The Horror! The Horror!

By: The Burning Platform
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The Horror


I'm constantly amazed by the ability of those in power to create a narrative trusted by a gullible non-critical thinking populace. Appealing to emotions, when you have millions of functionally illiterate, normalcy bias ensnared, iGadget distracted, disciples of the status quo, has been the game plan of the Deep State for the last century. Americans don't want to think, because thinking is hard. They would rather feel. For decades the government controlled public education system has performed a mass lobotomy on their hapless matriculates, removing their ability to think and replacing it with feelings, fabricated dogma, and social indoctrination.

Their minds of mush have been molded to acquiesce to the narrative propagandized by their government keepers.
"The problem isn't that Johnny can't read. The problem isn't even that Johnny can't think. The problem is that Johnny doesn't know what thinking is; he confuses it with feeling." - Thomas Sowell

With a majority confused, distracted, malleable, willfully ignorant, and easily manipulated by false narratives, heart wrenching images, and fake news, the Deep State henchmen have been able to control the masses with relative ease. The unanticipated rise of Donald Trump to the most powerful role in the world gave many critical thinking, anti-big government, skeptical curmudgeons hope he could drain the swamp and begin to deconstruct the massive out of control Federal bureaucracy.

His rhetoric during the campaign about repealing the disastrous Obamacare abortion, cutting taxes, dismantling Federal regulatory red tape, making Mexico pay for the wall, dumping Yellen, favoring higher interest rates, and not interfering militarily in countries who are not threatening the United States, appealed to many libertarian minded people.

I've watched with disgust over the last month as the promises of non-interventionism by a presidential candidate have been broken by the third consecutive president. George W. promised a humble foreign policy with no nation building. He had criticized the Clinton-Gore Administration for being too interventionist:
"If we don't stop extending our troops all around the world in nation-building missions, then we're going to have a serious problem coming down the road. And I'm going to prevent that."

With 9/11 as a convenient excuse, he invaded sovereign countries based on flawed data, passed the 4th Amendment destroying Patriot Act, allowed neo-cons to create a Orwellian surveillance state, and permitted the military industrial complex to regain its power and control over the political apparatus in Washington D.C. With no Cold War to fill their coffers, neo-cons in Congress, warmongering think tank co-conspirators, military brass and their arms dealer cronies needed to create a new war to keep the racket going.

The War on Terror is unwinnable because you can't defeat a tactic, and that is just what the Deep State is counting on. An unwinnable war, like the War on Drugs and War on Poverty, results in never ending funding, no evaluation of success or failure, continuous propaganda designating new enemies whenever convenient, and a narrative questioning the patriotism of anyone who argues against foreign interventionism.

After Bush's reign of error, the election of a liberal community activist as president surely would result in a dramatic reduction in military intervention around the world. It was so certain, Obama was awarded the Nobel Peace Prize for just being elected for promising hope and change. He ran against neo-con tool McCain who never met a country he didn't want to invade. Obama's words as a candidate echoed those of Bush Jr. before he was placed on the throne by the powers that be.

"We continue to be in a war that should never have been authorized. I am proud of the fact that way back in 2002, I said that this war was a mistake."

After being elected Obama immediately changed his tune about the business of war. He withdrew troops from Iraq as required by the agreement signed by Bush with the Iraq puppet government, but he ramped up the never ending Afghanistan war - now sixteen years old and still not won. The vacuum left by our epic failure in Iraq allowed the rise of ISIS. Obama essentially created ISIS by providing arms to "moderate" rebels fighting Assad in Syria.

By the end of his term, troops were back in Iraq and more are on the way. Obama and a Secretary of State named Clinton decided to overthrow Gaddafi even though he posed no threat to U.S. interests. They have left a lawless chaotic failed state, now home to ISIS, Al Qaeda, and various other terrorist factions.

