gop “rule 40b” makes brokered convention impossible, only @realdonaldtrump qualifies to be nominee

A little know GOP rule was put into place in 2011, to help Mitt Romney secure the nomination and prevent an outsider like Ron Paul from using delegate tricks to become the nominee or force a brokered convention: Rule 40b.

The rule is now haunting the GOP establishment as they watch their party apparatus getting dominated by Trump, and Trump beating them with their own rules to prevent such an occurrence from happening.
In Layman’s terms:

The Rule prevents a candidate who does not meet a qualifying threshold (which only Trump has reached) from being considered on the Second Ballot.

In short: The establishment cannot stop Trump. It’s over.

Even John Boehner admits this. (LINK)


Technically, most of the analysts citing Rule 40 are referring to the current version of Rule 40(b), which sets a certain minimum threshold for candidates at the Republican National Convention. According to this rule, candidates must arrive at the convention with a majority of the delegates from eight states or territories, or else they are disqualified from the first round. In most elections, this is a mere formality because the clear winner of the nomination is well-known before the convention begins, making the convention an extended infomercial for the party and its nominee.

Of course, there is good reason to suspect the Republican convention will be rather more exciting this year. Gidley noted there is apprehension among front-runner Donald Trump’s supporters that the GOP Establishment will use some “shenanigans” to “steal” the nomination from him at the convention. Among those shenanigans could be changing Rule 40 to bring candidates who don’t meet the established minimum threshold into the game.

There are two ghosts from the 2012 election haunting the Shakespearean drama of the 2016 primary, and Gidley invoked them both in a single breath: Ron Paul and Mitt Romney.

“This is actually called the ‘Ron Paul Rule.’ The Romney people put this in place,” Gidley explained. “The Establishment hurt Ron Paul, but I think this Establishment rule will actually help Donald Trump.”

ule 40 “was an effort to stop the Ron Paul faction from gaining traction at the convention,” Gidley recalled. “And now we see the fruits of that rule, which was designed to stop Ron Paul, could effectively stop the Establishment.”

“The second part of the rule is, you can’t even count votes for anybody else who doesn’t meet that threshold,” he pointed out. “So people can try to submit votes for other people — like Kasich, or like Rubio, or like Romney — but if you haven’t won a majority of the delegates in eight states, you can’t be on any ballot, at any time. First, second, third, fourth, fifth — it doesn’t matter.”

It has been suggested that the Rules Committee will simply change Rule 40 to arrange whatever outcome is necessary to block Trump, but Gidley was skeptical of this idea. Normally, a presumptive candidate who has reached the “magic number” of bound delegates needed to secure the nomination can control the rules. If Trump is held below that 1,237-delegate threshold this year, the Rules Committee could theoretically rewrite the rules to hurt him, but Gidley anticipated sheer chaos if such tactics were employed.

Breaking: GOP “rule 40b” makes brokered convention impossible, only Trump qualifies to be nominee.


real #unemployment 42.9%: the warren buffett economy #scprimary

As documented in Parts 1-3 (Part 1, Part 2, Part 3), the Fed has generated a $50 trillion financial bubble since Alan Greenspan took the helm in August 1987. After 27 years, honest price discovery has been destroyed, thereby reducing the nerve centers of capitalism—-the money and capital markets—-to little more than gambling casinos.

Accordingly, speculative rent-seeking in the financial arena has replaced enterprenurial innovation and supply side investment and productivity as the modus operandi of the US economy. This has resulted in a severe diminution of main street growth and a massive redistribution of windfall wealth to the tiny share of households which own most of the financial assets. Warren Buffett’s $73 billion net worth is the poster boy for this untoward state of affairs.


The massive and systematic falsification of asset prices which lies at the heart of this deformation of capitalism is a direct and unavoidable consequence of monetary central planning. That is, the pursuit of Keynesian business cycle management and stimulus through central bank interest rate pegging and massive monetization of existing public debt and other securities—-especially since the latter has no purpose other than to artificially goose the price of bonds and lower their yields; and also via other indirect  methods of financial asset levitation such as the Greenspan/Bernanke/Yellen doctrine of wealth effects and the implicit central bank “put” which underpins the economics of buy-the-dip speculators.

As previously indicated, the Keynesian bathtub model of a closed, volumetrically driven economy is a throwback to specious theories about the inherent business cycle instabilities of market capitalism that originated during the Great Depression. These theories were wrong then, but utterly irrelevant in today’s globally open and technologically dynamic post-industrial economy.

As reviewed in Part 3, the very idea that 12 people sitting on the FOMC can adroitly manipulate an economic ether called “aggregate demand” by means of falsifying market interest rates is a bad joke when in it comes to that part of “potential GDP” comprised of goods production capacity. In today’s world of open trade and massive excess industrial capacity, the Fed can do exactly nothing to cause the domestic steel industry’s capacity utilization rate to be 90% or 65%.

It all depends upon the marginal cost of labor, capital and materials in the vastly oversized global steel market. Indeed, the only thing that the denizens of the monetary politburo can do about capacity utilization in any domestic industry is to re-read Keynes’s 1930 essay in favor of homespun goods and weep!

