“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Friday, February 12, 2016

Henry Kissinger’s Hillary Clinton

Bernie Sanders' Best Moments Tonight Were on Foreign Policy

The two high points of tonight's Democratic debate—and, as far as I'm concerned, the two high points of Bernie Sanders' presidential campaign—came when the moderators raised the topic of foreign policy. Sanders has criticized Hillary Clinton for backing the Iraq war before, but this time he used that as a springboard for larger critique:
Angry Grandpa vs. The Stare of Cold FuryPBSNow I think an area in kind of a vague way, or not so vague, where Secretary Clinton and I disagree is the area of regime change. Look, the truth is that a powerful nation like the United States, certainly working with our allies, we can overthrow dictators all over the world.

And God only knows Saddam Hussein was a brutal dictator. We could overthrow Assad tomorrow if we wanted to. We got rid of Qaddafi. But the point about foreign policy is not just to know that you can overthrow a terrible dictator, it's to understand what happens the day after.

And in Libya, for example, the United States, Secretary Clinton, as secretary of state, working with some other countries, did get rid of a terrible dictator named Qaddafi. But what happened is a political vacuum developed. ISIS came in, and now occupies significant territory in Libya, and is now prepared, unless we stop them, to have a terrorist foothold.

But this is nothing new. This has gone on 50 or 60 years where the United States has been involved in overthrowing governments. Mossadegh back in 1953. Nobody knows who Mossadegh was, democratically elected prime minister of Iran. He was overthrown by British and American interests because he threatened oil interests of the British. And as a result of that, the shah of Iran came in, terrible dictator. The result of that, you had the Iranian Revolution coming in, and that is where we are today. Unintended consequences.

So I believe as president I will look very carefully about unintended consequences. I will do everything I can to make certain that the United States and our brave men and women in the military do not get bogged down in perpetual warfare in the Middle East.
Clinton responded first by noting that Sanders has not opposed regime change in every case (which is true, but it doesn't say a lot about Clinton's own judgment). And then she moved on to the argument the Clintonites always raise when Sanders cites her support for the Iraq war: “I do not believe a vote in 2002 is a plan to defeat ISIS in 2016."

That might have been an effective response if Sanders had simply brought up her Iraq vote and left it at that. But of course he hadn't stopped there. He had put her vote from 2002 in the context of her career-spanning support for an aggressive U.S. foreign policy, reaching up to her recent tenure as secretary of state; and he had put that, in turn, in the larger context of a series of Washington-sponsored regime changes that began before the public had heard of Hillary Clinton. He made a sustained argument both that Clinton's approach to foreign policy is fundamentally wrong and that it is part of a long tradition of destructive intervention around the globe. And he was essentially right.

The second high point came shortly afterward. After Clinton gave a brief spiel about the decision to send Navy SEALs against Osama bin Laden, Sanders steered the discussion toward something his opponent had said the last time they butted heads onstage:
I had some major disagreements with Christopher Hitchens, but two subjects he was usually right about were Henry Kissinger and Hillary Clinton.Verso[I]n this last debate, she talked about getting the approval or the support or the mentoring of Henry Kissinger. Now, I find it rather amazing, because I happen to believe that Henry Kissinger was one of the most destructive secretaries of state in the modern history of this country.

I am proud to say that Henry Kissinger is not my friend. I will not take advice from Henry Kissinger. And in fact, Kissinger's actions in Cambodia, when the United States bombed that country, overthrew Prince Sihanouk, created the instability for Pol Pot and the Khmer Rouge to come in, who then butchered some three million innocent people, one of the worst genocides in the history of the world. So count me in as somebody who will not be listening to Henry Kissinger.
Again it was a sharp attack, both in terms of being basically correct and in terms of laying bare some of Clinton's core problems on foreign policy. Not all of the exchange that followed was as illuminating as that—Sanders made an argument about Kissinger, the domino theory, and trade with China that wasn't very coherent. But the key point had been made: Hillary Clinton embraces the praise of a man whose record includes the "secret" bombing of Cambodia, the Christmas bombing of North Vietnam, and the coup that installed Augusto Pinochet in Chile. Bernie Sanders may not be a foreign-policy whiz, but at least he knows better than to seek counsel from that guy.

After the debate, the CNN panel chortled a little over the Kissinger chatter, suggesting that young viewers would have to Google the man to know who the candidates were talking about. And no doubt quite a few of them were in the dark. But then, such voters would have had to Google the guy when Clinton brought him up in the last debate too. If they did, they'd have plenty to think about as they contrasted Sanders' account of Kissinger's career with Clinton's comment that she was "flattered" by the old butcher's praise.