Obama should have won the Nobel Drone Prize as he launched ten times as many attacks as Bush, killing thousands, blowing up wedding parties, and murdering hundreds of innocent civilians. He bombed seven countries even though we are not officially at war with anyone. He renewed all aspects of the unconstitutional Patriot Act. Edward Snowden revealed the mass surveillance on all Americans by Obama's spy agencies.

His continued support for the overthrow of Assad, so Saudi Arabia and Qatar could build a natural gas pipeline to Europe, was thwarted by Putin. Hysterically, after eight years of war mongering and expansion of the warfare/welfare surveillance state, Obama is now portrayed as a pacifist. The fact is Obama, like Bush, filled his role in the imperial empire, policing the world, enriching the military industrial complex, and doing the bidding of his Deep State sponsors.

Now we have Donald Trump, the billionaire champion of the common man, who campaigned on getting out of the nation building business. Where have I heard that before? Exactly one year ago, Trump gave a foreign policy speech laying out his vision for the U.S. role in the world.
"We're getting out of the nation-building business and instead focusing on creating stability in the world. However, unlike other candidates for the presidency, war and aggression will not be my first instinct. You cannot have a foreign policy without diplomacy. A superpower understands that caution and restraint are really truly signs of strength. Although not in government service, I was totally against the war in Iraq, very proudly, saying for many years that it would destabilize the Middle East. Sadly, I was correct, and the biggest beneficiary has been has been Iran, who is systematically taking over Iraq and gaining access to their very rich oil reserves, something it has wanted to do for decades."
He scorned Obama and Bush's foolish attempt at creating western style democracies in 3rd world den of snakes, inhabited by factions of Muslim religious fanatics. He railed against the trillions wasted fighting worthless wars, leaving countries in anarchy, and allowing terrorists organizations like ISIS to fill the vacuum. His arguments sounded like they were being spoken by Ron Paul. He clearly ran as a non-interventionist.
"We went from mistakes in Iraq to Egypt to Libya, to President Obama's line in the sand in Syria. Each of these actions have helped to throw the region into chaos and gave ISIS the space it needs to grow and prosper. Very bad. It all began with a dangerous idea that we could make western democracies out of countries that had no experience or interests in becoming a western democracy. 
We tore up what institutions they had and then were surprised at what we unleashed. Civil war, religious fanaticism, thousands of Americans and just killed be lives, lives, lives wasted. Horribly wasted. Many trillions of dollars were lost as a result. The vacuum was created that ISIS would fill. Iran, too, would rush in and fill that void much to their really unjust enrichment."

Trump rationally promised to have peaceful relations with the other two nuclear superpowers. He was diplomatic, lucid and non-confrontational when talking about the two countries neo-cons love to hate.

His promises of improved relations lasted about as long as it took the Deep State to create a blatant false flag in Syria.

"We desire to live peacefully and in friendship with Russia and China. We have serious differences with these two nations, and must regard them with open eyes, but we are not bound to be adversaries. We should seek common ground based on shared interests. Russia, for instance, has also seen the horror of Islamic terrorism. I believe an easing of tensions, and improved relations with Russia from a position of strength only is possible, absolutely possible. Common sense says this cycle, this horrible cycle of hostility must end and ideally will end soon. Good for both countries."

There seems to be a common theme when it comes to how all presidents end up doing the bidding of the military industrial complex as soon as they settle into the Oval Office, no matter what they said during their campaigns. Trump is the latest example of talking diplomacy, no nation building, non-interventionism, and not putting boots on the ground, and then doing the exact opposite within weeks of taking office.

The game plan is tried and true. The Deep State either creates or provokes a false flag event to set in motion the pressure to respond militarily. They utilize their propaganda emitting media mouthpieces to spread disinformation and create the opinions of the non-critical thinking masses. Dramatic visual images and a storyline with an evil villain are essential to properly influencing a pliable, easily misled, oblivious public.

