.
Since he stopped issuing promo-tweets about ICOs (after allegedly being threatened by the SEC), one-time PC security pioneer turned crypto true believer has been relatively quiet (emphasis on relatively). To wit, he hasn't issued any more outrageous promises about his willingness to consume a certain appendage in front of a live audience should the price of bitcoin not eclipse a certain level, and he hasn't elaborated on an anecdote detailing his penchant for sexual congress with one of the ocean's mightiest mammals.
Whale fucking. No joke. Each year, on Feb 1st, in the Molokai Channel, a few men compete in the world's only whale fucking contest. Humpback whales are easy to fuck- for a second or less. World record: 31 seconds. I competed once. Almost got my ribs crushed. Stick with Ostriches.— John McAfee (@officialmcafee) June 24, 2018
In fact, he hasn't said much of anything that would be considered headline-worthy. That is, until today.
In a video published on his twitter account, McAfee, who famously fled from murder charges brought by authorities in Belize, revealed to that he is officially on the lam after a grand jury was allegedly convened in Tennessee to pursue unspecified federal tax charges against McAfee and his family.
But don't worry, McAfee fans. Because he isn't giving up on the battle against tyranny. Which is why he will be waging his 'McAfee 2020' campaign in exile...from his boat.
But why exactly is the federal government coming after McAfee? Well, this might be one explanation: According to McAfee, for the last eight years, he has refused to pay federal income taxes. The government's decision to prosecute himself, his family and - according to McAfee - several of his campaign workers - is just the latest indication that McAfee's prophesy about cryptocurrencies eventually leading to conflict with governments is finally becoming a reality.
"Cryptocurrency will at some point come head to head with government. Why? Because when privacy coins are widely used, governments will no longer be able to collect income taxes. This is a good thing. We will some day be at war."
But the government's reason is flawed, McAfee says, because refusing to pay taxes isn't actually illegal (according to McAfee).
"I have not paid taxes for eight years, I have not filed returns...I've been fine. It's not illegal. Today...Jan. 22...the IRS has convened a grand jury in the State of Tennessee to charge myself, my wife Mrs. McAfee and four of my campaign workers with unspecified IRS crimes of a felonious nature."
After piercing the government's transparent ruse, the true motivation behind McAfee's persecution should be obvious to all. The government is trying to silence McAfee for having the courage to boldly advocate for people to abandon fiat currency and switch to crypto. But rather than simply allowing the government to toss him in prison (where he presumably wouldn't have access to twitter), McAfee is taking his battle to the high seas.
"They want to silence me. I will not allow that. So I am running my campaign in exile on this boat for the duration...I will not allow them to imprison me and shut my voice down, which they will do immediately. Why? I am a flight risk - obviously, I am in flight.
"I will be putting out videos every day to explain what has happened."
We're very much looking forward to hearing more from McAfee, soon to be the first presidential candidate to run for higher office while remaining a fugitive from justice.
Call him the Dread Pirate McAfee.
The McAfee 2020 Campaign is, as of this day, in exile. I am being charged with using Crypto Cuttencies in criminal acts against the U. S. Government. More videos coming shortly. Stay tuned. pic.twitter.com/C75zcbnKTD— John McAfee (@officialmcafee) January 22, 2019
But where is McAfee going to seek refuge from the tyrannical US government? Why to Venezuela, of course!
The flybridge on our boat makes it the tallest boat in the Atlantis Marina. One of our shephars, Axel, has taken charge of the aft deck docking station. He's waiting, i think, until we disembark for Venezuela in 4 hours at which time he and the other pups are hijacking the boat. pic.twitter.com/BoaCMUZASK— John McAfee (@officialmcafee) January 22, 2019
And he's bringing a few campaign workers with him.
We imagine President Maduro will welcome McAfee with open arms, if only for his crypto expertise.
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Did you know that the CIA has its own Venture Fund? And did you know that Venture fund was key in starting Facebook and Google? As explained in the book Splitting Pennies – the world is not as it seems.
For many readers especially on Zero Hedge this comes as no surprise, as you are well aware of the octopus that wraps its tentacles around the globe. But it may surprise you how active In-Q-Tel is and how chummy they are with the rest of the VC community. It’s as if they are just another VC, but with another purpose. Let’s look at some of the stats, from Crunchbase:
Here’s a list of recent investments…
If you dig back you won’t see Google or Facebook on there – which is company policy for retail consumer investments that can impact the public (it’s kept secret behind an NDA). Here’s how it works – In-Q-Tel may invest in your startup but there’s a big catch. First, you have to sign an NDA which is enforced strongly – that you are not to disclose your partner. Second, you must agree to ‘cooperation’ when it comes to information sharing now or down the road, such as location data on people using Facebook, Google, or other systems – perhaps only to feed it into a big data brain at Palantir. Or perhaps for more street level surveillance. The surveillance is known by fact, not conspiracy theory – but by fact – due to the disclosure of classified documents by Edward Snowden. If it were not for Snowden, we could only guess about this. The name of the main program is PRISM but there are many others.
For those in the VC community that are deep in the know- the “Deep VCs” like Peter Thiel for example, the Snowden revelations would come as no surprise. MUST READ – No Place To Hide – the story of the NSA, PRISM, and Snowden (written by Greenwald).
But for others, it may come as a surprise that not only the CIA has its own VC fund, but that it sits on many corporate boards alongside many Wall St. firms and other VCs.
And of course, they always do well.
Let’s consider the doors they opened for Google, or in the case of Google it was more like the doors that were closed. Google was not the best search engine, it was not superior technology – it wasn’t even really very good. It just became a monopoly and crushed the competition. Many wonder how they were able to do it, and that this is part of the Entrepreneur “Magic” that few have. Well we can say in the case of Google there was no Magic they had a helping hand from a friend in the deep shadows. Google wanted to become huge – the CIA wants information (they always do, so we don’t use the past tense ‘wanted’). So it was a cozy and rational partnership – in exchange for making the right handshakes at the right time, allowing Google to become a global behemoth, all they needed to do was share a little information about users. Actually, a lot of information. No harm in that, right?