  1. The illegal we do immediately. The unconstitutional takes a little longer.

    Henry A. Kissinger

  2. Retail Sales increased 0.2% in January

    On a monthly basis, retail sales were up 0.2% from December to January (seasonally adjusted), and sales were up 3.4% from January 2015.

    From the Census Bureau report:
    The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $449.9 billion, an increase of 0.2 percent from the previous month, and 3.4 percent above January 2015. ... The November 2015 to December 2015 percent change was revised from down 0.1 percent to up 0.2 percent.

    This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

    Retail sales ex-gasoline were up 0.4%.

    The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

    Retail and Food service sales ex-gasoline increased by 4.5% on a YoY basis.

    The increase in January was at expectations, and retail sales for December were revised up from a 0.1% decrease to a 0.2% increase. The headline number was decent, and sales ex-gasoline are up a solid 4.5% YoY.


    Calculated Risk

    1. General merchandise sales, which have been soft reflecting price contraction for imports, rose a sharp 0.8 percent in January. Building materials rose 0.6 percent as did vehicles where the year-on-year rate is at plus 6.9 percent. Non-store retailers, reflecting building strength for e-commerce, are once again a standout, up 1.6 percent for a year-on-year 8.7 percent gain.

  3. Highlights
    Import price pressures are negative and severe but are increasingly centered in oil-based goods. Import prices fell 1.1 percent in January but fell only 0.2 percent when excluding petroleum imports. Year-on-year, total import prices are down 6.2 percent, which is steep but still an improvement from prior months. When excluding petroleum, import prices are down a year-on-year 3.1 percent (perhaps modest by comparison) which is also an improvement. But petroleum deflation is severe, with import prices down 13.4 percent in January for a year-on-year minus 35.3 percent.

    Export prices fell 0.8 percent in January and reflect, in bad news for the farming sector, a 1.1 percent decline in prices of agricultural exports. Year-on-year, export prices are down 5.7 percent with agricultural products down 12.7 percent.

    Price contraction for finished goods is easing though only incrementally. Import prices for both vehicles and consumer goods inched higher in the month with contraction in year-on-year rates narrowing, to only minus 0.3 percent for consumer goods. The export side also shows price improvement.

    By countries, import prices with Canada, reflecting fuel prices, continue to fall severely, down 2.8 percent in the month for a year-on-year minus 12.6 percent. Latin America is next, down 1.2 percent and 7.8 percent on the year. Other regions are much narrower with China at minus 0.1 percent in the month and minus 1.6 percent on the year.

    This report does fit in with FOMC expectations for an easing downward pull from import prices, at least excluding oil with prices for the latter, sooner or later as policy makers argue, certain to firm. An immediate plus is ongoing strength in the dollar which is pointing to easing import-price contraction for the February report.

    Import / Export Prices

  4. The turning point against ISIS has been reached:

    QuirkThu Feb 11, 06:26:00 PM EST


    -- Near Albu Hayat, one strike struck inoperable coalition equipment, denying ISIL access in support of coalition operations.


    It's all a part of 'the rat Doctrine'.......

    rendering the inoperable inoperable.

  5. "Q"Nit of the Day -

    Jihad Watch

    Exposing the role that Islamic jihad theology and ideology play in the modern global conflicts

    Muslim baggage handler at Minneapolis-St. Paul International Airport boasted of being able to take down plane

    February 11, 2016 9:03 am By Robert Spencer 37 Comments

    This AP story says that Warsame boasted of being able to take down a plane at the Minneapolis airport. It doesn’t bother to mention that he actually worked there. And no one there would have dared question him about what he thought of jihad terror. That would have been “Islamophobic.”

    Abdirizak Mohamed Warsame

    “Minnesota Man to Plead Guilty in Islamic State Case,” Associated Press, February 11, 2016:

    A Minnesota man accused of conspiring to provide material support to the Islamic State group is expected to plead guilty.

    Twenty-year-old Abdirizak Mohamed Warsame is scheduled to appear in U.S. District Court on Thursday for a change of plea hearing. Court documents allege Warsame tried to help other young men from Minnesota’s Somali community travel to Syria to fight for the Islamic State group.

    Nine other members of that group were charged previously; one is believed to be in Syria and three have already pleaded guilty….

    Warsame boasted of being able to take down a plane at the Minneapolis-St. Paul International Airport.


