Category Archives: Economy and Meltdown

Air Force Aborts ICBM Test Flight Just Before Launch For Unknown Reasons

Air Force Aborts ICBM Test Flight Just Before Launch For Unknown Reasons

On Wednesday the US Air Force was moments away from a planned test of an unarmed nuclear Minuteman III intercontinental ballistic missile but aborted prior to launch, according to an official statement. 

It was supposed to happen in the early morning hours at Vandenberg Air Force Base in California, but “experienced a ground abort prior to launch,” the Air Force Global Strike Command said. No further explanation was given as to why the test launch was shut down, other than the service indicating that the “cause of the ground abort is currently under investigation.”

Via ABC News

The news release did however note that ballistic missiles are only launched when “all safety parameters with the test range and missile are met,” according to the news release. The launch is expected to be rescheduled pending the results of the investigation. 

As a report in The Hill highlights, a debate is currently raging on Capitol Hill and in the halls of the Pentagon over the near-future viability of the program. “The failed test comes as lawmakers debate whether to proceed with the program to replace the aging Minuteman III missiles or try to extend the life of the missiles,” The Hill writes.

Currently some 400 three-state Minuteman III missiles form the critical land-based ‘last defense’ element in the US nuclear triad, and were first deployed in 1970 with an initial expected 10-year service life. But after undergoing multiple life extensions the Air Force has long argued for their complete replacement, but this would come at a hefty $1.2 trillion or more price tag.

Prior LGM-30G Minuteman III test launch, via US Air Force

US Strategic Command chief Adm. Charles Richard, who oversees America’s nuclear arsenal, has been pushing for the Ground-based Strategic Deterrent (GBSD) program to immediately replace the ageing systems.

“We simply cannot continue to indefinitely life-extend Cold War leftover systems,” Richard told Congress last month. “I do not see an operational reason to even attempt to do that.”

Tyler Durden
Thu, 05/06/2021 – 21:10

Atlas Is Shrugging: Forget ‘The Great Reset’, Here Comes ‘The Great Reject’

Atlas Is Shrugging: Forget ‘The Great Reset’, Here Comes ‘The Great Reject’

Authored by Mark Jeftovic via BombThrower.com,

The Jackpot Chronicles Scenario #4: Atlas Shrugged

Never mind The Great Reset. Here comes The Great Reject.

It occurred to me that I never did finish the final instalment of last summer’s Jackpot Chronicles, wherein I posited four possible post-Covid scenarios.

For a quick refresher, The Jackpot is concept I cribbed from William Gibson. It’s a term he uses across a few of his near-future cyberpunk novels that describes a series of rolling global catastrophes that set in sometime around 2016 (his stories span multiverses, and timelines, but the common theme is that somewhere around 2016, some kind of irrevocable glitch in the matrix occurred that put a permanent end to normalcy as it has been understood up until that point).

If there was a Jackpot, whatever it was, it could arguably have happened at many points throughout the 20th century, or if we wanted to confine our speculation to the 21st century then, 9/11 or the GFC would do. Everything after that being symptomatic as opposed to causal.

And then… 2020 and COVID hit. That’s when the fabric of time cleaves us into the before times and The Jackpot.

The other post-pandemic scenarios from the rest of my Jackpot series were:

  1. Force Majeure: The wheels come off completely and the system comes unglued. Mad Max.

  2. Tin Foil Hat: It really is one Big Conspiracy and we’re into a New World Order.

  3. The Great Bifurcation: The middle class gets wiped out and we get a two-tier society

I had thought the fourth scenario would be the one themed Deglobalization, and to a certain extent it still is. In the original outline I described that Deglobalization:

“Is where multi-national corporations, so shaken from this Near Death Experience, realizing their error of betting the farm on just-in-time supply chains, labour cost arbitrage and having zero buffers, begin pulling manufacturing back home.

The smart ones start building cushions and shock absorbers into their business logic, and they begin to eschew leverage after being on the wrong side of a series of cascading liquidity implosions. In other words, businesses begin to transition themselves into what I called “Transition Companies” as posited in the inaugural posting for [this blog]”.

