Now for something completely different...music.

I first saw Chris Stapleton on Saturday Night Live last year and after that episode, I downloaded his album. Awesome singing and song writing. Her is something he hasn't put yet (yet), but please, enjoy.



Thanks Jess for the link!

Officer Down

Sergeant Paul Tuozzolo
New York City Police Department, New York
End of Watch: Friday, November 4, 2016
Age: 41
Tour: 19 years
Badge # 870
Cause: Gunfire

Sergeant Paul Tuozzolo was shot and killed at approximately 2:45pm after he and another officers located a suspect who had attempted who had just held his estranged wife and her family hostage for several hours.

At approximately 2:45 pm the broke into his estranged wife's home in the Bronx. During the ordeal the man told his estranged wife that he was planned to get in a shootout with police. He eventually fled in a vehicle after the victim was able to call 911. Sergeant Tuozzolo and other officers were canvassing the area for the vehicle when they located it at Bronx River Avenue and Noble Avenue.

Officers boxed the vehicle in. As Sergeant Tuzzolo and another sergeant exited their patrol cars the subject opened fire with a .45 caliber handgun. Sergeant Tuozzolo was struck in the head and killed, and a second sergeant was struck in the leg. Other officers at the scene returned fire, killing the subject.

Sergeant Tuozzolo had served with the New York City Police Department for 19 years and was assigned to the 43rd Precinct. He is survived by his wife and two young sons.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Sergeant Anthony David Beminio
Des Moines Police Department, Iowa
End of Watch: Wednesday, November 2, 2016
Age: 38
Tour: 14 years
Badge # 5030
Cause: Gunfire

Sergeant Anthony Beminio and Police Officer Justin Martin, of the Urbandale Police Department, were shot and killed from ambush while sitting in their patrol cars shortly after 1:00 am.

Officer Martin was sitting in his patrol car at the intersection of 70th Street and Aurora Avenue when a subject approached and opened fire without warning, shooting into the driver's side of the patrol car between 15 and 30 times. Nearby citizens called 911 to reports shots fired and responding officers located Officer Martin inside.

Additional officers from multiple agencies setup a perimeter in the area. Approximately 20 minutes later the same subject approached Sergeant Beminio's patrol car, approximately two miles from Officer Martin's murder, and ambushed him at the intersection of Merle Hay Road and Sheridan Avenue. The man then fled the scene. At approximately 9:30 am he surrendered to law enforcement officers in Dallas County.

Sergeant Beminio had served with the Des Moines Police Department for 11 years.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Police Officer Justin Scott Martin
Urbandale Police Department, Iowa
End of Watch: Wednesday, November 2, 2016
Age: 24
Tour: 1 year, 3 months
Badge # 1140
Cause: Gunfire

Police Officer Justin Martin and Sergeant Anthony Beminio, of the Des Moines Police Department, were shot and killed from ambush while sitting in their patrol cars shortly after 1:00 am.

Officer Martin was sitting in his patrol car at the intersection of 70th Street and Aurora Avenue when a subject approached and opened fire without warning, shooting into the driver's side of the patrol car between 15 and 30 times. Nearby citizens called 911 to reports shots fired and responding officers located Officer Martin inside.

Additional officers from multiple agencies setup a perimeter in the area. Approximately 20 minutes later the same subject approached Sergeant Beminio's patrol car, approximately two miles from Officer Martin's murder, and ambushed him at the intersection of Merle Hay Road and Sheridan Avenue. The man then fled the scene. At approximately 9:30 am he surrendered to law enforcement officers in Dallas County.

Officer Martin had served with the Urbandale Police Department for 15 months.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Police Officer Jorge Sanchez
Miami Police Department, Florida
End of Watch: Tuesday, November 1, 2016
Age: 53
Tour: 21 years

Police Officer Jorge Sanchez was killed when his police motorcycle was struck by another vehicle at the intersection of Southwest 8th Street and 137th Avenue.