    "Q" Mini-Nit of the Day -

    Jihad Watch

    Exposing the role that Islamic jihad theology and ideology play in the modern global conflicts

    Washington State: Muslim prisoner screaming “Allahu akbar” hits guard on head repeatedly with metal stool

    February 11, 2016 12:50 pm By Robert Spencer 29 Comments

    The only groups that vet Islamic chaplains for prisons have links to Hamas and the Muslim Brotherhood.


    “WEEKEND REWIND: Corrections officer remains in Forks hospital, improving,” by Arwyn Rice, Peninsula Daily News, February 5, 2016 (thanks to Pamela Geller):

    FORKS — A Clallam Bay Corrections Center officer who suffered serious head injuries last week continued to improve but remained hospitalized Monday.

    Correctional Officer Terry Breedlove remained at Forks Community Hospital and will remain there until he can walk, according to his family.

    “He’s going to be here longer, I think,” said Breedlove’s mother, Joanne Spaulding.

    Breedlove suffered a brain injury during an attack Jan. 25 by inmate Abdinjib Ibraham, 28, of King County, investigators said.

    An MRI was performed on Breedlove on Saturday. It showed injuries to two vertebrae, Spaulding said.

    Breedlove can stand but experiences difficulty once standing, she said.

    Remains on lockdown

    The prison, which holds 900 inmates, went on lockdown after the attack and remained on lockdown Monday.

    Inmates are confined to their cells and there is no visitation.

    Ibraham said “Allahu akbar” (an Islamic phrase meaning “God is greater”) twice — once when he hit the guard, and again after the attack, said Brian King, chief criminal deputy for the Clallam County Sheriff’s Office….

    Breedlove was on duty in a medium-security portion of the prison when he was attacked, Anderson said.

    Ibraham had pried a round metal seat off a stool in a cell and repeatedly hit Breedlove over the head with it until other inmates stopped the attack, investigators have said….

    Ibraham, who was serving a King County sentence for four counts of vehicular assault, driving under the influence, second-degree taking a motor vehicle and first-degree robbery, has been transferred to Walla Walla.

  6. Especially for Quirk, who has questioned the knowledge of folks like Hugh Fitzgerald....long read, dense, intelligent, just designed for Quirk....

    While Israel has a breathing spell, it should work to improve its hasbara — public diplomacy, public relations, propaganda. It has to be more vigilant about the terms of the debate. The first phrase to go should be “Palestinian people.” Prior to the Arab defeat in the Six-Day War, no Arab leader, diplomat, intellectual, anywhere used that phrase; they always spoke about “Arab refugees.” It only began to be employed after the military defeat in June 1967, when it became clear that the Arabs would, before attempting another military assault, have to soften up Israel, isolating it diplomatically, and making the world forget that the Arabs started that war, and the one in 1948, long before the “Palestinian people” came into existence. From 1967 on, Arab propagandists have been involved in the “construction-of-the-Palestinian-identity” project, creating a “people” by promoting a word from geographic adjective (“Palestinian”Arab) to ethnic noun (“Palestinian”). This sleight-of-word contributed mightily to the invention of the “Palestinian people” — a “people struggling for its legitimate rights” and doing it “in Palestine, where it lived since time immemorial.” To start with, in its counter-campaign, Israel should use every occasion to bring up Zuhair Mohsain’s admission to the Dutch newspaper “Trouw” in 1974 about the propagandistic value of this fictive “Palestinian people”:

    The Palestinian people does not exist. The creation of a Palestinian state is only a means for continuing our struggle against the state of Israel for our Arab unity. In reality today there is no difference between Jordanians, Palestinians, Syrians and Lebanese. Only for political and tactical reasons do we speak today about the existence of a Palestinian people, since Arab national interests demand that we posit the existence of a distinct “Palestinian people” to oppose Zionism.

    And Netanyahu, who is sensitive to language, should make it known that from now on, the Israeli government will officially refer not to the “Palestinian people” (as it has so heedlessly done in the past) but only to the “Palestinian Arabs.” And that will remind the world that the “Palestinians” are just one part of the Arab people, the people more generously endowed than any other, possessing 22 states and 14 million square miles of territory. But Israel won’t achieve that desirable result unless its own leaders and diplomats and journalists agree among themselves to stop using the phrase “Palestinian people.” Make clear that that phrase is not neutral but highly tendentious.

    Second, Israel should hold up the word “Occupied” — as used in the phrase “occupied West Bank” or “occupied territories” or still worse, “occupied Arab lands” — for inspection. For the word “occupied” is being used to suggest that Israel has no claim to the “West Bank” or Gaza other than the temporary one of being military occupant. One thinks in this regard of “Occupied Berlin,” “Occupied Vienna,” “Occupied Paris,” “Occupied Japan” – in these designations, the territory in question is under the control of an outside power or powers, that control has been won through military conquest, and the claim to that territory is understood to be temporary, based solely on that military occupation. But Israel’s claim to Gaza and the “West Bank” is not based on the fact of military occupation. These territories are properly thought of as unallocated parts of the Palestine Mandate, and the provisions of that League of Nations’ Mandate still apply.....

