"Thank Goodness The Stock Market Only Goes Up..."

Authored by James Howard Kunstler via Kunstler.com,

It must be exciting to wake up on a gilded bed somewhere in Riyadh and realize that you are Saudi Crown Prince Mohammad bin Salman, mover and shaker of Middle East order. Actually, exciting just to have woken up at all.

Perhaps Prince MBS checks to make sure that there aren’t seventy-two virgins in the room before he rises to prayers, state business, and the prospect of World War Three.

The Kingdom of Saudi Arabia (KSA) has been a giant gasoline bomb waiting to explode for decades. It occupies one of the geographically least hospitable corners of the earth. Its existence as a modern (cough cough) state relies strictly on the reserves of oil discovered as recently as the late 1930s, that is, within the lifetime of people still reading this blog. The oil supply is in steep decline, and so, of course, is the stability of the kingdom.

Politically, it’s a super-medieval operation, an absolute monarchy tied to a severe religious order with the law floating precariously between the two, and old-fashioned customs such as the public beheading of criminals (for misdeeds such as “adultery,” “atheism,” and “sorcery”). The Saud clan has controlled the throne all these years, and its grip on power is slipping as the country itself slips into the prospective next era of its history, minus the endless gusher of oil that has made its existence possible - hence, a true existential crisis without the usual pseudo-intellectual bullshit.

How are they going to support the thirty or forty million people who will still be there when the oil exports dribble down? Most of the work done in the country is performed by foreign “guests.” The indigenous folk don’t even remember how to milk a camel, let alone run routine maintenance on a desalinization plant. (And what are you going to run the de-sal plant on when the oil runs down?) These are questions that must drive thoughtful Saudi royalty mad.

Hence, the Kingdom is going mad. The current king, Salman bin Abdulaziz Al Saud, is the latest in a line of geriatric monarchs. His brother and predecessor, Abdullah, spent his last years in a limbo of medical life-support (virgins standing by), and Salman is reputed to be dotty. Crown Prince MBS has assumed more of the king’s duties by necessity, but the land is filled with thousands of other princes, many of them frustrated, angry, and jealous of the Crown Prince’s prerogatives.

One can only imagine the clouds of intrigue wafting through the ornate corridors of wealth and power. Crown Prince MBS is lately out to deprive his many royal rivals of those two critical assets, and a couple of said rival princes - Abdul Aziz bin Fahd and Mansour bin Muqrin - were offed altogether (gunfight, helicopter crash) two weeks back. A score of non-royal public officials and business poobahs have also been arrested, including top ministers (Finance, Economy & Planning), the former CEO of the national airline, and a brother of Osama bin Laden, whose family ran the country’s biggest construction company.

It really amounts to a nascent civil war and it comes around at exactly the moment that the Kingdom’s arch-enemy, Iran, is feeling comfortably aggressive. Iran, formerly known as Persia, is a much sturdier old polity that has been around long before there was much ado about oil. They were fighting the ancient Greeks and Romans back in the day, and won a few rounds. But, of course, Iran has a good deal of oil, too. And having pissed off the Americans not so long ago by overrunning the US embassy and all, our country has been striving to punish them ever since — especially making it difficult for them to sell oil to our “friends” in Europe. As it happens, there are plenty of customers elsewhere for Iran’s oil — and, yes, they will eventually face their own depletion problems, but they do have the world’s largest untapped reserve stash next door in Iraq, which they are steadily and increasingly coming to control. And they do have that millennium-and-a-half beef with Arabia’s Sunni branch of Islam headquartered in KSA.

Crown Prince MBS may see war as a unifying theme for his domestic difficulties. He has a fifty-plus years’ stock of American war toys that have hardly been used - except for turning neighboring Yemen into a landfill. The USA has been KSA’s staunch ally all these years, and MBS has every reason to believe we have his back, as Iran probably believes Russia has its back. And then there is Israel in the background with its nuclear-armed subs… Israel, which actually took seriously Iran’s declaration a few years ago to wipe it off the face of the earth - and which now much of the world castigates Israel for so doing.

And in the middle of all this, poor, feckless, Hezbollah-haunted Lebanon, and the boneyard formerly known as Syria. The region is seriously coming apart. Someone is going to make a dangerous misstep.

The Golden Golem of Greatness has been off far away sampling General Tsao’s chicken and Singapore noodles.

And this country is completely preoccupied with Sex Among the Stars. Thank goodness the stock market only goes up.

"The Leaders Are Crashing" - It"s Not Just Junk Bonds That Have Given Up

We have been warning about significant divergences between equity prices and other asset classes for a few weeks (most notably the decoupling from equity risk and credit risk, junk bonds), but as BofA notes its not just these assets that are breaking away from soaring Nasdaq levels, in fact many of the rally"s leaders are crashing... in a way we have not seen recently.

High yield risk has suddenly decoupled from equity markets...

And Jeffrey Gundlach has been warning something"s got to give. Based on the past two days, looks like we have our answer.

Stocks fell around the world a second day and high-yield bonds headed for a fourth straight loss, resuming a historic correlation that the hedge fund manager on Wednesday had warned was alarmingly out of whack.

“JNK ETF down six days in a row, closing near its seven month low,” the DoubleLine Capital LP co-founder wrote on Twitter Wednesday. “SPX up five of last six days, closing at an all time high. Which is right?”

In fact the correlation between these two leaders has crashed...

In the past decade, there were only three other instances where the relationship between JNK and mega-cap tech broke down to this degree. Each time, the two assets began to resume their positive correlation within four to 12 days, data compiled by Bloomberg show.

But given the last few days in equities and credit... High Yield Bond prices (HYG) are at 8 month lows...

On record dollar volumes of trading...

Gundlach is calling a win...

“A material pullback would be something we need to watch for, as a deteriorating credit market has led each of the largest equity pullbacks since 2014,” said Frank Cappelleri, a senior equity trader and market technician at Instinet LLC.

 

“With divergences once again apparent now, the bulls face their latest test.”

It"s not just credit risk, but equity risk has decoupled from equity prices too...

VIX has started to creep higher but has further to go to fit with credit risk...

But it"s not just high yield bonds, price leadership has been stung in recent days: Oct 26th/27th ECB announced "tapering", Brent broke $60/b…concerns of "peak policy" stimulus & "peak profits"caused toppling of credit, bank, tech "leadership"; sell-off sequence past few weeks = 1st EMD, 2nd HYG, 3rd SX7E, 4th BKX, and #5 SOX...

As BofA"s Michael Hartnett notes, watch EMD & HYG in particular...needs to stabilize... but the recent pullback also follows insane gains...

FAANG+BAT market cap up $1.5tn YTD, a sum larger than entire market cap of DAX ($1.4tn); and Aug saw all-time low yields in US HY tech bonds (4.3% H0TY) & EU HY corp bond yields hit low in Oct (2.1% HE00, i.e. lower than yield on US Treasuries).

Finally, in case you think this is all much ado about nothing. The last time we saw such a divergence between credit and equities was in Aug 2015...

Just two weeks before the huge ETF  flash crash.

"I Think We Got Away With It": HSBC Trader"s Fate Left To Jurors After Damning Phone Recordings Revealed

After weeks of testimony, the fate of former HSBC trader Mark Johnson, who stands accused of orchestrating a massive international front-running scheme that netted his firm over $8 million in illicit profits, has been left in the hands jurors.

Over the past couple of weeks, tidbits of the prosecution"s case has made it"s way into the media, including reports last week that Johnson used the code phrase "my watch is off" to trigger trading by HSBC traders all around the globe.  Meanwhile, as Law360 recently pointed out, jurors also had the opportunity to hear some rather damning recordings of Johnson"s phone conversations with traders, including the one below in which he says "I think we got away with it."

Prosecutors played a recording of a call between Johnson and Stuart after the 3 p.m. fix as they debrief, with Johnson telling Stuart, “I think we got away with it,” but Stuart replies that HSBC executive Dipak Khot — who acted as the go between with Cairn and HSBC — thinks otherwise and suspects that Cairn will protest.

