Nature is Supreme

By: Captain Hook

Monday, June 22, 2015

The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, June 8, 2015.

We are all in the flow of it - both physically and psychologically - where it should be understood - bottom line human behavior is a function of Mother Nature - believe it or not. We know this to be true because our behavior can be measured mathematically if one knows what to look for, implying while every aspect and outcome may not be quantifiable, amazingly, mass flows can.

Known to most as mass (or crowd) psychology, humans have endeavored to measure this phenomenon within formal constructs that both recognize and dismiss this understanding, but in the end it's the numbers that prove theory, as will be demonstrated on these pages today. So those of you who think human behavior is independent of these forces should think again, because if you want to survive what is coming, one will need to adapt to the false conventional wisdom and propagandist doctrine being imposed on us by the technocrats.

The current state of our global political economy is best be described as a fully mature neo-fascist / neo-feudal monolith centered around the colonial Western Model based in Globalization that has peaked as the primary organizational construct organizing human interaction on the planet, now reverberating towards decentralization as the sandcastles of fiat economy are taken back by the wind.

Our fascist elites understand the power of mass psychology well, employing it on a daily basis via all levels of media in order to distract and destabilize the masses while systematically attempt to acquire more power and wealth - fiat sandcastles in the sky. Despite these efforts however, nature is taking its course concurrently, invisibly controlling the totality of the nexus unbeknownst to the perverts (of nature), which will prove to be the definer of outcomes in the end.

The Russians know this, which is why they continue to accumulate permanent commodity money that will transcend future political / economic upheaval. They understand that no matter how far the technocrats push, that man's frailties will always emerge and corrupt efforts to push aside the natural flow, and that conservatism is best in such matters. They understand human beings are transients on earth and could go the way of the dinosaurs in the end no matter what happens in between. They understand the ephemeral properties of 'vapor wealth' (thanks Max Keiser), the fragile and temporary asset constructs technocrats use to control political economy. Again however, you should know all this finagling will not matter in the end. The math tells us we have a predetermined destiny in a larger sense, as measured by Fibonacci.

In case you don't already know, what Fibonacci discovered centuries ago, is movement in nature has a signature that is repeated across the full spectrum, which was later applied to human behavior, and more specifically, financial markets. This is of course the technique, or methodology, we have employed in calculating market projections, where Fibonacci signatures tend to define both advances and retracements more often than not. As you can see below, in terms of the broad market we are using the S&P 500 SPX) / CBOE Volatility Index (VIX) Ratio (see below) because of the identifiable Fibonacci signature present in the trade, which is not present in just the index itself. The VIX is a primary tool of financial repression (engineering) utilized by US price managers, which may be the reason this is the case. Failure to reach the prescribed Fibonacci resonance target would portend bad things, as this would be an indication the natural order has been terminally disrupted due to technocrat shenanigans.

How could this occur? Well, for one thing, by turning the stock market into a perceived ATM machine (by participants who understand it's rigged), where it's though the bureaucracy's price mangers will not allow any sustainable losses now (think buybacks, hedge funds, prop desks, PPT, etc.), this has brought leveraged exposures to record levels, which is a recipe for a crash that could be triggered by an outside force not factored in to a particular Fibonacci signature. In this case we have Chinese participation rates, where new accounts openings are now in The Twighlihght Zone. This might be the bubble of bubbles we need to worry about, however it should be pointed out Chinese and other stock markets of the world have dubious correlation factors at best. Still however, more recently US market participants have grown increasingly concerned about the situation in China, so one cannot rule out a meltdown in foreign stocks affecting Western markets. (See Figure 1)

Figure 1

When a market is manipulated, the Laws of Nature are thwarted by man for as long as the manipulation exists, only to be reasserted when said manipulation ends, assuming the market survives. In the case of physical necessities required by man to exist, it doesn't matter if a man-made exchange that has been corrupted ceases to function because the commerce will simply shift to new or alternate platforms, which is essentially the story behind physical gold trade moving from faulty and fraudulent Western markets (COMEX and LBMA) to Chinese platforms (Shanghai Gold Exchange [SGE], etc.), where the rule of law is still enforced. The greedy bastards on Wall Street and in London think they can screw people with no ramifications because they make the rules. However they fail to realize they have imploded from within already because the people of the world not under their collective thumb (think China, Russia, BRICS, etc.) are moving away from the theft and corruption in Western markets as fast as they possibly can. (See Figure 2)

Figure 2

You will know this trend has reached critical mass when silver moves back above $25 ($21.50 technically), the large round number. Once it does this, it should move above long-term resistance at $50 quickly as localized pricing machinations associated with Western suppression are overcome, which would be the ultimate indication the unipolar US dominated world has officially come to an end. Silver is a small and localized market(s), making it the official 'whipping boy' of the Western bureaucracy because it's easily manipulated and due to its influence on gold trading (it's used to help manipulate gold lower), which is far less controlled and functions in a global sphere. Therein, you will know when China is ready to assert itself as a primary source of global hegemony, with the help of a growing list of its friends (think BRICS, Europe, Asia, etc.), by watching silver trade, where again, once it's able to clear $25 on a lasting basis, the shift of power within the global matrix will be officially signaled. (See Figure 3)

Figure 3

Because when the silver trade gets away from Western price managers - it's all over. If they lose control of this small and easily controlled market, that means their influence on global trade will be negligible - and a price discovery in previously manipulated markets should rapidly move in the direction(s) dictated by fundamentals, not the whims of bureaucrats and bankers. This should cause radial price movements higher in precious metals and lower in stocks in surprisingly fast fashion, allowing the Silver / SPX Ratio to break higher towards the Fibonacci resonance related signature denoted on the chart above. Silver has been held down for too long in an un-natural state for this story to turn out any other way. Again, sooner or later Western price managers will lose control of their manipulative practices and gold, led by silver, will need to be revalued, which will be the central component of a system wide reset.

Signs of a high degree top in stocks like those witnessed in 2000 and 2007 are everywhere now (see here, here, here, here, and here). In fact, when you think about it, considering all the QE, ZIRP, and now NIRP, present circumstances are far worse because of all this financial engineering and crony capitalism, which is why things, including stocks, may not be able to bounce back once they turn lower. Because we are not going into a routine recession, which is what the status quo boys will want you to believe when it comes. No, this time it's going to be a bona fide Depression, which will be so deep and widespread, that only the real crazies and people who don't bother to eat will be able to deny it. Sure, things will always recover over time, but again, this time the recovery process will be slow, patchy, and indistinguishable to growing numbers of disenfranchised Western mobs.