He was en route to the Miami Police Department headquarters when his motorcycle was struck from behind as he was stopped at the light at the intersection. The vehicle that struck him then collided with four other vehicles.

Officer Sanchez was transported to a local hospital where he succumbed to his injuries.

Officer Sanchez served with the Miami Police Department for 21 years. He is survived by his three children, mother, and fiancee. His son is also a Miami police officer.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Why do I have a bad feeling about this......

I am recalling the story of a Chicago officer who got the living shit beat out of her.

Chicago police say officer didn't shoot suspect beating her, fearing scrutiny

CHICAGO — Chicago police say an officer who was attacked by a man allegedly high on PCP should have shot the man, but risked her life out of fear the shooting would be controversial, reports CBS Chicago.

Parta Huff, 28, was charged Friday with attempted murder of a police officer after admitting in court to the attack.

A police officer and her partner were on patrol Wednesday when they witnessed a car crash. Seeing a man, who they say was Huff, leave the scene, they followed, according to police.

Video released by police shows officers yelling commands at Huff, who appeared not to follow the orders.

“A subject who was under the influence of PCP attacked the female officer, viciously pounded her head into the street as her partner was trying to get him off of her. This attack went on for several minutes,” Chicago Police Supt. Eddie Johnson said during a press conference Friday.

Body cam footage appears to show Huff holding on to the officers hair, as other officers attempt to subdue him. Huff admitted in court Friday that he slammed the officer’s head into the pavement. She lost consciousness during the incident.

Johnson said the officer should have shot her attacker, but chose not to so her family and department would not face the kind of intense public scrutiny experienced by other officers who have shot people.

“She looked at me and said she thought she was going to die, and she knew that she should shoot this guy, but she chose not to because she didn’t want her family or the department to have to go through the scrutiny the next day on national news,” Johnson said....

I recently took a class covering, among other things, the report of the President's Commission on Policing in the 21s Century. The report is basically justification for the federal government to take over local law enforcement. Now there is a truism that if you want to see America in 20 years, look at California today. I look at this and I am afraid, very afraid.

LAPD honors officers for their bravery and, for the first time, their restraint

Los Angeles Police Officer Danielle Lopez and her partner were driving to a South L.A. jail when they spotted a man in the middle of the street pointing an assault rifle at other cars.

The officers jumped out and drew their guns.

“Drop the gun!” Lopez remembers shouting at the man. “Drop the gun!”

It was a tense moment, a potentially life-or-death scenario that police train for but hope to avoid: one that could have ended in gunfire.

Instead, Lopez and her partner were able to persuade the man to drop the rifle and step away, arresting him without firing a single bullet. After taking him into custody, the officers realized that the gun he was carrying was, in fact, a fake.

On Thursday, Lopez and Officer Bryan Waggener were recognized for their judgment and restraint, joining a group of 25 officers who became the LAPD’s first recipients of a new award: the Preservation of Life medal.

The LAPD has long recognized officers for heroic acts, bestowing the department’s highest honor — the Medal of Valor — upon those who have pulled people from fiery car crashes or shielded fellow officers during shootouts.

But the Preservation of Life medal honors officers who go above and beyond normal police work to avoid using deadly force during dangerous encounters.

Six months after her confrontation with the rifle-wielding man, Lopez said Thursday that she was honored to receive the award but felt she was simply doing what she was trained to do....

...The new award marks a relatively novel approach by the LAPD, reflecting an increasing emphasis within policing on so-called “de-escalation” strategies aimed at defusing tense encounters with the public amid a heated national debate over how officers use force.

The LAPD is one of only a handful of agencies nationwide that have such an award. Police in Camden, N.J., have adopted a similar recognition. So too has the Philadelphia Police Department, which created a Medal of Tactical De-escalation in December and has since handed out 44 of the awards, according to an agency spokesman.