 

Johnson in turn argued that Cairn is still in a better position than it would have been if it had taken any other offers to execute the deal in alternate methods as opposed to the fix. “They don’t really have a lot of room to complain,” he said on the call.

 

But as Cahill was trading ahead of the 3 p.m. fix on the day of the transaction, Johnson sounded more concerned about “ramping it up” too much. Jurors heard another recording of a call between Johnson and Scott, with Scott talking to Cahill in the background as he trades, in which Johnson cautions against spiking the price of sterling too high out of concern that Cairn will "squeal."

 

“Frank, Frank if it rates above 30 at the fix, I think they’ll start to ah ... if you need to buy them, obviously, but ideally don’t ramp it above 30,” Scott tells Cahill. “Do what you need to do, but ... sorry I know I’m probably not helping much...I’ll leave you alone.”

 

“Is he getting a bit tetchy?” Johnson asks.

 

“No, he’s not,” Scott replies.

 

“He can’t, fucking moaning bastard,” Johnson said. “I do all the work and he gets all the glory.”

 

Jurors heard that days later in a call with HSBC forex trader Ed Carmichael in Hong Kong, Johnson told him that HSBC’s London forex trading desk, “just had a bonanza” on the Cairn deal, and described his response when Cairn sought an explanation on the less than stellar result for the oil and gas developer.

Of course, when HSBC"s client complained about their less than stellar execution price, Johnson admits that he blamed all the usual suspects: "Russians, other central banks, all that sort of stuff."

“And they said, well you know it jumped up a bit, who else was buying? And we said the usual Russian names, other central banks, all that sort of stuff,” Johnson said on the call.

For those who haven"t followed this particular story, Mark Johnson was arrested at New York’s Kennedy Airport in 2016 before he could return to the U.K. following a nearly 3-year investigation into efforts on the part of several large investment banks to rig FX markets but Stuart Scott has remained free at his home in the London suburbs pending the outcome of the extradition proceedings.  Per Bloomberg:

Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said.

 

According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing.

 

Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.

According to the original DOJ complaint, HSBC was selected by Cairn Energy Plc to execute a foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.  But, before executing that trade, he tipped off a bunch of HSBC traders who loaded up their proprietary accounts with Pounds just before the massive trade sent the currency higher.

“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” stated United States Attorney Capers.  “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades.  The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”

 

“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell.  “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”

As we noted last week, nearly a dozen HSBC traders around the globe netted over $8 million in profits by allegedly front-running their own client.

Of course, Johnson would like for you to know that this entire case is just "much ado about nothing" as he never intended to "front-run" his client but rather was just engaging in some innocent "pre-hedging"...which is a new term for us...must be a technical term only used by European FX traders.

This Is What Americans Heard During The Mysterious Cuban Sonic Attacks, And Why Experts Don't Buy It

Multiple neurologists and experts have told The Guardian that the mysterious "sonic attacks" upon US diplomats in Cuba are likely just a case of mass hysteria. The extensive Guardian report is based on research and interviews with top neurologists and medical experts explaining that the likeliest explanation for the strange and inexplicable symptoms reported by US embassy staff in Cuba which have led to a breakdown in relations between the two countries has nothing to do with some kind of Cuban sonic device or high tech conspiracy.

The neurologists say that the most plausible explanation is that the diplomats" high stress environment is leading to neurological abnormalities and disorders which are causing psychosomatic (or self-induced) symptoms. If true it would be a shocking revelation that such a "natural cause" phenomenon could result in the US removing most of its embassy staff from Havana. The Guardian report was issued on the very day that the Associated Press published what it purports to be an audio recording of high pitched undulating sounds which some embassy workers in Havana claim made them sick. Reports indicate that 22 US victims have suffered mysterious ailments after working at the embassy, including hearing, visual, cognitive, balance, sleep and other problems.

US Embassy in Havana, Cube. Image source: RNZ via AFP

Though it took over a year for the complaints to surface in the media, it all started in the fall of 2016. Several of the affected diplomats were recent arrivals at the embassy, which reopened in 2015 as part of Barack Obama’s reestablishment of diplomatic relations with Cuba. The various accounts were strange yet similar: one diplomat, for example, described being jolted awake in a Havana hotel room by a grinding, blaring cacophony. When he moved a few feet across the room, the noise stopped. When he got back into bed, the agonizing sound hit him again; as if, he told doctors, he had walked through some invisible wall cutting straight down the middle of his room. Multiple personnel also reported persisted nausea, nosebleeds, headaches, and dizziness while stationed in Cuba.

The US State Department has deemed the occurrence to be deliberate attacks, though US officials have stopped short of pointing the finger directly at the Cuban government. But The Guardian is now casting significant doubts on the US allegations even while its report acknowledged the new audio recording obtained by the AP.  

It sounds sort of like a mass of crickets. A high-pitched whine, but from what? It seems to undulate, even writhe. Listen closely: There are hear multiple, distinct tones that sound to some like they’re colliding in a nails-on-the-chalkboard effect.

The Guardian begins by citing Alan Carson, a consultant neuropsychiatrist and former president of the British Neuropsychiatry Association, who explained, “Typically what one gets in a functional disorder is some trigger. It is often relatively mild and non-specific, it can be a minor physical injury. But then a combination of a degree of anxiety and also belief and expectation distort that feeling.” Carson suggested that initial reports of US staff hearing strange sounds and experiencing unusual sensations could have triggered similar sensations in others: “If there is a strong enough expectation that something is going to happen, that will distort in an entirely real way the incoming information,” Carson said. “In certain circumstances that can be transmitted from person to person... If one person has that experience strongly enough and sets off that train of thought in somebody’s else’s mind, that can happen too.”

Sound waves from a sonic attack on the US Embassy in Cuba? Image source: New York Post

The report futher cites Mark Hallett, head of the human motor control section of the US National Institute of Neurological Disorders and Stroke, to introduce the likely possibility of a "mass hysteria" phenomenon. Hallet said, “From an objective point of view it’s more like mass hysteria than anything else.” This involves possible "functional disorders" taking root among small groups of people based on the power of suggestion in high stress close working environments. The Guardian explains further:

“Mass hysteria” is the popular term for outbreaks among groups of people which are partly or wholly psychosomatic, but Hallett stressed there should be no blame attached to them.

“Psychosomatic disease is a disease like anything else. It shouldn’t be stigmatized,” said Hallett, who is also president of the International Federation of Clinical Neurophysiology. “It’s important to point out that symptoms like this are not voluntary. They are not a sign of weakness in an individual’s personality.”

Hallet also noted the vagueness of the complains among the nearly two dozen embassy staff: “There are a very large number of individuals that have relatively vague complaints as far as I can see.” He said. “There has been an exploration of possible causes for this and nothing has been found and the notion of some sonic beam is relatively nonsensical."

“If it is mass hysteria that would clarify all the mystery – and presumably normalize US-Cuban relations again,” Hallett suggested. “These people are all clustered together in a somewhat anxious environment and that is exactly the situation that precipitates something like this. Anxiety may be one of the critical factors."

Audio released by the AP on Thursday purports to capture what American embassy staff heard in Cuba.

Jon Stone, a University of Edinburgh neurologist and leading author in the field also told The Guardan that such disorders were so frequent in society that it constitutes the second commonest reason people seek out neurologists. “There is a misconception that only people who are weak-willed, people who are neurotic, get these symptoms. It isn’t true,” Stone explained. “We are talking about genuine symptoms that people have of dizziness, of headaches, of hearing problems, which they are not faking.” Stone seconded Hallett"s analysis of the mass hysteria phenomenon as "the outbreak could have started with one or two people falling ill with headaches or hearing problems, and those spread in a high-stress atmosphere and then amid talk of a "sonic attack"."

One of the interviewed medical professionals went so far as to say it"s likely that experts within American intelligence understand the "mass hysteria" possibility quite well. According to Dr. Robert Bartholomew, author and widely regarded expert on outbreaks of mass hysteria:

None of this makes sense until you consider the psychogenic explanation... American intelligence agencies are the most sophisticated in the world, and they reportedly don’t have a clue as to what’s causing the symptoms. I will bet my house that there are agents in the intelligence community who have also concluded that this is a psychogenic event – but their analysis is either being repressed or ignored by the Trump administration because it doesn’t fit their narrative. Mass psychogenic illness is by far the most plausible explanation.

