Steve Bannon has described three converging forces shaping world politics: populist nationalism, the emergence of blockchain and cryptocurrency, and the movement for digital sovereignty in the face of overmighty tech firms.

Bannon told us: You have three converging forces, I believe, in the world,  Number one is this center-right, populist-nationalist movement that is politically driven, and it’s driven a lot by social media. On the second, you have this cryptocurrency, or blockchain. And the third, you have this concept of digital sovereignty — the taking of your intellectual property assets. And they’re all converging, I think, to empower this movement,. Right now, you’re serfs. You’re well-paid serfs, but you’re serfs. They’ve debased your currency, and so you’re continuing to underwrite debt for sovereign governments at zero interest rates, so you’re always on the spinning wheel like a little hamster, trying to get ahead. Because they’ve destroyed the ability of thrift, of you to save, to get ahead. It’s the same thing on your digital assets, your intellectual property.  They take it all for free. Facebook chief Mark Zuckerberg’s entire business model is based on these activities, taking your data for free and monetizing it, and then writing algorithms behind a wall that treat you like hamsters on a wheel.

Bannon at a  recent speech at a conference of France’s Front National — now reconstituted as ‘National Rally’ — said “Let them call you racist. Let them call you xenophobes. Let them call you nativists. Wear it as a badge of honour.”

“This is the great thing about the propaganda media,” answered Bannon.

“If you look at that speech, I built up [to that statement] … I talked about, ‘What is economic nationalism, that Donald Trump won on?’

“[Economic nationalism] doesn’t care about your race, doesn’t care about your colour, doesn’t care about your ethnicity, doesn’t care about your gender, doesn’t care about your religion, doesn’t care about your sexual preference.

“It cares about one thing: that you’re a citizen of the United States of America,” he said, citing low turnout for Hilary Clinton among working-class black and Hispanic voters before the election and rising prospects for those groups after the election to show how the concept works.

“That’s why I told these people, listen, the identity politics that Hilary Clinton came out with … racism, white supremacy — I sat there, and I told [the team] right there, ‘If she’s gonna run on identity politics and we run on economic nationalism — this was August 19th, and we’re down by 12 points — we are going to beat her. And we did.

“If they call you a racist they have nothing else to argue,” he concluded.

On Marine Le Pen and the Front National more particularly, Bannon was candid.

“Was I up there to say, ‘Those people are perfect’? They’re not perfect. The Deplorables are not perfect. I’m not perfect.

“I believe in the tenet of the Judeo-Christian West that man is fallen — we’re not perfect.

“But those are working-class people in France … I went there for one reason, to tell them they’re not alone.

“That this anti-establishment, populist-nationalist movement, as personified in Italy a couple days before, where two-thirds of the people voted anti-establishment, is on the rise, it’s on the move, and it’s only going to get stronger, it’s only going to get more powerful.

“And the reason is the party of Davos is destroying your citizenship, they’re debasing your currency, and they’re taking your data sovereignty — and as long as they continue to do that, people are going to rise up against it.”

Facebook, Twitter, and Google kowtow to the Islamic diktats of EU and Germany.  This is slow death, pure and simple.  These social media chose kleptocrats over the people.  This stupidity cannot last forever, leading to their decline and fall.

Germany fines social networks up to 50 million euros if they fail to remove hateful postings quickly! Germany has some of the world’s toughest laws covering defamation, public incitement to commit crimes and threats of violence, with prison sentences for Holocaust denial or inciting hatred against minorities. The measure requires social media platforms to remove obviously illegal hate speech and other postings within 24 hours after receiving a notification or complaint, and to block other offensive content within seven days.

It’s amazing how the establishment controls hoi polloi by censorship.  Every blog that dares tell the truth about the established institutions of politics, religion, education, and society is suspended by most blogging platforms for violating the terms of service.  Governments, big investors, and big donors are part of this scheme to gag dissenting voices.

Never forget that hate speech is also a part of free speech.  It’s amazing how frequently politicians accuse their competitors of hate speech or fake news. Instead of arguments based on facts and reason, we read nonsense based on false accusations and superstition.   

Schools and religions are major tools in brainwashing and controlling hoi polloi. It’s inhumane and ridiculous to imprison kids in schools for many years in order to indoctrinate them to the status quo and keep teachers busy.  Even though all religions are wrong and mumbo-jumbo escape from reality, governments support them in order to hoodwink the masses about the divinity of suffering.

This law sets out binding standards for the way operators of social networks deal with complaints and obliges them to delete criminal content. Statements that are deemed illegal under German law are now being conflated with statements that are merely deemed, subjectively and on the basis of entirely random complaints from social media users, who are free to abuse the code of conduct to their heart’s content, to be hate speech. Hate speech includes critiques of migration policies. To be in disagreement with the government’s policies is now criminal. Social media companies, such as Facebook, are supposed to be the government’s informers and enforcers, working at the speed of light to comply with the 24-hour rule. Rule of law, clearly, as in North Korea, Iran, Russia or any banana-republic, has no place in this system.

Social media platforms with more than two million users are obliged to delete or block any libel, slander, defamation or incitement, within 24 hours of receipt of a user complaint. The networks receive seven days for more complicated cases. Government could fine a social media company up to 50 million euros for failing to comply with the law; it could fine a company’s chief representative up to 5 million euros.

If Facebook insists on operating under rules of censorship, it should at the very least aim to administer those rules in a fair manner. Facebook, however, does not even pretend that it administers its censorship in any way that approximates fairness. Instead, Facebook’s practice of its so-called Community Standards, the standards to which Facebook refers when deleting or allowing content on its platform in response to user complaints, shows evidence of entrenched bias. Posts critical of migrant policies, for example, can get categorized as Islamophobia, and are often found to violate Community Standards, while incitement to actual violence and the murder of Jews and Israelis by Palestinian Arabs is generally considered as conforming to Facebook’s Community Standards!

Facebook’s bias is so strong that it recently restored Palestinian Arab terrorist group Fatah’s Facebook page, which incites hatred and violence against Jews, despite having shut it down only three days earlier. In 2016 alone, this page had a minimum of 130 posts glorifying terror and the murder of Jews.

EU is now imposing censorship on email providers and ordering postal authorities to screen letters, magazines, and brochures in the event that citizens spread xenophobia and fake news. During the Cold War, people living behind the Iron Curtain had their private letters opened by the communist authorities. Those passages deemed to be out of line with the communist orthodoxy, were simply blacked out. So many years after the fall of the Berlin Wall (1989), EU is reinventing itself in the image of the Soviet Union!

Don’t like millionaire black nationalists in the NFL refusing to stand for the anthem?

Too bad! It’s freedom of speech.

The same left that decided James Damore didn’t have freedom of speech at Google now insists that football players have it at the NFL. Never mind that the Google engineer was unknown until his firing while NFL players are celebrities whose behavior is televised nationwide to audiences of millions.

The left’s recent reunion with free speech came after vocally insisting that free speech was harmful, hurtful and racist. And the reunion didn’t last long. Right after insisting that the right of NFL black nationalists not to stand for the anthem was free speech, the left pivoted to accusing those players still standing for the anthem of “white supremacy”.

It’s only free speech if the left agrees.

The First Amendment protects unpopular speech as much as it protects popular speech. But popular speech doesn’t need much protecting. It’s unpopular speech that has to be defended.

And the nature of unpopular speech has changed. The anthem protests are a sign of how much.

When standing for the anthem becomes unpopular speech while demeaning it is popular speech, then the old measures of what kind of free speech needs defending no longer look anything like they used to.

Standing for the anthem has become the new counterculture. The question is, how do we protect it?

The biggest threat to free speech isn’t really government action. At least not right now. The Obama era saw ugly crimes against free speech that ranged from the arrest of a filmmaker for a YouTube video offending Muslims to eavesdropping on reporters to using the DOJ to investigate jokes about Obama.

But the real free speech threat was a crowdsourced culture war which manufactured its own social sanctions. The culture war is the collision between a secular leftist value system that its followers seek to forcefully impose on the entire country and the existing system of American values. When these two sets of opposing values collide, as they do when conservative speakers come to campus, Christian photographers refuse to participate in gay weddings or a tech company employee questions diversity, the most obvious victim is free speech. But free speech is always the first casualty of the culture war.

Speech is the lifeblood of culture. To win a culture war, you have to shut the other side up.

In the first phase of the culture war, the left seized the commanding heights of the media. Movies, television, music, newspapers and radio were consolidated into a network echoing the same ideas. This was largely done without any compulsion though victims of the old Fairness Doctrine might disagree. Outliers like conservative talk radio remained, but much like FOX News, they highlighted the homogeneity of the rest of the media. Everyone was getting the same set of political ideas all the time.

And, most impressively, a massive propaganda machine had been built without any of the brutality of the old USSR. Instead the machinery of capitalism had created a monopoly constantly spewing socialism.

But the old infrastructure model was quickly disrupted by the arrival of the internet.

The media coup had monopolized speech by monopolizing infrastructure. If you had enough licenses, printing presses and broadcasting facilities, you didn’t have to forcibly silence anyone. They just couldn’t be heard over the roar of your media machine.

The internet broke that model. Anyone could speak to millions with a site, a blog and a tweet.

Control was quickly reasserted. The media’s old stable brands were diversified with millennial internet brands. BuzzFeed and CNN might be wildly different in style, but they were vehicles for the same political message. The left still had the advertising industry connections and the networks to dominate messaging. Its entertainment side was expert at commodifying cool.

But the internet in general, and social media specifically, had altered the power relationship.

