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How Deep Is The Deep State?

How Deep Is The Deep State?

Authored by Jeffrey Tucker via The Epoch Times,

We received some seemingly excellent news over the weekend. The…

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How Deep Is The Deep State?

Authored by Jeffrey Tucker via The Epoch Times,

We received some seemingly excellent news over the weekend. The appellate court of the 5th Circuit has reimposed the restrictions on the White House, the Centers for Disease Control and Prevention, and the FBI to stop bullying social media companies to censor content.

This has taken place ahead of the actual trial because two judges found that the practice was so egregious that it needed to be stopped right now before more damage is done to the First Amendment.

“The officials have engaged in a broad pressure campaign designed to coerce social-media companies into suppressing speakers, viewpoints, and content disfavored by the government,” a three-judge panel wrote in Missouri v. Biden.

“The harms that radiate from such conduct extend far beyond just the Plaintiffs; it impacts every social-media user.”

That’s all excellent news so far.

But there's a fly in this ointment.

The lower court’s injunction included restrictions on a whole host of agencies, including the Department of Homeland Security (and its sub-unit, the Cybersecurity and Infrastructure Security Agency, or CISA), and the State Department and its relationships with other third-party agencies.

I was personally disappointed that the initial injunction didn't name the CIA and all of its thousands of proxies, to say nothing of the other 400-plus agencies in the administrative state of the federal government.

What’s strange and disappointing is that the appeals court stripped all of this out of its ruling.

It vacated the most devastating parts of the injunction, including that which hit the Department of Homeland Security and the State Department. It specifically stripped out the list of defendants.

I’m not a lawyer or an expert in administrative law, but the decision is packed with hints and suggestions that this injunction might be mostly cosmetic. It stops the most aggressive and overt censorship but also offers a road map for how they can do this in other ways, simply by burying the mechanisms of control one layer more deeply.

In short, the initial injunction didn't go nearly far enough. The renewed injunction, with its careful carve-outs, is far more toothless still.

What are the next steps? There will eventually be a trial and decision. That's likely to be settled for the plaintiffs in some measure and will imply certain policies. That could be appealed to the Supreme Court, which might take years to unfold. In the meantime, it’s unclear as to whether and to what extent the true Deep State does face much of a restriction on its activities.

One way that we will know could come in a matter of days.

  • If the White House appeals this injunction to the Supreme Court for an emergency ruling, it would suggest that some people at the top are very worried, even to the point of panic.

  • If they do nothing, which is very possible, it means that they can live with the current ruling. That would be a very bad sign.

There's very little public knowledge of the extent of the problem here. Over the weekend, at a scholars and fellows retreat for Brownstone Institute, we heard a presentation by Andrew Lowenthal, one of the journalists who was given access to the Twitter files after Elon Musk took over. Mr. Lowenthal and his colleagues found vast evidence of an extensive and complex network of censorship that reaches every part of mainstream social media: Twitter, Facebook, LinkedIn, Pinterest, TikTok, Reddit, Wikipedia, and beyond.

The controlling parties are the Department of Homeland Security and all of its agencies, the National Institutes of Health, the Department of Defense, all of their contractors in universities and state and local governments, media organs including The New York Times and The Washington Post, and all major technology companies, especially Google and Microsoft. Looking at what he calls the “Censorship Industrial Complex” on the screen during his presentation was truly ominous.

Talking with Mr. Lowenthal afterward, I pointed out to him that CISA wasn't just censoring. This agency on March 19, 2020, issued an edict to the country that defined every U.S. worker as either essential or nonessential. It created a techno-feudal structure that gave rights to the elites and those who serve them, while excluding the vast middle layer of the U.S. workforce as unessential.

CISA issued the kind of edict that no free and civilized society would or should ever tolerate. It was incredibly egregious. And yet there has been little to no public discussion of this outrage, and hence no awareness of how this came to be. Exactly who decided to do this? What was its impetus? Keep in mind that there are deep links between CISA and Big Tech, which suggests that this central plan was hatched in cooperation with the companies that benefited from it.

Mr. Lowenthal naively asked why the Department of Labor wasn't consulted. I explained that the department is an old-time civilian bureaucracy packed with old-fashioned public servants with no interest in high-tech hijinx. They're there just to assemble data. What happened in March 2020 was a coup d’état by a new generation of techno-despots from the intelligence community. They have their own agencies and methods of control—all suited toward the 21st century.