    Hugh Fitzgerald: Israel and the Reconquista of Language

    February 10, 2016 2:30 pm By Hugh Fitzgerald


  7. 'The Arabs of Palestine'

    Martha Gellhorn

    1. .

      Hugh Fitzgerald is an idiot.

      There has been a geographic area called Palestine for millenia. The people who live there can legitimately be called Palestinian in the absence of any separate designation. If they choose to call themselves Palestinians, what's to stop them? Even if the name was taken for political purposes (doubtful), so what? It happens all the time. Look at the Israelis and the term 'antisemitic'. That was a neologism constructed for political purposes, a faux scientific designation meant to identify Jew hatred, this despite the fact that the Jews and the Arabs are cousins, same people different tribes.

      Hugh Fitzgerald's intellectual level is comparable to that of Anat Berko, Israel MK, who posited the illegitimacy of the Palestinians on the basis that there is no 'P' in the Arabic language.

      Parroting left wing MK Meretz, I can only say "Are you an imbecile?"


    2. Pork Rinds for YahwehFri Feb 12, 10:30:00 PM EST

      Philistia, a name used in the Bible to refer to a pentapolis in the Southern Levant, established by Philistines c.1175 BC and existing in various forms until the Assyrian conquest in 8th century

      Palaistinê or Palaestina names used by Greek and Romans to refer to parts of the Levant during the Persian and Hellenic periods

      Paralia (Palestine), the coastal eparchy of Palestine during Hellenistic and Roman times.

      Syria Palaestina or Roman Palestine, a Roman province (135-390 CE) (135-330 CE), a province of the Roman Empire following merger of renamed Iudaea with Roman Syria

      Byzantine Palestine

      Palaestina Prima, a Byzantine province in the Levant from 390 to 636, comprising the Galilee and northern Jordan Valley

      Palaestina Secunda, a Byzantine province in the Levant from 390 to 636, comprising the shoreline and hills of the Southern Levant (Judea and Samaria)

      Palaestina Salutaris alias Palestina Tertia, a Byzantine province established in 6th century, covering the Negev and Transjordan

  8. Strikes in Iraq

    Ground-attack, attack, fighter, and remotely piloted aircraft conducted 20 strikes in Iraq, coordinated with and in support of Iraq’s government:

    -- Near Habbaniyah, two strikes struck an ISIL tactical unit and destroyed two ISIL fighting positions and an ISIL vehicle.

    -- Near Kisik, a strike struck an ISIL tactical unit.

    -- Near Mosul, six strikes struck four separate ISIL tactical units, suppressed an ISIL mortar position, and destroyed 21 ISIL fighting positions, an ISIL vehicle, an ISIL weapons cache, an ISIL supply cache, and two ISIL assembly areas.

    -- Near Qayyarah, a strike struck an ISIL tactical unit and destroyed two ISIL fighting positions.

    -- Near Ramadi, five strikes struck two separate ISIL tactical units and destroyed four ISIL fighting positions, an ISIL machine gun, an ISIL bed down location, an ISIL command-and-control node, and two ISIL vehicle bomb-making facilities.

    -- Near Sinjar, three strikes struck an ISIL tactical unit and destroyed five ISIL fighting positions.

    -- Near Sultan Abdallah, a strike struck an ISIL tactical unit and destroyed an ISIL fighting position.

    -- Near Tal Afar, a strike struck an ISIL tactical unit and destroyed an ISIL checkpoint.

  9. Officials Cull 20 Wolves to Help Lolo Elk

    Fewer than 1,000 elk left in once thriving herd

    by Eric Barker

    State and federal officials killed 20 wolves in Idaho's remote Lolo Zone, according to a Wednesday news release from the Idaho Department of Fish and Game.

    The operation, carried out with the assistance from the federal Wildlife Service, started last week and is now complete.

    The wolves were shot from helicopters by Wildlife Service agents as part of an effort to stabilize elk numbers there.

    The Lolo elk herd has been in decline since 1989, when the herd exceeded 16,000. It is now estimated to be less than 1,000.

    Wolves are the primary cause of elk mortality in the Lolo.

    Way to go, you eastern mother f*&^kers.

    Way to go.