CNN and the New York Times didn’t care if you disagreed with them. You could try writing letters to the editor. You might even summon a small protest outside their headquarters. And it wouldn’t shake their monopoly over speech in any way. But speech on the internet is crowdsourced. The algorithms can be rigged, and occasionally are, but individuals still have too much choice and too much voice.

You couldn’t talk back to your TV. But you can talk back to CNN. And people can hear you.

The second phase of the culture war can only be won by controlling everyone’s free speech. The media has been trying to rig the game at the big tech company level. It’s gotten Facebook and Google to agree to political censorship under the guise of fighting “fake news” with “fact checking”. But even the term “fake news”, once the banner headline of the media’s censorship crusade, was hijacked by Trump.

Once upon a time, derailing a media narrative in such a short time would have been nearly impossible.

And that’s why the second phase of the culture war is underway. The internet has made it impossible to proceed with the culture war without destroying free speech. It’s why the New York Times is running serial anti-free speech pieces (even while condemning President Trump for threatening free speech).

The only way for the left to win the second phase is to either fundamentally change the structure of the internet so that it more closely resembles its old media model or to silence everyone who opposes it.

Changing the internet is an ambition that the American left now shares with leftist regimes like the People’s Republic of China. But even with the consolidation of the internet in the hands of a handful of big companies, Google, Amazon, Facebook, etc, it remains an improbable project. The hysteria over election tampering doesn’t just serve the purposes of the Dem coup plot against Trump. It also creates a casus belli for political “fake news” censorship and deeper changes to individual agency on the internet.

If China and (ironically) Russia ever get their dream of a completely censorable internet, it will be the left that built it for them as part of a plot against free speech disguised as a xenophobic political panic.

But the easier course is still crowdsourced censorship under the guidance of the media network.

Surveys show that the generation that came of age in the wild and open spaces of the internet is also the most illiberal when it comes to free speech. Growing up screaming at each other in YouTube comments sections and Xbox Live tournaments has made for touchiness, not tolerance.

The culture war of identity politics is a natural fit for the most diverse and narcissistic generation whose greatest skill is still being nasty to other people on the internet while playing the heroic victim.

If you’re going to crowdsource censorship, it helps to keep your censors personally invested. And that’s what identity politics does. It also doesn’t hurt that some of the worst violations of the Constitution in the last several generations were enacted in the name of fighting bigotry. If you are going to end free speech, the best flag to fly is still anti-racism. And if you’re going to demean the anthem, do it by claiming to be the victim of racism even when you’re a privileged black nationalist celebrity who sees more money in one year than most working people of any race will ever see in an entire lifetime.

The quiet reshaping of the national culture is no longer an option. The culture war uses harassment, shaming and even violence to silence speech by those it opposes and to impose its speech instead.

And that is the overlooked element in the free speech debate.

It’s not just about silencing those you don’t like. It’s about creating a safe space in which your views are the only ones that can be heard. Professional victimhood is the pose of professional victimizers. And the best evidence of that is how easily they turn to violence when they don’t get their own way. Social justice crybullies go from shouting, “I can’t breathe” to wrapping their hands around their victim’s necks.

The culture war is a conflict between two sets of values. These values are meaningful and personal. Like the anthem, they stir our hearts, command our respect and embody the best of us.

And the left wages its culture war by attacking American values while demanding respect for its own.

The anthem must be disrespected, but Black Lives Matter can’t be criticized. Piss Christ must be displayed in museums, but don’t you dare wear a sombrero for Halloween. Speakers who praise Hamas and call for the murder of Jews are welcome on campus. But there’s no room for thinkers who praise free enterprise.

This is what a culture war looks like. And its first casualty is free speech.

The left doesn’t reject free speech because it’s a bunch of easily triggered “snowflakes”. It rejects free speech because it wants absolute power. And the first step is killing a free and open society.




A Muslim killed three people in southwestern France on Friday as he held up a car, fired on police and seized hostages in a supermarket, screaming Allahu Akbar before security forces stormed the building and killed him. Sixteen other people were wounded, including two who were seriously hurt.

More than 240 people have been killed in France in attacks since 2015 by Muslims. Friday’s attacker was identified by authorities as Redouane Lakdim, 25, from the city of Carcassonne.

Two people were killed when the Muslim attacked the supermarket in the nearby small town of Trebes. 20 people in the supermarket found refuge in its cold storage room.

Moroccan-born Lakdim was known to authorities for petty crimes, but had been under surveillance by security services in 2016-2017 for links to the radical Salafist movement.

Lakdim first killed one person with a bullet in the head while stealing a car in Carcassonne, a walled city with a medieval citadel that is one of France’s top tourist attractions.

He pulled up in the car to four police officers who were jogging in the city and opened fire, hitting one in the shoulder, then sped off to Trebes, about 8 km (5 miles) to the east, where he took the hostages in the supermarket.

Macron doesn’t give a damn about the terror of niggers and allahuakbars.  His own skin is more important to him. Squandering the taxpayers’ hard-earned money, Macron spends €10,000 per month on makeup and another €10,000 on haircuts! François Hollande and Nicolas Sarkozy spent exactly the same amounts on makeup and haircuts. French cannot believe Macron’s face costs €20,000 per month!

A deliberate side-effect of Macron’s policies is population change. Like many European leaders, Emmanuel Macron seems convinced that the remedy for the demographic deficit and the aging of ethnic European populations is more immigration. On September 6, 2015, he stated that “immigration is an opportunity for all of us”. On February 12, 2017, he said, “I will propose to the Algerian government the creation of a Franco-Algerian Bureau of Youth, to encourage mobility between the two shores of the Mediterranean”. A few weeks later, he declared that “the duty of Europe is to offer asylum to all those who seek its protection” and that “France must take its fair share of refugees”.

Almost all refugees arriving in France are Muslims. France already has the greatest percentage of Muslims in Europe. Macron wants Islam to have more room in France. His position concerning other religions is not known. His position on Islam is clear: Today, Muslims of France are poorly treated … Tomorrow, a new structure will make it possible to relaunch the work sites of the Muslim religion in France: the construction and the improvement of worthy places of worship will take place where their presence is necessary, and the training of imams of France will be organized.

The French branch of the Muslim Brotherhood congratulated Macron on his victory. It published an official communiqué saying: “Muslims think that the new President of the Republic will allow the reconciliation of France with itself and will allow us to go farther, together.”

Macron’s prime minister, Edouard Philippe, has close ties with the Muslim Brotherhood and favored their installation in the city of which he was the mayor, Le Havre. Richard Ferrand — a Socialist MP, the secretary-general of En Marche! since its inception, and now Minister for the Cohesion of Territories — has been financially contributing to the anti-Israel BDS movement and to “pro-Palestinian” organizations for years. Gerard Collomb, the Socialist Mayor of Lyon, and now Interior Minister, financed the French Institute of Muslim Civilization that will open its doors in December 2017.

Macron is a useful idiot of Islam. How the French could have chosen Emmanuel Macron? The mainstream media have played a role. Evidently, also, some people do not want to know the truth, even when the truth is in front of their eyes. Some people are accustomed to the idea that there are people above them in the hierarchy whose job is to think about, and take care of the big things while they, the citizens, the mice, take care of their own little lives.

A majority of the French did not choose Macron but apparently accept that there are people above them. Those who do not accept this fact so easily are many, but in minority, and they are likely to become a smaller minority. Macron is counting on their resignation. It is not certain, however, that the millions of people who voted for Marine Le Pen, despite her extremely problematic closeness to Russia and the harsh campaign against her, or those who voted for the leftist candidates, will so easily give up. It is also not certain, thanks to willful blindness and appeasement, that Islamists will mellow, or that Jihadi attacks will stop.

No-go zones are no longer relegated to the suburbs, where migrants and Muslims have usually been concentrated. No-go zones, through mass migration, have been emerging in the heart of Paris, Bordeaux, Toulouse, Marseille, Grenoble, Avignon — districts “privatized” here and there by a mix of drug traffickers, Salafist zealots and Islamic youth gangs. The main victims are women. They are sexually harassed and some are sexually assaulted.

Politicians, as usual, are fully informed of the situation imposed upon women. A report from the High Commissioner on Equality revealed that in the sensitive urban areas, nearly one in ten women has suffered physical or sexual violence. Public areas are occupied exclusively by men who park there, and women are merely authorized to pass through them. Women have been seen public spaces desert them. You have to stay away, not provoke. In some places, male groups monopolize public spaces and sometimes block the access to the entrances of buildings. Women are obliged to avoid the elevator in order to flee glances and remarks that are unpleasant. They have go up the stairs — dirty, unlit and several stories high. Cafés are occupied exclusively by men; women do not dare to enter them; they even avoid passing by.

Pseudorefugees are back at Calais! Niggers, ragheads, and naive do-gooders of Calais jungle raise hell. People-smugglers are going to extreme lengths to get migrants in Calais across the Channel to Kent. Placing debris on motorways to stop vehicles and then ambush them is a familiar tactic used in Calais. Truck drivers are threatened with chainsaws and lorries are smashed and set on fire. Migrants wielding bats and knives smash up vehicles on roads near the town as their owners sat in traffic.

Less than six weeks after the first driver death at Calais caused by migrants, a trucker has been struck on the head with a brick by illegals who then stole the victim’s vehicle.

The Road Haulage Association (RHA) described the attack on the driver, who is recovering in hospital with a serious head injury, as extremely disturbing — and noted that it comes as a stark warning to UK-bound hauliers that migrants will stop at nothing to reach our shores.

