All the Things That Can Go Wrong Coronavirus Care Kit AMERICAN CONSEQUENCES While You Were Washing Your Hands
I D E A S T H A T M A T T E R
E D I T E D B Y P . J . O ’ R O U R K E
I made money on September 11. I made money in the financial crisis. And I plan on making money out of the coronavirus fallout. “ ”
FROMTHE MEAN STREETS TO WALL STREET
AN EXCLUSIVE INTERVIEWWITH ENRIQUE ABEYTA
MARCH 2 0 2 0
EXPOSED: The REAL Reason Why the Rich are Getting Wealthier in America -- While Everyone Else is Being Left Behind
Today, most Americans are being left behind in a way we’ve never--ever--seen before. Sure, the gap between the rich and everyone else has always existed--but never on this level. And never has it increased at this speed. Every year, thousands of people in our country are ascending into millionaire status. On the other side, surveys show nearly 60% of Americans don’t even have $1,000 in savings. That’s why, for the first time ever, Porter Stansberry (an ultra-successful, multi-millionaire businessman), has gone on camera to explain the REAL reason for America’s huge and growing wealth gap. As Porter explains, we don’t need socialism in America. We need a better understanding of how this new economy works. And if you want to truly understand the REAL reason why the rich are getting richer… and the most important step you can take, to be on the right side of this trend, all you have to do is watch the first 10 minutes of Stansberry’s remarkable new video, filmed in his corner office.
Stansberry explains what politicians either don’t understand or simply won’t tell you… and he reveals the one investment he recommends you make (it’s not a stock, bond, ETF, mutual fund, or precious metals), to help make sure you don’t fall behind. Porter is one of the most controversial figures in America today—but he’s also one of the smartest, most successful, and most generous men you’ll ever meet. I guarantee you’ve never heard these ideas discussed in quite this way before. Just watch the first 10 minutes of Stansberry’s new video. You will think about what is happening in America in a completely different way. And you could even have the chance to make money, if you follow his recommendations. You can watch Stansberry’s new video, filmed at our firms’ headquarters, for free here:
CONTENTS MARCH 2020 : ISSUE 33 LOST? CLICK HERE
42 1970s Era Wave of Inflation Coming
4 Inside This Issue
BY STEVEN LONGENECKER
BY KENNETH ROGOFF
6 Letter From the Editor BY P.J. O'ROURKE
46 Coronavirus Care Kit BY DR. DAVID EIFRIG
Editor in Chief: P.J. O’Rourke Editorial Director: Carli Flippen Publisher: Steven Longenecker Executive Editor: Buck Sexton Managing Editor: Laura Greaver Creative Director: Erica Wood Contributing Editors: Patrick Buchanan, Dr. David Eifrig, Erick Erickson, Walter Reynolds Farley, Dan Ferris, Kim Iskyan, Dr. Ron Paul, Jeff Patch, Kenneth Rogoff, Nouriel Roubini Cartoon Director: Frank Stansberry General Manager: Jamison Miller Advertising:
12 From Our Inbox
54 The British Billionaire With His Hands in U.S. Environmental Politics BY JEFF PATCH
16 All the Things That Can Go Wrong BY NOURIEL ROUBINI
22 Central Banking Is Socialism BY DR. RON PAUL
59 Free Market Wokeness BY ERICK ERICKSON
24 While You Were Washing Your Hands BY KIM ISKYAN 28 Enrique Abeyta: From Trailer Parks to Trading Billions BY LAURA GREAVER 38 Will the Coronavirus Kill the NewWorld Order? BY PATRICK BUCHANAN
62 The Census Is a Bare-Knuckle Political Brawl BYWALTER REYNOLDS FARLEY
66 Mark Minervini and the '$100 Challenge' BY DAN FERRIS
74 The Final Word
Ricky D'Andrea, Jill Peterson Editorial feedback: feedback@ americanconsequences.com
BY BUCK SEXTON
78 Featured Contributors
Cover Photo By Jimmy Hurlburt
INSIDE THIS ISSUE
W e warned last month that American freedoms were disappearing. And now, thanks to the COVID-19 coronavirus, it’s happening faster than ever... This month has brought us lockdowns and enforced quarantines in major American cities, empty grocery-store shelves, a near- complete halt to national economic activity, and the most volatile stock market since the Great Depression. In this American Consequences magazine, we have tried to approach this coronavirus- spurred disaster from every angle... Editor in chief P.J. O’Rourke takes a look at the state of the U.S. presidential race. As he puts it... These candidates are either – as I like to say about my septuagenarian self – venerable, tested, time-honored past masters. Or they’re – as my children like to say about me – decrepit geezers, fossils, codgers, and fogeys past their sell-by date. And while coronavirus is the risk that everyone recognizes today, it’s not the only thing that should keep you up at night. Famed “perma bear” economist Nouriel Roubini shows why there are no black swans... just white swans flying to dark places. Dr. Ron Paul shares how the latest Federal Reserve rate cuts are socialistic and harmful to all American interests, while Chaos Chronicles editor Kim Iskyan details the nasty oil price action that’s happening while everyone is distracted by coronavirus.