I also went on to say that I considered this one most desirable yet least likely. My view on this scenario has changed somewhat, and I also think that the staggering government ineptitude and duplicity at all levels in all jurisdictions (with few notable exceptions) has made our regeared “4th scenario” more likely given that it’s in progress. Mass demonstrations, mass exoduses, crypto-currencies are symptoms of a Great Reject, or as I’ve renamed this scenario “Atlas Shrugged“.

The TL,DR of the novel, Atlas Shrugged is that once the institutional sclerosis of the ruling class was understood to be both incorrigible and irreversible, the only other option was a global opt-out. There was no Great Reset in Atlas Shrugged. They got The Great Reject instead.

Under the Atlas Shrugged scenario, deglobalization is just one of numerous motivating factors, but it’s mainly an outcome of a larger dynamic where all non-ruling factions in society lose faith in the prevailing structure of Neoliberal Globalism (a.k.a “Mr. Global”). With Mr. Global’s viability in question, people begin to look for the exits.

This begins to occur on two fronts. What Vilfredo Pareto called “the non-governing elites” begin to realize that the system which used to accommodate them, even rely on their tacit support, is now becoming hostile toward them. At the very least, the ruling elites are undermining their interests. This is part of the dynamic of Peter Turchin’s “elite overpopulation” that we looked at recently.

The other front is the comparatively powerless underclass, which, in pace with Pareto’s Theory of Elite Cycles, lose their moorings and standing within the system they are expected to adhere to. The social contract no longer seems to be a matter of middle-class protections and living standards but instead becomes starkly authoritarian and one-sided. What is clear is that the existing institutions are now functioning to defend the position of the overclass, not to uphold the rights and liberties of the underclass.

The culmination of multiple super-cycles (Pareto’s Elite Cycles, Turchin’s long term dynamics of sociopolitical instability, debt, a Fourth Turning, and a Maunder Minimum for good measure) combined with an accelerated onslaught of technological innovation: Internet, crypto-currencies …biotech? Nanotech? Micro nuke? Fusion? Quantum computing? We have all the necessary components for a complete breakdown of existing institutions and the total loss of legitimacy of the current governing elite class.

So it goes in our Atlas Shrugged scenario. Various interests of many forms and myriad factions, from dissident states (like Florida), to decentralized and virtual companies, emergent DAO’s, all the way to individuals and cultural tribes all begin to experience these moments of clarity in their own way. From there they will act in their own rational self-interests and cooperate with others doing the same in order to navigate the breakdown of Mr. Global.

In spite of this, Mr. Global’s prevailing policymakers and governance structures will frantically maneuver and spin narratives of fear and fantasy in order to keep the existing system on the rails.

They walked back the second one, but not the first one.

That is what The Great Reset really is: it’s an attempt at a zeitgeist-level rationalization that doubles-down on institutional failure on the part of the entire governance structure of Mr. Global, and gives them a new lease on life to remain in charge. Reimagined by the Davos crew, amplified by the mainstream media, lubricated by Big Tech.

The antidote to all of this are crypto-currencies, smart contracts and decentralization.

That antidote also brings significant upside regardless of which one of our four possible scenarios plays out.

When I listen to people who are complete denial about crypto, I realize that there is a common thread in their objections (what made me think about all this today was listening to Michael Pento’s criticisms of Bitcoin on George Gammon’s Rebel Capitalist. Pento’s 2012 book on the inevitable bursting of the bond bubble is a must read. That book helped be form the basis on what I think is the funds flow that is actually putting a floor under crypto. I don’t begrudge Pento for not seeing it, because as I’ll explain, he’s looking at it through the wrong lens)

We could go on for hours about how most of these people haven’t really delved into the technology or what it means, how their criticisms at the defects around Bitcoin apply even more accurately to US dollars (“backed by nothing”, “infinite supply”, “uses too much energy”, et al). But what they all have in common is that they all posit that whether Bitcoin and cryptos succeed or fail is premised on whether the existing establishment will permit it.

What will the Fed do? What if the government bans it? Won’t the World Bank just create their own CBDC?

This is completely inverted. They have it backwards. It’s not up to the existing system, because the existing system is over. That’s the part they don’t get.