“Since this situation began we have stressed that migrants are putting the lives of HGV drivers at risk,” said RHA chief executive Richard Burnett, adding: “This latest method of hijacking is is a new one and clearly shows that the desperation of migrants to get to the UK has reached new heights.”

The driver had stopped on the A16 motorway outside Calais, near Marck, where he noticed migrants trying to climb into his truck.

When he exited the vehicle to inspect the damage, he was attacked by the mob who then stole his truck and drove off towards the port — leaving the driver on the floor for dead, bleeding from his injuries.

The National Vehicle Crime Intelligence Service (NavCIS) said the hijackers, who were stopped by police about five miles away from the incident, were believed to number between 20 and 30 men.

NavCIS Industry liaison and intelligence officer Andrew Round said: If the levels of violence seen over the last six to eight weeks persist, I’d like to see the military brought back in. It is just not fair on the drivers; something has to be done between the UK and French governments above and beyond what they are already doing.

In June, a Polish driver was killed on one of the main approach roads to Calais after migrants dragged tree trunks onto the A16 motorway in a bid to slow traffic and break into vehicles bound for Britain.

The RHA reported that nine Eritreans were subsequently found in the back of one of the trucks.

The naive do-gooders of Jungle are not so naive after all.  They are there for free sex and orgies!  Volunteers in the Calais Jungle have been sexually exploiting refugees and even child migrants. The Calais Jungle is now a free brothel, a magnet of pedophiles!  Any man or woman can come in and rape a child!  Sex tourism galore!  Sex-deprived Brits come to Jungle for orgies, pretending they are volunteers!

Migrants have become increasing audacious and violent in their attempts to enter the UK illegally. Some roads are now a no-go zone between midnight and 6am. The situation at the Jungle has become uncontrollable as police numbers drop and migrant numbers rise.

We know from the drama in Calais that mobs of fighting age men are staking their claim to economic betterment while the liberal left continue to grant them refugee or asylum status before the fact. They are braying jackals, thieves, and muggers – those willing to flout the law in their search for freebies in Britain. And even then, they’ll probably complain about their complimentary meals, provided courtesy of the British tax payer.

Look back to recent pronouncements, admissions even, made by charities in Calais. Clothes and food are being dumped and burnt by the migrants in Calais. They have enough food, they have enough clothes and we have seen clothes everywhere thrown.

The fact is the British people are being played for mugs again, and the pro-migrant, disaster tourism brigades who stoke up tensions in Calais drip feed news stories into the media. Mass migration and open borders is a bumper industry. The British government is spending tax payer money funding these groups who attack the tax payer and indeed the British government.

At Calais, you will meet niggers and ragheads who destroyed their papers and refuse to be fingerprinted. Most of them are middle class and economic migrants and admit they are not refugees. They just want Brits to provide housing, welfare, and free access to the British NHS. But if you are honest about your status then you would have claimed asylum in the first country you arrived in.

Human feces were found in Coke cans in bottling plants. The night shift at a Coca-Cola plant was disrupted when a container of cans clogged up the machines, only for workers to discover a number were filled with human waste! It was absolutely horrible, and the machines had to be turned off for about 15 hours to be cleaned. 

Some migrants have made that long journey in the lorry and in their desperation were forced to use the cans instead of a toilet.  Cans arrive at factories without tops on, to be filled with the fizzy drink before they are sealed and sold.

Interior Minister Gerard Collomb made it official. France is “in a state of war”.

It’s not just rhetoric. Bombs turn up in a posh Parisian suburb. Two young women are butchered at a train station. And it’s just another week of an Islamic World War III being fought in France.

From the November attacks in 2015 that killed 130 people and wounded another 400+, to the Bastille Day truck ramming attack last year that killed 86 and wounded 458, the war is real.

French casualties in France are worse than in Afghanistan. The French lost 70 people to Islamic terrorist attacks in Afghanistan. And 239 to Islamic terrorist attacks in France.

The French losses in Afghanistan were suffered in over a decade of deployment in one of the most dangerous Islamic areas in the world. The French losses in France were suffered in less than two years.

There’s something very wrong when Afghanistan is safer than Paris.

10,000 French soldiers were deployed in the streets of their own country in Operation Sentinelle after the Charlie Hebdo – Kosher supermarket attacks in 2015. Thousands of French soldiers are still patrolling, guarding and shooting in French cities which have become more dangerous than Afghanistan.

Operation Sentinelle has deployed twice as many French soldiers to France as to Afghanistan. And French casualties in the Islamic war at home have been far higher that they were in Afghanistan.

When the French intervened to stop the Islamist takeover of Mali, they suffered a handful of losses. The 4,000 French soldiers came away from Operation Serval with 9 casualties and Operation Barkhane amounted to 5 dead. The Gulf War? Another 9 dead. It’s a lot safer to be a French soldier fighting Al Qaeda in a Muslim country than a Parisian civilian going to a concert in his or her own city.

French casualties in the struggle with Islamic terror in just the last two years are approaching the 300 casualties of the Korean War.

France is at war. That’s why there are soldiers in the streets. Its new anti-terrorism bill creates a permanent state of emergency. Suspected extremists can be placed under administrative detention in their own homes and neighborhoods under police surveillance and remote monitoring.

Pop-up checkpoints can appear in public spaces that are designated as security zones where anyone can be stopped and searched. Mosques can be shut down for six months. Public gatherings can be banned. Warrantless searches can be conducted within miles of potential targets.

The Interior Ministry will have police state powers. And it will be able to wield quite a few of them without having to go through the formality of asking judges nicely for permission.

Some of these measures should be familiar. France is the new Israel.

France’s Interior Minister called the anti-terrorism bill, a “lasting response to a lasting threat”. The choice of words recognizes that Islamic terrorism is here to stay.

The “State of War” is permanent. And France has no plans for winning the war. Instead it’s trying to get better at playing defense. And that’s what most Western domestic counterterrorism efforts amount to.

France is just taking the lead because it has the biggest problem.

The British put soldiers on the streets after the Manchester Arena bombing. The Italians and the Belgians began deploying soldiers in cities around the same time that the French did.

When an illegal alien Muslim terrorist due to be deported murdered two young women in Marseille while shouting Allahu Akbar, French soldiers opened fire. The 24-year-old who shot the terrorist was a reserve member of a regiment of combat engineers in the French Foreign Legion.

The French Foreign Legion isn’t off fighting in a foreign desert somewhere. It’s fighting in France.

French soldiers are told to loudly announce, “Stop or I Shoot”. And then open fire. And that’s what he did. And French soldiers are being forced to learn the phrase and expect to come under attack.

In February, French soldiers were attacked by a Muslim terrorist outside the Louvre. The Egyptian Jihadist shouted, “Allahu Akbar” and came after them with a machete. One soldier from the 1st Régiment de Chasseurs Parachutistes was wounded. The attacker was shot down.

The 1st Régiment de Chasseurs Parachutistes had been deployed to Afghanistan and Mali. Now they were at the Louvre. You don’t need to be Napoleon to know that counts as a major retreat.

A month later, a Muslim terrorist shouted “I am here to die in the name of Allah” while holding a female air force soldier hostage at Orly Airport.

He got his wish courtesy of her fellow soldiers.

In August, six soldiers from the 35th Infantry Regiment were hit by a BMW driven by a Muslim terrorist. Members of a regiment which had been deployed in Afghanistan were sent to a military hospital after an attack in the wealthy Levallois-Perret suburb of Paris. A year earlier, soldiers from the 5th Infantry Regiment had been hit by a Tunisian shouting Allahu Akbar while they were guarding a mosque.

France has entered its longest state of emergency since the Algerian War. The 2015 attacks saw its first state of emergency since 1961. But where is France supposed to withdraw from this time? Paris?

It was one thing to abandon the beleaguered Algerian Christians and Jews to Muslim terror. And to abandon them a second time when they fled to France only to face persecution by their old Islamic neighbors who had tagged along and settled down in Marseille. But can France abandon the French?

The issue once again is colonialism. But the new colonists are Algerians, Tunisians and other Islamic imperialists who have settled in France and wave the black flag of the Jihad over their no-go zone settlements in French cities. And they have made it abundantly clear that they will not stop there.

Former Prime Minister Manuel Valls said that every day attacks are foiled as we speak.

And it’s no wonder. Thousands of Muslim settlers left France to fight in Syria and Iraq. Valls was looking at 15,000 potential threats domestically. France has one of the largest Muslim populations in Europe. We don’t know exactly how many millions of Muslim settlers live in France. But we can measure their growth by the expansion of the terror threat. Islamic terrorism is, despite the spin, reducible to Islam.

There is no Islamic terrorism without Islam. As Islam expands, so does Islamic terrorism.

France is in the middle of a civil war. The civil war is based on religious differences. As the religious divide between the Islamic colonists and the militantly secular French government increases, the violence will worsen. The outcome of the war will determine whether France will be a secular republic or an Islamic state. The Jihadists have a plan for winning the war. The French authorities don’t.

And what goes for France also goes for Western Europe. And for the West.

The French combination of social appeasement and police state enforcement isn’t working. The same model ultimately fails wherever it’s applied. Breaking up terror cells and stopping attacks is far better than the alternative, but the scale of the problem will always continue increasing because of demographic growth and a globalized terror infrastructure.

Demographics dictate that France’s terror problem will only keep growing. And the French authorities understand this. That’s why its governments increasingly talk about Islamic terrorism as a lasting threat.

Our War on Terror has squandered endless blood and treasure while avoiding the root cause. Western nations deploy massive armies to root out small terror networks while allying with their Gulf backers. Soldiers patrol major cities waiting for a terrorist or several terrorists to attack. Meanwhile the mosques that indoctrinate them to hate and kill non-Muslims are also protected by those same soldiers. That’s not how you win a war. It’s how you lose everything.