Meanwhile The Guardian questioned the US State Department about the possibility of functional disorders, to which a spokesperson responded: “We have no definitive answers on the cause or the source of the attacks on US diplomats in Cuba, and an aggressive investigation continues. We do not want to get ahead of that investigation.”

We will be to the first to confess that the idea that this could all be much ado about nothing based on some kind of psychosomatic self-induced mass hysteria and panic event would be an explanation perhaps just as wildly unexpected and "out there" as the high tech sonic device attack scenario. Either one sounds like it could be the plot line for some sci-fi movie or X-Files type series.

Oust Trump, War With Russia

Authored by Finian Cunningham via The Strategic Culture Foundation,

Behind the sensational Western media coverage now linking the US president’s son to alleged Russian collusion in the American election, the real euphoria stems from relief that, at last, some «evidence» has been found.

For more than seven months now, the US corporate media have been running unrelenting claims that somehow Donald J Trump colluded with Russian state-sponsored hackers to get elected over his Democrat rival Hillary Clinton.

The media campaign has been dismissed as a witch hunt by Trump. Perhaps more sinisterly, US-Russia relations have also become deeply toxic due to the allegations. Not even a friendly meeting between Trump and Putin at last weekend’s G20 summit in Germany seems able to lift the poisonous cloud over bilateral relations.

However, the never-ending «Russia-gate» story was, to be frank, at risk of boring people to death from the sheer lack of evidence to shore up the conjecture of Trump being a Russian stooge. Despite the fact that three separate government probes have been working on the issue, they have nothing to show for it.

Then this week the «Russia-gate» story-tellers got a lifeline with reports that the president’s eldest son, Donald Jr, held a meeting with a Russian lawyer over a year ago at Trump Tower in New York City. The disclosure came from emails sent by Trump’s son to a mediator who promised «dirt on Clinton» that would damage her election campaign.

Democrats, Republicans, supporters of Clinton and the anti-Trump media are now cock-a-hoop that they have a «smoking gun» to prove the narrative of Trump-Russia collusion. Trump Jr is being accused of betraying his country by consorting with a foreign enemy, Russia.

A Washington Post comment noted: «Donald Trump Jr’s emails are the clearest indication yet that Trump campaign officials and family members were willing to deal with a foreign adversary in their mutual goal of taking down Hillary Clinton, and their revelation is dramatic proof that the Russia investigation is alive with no end in sight».

Meanwhile, the New York Times reported: «Rancor at White House as Russia Story Refuses to Let the Page Turn». It goes on to comment with a tone of satisfaction: «Every time the president tries to put the furor behind him, more disclosures thrust it back to the fore, and people close to him are anonymously blaming one another».

What the media outlets decline to say is that the Russia-gate story has not gone away precisely because the media have dutifully amplified leaks and anonymous intelligence claims – more accurately, innuendo – pillorying Trump as a Russian patsy.

The Deep State rulers of the US, comprising the military-intelligence apparatus, never wanted businessman Trump to become president. Unlike Clinton, Trump was insufficiently hawkish towards Russia. Ever since his shock election last November, the Deep State and its media machine have been full throttle to oust the «wrong president». The «Russian collusion» claims are the spearhead of this attack, an attack could qualify as a «soft coup» against the elected president.

With Trump’s son now admitting that he met with a Russian lawyer last summer as the head of his father’s election campaign, the anti-Trump campaign senses a mortal wound and are going full pelt to exploit it.

But the drama has the hallmarks of yet more media-driven sensation that is out of all proportion to the facts. Trump Jr’s lawyer dismissed the latest claims as «much ado about nothing».

The Russian government, which has consistently rejected any claims of interfering in the US election, said that the speculation about Trump and the «Kremlin-connected attorney» is «making a mountain out of a molehill».

As Trump Jr told Fox News this week, he held the meeting simply because he was interested in hearing «opposition research» on Hillary Clinton. As it turned out, no such information was forthcoming and the meeting ended inconclusively after only 20 minutes. That was the end of it. Apparently, Trump Sr wasn’t even told about the brief interview, so insignificant was it at the time.

It seems a fair and plausible observation that Trump Jr was simply doing what any political campaigner would do. Get dirt on opponents.

The US media are thus guilty of «protesting too much» about what is a rather prosaic matter. Apart from the obvious axe they want to grind against President Trump, the other reason for the media hysteria over the latest twist in the Russia-gate affair is that the Deep State and their media machine have, at last, something resembling hard evidence. This is why they are grandstanding. It is from relief that they have found something approximating a story to justify all the months of shrill speculation.

The hypocrisy of the pious media, pundits and politicians over Trump Jr’s betrayal is quickly revealed when one considers that Hillary Clinton’s campaign actively worked with the CIA-backed Kiev regime to dig up dirt on Trump during the election, as reported by Cristina Laila. «Where is the call for Hillary Clinton and her aides to be interviewed by the Senate intelligence panel», she asks.

According to US media interviews given by Nataliya Veselnitskaya, the Russian lawyer at the center of the Trump brouhaha, she is adamant that she was not acting for the Kremlin. The Kremlin also denies knowing her. She maintains that she not did approach the Trump campaign to provide «dirt» on Clinton, but rather to lobby against US sanctions imposed on her Russian business clients.

The claim that Veselnitskaya was «acting on Russian government information to help Donald Trump» apparently stems solely from the assertion made by the former British tabloid journalist Rob Goldstone, who wrote to Donald Jr to set up the meeting. It was Goldstone who described the meeting with Veselnitskaya as conveying «Russian government information to help your father’s campaign».

In other words that is not «proof» of Russian government involvement. It is simply hearsay from a tabloid hack with self-serving reasons.

Questions that the US media should be asking are: Was Goldstone hamming up his Russian government claims in order to sell Trump a mediation service and a scoop? Also, how did private emails between Goldstone and Trump end up in the possession of the New York Times? Did Goldstone flog them to the newspaper in order to cash in on the brewing Russia-gate scandal?

The lawyer for the family of Emin Agalarov, the Russian singer who asked Goldstone to set up the meeting between Trump Jr and Veselnitskaya, has now come out to rubbish the claims made by Goldstone.

«The vast majority of what Rob Goldstone said in email exchange with Donald Trump Jr is not accurate», Agalarov’s family attorney, Scott Balber, told RT. «The only thing that’s true is that Emin asked the meeting to be arranged. The rest of it is not true, it’s false».

As with so much else in the Russia-gate affair, the latest twist seems to be another concoction to turn wild speculation into the semblance of fact. It is as if the US media conceived the headline «Trump colluded with Russia» a long time ago, and have ever since been chasing to find a «story» to fit the headline.

There are too many holes in the whole Russia-gate affair for it to stand up. It is only the servile US media operating on the agenda of the powerful anti-Trump Deep State that make this non-story appear to stand up.

So desperate is the Deep State to oust Trump from office, it is willing to damage US-Russia relations beyond repair, to the point of risking all-out war.

Foundation & Empire - Is Donald Trump 'The Mule'?

Authored by Jim Quinn via The Burning Platform blog,

In Part One of this article I analyzed the similarities of Isaac Asimov’s Foundation Trilogy to Strauss & Howe’s Fourth Turning, trying to assess how Donald Trump’s ascension to power fits into the theories put forth by those authors. Now I will compare Trump to the most interesting character in Asimov’s classic – The Mule.

The Mule

“A horse having a wolf as a powerful and dangerous enemy lived in constant fear of his life. Being driven to desperation, it occurred to him to seek a strong ally. Whereupon he approached a man, and offered an alliance, pointing out that the wolf was likewise an enemy of the man. The man accepted the partnership at once and offered to kill the wolf immediately, if his new partner would only co-operate by placing his greater speed at the man’s disposal. The horse was willing, and allowed the man to place bridle and saddle upon him.

