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2023-05-29 07:00 by Karl Denninger
in Editorial , 207 references
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Memorial Day.

No, its not "beer-slugging day" or "steak-on-the-grill day."

The name is Memorial Day for a reason.

It is a national holiday during which we pay homage to those who died so we didn't have to.

Yes, some of those wars -- and many would argue most of them -- were unjust monstrosities.  That's a valid debate but one for another time -- any day, in fact, other than this one.

War is a monster; it eats the truth first and always.  As just one example of many Lincoln is often lionized as the "liberator" of blacks.  Yeah, he was a "liberator" all right: His intention was to repatriate all of them out of the United States and in fact was negotiating exactly that.  Funny how nobody ever brings that up -- and he has a huge memorial in Washington DC.

In the modern era we are currently doing war-by-proxy once again -- this time with Russia and Ukraine.  Perhaps this is all about the conduit in Ukraine for all manner of slush funding of this person or that, including our President, his entire family and what is likely half of Congress besides.  Many of them have never seen a war they didn't love.

Funny how that works when you don't have to hump a rifle and go take care of business yourself, isn't it?

I'll leave you with this: Think carefully about war today, and its price. 

That price being assessed upon all of us, for the first time in 150 years in this nation, may be much closer than you think.

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2023-05-13 06:33 by Karl Denninger
in Editorial , 332 references
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So he's indicted and has turned himself in.

Unlike the Trump indictment this one is pretty clear-cut, assuming its true although the count relating to lying to Congress is a joke, given the myriad lies by Rochelle of the CDC, Fauci, Schiff and many others.

The first element of this indictment is that Santos allegedly established a Florida LLC for the purpose of funneling funds to his campaign, which is illegal on its face (although the FEC is not directly involved in this said law is in fact implicated) as he was a principal, and further, that said firm told donors that was the cause. He allegedly further said the firm was a 501c(4) when it was not, which is black-letter fraud.  The real cause was paying for his clothing and credit card bills.

The second element is that Santos personally applied for CARES unemployment compensation when in fact he was employed and receiving a $120,000 a year salary.  That is also an allegation of direct, black-letter fraud.

The third is the "you lied to Congress" in required disclosure forms.  Pull the other finger on this one; this is about as common as gambling in a casino, but ok, its in there.

All the counts come from these three sets of allegations.

The last is clearly selective prosecution and for that reason I can no more support it than I can against anyone else until and unless everyone else in Congress also gets pounded for the same thing.

HOWEVER, the first two are allegations of wild-eyed, black-letter scams.  It is particularly cute to set up the LLC in Florida; I don't know why he thought that would evade detection but, well, he apparently did.  Anyone can go onto Sunbiz and find out who owns and controls an LLC in Florida; you can do it in seconds.  The claim of a 501c(4) "charitable organization" is particularly galling.

Plenty of people did in fact rip off the government with the CARES Act.  Every single one of them should go to prison.  IMHO that was a foolish act to start with, but that's not what's at issue here -- the issue is a Congressional Candidate who, it appears, stole taxpayer money.

Contrast this with the indictment against Trump, which is predicated on twisting facts to evade the Statute of Limitations and turn what would otherwise be a misdemeanor into a felony.  They couldn't be more different, in my view.

The Trump indictment is trash.

This one looks, at least on the surface, to be real although of course the truth of such allegations is yet to be proved in court.

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As is my typical practice I "score" last year's predictions first, and then make some new ones.  I'm probably my own worst critic in this regard but scoring is critical; poor reflection on the past leads to bad decisions forward, and we should all strive to improve.

So with that said here we are:

  • Inflation will not calm down.  Bullseye.

  • The Democrats are going to get obliterated in the midterms.  Clean miss; I didn't even hear the whizz of that one going by.  No, the narrow margin in the House isn't worth even a fraction of a point.

  • The Fed will be force into draining liquidity.  Bullseye.  They didn't like it, they tried to avoid it, but they're doing it.

  • The USSC will split the abortion decision.  Miss.  They instead overturned Roe, which was not what I expected.  I expected a decision confirming the first trimester Roe holding and underlining it.

  • The equity market is extremely vulnerable. Bullseye.  How's your 200.5k doing?  It didn't move the election, however.

  • There is no short-term supply chain relief coming.  I'll take a 50% credit on that one although there is a cogent argument both ways.  Since there is, fine, half-point.

  • Business is going to get it in both holes.  Bullseye.  Between labor productivity which I correctly predicted would be hammered as a result of what firms did with mandates and similar, along with inflation and uncertainty of supply, has hammered businesses in all corners.

  • The blue hives are in particularly-serious trouble.  Bullseye.  This data showed up directly in the midterm elections and continues.  Detroit-style crime and breakdown conditions did indeed manifest all over the blue hives this year.

  • Significant geopolitical trouble.  Nuclear bullseye.  If it was legitimate to give myself two points I would, but it isn't.  Ukraine anyone?

  • Ghislaine.  Miss.  And not a close call either.  Since this is on the "not-censured" side I'll leave it at that.

  • Biden is finished.  Miss.  Surprising, but miss.

  • Business uncertainty lifts in the back half.  Miss.  If anything its gotten worse.  More on this below.

  • Housing, as a bubble, is done.  Ding-ding-ding-ding.  Buckle up Buckwheat, this is just getting started.  More below.

  • The medical complex has a serious problem.  Nuclear bullseye.  More below and I thought we might not get it this year about Septemberish, but I was vindicated.  "Here it comes."

  • The credentialism of the so-called top-schools will deteriorate / collapse.  Miss.  Not yet, at least not visibly.  I think it is happening but it doesn't count if its not evident to the common  man, so nope.

  • Trump is done, along with Trumpets.  Half-point.  He demonstrably ruined several seats in both the House and Senate, and likely cost the GOP the Senate with who he backed in the primaries, leading to unwinnable races in the general.  But, it wasn't the collapse I expected, at least not yet.  I do, however, have to take the half-point that DeSantis was the winner of that because whether you like it or not he was.

Ok, so how's this all add up?