Right now these people must appear to be a bunch of lethargic idiots to those looking in, but this will change once the permanence of their deteriorating dispositions is realized. The bread and circus routines currently employed for distraction are increasingly beginning to wear thin, especially in periphery states not enjoying the fruits of centralized power. (i.e. in Brussels, London, New York, and Washington.) This is why we are seeing the decentralization process accelerating now, where everything from ISIS, to Greece (is Spain next?), to Baltimore, to the larger international scene, are a function of this new trend. The unipolar dominance of the America is coming to an end and you had better realize this - and prepare. Because once process gains critical mass, the changes will be both radical (fast) and profound.

So again, in terms of the markets moving forward from here, while failures in the SPX / VIX Ratio, Dow / Gold Ratio, etc. to reach their Fibonacci signatured targets is always possible, both Mother Nature and technical indications are still pointing to higher stocks and lower precious metals in the offing, and until we have definitive failures, this will remain our view. In terms of catalysts, you may know Greece missed an IMF payment on Friday, which was a first by any country since the 80's. But you should know they still have until month's end to make a 'bundled payment', so along as they come to some kind of an agreement before this time, say by the end of next week, the can kicking should continue, which would set the stage for a month end rally in stocks, and bashing of precious metals, just in time for COMEX options expiry.

Again, in terms of silver, we still have it going to $14ish before it takes off to the upside for two reasons. First, the market must purge the idiot paper market speculators before Western pricing mechanisms will allow for higher prices, assuming they continue to play the dominant role in global price discovery. And second, this also allows for a price shock when the larger equity complex initially collapses as well, whenever that may be. (i.e. beginning sometime in summer or fall.) This, is what would allow the SPX / SLV Ratio to reach our long-term target in the 160's, as well as see the SPX / VIX Ratio (see above) finish a month in the 225 area (or above) to complete the sinusoidal as well. If we are lucky enough to witness these two technical feats defined by Mother Nature herself, then we would have a better than even chance on bets geared to lasting reversals in these markets.

We would be investing in the wisdom of Mother Nature. We would have her power on our side.

This is what we would need to counter the self-anointed gods that consider themselves - the powers that be. (i.e. think New York and London bankers, politicians, and other kleptocrats.)

They have forgotten nature is supreme. Man usually suffers a hard earned lesson when this kind of thing is allowed.

This time will be no different - and quite possibly magnitudes above any other such instance in history.

Bank on it.

Markets Insight

June 23, 2015 8:28 am

The dangers of living in a subnormal interest rate world

John Plender

Debt and low investment returns both present problems

Federal Reserve Chair Janet L. Yellen speaks during a press briefing at the Federal Reserve June 17, 2015 in Washington, DC. The Federal Reserve left its benchmark interest rate unchanged at near zero Wednesday, while describing US economic growth as "moderate" after the winter slowdown. But predictions made by the individual participants in the Fed's monetary policy meeting indicated most expect the federal funds rate to rise above 0.5 percent by year-end. The Federal Open Market Committee trimmed its economic growth forecast for 2015 to just 1.8-2.0 percent, down from March's 2.3-2.7 percent outlook, to account for the unexpected contraction in the first quarter of the year. AFP PHOTO/BRENDAN SMIALOWSKI (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)©AFP
Janet Yellen has said when rises do come they will be small, incremental and predictable
It is curious to reflect that when US and UK policy interest rates were cut to their lowest ever levels in March 2009, markets expected them to be on the rise within the year. More than six years later the rates remain the same and the markets are still obsessed with the timing of a rise. When that will happen is as clear as mud in the wake of the Federal Open Market Committee’s statement last week.
The one thing that is beyond doubt is that the “normalisation” of monetary policy is a long way off. Janet Yellen, chairwoman of the Federal Reserve, has indicated that when the rises do come they will be small, incremental and predictable. For some years we will confront a subnormal interest rate world.
It will also be a low growth world — witness the downward revisions to growth projections of both the Federal Reserve and the Bank of England this month. The eurozone and Japan, despite enjoying the benefits of big competitive devaluations, are struggling to deliver half-decent growth rates.
And competitive devaluation is anyway a zero sum game that does nothing to boost the global economy. China is slowing palpably even if the official figures are disguising the underlying reality. The post-crisis assumption that emerging market economies would show the developed world a clean pair of heels now no longer holds.
Against a background of inadequate global demand the collapse in energy and commodity prices has added powerful disinflationary impetus. Wage increases in the developed world, with the notable exception of the UK just recently, have been subdued.
Forward markets are telling us that interest rates are going to be much lower than pre-crisis average policy rates since 1945 for the US, UK, the eurozone and Japan, which were respectively 3 per cent, 7 per cent, 3 per cent and 4 per cent.
In other words, the markets are saying that this time is different, a formulation that is reliably dangerous when it comes to predicting the future. Of course, some things really are different. For much of the postwar period most central banks were not independent, though whether independence has been the driving force behind prolonged disinflation is another matter, as is the question of whether central banks will remain independent in future.
Given the quasi fiscal nature of their activities since the crisis and the risk that unconventional measures pose to their balance sheets, the possibility of a political land-grab in monetary policy is not negligible.
On the other hand, liberalisation of labour markets and the decline of union power seems unlikely to be reversed in the short and medium term. Note, though, that with ageing populations, a shrinking workforce may exercise market power to grab higher wages against a retired population that tries to use voting power to secure stable retirement incomes.
The dangers inherent in a subnormal interest rate world relate, first, to the accumulation of debt. Debt of almost any size in relation to gross domestic product becomes manageable at today’s negligible interest rates. Whether it stays manageable depends on whether politicians seize the opportunity to deliver structural reforms and infrastructure investment to enhance growth, without which debts cannot ultimately be serviced.

 The snag is that low growth makes it hard to summon up the political will for reform, which tends to impede growth in the short run before producing a longer term pay-off.
Then there is the problem of dismal investment returns and the impact of low discount rates on pension fund liabilities. It is impossible to know how far pension fund deficits dampen animal spirits in the boardroom, but where pension funds are big in relation to the company, deficits cannot help.
They may well have been a factor, albeit a minor one, in the weakness of investment since 2008.

Equally important, a subnormal interest rate environment reduces the scale of creative destruction and confers advantage on big companies at the expense of more productive smaller companies that lack good access to credit markets.
In such a world any reversion to the historic interest rate mean is distant. There is no generalised sword of Damocles hanging over the heavily indebted developed world for the moment. Yet for individual countries an early reversion may be the reward for bad policy.