As I detailed in the Great Deformation, the Great Thinker actually came out for stringent protectionism and economic autarky six years before he published the General  Theory and for good and logical reasons that his contemporary followers choose to completely ignore. Namely, protectionism and autarky are an absolutely necessary correlate to state management of the business cycle and related efforts to improve upon the unguided results generated by business, labor and investors on the free market.  Indeed, Keynes took special care to make sure that his works were always translated into German, and averred that Nazi Germany was the ideal test bed for his economic remedies.

Eighty years on from Keynes’ incomprehensible ode to statist economics and thorough-going protectionism, the idea of state management of the business cycle in one country is even more preposterous. Potential labor supply is a function of the global labor cost curve and now comes in atomized form as hours, gigs, and temp agency contractual bits, not census bureau headcounts.

In fact, the Census Bureau survey takers and the BLS numbers crunchers have not the foggiest idea as to what the real world’s potential labor force computes to, and how much of it is deployed on any given day, month or quarter. Accordingly, printing money and pegging interest rates in pursuit of “full employment”, which is the essence of the Yellen version of monetary central planning, is completely nonsensical.

Likewise, the Fed’s current “soft” target of 5.2% on the U-3 unemployment rate is downright ridiculous. When in the year 2015 you have 93 million adults not in the labor force—-of which only half are retired and receiving social security benefits(OASI)—-and a U-3 computational method that counts as “employed” anyone who works only a few hour per week—-then what you have in the resulting fraction is noise, pure and simple. The U-3 unemployment rate as a proxy for full employment does not even make it as primitive grade school economics.

At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.

By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!

Yes, we have to allow for non-working wives, students, the disabled, early retirees and coupon clippers. We also have drifters, grifters, welfare cheats, bums and people between jobs, enrolled in training programs, on sabbaticals and much else.

But here’s the thing. There are dozens of reasons for 180 billion unemployed labor hours, but whether the Fed is monetizing $80 billion of public debt per month or not, and whether the money market interest rate is 10 bps or 35 bps doesn’t even make the top 25 reasons for unutilized adult labor. What actually drives our current 43% unemployment rate is global economic forces of cheap labor and new productive capacity throughout the EM and dozens of domestic policy and cultural factors that influence the decision to work or not.

To be sure, for a brief historical interval—-from roughly the New Economics of the Kennedy Administration to the 2007 eve of the housing crash and financial crisis—- the Fed did levitate the GDP and meaningfully impact the labor utilization rate. That was owing to the one-time trick of levering up the household and business sector through the inducements of cheap debt.

The Warren Buffett Economy——Why Its Days Are Numbered (Part 4)


#jobsreport: 93.8 million adults unemployed (may -640,000 june -432,000 july -144,000)

The number of people not in the labor force reached another record high in July, according to new jobs data released Friday by the Bureau of Labor Statistics.The BLS reports that 93,770,000 people (16 and older) were neither employed last month nor had made specific efforts to find work in the prior four weeks.
The number of people outside the workforce in July increased 144,000 over June’s record when 93,626,000 were not in the workforce.

July’s labor force participation rate however remained the the same as June at 62.6 percent. Before last month the labor force participation rate had not been that low since October 1977, when the participation rate was 62.4 percent.

The BLS reports that the civilian labor force did experience a slight uptick from 157,037,000 in June to 157,106,000 in July after the month of June saw it drop by 432,000.

While the labor participation rate remains at the lowest its been since the late 1970s, the BLS highlighted that the unemployment rate remained at 5.3 percent and nonfarm payroll jobs increased by 215,000.


united nations: obama covered up iran sanctions violations (#irandeal)

A new United Nations report that the Obama Administration and other western governments may be covering up Iran’s violations of international sanctions of ahead of the upcoming June 30 deadline for a final nuclear deal to be agreed.

As Sangwon Yoon reports at Bloomberg View, the UN report provides clear evidence of sanctions violations, such as the head of the Quds force of the Islamic Revolutionary Guard Corps openly violating an international travel ban. However, it says, western countries have stopped reporting Iran’s violations, which could only mean a “reduction of procurement activities by the Iranian side,” or, more likely, a political decision by some member states to refrain from reporting to avoid a possible negative impact on ongoing negotiations.” The report’s evidence suggests a cover-up is the likeliest explanation.

Yoon quotes Mark Dubowitz of the Foundation for Defense of Democracies, who said: ““This is a clear political decision not to publicize these examples of sanctions evasion in order to ensure that public reporting on this doesn’t in any way jeopardize the talks or harden congressional resolve….The Obama administration has bent over backwards to try and whitewash Iranian violations both on the nuclear side and also on the sanction-busting side.”

In recent days, the State Department has worked hard to dispel a report by the New York Times that Iran had a large excess of enriched uranium and was unlikely to meet a June 30 deadline to oxidize it to meet agreed-upon constraints.

The growing impression–now reinforced by skepticism from the UN, of all places–is that the Obama administration is determined to reach a deal with Iran at any cost, even though doing so would prove Iran a path to a nuclear weapon within several years at most, and would grant it hundreds of billions of dollars in frozen funds to support its ongoing proxy wars.

united nations: obama covered up iran sanctions violations