Laura Greaver interviews Enrique Abeyta, a tattooed, piratical-looking former Wall Street trader who has managed billions and made money in essentially every crisis. And now, he’s bringing his money-making expertise to Main Street, to help folks coming out of the coronavirus fallout. Pat Buchanan ponders whether the coronavirus will kill the New World Order... while Kenneth Rogoff notes that current financial conditions feel like the ’70s, with the potential for rising Coronavirus Care Kit to help you prepare... as ultimately, at least 50% of Americans are likely to be infected in the coming weeks. And make sure you read... • Jeff Patch investigates a British billionaire who is bankrolling extreme climate protestors in the U.S. • Erick Erickson shows how “free market wokeness” leads corporations to side with the left in steering social policy. • Walter Reynolds shows how the census is a bare-knuckle political brawl... and has been for more than 100 years. • Dan Ferris interviews Mark Minervini, a “Stock Market Wizard” who recently went viral with his $100 challenge. And finally, executive editor Buck Sexton rounds out our magazine with a dispatch from America’s viral “ground zero” – searching for a chicken at a Whole Foods in New York City. Regards, Steven Longenecker Publisher, American Consequences inflation during a deep recession. Dr. David Eifrig has put together a
Award-Winning Educator Reveals Treatment To Improve Brain Function...
Sound Healing Frequency Linked to a Longer Life?
Was a Healing Frequency Discovered Between 85-255hz ? I doubt any doctor has told you about this in your body… but starting in our brains, a silvery white “healing cord” runs through all of our bodies... For years scientists didn’t even know what it did… until they recently discovered that this hidden part of your body quietly controls everything from your blood sugar...to memory and brain function... to lung function...to mood...and more... And that’s where this story takes an amazing turn ... As it turns out, this system is built to respond to a specific sound frequency between 85 and 255hz... In fact, a number of celebrities are now
speaking out about how they’ve used this secret with amazing effects on their bodies...
Perhaps the most astonishing transformation is that of retired Woodstock rocker Jim Donovan.
You can see the astounding video about it here and discover how easy it is to spark this healing within your own body. If you’re tired of pills, difficult exercises, diets, or nutritional supplements, then this could be a game changer for you . What is it about this specific frequency that provokes such powerful healing? Well that’s a story that goes back 4,000 years and new evidence suggests... CONTINUE READING HERE
From Editor in Chief P.J. O’Rourke
TO KNOW BETTER
NO MATTER WHICH WAY YOU FLIP IT, WE'RE ALL ENDING UP WITH AN OLD WHITE DUDE
LETTER FROM THE EDITOR
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LETTER FROM THE EDITOR
hen the Super Tuesday primary polls opened on the morning of March 3, the race for the
slide, bend the monkey bars, or break the swing set seat. Joe Biden is a zombie from the policy cemetery of the Carter era, with a stump performance like Election Night of the Living Dead. And Bernie Sanders is the decrepit grouch who should be sitting on a park bench in Boca Raton, grouching about his grandchildren voting for Bernie Sanders. Meanwhile, how did the Democratic field of presidential hopefuls – a large and diverse selection of various talents and abilities (or lacks thereof ) – suddenly get winnowed down to the Mummy of the White Mountains and something that Dr. Barackenstein brought back to life in the Hope and Change lab of 2008? How come Elizabeth Warren flopped? New Hampshire’s governor, Chris Sununu, had the best take on Warren... During the February 11 New Hampshire primary, I was on Dan Rea’s NightSide talk show (WBZ Boston 1030 AM and available on a podcast – I heartily recommend it). Dan and I were discussing the incoming vote counts when Gov. Sununu stopped by the studio. Dan invited him to have a seat and grab a microphone. Dan Rea: “Governor, it looks like Elizabeth Warren is getting a real beating in New Hampshire. What did she do wrong?” Gov. Sununu: “She campaigned here.”
Democratic presidential nomination was a display of speed, strength, bravery, and nimble maneuvering that was as exciting, confused, and unpredictable as the running of the bulls at Pamplona. By the time the polls closed, the race was two old guys puttering along the political retirement community’s electoral cart path to see who’ll be first in line for the Early Bird Special at the convention in Milwaukee. In fact, the entire 2020 presidential campaign has turned into a remake of Grumpy Old Men. And when that 1993 movie was released, Jack Lemmon (at 68) and Walter Matthau (at 73) were younger than any of the three front-running presidential candidates will be on Election Day. Being a grumpy old man myself, I guess I should be... whatchamacallit... word’s on the tip of my tongue... Huh? What’s that? Speak up, goldurnit! And where are my dang bifocals?... Oh... I’m wearing them... Anyway, as I was saying... What was I saying? We might as well just go ahead and call 1600 Pennsylvania Avenue “The White Home” – A National Assisted Living Facility. Trump is much too old and far too big for his britches to be hanging around the political playground making up nasty nicknames and teasing the wimpy kids. One of these days, his big fat old ego is going to get stuck in the