16 predictions were made, and of them I score it as 9 points, for 56%.  All-in I call that not bad for predictions over a year's time.  As I also pointed out in last year's entry I intentionally omitted anything related to a specific virus because the Google censors had deemed my views and predictions on same to be "misinformation" even when what was being cited were formal, published scientific studies.  We now know, of course, that they were not "misinformation"; in fact they were decent prognostications and deductive reasoning that in nearly every case has been vindicated, and further it is now proved that the government stuck its foot on the scale and violated the First Amendment in doing so, specifically with Twitter and, it must be assumed, all other social and electronic media organizations.  

Those of you who read the -NAD side of the site know that I haven't shut up about such things, just removed them from places where so-called "advertisers" and "big tech" can complain about and attempt to levy punishments based on same.  That will continue in the coming year and likely beyond but the reasons for that form part of the next prediction series, so with that said here we go.

  • The virus "response" is collapsing -- and will continue to.  The pattern is ridiculously nasty, so far beyond any sort of statistical burying (despite the CDC trying to do so) and, in other nations, the same data is evident.  Indeed its an unbroken pattern with no exceptions that I've been able to find.  People can point fingers and call you a nut only until their loved ones start being disabled or worse because they followed the narrative, and the side effect profile starts to show up beyond the virus and its effects.  All of this is happening and will continue.  This spells bad news in a number of related areas because the destruction of trust within the medical system, which they earned and deserve, is going to get people killed for other reasons.  While what was done was statistically unsupportable and relied on unproved claims, essentially all of which have now been disproved, that does not mean everything in the past was also disproved.  Semmelweis anyone?  This is going to suck, in short, but the medical industry has only itself to blame for it.

  • That collapse and the wild cost increases it is bringing will accelerate the detonation of the federal budget via CMS.  I've predicted this for a long time and in fact in the 1990s put a mid-to-late 2020s timeline on it, then revised that to 2024 about 10 years ago.  We crossed the $2 trillion threshold in spending this last fiscal year, close to a third of all federal dollars spent and that's not all of it because Medicaid is a federal/state combined program and getting accurate data on state spending is difficult.  The Federal Government is studiously trying to avoid any sort of debate on this but at a certain point that the curtains are on fire and avoiding the checks bouncing means inflation cannot be tamed comes into full view and demands a response.  I am not predicting that collapse will come this year to get the point on this prediction, but that it is wildly evident will become clear and said debate will ensue (or I have to score it as a "miss.")

  • Other schemes and BS peddled as "medical advice" will be increasingly explored.  There is already evidence in the scientific papers that the mad push to vegetable oils and similar was basically underwritten by... you guessed it -- the people who made those products.  In 2011 I discarded the oft-repeated claims of what you "should" eat for what my own research said was a better and sustainable choice.  It was; I lost 60lbs, it has stayed off and, at least as importantly, my athletic performance skyrocketed and even today, at 59, I'm faster than I was when it comes to cross-country road running at the age of seventeen.  I require and consume no prescription meds and unlike most men of my age "everything still works as its supposed to in a man" if you get my meaning.  I'm not predicting that all of this will disappear, of course, but the prediction of the general view that "Beyond Meat" is the answer to anything is going in the dust bin along with said companies will, if it occurs, give me said point.

  • The consequences of corporate and government mandates will manifest in severe dislocations through industry.  We're already seeing it.  Southwest and their flight disruption is not just Southwest; it is not only a "oh we have a system engineered to remove all unnecessary cost" (which then has no redundancy in it so when something goes wrong it all goes to Hell immediately) it's everywhere in the airline industry and elsewhere.  It has been known for a decade that there's a problem coming with qualified pilots and part of the entire nonsense with increasing automation and such in cockpits, along with pressure to reduce qualifications.  Rather than make the investments in both training and pay to incentivize people to take that path the choice was made to lower standards and press existing employees.  That never turns out poorly, right?  Uhhhhh.... yeah, ok.  Health care is another example; people are screaming about shortages of beds and similar but there are beds -- just no staff, so entire wings are shut down because you need the staff to run that wing, and you don't have said people.  Management has gotten awfully arrogant, often with government backing (e.g. jab mandates) when it comes to employees and the bill for that will become increasingly critical this coming year.  All-in this is probably a good thing for society as a whole as labor/management balance is just that, but it won't come without pain and adds further inflationary pressure.

  • The cost-shift game in "online shopping" will crack.  This is a late one that I didn't previously have on the list but I truly believe it now.  Amazon, in particular is in trouble.  This is probably not specific to them either, but is most-acute there.  They have, for years, evaded what amount to net operating losses in their online marketplace through AWS sales.  But cloud is not a panacea; its just someone else's computer, and overhead is never free.  The more people who deal in a transaction the more it costs, always for the simple reason that nobody ever works for free.  There are already clear signs of this, where the "non-Prime" shipping that used to be a three or four day affair (2 with Prime) is now often quoted as close to two weeks.  Obviously the company is moving inventory around when they don't have everything in one place so as to avoid multiple shipments.  That's an indication of stress and its present.  We'll see how bad it gets, but if you're used to the "order it today, have it tomorrow" game I think you're in for a big surprise.  That squeeze is not local to one company and leads to.....

  • The market is not done going down.  Yeah, you didn't like that decline did you?  It's not over.  Trust me, I know both sides of this argument having been both an employee and a CEO, but what's happened over the last three years is egregious and outrageous -- and has consequences.  I'll be specific: We'll see at least another 10% decline from prices as of 12/31 sometime during the year, and a 20%+ decline is not off the table, or I won't take the point.

  • The Omnibus insures inflation is not over either.  Remember that inflationary pressures take six to twelve months to go through the system.  There was an indication of this relaxing in the last few months of the PPI but the Omnibus is going to reverse that.  Thus the odds are very high of a "false dawn" in that regard.