The LAPD is held in special regard, so for them to put this award at the same level as the Medal of Valor sends a huge message. — Chuck Wexler, executive director of the Police Executive Research Forum
Chuck Wexler, executive director of the Police Executive Research Forum, a Washington think tank focused on law enforcement issues, said other departments could follow suit.

“The LAPD is held in special regard, so for them to put this award at the same level as the Medal of Valor sends a huge message to the entire policing profession,” he said.

But the award has stirred some controversy. The union representing rank-and-file officers blasted the medal when the honor was created last fall, saying it was a “terrible idea” that prioritized “the lives of suspected criminals over the lives of LAPD officers.”

The concern, the union said, was that officers would second-guess themselves during dangerous encounters if they felt pressured to avoid using force because of the award...

Yes, we are being second guessed at every point. In that class a recommendation made from the commission report was the US Department of Justice should provide guidance for use of force, emphasizing "deescalation" and other actions. I was adamant that there are two failures in this line of thought. One, you presume the feds know that the hell they are talking about. I've learned there are many good federal officers out there. But there are also some idiots out there. Just because your badge says "fed" doesn't make you a genius. Two, having a federal investigation ever time an officer fires upon a suspect charging him with a knife will only lead to more incidents like the one above, or officers simply not going out and engaging with suspects. It's scary enough with the job. Add to that a possible federal investigation...

Officer Down

Deputy Sheriff Scott Williams
Taylor County Sheriff's Office, Florida
End of Watch: Monday, October 31, 2016
Age: 46
Cause: Automobile accident

Deputy Sheriff Scott Williams was killed in a vehicle crash near the intersection of US 98 and Beach Road at approximately 7:00 am.

He suffered fatal injuries when his patrol car collided with the rear of a logging truck.

Deputy Williams had served with the Taylor County Sheriff's Office for 17 months and had previously served with the Brooksville Police Department.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Sergeant Rod Lucas
Fresno County Sheriff's Office, California
End of Watch: Monday, October 31, 2016
Age: 46
Tour: 20 years
Badge # 119
Cause: Gunfire (Accidental)

Sergeant Rod Lucas was accidentally shot and killed as he and other detectives discussed the safety of backup weapons at their office near Clinton Avenue and Winery Avenue.

During the discussion one of the other detectives' weapons was accidentally discharged and the round struck Sergeant Lucas in the chest. He was transported to Community Regional Medical Center where he succumbed to the wound a short time later.

Sergeant Lucas had served with the Fresno County Sheriff's Office for 20 years and was assigned to the Special Investigations Unit. He is survived by his wife and four children.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Deputy Sheriff Dan Glaze
Rusk County Sheriff's Office, Wisconsin
End of Watch: Saturday, October 29, 2016
Age: 33
Tour: 7 years
Badge # 110

Deputy Sheriff Dan Glaze was shot and killed while investigating a suspicious vehicle on Broken Arrow Road, near Highway 27, at approximately 11:00 pm.

He had arrived at the scene and located the vehicle in a field. He radioed in a description of the vehicle but did not respond to additional radio traffic or calls to his cell phone. Responding units found him inside his patrol car suffering from a gunshot wound.

A suspect was identified and located at his home approximately 11 hours later. The man fired at deputies from the residence before being taken into custody.

Deputy Glaze had served with the Rusk County Sheriff's Office for 18 months and had served in law enforcement for seven years.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

K9 Down

K9 Jardo
Boise Police Department, Idaho
End of Watch: Wednesday, November 16, 2016
Breed: Belgian Malinois
Age: 6
Gender: M
Incident Date: 11/11/2016

K9 Jardo succumbed to a gunshot wound sustained five days earlier while attempting an apprehension on a suspect wanted for shooting two citizens and carjacking an elderly woman.

Jardo was performing a search for the subject in the area of Wilson Street and Irving Street. The man opened fire when Jardo located his hiding spot, striking Jardo, and two officers who were assisting his handler. The subject was killed by return gunfire.