Dan Rae: “And...” Gov. Sununu: “People got to know her.” People in the rest of the country got to know Warren too. The problem with that was summed up in a Monday, March 1 New York Times op-ed by Michelle Goldberg. The lead paragraph read: On Tuesday [February 25], after the last Democratic debate, Ann Coulter tweeted: “Sen. Warren has convinced me that Bernie isn’t that worrisome. SHE’S the freak who will show up with 17 idiotic plans every day and keep everyone up until it gets done.” Vicious reactionary that she is, Coulter cut to the heart of Elizabeth Warren’s promise. Or threat. And, mind you, this was an op-ed supporting Elizabeth Warren. (Ann Coulter sends her best, Michelle.) Mike Bloomberg is a different story. Bloomberg didn’t lose because he spent so much trying to buy the nomination. We Americans are willing to prostitute our votes. Bloomberg got about 2,340,000 votes on Super Tuesday (according to the rough figures available from Associated Press as I write). True, Bloomberg spent half a billion dollars getting those votes. But let’s divvy up the take... $500 million divided by 2.34 million equals less than $214 per whorish X on a ballot. We’re not a bunch of cheap hookers, Mike. America is a high-price cathouse. You’re going to have to pony up a lot more than $214
to buy our favors. Bloomberg lost because he didn’t spend enough trying to buy the nomination. Pete Buttigieg is out of the running due to his being so amiable, accomplished, intelligent, and personable that people immediately like him without giving it a thought. Then people started thinking. Specifically, they started thinking, “I’ve got socks older than he is.” After that they started thinking about Pete’s political bona fides, of which he has one: Mayor of Nowhere. A political career is like running the high hurdles... You’re supposed to clear a few jumps first. You can’t simply pop out of the starting blocks, trot along the side of the track, and leap over just the very last hurdle to land in the White House. Never mind that that’s what the current resident did. And, when he came to the last hurdle, Trump didn’t even take much of a hop – he just shoved the thing aside. But Pete’s no Trump (as Pete would be the first to point out). And before Pete makes a serious attempt to run for the presidency, So now the presidential campaign has entered a fully geriatric stage. There are only three remaining likely candidates (unless the fellow carrying a scythe and dressed in a floor-length black hoodie decides otherwise).
LETTER FROM THE EDITOR
Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. “Amy who ?” was something voters thought. Also, “If she’s actually a senator, how come I’ve never heard of her?” And, “She says she’s a Democrat who can work with Republicans. Does she own a flying pony too?” Then... You know how one thought leads to another... “Is Minnesota really a state?” “Has anybody ever he needs to be elected to a higher political office than he’s held so far – County Sewer Commissioner, maybe. As for Amy Klobuchar, I’m not sure what happened to her. Again, it may have had to do with voters thinking. Voters will do that – even Democratic primary voters.
been there?” “Are you sure it’s not just a place that Garrison Keillor made up?” In the end, maybe Amy Klobuchar was an imaginary candidate. If voters wanted imaginary things to vote for, Bernie Sanders’ campaign promises were already available. So now the presidential campaign has entered a fully geriatric stage. There are only three remaining likely candidates (unless the fellow carrying a scythe and dressed in a floor-length black hoodie decides otherwise). These candidates are either – as I like to say about my septuagenarian self – venerable, tested, time-honored past masters. Or they’re – as my children like to say about me – decrepit geezers, fossils, codgers, and fogeys past their sell-by date. However you want to put it, America has no choice about electing a president who’s old. The only choice we have left is “what kind of old?” There’s... OLD FAITHFUL Trump spouting off every 44 minutes. OLD GLORY a tattered Biden who should have been hauled down the flagpole long ago but who just keeps on flapping. And... old fart Bernie the Marxist butt trumpet.
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FROM OUR INBOX
P.J. O’Rourke comment: Many thanks, Jerry. “Common ground” is music to our ears. There’s some allegedly nonpartisan site on the Internet calling itself “Media Bias/Fact Check” that labels us as “Right Bias.” But what we try to be is more what reader Mack R., in last month’s Inbox, called us: “Militant Moderates.” And, by the way, I’m of the personal opinion that what the world needs more of is old geezers with their noses in books. (Although I may be “biased” since I am an old geezer and I write books.) I think the mag is great! Enjoyed the articles. What will it cost to subscribe? – Mitch M. P.J. O’Rourke comment: At a moment when good seems to be lacking, gosh do I have good news for you, Mitch. What it costs to subscribe to American Consequences is nothing, naught, nil, nix, zilch, zip, bupkis, diddly-squat, and nary a red cent. Just Google us and click on “Subscribe.” The price of our subscription is what Jerry, above, and the vets at his American Legion Post would call “soldier’s supper.” Although we prefer to use the term for a tennis score of zero, “love.” Re: Lockdown U.S.A Mr. Iskyan: You are correct. The governments are, as always “distorting” the truth to their liking about this outbreak... However there is a second lesson to be taught when the governmental control efforts fail. Hopefully the population of
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Appreciate your frankness. – Ernie W.