The man mounted, hunted down the wolf, and killed him. “The horse, joyful and relieved, thanked the man, and said: ‘Now that our enemy is dead, remove your bridle and saddle and restore my freedom.’ “Whereupon the man laughed loudly and replied, ‘Never!’ and applied the spurs with a will.” – Isaac Asimov, Foundation

I had not thought about the Foundation Trilogy for decades, until someone recently mentioned it in a comment on my website. They pondered whether Trump’s arrival on the scene represented The Mule’s advent during the decline of the Galactic Empire. Trump’s numerous enemies would love to portray him as an evil mutant freakish warlord, bent on using his persuasion powers to mislead the populace into doing his bidding. I don’t necessarily see Trump as The Mule, but as a disrupting factor, disturbing the best laid plans of the establishment and helping reveal the hidden agendas of the Deep State.

Seldon’s science of psychohistory was outstanding at predicting the behavior of large populations but worthless in trying to predict what an individual might do. The emergence of the Mule, a mentalic mutant with an acute telepathic ability to modify the emotions of human beings, could not have been predicted by the Seldon Plan, focused as it was on the statistical movements of vast numbers of peoples and populations across the galaxy.

The Mule was the unpredictable variable in the equations of history and the greatest threat to the Seldon Plan. He disrupts the inevitability of the continued evolution of the First Foundation and potential early ending of the Dark Age. The Mule, through telepathic manipulation, defeats and takes over the Foundation’s growing empire, which has become increasingly control-oriented and out-of-touch with the outer planets in its rapidly expanding realm of influence.

There are certainly parallels between Trump’s arrival on the scene and The Mule’s psychohistory defying disruption of Seldon’s Plan. The Mule was described as a freak and the subject of derision. This fueled his ambition to take over the galaxy. I believe Trump decided he was going to be president on April 30, 2011 during the Correspondence Dinner at the White House when Obama unrelentingly mocked and derided him in front of the corrupt Washington power establishment. This public ridicule from an empty suit community organizer president, who never worked a real day in his life, angered Trump to his core and propelled him to seek and win the presidency.

The Mule enters the scene disguised as a clown named Magnifico Giganticus. Over time, he uses his psycho-manipulative abilities to sway the masses to his side and eventually takes over the galaxy. When Trump announced his candidacy, it was taken as a public relations stunt to further his faltering reality TV career. He has a magnificent gigantic ego. His persona was that of an irascible self-made billionaire with an enormous ego and hunger for the spotlight. He was the butt of many orange hair and orange skin jokes.

For the most part, he went along with the joke, as any publicity is good publicity when you are selling yourself as a brand. He put his name on buildings, Chinese made clothing, scam universities, and just about anything that would produce a buck. He became more famous for his TV show The Apprentice, and his tag-line “You’re Fired”, than for the billion dollar real estate empire he had built.

Like The Mule, Trump used the GOP establishment’s disdain and underestimation of his persuasion abilities to capture control of the party from the out of touch elitist party hacks. At the outset of his candidacy I was among the libertarian minded skeptics who didn’t take him seriously. I found him entertaining, but didn’t think he had the gravitas to be president. I liked his rhetoric about not interfering in foreign conflicts, protecting our borders, enforcing the rule of law, repealing the disastrous Obamacare law, and his relentless trashing of the left wing mainstream media and Washington establishment.

I wasn’t a big fan of his bloviating about inconsequential matters. As time passed I began to realize he was probably the Grey Champion of this Fourth Turning and the regeneracy towards the next phase would be his unexpected election to the highest office in the land. He was the only person capable of destroying the fetid pustule known as the Deep State.

The Mule’s tormented childhood of alienation, combined with his mental ability to alter human emotions led to his desire for power, in order to exact revenge upon the human race which caused him so much pain. Trump’s childhood was no walk in the park, but it was far from being tortured. His father did send him to military school at the age of 13 to instill some discipline in him. It does seem like his drive to succeed was spurred by a desire to prove himself to his father and be more successful than his old man. Unlike The Mule, his motivation is not revenge motivated, unless you consider it revenge upon Obama for the abuse he withstood during that dinner.

The Mule had the mental capabilities to turn antagonists into followers, converting feelings of animosity into those of intense loyalty. He could also stimulate feelings of pervasive fear and panic among his enemies. He used the subtle influence of the subconscious to conscript individuals to his cause. The Mule used his mental powers to disrupt Seldon’s plan by invalidating his assumption no single individual could have a quantifiable impact on historical trends predicted by his theory of psychohistory. The Mule is a Grey Champion-like character rising to power at a crucial time in history as the disruptive factor to the best laid plans of over-confident elitists. The Mule uses his extraordinary cerebral abilities to conquer the unprepared and over-confident Foundation.

Trump has been underestimated every step of the way for the last two years. He has thrown sand into the gears of the political establishment, made up of both parties, and controlled by Deep State players used to getting their way. Trump was able to use his powers of persuasion to overcome the left wing media propaganda and motivate a large swath of disaffected Americans to come over to his side. The never ending barrage of misinformation and fake news spewed by the Deep State controlled media ignores the fact he won 53% of the white women vote, along with huge numbers of union workers from blue collar states like Michigan, Ohio, Wisconsin, Pennsylvania, and Indiana.

As documented during the campaign by Scott Adams, Trump’s phenomenal power of persuasion overcame all obstacles thrown in his way by the crooked establishment. He had no support from the GOP power players, was despised and ridiculed by the horribly corrupt Democratic establishment machine, scorned and mocked by the fake news corporate media, and undermined by the surveillance apparatus at the behest of the rancid resentful reprobate occupying the oval office. Their pure unadulterated hatred for the man resulted in them becoming blindsided and baffled by his tactics, strategy, and Svengali-like ability to draw huge crowds of normal Americans in flyover country.

Trump has disrupted the ongoing Deep State capture of our political, economic, financial, social, and cultural systems as a once in a lifetime figure destined to govern during a time of domestic disorder, global upheaval, civil chaos and ultimately war on a grand scale. The looting and pillaging campaign of the ruling class, disguised as free market capitalism and democracy, has been put at risk by an uncontrollable unpredictable outsider who doesn’t act according to their Plan.

The staged violent response by the billionaire funded left wing faux anarchists, fake news Russian conspiracy propaganda, and NSA/CIA/FBI campaign to discredit and/or overthrow the Trump presidency is the kind of response you would expect from a dangerous threatened animal backed into a corner. The establishment will not relinquish control without a bloody drawn out fight to the finish.

Since we know Asimov modeled the trilogy on Gibbons’ The Decline and Fall of the Roman Empire, there has been much conjecture as to who The Mule represented. He has historical parallels with Attila the Hun, Tamerlane, Charlemagne and Roman Emperor Augustus. Based on the historical time frame in which he was writing (1941 – 1950), I think it is safe to assume he modeled some of The Mule’s traits after Adolf Hitler. His disturbed childhood, trauma during the First World War, hypnotic ability to manipulate the emotions of the German people, boldness in attacking his perceived enemies, and attempt at world conquest, parallels much of The Mule’s story.

When I try to find parallels to our current situation and the role Trump is playing, I see the Foundation trilogy in a different light. Isaac Asimov was an intellectual. He had a PhD in biochemistry and was a life-long member of Mensa. He was a university professor for most of his life. Academics believe in theories and academic mumbo jumbo, as we can see from decades of academics running the Federal Reserve, destroying our currency and forcing millions into economic servitude.

Hari Seldon is an intellectual who creates the Foundation, made up of other academic intellectuals. Then he sets up a Second Foundation of even more talented intellectuals as a backup plan in case the Foundation fails. The true ruling powers on this planet always have a backup plan. You never know whether the leaders or organizations you support are really part of a bigger plan you have not considered. Keeping the populace off-balance, confused, and seeking unseen enemies is just part of the plan.

The inevitable decline of the Galactic Empire was entirely predictable by Seldon, as every empire in world history has ultimately declined. Whether the Roman Empire was ruled by a despot, wise man, or idiot, it continued its centuries long decline from glory to destruction. Empires are created by fallible men whose failings, weaknesses, and desires never change. John Adams foresaw the future of an American Empire two centuries before it became an empire. The American Empire is in the process of committing suicide and a single individual, no matter how bold and resolute, will not be able to save it from its inevitable destruction.