But in doing so Google violated itself as well as prostituted its model and its users. Google still does this and is not nearly as flagrant as its brother Facebook, however Google shares more detailed ‘meta data’ which is actually more useful to Echelon systems like Palantir that rely on big data, not necessarily photos of what you ate for breakfast (but that can be helpful too, they say).
The metaphor is making a deal with the devil; you get what you want but it comes at a price. And that’s the price users pay to Google – they get service ‘free’ but at a huge cost, their privacy. Of course – this is all based on the concept of Freedom which really does exist in USA. You don’t have to use Google – there are many alternatives like the rising star Duck Duck Go:
But who cares about privacy; only criminals, hackers, programmers, super wealthy (UHNWI) and a few philosophers.
Google remains the dominant search platform and much more. Google exploits niche by niche even competing with Amazon’s Alexa service.
The argument here is that Google wouldn’t be Google without the help of the CIA. This isn’t our idea it’s a fact, you can read about it here on qz.com:
Two decades ago, the US intelligence community worked closely with Silicon Valley in an effort to track citizens in cyberspace. And Google is at the heart of that origin story. Some of the research that led to Google’s ambitious creation was funded and coordinated by a research group established by the intelligence community to find ways to track individuals and groups online. The intelligence community hoped that the nation’s leading computer scientists could take non-classified information and user data, combine it with what would become known as the internet, and begin to create for-profit, commercial enterprises to suit the needs of both the intelligence community and the public. They hoped to direct the supercomputing revolution from the start in order to make sense of what millions of human beings did inside this digital information network. That collaboration has made a comprehensive public-private mass surveillance state possible today.
There you have it – Google is the child of the digital revolution of the surveillance state. Why spy, when you can collect data electronically and analyze with machine learning?
The new spy is the web bot.
And the investors in Google did well – so that’s the investing story that matters here. It pays well to have friends in high places, and in dark places. Of all the investments In-Q-Tel made, almost all of them have done very well. That doesn’t mean that Palantir is going to grow to the size of Google, but it does provide natural support should a company backed by In-Q-Tel run into problems.
By the time Facebook came out, digital surveillance was already in the n-th generation of evolution, and they really stepped up their game. In the creepiest examples, Facebook doesn’t necessarily (and primarily) collect data on Facebook users – it does this too. But that’s just a given – you don’t need to perform surveillance on someone who gives all their data to the system willingly – you always know where they are and what they are doing at any given moment. The trick is to get information about those who may try to hide their activities, whether they are real terrorists or just paranoid geniuses.
How does Facebook do this? There are literally hundreds of programs running – but in one creepy example, Facebook collects photos that users take to analyze the environment surrounding. Incidentally, the location data is MUCH MORE accurate than you see on the retail front end. So you get the newspaper and see a gift in your mailbox for your birthday – you take a photo because the ribbons are hanging out. What shows up in the background? All kinds of information. What the neighbor is doing. License plate of the car driving by. Trash waiting to be picked up by the street. A child’s toy left by the sidewalk. You get the picture. Facebook users have been turned into sneaky little digital spies! While they are walking around with their ‘smartphones’ (should be called ‘dumbphones’) scrolling their walls and snapping photos away – they are taking photos of you too. That means, Facebook collects data for the CIA about users who don’t have Facebook accounts. This is the huge secret that the mainstream media doesn’t want to tell you. Deleting your Facebook account will do nothing – every time you go out in public you are being photographed, video recorded, and more – all going into big data artificial intelligence for analysis.
But here’s the best part. You own it! The CIA may have a bad reputation but it is part of the US Government, and thus – profits go back to the Treasury (those which are declared) or at least they are supposed to. Considering this, why is there a stigma about even talking about In-Q-Tel when in fact we should be more involved in any US Government operation when it is technically owned by the people and funded by taxpayers? Meaning, do taxpayers have rights to know what goes in in taxpayer funded entities, like In-Q-Tel? The big difference between In-Q-Tel and the CIA is that In-Q-Tel functions just like any other VC – they disclose most of their investments, they attend conferences, they accept business plans. You can literally submit your idea to In-Q-Tel and get funding. Of course, like any VC there’s a very small chance of being funded.
So what’s an investor’s take on this story? In-Q-Tel is not Freddie Mac there is nor a quasi-government entity; it’s not an NGO and there is no implicit guarantee that In-Q-Tel’s deals will do any better than Andreessen Horowitz.
However, their deals do very well. Companies they fund not only have the backing of the CIA explicitly, it’s not only about business – it’s about national security! Under that guise, it’s no wonder that companies like Google and Facebook rocket to the top.
We are not suggesting that investors double down on In-Q-Tel bets. We are only suggesting that at a minimum, we follow what they do. It’s a data point – a good source of information. And the best part is that it’s public.
Their most recent investment is in a virtual reality company in Boca Raton, FL called Immersive Wisdom:
Immersive Wisdom® is an enterprise software platform that allows users to collaborate in real-time upon diverse data sets and applications within a temporal and geospatially-aware Virtual, Mixed, and Augmented Reality space. Immersive Wisdom is hardware-agnostic and runs on VR, AR, as well as 2D displays. Regardless of geographic location, multiple users can be together in a shared virtual workspace, standing on maps, with instant access to relevant information from any available source. Users can simultaneously, and in real time, visualize, fuse, and act upon sensor inputs, cyber/network data, IoT feeds, enterprise applications, telemetry, tagged assets, 3D Models, LiDAR, imagery and UAV footage/streaming video, providing an omniscient, collaborative view of complex environments. Immersive Wisdom also acts as a natural human interface to multi-dimensional data sets generated by AI and machine learning systems. The platform includes a powerful SDK (Software Developer Kit) that enables the creation of customer-specific workflows as well as rapid integration with existing data sources/applications.