P.J. O’Rourke comment: We come by it naturally. It so happens that Porter Stansberry – our friend at Stansberry Research and the catalyst behind the founding of American Consequences – goes by his middle name. His first name is Frank. He says to tell you we appreciate your Earnestness. Great magazine – discovered it while visiting Phoenix two years ago and never put it down. I share it everywhere. I’m in Illinois now and have asked everyone I know to read this amazing informative magazine. Great job to all those involved in its production. – RandyW. P.J. O’Rourke comment: We’re grateful for your praise, Randy. And we hope there are some state legislators among those Illinois readers that you’re drumming up. I’m a fan of Illinois. My mother’s family is from Mattoon, and I was partly raised in Chicago. But what a fiscal mess the state is in! The Land of Lincoln needs some of the “Honest Abe” financial outlook that we aim to provide. I’m an old geezer, MBA, and well read. I just got on to your website a couple weeks ago and really like it. Common ground. I will be passing website and subscription info on to buddies at the Am. Legion Post. Hopefully I can gain you additional subscribers. – Jerry S.
gets tangled up with our current health sortacare exploitation system. – Bill C. Kim Iskyan comment: Bill – yes, and double yes. One of my favorite quotes is from former U.S. defense secretary Donald Rumsfeld... “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” All of those unknowns are what’s the problem just now. The answer to those unknowns? Another of my favorite politician quotes is from Viktor Chernomyrdin, who was Russia’s prime minister during much of the 1990s. “We wanted the best, but it turned out like always.” (It sounds better in Russian: Хотели как лучше, а
“useful idiots” has been trained and do actually believe “their” governments are in control and omni-powerful will wake up and realize they are not. – John B. Kim Iskyan comment: John, the whole idea that governments have the answer – to anything – is terribly misguided. Occasionally, they cause more problems than they create... and things turn out “like always” (see below). In rare occasions, governments actually do work (see below again). Re: Coronavirus Blizzard Hits the U.S. I suppose that Kim thinks the Washington Post tells the truth? Leave him in Singapore and cut the cable to his house. – Carl H. It’s easier to understand why Singapore is so much better at handling the coronavirus
epidemic as Mr. Iskyan says since it is the third- richest country in the world, per capita. Almost twice as much per capita as in the United States. It’s also small and much easier to control by the “rich” government. Mr. Iskyan didn’t mention this. So who catches the virus? The rich in Singapore, or the poor in the U.S.? – Arnold P. Loved your analysis, a good example of “when you don’t knowwhat you don’t know”
получилось как всегда .) The danger now is that the unknowns turn out... like always. Re: Who’s the Most Dangerous
Democratic Presidential Candidate?
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The problem with these candidates is that none have figured how to pay for their
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derivatives which are nothing but examples of gambling over gamblers in order to make quick bucks, what does PJ have to say about American capitalism today now that his book is 15 years or more in the past? – Herb F. P.J. O’Rourke comment: Herb, I’d say those Albanian pyramid schemes are starting to look good. I wish I’d invested in one – I’d probably be down a lot less than I am in the S&P 500 this month. Incidentally, once Albania’s pyramid-scheme-fueled economy crashed in 1997 (with a 59% GDP contraction), the country began to experience real economic reform. GDP growth has been averaging close to 4% over the past five years – well above the EU average. Re: Like Roadkill and Maggots Thanks to Bill Bonner for telling the truth. I have been singing from the same hymnal for decades. The big questions: when the s%!@ hits the fan, what does that look like; how does one prepare; and what is the aftermath? I have little faith that my SS check will continue to arrive. It’s either that, or the dollar will be devalued to the point of worthlessness. – J.C.S P.J. O’Rourke comment: Or both, J.C.S. But don’t be worried – be alerted ! The thing that makes Bill Bonner so valuable as a thinker is not that he’s a doomsayer, but that he has a structural engineer’s view of political economics. Bill sees our finances, politics, fiduciary institutions, and debt and credit flows as all part of one integrated
new programs. They should show us how to pay for the New Deal and Great Society programs before they start another underfunded program. They start these programs by taxing the rich and end up bankrupting the middle class. America need less government and more freedom. – William Z. P.J. O’Rourke comment: William, you hit the nail on the head. (And, like you said, that government tax hammer smashed your thumb.) It never turns out that “just the rich” get taxed. And that tax never turns out to be “very small” the way Elizabeth Warren said her wealth tax would be. (And goodbye to you, Liz. Don’t let the door hit you in the back on your way out.) Not long ago, a friend of mine was talking about the debate back in 1913 over the ratification of the 16th Amendment authorizing a federal income tax. The original proposed tax rate was 1%. Opponents of the 16th Amendment said, “Wait a minute, what if we elect the wrong people and that income tax rate goes up to 2% or 3% or even, God forbid, 6%?” To which supporters of the 16th Amendment replied, “Oh, go on, get outta here, you’re talking crazy talk.” I bought and read PJ’s book wherein he describes 4 countries as examples of good and bad capitalism and good and bad socialism... He criticized Albanian capitalism as a bad example of capitalism because Albanian capitalism was chock-full of pyramid schemes.
Now that American capitalism is over 80%
Expert Financial Analyst Issues Rare RECESSION-PROOF STOCK RECOMMENDATION. Your portfolio will want to be positioned for the next recession.
system. Then he tests that system with thought experiments: “What happens if this component fails?” “What happens if that component fails?” “What would set off a cascade of failures?” (Bill’s the kind of structural engineer that Boeing could have used on its 737 Max.) THANK YOU for the Bill Bonner article in American Consequences . I found it very interesting and enlightening. As I have aged – I have noticed my politics changing back and forth from right to left. The article actually helped me to understand a bit of the WHY. I think (like so many other Americans) I am a Centrist at heart but the extremes in this country seem to control the conversation so we end up picking a side; just not necessarily one that we can consistently agree with. I don’t imagine that was the intent – but THANKS just the same! – Steve S. P.J. O’Rourke comment: You’re WELCOME, Steve. And we hear you about the difficulty of being a “Sensible Centrist.” (See my response to Jerry S., above.) The problem is just how greasy our political big wheels have become – as in the old adage “The squeaky wheel gets the grease.” But what if you’re driving an 18-wheeler (the Big Rig that is America) and every one of your wheels is shrieking for attention? My advice: pull into the next rest stop and read an issue of American Consequences .