“I do not say that democracy has been more pernicious on the whole, and in the long run, than monarchy or aristocracy. Democracy has never been and never can be so durable as aristocracy or monarchy; but while it lasts, it is more bloody than either. … Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy.

It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty. When clear prospects are opened before vanity, pride, avarice, or ambition, for their easy gratification, it is hard for the most considerate philosophers and the most conscientious moralists to resist the temptation. Individuals have conquered themselves. Nations and large bodies of men, never.” – John Adams, The Letters of John and Abigail Adams

I don’t see Trump as an evil Mule character in this Shakespearian tragedy, as it progresses towards its ill-fated denouement. I also don’t see Seldon and his ensemble of elitist intellectuals as the saviors of the universe. I see The Foundation as the Washington and Wall Street elite who are the face of the establishment – Pelosi, Schumer, Ryan, McConnell, Yellen, Dimon, Blankfein, Immelt, Gates, Buffet, etc. The Second Foundation was hidden in plain sight, operating in the shadows, unknown to the masses, and controlling the galaxy from behind the curtain. They were the Galactic Deep State.

The Seldon Plan smells like a current day Soros Plan. Wealthy, highly educated, egotistical, hubristic, evil snakes who believe they are the smartest men in the world operate behind the scenes as the invisible government, manipulating the mechanisms of society and pulling the wires controlling the public mind. Soros, along with other shadowy smug billionaires, are not fans of populism.

They believe they are entitled to run the world as they choose, with no input or resistance from the ignorant masses. With the basket of deplorables rising up and electing Trump, the Deep State players are now openly fighting back and revealing their warped thought process. Elitist billionaire Ray Dalio recently revealed his populism fears and those of his fellow billionaires. He doesn’t consider himself a common man.

Populism is a political and social phenomenon that arises from the common man, typically not well-educated, being fed up with 1) wealth and opportunity gaps, 2) perceived cultural threats from those with different values in the country and from outsiders, 3) the “establishment elites” in positions of power, and 4) government  not working effectively for them.  These sentiments lead that constituency to put strong leaders in power.  Populist leaders are typically confrontational rather than collaborative and exclusive rather than inclusive.  As a result, conflicts typically occur between opposing factions (usually the economic and socially left versus the right), both within the country and between countries.  These conflicts typically become progressively more forceful in self-reinforcing ways.  

In other words, populism is a rebellion of the common man against the elites to some extent, against the system. The rebellion and the conflict that comes with it occur in varying degrees. Sometimes the system bends with it and sometimes the system breaks.  Whether it bends or breaks in response to this rebellion and conflict depends on how flexible and well established the system is.  It also seems to depend on how reasonable and respectful of the system the populists who gain power are. Classic populist economic policies include protectionism, nationalism, increased infrastructure building, increased military spending, greater budget deficits, and, quite often, capital controls.

Dalio, Soros and their fellow billionaires see populism as a threat to their wealth, power, and control of the world. But, it’s much ado about nothing. It’s like jockeying for the best seat on the Titanic as it sinks into the frigid ocean depths of the Atlantic. The American Empire is in shambles and no one can reverse its course at this point. I’ll address that distressing situation in Part Three of this article.

Sessions Considering "Outside Special Counsel" To Review "Highly Politicized" Actions Of Obama DOJ

Even though Obama spent the waning days of his administration boasting about how he had managed to spend 8 years in the White House without a single "scandal", current Attorney General Jeff Sessions seems to have a slightly different view of how to define "scandal". 

But perhaps Obama just "did not recall" some of the highly controversial efforts of his administration including the intentional IRS targeting of conservative political groups, Eric Holder"s "Fast and Furious" gun running program which ultimately resulted in him being held in contempt of Congress and, of course, that infamous meeting between Bill Clinton and Loretta Lynch on the tarmac in Phoenix just as the DOJ and FBI were contemplating whether or not to press charges against Hillary Clinton over her email scandal.

Appearing on the air with radio host Hugh Hewitt, Sessions was asked if he would consider designating an outside counsel "not connected to politics" to take a second look at Justice Department actions that provoked Republican ire over the last eight years. Hewitt contended during his radio interview that the department had become "highly politicized" during the Obama administration and floated the idea of a special review by an attorney with the authority to bring criminal charges and "just generally to look at how the Department of Justice operated."

While Sessions was somewhat noncommittal, he did leave the door open, saying he would do everything he could to "restore the independence and professionalism of the Department of Justice." According to the AP, Sessions said that "generally, a good review of that internally is the first step before any such decision is made" but continued on to say that he "would have to consider whether or not some outside special counsel is needed."

Hewitt:  Now let me switch to the Department itself, Mr. Attorney General.  It has a bad eight years.  I"m a proud veteran of the Department of Justice as you are, but the IRS case, the Fast and Furious case, Secretary Clinton"s server.  The Department of Justice came under great criticism.  How about an outside counsel, not connected to politics, to review the DOJ"s actions in those matters with authority to bring charges if underlying crimes are uncovered in the course of the investigation, and just generally to look at how the DOJ operated in the highly politicized Holder-Lynch years.

Sessions:  Well, I"m going to do everything I possibly can to restore independence and professionalism of the DOJ, so we"re going to have to consider whether or not some outside special counsel is needed.  Generally, a good review of that internally is the first step before any such decision is made.

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Sessions went on to say the outcome of the IRS case, in particular, remained "of real concern." The Justice Department in 2015 found mismanagement at the tax agency but no evidence that it had targeted a political group based on its viewpoints or obstructed justice.

But we"re sure this is just all "much ado about nothing" as they say...after all Loretta Lynch already said Bill just stopped by her plane to chat about his grandkids for 30 minutes...surely she wouldn"t attempt the mislead the American people just to protect her administration, right?

Ben Hunt&#039;s Mailbag - Life In Trumpland

Via Ben Hunt of Salient Partners" Epsilon Theory blog,

The best part about this job, other than being recognized in random bars by 50-year old financial advisors who are always good to buy me a drink (hey, you take your celebrity where you can), is the correspondence with readers. I began writing Epsilon Theory 3+ years ago from a pretty dark place, and it’s still where I end up a lot of the time. But from the outset I started getting emails from really smart people, truth-seekers all, making their way in this world of mendacity and inauthenticity without succumbing to it, and it’s given me — if not an optimism — then at least the occasional absence of despair about the world my daughters will inherit.

I try to respond to all the notes I receive, but what usually happens is that the really good ones — the ones that require more than a flip answer — end up being marked unread and shunted to the “need response” folder on Outlook, only to die a lingering death of inattention over the following weeks. Ultimately I just mark the entire folder as read and let them pass on to the Great Archive in the sky, as it’s the only way I can live with the guilt. So to all of those Jacobs and Williams of the world … I am truly sorry.

As a partial repentance, if not solution, I’m going to make a regular habit of what I always found to be the most enjoyable part of Bill Simmons’ Sports Guy blog — the reader Mailbag. Geez, I miss the old Bill Simmons. Like Simmons of old, I’ll try to keep it entertaining rather than pedantic, and to that end I’ll sprinkle in some of the haters, as I find them occasionally fun when they’re not threatening rape or murder (Bill Simmons never had to deal with the Zerohedge commentariat). As it happens, I got more than the usual quota of great emails from my most recent note “The Evolution of Competition,” my take on the political and social polarization running rampant in Trumpworld. So without further ado …

I forwarded your note to my better half and she thought it was really good, BUT…

from your note: “…If you cooperate in a game of Chicken — i.e., you’re driving your tractor straight on at Kevin Bacon’s pick-up truck and you veer off from the looming crash…”

She needs you to rethink some things, and after she explained the facts to me, I thought it might be important for you (although I’m sure you have already heard from many of your 40-something-female-readers-who-have-watched-Footloose-multiple times!)

1. They were BOTH on tractors.


2. And this is the bender for your game analysis. Kevin Bacon tried and FAILED to jump off his tractor. He was FOILED by his shoe lace and thus WON the game of chicken BY ACCIDENT. Very interesting.

I’m gonna need some follow up from you on this one Ben, as she is leaning on me pretty hard to let you know that you’re not done with this Footloose incident!!