  • Rates are not done going up.  If you invest as if they are you're going to get it in every hole you have.  There are hundreds of firms, especially in the tech space but certainly not limited to there, that have survived and had their stock prices go to the moon over the last ten years specifically because of ever-decreasing rates.  This year is the second after that ended and short-term debt is going to roll over.  What you see this year in terms of that impact on balance sheets and earnings is nowhere near the full depth of it and you will hear repeated claims that it is.  These claims are knowing lies because corporations have been taking their revolvers and similar short-term facilities and issuing debt out the curve for a long time precisely because they could borrow at 2% or in some cases less.  That paper now is frozen and has to be held to maturity by whoever bought it lest they take a huge capital loss, but when it rolls, and it will, it will be at double or higher the previous rate.  This is going to go on for the same 10 years the original trend did and there's nothing that can be done about it.  If you think this won't translate directly into stock prices and cause a bunch of bankruptcies you're wild-eyed crazy.

  • Business is going to have return to employees actually being functional, and if you're not you're going to get fired. The Twitter example is going to play out nationally.  For those who haven't been paying attention Musk fired more than half the staff and the site still functions just fine.  This is proof positive that said half were not doing anything that keep the lights on and this is common through industry. More in the next point.

  • DEI and ESG will be increasingly recognized as resulting in DIE.  This won't play out entirely in one year, but it will start in earnest this year.  There are plenty of people who think they can double down on this and force it to not only continue but expand.  They're wrong and they're about to get a very expensive and personal lesson starting with the loss of their job and recognition that their lavish lifestyle does not square with the income that can be generated in the fast-food industry.  Refusal to recognize that the end of "free money" means you must actually produce and that means meritocracy wins and all else loses will lead you directly to the nearest Federal Bankruptcy Court.

  • Russia isn't going to be "beaten"; that is, Ukraine can't win -- and their support will vanish.  This year is my prediction for that.  Whatever side you're on for this makes no difference when it comes to outcome.  There is simply no path for Ukraine to force Russia to give up.  The one wild-card in the mixture is the possibility (much-rumored) that Putin is very seriously ill with cancer and may succumb.  The odds of it all going sideways, if that occurs, are very high.  In short the last thing you want is for him to drop dead as he is likely far more reasonable than whoever might replace him.  If Putin is indeed terminally ill as some claim the odds of this issue escalating into a no-bullshit real war that involves the entire Eurasian land mass are very high.

  • The impact of the Omnibus passed in the waning hours of 2022 will be historic, and nasty.  fundamental tenet of our Constitutional government is that no Congress can bind the next one.  Never before has Congress even attempted to circumvent that constraint, having respect for the institution above all else.  That seal has been broken now and its going to get ugly.  Neither party can claim to be above this since the threshold to begin debate in the Senate on the bill was 60 votes and they got them, so trying to pin this entirely on the Democrats (which has already started) will fail.  Yes, the House majority is slim, but a majority is a majority and as with votes one vote is as good of a margin as one million.  Those are the rules of the game and everyone knows it.  I'm expecting a severe reaction as the more-egregious provisions in that 4,000 page monstrosity come to light but while technically it can be repealed it won't be as the Senate is in Democrat hands, like it or not.

  • Green energy is headed for the dustbin and the firms in same are in serious trouble.  We'd all like a planet that is not despoiled but the fact remains that alleged "green" energy is unsustainable, cannot meet America's needs (or anyone else's) and the capacity for smaller-scale storage and use (e.g. EVs and similar) doesn't exist in terms of the resources necessary to make and maintain them as a displacement of existing ICE vehicles rather than as "sports cars" and other niche products. Further, the projections of an ever-warming planet that will produce "catastrophic" outcomes unless we cut carbon use to zero are fantasies as has been and will become increasingly clear.  There are multiple decade-long-period climate-related oscillators well-recognized in meteorology and the pattern is clear -- they're turning.  The claims that the recent cold snap were "unprecedented" are nonsense; Nashville, for example, in 1985 took a winter storm hit that was worse than what we just went through in terms of temperature -- by a lot.  In fact the daily mean temperature during that event was -5F, wildly worse than the single-digit figures we just put up.  The entire premise of shutting down all the coal plants was that this would never happen again because the planet is getting hotter and thus that capacity wasn't needed, even though we told people to stop installing gas furnaces and rely on heat pumps.  Wrong.  I very distinctly remember the late 1970s and early 80s weather patterns and the winters were nasty.  That cycle (yes, its a cycle Marge!) appears to be coming back around much to the chagrin of Greta and her adherents.  If you can't engineer a power grid to supply that plus a reasonable margin in addition, including provision for all the people added to the state since 1985 you have no business being involved in public policy when it comes to critical infrastructure -- period.  Essentially all of the companies in the "green energy" space continue to operate only as a consequence of massive direct and indirect subsidy, including putting their toxic waste in other nations such as China.  As this shifts and tolerance there wanes (and it will!) the economic capability to continue this scheme will end.  Further, if you think this recent storm in Buffalo was bad contemplate what it will be like with no natural gas allowed for heating, particularly when the power goes off and all that's left are small personal generators sufficient to run a circulating fan but definitely not a heat pump, strips or electric space heaters.  If the people let this happen and do not force governments to cut that crap out there will be major waves of death that result in future winter seasons.  NY and other states have banned natural gas as fuel-fed heat sources in new construction and intend to force everyone off existing plant.  I predict you'll see the start of a serious pushback on all that this year and to get a point, that's what has to happen.

  • Ron DeSantis will either basically cement his front-running RNC position or self-destruct; no middle ground.  He recently asked for and got a Grand Jury to investigate any materially false statements related  to the Covid vaccines by their manufacturers and the medical industry.  There are state fraud laws that bear on this and this is a rather high-stakes gamble on his part along with that of his state Surgeon General.  I am reasonably sure what the record shows if it surfaces.  If the Grand Jury whitewashes (or worse, stalls) and fails to produce a work product the political damage to DeSantis will be severe.  However, factual findings, however they go, likely vindicate and seriously help him politically.  Either way I expect a resolution this coming year and will take a point for either extreme but not if Trump is still materially in the game but he isn't politically finished (whether he admits it or not doesn't matter.)