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By Nouriel Roubini
THERE ARE NO BLACK SWANS... JUSTWHITE SWANS FLYING TO DARK PLACES
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THE THINGS THAT CAN GO WRONG
In my 2010 book Crisis Economics , I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller, but as “white swans.” According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution. But I argued that financial crises, at least, are more like hurricanes: They are the predictable result of built-up economic and financial vulnerabilities and policy mistakes. There are times when we should expect the system to reach a tipping point — the “Minsky Moment” — when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns,” but rather the “known unknowns.” Beyond the usual economic and policy risks that most financial analysts worry about, a number of potentially seismic white swans are visible on the horizon this year. Any of them could trigger severe economic, financial, political, and geopolitical disturbances unlike anything since the 2008 crisis.
Under President Donald Trump, the U.S. is trying to contain, or even trigger, regime change in these four countries (China, Russia, Iran, and North Korea) through economic sanctions and other means.
FOUR POWERS For starters, the United States is locked in an escalating strategic rivalry with at least four implicitly aligned revisionist powers: China, Russia, Iran, and North Korea. These countries all have an interest in challenging the U.S.-led global order, and 2020 could be a critical year for them, owing to the U.S. presidential election and the potential change in U.S. global policies that could follow. Under President Donald Trump, the U.S. is trying to contain, or even trigger, regime change in these four countries through economic sanctions and other means. Similarly, the four revisionists want to undercut American hard and soft power abroad by destabilizing the U.S. from within through asymmetric warfare. If the U.S. election descends into partisan rancor, chaos, disputed vote tallies, and accusations of “rigged” elections, so much the better for America’s rivals. A breakdown of the U.S. political system would weaken American power abroad. Moreover, some countries have a particular interest in removing Trump.
The acute threat that he poses to the Iranian regime gives it every reason to escalate the conflict with the U.S. in the coming months — even if it means risking a full-scale war — on the chance that the ensuing spike in oil prices would crash the U.S. stock market, trigger a recession, and sink Trump’s re- election prospects. Yes, the consensus view is that the targeted killing of Qassem Soleimani has deterred Iran, but that argument misunderstands the regime’s perverse incentives. War between the U.S. and Iran is likely this year; the current calm is the one before the proverbial storm. COLDWARWITH CHINA As for U.S.-China relations, the recent “phase one” deal is a temporary Band-Aid. The bilateral cold war over technology, data, investment, currency, and finance is already escalating sharply. The COVID-19 outbreak has reinforced the position of those in the U.S. arguing for containment and lent further momentum to the broader trend of Sino-American “decoupling.”
CYBERWARFARE But open aggression is not really an option at this point, given the asymmetry of conventional power. China’s immediate response to U.S. containment efforts will likely take the form of cyberwarfare. There are several obvious targets. Chinese hackers (and their Russian, North Korean, and Iranian counterparts) could interfere in the U.S. election by flooding Americans with misinformation and “deepfakes.” With the electorate already so polarized, it is not difficult to imagine armed partisans taking to the streets to challenge the results, leading to serious violence and chaos. Revisionist powers could also attack the U.S. and Western financial systems — including the Society for Worldwide Interbank Financial Telecommunication (SWIFT) platform. Already, European Central Bank President Christine Lagarde has warned that a cyberattack on European financial markets could cost $645 billion.
More immediately, the epidemic is likely to be more severe than currently expected, and the disruption to the Chinese economy will have spillover effects on global supply chains — including pharma inputs, of which China is a critical supplier — and business confidence, all of which will likely be more severe than financial markets’ current complacency suggests. Although the Sino-American cold war is by definition a low-intensity conflict, a sharp escalation is likely this year. To some Chinese leaders, it cannot be a coincidence that their country is simultaneously experiencing a massive swine flu outbreak, a severe bird flu, a coronavirus epidemic, political unrest in Hong Kong, the re-election of Taiwan’s pro- independence president, and stepped-up U.S. naval operations in the East and South China Seas. Regardless of whether China has only itself to blame for some of these crises, the view in Beijing is veering toward the conspiratorial.
There are several obvious targets. Chinese hackers (and their Russian, North Korean, and Iranian counterparts) could interfere in the U.S. election by flooding Americans with misinformation and “deepfakes.”
be frozen through U.S. sanctions (like those already used against Iran and North Korea). Of course, dumping U.S. Treasuries would impede China’s economic growth if dollar assets were sold and converted back into yuan (which would appreciate). But China could diversify its reserves by converting them into another liquid asset that is less vulnerable to U.S. primary or secondary sanctions, namely gold. Indeed, both China and Russia have been stockpiling gold reserves (overtly and covertly), which explains the 30% spike in gold prices since early 2019. In a sell-off scenario, the capital gains on gold would compensate for any loss incurred from dumping U.S. Treasuries, whose yields would spike as their market price and value fell. So far, China and Russia’s shift into gold has occurred slowly, leaving Treasury yields unaffected. But if this diversification strategy accelerates, as is likely, it could trigger a shock in the U.S. Treasuries market, possibly leading to a sharp economic slowdown in the U.S.