Japan and southern Europe are the laboratories in which this hypothesis will be tested.
The writer is an FT columnist

The Irrelevant Seven

Joschka Fischer

JUN 23, 2015

G7 leaders in Germany


BERLIN – The latest G-7 summit, in the beautiful Alpine setting of Garmisch-Partenkirchen in Germany, has come and gone. No longer the G-8, owing to Russia’s suspension, the forum is again composed exclusively of traditional Western powers. At a time when the emergence of large, densely populated economic powerhouses like Brazil, China, India, and Indonesia is challenging Western dominance, many believe that the current international system is due for an overhaul.
In fact, a new world order is almost certain to emerge – and very soon. The shape it takes will be determined by two key phenomena: globalization and digitization.
Globalization is enabling economies that are not yet fully industrialized to reap the benefits of industrialization and become integrated into global markets – a trend that has redefined the global division of labor and transformed value chains. The revolution in digital communication technology has underpinned this shift.
Of course, the impact of digitization extends beyond economics; it has broken down many cultural barriers, giving ordinary citizens in even remote regions access to information and ideas from all over the world. As globalization-enabled economic development continues to raise incomes, this cultural integration will undoubtedly lead to broader political participation, especially among an increasingly large – and increasingly demanding – middle class. Already, this trend is complicating governments’ efforts at domestic monitoring and control.
In terms of the global economic balance of power, however, the impact of globalization and digitization remains difficult to predict. While these trends have undoubtedly fueled the economic rise of some developing countries, the West – especially the US – retains a technological and innovative edge. Indeed, America’s technological lead – together with its enormous capital assets and dynamic business culture, exemplified in Silicon Valley – could ultimately reinforce its global standing.
But, with major emerging economies like China and India working hard to foster innovation, while still benefiting from technological catch-up, it is also possible that continued globalization and digitization will propel continued “de-Westernization” of the international order. Only time will tell whether these countries will successfully challenge the established powers.
Even if the US – and, to some extent, Western Europe – does retain a competitive edge, it is unlikely to retain the kind of global geopolitical control that it has had since World War II and, especially, since the Soviet Union’s collapse left it as the world’s sole superpower. In fact, even though the US remains dominant in military, political, economic, technological, and cultural terms, its global hegemony already seems to have slipped away.
The reality is that America’s global geopolitical supremacy did not last long at all. After becoming overstretched in a series of unwinnable wars against much weaker – and yet irrepressible – opponents, the US was forced to turn inward. The power vacuums that it left behind have produced regional crises – most notably, in the Middle East, Ukraine, and the South and East China Seas – and have contributed to a wider shift toward instability and disorder.
The question now is what will replace Pax Americana. One possibility is a return to the kind of decentralized order that existed before the Industrial Revolution. At that time, China and India were the world’s largest economies, a status that they will regain in this century. When they do, they might join the traditional powers – the US and Europe, as well as Russia – to create a sort of “pentarchy” resembling the European balance-of-power system of the nineteenth century.
But there are serious questions about most of these countries’ capacity to assume global leadership roles. With the European Union facing unprecedented challenges and crisis, it is impossible to predict its future. Russia’s future is even more uncertain; so far, it has been unable to rid itself of the phantom pains over its lost empire, much less arrest the deterioration of its society and economy.
India has the potential to play an important role internationally, but it has a long way to go before it is stable and prosperous enough to do so.
That leaves only the US and China. Many have predicted the emergence of a new bipolar world order, or even a new Cold War, with China replacing the Soviet Union as America’s rival. But this, too, seems unlikely, if only because, in today’s interconnected world, the US and China cannot allow conflict and competition to obscure their common interests.
As it stands, China is financing America’s public debt, and, in a sense, subsidizing its global authority. And China could not have achieved rapid economic growth and modernization without access to US markets. Simply put, the US and China depend on each other. That will go a long way toward mitigating the risks that a new global power’s emergence inevitably generates.
Against this background, it seems likely that the new world order will resemble the bipolar order of the Cold War – but only on the surface. Underneath, it will be characterized by engagement and mutual accommodation, in the name of shared interests.
The G-7 represents a dying order. It is time to prepare for the G-2.

What Borders Mean to Europe

By George Friedman

June 23, 2015 | 08:00 GMT


Europe today is a continent of borders. The second-smallest continent in the world has more than 50 distinct, sovereign nation-states. Many of these are part of the European Union. At the core of the EU project is an effort to reduce the power and significance of these borders without actually abolishing them — in theory, an achievable goal. But history is not kind to theoretical solutions.

Today, Europe faces three converging crises that are ultimately about national borders, what they mean and who controls them. These crises appear distinct: Immigration from the Islamic world, the Greek economic predicament, and the conflict in Ukraine would seem to have little to do with each other. But in fact they all derive, in different ways, from the question of what borders mean.

Europe's borders have been the foundation of both its political morality and its historical catastrophes. The European Enlightenment argued against multinational monarchies and for sovereign nation-states, which were understood to be the territories in which nations existed.

Nations came to be defined as groupings of humans who shared a common history, language, set of values and religion — in short, a common culture into which they were born. These groups had the right of national self-determination, the authority to determine their style of government and the people who governed. Above all, these nations lived in a place, and that place had clear boundaries.

The right of national self-determination has created many distinct nations in Europe. And, as nations do, they sometimes distrust and fear one other, which occasionally leads to wars. They also have memories of betrayals and victimizations that stretch back for centuries before the nations became states. Some viewed the borders as unjust, because they placed their compatriots under foreign rule, or as insufficient to national need. The right of self-determination led inevitably to borders, and the question of borders inevitably led to disputes among states. Between 1914 and 1945, Europeans waged a series of wars about national boundaries and about who has the right to live where. This led to one of the greatest slaughters of human history.

The memory of that carnage led to the creation of the European Union. Its founding principle was that this kind of massacre should never happen again. But the union lacked the power to abolish the nation-state — it was too fundamental to the Europeans' sense of identity. And if the nation-state survived, so did the idea of place and borders.

If the nation-state could not be abolished, however, then at least the borders could lose their significance. Thus two principles emerged after World War II: The first, predating the European Union, was that the existing borders of Europe could not be changed. The hope was that by freezing Europe's borders, Europe could abolish war. The second principle, which came with the mature European Union, was that the bloc's internal borders both existed and did not exist. Borders were to define the boundaries of nation-states and preserved the doctrine of national self-determination, but they were not to exist insofar as the movement of goods, of labor and of capital were concerned. This was not absolute — some states were limited in some of these areas — but it was a general principle and goal. This principle is now under attack in three different ways.

The Movement of Muslims in Europe

The chaos in the Middle East has generated a flow of refugees toward Europe. This is adding to the problem that European nations have had with prior Muslim migrations that were encouraged by Europeans. As Europe recovered from World War II, it needed additional labor at low cost. Like other advanced industrial countries have done, a number of European states sought migrants, many from the Islamic world, to fill that need. At first, the Europeans thought of the migrants as temporary residents.