If you’ve studied the history of markets, you know that sentiment can turn on a dime.

Whether it is an unexpected wake-up call like the collapse of Lehman Brothers, or simply the popping of a bubble that’s blown too big, the tides can shift in a matter of hours or days.

No one knows this better than the world’s most elite investors – and that’s why billionaires like Warren Buffett, Ray Dalio, Bill Gross, Paul Tudor Jones II, and Carl Icahn take the necessary precautions available to protect themselves from these big and unexpected market swings.

5 Risks That Keep Billionaires Up at Night

This infographic  highlights some of the potential market risks that could move markets, as well as how these elite investors are hedging to protect their fortunes.

The 5 Biggest Market Risks That Billionaire Investors are Hedging Against

While these are all market risks that billionaires are concerned about, it’s worth mentioning that these kinds of events are almost impossible to predict or forecast.

Despite the unlikelihood of them occurring, they all have the potential to impact markets – and that’s why elite investors are always active in hedging their investments.

A Note on Net Worth

Why are billionaires so concerned – after all, don’t they have lots of cash to protect themselves?

It’s worth noting that on a relative basis, billionaires often aren’t very liquid at all. In fact, the majority of their net worth is usually tied up in business interests or other investments, and the value of these assets fluctuate with the market.

That means a big market movement could wipe out millions or billions of dollars in the span of hours. For an extreme example of this, just look at Mark Zuckerberg, who saw his net worth plunge $6 billion in just one day in the wake of his company’s most recent privacy crisis.

The 5 Big Market Risks

Here are the risks keeping the world’s most elite investors up at night:

1. The Return of Inflation
Have central banks mastered monetary policy- or is there a chance that inflation could come back with a vengeance? After trending down for decades, billionaire Carl Icahn says that creeping inflation could lead to higher interest rates, which he thinks would be “difficult to deal with for the market”.

2. Record High Debt
The most recent number for global debt is at $233 trillion, and about $63 trillion of that is central government debt.

Bill Gross, the “Bond King”, says that our system is dependent on leverage, and the critical values that affect this are debt levels, availability, and the cost of leverage. He said that “When one or more of these factors deteriorates, the probability of the model’s success and stability go down”.

3. Bond Market Worries
Last year, 84% of investors said that the corporate bond market was overvalued – and 82% said that the government bond market was overvalued.

In a recent interview, hedge fund billionaire Paul Tudor Jones II predicted a price plunge, saying that “Bonds are the most expensive they’ve ever been by virtually any metric. They’re overvalued and over-owned.”

4. Geopolitical Black Swans
Elite investors continue to worry about geopolitical surprises that could impact markets, such as a trade war with China. 

5. Overzealous Central Banks
Lastly, many world-class investors are also concerned about the unintended aftereffects of massive central bank programs in recent years. With $13 trillion in total QE pumped into global markets since 2008, investors are worried about how much room that central banks have left to maneuver in a situation where the central bank “tool kit” is needed.

It’s a mistake to assume that taking action is the biggest risk. In many cases, the riskiest action is in fact inaction. The pace of change in today’s world means that standing still leads to falling behind current and emerging competitors. The way in which many companies make investment decisions blinds them to this reality. Most executives know that the present value of an investment comes from projecting its cash flows and discounting those numbers into today’s dollars. The general rule is projects with positive net present values should get funded, and those with negative ones shouldn’t. That assumes, however, that the base case is zero. If doing nothing leads to decline, projects with marginal projections actually are better alternatives than inaction.

It’s a mistake to believe that good entrepreneurs seek out risk. They don’t. Good entrepreneurs recognize the inherent risk of creating new businesses. After all, it’s well known that most new businesses fail, and that most of the ones that succeed do so in modest enough ways that the entrepreneur gets at best a modest financial return on his or her effort. As Noam Wasserman noted in The Founder’s Dilemmas, “On average, entrepreneurs earn no more by founding startups than they would have earned by investing in public equity – less, in fact, from a risk-return perspective.” What good entrepreneurs excel at isn’t taking risk, it is managing it. Working with partners, raising money from a syndicate of investors, building a team, scrappy ways to earn revenue are all examples of smart risk management.

It’s a mistake to celebrate failure to encourage risk taking. offers a reasonable definition of risk as “exposure to the chance of injury or loss; a hazard or dangerous chance.” There can be no innovation without risk, as innovation necessarily has uncertain outcomes, some of which can be bad. Encouraging risk taking, therefore, can help to boost innovation. However, that doesn’t suggest a blanket endorsement of failure. In many cases, failure is bad. Sometimes people fail because they didn’t do their homework. Sometimes they fail because they lacked skills or hadn’t practiced enough. These categories of failure should never be celebrated. Rather, executives should recognize that the path to innovation success is never a straight line, so fumbles, false starts, and, yes, sometimes failure are part of the game.

It’s a mistake to think that rewarding success will boost risk-taking. Innovation-hungry executives at large companies often gnash their teeth about the challenges of compensation, lamenting that their system simply won’t allow them to offer the unbridled upside that awaits entrepreneurs at unicorns (which, in reality, are an incredibly rare breed). True. But that’s not really what holds innovation back in most companies. It isn’t the lack of rewards; it is the presence of punishment. Execution-oriented companies are used to rewarding people who hit their numbers and punishing those who don’t. But the uncertainty that accompanies innovation means that sometimes people will do everything right and still have a commercial failure. And if that result carries stiff punishment, don’t expect anyone to ever take any risk. While it is well known that quick wins build confidence in change efforts, companies seeking to build their innovation capabilities should have a quick loss, where a project gets shut down and everyone celebrates rather than looking for a scapegoat. It helps to signal that the company is ready to think and act differently.


VUCA, volatile, uncertain, complex, and ambiguous, describes perfectly what is happening in the global business world today. Business is not running as usual. Leaders must deal with growing uncertainty, complexity, and ambiguity in their decision-making environments. CEOs have little idea what to expect in terms of health care policy, financial transactions, national security, and global trade—all of vital importance to themselves, their employees, and their stakeholders.

Managerial training in the classic techniques of control systems, financial forecasting, strategic planning, and statistical decision making have not prepared them for this amount of flux in the environment.

In short, these rapid-fire changes are putting extreme pressure on business leaders to lead in ways not heretofore seen.

Now is the time for authentic business leaders to step forward and lead in ways that business schools don’t teach. Let’s examine these different ways of leading comprising VUCA 2.0:

Vision – Today’s business leaders need the ability to see through the chaos to have a clear vision for their organizations. They must define the True North of their organization: its mission, values, and strategy. They should create clarity around this True North and refuse to let external events pull them off course or cause them to neglect or abandon their mission, which must be their guiding light. CEO Paul Polman has done this especially well by focusing Unilever’s True North on sustainability.

Understanding – With their vision in hand, leaders need in-depth understanding of their organization’s capabilities and strategies to take advantage of rapidly changing circumstances by playing to their strengths while minimizing their weaknesses. Listening only to information sources and opinions that reinforce their own views carries great risk of missing alternate points of view. Instead, leaders need to tap into myriad sources covering the full spectrum of viewpoints by engaging directly with their customers and employees to ensure they are attuned to changes in their markets. Spending time in the marketplace, retail stores, factories, innovation centers, and research labs, or just wandering around offices talking to people is essential.

Courage – Now more than ever, leaders need the courage to step up to these challenges and make audacious decisions that embody risks and often go against the grain. They cannot afford to keep their heads down, using traditional management techniques while avoiding criticism and risk-taking. In fact, their greatest risk lies in not having the courage to make bold moves. This era belongs to the bold, not the meek and timid.

Adaptability – If ever there were a need for leaders to be flexible in adapting to this rapidly changing environment, this is it. Long-range plans are often obsolete by the time they are approved. Instead, flexible tactics are required for rapid adaptation to changing external circumstances, without altering strategic course. This is not a time for continuing the financial engineering so prevalent in the past decade. Rather, leaders need multiple contingency plans while preserving strong balance sheets to cope with unforeseen events.

With external volatility the prevalent characteristic these days, business leaders who stay focused on their mission and values and have the courage to deploy bold strategies building on their strengths will be the winners. Those who abandon core values or lock themselves into fixed positions and fail to adapt will wind up the losers.

Assessing a company’s vulnerability to risk makes otherwise theoretical discussions of strategy more real. In the decade since the global financial crisis, financial companies have honed their ability to measure risk in a way that nonfinancial companies have not. Granted, nonfinancial executives hadn’t faced the same existential crisis. And they’ve seldom come under the same kinds of investor and regulatory pressure. But the result is that they haven’t absorbed many of the lessons on risk management learned by the financial sector.

We believe that nonfinancial companies, too, would benefit from a more aggressive look at the risks they face. Among the most important steps they could take, for example, would be to quantify risks in the context of broader scenarios, and not just as discrete sensitivities. They should calculate the effect of more extreme one-off events, such as a cybersecurity attack, in addition to continuous risks, like GDP. They should model risk-mitigation strategies as well as the risks themselves. And they should sustain a conversation about risk that is explicitly tied to strategic planning, capital allocation, and other business decisions.

We recently tested our thinking qualitatively in interviews with the CFOs, company secretaries, and controllers of 11 leading nonfinancial companies in the United Kingdom. Having just completed their first full reporting year under a new policy requiring companies to assess their longer-term viability,1 these nonfinancial company executives offered insight into the value a structured risk-measurement exercise can bring to a company’s decision making. As one UK executive reflected, seeing what certain risks could really mean for the value of their operations gives the whole intellectual exercise more currency.