As I further pointed out to him, this isn't only about censorship. The censors do what they do for a bigger purpose. What they're really seeking is complete control of society itself; that is, human beings. And they don’t just work on a national basis but an international one, which is why most countries on the planet Earth had exactly the same policies. The intelligence community that's ruling this machinery is truly global at this point.

In other words, this isn't just a Censorship Industrial Complex. It's a totalitarian hegemon that wants total control of our bodies, lives, and communities. The purpose of the censorship is to keep this from being debated and protested by the public. The censorship is bad, but its purpose points to something far worse than merely controlling the flow of information.

And there's another layer of control that wasn't even on the chart: the money-laundering machinery of, for example, FTX. There's little doubt that this crypto-exchange was set up to launder funding from venture capitalists to nonprofits and political candidates. That was the whole point. It was a ruling-class pump and dump. There's no political or legal process ongoing that will prevent something such as this from happening again.

It’s easy to look at such realities, realize the depth of the Deep State, and get discouraged. Sometimes, it feels as if we're just a tiny band of writers and podcasters with zero influence or power. But Mr. Lowenthal was careful to point out that this isn't true. The bad guys in this story feel very much outgunned and under vast pressure from all sides. They're right now under the impression that they're losing badly. That's because public opinion keeps shifting in the direction of freedom and democracy and against control and compulsion from the centralized despots.

I hope that he's right because it's hard to think of a struggle more important than this one.

“There can be little doubt that man owes some of his greatest successes in the past to the fact that he has not been able to control social life,” economist F.A. Hayek wrote more than 60 years ago in “The Constitution of Liberty.”

“His continued advance may well depend on his deliberately refraining from exercising controls which are now in his power.

In the past, the spontaneous forces of growth, however much restricted, could usually still assert themselves against the organized coercion of the state. With the technological means of control now at the disposal of government, it is not certain that such an assertion is still possible; at any rate, it may soon become impossible. We are not far from the point where the deliberately organized forces of society may destroy those spontaneous forces which have made advance possible.”

We can't have freedom and democracy with a deep state run by the intelligence community, in league with all the major universities and corporations, running our lives, elections, and communications. Something has to give. And without public understanding of the problem, there will never be a fix.

Tyler Durden Wed, 09/13/2023 - 20:40

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Q4 Update: Delinquencies, Foreclosures and REO

Today, in the Calculated Risk Real Estate Newsletter: Q4 Update: Delinquencies, Foreclosures and REO
A brief excerpt: I’ve argued repeatedly that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened followi…

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Today, in the Calculated Risk Real Estate Newsletter: Q4 Update: Delinquencies, Foreclosures and REO

A brief excerpt:
I’ve argued repeatedly that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble). The two key reasons are mortgage lending has been solid, and most homeowners have substantial equity in their homes..
...
And on mortgage rates, here is some data from the FHFA’s National Mortgage Database showing the distribution of interest rates on closed-end, fixed-rate 1-4 family mortgages outstanding at the end of each quarter since Q1 2013 through Q3 2023 (Q4 2023 data will be released in a two weeks).

This shows the surge in the percent of loans under 3%, and also under 4%, starting in early 2020 as mortgage rates declined sharply during the pandemic. Currently 22.6% of loans are under 3%, 59.4% are under 4%, and 78.7% are under 5%.

With substantial equity, and low mortgage rates (mostly at a fixed rates), few homeowners will have financial difficulties.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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‘Bougie Broke’ – The Financial Reality Behind The Facade

‘Bougie Broke’ – The Financial Reality Behind The Facade

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Social media users claiming…

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'Bougie Broke' - The Financial Reality Behind The Facade

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Social media users claiming to be Bougie Broke share pictures of their fancy cars, high-fashion clothing, and selfies in exotic locations and expensive restaurants. Yet they complain about living paycheck to paycheck and lacking the means to support their lifestyle.

Bougie broke is like “keeping up with the Joneses,” spending beyond one’s means to impress others.

Bougie Broke gives us a glimpse into the financial condition of a growing number of consumers. Since personal consumption represents about two-thirds of economic activity, it’s worth diving into the Bougie Broke fad to appreciate if a large subset of the population can continue to consume at current rates.