    1. from the local newspaper

    2. For sheer hard gut stupidity the idea of introducing wolves from Canada into the Lolo is right on a level with advocating an arabstinian state in the West Bank.

    3. Fuck you and the elk you rode in on.

    4. :)

      Well, that's certainly blunt enough.

      I ride reindeer though, not elk.

    5. .

      I thought with you it would have been unicorns.



    6. Do you wear a condom when you 'ride' those reindeer, Robert "Draft Dodger" Peterson?

  10. GDP Now

    February 12th, 2016 11:51 am | by John Jansen |

    The Atlanta Fed GDP Now model shows Q1 2016 running at 2.7 percent. Recessions are made with decidedly less sterner (economic) stuff than that.

    Via the Atlanta Fed:

    Latest forecast — February 12, 2016

    The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 2.7 percent on February 12, up from 2.5 percent on February 9. After this morning’s retail sales report from the U.S. Census Bureau, the forecast for first-quarter real consumption growth increased from 3.0 percent to 3.2 percent.

    Across the Curve

  11. Today is the Birthday of that Great American, Abraham Lincoln !

    Let us all honor him in our memories !

    1. We should celebrate they he was shot.

    2. An odd thing is that if Lincoln had not been shot but re-elected it's possible southern blacks would have been sent back to Africa.

  12. How the 50 States got their names -


    The origin of Idaho's name, like a few other names we've already talked about, is a mystery. When it was proposed as the name of a new U.S. territory, it was explained as a derivation of the Shoshone Indian term ee-da-how, meaning "gem of the mountains" or "the sun comes from the mountains." It's possible that the word, and its Indian origin, were made up by the man who proposed the name, George M. Willing, an eccentric industrialist and mining lobbyist (not all historians and linguists agree on this, though, and the most common alternate explanation is that the name comes from the Apache word idaahe ("enemy"), which the Kiowas Indians applied to the Comanches they came in contact with when they migrated to southern Colorado). When Congress was considering establishing a mining territory in the Rocky Mountains in 1860, Willing and B. D. Williams, a delegate from the region, championed "Idaho." The request for the name came up in the Senate in January 1861 and Senator Joseph Lane of Oregon objected to "Idaho," saying, "I do not believe it is an Indian word. It is a corruption. No Indian tribe in this nation has that word, in my opinion... It is a corruption certainly, a counterfeit, and ought not to be adopted." Lane was roundly ignored, probably because he had the bad luck of having been the vice presidential candidate for the pro-slavery southern wing of the Democratic Party in the previous year's election.

    After the Senate approved the name, Williams, for some reason, gave into curiosity and looked into Lane's claim. He heard from several sources that Willing or someone in his group of territorial supporters had invented the name "Idaho" and that the word didn't actually mean anything. Williams went back to the Senate and requested that the name be changed. The Senate agreed and used a name that had been on the table before Willing and Williams showed up: "Colorado."

    A year later, Congress set out to establish another mining territory in the northwest part of the continent. "Idaho" was again a contender as a name. Without Williams there to call shenanigans and with the senators who should have remembered the last naming incident just a little bit preoccupied with the Civil War, "Idaho" went unchallenged and became the name of the territory and the state.

    1. .

      It comes from a ancient and mysterious indigenous people who inhabited the Snake River Plain 12,000 years ago. Ancient paintings and symbols taken from cliff faces and cave walls have tentatively translated the name Idaho to 'Land of the Cuddly Wolf Cubs'.


  13. Who would gave guessed (Irony Alert) the former First Lady is a fully funded Israeli-Firster?

    Bill and Hillary Clinton are under increasing scrutiny from the mainstream press over paid speeches they have given to big banks in exchange for millions of dollars. According to CNN, the couple has earned a total of $153 million in lecture fees from companies and organizations affiliated with the financial industry.

    But the media has been conspicuously silent about the large sums the Clintons have raked in from paid addresses to pro-Israel organizations, including the Jewish National Fund (JNF), which directly participates in the ethnic cleansing of Palestinians and Bedouin citizens of Israel. An evaluation of Hillary Clinton’s public disclosures from 2001 to 2015 shows that she and Bill, and their daughter, Chelsea, have earned roughly $4 million in speaking fees from pro-Israel organizations, including JNF and organizations allied with the right-wing government of Israeli Prime Minister Benjamin Netanyahu. The vast majority of these documented payments—$3,599,999—have gone toward the Clintons’ personal income, and up to $450,000 has been funneled into the Clinton Foundation.

  14. Hillary is an Anybody Who Pays Me Firster.

    She's taken money from probably half the nations in the world.

    She's not for anyone but herself.