Companies often maintain a list of the main risks that managers believe they face, which they report as their “risk register” in annual reports. These include discrete operational events, such as major industrial accidents, cyberattacks, or employee malfeasance. If they take the next step to quantify those risks, many simply turn to that list and model them, often for the first time, onto their financial outlook. That’s a good start, as it gives managers some insight into how sensitive the company’s financial health is to changes around individual risks, which many companies don’t do. But measuring individual risks discretely does little to illuminate a more complex landscape of interrelated risks that often move together in the real world. That requires the further step of coherently clustering risks together into scenarios.

Scenarios are more appropriate because they help managers consider the effects of a variety of severe but plausible scenarios without being farfetched. They can also accommodate interaction effects among sensitivities. One manufacturer in our group reported modeling 18 different scenarios, after eliminating many more that they felt did not meet the plausibility criteria. The comprehensiveness of the exercise equipped the board with a clear perspective on the company’s resilience and a number of management actions in time for the Brexit referendum months later. And finally, integrated scenarios also ensure that companies do not miss or underestimate the correlations between their different business activities and individual risk types, thereby underestimating group-level vulnerability.

We frequently encounter companies willing to model broader, everyday market variables, such as GDP or inflation, or more specific variables, such as the rate of formation of new companies. But we seldom find companies willing to model more extreme variables or one-off events, such as a cyberattack or a natural disaster. The data to measure the effects of the former are fairly easy to come by, some argue, while reliable data on the latter are not. Others believe that their employees would sufficiently rally together to counter such events. As one UK executive told us, “We did not try to model events of nature and operational issues. All hands would be to the pump in the organization anyway, to deal with that particular situation, given its gravity. The complete random nature of seeking to put in a number—we think that is too difficult.”

One-off events can also be more correlated with market downturns than companies expect. For example, the pressure on income after a recession can translate into aggressive business practices that lead to one-off risk events—by undermining product or employee safety or leading to ethics violations. Governments may add to the pressure with a more aggressive tax and regulatory stance. Many companies will model the economic downturn, but they often don’t model one-off events like changes in tax policy.

Some companies do find ways around the challenge of quantifying one-off events—often turning to the lessons of history to drive the analysis. One IT company, for example, used the experience of other companies that suffered a cyberattack to quantify the potential impact on its business. Press and financial reports often provide the kinds of relevant details needed, such as an increase in customer churn rates or declines in revenues.

A materials company used a proportionate measure of the impact of the 2007–08 financial crisis on its business to stress test its current financial outlook. Managers then used the data to inform a strategy discussion with the board. In so doing, these companies gained a deeper appreciation for the magnitude these catastrophic shocks could have on their business and could allocate resources to prepare for them more effectively.

Even nonfinancial companies that undertake a regular measurement of risks often neglect also to measure the effects of their plans to mitigate the fallout of a downside scenario. Steps like reducing dividend payouts, cutting capex, or selling assets come with their own risks over the long term—and we believe risk-savvy managers should model both.

However, among our UK interviewees, several worried that modeling mitigations on top of the initial scenario or sensitivity amounted to piling assumptions on top of assumptions. Indeed, there was also some debate as to the right perspective from which to comment on risk. Viability is one, but metrics such as the risk of a dividend being cut might be another—or, for companies that have promised a progressive dividend, the risk that the rate of growth might slow.

Whichever metric is used, companies and their boards would benefit from understanding which mitigations exist, when they should be triggered, and what rough magnitude of impact they could deliver. One approach to understanding mitigation steps that we’ve observed elsewhere immerses executives in a war-game-like exercise. Teams representing different interests, such as competitors, suppliers, and regulators, debate a risk scenario and then run their respective reactions through the risk model to measure the effects. This has the benefit of ensuring that mitigation efforts are plausible and how they might affect viability or dividends, for example. It also gives management confidence in their approach when an actual crisis comes to pass.

The usefulness of risk-measurement exercises can be limited if they aren’t dynamically linked to strategic planning, capital allocation, and other business decisions. That means such exercises need to include more than just a CFO or a board audit committee, or they amount—as one UK interviewee put it—to little more than a “tick-box exercise” that fails to change behaviors in the business.

Yet in cases where internal engagement is more comprehensive, we’ve seen risk-measurement exercises provoke a systematic review of a company’s risk profile, risk-management approach, and strategic posture—even if it can take some time before the consequences become evident. One UK retailer we met with described holding workshops with the company’s executive team to reconsider its risk register and define plausible downside scenarios. Its board audit committee also spends significant time discussing the appropriate modeling methodology to arrive at robust and meaningful results. As with many of the companies we spoke with, it’s too early to see concrete impact—we didn’t hear of anyone who had made a major change in the business as a result. But several told us that a better understanding of risk was valuable input and wanted to deepen the process.

Indeed, several of our UK interviewees acknowledged that they’d previously had a limited understanding of their risk exposure. As a consequence, for example, they had no systematic understanding of how much capital they actually needed to absorb risk in current operations. Again, none reported after undergoing the risk-measurement exercise that they felt the need to raise or conserve more capital for such risks, though a few did report finding they were much more resilient to downside risks than they had expected. We also found broad recognition of the value of a more structured, analysis-enriched conversation with key decision makers about risks, and many companies were keen to improve on their approach going forward. As the lessons from the viability-statement exercise are embedded and companies’ approaches evolve, the intent is summed up by one interviewee as, “you start with the risk process and it develops and becomes richer in time.”

For nonfinancial companies, a more structured approach to risk measurement can lead to a more nuanced and insightful appreciation of true risk levels, and eventually a better-informed strategic posture.


Exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in relation to another currency. For example, an interbank exchange rate of 114 Japanese yen to the United States dollar means that ¥114 will be exchanged for each US$1 or that US$1 will be exchanged for each ¥114. In this case it is said that the price of a dollar in relation to yen is ¥114, or equivalently that the price of a yen in relation to dollars is $1/114.

The interest parity is 1+r=(1+r*)(1+I)

Where r is the interest rate, r* the pure interest rate, and I the inflation rate.

The forex parity is 1+r=(1+rf)(1+rx)

Where rf is the foreign interest rate and rx the return on the foreign exchange.

Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday. The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.

In the retail currency exchange market, different buying and selling rates will be quoted by money dealers. Most trades are to or from the local currency. The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell that currency. The quoted rates will incorporate an allowance for a dealer’s margin (or profit) in trading, or else the margin may be recovered in the form of a commission or in some other way. Different rates may also be quoted for cash, a documentary form or electronically. The higher rate on documentary transactions has been justified as compensating for the additional time and cost of clearing the document. On the other hand, cash is available for resale immediately, but brings security, storage, and transportation costs, and the cost of tying up capital in a stock of banknotes.

The real exchange rate is the purchasing power of a currency relative to another at current exchange rates and prices. It is the ratio of the number of units of a given country’s currency necessary to buy a market basket of goods in the other country, after acquiring the other country’s currency in the foreign exchange market, to the number of units of the given country’s currency that would be necessary to buy that market basket directly in the given country.

Thus the real exchange rate is the exchange rate times the relative prices of a market basket of goods in the two countries. For example, the purchasing power of the US dollar relative to that of the euro is the dollar price of a euro (dollars per euro) times the euro price of one unit of the market basket (euros/goods unit) divided by the dollar price of the market basket (dollars per goods unit), and hence is dimensionless. This is the exchange rate (expressed as dollars per euro) times the relative price of the two currencies in terms of their ability to purchase units of the market basket (euros per goods unit divided by dollars per goods unit). If all goods were freely tradable, and foreign and domestic residents purchased identical baskets of goods, purchasing power parity (PPP) would hold for the exchange rate and GDP deflators (price levels) of the two countries, and the real exchange rate would always equal 1.

The rate of change of the real exchange rate over time for the euro versus the dollar equals the rate of appreciation of the euro (the positive or negative percentage rate of change of the dollars-per-euro exchange rate) plus the inflation rate of the euro minus the inflation rate of the dollar.

A country may gain an advantage in international trade if it controls the market for its currency to keep its value low, typically by the national central bank engaging in open market operations in the foreign exchange market. In the early twenty-first century it was widely asserted that China had been doing this over a long period of time.

Other nations, including Iceland, Japan, Brazil, and so on have had a policy of maintaining a low value of their currencies in the hope of reducing the cost of exports and thus bolstering their economies. A lower exchange rate lowers the price of a country’s goods for consumers in other countries, but raises the price of imported goods and services for consumers in the low value currency country. In general, exporters of goods and services will prefer a lower value for their currencies, while importers will prefer a higher value.

There is a connection between fiat currencies and trade deficits, and many cynics have argued that the US dollar’s status as global reserve currency allowed Americans to consume more than they produced for decades. However, this deficit without tears argument is sometimes overstated.

When the dollar was separated entirely from gold in 1971, it ceased being the official IMF world currency and finally had to compete with other currencies. From that point forward, its value increasingly became discounted. Nevertheless, it was still the preferred medium of exchange. Also, the U.S. was one of the safest places in the world to invest one’s money. But, to do so, one first had to convert his native currency into dollars. These facts gave the U.S. dollar greater value on international markets than it otherwise would have merited. So, in spite of the fact that the Federal Reserve was creating huge amounts of money during this time, the demand for it by foreigners was seemingly limitless. The result is that America has continued to finance its trade deficit with fiat money, a feat which no other nation in the world could hope to accomplish.