Cool stuff for sure – but it’s in early stages. Pre IPO Swap suggests real Pre IPO ‘unicorns’ not because of size, but because of the right mix of risk and reward. https://preiposwap.com/pitch See why we think so in our pitch.
In any analysis, it’s worth watching In-Q-Tel, which is a top source of funding and investment data we watch on www.preiposwap.com Pre IPO Swap.
To get real-time updates on companies like this, companies that In-Q-Tel invests in - www.preiposwap.com/follow follow our blog free.
The New York-based investment firm’s Composite fund invests across multiple strategies and is the company’s largest and longest-running. It returned 3.5 percent last month, the person said, as the S&P 500 Index sunk 9.2 percent.
D.E. Shaw was founded by computer scientist David Shaw and has more than $50 billion in assets under management, including $28 billion in hedge funds. Its Composite fund has largely been closed to new investors since mid-2013, but the group continues to build out new strategies and products. Recent areas of development have included private credit opportunities in Europe and renewables investing.
The company founded by Peter Thiel, Elon Musk and Max Levchin has spawned three billionaires, many, many millionaires and generation-defining companies. Here, we break down the key players from the most notorious group in Silicon Valley.
On 13 March 1986, Microsoft went public at $21 a share. 100 shares would be worth $2100.Microsoft has since had 9 splits (Microsoft Stock Split History) for a total of 288x.Split adjusted IPO price would be 21/288 = $0.073. Your 100 shares would have become 28,800 shares.MSFT closed at $50.94 on 27 April 2016, which would make that $2100 investment worth $1,467,072, a 69860% return on investment. $2100 in 1986 would be approximately $4563 in 2016 so a 69860% ROI adjusts to 32154% after inflation.
Alpha Z Advisors.
This should serve as a wake up call to all managers and investors to re-asses the risk management plan - as in today's market anything is possible.
To see an example of an options strategy that has a 5+ year record, see Alpha Z Advisors - Strategies based on Anomalies.
Read the Entire Zero Hedge article:
Shorting vol (naked) with "Other People's Money..."? What could possibly go wrong?
Q: Have I lost all the money in account, then?A: Yes
I am writing to give you an update on the situation here with your account.We have spent the week unwinding our short natural gas call position as expediently as possible.Today which was to be the final day of liquidation, the market flared as prices appear to have been caught in a "short squeeze."The speed at which it took place is truly beyond anything I have seen in my career. It overran our risk control systems and left us at the mercy of the market.In short, it was a rogue wave and it overwhelmed us.Unfortunately, this has resulted in a catastrophic loss.Our clearing firm, FC Stone now requires us to liquidate all positions. We hoped to have this done today. If not, it will be completed tomorrow.Your account could potentially be facing a debit balance as of tomorrow. OptionSellers.com will be processing fee credits over the course of the coming days to help alleviate debit balances. What these will be will be determined after all positions are cleared.This has in effect, crippled the firm. At this point, our brokers at FC Stone have been assisting us in liquidation.Our offices will remain open and we will all still be here to answer your questions and process account closings. We will do everything in our power to ease what discomfort we can.I am truly sorry this has happened.I will be updating you again via memo in 24 hours.Regards,OptionSellers.com
What do I do about this Debit Balance?You likely received a debit call notice from FC Stone this morning via email. You may receive it in the mail as well. This is a call to add funds to bring the balance back up to zero. Instructions for paying the balance on the notice. Any questions on debit balances can be directed directly to FX Stone at the number on the notice. Stone requests the funds asap but if it takes a few days, that is OK.What happens if I don't pay the balance?We recommend balances be paid. If it is not paid, it becomes like any other unpaid bill.
As we noted previously, what is notable is that the move in nat gas was so powerful, it nearly caused a VIXtermination-type event in the VelocityShares Daily 3X Inverse Natural Gas ETN, which seeks to produce three times the opposite daily move of US natural gas prices and is known by its stock market ticker DGAZ.Derivatives strategist Pravit Chintawongvanich, who rose to popularity with his hourly hot takes during the February VIXplosion that anihilated several inverse VIX ETNs, pointed out that DGAZ and its “long” leveraged cousin UGAZ could be liquidated if natural gas prices move sharply: "Because these products offer 3x daily leverage, a one day move greater than 33 per cent in either direction would blow up one of them," he wrote.In other words, the market was this close to another inverse ETN extinction event, only this time not in volatility but in natural gas. Meanwhile, the DGAZ's days may be limited: starting off the month with $500MM in assets, in just two weeks it has been cut in half, and as of this morning had just $247MM in assets.
"I promise you every day when I woke up, I was checking for rogue waves..."
"I truly invested your funds like you were a family...I'm sorry this rogue wave capsized your boat... I wish you great luck and good health."
- Malta is providing a way for those on the OFAC list to avoid / circumvent sanctions
- By providing an OFAC loophole, Malta is as a state, aiding and abetting criminals (who are criminals according to the United States)
- As a side business, it is easy for these participants to launder money directly (for themselves) or for their criminal network friends. It is possible, and likely, that copy cats of Pilatus have setup laundry businesses using similar and less obvious loopholes.
- On the regulated front, Malta is providing a backdoor to the European Union (EU) with light regulation. This isn’t necessarily, by itself, a bad thing – but combined with the other more serious problems, it becomes a matter of discussion.
- Malta’s financial system can survive Pilatus bank and Ali Sadr trial. But what’s next? What next scandal lies in the shadows, another fraud to be unraveled? Could it involve a high-profile Russian diplomat on DOJ’s black list? If Pilatus is isolated, Malta can survive. As soon as the next mole pops up in the garden, it will be impossible for Malta to whack them all.
- Not only is the case about Ali Sadr Hasheminejad disturbing by itself, his bank, which was financed with his own illegal gains, was used to open a bank. That bank, among other things, was a laundry for Iranian capital. The bank was approved by MFSA, Malta’s regulator, who recently asked the ECB to rescind its bank license.