Over time, the Europeans conceded citizenship but created a doctrine of multiculturalism, which appeared to be a gesture of tolerance and was implicitly by mutual consent, given that some Muslims resisted assimilation. But this doctrine essentially served to exclude Muslims from full participation in the host culture even as they gained legal citizenship. But as I have said, the European idea of the nation was challenged by the notion of integrating different cultures into European societies

Partly because of a failure to fully integrate migrants and partly because of terrorist attacks, a growing portion of European society began perceiving the Muslims already in Europe as threatening. Some countries had already discussed resurrecting internal European borders to prevent the movement not only of Muslims, but also of other Europeans seeking jobs in difficult economic times. The recent wave of refugees has raised the matter to a new level.

The refugee crisis has forced the Europeans to face a core issue. The humanitarian principles of the European Union demand that refugees be given sanctuary. And yet, another wave of refugees into Europe has threatened to exacerbate existing social and cultural imbalances in some countries; some anticipate the arrival of more Muslims with dread. Moreover, once migrants are allowed to enter Europe by any one country, the rest of the nations are incapable of preventing the refugees' movement.

Who controls Europe's external borders? Does Spain decide who enters Spain, or does the European Union decide? Whoever decides, does the idea of the free movement of labor include the principle of the free movement of refugees? If so, then EU countries have lost the ability to determine who may enter their societies and who may be excluded. For Europe, given its definition of the nation, this question is not an odd, legal one. It goes to the very heart of what a nation is, and whether the nation-state, under the principle of the right of national self-determination, is empowered to both make that decision and enforce it.

This question does not merely concern Muslims. In the 19th and 20th centuries, the Ostjuden — the Jews coming into Western Europe as they fled czarist edicts — raised the same challenge, even though they sought more vigorously to assimilate. But at that point, the notion of borders was unambiguous even if the specific decision on how to integrate the Jews was unclear. In many countries, the status of minorities from neighboring nations was a nagging question, but there were tools for handling it. The Muslim issue is unique in Europe only to the extent that the European Union has made it unique. The bloc has tried to preserve borders while sapping them of significance, and now there is an upsurge of opposition not only to Muslim immigration, but also to the European Union's understanding of borders and free movement.

The Greek Crisis

The question of borders is also at the heart of the Greek crisis. We see two issues: one small, the other vast. The small one involves capital controls. The European Union is committed to a single European financial market within which capital flows freely. Greeks, fearing the outcome of the current crisis, have been moving large amounts of money out of Greece into foreign banks. They remember what happened during the Cyprus crisis, when the government, capitulating to German demands in particular, froze and seized money deposited in Cypriot banks. Under EU rules, the transfer of deposits in one country of the bloc, or even outside the bloc, is generally considered legitimate. However, in the case of Cyprus, the free movement of capital across borders was halted. The same could conceivably happen in Greece.

In any event, which is the prior principle: the free movement of capital or the European Union's overarching authority to control that flow? Are Greek citizens personally liable for their government's debt — not merely through austerity policies, but also through controls imposed by the Greek government under European pressure to inhibit the movement of their money? If the answer is the latter, then borders on capital can be created temporarily.

The larger issue is the movement of goods. A significant dimension of this crisis involves free trade.

Germany exports more than 50 percent of its gross domestic product. Its prosperity depends on these exports. I have argued that the inability to control the flow of German goods into Southern Europe drove the region into economic decline. Germany's ability to control the flow of American goods into the country in the 1950s helped drive its economic recovery. The European Union permits limits on the movement of some products, particularly agricultural ones, through subsidies and quotas. In theory, free trade is beneficial to all. In practice, one country's short-term gain can vastly outweigh others' long-term gains. The ability to control the flow of goods is a tool that might slow growth but decrease pain.

The essential principle of the European Union is that of free trade, in the sense that the border cannot become a checkpoint to determine what goods may or may not enter a country and under what tariff rule. The theory is superb, save for its failure to address the synchronization of benefits. And it means that the right to self-determination no longer includes the right to control borders.

Ukraine and the 'Inviolability' of Borders

Finally, there is the Ukraine issue — which is not really about Ukraine, but about a prior principle of Europe: Borders cannot be allowed to change. The core of this rule is that altering borders leads to instability. This rule governed between 1945 and 1992. Then, the fall of the Soviet Union transformed the internal borders of Europe dramatically, moving the Russian border eastward and northward. The Soviet collapse also created eight newly free nations that were Soviet satellites in Central and Eastern Europe and 15 new independent states — including Russia — from the constituent parts of the Soviet Union. It could be argued that the fall of the Soviet Union did not change the rule on borders, but that claim would be far-fetched.

Everything changed. Then came the "velvet divorce" of Slovakia and the Czech Republic, and now there are potential divorces in the United Kingdom, Spain and Belgium.

Perhaps most importantly, the rule broke down in Yugoslavia, where a single entity split into numerous independent nations, and, among other consequences, a war over borders ensued. The conflict concluded with the separation of Kosovo from Serbia and its elevation to the status of an independent nation. Russia has used this last border change to justify redrawing the borders of Georgia and as a precedent supporting its current demand for the autonomy and control of eastern Ukraine. Similarly, the border between Azerbaijan and Armenia shifted dramatically as the result of war. (On a related note, Cyprus, divided between a Turkish-run north and a Greek-run south, was allowed into the European Union in 2004 with its deep border dispute still unsettled.)

Since the end of the Cold War, the principle of the inviolability of borders has been violated repeatedly — through the creation of new borders, through the creation of newly freed nation-states, through peaceful divisions and through violent war. The principle of stable borders held for the most part until 1991 before undergoing a series of radical shifts that sometimes settled the issue and sometimes left it unresolved. The Europeans welcomed most of these border adjustments, and in one case — Kosovo — Europeans themselves engineered the change.

It is in this context that the Ukrainian war must be considered. Europe's contention, supported by America, is that Russia is attempting to change inviolable borders. There are many good arguments to be made against the Russians in Ukraine, which I have laid out in the past. However, the idea that the Russians are doing something unprecedented in trying to redraw Ukraine's borders is difficult to support. Europe's borders have been in flux for some time.

That is indeed a matter of concern; historically, unsettled borders in Europe are precursors to war, as we have seen in Yugoslavia, the Caucasus and now Ukraine. But it is difficult to argue that this particular action by Russia is in itself a dramatically unprecedented event in Europe.

The principle of national self-determination depends on a clear understanding of a nation and the unchallenged agreement on its boundaries. The Europeans themselves have in multiple ways established the precedent that borders are not unchallengeable.