The use of false flag events, fake news, and staged graphic photographs to control and manipulate public opinion has been utilized for decades by the Deep State to push the country into military conflict craved by the military industrial complex. We've known for almost a century war is a racket, as described by General Smedley Butler in 1935.

Smedley Darlington Butler
"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives."

We were warned by the most respected general of the 20th Century about allowing the military industrial complex to gain control over our government and politicians. Eisenhower experienced the influence of the Deep State from the military perspective and firsthand as president. Sadly, his hopes for an alert and knowledgeable citizenry keeping the military industrial complex under wraps were dashed on the shoals of a purposefully failing public education system and a relentless propaganda campaign championing never ending war.

Eisenhower's Liberty Warning

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together." - Dwight D. Eisenhower

Those controlling the levers of power have understood the power of propaganda since Edward Bernays taught them how to manipulate the public mind with his theories of propaganda in 1928. He believed the masses were driven by biological urges which needed to be channeled and guided by highly intelligent corporate elite overseers. His contempt for the masses was born out in his corporate fascist view of the world.

He believed our dangerous animalistic urges needed to be subdued to keep society sedate and controllable by those constituting the invisible government (aka Deep State). He trained the controllers to use propaganda in order to mold the minds of the masses in a way most beneficial to the state.
"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. 
Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind." - Edward Bernays - Propaganda

The use of propaganda and the flogging of false flag narratives by the corporate media acting as mouthpieces for the Deep State has worked wonders and resulted in the deaths of hundreds of thousands of American boys and innocent victims (collateral damage according to neo-cons) around the world. An explosion that sunk the USS Maine was used by William Randolph Hearst and William McKinley to provoke a war with Spain in 1898.

The Gulf of Tonkin incident was a false flag used by LBJ and the war party in 1964 to kick off the Vietnam War, resulting in over 58,000 American deaths, 153,000 Americans wounded, hundreds of thousands mentally scarred for life, and the deaths of over 2 million Vietnamese.

For who? For what? The American boys sacrificed on the altar of the Deep State were nothing but cannon fodder in the warped minds of McNamara, LBJ, Westmorland and the rest of warmongering elitists. Only the military industrial complex benefited, as the burgeoning welfare/warfare state resulted in raging inflation during the 1970s.

As time passed, the propagandists have become immensely more sophisticated in their messaging, psychological assessment of a dumbed down American populace, and manipulation of patriotism, symbolism and emotions to run roughshod over those opposing nonsensical, illegal, and immoral military intervention around the world. The most successful technique utilized by the Deep State for the last few decades has been "atrocity propaganda". Appealing to the emotions of people who have been indoctrinated by government schooling to feel rather than think has been wildly successful in controlling the agenda.

Navirah

Atrocity propaganda was initially employed to sway public opinion to support the First Gulf War against Sadaam Hussein, engineered by Madison Avenue maggots from Hill & Knowlton on behalf of the Kuwaiti government. In emotional testimony before Congress an unidentified 15 year old girl, who happened to be the daughter of the Kuwaiti ambassador to the U.S., gave false testimony that she had witnessed Iraqi soldiers take babies out of incubators in a Kuwaiti hospital, take the incubators, and leave the babies to die.

This propaganda successfully convinced a clueless public to support our involvement in the Gulf War. With the end of the Cold War, how could the military industrial complex generate immense profits without enemies? Afterwards, Stormin Norman Schwarzkopf was glorified as the brilliant courageous hero. The masses need a hero to worship.

Whether 9/11 was a false flag or a monumental security blunder, it was hijacked by the neo-con faction within the government to wage perpetual war and turn our country into a surveillance state. A critical thinking citizen or honest journalist might wonder how the 342 page Patriot Act, which changed 15 existing laws and created entire new agencies, could be written, debated, and signed into law within 45 days of the 9/11 attack. It almost seemed like it was already written, awaiting the opportune time to implement. The War on Terror had begun. The Deep State managed to create a war against a tactic, which could never be won. It has done wonders for the military industrial complex, as arms industry stocks have risen 400% to 500% since 2001 versus the 100% rise in the S&P 500. War is a profitable racket.