- The creator of this passport program, Joseph Muscat, is accused of taking bribes from wealthy criminals from banned/blocked places due to his name appearing in the Panama Papers. We need to note here that we have not seen the contents of these documents, so there is no smoking gun evidence. But the timing is otherwise too coincidental for a forensic auditor.
- For Malta, this is a recent phenomenon, that started around 2013.
- Cyprus isn’t flagrantly taunting violating US rules. Russian Mafia has been in Cyprus for decades, but so are many other interests as well. Malta’s passport program and the Panama Papers leaks made Malta stick out as a world leader in EU passport selling to those on a black list OFAC or other.
- There is Mafia in Italy, but Mafia doesn’t run the government (anymore). What Muscat has done is created his own Maltese Mafia.
Important Reference Articles to read on this topic
Predator Arbitrage trading dashboard
Traditional Macro Economic Analysis
Arbitrage vs. Traditional Trading
Learn more @ www.totalcryptosuniversity.com
They wept in relief as the verdict was handed down in Manhattan federal court Friday after the jury deliberated for less than a day.
Jurors heard testimony that the men spent almost all of their work days in the chatroom, where they exchanged market color, inside jokes and personal information.
The three former traders told jurors that, at the urging of the defendants, they altered the rate or pressured others to submit false data to benefit trading positions held by Connolly and Black. Parietti said Connolly ordered him to disclose positions to the submitters in London because Connolly believed his team was being undermined by others at the bank who were rigging the rate in their favor.The defense argued that there were no clear guidelines on how banks should submit their rates for the calculation of Libor until at least 2008, and that they weren’t expressly forbidden from taking derivative trading positions into account when making the submission until 2013.During cross-examination, attorneys for Connolly and Black attempted to portray the government’s witnesses as liars who initially defended their practices to investigators and changed their stories only in exchange for a deal with prosecutors.
Good Friday claims a sacred spot on the Maltese calendar, and this year the holiday was casting its reliable spell. In the late afternoon, hundreds of people streamed from Baroque cathedrals outside the capital city of Valletta, forming slow parades through steep and narrow streets. Men in biblical robes lugged crosses, children clutched bright flowers, and small brass bands marched behind with raised trumpets and inflated cheeks. A breeze wrinkled the Mediterranean, and the sun slipped to a flattering angle, encasing all that charm in amber.
At the same time, the nation’s top-rated prime-time television show was wrapping up a special daytime broadcast: an annual telethon to raise money for children receiving cancer treatments abroad. In the bottom-left corner of the screen, a digital counter tallied the donations. When the number finally hit €1.26 million ($1.46 million), the studio audience began to stir, eager to applaud the fundraising record.
That’s when Prime Minister Joseph Muscat called into the telethon’s phone bank. He, too, seemed in a celebratory mood. The day before, the country had announced that it had registered a €182 million surplus for 2017, its second straight year in the black after decades of deficits. Patched through to the telethon’s host, Muscat pledged €5 million to the cancer charity on behalf of the government, nearly quadrupling the previous telethon record in an instant. The audience erupted. Some of the operators on the dais behind the stage removed their headsets and laid them on the table, as if to declare victory.
But these days in Malta, feel-good stories never seem to last. When Muscat hinted that the donated money would come from a fund fed by Malta’s Individual Investor Programme—a government initiative that sells Maltese passports to foreigners for €650,000 (less for additional family members), plus a €150,000 investment in government bonds—Good Friday took a turn.
Prime Minister Joseph Muscat and his wife, Michelle.PHOTOGRAPHER: DANIEL LEAL-OLIVAS/WPA POOL/GETTY IMAGES
An opposition Parliament member wrote on Facebook that, as a cancer survivor, he was disgusted by the possibility that the patients’ care was being financed by money from “criminals and the corrupt.” Another suggested Malta was trying to clean its dirty money by funneling it through a good cause. “It’s [like] thinking that prostitution is OK once part of the proceeds are donated by the pimp to charity,” Jason Azzopardi, a Parliament member, complained on Facebook.
The story of how Malta got to this point—where a holiday donation to a children’s charity can spark outrage and lament—starts brightly enough. A tiny country carves a small but lucrative niche in the global economy. Money flows in, thousands of jobs are created, and the government intensifies the strategy, opening the country to more partners and funding sources. Then comes the twist: Allegations of money laundering, political skulduggery, smuggling, organized crime, and even a murder.
Multiple investigations—by local magistrates, American prosecutors, and European politicians and banking regulators—have been rattling Malta’s financial and political networks for more than a year. Some of the most powerful countries in the world have suggested that a nation of about 450,000 people might pose a serious threat to global efforts to track money laundering, enforce economic sanctions, and maintain fair transnational standards.
A 15-month inquiry into one of the most contentious of the allegations—one suggesting that Muscat’s wife was directly involved in setting up a shell company for money laundering—wrapped up in late July without uncovering evidence that would justify criminal charges. “One hundred threads of suspicion don’t stitch together a single strand of proof,” the investigating magistrate concluded.
The story isn’t over yet, because some of those threads still dangle, and critics of the government both inside and outside Malta remain convinced that they tie into other scandals, other crimes. The government continues to try to nurse its battered reputation back to health, and how it all turns out will likely depend on how the Maltese ultimately answer the question lingering over their country: To supercharge its financial-services sector, did the smallest country in the European Union sell its soul?
Taking a sunset dip in Sliema Harbor, near Manoel Island.
Taking a sunset dip in Sliema Harbor, near Manoel Island.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
South of Sicily, east of Tunisia, and north of Libya, Malta’s three tiny islands have been eyed as well-placed steppingstones by the Phoenicians, Greeks, Romans, Byzantines, Arabs, Normans, French, and British. All coveted Malta as a staging ground, which makes its history a swashbuckling saga of raids, sieges, bombings, and rotating occupations. When the last British military base finally left in 1979, it took with it the country’s main economic engine. Malta turned to tourism, doing its best to sell ancient ruins, fortress walls, sloping medieval streets, and sheer limestone cliffs. The country eventually discovered, as most sunbaked islands do, that while it’s possible to get by on atmospherics, it’s hard to do much more.