    When she is finally knocked out of politics no one is going to pay her a damn thing.

    1. .

      If anyone doubts the DNC is in the tank for Hillary, read the latest from the WaPo

      DNC rolls back Obama ban on donations from federal lobbyists

      Critics have called the decision a step backward in the effort to limit special-interest influence in Washington. Some suggested it could provide an advantage to Hillary Clinton’s fundraising efforts...

      Hillary Clinton had drained her big donors while Sanders continues to draw from small doners and doesn't face any limitations. This will assure Hillary doesn't run out of money.


    2. Sorry Deuce, we funded Obama also and it got us where?

      NO WHERE

      The Idea is you fund all the candidates


      BTW are you going to do a thread about the Moslem terrorist attack in Ohio last night??


    3. COLUMBUS, Ohio — From the front door, the man with the machete didn’t have a straight path to people in the booths at the small suburban restaurant. He stepped by the welcoming greeting on the front glass, past the half-wall entryway divider and the display case of kataifi and other Mediterranean pastries.

      Immediately, police said, he started swinging.

      ‘‘There was no rhyme or reason as to who he was going after,’’
      said Sergeant Rich Weiner, a Columbus police spokesman.
      Owner Hany Baransi told The Columbus Dispatch he believes his restaurant was targeted because he is Israeli. But FBI Special Agent Rick Smith told the newspaper it’s too early in the investigation to jump to any conclusions.

    4. Nothing quite like the lack of factual information requied before our "O"rdure jumps to conclusions not yet substantiated by law enforcement.

      Looks as much like another false flag Mossad operation, this time targeting an Arab Christian refugee from Israel than it does a Moslem terrorist attack.

    5. Ah yeah, you blamed the kidnapping and murder of 3 Jews (2 israelis and one american) on the mossad too...

      Once again you are full of shit.

  15. The Republicans, of course, kept their ban on Federal Lobbyists in place. Right?

  16. Econbrowser

    Analysis of current economic conditions and policy

    Yield Curve, February 11th

    Given worries regarding an imminent slowdown in the wake of the stock market decline, it’s of interest to see what the term premium is signalling.

    Figure 1: Ten year minus three month Treasury yield spread, % (blue). February observation is for 11 February. NBER defined recession dates shaded gray. Source: FRB via FRED, NBER, and author’s calculations.

    Estimating a standard probit model for recessions based on one year lagged term spread over the 1986-2015 period (encompassing the “Great Moderation”) yields:

    Prob(recession=1)t = -0.145 – 0.863×spreadt-12 + ut

    McFadden-R2 = 0.30. NObs = 350.
    Where bold denotes significance at 1% msl, using Huber-White standard errors. Using a 20% threshold, the model predicts recession dates correctly 78% of the time, and no recession dates 85% of the time.

    The spread on 11 February was 1.35 percentage points. Putting this into the estimated equation yields a value of -1.31, implying a 9.5% probability of a recession within the next year.

    This is a slightly different probability than that reported in this post due to the flattening of the yield curve since January 11th, and a slightly different sample period (the previous used 1970-2013).


    1. China Navigates the Trilemma (and Slowing Growth)

      Benn Steil and Emma Smith at the Council on Foreign Relations present an interesting picture of Chinese reserves.

      They write:

      The People’s Bank of China has been selling off foreign currency reserves at a prodigious rate to keep the RMB stable. At $3.2 trillion, China’s reserves still seem enormous. But they are down $760 billion from their 2014 peak, and $300 billion in just the past three months. As shown in the figure above, at the current pace of decline China’s reserves will, according to the IMF’s framework for reserve adequacy, actually fall to a dangerously low level in the spring. This means that China would be at risk of a balance-of-payments crisis, unable to pay for essential imports or service its dollar debt payments.

      China has for years been pursuing what has been called the “Impossible Trinity”: controlling interest and exchange rates while leaving the capital account significantly open. Chinese residents are permitted to send up to $50,000 overseas annually – this is enough to allow trillions in outflows. So what can China do to staunch the rapid decline in reserves?
      In an interview with Allison Nathan in Goldman Sachs Global Macro Research‘s must-read Top of Mind publication (the issue entitled “China Ripple Effects”) released the day before yesterday, I made the following observations regarding the choices facing Chinese policymakers:

      Allison Nathan: What options does the PBOC have for managing the RMB in the face of ongoing capital outflows?