The neo-cons immediately began their propaganda campaign to invade Iraq, even though they had absolutely nothing to do with 9/11. There were virtually no religious Muslim zealots inhabiting the country. Hussein hated bin Laden and his ilk. The propaganda machine, driven by Cheney and Wolfowitz, churned out false stories about 9/11 involvement and the imminent threat from Hussein using "WEAPONS OF MASS DESTRUCTION". The Colin Powell show on national TV convinced the fearful American populace to support the invasion of a country who threatened us in no way, without a declaration of war from Congress.

Colin Powell

The invasion of Iraq set the precedent that presidents can wage war around the globe with no legislative approval. The invasion became a reality TV show called Shock & Awe. In retrospect, the Iraq War was either a colossal error of judgement or exactly what the Deep State had in mind. The ultimate financial cost of our Middle East adventures will exceed $6 trillion, while 4,400 young men gave their lives, 32,000 were badly wounded, thousands more are afflicted with PTSD, and hundreds of thousands of Iraqis killed or maimed, all for a worthless cause. Iraq is now a failed state, with Muslim terrorists controlling large swaths of territory.

The warnings from men of stature, integrity and nobility like Smedley Butler, Dwight D. Eisenhower, and Ron Paul have gone unheeded by an increasingly dumbed down, iGadget absorbed, intellectually lazy, willfully ignorant, emotionally stunted populace. They question nothing. They believe whatever the boob tube tells them to believe. Their extreme level of normalcy bias allows the Deep State to maintain control and become outrageously bold in their lies, misinformation, and ability to convince the masses of the most ridiculous narratives. Only one voice in the wilderness remains. Speaking truth to power only creates change if an educated populace says enough is enough.

Ron Paul
"How did the American people ever reach this point where they believe that US aggression in the Middle East will make us safe when it does the opposite? How did the American people ever reach the point where they believe that fighting unconstitutional wars is required to protect our freedoms and our Constitution? Why do we allow the NSA, CIA, FBI, TSA, etc. to destroy our liberty at home, as part of the Global War on Terror, with a pretext that they are preserving our liberty? 
Why are the lying politicians reelected and allowed to bankrupt our country, destroy our money, and enter wars without the proper consent? Why do the American people suffer in silence and not scream "Enough is enough!"? We've had enough of the "humanitarian do-gooders" and the proponents of "American exceptionalism" who give us nothing but war, economic suffering, and less freedom. This can and must be stopped." - Ron Paul, Swords into Plowshares: A Life in Wartime and a Future of Peace and Prosperity
Apocalypse Now
"The offing was barred by a black bank of clouds, and the tranquil water-way leading to the uttermost ends of the earth flowed somber under an overcast sky-seemed to lead into the heart of an immense darkness." - Joseph Conrad, Heart of Darkness


In Part Two of this article I will detail various recent false flag and propaganda episodes which are being used by the Deep State to push the world toward war. The acceleration of events based on false narratives, appeals to patriotism, and fake news puts the lives of millions at risk, with no comprehension of how they are being manipulated through propaganda techniques refined to a science. Imperial empires always fall due to their hubris and military overreach.

We are being led into a heart of immense darkness.


Gold - Are You Scared?

by: Nikhil Gupta


- Gold is less than 3 percent off from its recent highs.

- The bull market is still intact.

- Continue to accumulate on dips.

 
Gold continues to extend its pullback from near $1300, worrying the investors that the good times may be behind them. In this technical analysis article, I hope to ease their concerns and provide some important levels to watch out for. The decline does not perturb me and I believe that it is a welcome dip.
 
http://thecrux.com/wp-content/uploads/2017/04/gold-bull-feature-img-670x354.jpg
Source: thecrux.com
 
 
In the past several of my articles on gold, I had said that I would make sure to update my readers and followers if a threat emerged to the bullion rally. With the recent correction disturbing some investors, I think now is as good a time as ever to provide an update.
 
