The National Intelligence Bulletin is a weekly look at threats to social, political, economic, and financial stability in the United States, and provides early warnings and indications of America’s volatile future. This report is available each week for Intelligence subscribers.
In this National Intelligence Bulletin…
- InFocus: Two Americas
- The National Emergency
- McCabe: DOJ held meetings to oust Trump
- Schiff: “Our work on Trump’s finances has already begun”
- Nielsen & Whitaker speak at the NSAC
- Bill Gates: Socialism has “worked extremely poorly”
- Far Left Politics Roll-Up
- Economic/Financial Watch commentary
InFocus: Reading “opposition” publications is much more instructive than reading news published by those who share your ideologies. I subscribe to and read the New York Times, The Economist, Bloomberg, Foreign Affairs, Financial Times, and several other left-leaning or outright Leftist outlets for one reason: their writers often outline the path to creating the world they want to live in.
Case in point: The latest issue (March/April 2019) of Foreign Affairs is entitled “The New Nationalism”. It starts off with an article entitled “A New Americanism”. It’s about how to “reappropriate” American nationalism, away from the “myth of common ancestry” and towards the ideals of Frederick Douglass: “I want a home here not only for the negro, the mulatto and the Latin races; but I want the Asiatic to find a home here in the United States, and feel at home here, both for his sake and for ours.” It’s a deeply troubled America that was founded by white Europeans but perfected by a diverse, global citizenship.
The second article is about “The Importance of Elsewhere,” which is a reference to the battle between nationalists and globalists, or “Somehwere’s” and “Anywhere’s”. Somewhere’s have roots: they have a home town, they probably still live there, their identity is often tied to that place or at least their nation, and they’re not especially upwardly or geographically mobile. They may be the fourth- or fifth-generation to live in the area; they have well-established lives in these places and no desire to leave. Anywhere’s, on the other hand, have a college degree and the air of superiority that brings. They’re cosmopolitan, and they can get a job in any major city and feel just as “at home” in Chicago as they would in New York, Miami, Dallas, or Los Angeles. Their roots aren’t tied to ‘somewhere’ — they make their home ‘anywhere’. This comes down to identity, but also belonging: anywhere belongs to anyone, and somewhere belongs to someone.
This is the crux of the “cosmopolitan” argument: America owes something to every global citizen, and every global citizen is welcome because mere existence transcends borders.
The nationalists: America owes nothing to any global citizen; this nation is our home and it belongs to us.
There are no doubts that there are two Americas: one which believes in a nation built on sovereignty, shared roots, and the Greco-Roman principles of Western Civilization, and one which believes not in national or state sovereignty, but in global citizenship and access to a borderless and open country.
This America is in cultural flux as newcomers bring their old roots with them, and it remains at the mercy of the whims of an ever-changing electorate. Since that America is the nationalist’s home and his identity is deeply tied to it, the nationalist is naturally hostile to the “New America”. One Foreign Affairs author, who is American but not of European ancestry, concludes: “That side of nationalism needs taming, and cosmopolitanism is one means of mastering it.”
The simplest explanation for our current political turmoil is that the “New America” puts at grave risk the relevancy of the Old America. In hindsight, it’s why Trump was elected, it’s likely going to dominate the 2020 election, and it’s ultimately why we’ll continue to have domestic political and cultural conflict. New America believes it will win. Just last month, former Attorney General Eric Holder, who may soon become a president candidate, made a strong case when he said, “Demography is trending our way.” It is. The “American experiment”, as they see it, isn’t ending; it’s just taking on a new trajectory now lead by the New Americans.
On a personal note, here’s what concerns me the absolute most... I’ve included a bit about President Trump’s national emergency announcement this morning, and the reaction among Democrats. It’s entirely possible that 2020 and 2024 will be the most important elections in American history… right after 2016, 2012, and 2008. We have a tendency to apply more importance to contemporary events, especially those that carry a sense of such urgency and affect us so greatly, but considering that Americans are moving further to the Left or further to the Right, according to several surveys, I really do think quite often about a sharp and prolonged spike in unrest and political violence. On the extreme side of the spectrum of possibilities (which only seems extreme right now), I really do fear what will happen politically after the next swing Left. In the past week or two alone, a prominent Democrat who’s running for president has said things like:
“You can feel it now. In Congress, it has started to shift [to the Far Left]. It has started to shift. We’re not there yet. We’re not all the way there, but it has started to shift” and “So once [Trump is] gone, we can’t pretend that none of this ever happened; it won’t be enough just to undo the terrible acts of this administration…Our fight is for big structural change.” (Elizabeth Warren)
In a recent speech, Eric Holder extolled Democrats, saying: “The first bill introduced by Democrats in the new Congress would make Election Day a federal holiday… So, how did Republicans respond? The Senate majority leader called it a ‘power grab’—because he knows the best strategy for Republicans to keep their majority is not to make their case to the people, but to make it as hard as possible for the people to vote.”