And security officials have expressed similar concerns about the U.S., where an even wider range of telecommunication infrastructure is potentially vulnerable. By next year, the U.S.-China conflict could have escalated from a cold war to a near-hot one. A Chinese regime and economy severely damaged by the COVID-19 crisis and facing restless masses will need an external scapegoat, and will likely set its sights on Taiwan, Hong Kong, Vietnam, and U.S. naval positions in the East and South China Seas... Confrontation could creep into escalating military accidents. DUMP TREASURIES? It could also pursue the financial “nuclear option” of dumping its holdings of U.S. Treasury securities if escalation does take place. Because U.S. assets comprise such a large share of China’s (and, to a lesser extent, Russia’s) foreign reserves, the Chinese are increasingly worried that such assets could
Climate change is not just a lumbering giant that will cause economic and financial havoc decades from now. It is a threat in the here and now, as demonstrated by the growing frequency and severity of extreme weather events.
U.S. WON’T SIT IDLE The U.S., of course, will not sit idly by while coming under asymmetric attack. It has already been increasing the pressure on these countries with sanctions and other forms of trade and financial warfare, not to mention its own world-beating cyberwarfare capabilities. U.S. cyberattacks against the four rivals will continue to intensify this year, raising the risk of the first-ever cyber world war and massive economic, financial, and political disorder. Looking beyond the risk of severe geopolitical escalations in 2020, there are additional medium-term risks associated with climate change, which could trigger costly environmental disasters. Climate change is not just a lumbering giant that will cause economic and financial havoc decades from now. It is a threat in the here and now, as demonstrated by the growing frequency and severity of extreme weather events. In addition to climate change, there is evidence that separate, deeper seismic events are underway, leading to rapid global movements in magnetic polarity and accelerating ocean currents. Any one of these developments could augur an environmental white swan event, as could climatic “tipping points” such as the collapse of major ice sheets in Antarctica or Greenland in the next few years. We already know that underwater volcanic activity is increasing; what if that trend translates into rapid marine acidification and the depletion of global fish stocks upon which billions of people rely?
WHEREWE STAND As of early 2020, this is where we stand: The U.S. and Iran have already had a military confrontation that will likely soon escalate; China is in the grip of a viral outbreak that could become a global pandemic; cyberwarfare is ongoing; major holders of U.S. Treasuries are pursuing diversification strategies; the Democratic presidential primary is exposing rifts in the opposition to Trump and already casting doubt on vote- counting processes; rivalries between the U.S. and four revisionist powers are escalating; and the real-world costs of climate change and other environmental trends are mounting. This list is hardly exhaustive, but it points to what one can reasonably expect for 2020. Financial markets, meanwhile, remain blissfully in denial of the risks, convinced that a calm if not happy year awaits major economies and global markets. © Project Syndicate
Nouriel Roubini , Professor of Economics at New York University's Stern School of Business and CEO of Roubini Macro Associates, was Senior Economist for International Affairs in the White House's Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the U.S. Federal Reserve, and the World Bank.
companies to the Fed’s already large balance sheet. Allowing the central bank to buy assets of, and thus assume a partial ownership interest in, private companies would give the Federal Reserve even greater influence over the economy. It could also allow the Fed to advance a political agenda by, for example, favoring investment in “green energy” companies over other companies or refusing to purchase assets of retailers who sell firearms or tobacco products. Mr. Rosengren’s proposal to allow the central bank to “invest” in private companies seems like something one would hear from democratic socialists like Senator Bernie Sanders. This is not surprising since the entire Federal Reserve system is a textbook example of socialism. The essence of socialist economics is government allocation of resources either by seizing direct control of the “means of production” or by setting prices business
arlier this month, the Federal Reserve responded to Wall
Street’s coronavirus panic with an “emergency” interest rate cut. This emergency cut failed to revive the stock market, so the Fed cut rates again – driving interest rates
to near zero. Lowering interest rates punishes people for saving, thus encouraging consumers and businesses to spend every penny they make. This may give the economy a short-term boost. But it inhibits long-term economic growth by depleting the savings necessary for investments in businesses and jobs. The result of this policy will be more pressure on the Fed to indefinitely maintain low interest rates and on the Congress and president to create another explosion of government “stimulus” spending. Boston Federal Reserve President Eric Rosengren has suggested that Congress allow the Federal Reserve to add assets of private
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CENTRAL BANKING IS SOCIALISM
Dr. Ron Paul
Dr. Ron Paul is a 12-term member of Congress and three-time presidential candidate. While in Washington, D.C., he was one of the few voices advocating for limited government, individual liberty, and sound fiscal principles. He is the author of the No. 1 New York Times bestselling books The Revolution: A Manifesto and End the Fed . And today, he is the spokesperson for financial publisher Stansberry Research. This article originally appeared at the Ron Paul Institute for Peace and Prosperity. Copyright © 2020 by Ron Paul Institute. and central banking are the cause of their problems and that free markets in all areas – and especially in money – is the solution. It is important that the liberty movement put pressure on Congress to cut spending and rein in or, better yet, end the Fed. Since the bailouts of 2008, there has been a growing understanding that the current system is rigged in favor of the elites and against the average American. Unfortunately, popular confusion of our system of Keynesian neoliberalism with a free-market economy, combined with a widespread entitlement mentality, has led many Americans to support increasing government control of our economy. The key to beating back the rising support for socialism on both the left and right is helping more people understand that big government
can charge. Federal Reserve manipulation of interest rates is an attempt to set the price of money. Federal Reserve attempts to set interest rates distort the signals sent by the rates to investors and business. This results in a Fed-created boom, which is inevitably followed by a Fed-created bust. Economic elites benefit when the Federal Reserve pumps new money into the economy because they have access to the money created before there are widespread price increases. Artificially low interest rates also facilitate the growth of the welfare-warfare state. The Federal Reserve’s inflationary policies harm the average American by eroding the dollar’s purchasing power. This forces consumers to rely on credit cards and other forms of debt to maintain their standard of living. Many Americans are unable to afford their own homes because they are saddled with student loan debt that can even exceed their income.