First, let us consider the action in the gold futures market on a daily basis. The price chart submitted below clearly reveals that the precious metal is cooling off after an extended rally and is about to test its previous resistance zone of $1260. I expected gold to cross $1300 before shedding some gains but the profit-booking was too strong. In its entire run-up from December 2016 low of $1130, gold has provided investors with intermittent opportunities to go long and achieved higher tops. At the current level of $1263, gold is not only close to the strong support near $1260 but is likely to receive multiple cushions from the 30-day, the 50-day, and the 200-day SMAs at $1263.32, $1249.45, and $1256.67 respectively. The downside looks limited on the daily charts.
 
 
Source: TradingView
 
 
The classic bullish structure is explicit on the weekly gold futures price chart and shows the metal retreating from the medium-term resistance trendline.
 
 
Source: TradingView
 
 
But, can we really overcome the selling pressure near the psychological level of $1300? I believe that given due time and patience, we can definitely cross this hurdle and head higher. To present my case, I would like to discuss the action in the following monthly gold futures price chart.
 
The 10-year price chart has been marked to show what is really happening in Aurum. Even a cursory look at the chart is enough to comprehend that with time, the support for gold is only shifting higher.
 
This multi-year support trendline was nearly tested in December 2016 and since then, the precious metal has sharply bounced back gaining approximately 15 percent in the last 4-5 months.
 
Unfortunately, the upmove has been curtailed by the downward sloping long-term resistance trendline which has been formed by joining the 2011- and 2012-peaks. Generally, the market respects the long-term trend more than the short-term trend which in this case happens to be in the favor of the buyers.
.
Source: TradingView
 
 
Another point to note from the above monthly chart is that the range has contracted significantly for gold and that a breakout will likely occur this year. Unless the classic higher-top, higher-bottom pattern is violated decisively, there is a strong probability that the breakout will occur on the upside. If this thesis plays out successfully, we can reasonably expect levels of near $1400 this year which would also mark the beginning of a fresh bull run in gold as I discussed in my last article.

Having stated what was important to know from a technical standpoint in gold, I think the same bull case can be made for the underlying ETF, the SPDR Gold Trust ETF (NYSEARCA: GLD). Bearing the brunt of a decline in gold price, the ETF has failed its earlier breakout on the daily price chart and is now near its support level of $120. While the 14-day RSI reading has reversed slightly, the 14-day Money Flow Index is surprisingly strong at 69.69.
 
Source: TradingView
 
 
Conclusion
 
What is immediately required from the gold and the GLD investors is that they do not panic in this minor pullback (we are less than 3 percent off from the highs!) and see it as an opportunity with a long-term perspective in mind. Having returned approximately 15 percent since the December lows and following the higher-top, higher-bottom pattern, it is not unimaginable for gold to take a breather before it crosses the multi-year hurdle marked on the monthly price chart.
 
Once again, I say that this is simply my interpretation of the price action. Others can see things very differently. If you agree with my analysis, or if you have a different opinion, then please discuss in the comments section. I would love to read contrarian views.


Lawless

By: Captain Hook


It's frustrating to think there's nothing you can do about it, because it's all around you and pervasive in our society today. It's born in human greed and the desire for power, which are the base modus operandi behind all its manifestations, from America's new found extremes in neo-fascism, to the (Western) police state, to Empire. From the lowest clerk to 'the powers that be', all are equally guilty in allowing its spread in tacitly complicit bureaucracy. It's why the Constitution of The United States of America was put in place - to protect the people from power that corrupts. We are talking about the 'lawlessness' that has gripped the ugly side of our society's collective consciousness - an unfortunate (but natural) element of the growing realization the 'good times' are gone.