This is exactly what we can expect: increasing the number of voters who overwhelmingly vote for Democrats in order to gain and keep power indefinitely. That’s why states are debating whether or not non-citizens should vote and we’ll probably end up having a national debate over that, too. As Holder says, “Demography is trending our way.” That’s one of the first things we can expect to happen under Democrat rule, and everything else that happens — gun laws, tax laws, financial and business regulations, among other parts of their agenda — simply becomes “the will of the People”.
Consider the implications when the next Democratic administration comes into power with as much desire to replace Old America as President Trump did to prevent it. And it appears now that the next Democrat administration, whether in 2020 or 2024, is more likely to prioritize the erasing of the Trump administration and punishment of those who enabled it, than to reinforce a sense of calm and unity. I do fear what the Democrats will do once they control the White House and the Congress. To me, New America — not just the demographic shift, but possibly the permanent political, cultural, and social shift — represents the most likely “doomsday” scenario for this country as we know it. – S.C.
Priority Intelligence Requirements
PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?
PIR2: What are the new significant indicators of threats to economic or financial stability?
PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?
- Ongoing political instability due to high stakes political warfare
- Removal of political guardrails increases risk of reaction
- Simmering social grievances based on race, class, and political ideology contributing to sporadic violence
- Ongoing culture war features information operations and economic warfare
President Trump announced a national emergency this morning to continue the construction of a border wall/fence/barrier. It received total denunciation from Democrats and mixed reviews among Republicans.
House Speaker Nancy Pelosi fired back at President Trump over the national emergency option saying, “A Democratic president can declare emergencies, as well. So the precedent that the president is setting here is something that should be met with great unease and dismay by the Republicans.” Pelosi went on to describe gun violence as a national emergency. She continued: “Why don’t you declare that emergency, Mr. President? I wish you would. But a Democratic president can do that.”
Pelosi isn’t the only one threatening emergencies. Rep. Emanuel Cleaver (D-MO) tweeted out: “Gun violence is a national emergency. Climate Change is a national emergency. Income inequality is a national emergency. Access to healthcare is a national emergency. Building a wall on the southern border is not.” Many people, including us at Forward Observer, have warned that the national emergency precedent would potentially lead to more. That’s one thing that concerns Republican detractors, too. I’ve written numerous times about ‘bending the guardrails’ and this is one instance where the guardrails could be bent for the next Democratic administration for all kinds of reasons. For as much as the Democratic presidential hopefuls will campaign on a “return to dignity and order” in the White House, a split Congress could tempt the next Democratic president to at least consider a national emergency option, especially if President Trump’s is successful.
Democrats are expected to challenge the national emergency declaration in court and through legislative veto. If you’re troubled about the precedent being set by President Trump, which may be available to future presidents, here’s one consideration. Writing at the Washington Examiner, Philip Klein points out: “The only hope for limited government conservatives is that any emergency declaration gets quickly enjoined, and eventually nixed, in federal court. At least then, the silver lining would be that a legal precedent would be set that the president cannot attempt such an end around Congress.”
McCabe: DOJ held meetings to oust Trump
In an interview on 60 Minutes, former FBI deputy director Andrew McCabe admitted to Scott Pelley that there was an effort to undermine and oust President Trump in 2017. According to what Scott Pelley says McCabe told him, “There were meetings at the Justice Department at which it was discussed whether the vice president and a majority of the Cabinet could be brought together to remove the president of the United States under the 25th Amendment.” If true, McCabe’s statements confirm previous reporting that Deputy Attorney General Rod Rosenstein pursued the 25th Amendment option after President Trump fired then-FBI Director James Comey. In a recent statement, Rosenstein denied the allegations.
Schiff: “Our work on Trump’s finances has already begun”
After Democrats laid out a roadmap this week, the House Intelligence Committee is taking the lead on investigations into President Trump and his allies. The House Financial Services Committee and House Foreign Affairs subcommittee on Russia will be joining in the investigations. Perhaps doubting the significance or impact of the Mueller report, they’ll be going after the Trump Tower Moscow deal and other Trump financial dealings in search of wrong-doing.