Jardo was transported to an emergency veterinary hospital suffering from a gunshot wound to the chest. He was released several days later, but developed complications. He was taken back to the vet where he died while undergoing additional surgery.

Rest in Peace Jardo…till our next roll call at the Rainbow Bridge!

In Memory of all Police Dogs

They handled themselves with beauty & grace

And who could ever forget that beautiful face

Whether at work; or at home; whatever the test

They always worked hard; and did their best

They were real champions; at work or at play

But their lives were cut short; suddenly one day

While working on the job with their partner one day

They put themselves out on a limb; out into harms way

They gave the ultimate sacrifice; any dog can give

They gave up their life; so someone could live

The best of their breed; as his partner and anyone would say

Many hearts are now broken; that he had to prove it this way

Now as the trees are blowing in the gentle breeze

The sun is shining; thru the leaves on the trees

The meadows are green; and the grass grows tall

Off in the distance they can see a waterfall

As they look over the falls; down through the creek

The water flows gently; as a rabbit sneaks a peek

Far up above; in the deep blue sky

They see the birds soar high; as they fly by

They see animals playing; at the bridge by a waterfall

Chasing each other; and just having a ball

They play all day; from morning to night

There's no more rain; just warm sunlight

Off in the distance; they hear trumpets blow

Then all the animals look up; and notice a bright glow

The harps would play and the angels would sing

As they know they've come home; they've earned their wings

We remember that they died; in the line of duty

And are now with the Lord; sharing in heaven's beauty

Off to the meadows now; where they can play and roam free

With an occasional rest stop; under a tall oak tree

No more bad guys to chase; or bullets to take

Just a run through the meadow; down to the lake

A quick splash in the water; then back to the shore

Then it's off to the forest; to go play some more

These special dogs are back home; up in heaven above

They're cradled in God's arm's; and covered with His love

We'll light a candle for all of them; in the dark of night

In loving memory of all; these very special knights

By John Quealy

Officer Down

Police Officer Myron Jarrett
Detroit Police Department, Michigan
End of Watch: Friday, October 28, 2016
Age: 40
Tour: 8 years
Badge # 4538

Police Officer Myron Jarrett was struck and killed at approximately 10:30 pm by a hit-and-run driver while assisting other officers during a traffic stop near the intersection of Puritan Avenue and Monica Street.

Officer Jarrett was re-entering his patrol car as he and his partner were preparing to leave the scene. A van traveling at a high rate of speed struck Officer Jarrett, his patrol car, and several other vehicles before stopping a short distance away. The male driver and a female passenger then both fled on foot. The driver was arrested at a bus stop several hours later.

The other officer in the patrol car suffered minor injuries.

Officer Jarrett had served with the Detroit Police Department and was assigned to the 12th Precinct.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Police Officer James Brockmeyer
Chester Police Department, Illinois
End of Watch: Friday, October 28, 2016
Age: 22
Tour: 10 months
Badge # CH09
Cause: Vehicle pursuit

Police Officer James Brockmeyer was killed in a vehicle crash while pursuing a vehicle on Palestine Road at approximately 10:00 pm.

His patrol car left the roadway and overturned just south of Union School Road in Randolph County. He became trapped in the wreckage as a result of the crash.

The vehicle he was pursuing continued to flee and its driver remains at large.

Officer Brockmeyer had served with the Chester Police Department for only 10 months. He is survived by his parents and sister.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Why you do the job.....

The city gets rocked from time to time with crimes that make you question that some two legged Homo sapiens deserve them "human," and this is one of them. Last week three human creatures robbed a mother with her two children. The mother and one daughter were shot and this four year old girl was murdered.

A 4-year-old girl was killed and her mother and older sister were critically wounded when a robbery in their apartment complex's parking lot turned violent Monday evening.