The existing system should be looking for its place in the new reality of network states, not pontificating how it will run the new landscape. The coming system will be multipolar in not just the geopolitical dimension, but across cyberspace and the network dimensions as well.

Instead, the incumbent system is busy banning menthol cigarettes, imposing negative interest rates and undergoing mass conversion to a peculiar new religion called Wokeness.

It won’t work, and it brings to mind a particularly vivid example I once heard about a balloon disaster that still makes me cringe when I think of it:

A group of people were embarking on a balloon ride and as they were just a foot or two off the ground, the burner erupted into flames. The balloon pilot realized immediately what this meant and he leapt from the gondola which was still only a few feet off the ground.

One or two of the passengers were quick witted enough to realize what this meant and followed him. This set off a feedback loop: as the fire expanded, its hot air forcing the balloon higher, combined with the weight reductions as the first few people bailed out, the situation very quickly escalated past a point of no return.

The balloon had accelerated very rapidly to heights from which it was no longer possible to leap safely. The unfortunates who had hesitated and were trapped in a gondola being propelled higher by a fireball, to their inevitable doom.

That’s what our entire situation feels like today. The balloon is still hanging a foot or so above the ground, the canopy is on fire, and the people who have figured out what this means are bailing out while they can and in doing so they are accelerating the ultimate burn-then-crash of the entire system.

In Rand’s book they went to a hidden valley called “Galt’s Gulch” and used their skills and their resources to restore new communities while the old systems imploded. If this scenario plays out we’d be looking for people creating a decentralized, network of gulches. Seeking each other out who are pursuing this same goals, creating open protocols to to rebuild civil societies and autonomous communities built on the ageless principles of free markets, liberty and prosperity.

*  *  *

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Tyler Durden
Thu, 05/06/2021 – 20:50

China Pollutes More Than US And All Developed Countries Combined: Report

China Pollutes More Than US And All Developed Countries Combined: Report

China’s 2019 greenhouse gas emissions exceeded those of the United States and the rest of the developed world combined, according to CNBC, citing a Thursday report by the Rhodium Group – a New York-based advisory group founded in 2003 by China expert Daniel H. Rosen.

According to the study co-authored by a former Obama admin climate policy official, energy modelers and emissions experts (just go with it), China is now responsible for 27% of total global emissions – more than the combined total produced by the United States (11%), India (6.6%) and the 27 EU member nations together (6.4%).

In 2019, China’s emissions not only eclipsed that of the US—the world’s second-largest emitter at 11% of the global total—but also, for the first time, surpassed the emissions of all developed countries combined (Figure 2). When added together, GHG emissions from all members of the Organization for Economic Cooperation and Development (OECD), as well as all 27 EU member states, reached 14,057 MMt CO2e in 2019, about 36 MMt CO2e short of China’s total. -Rhodium Group

In short, Chinese President Xi Jinping stole Greta Thunberg’s childhood.

That said, the Rhodium Group also gives China somewhat of a pass for their climate sins – noting that since it’s home to over 1.4 billion people, they’re not quite so evil per capita.

To date, China’s size has meant that its per capita emissions have remained considerably lower than those in the developed world. In 2019, China’s per capita emissions reached 10.1 tons, nearly tripling over the past two decades (Figure 3). This comes in just below average levels across the OECD bloc (10.5 tons/capita) in 2019, but still significantly lower than the US, which has the highest per capita emissions in the world at 17.6 tons/capita. While final global data for 2020 is not yet available, we expect China’s per capita emissions exceeded the OECD average in 2020, as China’s net GHG emissions grew around 1.7% while emissions from almost all other nations declined sharply in the wake of the COVID-19 pandemic.

While China exceeded all developed countries combined in terms of annual emissions and came very close to matching per capita emissions in 2019, China’s history as a major emitter is relatively short compared to developed countries, many of which had more than a century head start. A large share of the CO2 emitted into the atmosphere each year hangs around for hundreds of years. As a result, current global warming is the result of emissions from both the recent and more distant past. Since 1750, members of the OECD bloc have emitted four times more CO2 on a cumulative basis than China (Figure 4). This overstates the relative role of OECD emissions in the more than 1 degree Celsius increase in global temperatures that has occurred since before the industrial revolution because a large share of annual CO2 emissions is absorbed in the earth’s carbon cycle in the decades after release. But China still has a way to go before surpassing the OECD on a cumulative contribution basis.