There are two principles competing. The first is the European Union's desire that borders be utterly permeable without the nation-state losing its right to self-determination. It is difficult to see how a lack of control over borders is compatible with national self-determination. The other principle is that existing borders not be challenged. On the one hand, the union wants to diminish the importance of borders. On the other hand, it wants to make them incontestable.

Neither principle is succeeding. Within Europe, more forces are emerging that want to return control over borders to nation-states. In different ways, the Muslim immigrant crisis and the Greek crisis intersect at the question of who controls the borders. Meanwhile, the inviolability of borders has been a dead letter since the fall of the Soviet Union.

The idea of borders being archaic is meaningful only if the nation-state is archaic. There is no evidence that this is true in Europe. On the contrary, all of the pressures we see culturally and economically point to not only the persistence of the idea of nationality, but also to its dramatic increase in Europe. At the same time, there is no evidence that the challenge to borders is abating. In fact, during the past quarter of a century, the number of shifts and changes, freely or under pressure, has only increased. And each challenge of a national border, such as the one occurring in Ukraine, is a challenge to a nation's reality and sense of self.

The European Union has promised peace and prosperity. The prosperity is beyond tattered now. And peace has been intermittently disrupted — not in the European Union, but around it — since the Maastricht Treaty was signed in 1992 to create a common economic and monetary union. All of this is linked to the question of what a border represents and how seriously we take it. A border means that this is my country and not yours. This idea has been a source of anguish in Europe and elsewhere. Nevertheless, it is a reality embedded in the human condition. Borders matter, and they matter in many different ways. The European crisis, taken as a whole, is rooted in borders. Attempting to abolish them is attractive in theory. But theory faces reality across its own border.

Rates Are Rising for All the Wrong Reasons

By: Michael Pento

Monday, June 22, 2015

Wall Street carnival barkers are relishing in the fantasy that the economy has finally achieved escape velocity. Therefore, they accept with alacrity that this is the primary reason why interest rates have started to rise. However, the fact still remains for the first half of 2015 GDP growth will probably be less than 1%.

GDP contracted by 0.7% in the first quarter of 2015. The Atlanta Fed, whose GDP Now calculation has been on the money, now sees second quarter growth at 1.9%. Therefore, it is prudent to conclude the most optimistic case for growth in the first half of the year will be about 1%. Of course, the perpetually upbeat economists on Wall Street are always convinced the economy will skyrocket in the second half of each year. But still, if the Atlanta Fed is correct-and it looks like it will be spot on given the anemic data already released for April and May-annualized GDP for the first two quarters of 2015 will be running at a pace that is less than half of the 2.2% growth averaged since 2010.

Perpetual optimists will highlight the recent positive data in housing as evidence of a robust recovery.

But most of the upbeat numbers in housing are a result of front running the inevitable mortgage rate increases, as people rush to lock into low rates while they still can. And even with this, housing data has been mixed at best. U.S. housing starts in May fell 11.1%, to an annual rate of 1.04 million units from a revised 1.17 million units in April. This rate of new home construction is far below the 1.5 million rate seen in the year 2000, and light years away from the 2.2 million rate at the height of the housing bubble.

And we also have some encouraging data in retail sales, courtesy of the booming auto market.

But sales in cars have been driven by the resurgence of the infamous liar loans, loose lending standards and virtually free money that led to the collapse in Mortgage Backed Securities in 2007.

Yet, despite booming car sales and slightly better new home construction rates, the nation's manufacturing base remains literally in the basement. For example, the Empire State's business conditions index unexpectedly dropped to -1.98 in June and Industrial Production decreased 0.2 percent in May after falling 0.5 percent in April. May is the fourth negative reading in the last six months on I.P., with the other two readings being flat.

But bond yields have started their inevitable climb higher regardless of the persistent economic malaise. Since mid-April the yield on the 10-year U.S. Treasury has gone from 1.85%, to 2.36%. The yield on the 10-year German bund has surged from essentially zero, to 0.8%. And the Spanish 10-year has gone from 1.45%, to over 2.40%.

One has to wonder, if worldwide economies are barely growing with free money how they will fare as rates start to spike. But the cheerleaders on Wall Street love to site rising rates as evidence the global economy is improving. They argue rising rates are a healthy sign, proof that the U.S. and European economies are strengthening, people are spending, companies are hiring and prices are starting to rise at more normal rates. And more importantly, the risk of too-low inflation-whatever nonsense that means--has ended.

Before you pop the champagne corks remember: this is the same crowd who was convinced rising rates wouldn't hurt the housing market back in 2008-because a bubble didn't exist, and even if one did the demise of subprime home buyers wouldn't spill over to the overall economy.

Wall Street and Washington fail to realize that rates are rising for all the wrong reasons.For instance, the yield on the Ten year in Greece has now skyrocketed to around 12.5%. Is this a result of budding optimism in the Greek economy? No, the rising rates in Greece represent the increasing likelihood of a Greek default.

Here is the truth behind the global rise of interest rates: Interest rates are spiking due to the increased insolvency risks in the American, Japanese and European social welfare states that have piled on an incredible $60 trillion of new debt since the credit crisis.

Rates are also now rising because of the return of inflation, or at the very least the end of deflation. Inflation in Germany crept higher in May, with consumer prices rising by 0.7 percent year-on-year.

The index had risen by 0.5 percent on a YOY basis during the month prior. And even more importantly, data collected by Gabriel Stein at Oxford Economics shows M1 money supply in the Eurozone has been growing at a 16.2% annualized rate over the last six months. And broader M3 money supply has been surging at an 8.4% rate, a pace not seen since just before the credit crises blew up.

Rising Rates Forebode Stagflation

In the past, the Fed has viewed itself as a rocket booster: Providing the reagent to launch economic growth; and then retreating once the economy achieved escape velocity. But with growth at 1% for the first half of this year we are still firmly within the earth's gravitational field-even after seven years of massive market manipulations.

Debt disabled economies that are mired in slow growth will not view rising interest rates as the pathway to economic nirvana--they are simply the product of stagflation. And since rates are rising for all of the wrong reasons how can this be viewed as a benefit to the stock market?

The bottom line is interest rates are now rising because the free market is doing the work that feckless central bankers don't have the courage to undertake. The stock market currently trades at extremely high valuations; and these inappropriate valuations sit atop little to no revenue, earnings and economic growth. Far from being the harbinger of a strong economy; these rising rates will instead be the dagger for the massive asset bubbles created by governments worldwide.

Perhaps for the immediate future the stock market will cheer the Fed's abeyance to deal with interest rate normalization. However, asset bubbles grow increasingly more incendiary with each passing day that central banks fail to act. And that means the inevitable collapse will be all the more pernicious.

NATO’s Spending Slumber

The Alliance boosts staff benefits while Putin buys guns.