– John

A lot of games of Chicken are won by accidental (or intentional) incompetence. For example, if I see that Kevin Bacon is stuck on his tractor and can’t possibly jump off even if he wanted to, then my only rational choice … the only way to avoid MY death in a crash … is to jump off my tractor. By limiting his competence and degrees of freedom, Kevin Bacon paradoxically becomes more powerful in a game of Chicken.

A variation on this theme is to convince your opponent that you’re not necessarily powerless to decide otherwise, but that you’re so mentally incompetent that you really don’t care if you live or die. Henry Kissinger and Richard Nixon famously played this “madman” strategy (in the form of being crazy enough to launch nukes even if it drew China and USSR into war) to get the North Vietnamese government to attend peace talks in Paris.

 Good piece. Decency and ability to stay above the fray is almost non-existent at this point. Not to be nerdy but I keep replaying the Star Wars quote “So this is how liberty dies – with thunderous applause” (About the only good thing that came from those terrible prequels.).

– Victoria

That’s a good quote! As for the quality of the prequels … I mean, obviously you’re right. I can’t remember any of the Episode 1-3 quotes because I hear everything in a Jar-Jar Binks accent. And the acting … well, let’s be generous and call it Godfather 3 Sofia Coppola-esque. But isn’t it time for a bit of perspective on the entire canon? In meme terms, I think “Star Wars” is the functional equivalent of “Ronald Reagan”, in that both have evolved into expressions of almost pure nostalgia. Fun fact: the word “nostalgia” derives from the Greek nostos (return home) and algos (pain). There’s a wincing quality to so much about the Star Wars movies and the Reagan Administration, but it’s completely trumped by some sort of warm fuzzy emotional balm. I’d like to figure out how to bottle that.

 Nice job. Were you pro Gaga or anti Gaga? Your readers deserve to know!

– Ian

I was anti-Gaga in the ET note “American Hustle” for what I saw as pretty profound inauthenticity around the U.S. election. But how about that SuperBowl™ performance, huh? I thought that was great. Seriously. And with game theoretic implications, too …

During the halftime show of the Super Bowl on FOX, after Lady Gaga’s performance, they went back to the studio and had someone ready to report on what the reaction to the halftime show was on social media. My immediate reaction – 1) How could I possibly trust FOX to give me an accurate take on the social media reaction to the halftime show that they just broadcast? 2) I don’t care. 3) Doesn’t anyone who does care (and is therefore already monitoring social media for themselves) already know?

– Jay

Actually, I thought Fox was pretty brilliant in their coverage of Lady Gaga’s halftime show. They assumed that we were incapable of determining for ourselves whether or not it was a good performance until we were told by others (Missionaries in game theory terms) whether or not it was a good show. And they’re absolutely right. A classic example of The Common Knowledge Game in action.

 I am a pretty competitive person/athlete and always lost at Chicken versus my brother. I am still trying to repair the Chicken self-image.

– Kim

Me, too, and to my younger brother, to boot. Although I would bet he would say the same thing about me. It’s amazing how these social competitions in a Chicken format stick with us for a lifetime.

 Spot on. I’m doing daily battle with my family and best friends back home, and getting nowhere.

– Drew

It’s the “back home” aspect of all this that’s particularly difficult on our social lives, I think. Geography has simultaneously become irrelevant with modern communication technology and the only thing that matters with the balkanization of economic opportunity.

 This guy is just butt hurt that Trump won. He is a delusional asshole. He thinks that what his side did was about is cooperation.

His idea of cooperation is me giving him half of my money and my wife giving him a *** while my kids wash his car.

In exchange he will offer my family some constructive criticism on how we can become better human beings.

Suddenly when I grab him by the back of his neck and throw him out of my house he finds my behavior objectionable.

What a douche.

– BarkingCat

Ah, the haters. I included this note because I think there’s an important point here. The meaning of Trump to BarkingCat is personal empowerment. Trump changes the story that this guy tells himself about himself, which is the most important story that we have!

In the mind’s eye of BarkingCat, he is now the powerful one, able to grab me by the scruff of my neck and physically throw me out of his house. It doesn’t matter that, in reality, the Takers and the Powerful are now more in control of his house and his real-world life than ever before. I mean, if you think we lived in a world of, by, and for the 1% before (and we did), you ain’t seen nothing yet. But the real-world impact of Trump isn’t what drives behavior. In politics as in markets, it’s always the story that drives our behavior, particularly the story we tell ourselves about ourselves.

You know where I see this phenomenon a lot? In SEC college football. Some of the most virulent (and I mean that word in its clinical sense) fans of Alabama football have zero connection to the University of Alabama other than that they live in the same state as Nick Saban. But, like BarkingCat, they derive enormous personal empowerment and psychic benefit from a totemic connection to a powerful man. Roll Tide!

The premise is that all cooperation habits we’ve developed, our ways of getting along, are breaking down to be replaced purely with competition. If the premise were right, the rest of his argument might well follow. But the premise is wrong.

Trump found a NEW COALITION. He often speaks of the LOVE at his events. Trumpsters may compete in business, but basically we like each other and won’t tend to be all that cut-throat, most of us anyway. (Trump himself is more cut-throat than most of us. Look at how he’s dumped Giuliani and Christie now that he’s done with them. But that’s beside the point.) Within this new coalition, we are able to slough off some of the strange bedfellows we were put with before, to treat them in a more arms-length way. We have an alternative to the old coalitions the social engineers had cornered us into.

– Artichoke

Coalitions are constantly reconfiguring themselves on the basis of shared interests. There are millions of people who have always despised the right but lo, in the past few months the right has popped up as the counterculture. It’s now anti war and pro labour. It’s all about free speech and diversity of thought. The left is now the establishment and is making a big effort to crack down on the counter culture that it brands as racist and attacks with violent thugs.

Amazing really, the right is now about peace love and togetherness and the left is angry decisive and hatefilled.

I don’t hate my colleagues for having opposed Trump, but I dare not say I supported him or they would hate and ostracise me. That’s why Trump is always speaking about love. Because hate is on the other side.

Strange days. Everything is the opposite of what it’s supposed to be. People need to understand this.

– Beijing Expat

I gotta say, this was the most unexpected thread in the comments and email I received, this notion that there’s all this Love with a capital L embedded in Trump-the-man and Trump-the-movement.

I think what’s going on here is an expression of the same emotions that you see in oral histories of any protest movement. Why do people go march in the streets and stop traffic and maybe break some windows (literally or figuratively)? Because it’s FUN. There’s an enormous sense of camaraderie and excitement derived from sticking it to the Man, whether you’re in Berkeley, California in 1968 or Mobile, Alabama in 2016.

Just don’t confuse tribal attachment with Love. Because your tribal leaders, whether you’re on the left, the right, or wherever, will eventually sell you down the river. Every single time.  

I think he was trying not to offend and that’s why he could never fully approach his point. He just took swats and glancing blows. I find it offensive.

– IndyPat

Blood alone turns the wheels of history.

– IndyPat

Two brief comments from a guy who believes that “blood alone turns the wheels of history” but is offended by my tone in an email.

You’re delusional. You need to read, “The Art Of The Deal,” and “The Art Of The Comeback” to get better informed about Trump. CNN and MSNBC are not good sources. For instance Trump fixed the Wollman Rink in NY City after the city gov’t had screwed it up for 6 years at a cost of $9M in tax payer money. Trump VOLUNTEERED to fix it. He did it under schedule (given 6 months) and budget (given $3M). I would call that a win-win. It is more than a win-win, it was a game changer that traditional accounting methods don’t credit Trump with the true impact. Traditional methods would say he saved a mere $0.6M (his cost was $2.4M) because traditional accounting does not include the $9M wasted by the gov’t not to mention the 6 years.

You no doubt see that somehow as a win-lose or a lose-lose. The Trump approach broke the status quo paradigm that just was not working and was very expensive. He brings that same game to the stifling U.S. gov’t bureaucracies and international agreements. I anticipate change in those areas that you can’t begin to comprehend and with your poor accounting practices of what counts as win and what counts as a lose you are way off base. Apparently you think it is a win-win to run the U.S. international policies through the Clinton Foundation where motives are clearly self-serving rather than out in the open via the State Dept.