So of course, historically speaking, China has polluted far less – a point we’re still trying to understand.

As CNBC notes, “The findings come after a climate summit President Joe Biden hosted last month, during which Chinese President Xi Jinping reiterated his pledge to make sure the nation’s emissions peak by 2030. He also repeated China’s commitment to reach net-zero emissions by midcentury and urged countries to work together to combat the climate crisis.”

“We must be committed to multilateralism,” said Xi during brief remarks at the summit. “China looks forward to working with the international community, including the United States, to jointly advance global environmental governance.”

Xi also said that it would ‘control its coal-fired generation projects and limit increases in coal consumption over the next five years.’

As we noted on Tuesday, this means China needs to shutter 600 coal plants to meet its emissions goals of net zero greenhouse emissions by 2060. If they don’t meet that goal, we’re sure the virtuous masters of the universe will surely refuse to conduct further business with Beijing.

Tyler Durden
Thu, 05/06/2021 – 20:30

Why Masks Are Still Mandatory

Why Masks Are Still Mandatory

Authored by Alex Hamilton via AmericanThinker.com,

Joe Biden is in a pickle.  

He wants to continue to convince Americans they should get the experimental biological agent (AKA “the vaccine”), but, as Tucker Carlson pointed out last week, the administration and the CDC have offered no explanation as to why you need to continue to wear a mask after you have taken “the vaccine.” 

 Why would they want us to doubt the efficacy of the vaccine?  Why would any sane person who is not in a high-risk group contemplate becoming a lab experiment subject if you are not allowed (yes, our rights are now derived from government and will be doled out based on compliance) to burn your mask and return to a pre-pandemic way of life?  

That’s just bad salesmanship…until you think about the alternative.

Think about what would happen if they allowed (there’s that word again) people not to wear masks after being vaccinated.  

Here’s a typical scenario.  

The vaccinated test subject enters the supermarket.  

The vigilante mob of leftists can’t wait to accost and demand compliance to their edict, using physical violence if necessary.  

The test subject then proclaims that he has put his mask in his pocket.  

A short time later, the test subject hears the man claim the same immunity.

In this fictional example, you can begin to see what the ramifications of this policy would be.  

Within weeks, the majority of Americans would stop wearing masks.  

(Along with social distancing, and lockdowns, and getting the vaccine).  

People would actually begin to associate non-masking people with safety, while mask-wearing people would signal danger.  The danger of the unvaccinated.

The government has just lost all control.  

Do you really think these people will give up their newfound power so easily?  I’m afraid not.  

I imagine that their Big Tech partners are working furiously building a mandatory vaccine passport system as you read this.  

Until that is up and running, you can expect the regime to continue requiring all people to wear masks, especially those who have been “vaccinated.”

Tyler Durden
Thu, 05/06/2021 – 20:10

Why Have Bond Yields Gone Nowhere In The Past Month Despite Blowout Macro Data: Here Is Goldman’s Answer

Why Have Bond Yields Gone Nowhere In The Past Month Despite Blowout Macro Data: Here Is Goldman’s Answer

After a turbulent start to the year for the treasury market, which posted its worst quarterly total return since 1980 as 10y Treasury yields rose more than 80bp, leaving markets to consider just how much further yields might move once the expected economic acceleration went from forecast to fact, Treasuries have found themselves stuck in a very narrow range, gripped by an eerie calm even as the US economy continues to power ahead and is on pace for the strongest expansion in GDP since the record Q3 of last year.

However, hile one can analyze CTA flows, extrapolate Japanese pension positioning and even speculate about stealth central bank intervention in seeking an answer for the recent bond market calm, there may be a far simpler reason why bond moves have fizzled out even as economic surprises continue coming hot and heavy: as Goldman’s William Marshall writes, yield sensitivity to data surprises tends to decline at higher levels of forecast uncertainty – a key feature of the macro environment since the onset of the pandemic. As a result, until there is some convergence in projections, “yield responses to data releases may remain muted by historical standards.”