June 22, 2015 9:19 p.m. ET

Flags of member countries in front of NATO headquarters in Brussels. Flags of member countries in front of NATO headquarters in Brussels. Photo: Virginia Mayo/Associated Press

NATO released its annual report on defense spending Monday, including 2014 expenditures and 2015 projections. The numbers show that the Atlantic Alliance is still asleep to the threat from Russia, more than a year after the invasion of Ukraine.

Only five of NATO’s 28 members—Britain, Estonia, Greece, Poland and the U.S.—are on track this year to spend 2% of GDP on defense, a figure that is supposed to be a requirement for membership. France and Turkey come close with 1.8% and 1.7% of GDP, respectively.

Among NATO’s larger economies, the 2014 hall of shamers include Germany (1.2%), the Netherlands (1.2%), Italy (1.1%), Canada (1%) and Spain (0.9%). Last year the U.S. accounted for 70% of all spending in NATO. Yet American defense spending is also on a downward slope. In 2015 U.S. defense outlays will amount to 3.6% of GDP, according to NATO, down from an average of 4.4% in George W. Bush’s second term.

The numbers look worse once you consider where the money is going. Most NATO members are devoting half or more of their total defense budgets to personnel costs at the expense of equipment modernization. Nearly 70% of Spain’s military spending in 2014 went to people and only 13.5% to equipment. In Italy the proportions were 76% and 11%. In the U.S. personnel costs amounted to 36% of the Pentagon budget.

This would be fine if the greatest threat to NATO was arthritis. In reality, it’s a Russia that is spending around 4.2% of GDP on its military, according to a World Bank estimate for 2013. Though last year’s fall in oil prices has hit the Kremlin’s budget hard, Moscow continues to develop and field sophisticated new weapons, including the S-400 air-defense system, the Su-34 jet and an upgraded fleet of military-transport aircraft.

A U.K. parliamentary report concluded last year that “NATO is currently not well-prepared for a Russian threat against a NATO Member State.” A year on, the leaders of the Alliance are still pressing the snooze button on the alarm. 

jueves, junio 25, 2015



Spendable Gold

by Jeff Thomas

June 22, 2015

The US has embarked on a programme to end the use of paper currency and replace it with a system in which all transactions are made electronically (by plastic card or cell phone).

That would mean that, if the programme were to be fully successful, the individual could not buy so much as a candy bar without swiping his bank card or phone.

On the surface, this might seem very convenient, but to view it in this light would be extremely shortsighted. In the long term, it would mean that no commerce could take place, except through a bank transaction.

This would allow for banks to charge the client for the privilege of spending his own money. It would also discourage savings, as the depositor would be steadily losing his money through monthly interest charges.

But it doesn’t stop there. The depositor would be virtually enslaved by his bank, to the point that the bank would have the power to approve or disapprove any transactions.

Additionally, government could institute direct taxation by debiting the account (since they would have access to the account holder’s every monetary transaction and could decide unilaterally what to charge at tax time).

To a great extent, the elimination of currency that can pass between individuals would spell the end of monetary freedom.

The US government is hurrying the demise of the paper dollar as quickly as it is able.

Why the urgency?

The answer is that both the government and the central bank, through runaway borrowing, have become insolvent and, at some point soon, will collapse. If that were to happen, there would be a run on the banks.

But if the banks held all the money electronically and it were no longer possible for a depositor to remove his funds in the form of paper banknotes to then be stuffed in a mattress, the depositor would be at the mercy of the bank. He would go down with the system.

Texas Gold

But a new development on the horizon suggests that pushback may already have begun.
The state of Texas has passed a bill to create a gold depository and to create a means for transactions to occur in precious metals.

(The US Constitution states in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts….” Therefore, whilst a state may not produce its own fiat currency, it can use gold and silver as payment.)

Under the new law, an account holder could use an electronic system to make payments to others who hold accounts. (A portion of his gold on deposit would be transferred to the other party.)

This legislation, if it’s followed through upon, would end the monopoly now held by the Federal Reserve to create money, and end the plan for the banks to totally control money.

Any individual who sees the currency debacle coming would be able to withdraw his funds and buy gold. Were this legislation to spread to other states, each state could develop the ability to be economically independent of the central bank.

So, may all US residents breathe a sigh of relief?

Not likely.

It’s anyone’s guess as to what the US government will use as its tactics, or how it will justify them, but it cannot tolerate this move by Texas. They must find a means to quash this legislation before it’s put into practice.

Perhaps they’ll declare this legislation to be an act of monetary secession, which cannot be accepted (even though Texas has a legal right to secede, if it wishes). Or they may claim that gold is the preferred currency of terrorists and that, if Texas is allowed to have a bullion bank, it will become the terrorism centre of the US.

However it plays out, the pressure from the federal government can be expected to be considerable.

But what if several states reacted as Texas has? What if Americans in general figure out what is to befall them and realise that precious metals are an answer? The very union of the states as a country could be in question.

To be sure, as the effort to eliminate the holding of currency plays out, we shall see, worldwide, a plethora of solutions popping up. And there can be little doubt that gold will play a significant part in the various attempts to maintain personal control of wealth.

Global Gold

In recent years, quite a few private companies have been created whose purpose was to provide gold depositories, with the ability to handle transactions from party to party in gold, by the gram, much in the way that banks presently handle transfers in cash.

Some of these companies have failed, because the principals diverted the deposits for other purposes.

Some have been killed off due to US government harassment and/or legal attacks.

But others have survived.

Certainly, we shall see many more of them in the future, and those that are successful are likely to be incorporated outside the US (and the EU, for that matter), where they can operate more freely.

As more of them appear, standards will develop, and together they have the potential to form a new Global Borderless Currency System, independent of exchange rates and political manipulation.

At present, no gold Digital Currency Banks (DCBs) engage in lending and this is likely to continue, as the practice of irresponsible lending has been one of the very causes of the current economic crisis.

It should be borne in mind that such services are not a panacea.

First off, any sort of deposit (whether in a conventional bank, gold bank or any other type of bank) necessarily means that your wealth is no longer physically in your hands, and therefore the level of risk has increased.

Second, payments can only be made through a gold DCB if the recipient agrees to this form of payment.

Third, payment is by the gram, so the service is not useful for to-the-penny payments.

(A gram of gold is worth, roughly, US$40 at present, so it would be useful only for larger transfers. A conventional bank would still be necessary to make everyday purchases such as groceries and gasoline.)

However, assuming conventional banks were willing to accept transfers of money from gold DCBs, the bulk of an individual’s wealth could be maintained in the gold depository, and regular transfers could be made to the conventional bank to cover day-to-day purchases.