      Menzie Chinn: The standard rules of international finance apply: they have the options of further devaluation, FX intervention, or interest rate defense. For now, I’m going to eliminate one other option—substantial and persistent tightening of capital controls—because that would run counter to their longer-term program of capital account liberalization. Of the three more likely choices, an interest rate defense is least likely because it would conflict with their goal of stimulating growth, which I believe trumps all else. Even if the PBOC tried to raise interest rates, the fact that such a move would likely depress the economy means it would be difficult to persuade the markets that higher rates would remain in place for an extended period. In the end, outflows would not be staunched, and policymakers would be forced to relent, thereby damaging policy credibility. That means the authorities are almost certain to pursue a combination of further intervention in the currency markets and some exchange rate depreciation if need be. They have plenty of ammunition to continue to do the former given their still-massive holdings of foreign exchange.

    2. Allison Nathan: What lessons can we draw from past currency attacks and defenses—successful or not—in other countries when thinking about the PBOC’s policy choices?

      Menzie Chinn: Let me first say that I am reluctant to call China’s current situation an attack on the RMB; the currency has weakened because of capital outflows and the deteriorating economic outlook, not because of fear of an impending large and discrete devaluation. It is unfortunately
      difficult to draw lessons from other countries that have experienced attacks on their currencies because China’s circumstances differ in many respects from these historical precedents. First, China has a current account surplus, which is not typical for a country facing a run on its currency. This means that even if China has capital outflows, there will still be
      some offsetting inflow of foreign currency just by virtue of the fact that they export more than they import. This is a critical difference from countries that rely on capital inflows to offset the deficit in their current account balance. For these countries, if capital inflows cease or reverse and access to borrowing disappears, policymakers end up in a bind—they have no choice but to curtail imports until they match exports.

      Second, China has an incredibly large stockpile of foreign exchange reserves, which means that even if the current account-related foreign currency inflows are not sufficient to offset outflows, they can use their reserves to offset depreciation pressures.

      Third, they have a vast arsenal of capital controls that they could quickly tighten if need be. These three factors suggest that the market should not be particularly anxious about the potential for a sudden devaluation.

      The entire interview is here. For a recent post on capital flight, see here, and on financial reforms in pursuit of RMB internationalization here, and the Trilemma generally here.

      China's Trilemma

  17. . . . . . . . . but the more meaningful metric is the measure of inflation expectations which is now at its lowest level since inception of the survey in 1979 as expectations dropped to 2.4 from 2.7.

    If I were still hawking bonds to the unsuspecting I might ask you how many 10 year notes you want me to offer you!

    Via a fully paid up subscriber:


    Across The Curve dot com

  18. I think it's time to get serious about life, and arrest Dr. Phil.

    If you lived with a woman that watches Dr. Phil, and you get a snip here and a snip there of the conversation, you'd agree with me.

  19. American Thinker Blog

    Debbie Wasserman Schultz asked to explain how Hillary lost NH primary by 22% but came away with same number of delegates
    February 12, 2016

    DWS offers an evasive but unintentionally revealing answer. More

    1. Hillary's on a roll.

      She lost Iowa, but won Iowa.

      She nailed six coin tosses in a row.

      She lost in N.Hampshire by 22% but gained the same number of delegates.

      She's tough to beat.

      Rufus is 'Definitely' going to vote for her.

      And, what the hell, one might as well go with a winner, she seems to win no matter how people actually vote.

    2. Also, she's got those 'super delegates' in her purse.

    3. Mediaite

      Trump vows to never use profanity at a rally again

      Dammit, he's beginning to cave to P.C.

  20. Fox just mentioned the machete attack in some restaurant in Columbus, Ohio that WiO pointed out.

    Four wounded, sounds like.

    Need the details, but I might have some material for another "Q"Nit of the Day here.


    1. COLUMBUS, Ohio — From the front door, the man with the machete didn’t have a straight path to people in the booths at the small suburban restaurant. He stepped by the welcoming greeting on the front glass, past the half-wall entryway divider and the display case of kataifi and other Mediterranean pastries.

      Immediately, police said, he started swinging.

      ‘‘There was no rhyme or reason as to who he was going after,’’
      said Sergeant Rich Weiner, a Columbus police spokesman.
      Owner Hany Baransi told The Columbus Dispatch he believes his restaurant was targeted because he is Israeli. But FBI Special Agent Rick Smith told the newspaper it’s too early in the investigation to jump to any conclusions.

    2. 6 wounded. 1 still critical.

      It was a Somali moslem named Mohammed Beri.

      He went into the restaurant a 1/2 hour before asking where the owner was from.

      The owner is/was an israeli-arab.

      the terrorist? another typical friend of rat's.