  • Political shifts are going to increase in ugliness; there is no "reconciliation" in the new Congress.  Two points have already come into focus on this -- the first being the Lake fiasco in Arizona where clear human action had to have taken place that did implicate the results -- this was proved -- and under Arizona law intent, that is malice, is not necessary for a contest to win.  The Judge ignored the law and ruled only on intent, ignoring the actual standard in the Statute.  That's going to get appealed, obviously.  But what might actually be worse is what has come out about Santos (R-NY) in his recent "win"; he essentially fabricated huge parts of what he presented as his personal history to voters.  He flipped the district too so this really is an election that mattered.  Of course we all know politicians lie and trade on information as well; indeed that sort of game is so well-established that it makes professional wrestling look honest and thus one has to wonder if all the strum and furor is just noise.  Whether these two incidents go anywhere or not my prediction is for more of it, more strife and more nastiness, not less, and I'll put a stake in the ground: At least one eye-popping egregious event that reaches into the realm of undeniable criminality  that even the most-partisan cannot deny will occur this year by at least one of these clowns in the House or Senate.

  • The economic and political disparity between "blue" and "red" area will grow and start to produce actual fractures in supply lines and cooperation.  The number of pundits who have ignored what is clearly in the data from the last election stun me, frankly.  I've never seen more stupidity in that regard in my 59 orbits around the flaming ball responsible for all of global warming (and indeed life) on this rock.  The "Red" states where middle fingers went up to mandates to any degree at all (none of them sufficient) gained population and thus their "Red" voting percentages increased.  Those places that played lockdown mania and worse lost people, and disproportionately they lost productive, high earning people who pay taxes in size.  Those people moved to the Red states and it is clearly visible in the Governor's races in this last election.  The pundits all refuse to deal with the fact that in politics a win is a win and thus what happened actually decreased those "blue" races that can in the future be flipped "red" because once you win by one vote siphoning off more votes from some other jurisdiction does not help your victory but damages the capability for the other state or locale to flip red as well.  The same of course applies in reverse.  A pluralistic society cannot function reasonably if the various factions refuse to get along and while you can pass all the laws mandating "full faith and credit" you'd like (I remind you said is in the Constitution) you can't force someone to like someone else and as we've seen full faith and credit isn't worth the paper its printed on when it comes to many areas already, including but certainly not limited to areas such as immigration and marijuana.  To be clear -- I'm not predicting a revolutionary-style event between states, but I am predicting substantial trouble that reaches into supply lines and interstate cooperation.  So far, with the exception of lots of noise and a few states banning "official travel" this hasn't happened so for it to start would be a major shift.

  • Illegal immigration forces policy change this year.  Buried in the Omnibus just passed is a provision that bans the use of any additional federal funding to secure the border.  A quarter million people attempting to enter this nation a month without prior authorization is not a "humanitarian" situation, it is an invasion as these are intentional acts taken with knowing disregard for the law.  This is not only not sustainable its already well beyond the point that one or more states with said border should have declared what's going on an invasion and acted on their own, as the Constitution requires the Federal Government to do and in the absence of same they can indeed step in, with doing so being entirely Constitutional.  The odds of this setting off a political crisis approach 100% and thus I'm reasonably sure this one will score.

  • Housing is nowhere near done going down.  If you haven't sold yet you're not at the bottom.  If you're holding on thinking you missed the window -- you're wrong.  I'm starting to see the cracks here and Real Estate is always local to a large degree but deals are falling apart at a much-accelerated rate and sellers are increasingly forced to cut prices bigly or nobody buys.  Its always true that a properly priced house will sell but "properly" might be 20% off what you see in the other listings, none of which have moved in the last two months!  If you think this trend has bottomed and thus property taxes are stable and will be able to be raised on a net collection basis IMHO you're nuts.

  • Auto prices, specifically used car prices, are going to massively collapse.  Some of the practices I'm hearing about are unbelievable and almost-certainly wind up as frauds perpetrated into the securitized markets for car loans.  These unsound practices in the face of ratcheting inflation will result in repos headed through the roof and there will be plenty of supply by this time next year in the used market, which means dealer capacity to play games with "market adjustments" on new cars will evaporate.  The squeeze in that business will get quite-acute, blunted only by the shortage of new cars and as a result floor lines are likely basically non-existent so the debt won't kill them.  That's the good news, but hunger for business has a way of fixing inflated prices when supply is plentiful, and I expect it to.  Indeed, I'm looking forward to quite-possibly being able to do such a transaction myself in this coming year.  If you think Carvana's 52-week stock performance is a one-off you're about to get a rude surprise.

I hope everyone enjoyed the relative "salad days" of the last 10 or so years; they're over and this isn't one of the predictions since it isn't something that will be a 2023 event in particular.  Rather, the new way to look at it is "embrace the suck" much as it was in the early 1980s and didn't really start to clear up and improve until the middle of the decade.  If we're lucky things will start to get better in about five years -- if not, well, the 1930s might in fact be the best fit for how bad it will get and how long it will last.

As always I reserve the right to add or revise prior to 12:01 AM January 1st 2023, and will exempt this thread so it will remain available through the year for commentary and review.

Good luck!

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As is my practice I will do this once again....

But first, scoring last year.

  • Harris/Biden inaugurated.  Yep.

  • Senate NOT going 50/50.  Miss.  It did and is.

  • Rumblings of secession.  Yep.  Multiple states, with the most-noted being Florida, surprisingly enough.  Nonetheless this was not really much of a rumble and a "Cesar" in DeSatan is arguably worse than Biden, so on balance its a miss.

  • Covid insanity collapsing.  Nope.  Karen still screams.

  • Dooming public acceptance of jabs.  Depends on how you count it.  If you count it on coercive tactics that's a solid score. Acceptance is just that -- not a gun up the nose.  I'm taking that point.

  • Inability to interdict spread will be resisted -- and won't matter.  Yep.  Delta and now Omicron have proved all the "mitigations" were worth zero.  Now even CNN admits it, yet it doesn't matter, as I predicted.  I said we'd learn an effective nothing, and, well, we learned an effective nothing.

  • Bread and circuses still work.  Indeed.  Now the backlash, but that's for this coming year, isn't it?  Yep.

  • Inflation is coming.  Oh boy, did it.  Do I get two points for that one?

