Why WWIII Is On The Horizon

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

The collapse of the Soviet Union in 1991 gave birth to a dangerous American ideology called neoconservativism. The Soviet Union had served as a constraint on US unilateral action. With the removal of this constraint on Washington, neoconservatives declared their agenda of US world hegemony. America was now the “sole superpower,” the “unipower,” that could act without restraint anywhere in the world.

The Washington Post neoconservative journalist Charles Krauthammer summed up the “new reality” as follows:

“We have overwheming global power. We are history’s designated custodians of the international system. When the Soviet Union fell, something new was born, something utterly new–a unipolar world dominated by a single superpower unchecked by any rival and with decisive reach in every corner of the globe. This is a stagering new development in history, not seen since the fall of Rome. Even Rome was no model for what America is today.”

The staggering unipolar power that history has given to Washington has to be protected at all costs. In 1992 top Pentagon official Undersecretary Paul Wolfowitz penned the Wolfowitz Doctrine, which became the basis for Washington’s foreign policy.

The Wolfowitz Doctrine states that the “first objective” of American foreign and military policy is “to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat [to US unilateral action] on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.” (A “hostile power” is a country sufficiently strong to have a foreign policy independent from Washington’s.) Continue reading

Questions and Answers

Submitted by James Howard Kunstler  –  www.kunstler.com

The really big item in last night’s 60-Minutes newsbreak was that the latest Star Wars movie passed the billion dollar profit gate a week after release. That says just about everything you need to know about our floundering society, including the state of the legacy news media.

The cherry on top last week was Elon Musk’s SpaceX company’s feat landing the first spent stage of its Falcon 9 rocket to be (theoretically) recycled and thus hugely lowering the cost of firing things into space. The media spooged all over itself on that one, since behind this feat stands Mr. Musk’s heroic quest to land humans on Mars. This culture has lost a lot in the past 40 years, but among the least recognized is the loss of its critical faculties. We’ve become a nation of six-year-olds.

News flash: we’re not going Mars. Notwithstanding the accolades for Ridley Scott’s neatly-rationalized fantasy, The Martian (based on Andy Weir’s novel), any human journey to the red planet would be a one-way trip. Anyway, all that begs the question: why are we so eager to journey to a dead planet with none of the elements necessary for human life when we can’t seem to manage human life on a planet superbly equipped to support us?

Answer: because we are lost in raptures of techno-narcissism. What do I mean by that? We’re convinced that all the unanticipated consequences of our brief techno-industrial orgy can be solved by… more and better technology! Notice that this narrative is being served up to a society now held hostage to the images on little screens, by skilled people who, more and more, act as though these screens have become the new dwelling place of reality. How psychotic is that? Continue reading

Domestic Sales Problem

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Durable goods estimates were somewhat better in November than they have been in recent months. Year-over-year, orders contracted by less than 1% in the latest month after contracting more than 2.7% in each of the prior six. In September, durable goods orders (ex transportation) were down almost 5.5%. While that counts as improvement it may not count as meaningful. The slump in manufacturing has continued, engulfing all of 2015 so far. While there is variability in the monthly numbers, as expected, durable goods orders have contracted in each of the past ten months leaving only January’s +0.04% on the growth side.

This has forced media commentary all over the place throughout the year as orthodox economics doesn’t know how to consider such a slump. In the past few months, that has coalesced into a reduction for manufacturing into just overseas weakness (the dollar) and 12%. From the Wall Street Journal:

“Unless we see a big rebound in December or upward revisions, it appears that investment in equipment contracted in the fourth quarter,” said Paul Ashworth, chief U.S. economist at Capital Economics, in a note to clients.
The manufacturing sector, which accounts for roughly 12% of the nation’s economic output, has slumped in the last year as low oil and gas prices squeeze domestic energy producers while weakness overseas and a strong dollar reduce demand for U.S. exports. A strong dollar also makes imported goods cheaper.

CNBC:

Manufacturing, which accounts for 12 percent of the economy, has also been hit by efforts by businesses to reduce an inventory bloat, which has curtailed new orders growth.
The dollar has gained almost 20 percent against the currencies of the United States’ main trading partners over the last 18 months.

ABC:

Durable goods orders have tumbled 3.7 percent year-to-date. Slow economic growth among major U.S. trading partners — including Europe, China and Japan — has caused the dollar to rise in value, making U.S. goods more expensive overseas and less competitive. Lower oil prices have also squeezed demand for pipelines and equipment by energy companies.
“The manufacturing sector still looks fairly weak — weaker than non-manufacturing, reflecting more exposure to declining exports, a plunge in oil-related investment and an inventory cycle” where wholesalers are reducing their stockpiles, said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

These almost coordinated narratives set up really heavy internal contradictions that are left unexplained. If there is “inventory bloat” and “an inventory cycle”, then you would expect some reasons as to why and how those might have come about. Such great imbalance as to push manufacturing into its own recession cannot originate with manufacturing alone. On some level, manufacturers, as wholesalers, are not keeping up with their expected sales, leaving the manufacturing slump as a matter of pure spending. Continue reading

McWilliams: Economic Lessons from the Age of the Pharaohs

Submitted by Mark O’Byrne  –  GoldCore

“Joseph urged the Pharaoh to set aside one fifth of the crop in the good times and store the grain to ease the famine in the bad times, because if he didn’t do that, the good times would be forgotten and all the people would remember was the bad times. This wouldn’t be politically good for the Pharaoh.”

“This is where economics began, on the shores of the Nile. This is where the Hebrew Joseph began to interpret the dreams of the Pharaoh, claiming that the economy moved in cycles. This was also the birth of the seven-year business cycle, plus countercyclical macro policy.”

David McWilliams looks in the past and ahead at the effects of enormous debt accumulation in a world where another seven-year business cycle is ending. The full article can be read here.

The Daily Debt Rattle

 Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Weak Demand, Vessel Surplus Mean Horror 2016 For Commodities Shipping (Reuters)
Energy Stocks Fall Along With Oil Prices (WSJ)
Saudi Riyal In Danger As Oil War Escalates (AEP)
Saudis Plan Unprecedented Subsidy Cuts to Counter Oil Plunge (BBG)
Saudi Arabia Plans Subsidy Cuts as King Unveils 2016 Budget (BBG)
Where Next For The Three Arrows Of Abenomics? (Telegraph)
Record Merger Boom Won’t Stop In 2016, Because Money Is Still Cheap (Forbes)
China Control Freaks (BBG)
China Clamps Down on Online Lenders, Vows to Cleanse Market (BBG)
China Central Bank Says To Keep Reasonable Credit Growth, Yuan Stable (Reuters)
Cost Of UK Floods Tops £5 Billion, Thousands Face Financial Ruin (Guardian)
UK Factories Forecast To Shed Tens Of Thousands Of Jobs In 2016 (Guardian)
Questions and Answers (Jim Kunstler)
Qatari Royals Rush To Switzerland In Nine Planes After Emir Breaks Leg (AFP)
Freak Storm In Atlantic To Push Arctic Temps Over 50º Above Normal (WaPo)
German States To Spend At Least €17 Billion On Refugees In 2016 (Reuters)
Schaeuble Slams Greece Over Refugee Crisis, Aims For Joint EU Army (Reuters)
Selfishness On Refugees Has Brought EU ‘To Its Knees’ (IT)
Refugee Arrivals In Greece Rise More Than Tenfold In A Year (Kath.)