After all, it’s not too shabby to import cars, clothes, and fancy electronics in exchange for green pieces of paper.  There is a dark side to the exchange, however. As long as the dollar remains in high esteem as a trade currency, America can continue to spend more than it earns. But when the day arrives — as it certainly must — when the dollar tumbles and foreigners no longer want it, the free ride will be over. When that happens, hundreds of billions of dollars that are now resting in foreign countries will quickly come back to our shores as people everywhere in the world attempt to convert them into yet more real estate, factories, and tangible products. As this flood of dollars bids up prices, we will finally experience the price inflation that should have been caused in years past.

When economists compute the trade balance (or more accurately the current account), they don’t include the sale of financial assets. So if foreign investors want to spend more (once we convert to a common denominator) on American assets than US investors want to spend on foreign assets, the trade balance is negative. The capital-account surplus is counterbalanced by a current-account deficit.

For example, suppose Americans buy $9.5 trillion in stocks, bonds, and other financial assets from outside the United States, while non-Americans acquire ownership of $10 trillion worth of stocks, bonds, and other financial assets from within the United States. This means the foreigners have on net gained $500 billion of American wealth. Surely the foreigners need to do something in return, and indeed they do: they send Americans $500 billion worth of cars, TVs, iPods, etc.

Tying the dollar to gold, or, better yet, abolishing the government’s involvement in money and banking completely, would make the United States an even stronger magnet for foreign investment. It’s possible that the absolute size of the trade deficit would fall (as we will explain in the next section), but it wouldn’t disappear.

In fact, if the US government not only returned the dollar to gold, but also eliminated the IRS and slashed its budget, it’s possible that the US trade deficit would mushroom. This would make perfect sense, as capital from around the world would flow to the new haven where its (after-tax) returns would be much higher.

In this scenario, aliens in space would see tractors, computers, factory parts, bulldozers, and crude oil flowing from all corners of the earth to the United States. If those aliens understood trade accounting, they would compute this massive net inflow of goods as an unprecedented trade deficit. But of course that is exactly what should happen if the United States (or any country) adopted free-market reforms and thereby became a much more hospitable arena for economic activity.

A large trade deficit can be consistent with a healthy, productive economy. That’s far different from saying a trade deficit is proof of a solid arrangement. Specifically, the problem occurs because foreigners can invest in American assets to fuel either production or consumption. It’s true, if the US government enacted the reforms discussed above, then foreigners would invest heavily in American industry. Corporations would float new bonds and issue new stock, and with the influx of funds they could rapidly expand their operations. In terms of physical goods, we would see heavy equipment and raw materials flowing from other countries into the United States, and these inflows of capital goods would constitute a large part of the rising trade deficit.

Unfortunately, there is another possibility. If the Federal Reserve creates hundreds of billions in new dollars out of thin air, and the foreign investors are other central banks that gobble up the dollars because their own rules treat them as reserves, then this increase in the foreign demand for American assets is of a much-different character.

In particular, the low US interest rates that accompany such a gusher of new dollars will encourage domestic consumption and will discourage foreigners in the private sector from investing in the United States. The rest of the world will acquire American assets all right, but they will be more heavily tilted toward debt (rather than equity in growing companies). The physical goods flowing into the United States will be consumer goods such as TVs and iPods. This type of mushrooming trade deficit is indeed unsustainable. Unlike the importation of tractors and crude oil, the influx of consumer electronics doesn’t allow the US economy to produce more in the future.

The increase in foreign claims on US income streams therefore isn’t a constant or shrinking portion of the growing American pie, but rather is a growing portion of a constant pie. It can be sustainable for the absolute dollar amount of US corporations’ outstanding bonds to increase over time, so long as earnings and profits increase proportionately. But it is not sustainable if households and the government experience a rising debt-to-income level.

There is a definite connection between fiat currencies and trade deficits. Critics of the Federal Reserve are right to blame it for distorting trade flows and setting the US economy up for an inflationary crash. However, a trade deficit per se is not a sign of a bad economy. Indeed, the trade deficit might blossom if the US ever returned to the gold standard, though it would be due to a productive net inflow of producer goods.


A spot transaction is a two-day delivery transaction (except in the case of trades between the US dollar, Canadian dollar, Turkish lira, euro and Russian ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract, and interest is not included in the agreed-upon transaction. Spot trading is one of the most common types of Forex Trading.


One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be one day, a few days, months or years. Usually the date is decided by both parties. Then the forward contract is negotiated and agreed upon by both parties.

Non-deliverable forward (NDF)

Forex banks, ECNs, and prime brokers offer NDF contracts, which are derivatives that have no real deliver-ability. NDFs are popular for currencies with restrictions such as the Argentinian peso. In fact, a Forex hedger can only hedge such risks with NDFs, as currencies such as the Argentinian Peso cannot be traded on open markets like major currencies.


The most common type of forward transaction is the foreign exchange swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange. A deposit is often required in order to hold the position open until the transaction is completed.


Futures are standardized forward contracts and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts. Currency futures contracts are contracts specifying a standard volume of a particular currency to be exchanged on a specific settlement date. Thus the currency futures contracts are similar to forward contracts in terms of their obligation, but differ from forward contracts in the way they are traded. They are commonly used by MNCs to hedge their currency positions. In addition they are traded by speculators who hope to capitalize on their expectations of exchange rate movements.


A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world.


  1. What is the interest parity?
  2. What is the forex parity?
  3. What is the real exchange rate?
  4. What are currency futures?
  5. What are currency swaps?




Through strategic venture investing, New York-Presbyterian Hospital is focused on innovation in the complex world of health care.
Shorter wait times. Rapid communication between clinicians. Improved operating efficiency. Remote consultations, including second opinions. As health care transforms to accommodate patient needs, New York-Presbyterian seeks to lead the way with a venture capital fund that invests in innovation.

The academic medical center launched NYP Ventures in 2015 to drive digital health care transformation, said executive vice president and chief financial officer Phyllis Lantos, SB ’72, SM ’74, who oversees the fund.

“NYP Ventures is part of the growing trend of health systems launching investment arms that focus on identifying appropriate technology solutions and shaping the evolution of digital health tools,” Lantos said. “Our goal is to enhance the quality and experience of care we deliver to the populations we serve. We seek to be leaders in innovation.”

So far, they’re succeeding: Fast Company recently recognized the hospital as one of the top 10 “most innovative” companies in artificial intelligence and telehealth.

The fund focuses on investing in companies that are developing technology to enhance patient care and improve operational efficiency. Outcomes include shorter emergency room wait times, reduced delays for infusion patients, improved communication among clinicians, and the simplification of cardiac MRI analyses for radiologists.

The fund’s $15 million allocation is mainly targeted towards Series A and B investments in companies using technology to innovate in health care. In 2017, Lantos also helped to establish a New York-Presbyterian Silicon Valley office to build closer relationships with local investors and startups and monitor evolving technology trends.

To date, NYP Ventures has invested $3.5 million in four companies:

  • Arterys makes artificial intelligence-based medical imaging software for cardiology and oncology.
  • Avizia offers an end-to-end telehealth hardware and software platform that connections clinicians and patients.
  • CLARA Analytics uses artificial intelligence to streamline management of workers’ compensation claims.
  • LeanTaaS uses predictive analytics to help improve infusion center operations and maximize operating room use.

The fund is part of a larger push by the hospital to identify technological solutions to important challenges, Lantos said. This effort is led by the New York Presbyterian Transformation Center, launched in 2014. The two organizations — Transformation and Ventures — collaborate to identify promising startup companies, deploy their products, and make investments.

One example of this collaboration is NYP OnDemand, a digital health suite that allows patients to connect with NewYork-Presbyterian experts online for remote second opinions, urgent care consults, and virtual follow-up appointments. Adults can have a live video visit with a Weill Cornell emergency physician from their phone or tablet and get detailed, written second opinions on their diagnosis or treatment from specialists at Weill Cornell Medicine and ColumbiaDoctors.

As part of a new Express Care program, lower-acuity ER patients at four hospital campuses can opt for a live video visit with board-certified emergency medicine physicians from a private location within the hospital. And through an inter-hospital consult program, providers across hospital sites collaborate on cases around specialized needs such as psychiatry and stroke neurology, improving outcomes and reducing wait times for patients at both the academic hospitals and community facilities. Both programs use the telehealth platform offered by Avizia.

It’s part of a push to deliver the best care in new ways, Lantos said.

“Telemedicine will change access dramatically,” she said. “This represents a more patient-focused approach to health care. It’s about giving patients access to care when they need it, where they need it, in the right setting. These are exciting times.”


Shoplifting and reports of theft in British shops have almost doubled in just 12 months, with police ignoring physical crimes as they focus on hate speech and online comments. But hate speech is free speech!

There were an estimated 950,000 incidents of theft last year in shops of under 3,000 square foot, rising from 575,000 in the previous year, the Association of Convenience Stores’ (ACS) 2018 Crime Report revealed.

The organization’s crime survey further estimated that there were more than 13,400 reported incidents of violence in shops last year, but many more could have gone unreported.

The sudden rise in crimes comes after many UK police forces introduced a policy of only investigating theft if a value of £200 or more is stolen, with those stealing less than the threshold being dealt with by post in some cases.

Critics say that criminals are exploiting the new rules and that small-scale theft has been effectively decriminalised in UK shops.

The total cost of crimes committed against the sector over the past year was £193 million, the ACS said, which equates to a 7p “crime tax” on every transaction in the shops, they calculated.