  • The money-printing grab-bag will continue.  Alright, do I get two for this one as well?

  • The left will go back to violence.  Well...... I guess that one is tougher.  On the one hand yes, but on the other no.  This one is a tough call, but what I thought I'd see is not what we got, although we got plenty with wildly-elevated murder rates and monstrous amounts of smash-n-grab and similar.  I'm going to be tough on myself and score that as a miss, as what I thought we'd get was more-akin to "burn it all to ash" ala "I can't breathe!" style nonsense.  We didn't, so it's a miss.

  • They'll ignore the lessons of Christmas Day in Nashville in 2020.  Yep.  And we have paid for it, but not in really ridiculous terms.  Yet.  Log2j, lots of service outages, but.... no "grand" exploit.  I said I wouldn't be surprised, so that wasn't a "it'll happen", and what I did expect (ignoring it) did, so I'll take that point.

  • Political violence escalation. Nope.  Not yet anyway.  Clean miss.

  • Bond market coming apart.  No, although you have to wonder what Powell is actually thinking.  He's lying by the way, but so far getting away with it.  Miss.

  • Strum and furor out of DC, but no real progress. Check.  I don't know how in the Hell I could have predicted that one better.  Let's Go Brandon!

  • My cat will remain my best friend.  Indeed.  The list of people I hang around with and actually like (as opposed to a purely-transactional experience) has gone to nearly zero, and I doubt it will change in the future.  Point.

So I score it as 9 to 6.  Not terrible for a one year prognostication.

How about for 2022?

Well, here we go, because why not?  I will intentionally omit anything related to the virus directly because of where this is posted, and because of the censorship of the big techs.  Never mind that you all know where I come down on most related topics in that respect anyway, so let's keep it to social, political and economic for this year.

  • Inflation will not calm down.  Yes, it will ebb and flow some, but this is a math problem at the end of the day and until Congress cuts it out it isn't going to stop unless The Fed says "nuts!" and, so far, they haven't.  Incidentally for those who say it will be "hyperinflation" you're nuts; I'll take the other side of that bet every day and twice on Sunday.  But in terms of trouble in the supermarket, yep.

  • The Democrats are going to get obliterated in the midterms.  Let's define that: They absolutely lose the Senate and I'll give it 50/50 they lose The House.  In any event without the Senate anything Biden wants is done, and so is anything Pelosi wants, no matter if she keeps the gavel or not.  My prediction is that the Senate will be at least 52-48 and it might be worse than that for the "D" side, so even if they can peel off a defector it doesn't help.  In short Biden's administration has about six months of actual life left in it after which its a dead letter with the upcoming elections and then the change in power comes the following January.  As I've pointed out for 20 years despite the screaming people always vote their wallet and the Democrats have literally stolen their wallets with inflation.  They're done, even though Trump caused half of it or more they're going to eat the blame for it, just as Carter did.  If the bracketing predictions (above and below) prove up in 2023 inflation will ebb as the Republicans take control of the legislature and 2024 will mark the end of the current Democrat party; all that will be left is the screaming Socialists like AOC who will be lucky to have 150 seats in The House.

  • The Fed is going to get forced into actual liquidity drains.  Not the lies of the last couple of months, real drains.  By spring, with inflation still raging, they'll have little choice -- and inflation is shifting away from fuels (which become less relevant in terms of "need" as heating season winds down anyway) into other core staples.  There comes a point at which the exponential nature of this deterioration is going to force their hand and I think we're a couple months away from it happening.  They won't like it, but they'll do it.

  • The USSC will "split the baby" on the abortion decision and nobody is going to like it.  This could be very dangerous in terms of court-packing except for one problem -- the Democrats can't get it through Congress, and they lose this upcoming November.  Ditto for any other decision that could threaten "court-packing."  It's not going to happen folks; you can't do that on reconciliation and there's not a snowball's chance in Hell you get it past a filibuster.

  • The equity market is extremely vulnerable over the next six to nine months.  Risk:reward is wildly unfavorable.  It will shift coming into the elections but for the time being I would be very, very selective about anything with exposure to a blow-up in the term structure (meaning any firm with potential debt coverage issues), any of the "social" stocks and anything levered to government tax farming.  I'll put the odds of a blow-up from now until the last few weeks before the election, defined as a 25% draw-down or worse, at 50:50.  The compounding effect of that on the midterm elections, if it occurs, will be substantial.

  • There is no short-term supply chain relief coming.  The problem is simply this: It's only smart to offshore labor to China when you can use wage and environmental disparities; it is otherwise stupid since transportation is never free.  In an inflationary environment this is especially nasty because if the supply chains lengthen you also increase your risk in that regard.  Being unable to quote prices with a reasonable degree of forward accuracy makes long-duration, long-distance supply chains wildly dangerous.

  • Business is going to get it in both holes.  Between labor productivity and costs, which will continue to deteriorate due to multiple factors (inflation, how business has treated employees, supply chain issues and more) and the inability to put any sort of forward pricing certainty in place there is serious trouble afoot.  Those with the longest international supply chains and heavily labor-intensive outfits get it the worst, but nobody is immune.  Businesses can claim its about "mandates" all they want but from the perspective of the employee it is all the fault of their boss, period, and they're right.  Businesses can tell the government to screw goats and shut down, refusing to comply with mandates by refusing to operate.  How long does DC or any other city or state survive without food, fuel, power and similar?  Hours.  Who has the power in this relationship again?  Yeah.  May I remind you (again) that the only difference between sex and rape is consent?

  • The blue hives are in particularly-serious trouble.  Mandate all you want; you can't force people to come.  All of these locations are wildly dependent on leisure, business travel or both.  Those who live in such places can and will go out of said cities on a temporary basis to do things such as eat, and if it continues they can and will move.  This is a losing game in a big way for these cities and towns.  The losses when it comes to hospitality and optional firms such as theatres, restaurants and similar, along with the tax revenue losses, will be catastrophic and once someone packs and moves they're gone and won't be coming back.  I'm expecting a quarter to a third or more of all remaining restaurant and similar firms in the blue hive cities to permanently close within the next 12 months and without the tax revenue city services cannot be provided.  If the city governments do not relent before warmer weather comes Detroit will be reprised in multiple places including New York, Chicago, Boston and elsewhere.