The girl, Ava Castillo, died after being transported to a hospital by LifeFlight, said Deputy Thomas Gilliland with the Harris County Sheriff's Office. By Tuesday morning, the mother and sister — Diana Gomez, 27, and Betzida Castillo, 10 — had been upgraded to stable condition.

Gilliland confirmed Tuesday evening that deputies were interviewing someone in relation to the case. He declined to label the individual as a person of interest.

Family members were unloading groceries at their Greenspoint-area apartment complex near the North Freeway and West Road when the three men drove up in a sedan, Gilliland said. The mother did not give up her purse to assailants, one of whom started shooting at the family. The three suspects remain at large...

Friend, fellow sergeant and academy classmate Bryan Garrison posted this on Facebook and it says it better than I ever can:

Standing in a line earlier today a black female turned towards me, looked at me with the hate and disgust I've known for almost two decades because I wear a badge and never turned around again. Running in my neighborhood yesterday I saw fresh graffiti reading "f@ck the police". It really doesn't bother me. It's nothing new. I've experienced this for many years working the worst parts of our nations fourth largest city at night.

I don't even hate them back. They are sheep. They believe the lies media tells them and to be completely honest the opinion of sheep doesn't really matter to me. I will protect them regardless of their hatred towards me unless they become a threat at which point I will deal with them accordingly. The outcome of that depends on luck, Gods will, my mindset and training - but it's all predicated upon their actions.

A lot of us are becoming more jaded than we normally are and expressing a desire to quit or simply not go the extra mile out of fear of losing our job and potentially our freedom. I don't completely blame them; however, I must remind them we didn't answer this calling to be loved, liked, or respected. We didn't do it for money. We did it because that shield is a symbol of who we are and that is the literal protector of others. It might get us coffee - but it also requires a commitment to put others ahead of yourself. While many of us are wondering why we should continue I simply share this picture.

This little girl was murdered by several pieces of human waste two nights ago while they were trying to steal a purse. I might get my paycheck from the City of Houston and I generally respect my chain of command and do what is required to the best of my ability- but on the street I did my job and answered to the innocent people like this little girl and her family. I work for them. Regardless of how many hate us I know we'll do our best for the ones who need us - despite some of their contempt.

Animals like this need to be removed from he human gene pool. The investigators have a suspect, they've released a picture of the suspect vehicle and I really hope these sub-human beings are...

I won't got there.

I just hope they are brought to justice soon. Nothing is more dangerous than a scared animal.

Officer Down

Sergeant Allen Brandt
Fairbanks Police Department, Alaska
End of Watch: Friday, October 28, 2016
Age: 34
Tour: 11 years
Incident Date: 10/16/2016

Sergeant Allen Brandt succumbed to complications of gunshot wounds sustained shortly after midnight on October 16th, 2016, while responding to a shots fired call on the 300 block of Seventh Avenue.

As Sergeant Allen Brandt arrived in the area he observed a man walking down the sidewalk. He pulled over as he approached the pedestrian, and the man dashed in front of the car with a gun in his hand. Sergeant Brandt opened the door to get behind the police car for protection and the man opened fire, striking him five times in the legs. One additional round was stopped by Sergeant Brandt's vest. The man then kicked Sergeant Brandt in the head before stealing his service weapon and patrol car.

The subject fled the scene in the patrol car but was arrested two days later. He was charged with attempted murder in the first degree, assault, vehicle theft, theft and tampering with evidence.

A piece of shrapnel from the round that struck Sergeant Brandt's vest lodged in Sergeant Brandt's eye. On October 27th, 2016, Sergeant Brandt underwent surgery in an attempt to remove the shrapnel and save his eye. He suffered severe complications during the surgery and passed away the following day.

Sergeant Brandt had served with the Fairbanks Police Department for 11 years. He is survived by his wife and four children.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Trooper Timothy P. Pratt
New York State Police, New York
End of Watch: Wednesday, October 26, 2016
Age: 55
Tour: 29 years
Badge # 2519

Trooper Timothy Pratt was struck and killed by a vehicle while assisting a lost motorist on the 300 block of Ballard Road in Wilton, New York, at approximately 6:15 am.