ACS chief executive James Lowman told us: Retailers need a consistent response from the police to ensure that when a crime is committed against a retailer it is taken seriously by the police and the courts. Shop thefts especially are often being committed by people that are dependent on drugs or alcohol, or part of an organised gang, with many now unafraid to turn to violence when challenged. Allowing shop theft to go unpunished means that these people go on to commit other offences, and where they have addiction problems they are not treated. We need fresh thinking from government and the police because when shop theft is not tackled properly, it has wider implications for communities.

In January, the Office for National Statistics (ONS) revealed that in England and Wales, around 5.3 million violent crimes were recorded in the 12 months to September 2017, up 14 per cent on the year before.

Sadiq Khan’s London saw the largest increase in recorded knife crime – rocketing by a massive 38 per cent in just one year.

The police figures from 44 forces around the country reveal that robbery was up by 29 per cent, sex offences up 23 per cent, knife crime up 21 per cent, and violent crime overall surged by 20 per cent.

London is more Islamic than many Muslim countries put together. British multiculturalists are feeding Islamic fundamentalism. Londonistan, with its new 423 mosques, is built on the sad ruins of English Christianity.

In Birmingham, the second-largest British city, where many Jihadis live and orchestrate their attacks, an Islamic minaret dominates the sky. There are petitions to allow British mosques to call the Islamic faithful to prayer on loudspeakers three times a day!

Demographically, Britain has been acquiring an increasingly an Islamic face, in places such as Birmingham, Bradford, Derby, Dewsbury, Leeds, Leicester, Liverpool, Luton, Manchester, Sheffield, Waltham Forest and Tower Hamlets. An analysis of the most common name in England showed it is Mohammed, including spelling variations such as Muhammad and Mohammad.

Most important cities have huge Muslim populations: Manchester (15.8%), Birmingham (21.8%) and Bradford (24.7%). In Birmingham, the police just dismantled a terrorist cell. There is also a greater probability that a child will be born into a Muslim family than into a Christian one. In Bradford and Leicester, half the children are Muslim. Muslims do not need to become the majority in the UK. They just need gradually to Islamize the most important cities. The change is already taking place. Londonistan is not a Muslim majority nightmare. It is a cultural, demographic, and religious hybrid in which Christianity declines and Islam advances.

Only two of the 1,700 mosques in Britain today follow the modernist interpretation of Islam, compared with 56% in the United States. The Wahhabis control six percent of mosques in the UK, while the fundamentalist Deobandi control up to 45%. A third of UK Muslims do not feel part of British culture.

London is also full of sharia courts. There are officially 100. The advent of this parallel judicial system has been made possible thanks to the British Arbitration Act and the system of Alternative Dispute Resolution. These new courts are based on the rejection of the inviolability of human rights: the values of freedom and equality that are the basis of English Common Law.

British personalities keep opening the door to introduce sharia. One of Britain’s leading judges, Sir James Munby, said that Christianity no longer influences the courts and these must be multicultural, which means more Islamic. Rowan Williams, the former Archbishop of Canterbury, and Chief Justice Lord Phillips also suggested that British law should incorporate elements of sharia law. The British cultural establishment is rapidly capitulating to Islamic fundamentalists in accepting their demands.

British universities are also advancing Islamic law. The official guidelines of the university, External speakers in higher education institutions, published by Universities UK, provide that orthodox religious groups may separate men and women during events. At Queen Mary University of London, women had to use a separate entrance and were forced to sit in a room without being able to ask questions or raise their hands, as in Riyadh or Tehran. The Islamic Society at the London School of Economics held a gala, in which women and men were separated by a seven-meter panel.

After the attack on the French satirical magazine Charlie Hebdo, the head of MI6, Sir John Sawers, recommended self-censorship and some restraint in discussing Islam. The British ambassador in Saudi Arabia, Simon Collis, converted to Islam and completed the pilgrimage to Mecca, the hajj. He now calls himself Haji Collis. What will be next?

It’s appropriate to remember Theresa May’s documented record of dhimmitude during her stint at the Home Office. As Home Secretary, she made the official decision to keep the super-heroes Robert Spencer and Pamela Geller out of UK! May is in the habit of changing her opinions on immigration and Islam whenever the political winds change direction. Since the American winds have most assuredly reversed their direction, she may find it expedient to abandon her earlier dhimmitude as she climbs aboard the Trump bandwagon.


Pseudo-children pseudo-refugees arrive in UK covered by blankets to hide their old age! Children do not have wisdom teeth, because they erupt between the ages of 17 and 25.  So all those pseudo-refugees with wisdom teeth are big liars when they claim they are children in order to come to UK.  Britons are fooled by pseudo-children pseudo-refugees.


Sharia councils in the UK are overwhelmingly run and overseen by men with a history of expressing jihadist and deeply misogynistic notions. For example, Suhaib Hasan — a senior figure at the Islamic Sharia Council — is on record as calling for the chopping the hands of the thieves, the flogging of the adulterers, the flogging of the drunkards, then jihad against the non-Muslim. Furthermore, Haitham al-Haddad, another senior pseudo-judge at the same organization, has stated clearly that a man should not be questioned why he hit his wife. He also advocates lashing and stoning as punishment for adultery.

A woman has no unilateral right to divorce under sharia law, even in cases of domestic violence, and are obliged either to seek the permission of a husband or a group of clerics, a woman’s testimony is worth less than a man’s, and fathers have exclusive rights over children. Sharia law is not compatible with UK laws or norms, but at no point is the public informed of this.

The European Court of Human Rights (ECHR) declared that sharia family law, the area of law being practiced in the UK, is wholly incompatible with human rights, due to its treatment of women. The Court found that sharia was incompatible with the fundamental principles of democracy as set forth in the Convention. It considered that sharia, which faithfully reflects the dogmas and divine rules laid down by religion, is stable and invariable.

Principles such as pluralism in the political sphere or the constant evolution of public freedoms have no place in sharia. According to the Court, it was difficult to declare one’s respect for democracy and human rights while at the same time supporting a regime based on sharia, which clearly diverged from Convention values, particularly with regard to its criminal law and criminal procedure, its rules on the legal status of women and the way it intervened in all spheres of private and public life in accordance with religious precepts.

Sharia councils work under the authority granted to them under the Arbitration Act 1996, and the councils’ relationships with UK courts are convoluted, to claim they have no legal force is a complete falsehood. Fake news if you will. Though the mainstream media have become somewhat accustomed to that in recent weeks.

We are observing the plight of real women who are fleeing marital rape, domestic violence, or just don’t want to be married to their husbands any more. Muslim women are often forced into marital captivity, Shariah councils are prejudiced in favor of Muslim husbands, and Imams reject the supremacy of UK law when it comes to matters of divorce.

We object to Sharia law, because these practices are contrary to the rights of women. Judges in these courts tell women to accept polygamy and to not to report domestic violence to the police. Violent fathers are given custody of their children. As these facts become known, the tide of the public debate is turning. We hardly hear anyone pleading in favor of sharia courts now.

Intolerance wears a progressive mask in the 21st century. Students hound political undesirables off campus in the name of protecting diversity. Adverts are banned from the London Underground in the name of women’s rights. Rappers and other hotheads are barred from Britain on the basis that their utterances are not conducive to our good, progressive way of life. And now assorted leftists and tweeters are seeking to punish tabloid newspapers, to starve them of big revenue, in the name of promoting tolerance. Yes, intolerance – in this case of the redtop press and its right to say what it wants – is tolerance.

Stop Funding Hate is a new campaign aimed at getting big businesses — like Lego, John Lewis, Walkers Crisps, Virgin — to stop advertising in what are referred to as hate newspapers. So leftists, who are meant to be anti-big business, and particularly anti big business sticking its moneyed, self-interested nose into political life and debate, are calling on big business to use its clout to harm newspapers that say disagreeable things. They want huge corporations — Virgin is a $19bn business, Lego a $5bn one — to put pressure on newspapers; to tell them we will stop giving you money unless you change your editorial tone. Let’s curb the euphemisms and all the talk of promoting tolerance — this is a sly, sinister effort to chill and tame the press; a marshalling of capitalist power to punish newspapers and force them to change. It’s a stab at censorship, not a cry for tolerance.

Stop Funding Hate is primarily concerned with the tone of the tabloids since the EU referendum. It doesn’t like what some of these apparently low, rude papers have said about immigration. Or judges. It was especially upset when the Mail branded the three judges who said Brexit should be ruled on by MPs as ‘enemies of the people’. Imagine that: a paper criticizing the judiciary. This clearly cannot stand. Call in the capitalist class to punish these redtop upstarts, these wicked ridiculers of judges, these sewer-inhabiting critics of the powers-that-be.

The city of Birmingham in the West Midlands, the heart of England, the place where the Industrial Revolution began, the second city of the UK and the eighth-largest in Europe, today is Britain’s most dangerous city. With a large and growing Muslim population, five of its electoral wards have the highest levels of radicalization and terrorism in the country.

There is an unease with the growing dislocation between normative British values and those of the several Islamic enclaves. In the Small Heath quarter nearly 95% of the population is Muslim and little girls wear veils. Most of the men wear beards, and women wear jilbabs and niqabs to cover their bodies and faces. Market stalls close for the hours of prayer, the shops display Islamic clothes, and the bookshops are all religious.

There are plenty of private Muslim schools and madrasas in this city. They pretend that they all preach tolerance, love and peace, but that isn’t true. Behind their walls, they force-feed students with repetitive verses of the Qur’an, about hate, and intolerance.

There are some no-go areas where even the police are afraid to go, where the country’s normal laws barely apply.  The sectarian lifestyle of the Islamists increasingly imposes itself and threatens to blow up a society which has fallen victim to its multicultural utopia.