In the early 1990s, Malta’s two major political parties argued over whether to take a shot at EU membership—generally speaking, the Labour Party didn’t like the idea and the Nationalist Party did. By the mid-’90s, with the Nationalists in power, the country began to prepare its application to join the bloc.
To convince the rest of Europe that it could be a trusted partner, Malta began instituting a series of financial and regulatory reforms. In the process, the country was reinventing itself as a new sort of steppingstone: a transit hub not for ships or soldiers but for money, in an environment of regulatory legitimacy, transparency, and stability. Malta discovered that the residue from centuries of turmoil (an ingrained adaptability, strong links to disparate cultures, the English language) was an asset, as was the country’s size, which allowed it to nimbly sidestep bureaucratic delays and cater to rapidly evolving industries that valued good computer connections more than natural resources. The traditional downsides of island economies—the high costs of transporting supplies in and out, for one—didn’t apply to the financial-services industry.
By the time the country’s membership in the EU was formally approved in 2004, Malta had staked out its place within Europe’s economy, and the nation’s attractive tax schemes—effective rates as low as 5 percent for foreign-owned companies, vs. an average of 22 percent for other European countries—helped attract investment funds, banks, and financial-services firms from all over the world. The steady influx of new business helped the local economy avoid a significant downturn during the 2008 financial crisis. Shortly after Muscat and his Labour Party took office in 2013, effectively ending 25 years of Nationalist electoral dominance, the country instituted the controversial passport-selling scheme, which was denounced by EU officials who feared it could create a back door for shady individuals or dirty money to gain access to Europe’s financial markets. But Muscat energetically pushed the plan, traveling abroad to sell it to prospective citizens, and it quickly took off. In 2014, Malta began a three-year run as the fastest-growing economy in Europe, and Muscat and his allies described the passport program as a complete success. By the beginning of this year, the government had collected about €600 million through it.
Muscat’s opponents in the Nationalist Party, as well as some members of the Maltese press, weren’t sold. In 2016 investigative journalist Daphne Caruana Galizia dug into the documents released in the Panama Papers leak and discovered that two of Muscat’s closest aides had established companies in Panama. She accused them of using those businesses to launder money from kickbacks she said they’d received for helping to arrange the sales of passports to Russian nationals. They denied it; a separate magisterial inquiry regarding those allegations is under way.
Later, Caruana Galizia reported that Muscat’s wife, Michelle, had established her own Panamanian shell company through the same middleman who’d set up those for Muscat’s aides—the accusation that the magistrate this summer said he’d found no proof to support. Caruana Galizia also accused Pilatus Bank, a Maltese institution founded in 2014, of handling much of the money in those alleged transactions, as well as those involving the shell companies set up by the prime minister’s aides.
Additionally, the journalist alleged that the first lady had received at least $1 million from Azerbaijan’s ruling family. Last year an international consortium of investigative journalists accused members of Azerbaijan’s ruling elite of operating a $3 billion scheme to launder money, pay off European politicians, and buy luxury goods; the reports cited “ample evidence” tying the ruling family to the schemes. Azeri President Ilham Aliyev last year labeled the accusations “totally groundless, biased and provocative.”
Caruana Galizia’s blog became the most-read news source in Malta. And even though she criticized both parties, it was a clearinghouse for critics of Muscat’s government. On any given day she might have accused a Maltese official of visiting a prostitute; or exposed an alleged local oil smuggling ring that helped Libya evade sanctions; or traced personal connections between government officials and suspected criminals; or slammed Muscat for trying to pitch Malta as a cryptocurrency capital, which she suggested would attract more corruption; or detailed alleged links between the country’s growing online gaming sector and the Italian Mafia. The list of her enemies was large and growing, and by last fall she faced 47 lawsuits—42 civil, 5 criminal—about 70 percent of them from government officials, according to her sister, Corinne Vella.
Prime Minister Muscat was one of those suing her, and he labeled her accusations as “the biggest lie in Malta’s political history.” Many in Malta seemed to believe him; in June 2017, as the allegations swirled, Muscat called for a snap election, and he was reelected with 55 percent of the popular vote.
Last October, as she drove away from her house, Caruana Galizia was killed by a car bomb. Police later arrested three men, low-level criminals, for planting and detonating the device. But no one in Malta considers the crime solved. Whoever ordered the killing remains unidentified. Some speculate that criminals involved with the Libyan smuggling ring might have targeted her, or that the Sicilian Mafia put out the hit. Many others blame the government.
Muscat and his administration loudly condemned the murder, calling it a tragedy and energetically denying any link to it. But the killing marked a turning point for Malta. The notion that corruption might have overtaken Malta’s economy now spread far beyond the confines of an opposition party, and the eyes of the world turned toward the tiny country. It has been struggling to clear its name ever since.
Protesters call for action following the killing of Caruana Galizia last October.
A recent protest over the killing of journalist Daphne Caruana Galizia, murdered last October.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
Everyone knows everyone in Malta. It’s an exaggeration, of course, but among the nation’s financial elite, the people who run the banks and institutions and sit on the governing boards, the notion is all but taken for granted. “There are, unofficially, some 10,000 people who work in Malta’s financial industry, and the guys in charge—there are maybe 50 or 70 of us—we know each other fairly well,” says Joseph Portelli, chairman of the Malta Stock Exchange.
In describing the financial community as small and closely knit, Portelli is defending it. He grew up in New York with his Maltese parents, and 15 years ago moved to Malta to manage his own fund, which specializes in emerging-market investments. He entered a financial-services industry that was fiercely protective of its reputation and keenly sensitive to insinuations of corruption. Now, as allegations of wrongdoing swirl, that defensive sensitivity is more acute than ever. Portelli has adopted it as naturally as any lifelong resident.