Most don't realize what is happening. But for those who do and have decided to look away, or worse, participate, in the growing lawlessness that has gripped the world, shame on you. They are called the seven deadly sins, and 'deadly' is exactly what they are if widely practiced. Greed, pride, lust, envy, gluttony, wrath, and sloth - it's not difficult to see all of these elements at work in the increasing vice of our collective behavior today, which unfortunately means we are losing our humanity in the process. My recent revelation concerning the per capita debt of the world equaling the value of a Dow unit, symbolizing we are essentially bankrupt as a society, is the math and figurative behind the formula. In our avarice to 'have' (without the associated work), we have borrowed to heavily from the future (via our fiat economies), and now must pay it back.

And process is accelerating in this regard. It's the end of Empire for American and the kleptocrats are not taking it well, because the decentralization process is quickening, and they are losing power. So they are reacting in classic late cycle fashion by threatening to start wars that cannot be won, to turning on the domestic population as foreign aspirations continue to harden, in looking for more defenseless victims. And while this kind of thing can go on for some time before blowback breaks out, which will likely progress into future secession movements and civil war (like in Europe now), eventually the mounting lawlessness of central authorities will be challenged in increasingly profound ways, in the end leading to wholesale status quo collapse up and down the line.

Think of Germany post World War II (WWII).

Of course US bureaucracy did not collapse post WWII. It's done nothing but expand since then, where the colossus has hundreds of vestiges now, comprising an ever expanding percentage of the workforce, just shy of the global average at 20-percent (not including contract, corporatist alliance, etc.). And this trend quickly filled the gap in Europe over the years as well, and got them back on track in leading the trend towards global socialism, which can be seen in this chart. Mature industrialized economies naturally go this way simply because the growing populations demand it. Employment must be manufactured if the manufacturing base itself must be exported in the search for cheap labor (capitalism). Germany and Japan have been able to thwart this trend through productivity improvements and superior craftsmanship, however this is not the case in the US.

No, America depends on its military, it's Empire, in order to maintain the economic stranglehold it has on the rest of the world, which as you may have guessed is a function of it's vast and embedded bureaucracy in the end. All the parasites in New York and along the Beltway must be paid by some means. So if the wealth can no longer be extracted from America alone, increasing empire must be employed. This is why its no coincidence America has more than 1000 installations and bases around the world, with military personnel in some 156 countries. And this is why somebody like Hillary Clinton can run for President and be taken seriously by the seriously deranged. And why Trump can bomb the hell out of countries in illegal acts of war with impunity - because as long as you don't screw with American Empire - you are above the law.

So it will be interesting to see how long the American Empire remains in tact with all the forces at work to decentralize the global power-base in motion these days. Because once the US is unable to export its shitty derivatives and dollars($) moving forward, it will no longer be able to finance the war machine, and America Empire will go the way of the Romans. And make no mistake, it's essentially this existential risk that is emboldening Trump right now to bomb the crap out of America's manufactured enemies (and anybody else who cannot fight back), because he's got to get his financing approved at month's end or both he, and the republic, could be in big trouble. With the US economy now showing visible signs of slowing (see here and here), don't be surprised if more of the same occurs right up until the potential government shutdown on April 29. If that occurs, then what looks like a 'consolidation' in the S&P 500 (SPX) / CBOE Volatility Index (VIX) Ratio could end up an actual reversal.


Brexit and the slide into nationalism
   
There is a British ‘finest hour’ reflex susceptible to appeals to glorious isolation     

by: Gideon Rachman
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Sitting on the Heathrow Express last week, returning from a short trip to Berlin, I found myself composing a speech for Theresa May — to be given the day after the Brexit negotiations have broken down irretrievably.

The prime minister is seated behind her desk in Downing Street. A Union Jack is visible in the corner of the room. Mrs May tells the British people that, despite the unstinting efforts of her government, the UK and the EU have been unable to reach an agreement. She has to warn her fellow countrymen that difficult times lie ahead. There will be severe disruption to trade and travel for an extended period of time. There is likely to be a serious recession. Britain had made a democratic decision to leave the EU. But the EU has proved unwilling to accept that decision and negotiate a fair deal. Instead, it is determined to punish the UK.