    3. Thankfully some of our Public Servants in Blue dispatched 'Machete Mo' Beri to the otherworld forthwith.

  21. U.S. Economic Outlook: January 2016

    Equity and Mortgage Debt: The Yin and Yang of Property Ownership

    It’s common for a homebuyer to use both a down payment and a mortgage loan to acquire their home, in other words, a combination of equity and debt. As home prices rise and loans amortize, equity grows and debt shrinks. But if home prices fall, equity can be wiped out, leaving an owner with debt that exceeds the home’s value.

    Fortunately, home prices in most of the nation have risen briskly, up about 5.5 percent in the national CoreLogic Home Price Index through the year ending September 2015. The latest report from CoreLogic on home equity found that if you add up the equity of all the homeowners with a mortgage in the U.S., their equity grew by $741 billion over the year through September 2015.1 Unfortunately, there still remain about 4.1 million homeowners who have negative equity—also referred to as ‘underwater’—representing 8 percent of owners with a mortgage. This has fallen since 2010 when the number “underwater” share was nearly three times higher (Exhibit 1)

    These figures exclude homeowners who own their homes free and clear of mortgage debt, and they represent 36 percent of all owners.2 Adding them in, the increase in home equity on owner-occupied homes was even greater, about $1.3 trillion over the same 12-month period, and $6 trillion since mid-2011 (Exhibit 2). Not only did home equity rise, but single-family debt outstanding also rose over the past year, but only by $80 billion. In fact, 2015 marked the first time in a decade that both home equity and mortgage debt rose in the same year.

    1. During a weak housing market, debt can fall because of foreclosures, short sales, and lower utilization of mortgage credit. In a growing market, mortgage debt can rise for at least three reasons. First, debt may rise if more homebuyers use a mortgage loan to finance their home purchase; through the first three quarters of 2015, 66 percent of buyers used a mortgage, the highest share since 2008, according to CoreLogic public records analysis.3 Second, debt outstanding grows if existing owners cash-out equity through a refinance or placing a second mortgage; Freddie Mac reported that equity cashed-out through the third quarter of 2015 was the most since 2009.4 Third, an increase in the single-family housing stock can increase aggregate equity and debt simultaneously.

      In fact, in a growing market we should expect to see both equity and debt rise over time. We can compare the lending recovery across property types by looking at the rise or fall of debt over time (Exhibit 3). When doing so we see that, across major property segments, multifamily debt began to recover first from the Great Recession, turning around in 2011. Nonresidential mortgage debt began to expand in 2013. Single-family mortgage debt was last to grow, only beginning a slow rise in 2015.

      The growth in home equity and nascent recovery in single-family mortgage debt underscore that the single-family market continues to get healthier but has not fully recovered. If home prices rise 5 percent uniformly across the nation in the coming year, we expect to see the number of ‘underwater’ homeowners fall by another 1.1 million in the coming year, as appreciation lifts them up from being underwater. This will allow their equity to grow while their debt pays down.

  22. Israeli-born restaurant owner suspects attack was hate crime

    Long before news broke that Mohamed Barry's car had triggered an alert that caused police to contact counter-terrorism agents, plenty of people on social media Friday weighed in on whether his machete attack Thursday in a popular restaurant was motivated by religion or ethnicity.

    Law-enforcement officials cautioned against jumping to conclusions, but Nazareth Mediterranean Cuisine owner Hany Baransi was certain: "Obviously, we were targeted, because there's a whole bunch of businesses around here. I'm the only foreigner."

    As an Israeli Arab Christian, Baransi said, "I am the minor, minor, minor of the minority. So nobody likes me."

    A look at Baransi's Facebook page and Twitter account and the GoFundMe site raising money for the restaurant tells a different story. They're filled with praise for the restaurant and tributes to Baransi's generosity and beaming personality.

    A sign on the restaurant Friday read, "Closed till Monday. Thank you for your support" and ended with Baransi's signature phrase: "I love you, man."

    Baransi said he was told that Barry came into the restaurant and asked for the owner and where the owner is from. Baransi had left earlier with a migraine. It was the first night he had taken off since Jan. 2.

    Barry returned about a half-hour later with a machete and began attacking customers.

    Witnesses described Barry in a variety of ways, that he looked "Middle Eastern" or "Muslim" or was black. One said he was wearing a white cap and caftan-like robe, but police said he was wearing western clothes.

    Fuck you rat.

  23. Meanwhile it was announced today that the Bill, Hill and Chelsea Foundation is now being investigated.

    1. None Dare Call It Treason

      The disclosure about Valerie Plame was called "treason" and people have gone to jail for mishandling classified info, what Hillary Clinton is accused of.

      A. Barton Hinkle | February 8, 2016

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