WHILE YOU WERE WASHING
YOUR HANDS THERE'S A NASTY OIL PRICE SPILL THAT'S SPREADING FASTER THAN COVID-19 “It’s like magic,” my Armenian friend Tigran said to me from Yerevan yesterday morning. “We look where they want us to look.” Like many people from the former Soviet Union – the birthplace of fake news, back when it was called “propaganda” – Tigran has a healthy respect for conspiracy theories and sleight of hand. And what’s really going on in the world... What really matters while most folks are busy thinking of new 20-second ditties to hum while washing their hands... is oil.
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By Kim Iskyan
flying and shaking hands (thanks, COVID-19) meant less demand for oil. More supply and less demand means a (much) lower price. But wall-to-wall COVID-19 news is making us look away from what might be – in economic, market, and geopolitical terms – the much bigger story of an oil-price crash... Here in America, as Donald Trump famously – and correctly – pointed out back in November 2018, a lower oil price is like a tax cut. You pay less to drive your Jeep Grand Cherokee Trackhawk (13 miles per gallon). But there’s another side to it, too. Thanks to higher production of shale oil, the U.S. produced twice as much oil in 2018 compared to 2011 – and more than either Russia or Saudi Arabia. The problem with shale oil is that it’s expensive to get out of the ground... And at a lower oil price, a lot more shale oil producers will be gushing even more red ink than they already were. That’s bad news for the people who work for those companies... the banks that lent money to shale oil producers... investors in those banks and companies... and the economies of the cities and states where shale oil producers are an important source of jobs and tax revenue. Saudi Arabia, in turn, is happy to show Russia who’s boss... and put those pesky American shale oil producers out to pasture. But it comes at a steep cost, since Saudi Arabia is now making a lot less money from its main resource.
As of last week, a barrel of one of the essential inputs of modern civilization costs less than half of what you’d pay for a same-sized fix of Coca-Cola Cherry Zero. As political risk media company GZERO Media explained earlier this week... For three years, Russia and Saudi Arabia, the world’s two largest oil exporters, had a deal to prop up global crude prices by limiting production. They calculated that by producing fewer barrels, rising prices would make each barrel worth more. Over the weekend, that deal collapsed when Russia backed out, allegedly because it decided that higher prices were also providing an unexpectedly large boost for the U.S. oil industry, which has expanded its market share by increasing production by nearly 50% since the Russia-Saudi (formally, Russia-OPEC) deal began in late 2016. A lot of that increase has come from U.S. shale oil. Saudi Arabia, eager to show Russia that its market power is not to be ignored, slashed the price at which it sells its own oil and moved to sharply boost production. The expected flood of new Saudi supply dropped global oil prices by more than 30% on Monday, the biggest overnight drop in almost three decades. The price of oil was already under pressure because closed factories, crippled supply chains, and people FaceTiming instead of
WHILE YOUWEREWASHING YOUR HANDS
There’s also the problem of state oil-producer Aramco, which in December sold a 1.5% stake for $25.6 billion in what was the world’s biggest IPO. To help get that deal out the door, nearly 5 million Saudis – of a population of 33 million – bought shares in the deal. But with the decline in the oil price, Aramco shares are now trading at 9% under the IPO price... and falling. That’s going to make a lot of dumb-money Saudi investors very unhappy, which is bad news for Saudi leader Crown Prince Mohammed bin Salman. Meanwhile, Russia has an economy that’s addicted to hydrocarbons – where over the past few decades a collapse in the price of oil has crashed the economy. My hedge fund I was running was collateral damage in the 2008 oil-price collapse during the global economic crisis – when the Russian stock market fell 85% and the economy contracted almost 8%. Russians are used to a good crisis... And this one won’t be a surprise. But here in the U.S., most of this happened while you were sleeping. A few days ago, under the cover of the oil-price crash, Vladimir Putin and the Russian parliament endorsed plans to lift or lengthen term limits so he can stay in power as Russia’s president as long as he wants. (“Everyone knew it was coming,” my friend Tigran said to me.) Another big loser of a lower oil price is Nigeria, Africa’s biggest economy. There, oil accounts for around 6% of GDP and 90% of export revenues. Perpetually unstable, Nigeria
– with 190 million people – is the biggest country that no one wants to think about what might happen if it implodes. And now the likelihood that it will is a whole lot higher. Finally, Venezuela is often overlooked as the country with the world’s biggest oil reserves. It’s barely getting by – and the only way it does is thanks to oil revenues. With those in free-fall, pressure for political change in Venezuela (and the flow of migrants into Colombia and elsewhere) is going to increase sharply. However, it’s not all losers in oil... This morning, I rode over to the beach close to where I live here in Singapore. All across the horizon were enormous oil tankers... Over the past few days, the cost of renting a very large crude carrier (“VLCC,” as they say in the industry) has spiked around 30%. That’s because after the collapse in the price of oil, big oil traders want to keep their product off the market – in anticipation of prices rising – rather than sell it. Right now, renting one of those floating Molotov cocktails for a day – with enough space to store 127 Olympic swimming pools-worth of oil – will set you back around $38,000. It was less than half of that a month ago. UNKNOWN UNKNOWNS One of my favorite quotes is from former U.S. defense secretary Donald Rumsfeld... “There are known knowns. These are things we know that we know. There are known