Rep. Adam Schiff (D-CA), chairman of the House Intelligence Committee, intends on issuing subpoenas to Deutsche Bank officials to identify financial transactions involving President Trump and the Trump Organization. “Our work on Trump’s finances has already begun,” Schiff said. Last week, President Trump complained that Schiff was “looking at every aspect of my life, both financial and personal.” (Analyst Comment: Speaking of personal, this is a personal issue for Schiff, who’s had a very contentious relationship with President Trump. And it brings up a very important point: newly confirmed Attorney General William Barr is in a position to decide whether or not the Mueller report is released to the public, which Rep. Schiff finds unacceptable. Last month, Schiff said, “If it’s going to be the position of the incoming attorney general… that the public doesn’t get to learn about this, then it will fall upon Congress to share with the American people what happened, and we will do that in several ways.” Every few weeks, news outlets report that the Mueller investigation is wrapping up and every few weeks those reports become untrue. Regardless, be prepared for news of one battle after another: not just over the Trump lawyers’ attempts to block Congressional investigations, but over the Mueller report, as well. It’s going to be a long year.)
Nielsen & Whitaker speak at the NSAC
DHS Secretary Kirstjen Nielsen and then-acting Attorney General Matt Whitaker gave remarks at the National Sheriffs’ Association Conference.
Acting AG Whitaker stated that “36 percent of all defendants in federal district courts were illegal aliens,” which is putting a burden on the federal courts system. Last year, charges of illegal entry were up 85 percent and “felony re-entry prosecutions” were up 38 percent. Drug prosecutions were also up across the boards.
Secretary Nielsen said 89 percent of all ICE apprehensions are “persons with criminal convictions or criminal charges”. Additionally, DHS has seen a 50 percent increase of apprehended gang members coming over the Southern border.
Bill Gates: Socialism has “worked extremely poorly”
File under: Things I didn’t see in the mainstream news this week. In a recent interview, Bill Gates, the billionaire founder of Microsoft, said that socialism has “worked extremely poorly” where tried. “The common sense idea that we ought to just equally have everything is always appealing. And even academics have always been more socialistic in their views. It just has a certain appeal. It has never—it’s worked extremely poorly… We’re rich enough now that people sort of think we’re infinitely rich, and we’re not infinitely rich… So if you say healthcare for everyone, higher education for everyone, then you’re just—you will be making resource tradeoffs, significant resource tradeoffs, and you won’t achieve your goal.” (Analyst Comment: To be fair, Gates does call for a more progressive tax structure, but he’s firmly against a centrally-controlled economy and publicly funded solutions, which he says — via socialism — has worked out very poorly for those who lived under those systems.) [source]
Powell speech on poverty and rural economic health
Federal Reserve chairman Jerome Powell delivered remarks at Mississippi Valley State University, where he covered topics like poverty and rural economic health. According to Powell, “70 percent of the 473 persistent poverty counties… are rural.” Powell went on to talk about racial wealth disparities and how poor black communities often suffer from low wealth and low credit scores, which makes access to credit and financial services difficult. Furthermore, bank closures and consolidation have affected rural black communities, which negatively affects small businesses and the elderly. Powell wrapped by repeated something he said about a week ago, which is that education is the key to future economic success. Ending his speech on 12 February, Powell said, “[P]eople in rural communities who are struggling with persistent poverty need access to high-quality education from preschool through college.” (Analyst Comment: It may not be deliberate, but it appears that Powell is supporting universal education when he stresses the importance, especially for those who can’t afford it. In his 06 February speech, Powell said that while it was outside the lane of the Fed’s authority, the federal government needed to pursue policies that would improve social mobility. He also said that the government should make sure “the prosperity we do achieve is widely spread… [W]e need policies to make that happen”. When fielding questions from the MVSU audience, Powell is asked about how to change the thinking where loan makers question ‘how much money they’re going to lose’ if they start making loans to risky communities; i.e., rural, poor credit communities. Powell says that getting more people into the labor force should be a “high priority” and that the Community Reinvestment Act of 1977 should be reformed so that more loans and better financial services can make their way into economically depressed communities. As for the social and political aspects, this is becoming a common theme, especially among Democratic presidential candidates. There’s this mantra that America is doing better but some Americans are being left behind. No where is that more underscored that in poor black communities. The Democrats are going to ride this into 2020.)