“We’re getting this blemish that we’re money launderers,” he says, “and that’s the worst irony.” There have been a few small problems, he concedes, with a handful of small banks. “You know what they all have in common?” he asks. “Not one of the principals was Maltese, they were all foreigners.” The locals, he suggests, police one another.
It’s a variation on an argument that’s been around since Plato and Aristotle. Small states tend to be less susceptible to corruption for two reasons: It’s more difficult to hide indiscretions, and higher levels of social cohesion discourage dishonesty. In the early 2000s several academic studies used data to support this theory, and some analysts suggested that globalization might be of particular benefit to small countries—freer trade and the increased mobility of labor and capital would reduce the costs of being small, they argued, while the advantages associated with less corruption could be retained.
An alternative theory is that small states will be susceptible to cronyism—all those close connections might enable, rather than discourage, financial subterfuge. More recent studies, including research conducted by the World Bank, have found that the data used in the earlier reports were incomplete, and the suggestion that smaller countries are statistically less corrupt than large ones remains unproven.
By the beginning of this year, the government had collected about €600 million through the passport program
For critics of Muscat, one powerful symbol of cronyism is Ali Sadr Hasheminejad, head of Pilatus Bank, the institution allegedly in the middle of the suspicious transactions involving the Panamanian shell companies linked to government officials. Sadr is an Iranian national, but when establishing and registering the bank in Malta he used a passport he’d purchased from St. Kitts. While Sadr was enmeshed in controversy in Malta, a parallel investigation into him and his bank culminated in his arrest by U.S. authorities, who charged him this spring with setting up a network of shell companies and bank accounts to hide money being funneled from Venezuela to Iran—transactions that allegedly violated economic sanctions against Iran. Prosecutors also alleged that Sadr established Pilatus Bank using illegal funds. Sadr pleaded not guilty and has been released on bail in the U.S.; his lawyer didn’t respond to requests for comment.
Malta’s government attempted to distance itself from Sadr, but the same sort of intimate connections found throughout the financial sector have undermined those efforts. Local news outlets reported that among the 250 guests at Sadr’s 2015 wedding in Italy were Muscat, his wife, and one of the aides accused of moving money from kickbacks related to the passport program through Pilatus Bank.
The July magistrate’s report stated that some of the evidence used by Caruana Galizia and others to implicate Michelle Muscat—including Pilatus Bank documents suggesting she was the owner of the shell company at the center of the scandal—bore falsified signatures. Muscat and the lawyers for Pilatus Bank immediately presented the findings as a “certification” that the whole story had been a lie cooked up by Caruana Galizia and foreign critics, and they denounced it in terms familiar to anyone conversant with the new vocabulary of political grievance: It was “fake news,” part of a “witch hunt.” They also drove home the point that the magistrate’s report identified serious improprieties on the part of their critics.
But the family of Caruana Galizia pointed out that the identity of the owner of the Panamanian shell company is still a secret. Furthermore, the European Banking Authority just weeks before had cited “serious and systematic shortcomings” in how Maltese regulators monitored Pilatus Bank before and after Sadr’s ties to Iran were exposed. A confidential 2016 regulatory report that was leaked last year confirmed that the bank’s profitability depended on politically involved clients from Azerbaijan. And the U.S. allegations that Sadr founded Pilatus Bank with criminal proceeds remain unaffected by that magisterial report.
The result of all this is a contagion of suspicion. Many of the allegations of money laundering and other financial crimes have proved difficult to either verify or dismiss outright, but collectively they make it increasingly hard to swallow the idea that corruption is strictly a foreign import here. The country’s only independent think tank, the Today Public Policy Institute, ceased operations in April. Its stated reason for closure was bluntly condemnatory: “a sense of defeatism over the government running roughshod over standards of professionalism, transparency, and accountability.”
Muscat and those in his government generally have responded to such criticisms by going on the offensive: Instead of putting the brakes on controversial policies, they’ve stomped on the gas. Muscat this year pushed for an expansion of the passport sales program, arguing that such investments and the economic activity they spur could help Malta become one of the wealthiest countries in Europe within his lifetime. Last year alone, private wealth in Malta jumped by more than 20 percent, thanks in part to its newly minted citizens.
“Globalization is like a treadmill—you can’t say you are tired, because the second you stop, you will fall off,” Muscat said during a press conference earlier this year. “Once in the race, we must not simply be there to take part, but we are there to win.” Previously he’d outlined the types of policies that would power Malta’s sprint toward success: “some sensible, others risky, yet others which might sound, and be, outright insane.”
In April, just as several Asian countries were cracking down on cryptocurrencies, Muscat announced that Malta would become the first country in Europe to create a regulatory and legislative framework specifically designed to attract virtual currencies. Shortly thereafter, Binance Holdings, the world’s largest cryptocurrency exchange, announced it was moving its headquarters from Hong Kong to Malta. Within weeks, Morgan Stanley analysts were reporting that a majority of the world’s crypto trading volume was moving through companies based in Malta.
There are people who insist that the government’s continued success in attracting investment and generating revenue is itself an answer to the disputed allegations of money laundering, kickbacks, and other financial crimes. “Luckily, this comes at a time when it washes off,” says Edward Scicluna, the country’s finance minister. “The false and fake parts are washing off, because Malta is being so successful that it’s very hard to accept them and to correlate them with a successful country. Normally corruption is rife in backward countries where there are no investments. So you find it very difficult to reconcile these two.”
A yacht moored in Sliema.
Yachts have largely displaced fishing boats in the harbor in Sliema.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
In Sliema, one of the most affluent towns in Malta, open-air restaurants line the harbor road. A few decades ago, diners here would look out upon dozens of Maltese fishing boats bobbing in the water, their prows upturned and their wooden hulls painted in rainbow stripes. Now the harbor is crowded with hundreds of fiberglass yachts—large, modern, colorlessly impressive.