The Wealth Divide Disclaimer

Forecasting personal consumption is always tricky, but it has become even more challenging in the post-pandemic era. To appreciate why we share a joke told by Mike Green.

Bill Gates and I walk into the bar…

Bartender: “Wow… a couple of billionaires on average!”

Bill Gates, Jeff Bezos, Elon Musk, Mark Zuckerberg, and other billionaires make us all much richer, on average. Unfortunately, we can’t use the average to pay our bills.

According to Wikipedia, Bill Gates is one of 756 billionaires living in the United States. Many of these billionaires became much wealthier due to the pandemic as their investment fortunes proliferated.

To appreciate the wealth divide, consider the graph below courtesy of Statista. 1% of the U.S. population holds 30% of the wealth. The wealthiest 10% of households have two-thirds of the wealth. The bottom half of the population accounts for less than 3% of the wealth.

The uber-wealthy grossly distorts consumption and savings data. And, with the sharp increase in their wealth over the past few years, the consumption and savings data are more distorted.

Furthermore, and critical to appreciate, the spending by the wealthy doesn’t fluctuate with the economy. Therefore, the spending of the lower wealth classes drives marginal changes in consumption. As such, the condition of the not-so-wealthy is most important for forecasting changes in consumption.

Revenge Spending

Deciphering personal data has also become more difficult because our spending habits have changed due to the pandemic.

A great example is revenge spending. Per the New York Times:

Ola Majekodunmi, the founder of All Things Money, a finance site for young adults, explained revenge spending as expenditures meant to make up for “lost time” after an event like the pandemic.

So, between the growing wealth divide and irregular spending habits, let’s quantify personal savings, debt usage, and real wages to appreciate better if Bougie Broke is a mass movement or a silly meme.

The Means To Consume 

Savings, debt, and wages are the three primary sources that give consumers the ability to consume.

Savings

The graph below shows the rollercoaster on which personal savings have been since the pandemic. The savings rate is hovering at the lowest rate since those seen before the 2008 recession. The total amount of personal savings is back to 2017 levels. But, on an inflation-adjusted basis, it’s at 10-year lows. On average, most consumers are drawing down their savings or less. Given that wages are increasing and unemployment is historically low, they must be consuming more.

Now, strip out the savings of the uber-wealthy, and it’s probable that the amount of personal savings for much of the population is negligible. A survey by Payroll.org estimates that 78% of Americans live paycheck to paycheck.

More on Insufficient Savings

The Fed’s latest, albeit old, Report on the Economic Well-Being of U.S. Households from June 2023 claims that over a third of households do not have enough savings to cover an unexpected $400 expense. We venture to guess that number has grown since then. To wit, the number of households with essentially no savings rose 5% from their prior report a year earlier.  

Relatively small, unexpected expenses, such as a car repair or a modest medical bill, can be a hardship for many families. When faced with a hypothetical expense of $400, 63 percent of all adults in 2022 said they would have covered it exclusively using cash, savings, or a credit card paid off at the next statement (referred to, altogether, as “cash or its equivalent”). The remainder said they would have paid by borrowing or selling something or said they would not have been able to cover the expense.

Debt

After periods where consumers drained their existing savings and/or devoted less of their paychecks to savings, they either slowed their consumption patterns or borrowed to keep them up. Currently, it seems like many are choosing the latter option. Consumer borrowing is accelerating at a quicker pace than it was before the pandemic. 

The first graph below shows outstanding credit card debt fell during the pandemic as the economy cratered. However, after multiple stimulus checks and broad-based economic recovery, consumer confidence rose, and with it, credit card balances surged.

The current trend is steeper than the pre-pandemic trend. Some may be a catch-up, but the current rate is unsustainable. Consequently, borrowing will likely slow down to its pre-pandemic trend or even below it as consumers deal with higher credit card balances and 20+% interest rates on the debt.

The second graph shows that since 2022, credit card balances have grown faster than our incomes. Like the first graph, the credit usage versus income trend is unsustainable, especially with current interest rates.

With many consumers maxing out their credit cards, is it any wonder buy-now-pay-later loans (BNPL) are increasing rapidly?

Insider Intelligence believes that 79 million Americans, or a quarter of those over 18 years old, use BNPL. Lending Tree claims that “nearly 1 in 3 consumers (31%) say they’re at least considering using a buy now, pay later (BNPL) loan this month.”More tellingaccording to their survey, only 52% of those asked are confident they can pay off their BNPL loan without missing a payment!