Far Left Roll-Up
“Well I think when you run for office at my age, to some extent your face is your message and a big part of our message is going to be about generational change… We’re the generation that’s going to pay the bill for these unaffordable tax cuts for the wealthy. We’re the generation that’s going to be on the business end of climate change…” – Pete Buttigieg, Democratic presidential candidate
“[C]limate really is an emergency that has come to hit us right now and we need to treat it as a national emergency that has the same destructive powers, something like the Great Depression or a World War. And if the seriousness of this issue is commensurate with those world historical moments, but the big different is this time we see it coming, shame on us if we don’t act ambitiously, aggressively, audaciously to do something about it.” – Pete Buttigieg, Democratic presidential candidate
“Socialism is storming back because it has formed an incisive critique of what has gone wrong in Western societies… [T]he left has focused on inequality, the environment, and how to vest power in citizens rather than elites… Many of the new socialists are millennials. Some 51% of Americans aged 18-29 have a positive view of socialism, says Gallup.” – From The Economist cover story, “Millennial Socialism”
“The tragic reality is this planet simply can’t sustain billions of people consuming industrially produced animal agriculture because of environmental impact. It’s just not possible, as China, as Africa move toward consuming meat the same way America does because we just don’t have enough land.” – Sen. Cory Booker
“[T]he issue of potential Gulf money is the second-largest area of concern after Russia… [T]hey may be distinct but overlapping when it comes to, for example, funding the [Trump] inauguration. There may have been efforts to illegally funnel Russian money as well as Gulf money.” – Anonymous member of Congress, speaking about the House Democrats’ investigations into President Trump
“You can feel it now. In Congress, it has started to shift [to the Far Left]. It has started to shift. We’re not there yet. We’re not all the way there, but it has started to shift.” – Sen. Elizabeth Warren
“[McConnell is] trying to bully the party, and he’s banking on people not being courageous. I think people should call his bluff.” – Rep. Ocasio-Cortez on Senate Majority Leader Mitch McConnell’s forcing a Senate vote on the Green New Deal
“The [Congressional Black Caucus] has for some time now become extremely nosey as it relates to the staff that members who seek higher office bring aboard, because if they can’t get that right we have very little hope that they’ll do anything else right.” – Rep. Emanuel Cleaver (D-MD)
“Anytime [Democrats] reject the white boy wunderkids who got us into this mess — the better. Campaigns woke up from 2016, saw the level of influence voters of color had over 2018 and are taking that seriously with their first big decision as a presidential candidate: by hiring diverse senior level staff.” – Jess Morales Rocketto, former Hillary Clinton staffer
“By the time we get to 2020, Donald Trump may not even be president. In fact, he may not even be a free person… If we go down that path, we’re going to need to help pull this country together and have as many people as possible understand it was a legitimate process based on facts.” – Sen. Elizabeth Warren
“Democratic Party chair Tom Perez is seriously considering holding one of its 2020 presidential debates on Fox News. This is a terrible idea, and must be stopped.” – Daily Kos petition
“Americans must thoughtfully pursue an expanded, identity-conscious politics. New, vibrant, noisy voices represent the strongest tool to manage the growing pains of multicultural coexistence. By embracing identity and its prickly, uncomfortable contours, Americans will become more likely to grow as one.” – Stacey Abrams, former Democratic gubernatorial candidate in Georgia
“So once [Trump is] gone, we can’t pretend that none of this ever happened; it won’t be enough just to undo the terrible acts of this administration…Our fight is for big structural change. And that is why I stand here today to declare that I am a candidate for president of the United States of America.” – Sen. Elizabeth Warren who recently announced her presidential candidacy
PIR2: What are the new significant indicators of threats to economic or financial stability?