The view helps explain why many Maltese are ambivalent about their country’s progress: They know that economic opportunities are more plentiful than they used to be, but they fear progress might be smoothing away the country’s distinctive edges. The skyline is dotted with cranes rising above the cathedral domes, and those cranes always seem to be hovering over the same sort of building: tall, rectilinear, and cut in clean angles. Malta is the most densely populated country in the EU, and the economic boom of recent years has intensified the pace of construction. Locals often complain of the dust from all of the building sites; when it rains, the drops sometimes hit windshields as small, powdery explosions—tiny puffs of brown smoke.
Competing real estate agencies line Sliema’s coast road, stretching for several blocks. Constantly changing listings for apartments and houses paper their windows. “There’s big demand, and the prices keep getting higher,” says Carl Peralta, director and founder of 77 Great Estates, one of the agencies.
Driving that demand is a new genus of Maltese resident that, Peralta insists, can easily be spotted in the cafes and restaurants of Sliema. Many are from northern Europe, and almost all are young—20s, maybe early 30s. They carry backpacks, they don’t drive cars, and they’re rarely spotted anywhere before 10 a.m. They work for the hundreds of internet gaming companies that have flocked to Malta in recent years. The companies offer the range of gambling services, from online poker and games of chance to sports betting.
In the early 2000s, only two online gaming companies could be found in Malta; now there are up to 300, and the sector accounts for an estimated 12 percent of the economy, according to the Malta Gaming Authority. Both the governing party and the opposition agree that the growth was a result of commendable foresight: In 2004, Malta became the first country in Europe to regulate online gaming, helping to legitimize an industry that previously stood on the fringes of respectability and legality.
“Laugh all you like, prime minister. But we will insist that you don’t get off scot-free”
The new arrivals who’ve bought citizenship through the passport program maintain a much lower profile than the gaming-industry workers. You can’t pick them out of a crowd on the street, and it’s difficult to even identify them in government documents. When Malta last released its annual list of new passport holders, it was maddeningly difficult to decipher; purchasers were listed in order of their first names, without a country of origin, and mixed among thousands of others who obtained their citizenship though birth or naturalization.
The Maltese press has discovered that the list of new citizens includes Russian oligarchs and even a woman who was suspended from the Vietnamese parliament for having dual citizenship, which is illegal in Vietnam. Roberta Metsola, who represents Malta in the European Parliament, suggests that many of the passport purchasers want nothing to do with Malta; they simply want the financial and travel access that an EU passport provides. “We’ve had cases of people arriving on a private jet, meeting a real estate agent, taking out a basement flat somewhere here for a year, never even seeing it, and leaving in the afternoon,” Metsola says.
Peralta, the real estate agent, says that rings true to him. Those who are buying passports, he says, know the minimum they must spend on housing—either €350,000 for a purchase or rental payments of at least €16,000 a year for five years. Meeting those minimum requirements, Peralta says, is often the only feature they’re specifically looking for in a property. “I know there are checklists they have that say they need to open the water taps once a month, or send a cleaner once a month,” he says. “But no one is living there.”
The town of Sliema is a popular destination for expats and new citizens.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
Jonathan Ferris speeds through Valletta’s darkened streets, jumps off his motorcycle, and walks briskly into the lobby of the Phoenicia Malta Hotel, where he finds a table in the noisy lounge. His features are lean, and he moves with a restless energy. His eyes scan the room, and he raises his voice just loud enough to be heard above the lounge singer, who is halfway through a slow and torchy version of Fleetwood Mac’s Songbird.
“I was the top man,” Ferris says, “the top investigator of financial crimes in the country. Type my name in the internet. All bloody hell comes up.”
The European Parliament is concerned enough about Malta to have sent an investigative delegation to the country multiple times this year. The committee’s report, issued recently, described an atmosphere of fear had settled over the country—and a sense that criminals could operate with impunity. Ferris believes his life during the past year perfectly represents the intersection of both phenomena.
He says that in 2017 his bosses at Malta’s Financial Intelligence Analysis Unit, the national agency tasked with policing money laundering, asked him to step aside from the investigation of the allegations involving Muscat’s wife and aides. He had told them he didn’t trust one of the known sources that had fed Caruana Galizia information regarding Michelle Muscat’s alleged ownership of the shell company—a source Ferris had investigated before and who, incidentally, was later discredited by the magisterial inquiry. Ferris’s bosses told him they believed his history with that source compromised his objectivity. That angered him, and he told his bosses that within 72 hours he could determine the true owner of the company that Michelle Muscat was allegedly involved in. He explained to them how he would consult tax returns, political party documents, and bank records. The next day, he says, he was fired and stripped of access to investigative documents and records. His firing further fueled suspicions against Muscat and his wife.
Investigator Jonathan Ferris.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
After Caruana Galizia was killed, Ferris says, he began to fear for his own life. He takes his bloodhound out for walks in the early morning, and several months ago he began to notice cars following him with the headlights off. “I decided, from now on, I’m always going to carry my gun around,” he recalls. Police officers now monitor his house for eight hours each night. “What good does it do? I don’t know, because for the rest of the 16 hours out of 24, I and my family are all alone.”
After Caruana Galizia’s murder a similar anxiety spread quickly among those seen as unfriendly to the government. Some of Malta’s neighbors pointed to that generalized unease as emblematic of the current state of the country. The European Parliament report described “systemized and serious deficiencies” in the rule of law in Malta, which had eroded the population’s general sense of security. Additionally, a police investigation in Italy has alleged that the Sicilian Mafia infiltrated companies in the online-gaming sector, using them to launder illicit funds.
When Muscat sat in front of European Parliament members during a plenary hearing to discuss the rule of law in Malta last June, he dismissed the allegations publicized by Caruana Galizia as politically motivated, setting a tone for his denials that he’s used ever since. His relaxed attitude—and particularly his periodic smiles—during the questioning rankled some of the politicians.