Wage Growth

Wages have been growing above trend since the pandemic. Since 2022, the average annual growth in compensation has been 6.28%. Higher incomes support more consumption, but higher prices reduce the amount of goods or services one can buy. Over the same period, real compensation has grown by less than half a percent annually. The average real compensation growth was 2.30% during the three years before the pandemic.

In other words, compensation is just keeping up with inflation instead of outpacing it and providing consumers with the ability to consume, save, or pay down debt.

It’s All About Employment

The unemployment rate is 3.9%, up slightly from recent lows but still among the lowest rates in the last seventy-five years.

The uptick in credit card usage, decline in savings, and the savings rate argue that consumers are slowly running out of room to keep consuming at their current pace.

However, the most significant means by which we consume is income. If the unemployment rate stays low, consumption may moderate. But, if the recent uptick in unemployment continues, a recession is extremely likely, as we have seen every time it turned higher.

It’s not just those losing jobs that consume less. Of greater impact is a loss of confidence by those employed when they see friends or neighbors being laid off.   

Accordingly, the labor market is probably the most important leading indicator of consumption and of the ability of the Bougie Broke to continue to be Bougie instead of flat-out broke!

Summary

There are always consumers living above their means. This is often harmless until their means decline or disappear. The Bougie Broke meme and the ability social media gives consumers to flaunt their “wealth” is a new medium for an age-old message.

Diving into the data, it argues that consumption will likely slow in the coming months. Such would allow some consumers to save and whittle down their debt. That situation would be healthy and unlikely to cause a recession.

The potential for the unemployment rate to continue higher is of much greater concern. The combination of a higher unemployment rate and strapped consumers could accentuate a recession.

Tyler Durden Wed, 03/13/2024 - 09:25

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The most potent labor market indicator of all is still strongly positive

  – by New Deal democratOn Monday I examined some series from last Friday’s Household survey in the jobs report, highlighting that they more frequently…

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 - by New Deal democrat


On Monday I examined some series from last Friday’s Household survey in the jobs report, highlighting that they more frequently than not indicated a recession was near or underway. But I concluded by noting that this survey has historically been noisy, and I thought it would be resolved away this time. Specifically, there was strong contrary data from the Establishment survey, backed up by yesterday’s inflation report, to the contrary. Today I’ll examine that, looking at two other series.


Historically, as economic expansions progress and the unemployment rate goes down, average hourly wages for nonsupervisory workers improve at an increasing rate (blue in the graph below). But eventually, inflation (red) picks up and overtakes that wage growth, and a recession occurs shortly thereafter. Not always, as we’ll see in the graph below, but usually:



As you can see, there have been a number of exceptions to the rule, chiefly where inflation outstripped wage growth, but no recession happened anyway. Typically this has occurred because of the entry of so many more people (like women in the 1980s and early 1990s) into the labor force.

And we certainly see that inflation outstripped wages in 2022, not coincidentally when there were several negative quarters of real GDP. But with the decline in gas prices, in 2023 inflation subsided much more sharply than wage growth, and the economy improved more substantially. That has remained the case in the first two months of 2024.

But an even more potent indicator is one I have come to rely on even more: real aggregate payrolls for nonsupervisory workers. Here’s its historical record up until the pandemic:



There’s not a single false positive, nor a single false negative. If YoY aggregate payroll growth is stronger than YoY inflation, you’re in an expansion. If it’s weaker, you’re in a recession. Period.

And here is its record since the pandemic:



Real aggregate nonsurpervisory payrolls are positive, and they got more positive in 2023 compared with 2022. Currently they are 2.6% higher YoY than inflation.

In addition to the YoY comparison, real aggregate nonsupervisory payrolls have always declined, at least slightly, from their expansion peaks before every single recession in the past 50 years except for when the pandemic suddenly shut down the economy:



Not every slight decline means a recession is coming. But if real aggregate payrolls are at a new high, you’re not in a recession, and one isn’t likely to occur in the next 6 months, either.

And in case it isn’t clear from that long term graph, here’s the short term graph of the same thing:



Real aggregate nonsupervisory payrolls made a new all-time high in February. Despite the negative metrics in the Household survey, this is *very* potent evidence that not only are we not in a recession, but one isn’t likely in the immediate future either.


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