Now comes the Churchillian riff. Lowering the timbre of her voice and staring straight into the camera, Mrs May says that some European politicians seem to believe that they can humiliate Britain and bend the country to their will. Clearly, they have no knowledge of the history or nature of the British people. A country that has defeated Hitler, the Kaiser, Napoleon and the Spanish Armada has no reason to fear the bureaucrats of Brussels, or the governments of Malta and Slovakia. A quick reference to Shakespeare and the ­“sceptred isle” and an appeal for national unity, and the speech would be over.

I was rather shocked to find how easy it was for me to compose a speech like that, on a short train ride. After all, I am a “Remoaner”, who voted against Brexit in the EU referendum, and I still cling to the hope that it will never happen. If I can reach effortlessly for the language of nationalism while stone-cold sober on the Heathrow Express, what could the journalists of the Daily Mail do or the backbenchers of the Tory party?

All this could be dismissed as idle ­fantasy. But the danger of a slide into nationalism and confrontation is real — on both sides of the channel. The Brexit negotiations are starting with the two sides miles (or possibly kilometres) apart. After meeting Mrs May last week, officials from Brussels briefed that the UK prime minister’s demands are “completely unreal” and that she is living in a “different galaxy”. The British, for their part, regard the EU’s demand for a €60bn divorce settlement as outrageous. The EU says that trade talks cannot begin until the Brits have agreed to pay up. But that position is also seen as unjustified and punitive in London.

Senior figures in the British ­government may eventually conclude that they have no option but to play by the EU’s rules. It is possible that, fortified by a large majority in the next election, Mrs May can find the political space to make painful concessions, and face down the resultant rage in the media and her own Conservative party. But it is more likely that what Brussels regards as indispensable, London will find impossible.

That means talks will inevitably break down — and then angry rhetoric will surge on both sides of the channel. Popular culture and the education system have produced a fairly pronounced “finest hour” reflex in most British people, which is susceptible to an appeal to glorious isolation. (It is epitomised in the David Low cartoon from 1940 of a soldier on the cliffs of Dover, captioned: “Very well, alone”). That means that if and when negotiations with the EU go badly wrong, it will be easy for nationalists in Britain to blame the French and Germans, and to make an appeal for sacrifice and national solidarity that will drown out the appeals to reason of the remaining Remainers.

And while the Europeans like to argue that their position is dictated by reason and law — and not by any desire to punish Britain — there are, of course, some on the other side of the channel who will enjoy the opportunity to humble the arrogant Brits.

I have certainly seen the occasional involuntary smile from European officials, as they explain how the reimposition of customs procedures could lead to long lines of lorries on British motorways, stacked up miles from the port of Dover. Beyond the issues that flow directly from Brexit, there is a plethora of long-buried resentments against Britain that can come tumbling out when the negotiations get nasty. Gianni Riotta, an eminent Italian journalist, already spots an “anti-UK rage in the EU upper echelon”.

The EU, which has been troubled by divisions over everything from the euro to refugees, is currently enjoying the unusual unity of purpose that Brexit has produced among the other 27 member states.

The British hope that this unity will crack, as the negotiations become more difficult. But it is just as likely that the EU will find that confrontation with Britain continues to serve as a useful rallying point for an otherwise divided organisation — and as a focus for the anger at everything else that is going wrong inside the Union.

I will keep the notes from my Heathrow Express speech. They might make interesting reading if and when Mrs May gives her own version, in a couple of years’ time.


A False Spring at the Spring Meetings?

Carmen Reinhart, Vincent Reinhart
. IMF World Bank Meetings


WASHINGTON, DC – Every spring, international bureaucrats flock to Washington, DC, as reliably as swallows to Capistrano, for the annual meetings of the International Monetary Fund and the World Bank, where they exchange information about their local economies and policy prospects. Because these officials attend multiple events over the course of the week, an echo chamber develops, from which a general perception of the state of the global economy emerges.