And whilst this would be a bit of a nuisance that does not presently exist, it would save the bulk of the individual’s wealth from the controls and confiscations that are most certainly on the way with conventional banking.

In the future, anyone who wishes to retain a measure of his personal economic liberty is going to have to work harder at it. However, he will not be alone. Historically, the more controlling governments become, the more inventive people become in circumventing the system.

As present-day examples, we can look at such countries as Argentina and Venezuela. Each time their governments pass new legislation to further control the free flow of money, a dozen new leaks in the system pop up.

Inventiveness has always proven to win out in the end.

Alternate forms of currency and black markets appear spontaneously and become too numerous to regulate. These markets are generally illegal, and in a way, that’s their foremost attribute, as an illegal market is a free market: it is unregulated and has the potential to thrive if it cannot be controlled.

Eventually, the government is forced to cave in to the free market because it works. (Possibly the most recent such case is Zimbabwe in 2008, where, eventually, even the government itself began using the black market, as it was the only remaining market that was actually functional.)

We cannot be sure at this juncture whether Texas will succeed or fail. Nor can we be certain what role gold will have as governments increase their strangleholds on cash.

We can, however, be sure of two things: first, that we are in for a rough economic ride in which many people will lose much of their wealth and economic freedom and, second, that however Machiavellian economic controls are in one or more jurisdictions, relative freedom will correspondingly expand in others.

The Miracle of Pope Francis

The clash of visions harks back to that between Adam Smith and Thomas Malthus.

By William McGurn

June 22, 2015 7:02 p.m. ET

Pope Francis.   Pope Francis. Photo: Associated Press

You might call it his first miracle. Pope Francis has succeeded in getting the New York Times NYT 0.98 % to do what perhaps no pope has done before: hail a papal teaching as “authoritative.”

For decades the Times has warred with popes over moral issues such as marriage or the value of unborn life. But when it comes to science and climate change, the paper that likes to regard itself as the paper of record is now on record as recognizing the authority of a papal encyclical.

True, the Times did modify its praise with the adverb “unexpectedly.” And in fairness, it was Pope Francis who crossed the Tiber to embrace the Times’s orthodoxy here rather than the other way around. But such is the glee at having a papal imprimatur on the notion of man-made climate change leading the planet to catastrophe, those busy applauding are willing to overlook the pope’s critique of an environmentalism that protects endangered species but not the unborn child.

Then again, perhaps that’s because they recognize he has embraced their logic if not their conclusion.

For if resources are truly finite, and if man is driving climate change, then each additional human being means a smaller slice of the pie for everyone else—and a larger carbon contribution that brings us closer to environmental Armageddon. The point is, it’s not the logic the greens have wrong; it’s their assumptions.

Which brings up a striking characteristic of this document: its bleakness. Only months ago, Pope Francis warned members of the Vatican Curia against being too dour. His earlier apostolic exhortation was called “The Gospel of Joy.” But for a document whose title is taken from a St. Francis of Assisi hymn celebrating God’s creation, “Laudato Si’ ” (“Be praised”) is steeped in pessimism. “Doomsday predictions can no longer be met with irony or disdain,” the pope writes.

Other popes have issued bracing critiques of modern Western culture. Pope Francis, however, goes deeper. This encyclical is less a corrective to the excesses of science and technology and markets than it is an argument that they are fatally flawed.

In an online article for the religious journal First Things, editor R.R. Reno describes the encyclical as a “dark reflection on the systemic evils of modernity,” one that sees “perversion and decadence in a global system dominated by those who consume and destroy.” Pope Francis at one point declares business “a noble profession,” but you’d never know it from the rest of the document.

Indeed, the pope seems to embrace the idea that global capitalism exploits those in poor countries—even though investing in a factory or opening a business in the developing world is inherently an affirmation. It means a company recognizes that a place and its people have untapped potential: They have something to contribute to the global economy. The pope often denounces the “economy of exclusion,” and rightly so. But economic growth and the expansion of markets are inclusive.

As for the environment, yes, there are plenty of examples when businesses befoul the environment and leave the costs to the community. But if profit is the problem, why is it that the cleanest water, the healthiest air and the greenest environments are in rich and developed lands rather than poor and undeveloped ones?

In some ways the conflict is not new. After all, it was a cleric, the Rev. Thomas Malthus, who gave his name to a zero-sum view of life that saw men and women breeding to their own destruction. In sharp contrast, the first economist, Adam Smith, wrote that to complain about population growth was to lament “over the necessary effect and cause of the greatest public prosperity.”

Nor is Smith alone. Gary Becker won the 1992 Nobel Prize in economics for his work on human capital. Julian Simon called people “the ultimate resource” in his 1981 book by that title. In the 1970s when predictions of a global apocalypse were also in vogue, Lord Peter Bauer of the London School of Economics countered Malthusian materialistic assumptions by highlighting the absurdity of the idea that when a calf is born the national wealth goes up, but when a baby is born it drops.

Put it this way. If you were a parent whose family was languishing in soul-crushing poverty in some desperate part of Africa, you’d hear two messages today:

The economist and entrepreneur will tell you that there is no nation so poor that its people cannot lift up themselves if they have the freedom to take advantage of modern technology and participate in the global marketplace. In the process, their neighbors will also be enriched and the environment improved.

Meanwhile, Pope Francis suggests that the impoverished in the developing world can never have better lives or a cleaner environment until the West imposes a much-reduced standard of living on itself.

Which offers the more hopeful and human way forward?

Mending Hearts

Blood Pressure, the Mystery Number


JUNE 22, 2015

Glenn Lorenzen at church in Weymouth, Mass., in 2014. He has had two heart attacks, and his systolic blood pressure, once above 200, is now 124. Credit Kayana Szymczak for The New York Times       

Almost half a century after rigorous studies showed medicines that lower blood pressure prevent heart attacks, strokes and deaths, researchers still do not know just how low blood pressure should go.
More than 58 million Americans take these drugs, but this fundamental question remains unresolved.
“We all know treating hypertension is good, but we don’t know how aggressive we should be,” said Dr. Michael Lauer, the director of the Division of Cardiovascular Sciences at the National Heart, Lung and Blood Institute.
The institute is seeking definitive answers as part of its mission to drive down deaths from cardiovascular disease, continuing the decades-long plunge in mortality rates from this leading killer.
The results of a large and rigorous study, called Sprint, are expected in 2017. Researchers are following 9,000 middle-age and older adults with high blood pressure. Half were randomly assigned to get their systolic pressure — the top number that measures pressure when the heart contracts — to below 120 while the others were to get to below 140. The study will measure not just heart attacks, strokes and kidney disease, but also effects on the brain. Do people think better and avoid dementia with lower pressure?