Also, it’s rich... which means that Singapore has the resources to protect its people and implement measures that wouldn’t be economically feasible in poorer countries. But maybe most important, Singapore’s government is extremely competent. Government ministers are paid like CEOs, and government employees at every level are compensated well. People here aspire to work for the government (“It’s good enough for government work” isn’t an expression that people use here). So most government policies are data driven, thoughtful, and carefully implemented. All of those unknowns are what’s the problem just now... The danger now is that the unknowns turn out... like always. For example... during the height of the mini- panic here in Singapore in early February, the country’s prime minister, Lee Hsien Loong, released a message (see it here) that’s reassuring and measured and hits all the right notes. What’s more, the prime minister made similar statements in three languages... English, Malay, and Mandarin. Forgivably, he doesn’t speak Tamil, Singapore’s fourth official language. That compares to other countries, where the leader struggles to speak even one language. But that’s not where they want you to look, as Tigran would say... May you find your way through the chaos.
unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” All of those unknowns are what’s the problem just now. The answer to those unknowns? Another of my favorite politician quotes is from Viktor Chernomyrdin, who was Russia’s prime minister during much of the 1990s. “We wanted the best, but it turned out like always.” (It sounds better in Russian: Хотели как лучше, а получилось как всегда .) The danger now is that the unknowns turn out... like always. THE SECRET TO SINGAPORE’S SUCCESS As I mentioned a month ago Singapore had the second-most cases of coronavirus of any country. Now it has dropped to No. 20. No one in Singapore has died of coronavirus. COVID-19 has been a lot easier to get under control here because the entire country of Singapore is only a bit bigger than Columbus, Ohio. It has as many people as the Washington, D.C. metropolitan area. That it’s so small makes it a lot easier to control. Along those lines, it helps that Singapore is an authoritarian state. Don’t get me wrong, it’s a Disney-fied steel boot... But it’s a hard and unforgiving boot nevertheless. When Singapore says “jump,” the only question is how high you jump. That’s useful in a time of crisis.
FROM TRAILER PARKS TO TRADING BILLIONS
ENRIQUE ABEYTA’S PATH TO WALL STREET AND BEYOND
By Laura Greaver
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RISING FROM THE ASHES Enrique spent his childhood in Phoenix, Arizona, and after stints in Pennsylvania, New York, and Japan, he now calls Phoenix home again... just 10 miles down the road from where he grew up... a full circle, with plenty of twists and turns along the way. But there is a huge distance in those short 10 miles... His life now is much happier and more stable than it was growing up. He enjoys frequent desert hikes and spending time with his wife and two young children. His mom, originally from Uruguay, and his dad, fromMexico, met and married in Reno, Nevada in an unconventional way – a fitting story for the start to Enrique’s nontraditional life. “My mom was going to be deported, but she couldn’t go home because of her family situation there. Like a lot of Latin America, there was a ton of political unrest, and my family ended up on the wrong side of it. My uncle (her brother) got wrapped in it. When he was just 16 years old, he got caught driving around a couple other “revolutionaries” and was thrown in jail for 7 years. He was just a young kid… But either way, she would have been arrested as soon as she got off the plane.” Enrique’s father, known as Pepe, was a hairdresser. “This was the 1960s, so you got your hair done every week.” His mom, Selva, was in the salon, lamenting her citizenship situation, when another barber asked, “Why don’t you just marry someone to stay in the states?” Selva replied, “Who the hell would I marry?” and he said, “Pepe! He would do something like that.”
ith his tanned skin covered in tattoos, dark beard reminiscent of a pirate, and casual uniform of a black T-shirt and black jeans, Enrique Abeyta isn’t your typical finance guy... Sure, he’s had a successful 25-year career on Wall Street – managing high-profile hedge funds and raising more than $2.5 billion in investment capital. But the flashy money-lined streets of Manhattan are a far cry from his roots in Phoenix, Arizona, where he grew up poor in a volatile household with an alcoholic, often- absent father. How did he go from briefly living on the streets to making it big on Wall Street – then getting out of Dodge? He says it’s easy... “ It was live or die. I shut out all the noise, and I just put my fucking head down and got to work .” That electric-current intensity was still surging when I met Enrique for the first time... He punctuates his quick, passionate speech with laughter and curse words. He’s full of what he calls “natural energy.” He tells me he’s never had a cup of coffee in his life.
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