Policymaking around the world is then influenced by that perception.
 
This time round, the sense was positive. According to IMF staff, as reported in their World Economic Outlook, real GDP should expand by about 2% in advanced economies this year and next. This will pull the unemployment rate below 6%, not much different from its level before the 2008 financial crisis. Deflation or unwelcome disinflation is now seen only in the rearview mirror, as consumer price inflation settles around 2%, the goal of most major central banks.
 
But, as any resident of New England knows, April showers do not always bring May flowers; sometimes they bring only more and colder showers. Not to rain on officials’ parade, but we fear that they are taking too much comfort in the stabilization of economic conditions. Beneath the headline numbers, there is little evidence that underlying problems have been resolved.
 
It wouldn’t be the first time. The post-1945 record includes two prior “lost decades” in which economies struggling to recover from severe financial crises – including about a dozen countries in Latin America from 1982 to 1992, and Japan from 1992 to 2007 – underperformed their own trend growth and that of their peers.
 
As bleak as this history seems, annual real GDP growth per capita was positive in 60% and 75% of those years, respectively, in Latin America and Japan. Indeed, real GDP per capita expanded by more than 2% in at least a quarter of those years. That is, these countries glimpsed rays of sunshine through what turned out in retrospect to be a mostly solid cloud cover.
 
Acceleration in economic activity may stir hope in officialdom, but levels matter, too. In Europe, real growth GDP has been only barely positive, on average, since the financial crisis, and its level in 2016 was about 20% below that predicted by the trend over the ten years up to 2007. This ranks as the slowest recovery from a severe financial crisis in two centuries. And aggregation hides a multitude of problems: Greece and Italy, for example, will not regain their pre-crisis level of real GDP per capita within the World Economic Outlook’s forecast period, which stretches to 2022.
 
Yes, post-crisis spending headwinds are an important impediment to growth, partly owing to their persistence. But central to economic performance over this period is stagnating growth in potential output. According to the IMF, growth in the advanced economies’ real potential GDP – think of this as the underlying trend for aggregate supply – has fallen by half this century, from 2.71% in 2001 to as low as 1.28% just a few years ago. The picture is bleaker in the US, where, according to the Congressional Budget Office the amplitude of the swing is double, from about 4% to 1.5%. But all of the G7 economies share this phenomenon, because their aging populations are growing more slowly, withdrawing from the labor market, and adding little extra output per additional hour worked.
 
Whether productivity, or output per hour, will continue to languish is hard to predict. But data are data, and they show quite clearly that productivity growth has been languid for some time.
 
The growth of potential output is not just an economist’s abstraction. If, as seems to be the case, the expected path of income turns south, we will have fewer future resources to meet our needs.

To the extent that we have consumed and borrowed now in anticipation of higher income, disappointment is in store.
 
There certainly is scope for disappointment in advanced economies, considering that gross general government debt is hovering around 106% of nominal GDP and fiscal deficits are stretching beyond the forecast horizon. The budget math only gets harder as central banks normalize monetary policy, even if interest rates do not return completely to their pre-crisis levels. In economies with a recent record of fiscal restraint, including Australia, Canada, and New Zealand, the private sector has been borrowing hand over fist. In times of distress, private-sector mistakes often become public-sector obligations.
 
The machinery of representative government works best when it is used to apportion a growing economic pie. For example, when the US economy was experiencing 4% trend growth, real GDP could be expected to double in 18 years, comforting parents about their children’s economic future.
 
At the current trend of 1.5% growth, the period needed to double GDP stretches to 48 years, darkening the economic prospects of the grandchildren. In those circumstances, will elected officials make the hard decisions needed to get from economic stabilization to sustained recovery?
 
 
real gdp growth