The depth of your ignorance on the Trump business style is breathtaking. Your assumptions on how well the system was working pre-Trump is much like Mayor Koch who screwed up the Wollman Rink for 6 years. Koch thought things were just fine. And your assumptions on Trump being win-lose or lose-lose are equally naive.

– Anonymous

The Wollman Rink. Ed Koch. Hilarious. This guy “knows” Trump by reading Trump’s books, and thinks I’m ill-informed.

 I’ve been reading Epsilon Theory for a while now. I find your material thoughtful, often brilliant, always entertaining.

Recently you have put forth a few ideas that to me seem biased and confuse cause and effect.

I think that the idea that this country has up to now been playing a politically cooperative game is quite simply wrong. For the last two presidencies there has been virtually no cooperation between the two political parties. Neither party has any inclination nor any motivation to play a politically cooperative game. This is what must be changed and this is the challenge for America. But I digress.

I believe that there are two distinct and opposing views for the future direction of the country. Let’s call these agendas. One agenda is to move toward a “Great Society”, now probably more correctly termed a “Global Great Society”. The other agenda is to remain an autonomous country with the personal freedoms, rights, and responsibilities we have always expected as Americans.

Trump is not a great divider who somehow maneuvered his way to the presidency and is ushering in political non-cooperation. Trump is the effect, the pushback against one agenda by voters with a different agenda who have come to realize that this is indeed a non-cooperative political game. The election of Trump simply illustrates that voters have come to realize that we are already deeply entrenched in a non-cooperative political game.

– Bill

I get your point, but I disagree. Trump didn’t just stumble onto a non-cooperative political game in full bloom. He’s a remarkable political entrepreneur who recognized, accelerated, and transformed the zeitgeist. I mean, look at the Republican primary. This wasn’t some grand struggle between globalist Great Society oligarchs and hardscrabble defenders of liberty (and if it were, you’ll have a hard time convincing me that Trump is the latter rather than the former). Trump rolled the field of fellow Republicans because he played the game differently. His gameplay was always Defect and never Cooperate, which was totally new, totally effective, and totally irreversible. It’s like Napoleon (another remarkable political entrepreneur) and the levée en masse (mass conscription). Once Napoleon invented the draft and put a couple of hundred thousand troops on the battlefield, every other country had to follow suit, transforming the game of international conflict forever. One thing I’ve noticed among both Trump haters and Trump lovers: they usually don’t give him enough credit. He’s more than a symptom.

You should go back to writing about investments. Your biases continue to direct you.

The move from Cooperation to Competition (in this case) has proceeded from two conservative realizations:

1. That the veneer of cooperation maintained by liberals is false; that the Left has been competing all along. ‘Nice’, cooperative public television is about as even-handed as Pol Pot, and just as willing to dictate your life.


2. That there CANNOT be a balance in benefits arising from the arrangement of cooperation, because of fundamentally different values.

Trump is their big F U to the perceived hypocrisy of continuing to cooperate (even if they don’t like him).

Many Europeans are arriving at the same conclusion.

– Anonymous

What was the pro-Trump “conservative realization” in the Republican primary? That he was tougher on conservative shibboleths like public television or Planned Parenthood or Great Society programs than his competitors? Please. This notion that Donald Trump is somehow the great flowering of the conservative movement is just pure revisionist hokum.

I’ve enjoyed reading your column over the years but you are seriously disappointing me lately. I can understand your left leanings make it difficult to grasp how at least one half of your readers feel, but to put something in writing as vile as the statement “So, for example, if you voted for Clinton as an affirmation of a personal identity that rejects the racism and sexism you see in Trump, your natural assumption is going to be that anyone who voted for Trump similarly did so as an affirmation of a personal identity, but one that accepts racism and sexism.”, is totally uncalled for and extremely offensive not just to President Trump, but to all of us who supported a change from the Elite Class we’ve been forced to stomach for the past 20 years.

I’m sorry you’re not comfortable now. Welcome to my world for the past twenty years.

– John

You’ve totally missed my point. I wrote this note because I am so effin’ tired of being called a racist or a sexist because I don’t think that Donald Trump is evil incarnate. There are MILLIONS of people in this country who think that I am a bad human being because I don’t hate Trump. And by the same token, there are MILLIONS of people in this country who think that I am a bad human being because I don’t think that Hillary Clinton is evil incarnate, either. That’s why I wrote this note.

I didn’t vote for Trump (nor Clinton … left prez line blank) because I think he takes us from the frying pan into the fire. But I do understand that we’ve been in a frying pan for 24+ years.

I don’t see Hitler.

– Brendan

Neither do I. I think Trump is a narcissist and an ass, not a Fascist. Like most people in the financial services world, I deal with narcissists and asses every day … they’re not Hitler clones because the only thing they’re really true-believers about is their own self-aggrandizement. Steve Bannon? There’s more than a little Big Lie and Fascism in his self-avowed “economic nationalism”, but he can’t front the band, so he’s no Hitler. Elizabeth Warren? I dunno. More the Madame Defarge type, knitting by the guillotines. Mark Zuckerberg, though, now embarked on his ‘listening tour” through America? Bears watching. Yes, I went there. Big Brother tech plus smiley-face billionaires scare me that much.

There is an old saying that really applies these days. I believe it was from Benjamin Franklin or my mother. “Believe none of what you hear, and only half of what you see.” Unfortunately people don’t let facts get in the way of the Truth.

– Anonymous

Agreed (although I thought it was MY mother).

Your note describes what happens to society, including the best educated, when philosophy disappears. And when 95 million+ people are boycotting the workforce.

Too much time on your hands? Then pay attention to Drudge, ZeroHedge, Huffington Post, etc. Or Ashley Judd, Madonna, Rosie O’Donnell. Or Hannity. Supposedly smart, educated people react what’s going on as if they are watching pro wrestling.

No schooling in or acquaintance with philosophy? Then react to all these mindless, emotion-laden messages like a puppet on a string, unable to resist any impulse to react or comment. We should be dropping Meditations from helicopters.

– Orville

Helicopter Meditations instead of helicopter money? Yes, please.

Once again another good piece. I have seen the same in myself, the question I’ve been thinking is how does it end? or what comes next? You used car crashes, good analogy. I hope society is not using Takata airbags.

– Anonymous

I’m totally stealing that line.

Well done on a tough topic. I am reminded a bit of the religious discussion, where you believe that anyone who doesn’t agree with you burns in hell forever. Somehow, we have to find a way to discuss “my truth” while recognizing “your truth”.

– Mick

Yes, there are clear parallels between what we’re experiencing as a society today and any religious schism. Not sure what the equivalent of the Peace of Westphalia will be for us, but that’s what it’s going to take for us to get out of this.

Started re-reading Virus of the Mind at 4:00 this am. Some dangerous “memes” are replicating themselves.

– Mike

Virus of the Mind is a 2011 collection of essays on memes, including (perhaps confusingly) the Richard Dawkins essay, “Viruses of the Mind,” that pretty much started the conversation. Required reading.

It seems to me that the Trump phenomena (there are many) are moving us towards the kind of crisis outcome that Neil Howe and William Strauss write about in The Fourth Turning. We only have to wait till the mid-20’s to see the rebuilding of the national and international organizations to allow the next flourishing. Sadly, the crisis usually culminates in a war – if it has to happen this time, let’s hope it is a small one with no big bangs!

– Neil

I get more questions and comments about The Fourth Turning than any other book. It’s also required reading, although I remain … not suspicious … but unconvinced that demographic and super-cyclical transitions are investable ideas in any meaningful way. Meaningful to me, anyway.

Something I wanted to share about Trump. He is the antithesis of orthodoxy. And this makes him dangerous given that all issues seem to be structured as binary choices between two different orthodoxies. Globalist v. Nationalist, Progressive v. Conservative, Anti-this v. Pro-that. It’s everywhere. But what I realized is that the Republican v. Democrat is not one of them. They are the same in fact.