“You can laugh all you like, prime minister,” said Werner Langen, a German member. “But we will insist that you don’t get off scot-free.”
A vigil held to remember Caruana Galizia at the Great Siege Monument, nine months after she was killed.
A memorial for Caruana Galizia at the Great Siege Monument.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
This past year was supposed to be Malta’s chance to showcase its economic gains to the outside world, to take a victory lap after years of growth. It assumed the presidency of the EU in 2017—a first for the country—and this year Valletta was named the EU’s Capital of Culture, another rotating title that was cast as a big deal for such a small country. Earlier this year Muscat went so far as to claim that national pride in Malta had hit an all-time high.
The country’s tourism authority kicked into high gear to take advantage of the promised attention. All sorts of cultural galas and grand openings were organized, and the National Museum of Archeology, a grand 16th century building in the middle of Valletta, became a nucleus for the celebrations.
One afternoon in April, tourists filed through the museum’s entrance and wound their way past exhibits that guided them along the country’s circuitous story. On the second floor, dozens of people entered the majestic Gran Salon, which centuries ago served as a banquet hall for the knights of the Order of St. John. Enormous tapestries, ancient and colorful, hung from the walls, and a small crowd gathered in front of a podium for a special event that had been organized just the day before. Scicluna, the minister of finance, stepped to the microphone.
“I’m very proud, and very pleased, to be the person to launch this national Anti-Money Laundering and Combatting of the Financing of Terrorism strategy and plan,” Scicluna said.
Despite the introduction, he didn’t appear to be particularly pleased to be delivering a speech denouncing money laundering, drawing more attention to a problem that he clearly sees as a threat to Malta’s reputation and livelihood. The reputational damage resulting from continued scrutiny from various quarters—the European Parliament, the European Banking Authority, Italian police, the U.S. Department of Justice—could trigger a backlash against the tiny country that might pose a real threat to its economic foundations.
As the investigation into Mafia involvement in Malta’s online-gaming sector continues, European lawmakers have several times proposed restrictions on cross-border betting, a change that would classify the services provided by many Maltese companies as illegal. Ana Gomes, a Portuguese parliamentarian who leads the EU commission investigating rule of law in Malta, has said the country’s low corporate tax rate is “anti-European” and saps billions in revenue from other member states. In March, the European Parliament voted to pursue a “tax harmonization” scheme that would create one common corporate tax rate applied throughout the EU. A U.K.-based nonprofit advocacy group, Tax Justice Network, issued a report estimating that such a policy would cut Malta’s tax base by more than half.
In the midst of these pressures, Scicluna stood at the podium and delivered a string of statements that should seem so self-evident that they’d never have to be uttered. “I’d like to say that Malta—and this is an important statement to make—is deeply committed to preventing, detecting, and prosecuting money laundering and terrorist financing activities. Financial crime threatens the safety of our society, the integrity of our financial system, and the stability of our economy.”
That economy, Scicluna hastened to add, was healthy and strong, and this year the International Monetary Fund’s executive board singled out the country’s “sound policies” as the root of its success.
When he wrapped up his remarks, the crowd in the Gran Salon filed out of the museum, where they joined the current of pedestrians flowing along Republic Street toward the Great Siege Monument, which sits in front of the main courts building in one of the city’s central squares.
Since last fall, people have been placing candles, flowers, and signs at the base of the monument as a makeshift memorial to Caruana Galizia. At least eight times since then, someone has swept away the items in the dark of night; each time, the flowers and candles and signs are quickly restored. Recently, a local governing council lobbied to ban the temporary memorial for good, arguing that it was time for the country to move on.
On this day, dozens of tourists stopped in front of the monument and faced the plaques that explained the historical significance of the statues. But none of them pointed their cameras up at the statues. Every one of them focused on the marble base and the makeshift memorial, and on the sign that read, “No Justice.”
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As Hurricane Florence bears down on the southeastern United States, nearly 759,000 homes are in the storm’s path, and a worst-case rebuilding scenario could cost more than $170 billion, according to an estimate from real estate data provider CoreLogic.CoreLogic calculated the reconstruction cost value, which is the total expense of completely rebuilding a property in case of 100% destruction, for 12 metro areas in the Carolinas and Virginia. The table below shows those estimates for a Category 4 storm, which is Florence’s current designation. Additional estimates based on other categorizations is available on CoreLogic’s web site.
Equity investors are closely tracking Hurricane Florence as the worst storm to hit North Carolina in decades could also have a menacing effect on the insurance, retail, agriculture and restaurant industries. More than 1 million people are evacuating their homes as the Category 4 storm is expected to make landfall over the weekend. Analysts say the event could also be a boon for companies that specialize in roof repairs or disaster-related services, as well as transportation providers.
According to National Hurricane Center, Hurricane Harvey is second only to Hurricane Katrina as the costliest hurricane to hit the United States at $125 billion. Katrina cost about $161 billion. By the time December 2017 had rolled around, the United States government had sent about $11 billion in federal disaster aid to Texas, and the state was asking for $61 billion more in federal assistance. After Hurricane Katrina, Louisiana had received almost $115 billion in federal aid. Multiple organizations and companies have raised money and provided aid for the people of Houston. The companies and aid listed below have provided a combined amount of at least $26.82 billion of the $125 billion that Harvey caused.
A protectionist policy that must be individually tailored to each product category requires large numbers of administrative staff, and a period must be established during which companies can apply for exemptions. Exchange rate-based adjustments, on the other hand, entail no such costs.In that sense, the more problematic administrative delays become and the more industry opposition mounts, the greater the likelihood that President Trump will replace tariffs with exchange rates as his main tool for addressing US trade imbalances.
Such a move would be a long shot by any stretch of the imagination, but with Trump invoking national security to impose tariffs, Patel says he can’t “completely rule out” the possibility.
"As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry."
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