  • Significant geopolitical trouble breaks out.  I'll give it one of two places -- Ukraine or any of the Chinese issues, specifically their Muslim population and Taiwan.  Of the two Ukraine has the higher probability.  The facts of the matter are that Europe has sucked off our military spending for decades when it comes to such matters and frankly, if they're pissed off about both energy and defense they should have done something about it instead of whining and shutting down their existing energy sources.  I have zero sympathy for them and I don't care if Putin decides he's had enough of NATO.

  • Ghislaine Maxwell's trial is not the end of that story.  I'll predict that it blows up this coming year in a lot of people's faces.  What you've seen at CNN, for example, I'll bet is just a start.  This crap has been going on for a very long time and the "bench" on it in terms of who's in it up to their necks is deep and long.  It does not end with her by any stretch of the imagination, nor with one dude at CNN either.  While I don't expect the entire sordid mess to come apart in 2022 I do expect serious cracks in the dike and they don't have enough fingers to try to plug the holes.  Watch this one closely as it could easily go prompt critical and if it does all bets are off in terms of the scope and depth of the damage.

  • Biden is finished this year.  He's done.  Either he dies literally or he bows out due to "health."  It's wildly clear at this point the man is an empty head with advanced mental deterioration.  Repeated strokes, and he's had several, have a way of doing that to people and so does age-related dementia generally.  Like it or not here comes Kamala but it won't matter because of the above; she's even less liked than Biden is, so Seat Warmer Harris it shall be.

  • Business uncertainty lifts in the back half.  Yes, I know, I said it looked like crap up front and will be for most of the year.  But not all, and with the Federal Government basically out of the picture as of the first of 2023 economically and market-wise the forward view looks better.  Beware holding a bearish view politically or economically beyond the November elections; you are likely to get your face ripped off.

  • Housing, as a bubble, is done.  God help you if you overpaid and it wasn't a lateral move.  For those whom it was, you traded one bubble for another so provided you didn't dump your equity percentage blowing the rest on other things you won't be hurt badly.  For those who entered into it from 2020 forward and especially for those who thought the investment side was going to continue to skyrocket you're going to get it in both holes.  Between cities doing rankly stupid things (such as NY mandating no natural gas in new buildings) that will wildly raise operating costs, tax term structure going to Hell in anywhere blue and the collapse in real labor value among productivity and costs you've got pressure on all sides in this part of the market.  My base case is that returns are wildly negative accounting for that over the next five years and 20-50% capital losses are possible from top to bottom.  Those who reset their leverage thinking the current prices were "a floor" are in for a date with Mr. Hands.  This is not a one year story and the worst of it is not a 2022 story either, but it will become apparent this year.  I do not expect things to clear until 2024-25 or even perhaps later.

  • The Medical Complex has a serious problem on their hands - both in credibility and cost.  Sure, some will be ok, but not much of it.  I suspect this trend is generational and may not clear for a decade or more.  It will be quite interesting to see the screaming and whining that comes out of these folks as their naked swimming becomes exposed for all, and it will.  This is the year it becomes apparent to enough people to matter.  Since this is 20% of the economy, one dollar in five, its an economic earthquake that will send shockwaves through colleges, government agencies and businesses.  This has been a long time coming and both fully earned and deserved, especially for the TikTok dancers and those exhorting othersIf you're in that sector with investments get out -- it will be radioactive within six to twelve months and stay that way for years.

  • The credentialism of the so-called "top schools" will deteriorate markedly and some may collapse.  The idea that you can con people into paying $50,000/year to sit at home and watch zoom calls is flat-out insanity.  It has long been apparent that the majority of the "value" in such places is the "ins" you get by going there, living there and hob-nobbing with people in low places -- not the education "per-se."  That these institutions are so arrogant as to believe they can destroy the social interaction that is the very basis of their current value equation and not have that blow up in their face is astounding, but here we are.  This is a realization that should have come 20 years ago, but like all such ego-driven nonsense it tends to go on a lot longer when the red warning light is on before someone blows off their own hand -- or head.

  • Trump is done, and so are those who cling to him.  Run away now or be run over.  The man will become glowing nuclear waste before the election.  Exactly who fills the vacuum is not currently known, but the leading odds dude is likely DeSantis.  I don't like that very much but it is what it is and the bench sucks on both sides of the aisle -- it's not just the GOP in that regard.

As always I may add more to this and revise predictions until 12:01 on January 1st, 2022 at which point other than typos its a time capsule and we'll see how it all plays out come the end of 2022.

Oh, as for that wee light in the tunnel referenced up top?

IT'S A TRAIN.

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2020-05-18 06:00 by Karl Denninger
in Editorial , 578 references
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The only difference between rape and sex is consent.

It's quite clear that the screwing that has been going on since March, as defined by the people of this nation, can only be described as sex as I can't find even a single digit percentage of Americans who refuse consent.

Let's cut the crap.

Since the end of March it has been obvious that there was exactly zero evidence for any sort of "lockdown" of any business or person save one -- nursing homes.

I've been pointing it out.  Trump had a point with the original "15 days" simply because we didn't know where we were.  I had a working hypothesis with regard to the actual "R", methods of spread, their comparable efficacy and similar, all derived from the data available.  It was also obvious in the beginning and middle of March that ventilators were not an answer and thus attempting to build lots of them was stupid at best -- and homicidal at worst.

Even in March we had good reason to believe we were not on the cusp of a disaster.  Events such as Diamond Princess provided extremely strong evidence of this; that we were either much further along with infections than we thought we were or there was some sort of cross-immunity or resistance to this bug.

The person making extraordinary claims (2.2 million Americans will die) has the burden of proof, and the more-extraordinary the claim the higher the burden.

May I point out that while "2.2 million Americans will die" sounds apocalyptic it in fact isn't?  2.7 million, more or less, Americans die every single year.  It's normal.  The question isn't whether someone will die; it is of what will they die.  Not "with" what -- of what.