Let’s back up.

As Marshall notes, after a torrid first three months of 2021, and despite a continuation of positive surprises across a range of significant releases last month – including payrolls, CPI, and retail sales – US yields finished the month lower on net, with yield responses to the data surprises ranging from muted to puzzling. A feature of data releases since the COVID shock has been and remains the high degree of forecast dispersion, which at this point likely reflects the range of views on both timing and magnitude of the acceleration.

This week brings the first look at April data, with economists projecting even stronger job gains (consensus is now just around 1 million new jobs) Goldman takes a look at the likely responsiveness of US rates to data surprises in this environment.

In tracking the evolution of data surprises, the standard approach is to normalize individual releases by some measure of historical forecast error. This approach helps in providing historical grounding for the magnitude of a given surprise. However, in periods where data is somewhat more volatile than normal — such as at present —using realized forecast errors may significantly under-represent the degree of uncertainty around individual releases. For markets, identifying the level of perceived noise around economic data is useful in gauging how much of a signal a given data point can provide. To this end, using forecast dispersion to normalize data surprises(rather than historical forecast errors) may provide a better picture of the information content in a particular release for markets by directly capturing the level of uncertainty surrounding the print. In general, both approaches (the more standard normalization by historical errors or normalizing each surprise by Bloomberg forecast standard deviation) produce highly correlated results until 2020; however, the last year or so and to a lesser extent the period around the GFC stand out as notable exceptions as shown in the chart below.

Intuitively this makes sense: if the underlying data volatility is orders of magnitude higher than some “calm” baseline, the information value of every outlier print is reduced exponentially as the very next month we may see a sharp reversal.

To gauge how markets respond to data surprises in different forecast uncertainty regimes, Goldman regressed daily yield changes on daily surprise scores, splitting the sample into regimes of forecast dispersion using the series shown in Chart 1. Pre-COVID (2000-2019) evidence suggests that when forecast dispersion is relatively high, the beta of yields to data surprises normalized by historical forecast errors is somewhat lower than in periods where forecast dispersion is low.

Meanwhile, the relationship between yield sensitivity to surprises and the level of forecast uncertainty is less apparent when scaling surprises by forecast dispersion. An interpretation of this initial observation is that periods of higher forecast uncertainty tend to be associated with lower sensitivity of yields to data by historical standards. Expanding the sample to include the last year firmly reinforces this pattern.

So what does this mean? Here is some more analysis from Goldman guaranteed to make your brian bleed as it tries to put in scientific terms what is ultimately a very simple concept:

There is a clearer negative relationship between forecast uncertainty yield sensitivity to data surprises normalized by historical standard errors, particularly when forecast dispersion is in the top decile. Normalizing by forecast standard deviation, meanwhile, generates somewhat more stable sensitivities across forecast dispersion regimes, suggesting that the impact of a given data surprise on yields is more reliably informed by the level of uncertainty around any given release — what may be a market-movingsurprise in the context of low levels of dispersion among forecasters is little more than noise when said dispersion is high.

Got all that – it certainly is a smarter way to say that data no longer matters…

Anyway, the simple implication of all this is that for now – until the data volatility returns to normal –  it’s likely that yield sensitivity to data will be muted by historical standards, owing to the wide range of expectations (e.g., the standard deviations of forecasts for April non-farm payrolls is more than 3x its historical average).

That is not to say that data won’t matter — US rates rallied on the back of the softer than expected ISM manufacturing earlier this week, and in the accumulation of better than consensus data will take yields higher into mid-year (and vice versa). However, it likely means that more historically “normal” yield responses to data will require some amount of convergence among forecasters, instead of the prevailing “throw a dart at the wall” chaos.

It’s reasonable to expect that convergence to occur later this year, though that may take place in the context of less volatility in the data itself. In other words, don’t be surprised if we get an absolute blowout beat (or miss) tomorrow, and the 10Y does… nothing.

Tyler Durden
Thu, 05/06/2021 – 19:50