He was just beginning his shift when he observed a tractor trailer parked in the center turn lane in front of the New York State Police barracks in Wilton. After speaking to the driver and providing him directions, Trooper Pratt stepped off the cab of the truck. As he stepped onto the roadway he was struck by an oncoming vehicle.

Trooper Pratt was transported to a local hospital before being flown to Albany Medical Center Hospital. He succumbed to his injuries approximately three hours after being struck.

Trooper Pratt was a U.S. Air Force veteran and had served with the New York State Police for 29 years. He is survived by his daughter, two sons, and fiancee.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

A story of one of the good guys....

With rent-a-mobs and terrorist organizations like Black Lives (Don't) Matter running amok, with the 4th Estate implying every police involved shooting is a modern lynching, it's good to see a cop shown in a better example of what the Thin Blue Line does every day. The video is well worth the 6 minutes.

Sacramento Police Officer A Shining Beacon In Wake Of Drive-By Shooting:

SACRAMENTO (CBS13) — A Sacramento father watched his son dying after he was gunned down in the street.

There was no response, no heartbeat and no hope for Michael Caldwell that his son would survive.

What a Sacramento Police officer did next would change all of their lives forever.

On May 30, Michael Caldwell found his son Marcellis lying motionless in a pool of blood. He was one of five victims in a vicious drive-by shooting.

Families had gathered in Oak Park for a quiet Memorial Day barbecue when the bullets started to fly.

Four victims survived, but Marcellis’ life was slipping away.

Sacramento Police officer Beth Glynn was right around the corner.

“I heard over the radio that there was shooting,” she said. “I saw him laying in the gutter and I saw a tremendous amount of blood.”

A man frantically giving Marcellis CPR sees Glynn walking up.

“And he said, ‘That’s my boy,’ and my heart just sank,” she said.

She knows him.

“I saw what turned out to be Mr. Caldwell over his son doing CPR on his son,” she said.

Caldwell pressed his son to hold on.

“I’m telling him, ‘Hey Son stay with me, stay with me.’ His eyes were closed. He wasn’t coherent at all. I believe he was hearing me and I kept doing CPR until I got assistance,” he said.

“When I looked at him,” Glynn said, “I can tell he was starting to emotionally lose it. So I pushed him out of the way and started CPR.”

Arriving on scene that day were Sacramento County Sheriff’s deputies Amar Gandhi and Jeb Trummel.

“Got bodies laying everywhere, people screaming for help,” Gandhi said.

“We checked for a pulse on him and there was no pulse on him,” Trummel said. “So, I jumped in with her and started doing CPR.:

Glynn wonders if Marcellis was already gone at that point.

“I didn’t think he was still with us but I wanted him to at least have an opportunity to fight for it,” she said.

Both officers continued CPR.

“You have to have that little glimmer hope that you can do something,” Gandhi said.

Minutes ticked by until finally, there was a pulse.

“It’s just unbelievable,” Caldwell said....

Gotta say I love the duct tape on the dashboard of the deputy's vehicle (around 2:10). That's real world! :)

Great work and hopefully the young man fully recovers.

Thank you Austin M. for the link

STRATFOR: Prepare for a Transition, April 29, 2016

Prepare for a Transition

(Stratfor)

Summary

Editor's Note: This is the fifth installment of a five-part series authored by ETM Analytics, an economic and financial advisory firm with offices in the United States and South Africa. The analysis contained herein reflects the views of ETM and not of Stratfor. In fact, as you will see, it is different from our existing worldview in some significant ways. We are sharing this with our readers because it is good work, produced using rigorous analytic tools and methodology. As always, we look forward to receiving comments and feedback. At the end of the series, we will share what we hear from you along with Stratfor's thoughts on how our view differs from ETM's.