- Trade war with China poses risk to U.S. farmers and manufacturers, emerging markets
- Slow in global economic growth poses risk to emerging and developed economies
- Unsustainable national debt to increase due to trillion dollar budget deficits
- Strong potential for an economic recession around 2020 that causes significant financial disruption
The latest retail numbers came out yesterday and purportedly show a 1.2 percent drop in December. Economists questioned the accuracy of the report because it was so unexpected and at-odds with other economic data. The Atlanta Fed’s GDPNow estimates for Q1 is now at 1.5 percent, down from 2.7 percent just a week ago. GDPNow estimates tend to fluctuate and could still be revised higher on new data, however, this could represent a substantial slowdown. [15 Feb]
But maybe it’s not all doom and gloom. I’ve followed Fidelity Investments’ Director of Global Macro, Jurrien Timmer, for about a year now; partly because his previous market calls were spot-on. In a recent statement, he said the current cycle could turn out like 1994, 1998, and 2011. “In those cycles, there was a meaningful correction, no recession and a central bank pivot—the Fed in 1994 and 1998 and the [European Central Bank] in 2011” — meaning that he sees a possibility that we avoid a recession altogether. That’s certainly an alternative take, considering that the global economy is both slowing down and over leveraged. Still, Timmer says he doesn’t see a global recession on the horizon, at least for now. [15 Feb]
The German economy narrowly avoided a recession after last quarter’s economic growth came in a 0.1 percent. It had contracted by 0.8 percent the previous quarter. It’s part of a broader slowdown in Europe, as the entire Eurozone managed to eke out 0.8 percent growth last quarter. Japan’s economy grew at a 1.4 percent annualized rate last quarter, which follows a contraction of 2.8 percent in the third quarter. One analyst, however, says the Japanese economy may not be out of recession territory. [14 Feb]
According to a recent Bankrate survey, there’s been an uptick in Americans who say that their credit card debt is larger than their savings. Some 29 percent said they had more credit card debt than savings in 2019, compared to 21 percent last year. That’s the highest in nine years, according to the survey. And 44 percent of those polled said they had more savings than credit card debt, which is down from nearly 60 percent last year. “The sharp deterioration in the relationship between credit card debt and emergency savings… is an ominous indicator of the financial health among American households,” said Bankrate’s chief financial analyst. [source] [14 Feb]
Job openings hit new highs this week in construction, hospitality and restaurants, entertainment and recreation, and healthcare. The South has the biggest regional gains in new job openings. [13 Feb]
Even has companies are still hiring and wage growth is rising, mortgage debt is still near 2007/08 levels ($9 trillion) and total household debt ($13 trillion) is above 2007/08 levels. [13 Feb]
There’s growing concern about a corporate earnings recession, which is an early warning indicator of overall economic recession. Technically, we had a corporate earnings recession a couple years ago when the oil and gas sector was hard hit by falling prices on decreased demand. Recently, Bloomberg analysts lowered their corporate profits forecast to 5.4 percent, down from 7.7 percent. And Morgan Stanley’s Mike Wilson says, “Our earnings recession call is playing out even faster than we expected…Earnings recession is here.” Wilson, the chief U.S. equity strategist, recently cut his growth expectation to one percent — not by one percent, but to one percent. “This earnings slowdown could have real knock-on effects to corporate behavior like spending and hiring which then put further pressure on growth,” Wilson said. [source] And that’s how recessions start. [12 Feb]
I don’t mean to ‘recession’ you every morning. There are lots of indicators that point to a strong economy, and the economy will continue to grow for the foreseeable future. But 2019 is increasingly looking like a year of slowing growth. In China, two large bond holders just missed their repayment date, and they contribute to a growing debt default trend in China. The number of missed bond repayments quadrupled in China from 2017 to 2018, and Chinese analysts expect 2019 to keep pace. The Chinese central bank is easing monetary conditions to stabilize their own slowdown, but a Chinese financial crisis or recession could start a global one. Point is, it’s not just the United States we have to worry about. [12 Feb]
As an ‘odds and ends,’ a Birmingham, Alabama-based U.S. Steel plant is restarting a furnace expected to add 150 jobs. Executives cite improved market conditions resulting from President Trump’s steel tariffs on China as the reason for continuing the project it started in 2015 but shut down after being undercut by Chinese steel. [12 Feb]
I really hate to quote economist Paul Krugman, but I will just to provide a broader perspective on economic expectations. Krugman says, “I think that there is a quite good chance that we will have a [global] recession late this year (or) next year… The main concern has always been that we don’t have an effective response if stuff slows down.” [source] (AC: Many economists and investors concerned about the next recession have also expressed concern that the Federal Reserve will have limited tools to deal with stimulating growth again. That’s one reason why I think the next recession could last longer than the average 11 months.) [11 Feb]
Former George W. Bush official Marc Summerlin, now a partner at an investment firm, recently told Financial Times: “Whether or not you have a recession in 2020 is the biggest determinant of President Trump’s re-election odds… The current economic data is looking positive, but there are forward-looking indicators that are looking weaker — housing permits for example, together with signs that banks are tightening credit modestly. The biggest concern is there are no new catalysts for growth next year.” [source] [11 Feb]
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