In the meantime, doctors are making decisions in a fog of uncertainty.
What about a patient like Glenn Lorenzen, 67, whose systolic pressure was a frightening 220 in October? On a chilly day in December at the cardiovascular clinic at the Boston Veterans Affairs hospital, he had received the good news that drugs and weight loss had lowered his reading to 124.
Should he be happy? Should he aim to be below 120? Or should he ease up on the medications a bit and let his pressure drift toward 140 or even 150?
One school of thought says blood pressure rises with age to push more blood into the brain.
Another says high blood pressure damages the brain, perhaps causing silent ministrokes.
“We don’t know which is right,” said David Reboussin, a biostatistician at Wake Forest University who is a principal investigator for the new federal study.
The trend in geriatrics is to let pressure drift up, although not above 150, said Dr. Alfred Cheung, a study investigator who is a nephrologist and professor of medicine at the University of Utah.
“It’s not based on hard data,” he said.
The lack of evidence is at the heart of a dispute that is partly an artifact of the way thinking on blood pressure evolved.
When drugs to lower blood pressure came on the market in the 1950s, many doctors did not know if they should prescribe them. They thought systolic pressure should be 100 plus a person’s age. The conventional wisdom was that blood vessels stiffen with age, so higher pressure helped push blood through them.
That view was discredited in 1967 when a rigorous study comparing the drugs with a placebo ended early because those taking the medicines had so many fewer strokes and heart attacks.
The drugs became mainstays in medicine, credited with saving millions of lives.
“The general thinking — incorrectly — was that as you get older, the systolic naturally goes up” to supply the brain with blood, said Dr. William C. Cushman, the chief of preventive medicine at the V.A. Medical Center in Memphis.
It was only in 1991 that the first study on systolic pressure was published. It and subsequent research concluded that the treatment goal should be a level below 150 in order to prevent heart attacks, heart failure and strokes. Almost no studies examined the outcomes at lower goals.
So doctors and guideline makers have a conundrum, Dr. Cushman said. “The epidemiology is consistent that having a systolic pressure of 120 or even below 120 is associated with reduced cardiovascular mortality. But that doesn’t necessarily mean that treating with medications to reach that level will give you that benefit.” The concern is that drugs always have more effects than the one they are being used for. So a blood pressure lowered with drugs is not necessarily the same as one that is naturally lower.
Guidelines from experts are all over the map. A panel appointed by the National Heart, Lung and Blood Institute suggests a systolic pressure below 150 for those older than 60. The American Heart Association and other groups say it should be under 140.
European guidelines call for a systolic pressure less than 150 except for older adults, but they also take into account a person’s risk of heart disease when deciding how low that number should go. And epidemiological studies that follow large groups of people over time have found that people whose systolic pressure is naturally 120 or lower have the lowest risk of heart attacks and strokes.
The guidelines from the Heart, Lung and Blood Institute panel constituted one of the most ambitious efforts to build a consensus for blood pressure levels. The mission was to use data from rigorous studies rather than expert opinion, the older standard.
Previous guidelines by a similar committee convened by the National Institutes of Health had set a goal of systolic pressure below 140. The new guideline called for a pressure below 150 for people age 60 and older. “That is where the benefit was seen,” in clinical trials, said Dr. Suzanne Oparil, the director of the vascular biology and hypertension program at the University of Alabama in Birmingham and chairwoman of that committee.

Dr. J. Michael Gaziano, a Harvard professor of medicine, criticizes the system for grading blood pressure improvements. Credit Kayana Szymczak for The New York Times 

But when the committee’s report was published in December 2013, it immediately came under fire and five out of the 12 committee members published their own report, advocating blood pressure below 140.
“A minority group on the guidelines panel felt it was insane to raise the target to 150 in the segment of the population at highest risk from hypertension,” said Dr. Jackson T. Wright, Jr. of Case Western Reserve University, who was among the dissenters.
And it’s not just the question of the right goal for systolic pressure. Blood pressure and cholesterol levels are now treated very differently. Cholesterol guidelines take into account a patient’s overall risk of a heart attack. But with blood pressure, at least for United States guidelines, the only thing that matters is blood pressure levels and not other factors like family history or cholesterol levels.
That was how the studies were designed, though, Dr. Cushman said. Cholesterol trials took other risks into account. Blood pressure trials looked at only blood pressure. But clearly some people are at lower risk than others even though they have the same blood pressure. Yet all are treated the same.
Should that change?
“You’re the thinnest person I know,” Mr. Lorenzen told Dr. Gaziano on the recent visit.
Mr. Lorenzen, who has had two heart attacks, is still heavy, but he is one of Dr. Gaziano’s star pupils. He has lost 60 pounds and exercises most days. When his pressure used to be 200 and above, he said he felt glum and his head hurt “like a wicked sunburn.” Although high blood pressure is often called the silent killer, when pressures go very high, people may feel effects from increased pressure in the brain, Dr. Gaziano said.
“Your blood pressure is headed in a good direction, better than I would have expected,” Dr. Gaziano told him. “The medicine alone wouldn’t do it. I have a feeling your exercise and weight reduction have played a significant role.”
“I get an A,” Mr. Lorenzen said proudly.
Hospitals and medical practices evaluate doctors by how well patients’ pressures adhere to guidelines and often penalize them financially when patients are not adherent, so Dr. Gaziano would get very high marks for Mr. Lorenzen with a blood pressure level of 124. The V.A. wanted systolic pressure below 140.
But Dr. Gaziano said the grading system that targets a single value as a measure of success is flawed. “If a patient starts with a pressure of 180 and gets it down to 145, I get a bad mark. I did not succeed. But if a patient goes from 140 to 139, I succeeded.”
Another patient at the clinic that day, Joseph Moscillo, 65, of Medford, Mass., had had a heart attack, but he had reduced his pressure to 150 from 200. He would not have been seen as a success story. But Dr. Gaziano said he believed that rather than adding more drugs to lower his pressure, it was more important for Mr. Moscillo to trim down from 225 pounds.
“We can keep piling on meds, but it is a losing game if you don’t exercise and control your weight,” Dr. Gaziano told Mr. Moscillo.
The results of the Sprint study may affect doctors’ daily decisions. If it finds that a pressure of below 120 is better than below 140, then the plans for Mr. Lorenzen and Mr. Moscillo would probably change.
”If Sprint shows that below 120 is clearly better, that will change the whole landscape,” Dr. Cushman said.
But if the study finds that below 120 is no better than below 140, “we are left where we are now,” he added.
A third possibility is that a pressure of below 120 is actually harmful.
Few expect that but, Dr. Cushman cautioned, “You never know what you will find in a study until you open the envelope.”