– Sal

Spot on. I’ve written about this polarization and shift in political identification in a couple of notes. It’s not so much the growing distance between the median Democrat and the median Republican that’s worrisome for stable policy in a two-party system. It’s that voter self-identification is becoming more and more distinct from party self-identification, so that “Democrat” or “Republican” is no longer shorthand for a wide range of behaviors. The last time we saw this (and not just in the U.S.) was in the 1930s.

About 10 days ago, marveling and laughing at how everyone back home was going absolutely nuts, I had a Eureka moment. I realized that Trump viewed his Presidency as the biggest and most complicated turn-around in the history of the world. He is following the turn-around playbook exactly. Looking at what he does and how he does it, using this prism, everything falls into a logical pattern. It even becomes logically predictable.

– Anonymous

Interesting piece. I think you may be missing a subtlety with regards to Trump’s negotiating style. He tends to be a “hard out of the gate” negotiator. His process is to push the other side to the mental and emotional breaking point, then back off to assure a “deal” gets done. He has a certain intuitive ability to find out exactly how far he can push, then back off. He’s been operating this way for almost 50 yrs. in the most competitive real estate environment in the world – NYC. It’s not a game of chicken where he doesn’t care if the deal gets done, then he walks away leaving the other party so pissed-off that they refuse to ever do business with him again. If that were true, he would have pissed off everyone in NYC by now and would never get a deal done. His brash outward appearance is quite paradoxical when compared to his pragmatism. He is not a very ideological person. His ultimate goal in any transaction is to maximize efficiency. To make that omelet, you gotta break a few eggs

Now does that make him a likeable character? Hell no! I personally don’t like the guy, but I believe he is the right agent of change that was needed for the current context. In any complex dynamic system, change is only born out of extremes. We were at a point in time where the extreme of Globalism had run its course. As always happens, a counter-vailing force was introduced to send the persistence of Globalism into a bout of turbulence. Hopefully this leads to a new trend in the opposite direction, but that hasn’t materialized yet. We will deal with some anti-persistence (turbulence) for a while. That’s a good thing. Change (turbulence) is messy both intellectually and emotionally, but it’s a necessary pain we must transcend. As the turbulence subsides, a new trend will emerge and gain some of its own persistence. It’s a wild ride living on this rock hurtling 1,000 mph through space. Best bet is to hold on, and try to enjoy the ride/view.

– Mark

These are both smart emails. I put them together because they touch on the run-America-like-a-business meme. I get the appeal of that idea, and I think these readers are correct in that this is a big part of the story that Trump tells himself. I’m also sure that his negotiation style is very effective in business, particularly the NY real estate business (as Mark says, it’s straight out of a Roger Fisher “Getting to Yes” class). But I think it’s both an ineffective and highly damaging negotiation style when it comes to Madisonian political institutions, particularly when coupled with Big Brother tech and enormous concentrations of private wealth. That’s my big problem with Trump, and that’s what I mean when I say that he breaks us.

I suppose that the men we have elected as President are generally representative of our Zeitgeist. It may be at times that spirit is not very strong or clearly defined resulting in a sort of caretaker President. At other times, like now, it is pretty strong and sharply defined. Trump is a very real individual occupying the White House — and Mar a Lago, Trump Tower and whatnot. He also is the result of some sort of cumulative consensus about what matters, what should be done and how it should be done. This Zeitgeist concerns me more than the man because it amplifies him and possibly would continue on even if he doesn’t.

My fund of historic knowledge isn’t sufficient, but it is all I have. I’ve thought about how other so called developed nations that marched into totalitarianism moved back to more civil and pluralistic states. The only examples I’ve come up with where this happened peacefully are Spain and Portugal. And that took about six decades. Some might suggest Burma but I think that jury is still having lunch. Otherwise it seems that a comprehensive social collapse usually brought about by international or civil war has been required to exhaust the spirit of the totalitarian ghost and thoroughly discredit the ideas it promulgated. Germany, Italy and England (Cromwell) come to mind. Most of the others are still totalitarian.

I hope my paucity of historic information has obscured many shining examples of societies that awoke from their paranoid dreams of universal competition to remember the benefits of being nice and cooperative. I hope I’ve dramatically exaggerated the fix we are in. I hope…..

– Tom

I don’t think you’ve exaggerated the fix we’re in. Not at all. I think we’re more likely to see 21^st century totalitarianism delivered with a smiley-face than a jackboot, but only because the technology of persuasion is that good. And I also think that the ultimate winners in this struggle for control is less likely to be Trump and his apologists than whoever leads the Thermidorian Reaction against Trump.

I have increased my conversation-avoidance skills (something as a libertarian / monetarists / Classical economics-leaning guy I had to learn to do to live in NYC) since the Trump election. As you note, today, everything is a trip wire.

Many years ago, I realized (1) you very, very rarely change people’s minds even a little bit, (2) I don’t really care that much if I do and (3) even if I did, it would not have any impact on changing anything in the world. Hence, I try not to talk with anyone, but a very small number of people, about, to be honest, anything that means anything as – probably should have started here – I’m tired of arguing (see points 1 – 3 as to why).

Hence, my day to day, which was always a bit of topic avoidance, has been in full-on topic-avoidance mode since the election.

I fear my exhaustion is only going to increase.

– Anonymous

People are quick to take offense (where none was intended) at the slightest indication I am not on board with their political or economic leanings. Not nearly as much “give and take”, but more “take it or leave it”. I find myself having to explain that certain economic/investment principles I hold dear are not an endorsement of Trump (or any political stripe) and that because I happen to eschew identity politics doesn’t make me a lesser human, it just means I hold that certain unintended consequences happen when following certain paths of behavior. Hard to believe that such innocuous sounding phrases can be “trigger words” for those who are seeking redress for slights no matter how small or unintended.

I’ve been called many names by people who either refuse to have rational discussions or refuse to consider views that are alternative to their own. When I explain the situation we are currently in, nationally, in terms of economic consequences (game theory is generally too far out there for the average citizen) and how I am trying to make a buck (no different than under the previous six administrations) for myself and for clients, I’m treated with borderline loathing and disdain.

There is a feral quality to the angst experienced by those who lost in this election, something I’ve not experienced before. Trying to maintain a level head and an even-handed view of the world has become its own challenge. My response has been to start at home (getting things straight with my wife about what a Trump presidency does and does not mean, news media hysteria to the contrary), then work on our circle of friends, all well-educated but deeply biased to the blue side of the ledger, both socially and politically. The experience with our friends was interesting in that they know and like me, personally, but it took a three hour dinner party and some follow up, to finally get through to them that Tweets do not policy make and reactions to same do not make good bases for decisions, economic or otherwise.

Thanks for the lucid and erudite essays. They help more than you know.

– Anonymous

I’ve anonymized these two emails as best I can because they speak for me and, I think, lots of others out there.

The last two lines in your piece, “Know Thyself” and “Treat others as you would have them treat you” are the essential wisdoms from two traditions – Buddhism and Christianity. Buddhism attempts to guide a person seeking a true understanding and relationship with themselves and Christianity seeks to guide people toward a true, healthy relationship with others.

A minister I heard last summer (he was an old Episcopalian who formally taught at Harvard Divinity) lamented that we, our culture, has sunk toward the “morbid pursuit of advantage”. Which I find to be such a brilliant phrase that I have frequently recalled it. That is the Competition Game in a nutshell. Morbid – because it is ultimately deadly. Deadly to the soul and deadly to the culture.

– Jon

The “morbid pursuit of advantage”. Yep, that’s our zeitgeist.

Thanks for this. It is exactly what I’ve been experiencing and have tried to formulate into words, and the words into actions.

Good lessons for us and our children, and sooner or later we will all be forced to hear it. Like it or not.

They will run and not grow weary, they will walk and not grow faint. Isaiah 40. Keeps me focused on perseverance.

– DL

Words into actions. Perseverance. Sounds like a plan.

Thank you for taking the time to write this and share your thoughts. After having read it only once, I don’t know what to say, but I do know what I am going to do. I am going to share this with my 14 year old daughter. I am certain that it will foster a meaningful discussion and teach us both a few things.

– Natalie

As many readers know, I have four daughters. I write Epsilon Theory for them. And now for Natalie’s daughter, too. This is how we keep the darkness at bay. One daughter at a time.