The United States has made a grand gamble, risking its finances on an activist economic policy that has repeatedly destabilized the financial system. China, too, has taken risks with policy activism, racking up a great deal of debt, the consequences of which reach far beyond Chinese borders. These great wagers reveal a profound transition underway in the global economy, one that will bring new threats to be avoided and fresh opportunities to be seized. Though the past decade was anything but calm, the next decade is set to be rockier still as financial instability shakes the global monetary order to its very foundations.

Analysis

After the dot com bubble burst — and after the post-9/11 U.S. military escalation — Washington engaged in fiscal and monetary activism that would culminate in the 2008 failure of the global financial system. Instead of changing tactics, Washington raised the stakes, taking on a lot more debt and printing a lot more money.

Since then, cycles of easy money policies have created a series of dollar liquidity summers and winters. Summers, or periods of abundant liquidity, are associated with greater risk-taking and higher asset prices, but they also foster excessive debt, bubbles and instability. Winters, on the other hand, are periods of less liquidity characterized by lower appetite for risk, bubble deflation and recession, but also by corrections of excess, repairs of balance sheets and restoration of confidence. Near the end of the third quarter of 2014, a winter set in, bringing with it falling commodity prices, cracking currency pegs, fearful corporate bond markets and volatility on Wall Street.

The recent convulsions in Chinese financial markets have only made things worse. Beijing appears wholly amenable to keep pumping more credit into the system without regard for the consequences, although this time its citizens and the markets are unconvinced that such aggressive policy stimulus will work. The veneer of Beijing's efficient, competent and formidable autocracy is cracking, chipping away at China's strategic ambitions and the integrity of its currency in the process.

And problems for the United States and China mean problems for the stability of the international currency system. When reserve currency control became a matter of privilege rather than responsibility, it sparked a chaotic battle in the global financial system. This struggle has now become a morass of inflationary monetary expansion and geopolitical clashes as nations pursue incompatible currency objectives. Those clashes, in turn, have yielded widespread financial instability, weakening the state-centric currency model that has dominated decentralized market-centric monetary innovation for around 100 years. Digital currency technology is now making a subversive assault on nationalized currency that could radically change the monetary landscape, the politics of monetary control and state power itself.

Threats for Some

Winter has not ended, and the investors, markets and economies that became complacent during the previous summer cycle are likely to find themselves more exposed to tighter liquidity conditions. In the United States, threats to financial stability have manifested in many sectors: student loans, corporate leveraged loans, vehicle markets and mergers and acquisitions as well as biotechnology and social media. Each of these sectors boomed in times of easy financing but are now more vulnerable to tightening liquidity. For example, since the recession ended in 2009, the amount of student debt has nearly doubled and now stands at about $1.3 trillion. Meanwhile, college tuition has soared. The higher costs, combined with bleak job prospects for graduates, have made conditions ripe for a high rate of default. The entire college economy may be vulnerable, from credit and business risk to the universities themselves and the industries that support college towns.

Elsewhere, mergers and acquisitions in the global biotech industry surged by 270 percent in 2014 and rose by another $500 billion in 2015, increasing their share of total mergers and acquisitions from 6 to 13 percent. This current biotech bubble resembles those in the telecommunications sector in the late 1990s and in the retail and banking sectors at the end of the 2000s. All of these sectors experienced surges in mergers and acquisitions as global liquidity became scarcer. In another risk-laden sector, U.S. sales in lightweight vehicles have returned to historic highs of around 17.5 million units per year, thanks to a 21 percent increase in automobile debt per capita since 2007 and the growing portion of sales funded by subprime automobile loans. Though perhaps not posing the systemic risk of subprime mortgages, subprime automobile delinquencies are becoming more common, posing a growing threat to the United States' trillion-dollar auto loan portfolio and the market for new vehicles, which turns over about half a trillion dollars each year.