Terror convictions have apparently doubled in the past five years. Worse, the number of offenders not previously known to the authorities has increased sharply. Women’s involvement in terrorism, although still less than men’s, has trebled over the same period. Alarmingly, proportionally, offences involving beheadings or stabbings (planned or otherwise) increased eleven-fold across the time periods, from 4% to 44%.”

Only 10% of the attacks are committed by lone wolves; almost 80% were affiliated with, inspired by or linked to extremist networks — with 25% linked to al-Muhajiroun alone. That organization, which went under various names, was once defended by some Whitehall officials, a clear indication of governmental naivety.

A clear link is shown between highly-segregated Muslim areas and terrorism.

Nearly half of all British Muslims live in neighborhoods where Muslims form less than a fifth of the population. However, a disproportionately low number of Islamist terrorists — 38% — come from such neighborhoods. The city of Leicester, which has a sizeable but well-integrated Muslim population, has bred only two terrorists in the past 19 years.

Only 14% of British Muslims live in neighborhoods that are more than 60% Muslim. However, 24% of all Islamist terrorists come from these neighborhoods. Birmingham, which has both a large and a highly segregated Muslim population, is the key example of the phenomenon.

Just five of Britain’s 9,500 council wards — all in Birmingham — account for 26 convicted terrorists, a tenth of the national total. The wards — Springfield, Sparkbrook, Hodge Hill, Washwood Heath and Bordesley Green — contain sizeable areas where the vast majority of the population is Muslim.

Birmingham as a whole, with 234,000 Muslims across its 40 council wards, had 39 convicted terrorists. That is many more than its Muslim population would suggest, and more than West Yorkshire, Greater Manchester and Lancashire put together, even though their combined Muslim population is about 650,000, nearly three times that of Birmingham. There are pockets of high segregation in the north of England but they are much smaller than in Birmingham.

The greatest single number of convicted terrorists, 117, comes from London, but are much more widely spread across that city than in Birmingham and their numbers are roughly proportionate to the capital’s million-strong Muslim community.

Clearly, lack of integration is, not surprisingly, the root of a growing problem. Muslim communities formed by Pakistani and Bangladeshi immigrants and their offspring are the most resistant to integration within British society. Such communities do little or nothing to encourage their children to join in non-Muslim education, events, or activities. Many of their women speak no English and play no role within wider society, and large numbers prefer sharia law to British law.

In the infamous Trojan Horse plot, Muslim radicals conspired to introduce fundamentalist Salafi doctrines and practices into a range of Birmingham schools, not just private Muslim faith schools but regular state schools. A number of schools in Birmingham had been taken over to ensure they were run on strict Islamic principles.

There is a range of inappropriate behavior across the schools, such as irregularities in employment practices, bullying, intimidation, changes to the curriculum, inappropriate proselytizing in non-faith schools, unequal treatment and segregation. Specific examples included:

  • a teachers’ social media discussion called the “Park View Brotherhood”, in which homophobic, extremist and sectarian views were aired at Park View Academy and others;
  • teachers using anti-Western messages in assemblies, saying that White people would never have Muslim children’s interests at heart;
  • the introduction of Friday Prayers in non-faith state schools, and pressure on staff and students to attend. In one school, a public address system was installed to call pupils to prayer, with a member of the staff shouting at students who were in the playground, not attending prayer, and embarrassing some girls when attention was drawn to them because girls who are menstruating are not allowed to attend prayer; and
  • senior staff calling students and staff who do not attend prayers kuffarr. Kuffar, the plural of kafir, is an insulting term for unbelievers. This affront reproduces the Salafi technique of condemning moderate or reformist Muslims as non-Muslims who may then be killed for being apostates.

There has been co-ordinated, deliberate and sustained action, carried out by a number of associated individuals, to introduce an intolerant and aggressive Islamic ethos into a few schools in Birmingham. This has been achieved in a number of schools by gaining influence on the governing bodies, installing sympathetic headteachers or senior members of staff, appointing like-minded people to key positions, and seeking to remove head teachers they do not feel sufficiently compliant.

The situation remains unstable. Sir Michael Wilshaw, Her Majesty’s Chief Inspector, in a letter to the Secretary of State for Education, which declared that the situation remains fragile, with:

  • a minority of people in the community who are still intent on destabilizing these schools;
  • a lack of co-ordinated support for the schools in developing good practice;
  • a culture of fear in which teachers operate having gone underground but still there;
  • overt intimidation from some elements within the local community;
  • organized resistance to the personal, social and health education (PSHE) curriculum and the promotion of equality.

Birmingham has the largest number of women who are non-proficient in English and the largest number of mosques (161) in the UK.

For many years, the British government has fawned on its Muslim population; evidently the government thought that Muslims would in due course integrate, assimilate, and become fully British, as earlier immigrants had done. More than one survey, however, has shown that the younger generations are even more fundamentalist than their parents and grandparents, who came directly from Muslim countries. The younger generations were born in Britain but at a time when extremist Islam has been growing internationally, notably in countries with which British Muslim families have close connections. Not only that, but a plethora of fundamentalist preachers keep on passing through British Muslim enclaves. These preachers freely lecture in mosques and Islamic centers to youth organizations, and on college and university campuses.

Khalid Masood, a convert to Islam who killed four and injured many more during his attack outside the Houses of Parliament in March, had been living in Birmingham before he set out to wage jihad in Britain’s capital. It is time for some hard thinking about the ways in which modern British tolerance of the intolerant and its embrace of a wished-for, peace-loving multiculturalism have furthered this regression. Birmingham is probably the place to start.

Prince Charles, whose liking for strolling around his Islamic garden wearing a dishdasha and wittering on about wanting to be the Defender of Faiths have oft made us sing God Save The Queen. He likes that Islamic monarchs are free to divorce unwanted wives at a whim and rape children.

Mistrust of Jews is the main reason for the heir apparent’s Islamophilia.  Pedophile Charles said: Tried to read a bit of the Quran and it gave me some insight into the way the Arabs think. Much admire some aspects of Islam — especially accent on hospitality and accessibility of rulers. The influx of foreign Jews, especially from Poland, has helped to cause great problems. Surely some US president has to have the courage to stand up and take on the Jewish lobby. 

Prince Charles feels antipathy towards the Jews, the ultimate clever and self-starting race: 22 per cent of Nobel prize winners are from only 0.2 per cent of the world’s population. It’s completely comprehensible that this most Marie Antoinettish of monarchs-in-waiting, forever yearning for a time when food was fresh and women were treated as a cross between children and livestock, would yearn for a bit of noble savagery.

Still, this is such a strange and creepy missive — the assumption that reading a few lines of the Quran gave him ‘insight’, the away-with-the-djinns reference to the accessibility of rulers. But it takes a truly ill-informed mind to bypass the horrendous historical events which drove so many European Jews to leave the lands they had lived in and contributed to so magnificently for centuries and ship out to a sliver of ancient homeland.



Used car sales climbed to an all-time high of 39.2 million vehicles in 2017, according to the latest Used Car Report released by Edmunds, the leading car shopping and information platform. This reflects a 1.6 percent increase in sales from 2016 and a 4.3 percent increase from 2012. Analysts at Edmunds attribute this spike to increased replacement demand due to Hurricanes Harvey and Irma and increased used inventory due to a glut of off-lease vehicles hitting the used market in 2017. This large quantity of near-new off-lease models also contributed to a slowing in used-vehicle price growth: Used vehicle prices rose 1.4 percent in 2017, compared to the 3.6 percent average increase between 2012 and 2016.


“Consumer demand for SUVs — which were limited in supply — is really what helped fuel the modest price growth that the used market eked out in 2017,” said Ivan Drury, senior manager of industry analysis at Edmunds. “Shoppers looking for better deals on newer used vehicles will likely find them on 2- to 3-year-old passenger cars, since their residual values were hit so hard by this trend.”

Given the pressure that the influx of near-new vehicles is placing on residual values, in the report Edmunds analysts also took a deep dive into trends in the rental fleet market. Since vehicles coming off lease and those sold from rental fleets both hit the used market early in their life cycles, analysts looked at both factors to get a sense of the full-scale impact. 

From a combined perspective, the number of new vehicles sold to rental agencies and the number of vehicles leased by consumers dropped to 5.9 million vehicles in 2017, compared to 6.2 million in 2016.

“Looking forward, we expect to see leasing become more expensive as interest rates climb and residuals continue to fall,” Drury said. “However, rental sales are at risk of slowing as more consumers gravitate toward ride-hailing services and peer-to-peer car sharing.”

As automakers search for ways to protect residual values yet keep sales volumes high in a shrinking market, Edmunds analysts noted several converging dynamics in the fleet segment. Since trucks and SUVs with a reasonable number of options tend to hold their value, rental car customers might be pleasantly surprised to find lots stocked with larger vehicles equipped with unexpected creature comforts. 

Rental customers may also notice that the Ford, GM and FCA vehicles they’re used to seeing have been replaced by Hyundais and Nissans, reflecting pivoting automaker strategies. Five years ago, Ford, GM and FCA represented nearly two-thirds of all vehicles on rental lots, compared to 53 percent in 2017. Nissan and Hyundai have filled the gap, with 32 percent of vehicles on rental lots in 2017, compared to 16 percent in 2012.

“Years ago, strong residuals allowed automakers the ability to be more liberal in their short-term sales strategies, but as residuals begin to fall in more vehicle categories, sales driven by retail leasing and daily rentals will become increasingly scrutinized,” said Drury. “Companies will need to balance their portfolios going forward in order to minimize residual losses.”