There's plenty of evidence of not only fraud but intentional causation of death during this alleged "pandemic."  Colorado has walked back roughly 15% of their claimed deaths after being caught claiming that someone who literally drank themselves to death died of Covid-19.  No, Covid-19 did not cause the person with a 0.55 BAC level to expire.  But it took exposition of fraud at that level of outrage for the State to 'fess up and reclassify those who were falsely spiking the numbers back out -- and we don't even know, because there's no independent auditing going on, whether they in fact took them all back out.

Then there are the ten states where nursing home deaths are half or more of all deaths.  Nursing homes are state regulated institutions.  The States, in several cases including New York, issued regulations forcing these institutions to accept people who were Covid-19 positive, effectively seeding the equivalent of smallpox into those facilities on purpose.  We knew very early on that if you had one of a relatively-short list of maladies you were much more likely to have a severe case of this disease and by definition anyone in a nursing home is seriously compromised in their physical health.  We have thrown people in prison for manslaughter on far less provocation that what these governors have done -- and with good cause.  Where are the prosecutions and why have the citizens of New York, along with other states, allowed their governors to kill Grandma without an immediate uprising?

Next up is the claim was that these lockdowns and other restrictions were to "flatten the curve" and prevent hospital overloads.  Most people would accept that if it was true.  But it was never true especially when you take the intentionally-caused serious cases out of the system.  New York was one of the few places with an actual hospital overload but in New York Cuomo's order on nursing homes caused roughly half the deaths and without them there would have been no overload at all.

But the most-damning evidence of all comes out of the unbroken series of serology tests along with coroner's reports (including out of NYC) that prove that for those without one of a list of underlying conditions your risk of a bad outcome is very close to zero -- and well below that of all-cause mortality.  To be blunt you're more-likely as an infant to die of SIDS than Coronavirus.  Never mind the personal choices people make that increase their risk, particularly obesity.  Would you lock down the entire nation and destroy its economy because some people choose to smoke or drink to excess, and as a result are more-subject to lethal disease?

That's what we've been doing!

To be blunt: So-called social distancing is a flat-out crock of shit.

What's even more outrageous is to claim a "public health emergency" exists when you ride down the street in an armored truck shooting people, explicitly targeting those who are fat and thus it would pose more difficulty in treating their wounds, yet that is exactly what Governor Cuomo -- and others -- did.  These governors roughly doubled the fatality count from Covid-19 through their own intentional acts with full knowledge of the danger they were putting the victims under.

In any just society that would lead to instantaneous federal indictment under 18 USC 242 with said person being arrested and thrown in the dock immediately -- and no prayer in Hell of being bonded out. Indeed the entire point of the federal government claiming a right to enforce Civil Rights at the state level arose out of exactly this sort of disparate harm intentionally aimed at certain parts of the population.  Since when does being black give you special rights that someone who is also part of a distinguishable part of the population -- specifically, being old and frail -- does not have?

May I point out the penalties clause for 18 USC 242:

Whoever, under color of any law, statute, ordinance, regulation, or custom, willfully subjects any person in any State, Territory, Commonwealth, Possession, or District to the deprivation of any rights, privileges, or immunities secured or protected by the Constitution or laws of the United States, or to different punishments, pains, or penalties, on account of such person being an alien, or by reason of his color, or race, than are prescribed for the punishment of citizens, shall be fined under this title or imprisoned not more than one year, or both; and if bodily injury results from the acts committed in violation of this section or if such acts include the use, attempted use, or threatened use of a dangerous weapon, explosives, or fire, shall be fined under this title or imprisoned not more than ten years, or both; and if death results from the acts committed in violation of this section or if such acts include kidnapping or an attempt to kidnap, aggravated sexual abuse, or an attempt to commit aggravated sexual abuse, or an attempt to kill, shall be fined under this title, or imprisoned for any term of years or for life, or both, or may be sentenced to death.

I'll take Guillotines for $100, Alex.

Then there are the nasty set of facts on this virus to begin with.  Those who have severe or critical cases are much more likely to be deficient in Vitamin D, for example.  Vitamin D is found in fatty fish such as salmon with small amounts also found in other animal products such as beef liver, cheese and egg yolks.  It is also generated by your body as a consequence of sun exposure.  That is, locking people into their homes directly injures them in terms of their personal risk of a severe outcome from this disease and despite the screaming Karens those Spring Breakers who flooded the beaches of Florida were actually engaged in behavior that was partially protective.  Isn't it interesting that despite all the claims that we'd have spring breakers dropping like flies the actual count of cases traced to that numbered...... wait for it..... five?

Who has been taken out, put in the stocks and pelted with rotten tomatoes for their vilification of young people, inherently at less risk to start with, engaging in behavior that we now know is actually protective?

Of course doctors and other "medically minded" people killing people through malfeasance and misfeasance is not new.  Such as my article from 2014 on UK doctors killing 80,000 people a year over a decade's timewhich I remind you is far more than have succumbed to The Roma in the UK.  Did we lock down for that?  Did the UK impose house arrest or other "restrictions" on the population?

Do you think this is an isolated incident?  May I remind you that upwards of 100,000 people a year are killed in the United States by nosocomial infections -- that is, infections acquired in a hospital!  That's more than the number of people felled by The Roma thus far and it happens in the US every single year.  Every one of those deaths is not only a homicide it's a negligent homicide too; exactly zero of them are unavoidable.  The medical industry put the name "nosocomial" on them so as to evade ordinary people calling it what it is and parading it on the TV: Negligent homicide.

Where is the chyron at the bottom of CNN, Faux Snoox and everywhere else listing the number of people killed every day by hospitals and doctors through their refusal to practice reasonable infection control?  If Covid-19 is a "public health emergency" why hasn't this been a continuing public health emergency and subject to the same sort of "mitigation" for the previous 20+ years when it kills an equal number of Americans not once -- but every year without fail!

As expected there are the screams of racism! coming from people because of a skew in the death numbers toward black and brown people.  So viruses are racist eh?  Nice try.  The truth is something entirely different: Lifestyle choices made by people have an outsized impact on the course of this disease -- specifically, the Pie Hole virus frequently precedes, by decades of willful personal action, a fatal outcome for Covid-19 exactly as it does for smoking and lung cancer.

Take both the willful and intentional actions of governors along with personal choice out of the mix as causative factors for serious, critical and fatal outcomes and suddenly this bug is an epidemiological annoyance.

Now let's add in 1968.  In 1968/69 H3N2 swept the globe; it was extremely contagious and troops returning home after the Vietnam War brought it rapidly into the United States, where it killed about 100,000 people.  There were about 200 million people in the US at the time, so adjusting for population this would put the death toll at about 150,000 today.

This is almost-directly comparable in terms of the rate of death seen with Covid-19 and yet exactly zero lockdowns were put in place and the economy was not impaired.  In addition, unlike Covid-19 but in line with most influenza strains that virus also killed a lot of infants and very young children.

And if that's not enough the prognostications of doom for those places that have reopened have been universally false.  The last leg of the stool on which these "lockdowns" rested was that if we did reopen the economy on a mass basis people would die en-masse.  But now we have the facts on that as well; it simply hasn't happened in any measurable way at all and that destroys the last argument for not immediately and completely removing all of the constraints.

China lied about this current virus in many respects, including its fatality rate.  But we've lapped up many of those lies as Americans and the so-called mainstream media has amplified them along with governors on both sides of the aisle.  There are exactly zero governors who have lifted all constraints and told people the truth: We were lied to, we were wrong and our actions, in light of the facts which we now know, were unsupportable.  This bug is nasty if you are medically impaired however we can lock in nursing homes and by doing so there is little risk of overload of the medical system, never mind that since hospitals are ill-equipped to deal with infectious disease generally the correct model for those infected is a sanitarium, which we will put in place for the duration should we have problems with this or a similar disease in the future.

Busing patients to such a place (and back when they're recovered) is dirt cheap compared to shutting down the economy.  Paying the caregivers in such places a  very significant bonus as compensation for being "locked in" for the duration or until they seroconvert and no longer can transmit the infection is dirt cheap by comparison as well.  Rent and line up RVs in the parking lot if you have to.

But instead we have a nation where half the people are screaming Karens parading around in masks claiming that "we're all gonna die" from the Roma if we are not literally imprisoned in our homes while the other half spends so much on kneepads as to run Amazon.com and everyone else out of them. The reason for their purchases?  To hide the use of their man-pleaser on our President's schlong on a daily basis; without those kneepads said acts would be evidenced by bare, white bone sticking out of the front of their knees.

Meanwhile our economy is dying.  A huge percentage, perhaps one in four or more, small businesses that were forced closed will never reopen.  Those are the firms that employ a quarter of America.  They're also how Americans have risen from being a wage slave to financial and personal independence from all walks of life irrespective of their race, color, religion or family wealth over the entire time this nation has existed.  Destroying these people through no fault or poor decision-making of their own is an outrage literally beyond words and more than sufficient cause for the people of this nation to start penning a second edition of The Declaration of Independence.

There are many who think the Federal Government can simply "spend" to make this up.  Nope.  That will inevitably be reflected back into prices and already is happening in the grocery store.  The full impact won't be felt for a couple of years and once again those at the lower end of the income ladder will take the worst of it simply because they lack the disposable income to deal with a 20, 30 or 50% increase in the cost of certain necessities.  That's financial sex; it's not rape because, once again, you continue to consent on a daily basis instead of dragging the people responsible out of their offices by their hair.

And oh, by the way, the "masks" worn by our so-called "leaders" have been caught on multiple occasions already as nothing more than theater; as soon as they think the cameras are turned off they all immediately take the masks off.  So much for believing what they're saying in public and even ordering you to do as a matter of alleged "law."

There is zero reason for anyone, irrespective of their political leanings, to consent to any element of our federal, state and local governments at this point.  I remind you that even a low single-digit percentage of those who actively refuse and are willing to back up that refusal with whatever is necessary to enforce same is sufficient to stop all of this bullshit in one afternoon as they would outnumber every law enforcement agency in the nation by a factor of 10:1.

There are those who claim this is all a "Get Trump!" conspiracy.  For those individuals please identify the Red State that has told all the screaming Karens to go screw a goat and has dropped all the constraints -- every one of them.  Those running that bullshit are lying; The fact is that both sides of the aisle are literally orgasmic over the power they're exerting and the screwing they are imposing on the populationespecially those on the lower end of the income scale.

Leaving aside the economic damage intentionally inflicted on our nation under false pretense, the majority of which has fallen on those making less than $50,000 a year -- the ordinary working stiff -- with exactly zero having fallen thus far on federal employees and lawmakers, every single one of whom is drawing their regular salary, along with the criminal malfeasance among governors who screwed up their alleged "unemployment" systems such that those people are not getting that which they paid into as insurance premiums, the rank violations of the basic Constitutional Freedom to go where we wish, when we wish and with whom we wish under intentional false pretense is plenty of reason standing alone for the people of this nation to refuse to consent to the continued existence of the government at all levels -- federal, state and local.

This intentional criminal malfeasance by governors has included freeing persons in jail and prisons. In at least two cases, one in Blue Colorado and a second in Red Florida these freed persons, one a convict and the second being held awaiting trial said individuals now stand accused of murder -- acts they would not have been able to commit but for their release.

If you drive someone to a bank knowing they are of criminal mind and they rob said bank you get charged.  Where are the criminal charges of accessory to murder for the governors and other jurisdictions involved in these releases when said persons were of knowing criminal mind -- trivially proved since they were already in jail!

Ask yourself this: If you're not going to rise and put a stop to the grave insult served upon our Constitutional freedoms at this level, deliberately aimed at the 70% of private sector workers on the lower end of the scale while exempting from those same consequences every single lawmaker, politician and enforcer irrespective of political party or affiliation then exactly when and under what circumstance would you so rise -- and why should anyone bother so much as lifting a finger to push buttons on a keyboard, say much anything else, in furtherance of defending your alleged "freedom"?

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