In the meantime, contagion from crashing oil and natural gas prices has yet to run its course. Junk energy bonds continue to hurt the total junk and leveraged loan markets. At the same time, the economy is still feeling the effects of credit contagion on upstream and downstream energy service industries and government finances that rely on energy revenue. The collapse of oil prices has exposed the poor economic management of many oil-producing countries, where currency pegs are at risk of breaking or, in some cases, have already broken. Nigeria has been forced to devalue the naira, and Saudi Arabia might have to follow suit with the riyal before long. Africa, in particular, has been hit hard by the steep dive in energy prices, and exploration for new oil and natural gas reserves has dropped off precipitously. Latin America has not fared much better; the latest winter cycle and low oil prices have hastened the slide of the Venezuelan economy to the brink of a hyperinflationary catastrophe.

Of course, what hurts the energy sector and deepens sovereign debt also damages the financial sector, too. In Europe, banking risks are rising, a situation worsened by negative interest rate policies and a flattening term interest rate structure. Then again, the drastic suppression of interest rates might be the only thing keeping investors from lumping debt-laden France in with the rest of the eurozone's peripheral members.

Real estate could face some serious problems as well. Easy money policies and the flight of Chinese capital into desirable property around the world have made the real estate market a potential flashpoint for financial crisis worldwide. Residential and commercial property sectors in Canada, the United Kingdom, Scandinavia and Australia are arguably in the midst of mega-bubbles that any number of events could burst. If these countries' central banks attempt to counter the bubbles' deflation and prop up their markets with extremely loose monetary policies, their currencies might bear the brunt of the resulting pain and depreciate even further.

Opportunities for Others

Still, this is not to say that the effects of the winter cycle will be all bad. Latin America might look fragile at the moment, but it is well-positioned to bounce back from its current troubles. Structurally, the region's largest economies have either made great strides in becoming more liberal or are on the cusp of shifting away from the leftist tide that swept Latin America in the late 1990s. And because the markets have already adjusted to account for poor regional performance, spurring currency and stock sales in the process, rising interest rates are generating returns at a time when much of the developed world's yields are plunging. Latin America also has geopolitical stability to offer, something that is being increasingly factored into economic risk calculations of late.

Other types of currency, including gold and cryptocurrencies, also stand to do well. These kinds of assets can capitalize on messy currency skirmishes among nations, skirmishes that take their toll on the current monetary order. The gold mining sector, which has been beaten down in recent years, is already starting to recover and could see impressive returns in the years ahead. Meanwhile, private investors are pumping money into blockchain technology, and though a financial crisis could stem these funding flows somewhat, cryptocurrencies and blockchain technology seem likely to experience high levels of growth over the next decade.

In health care, new niche technologies will continue to outperform their competitors in today's graying society, especially those that aim to extend lifespans and combat diseases related to old age. Robotics is also an exciting opportunity for growth, as are technological advances in transportation and infrastructure, which will be aided so long as commodity prices remain low.

Finally, after a prolonged retreat in emerging markets, this year may prove to be a turning point, featuring fresh opportunities for investors looking to borrow money at low interest rates to invest in assets with high returns. For that to happen, though, the developed world's core economies — especially that of the United States — will have to first loosen their monetary policies considerably.

If the United States' grand gamble fails, the international monetary system should brace itself for significant and destabilizing change. Moreover, as the effects of this winter cycle's tightening liquidity spread, it is unlikely that commodities and emerging markets will be the only bubbles to pop. Beijing's debt, for one, remains a threat to both China and the rest of the world, particularly as the Asian giant becomes more integrated with international markets than ever. The uncertain future of the U.S. dollar adds to global financial instability and enhances the prospects of an ugly transition, the effects of which could create as many risks as opportunities. The next decade is poised to be every bit as remarkable as the last.

Officer Down

Sergeant Alfonso Lopez
Los Angeles County Sheriff's Department, California
End of Watch: Monday, October 24, 2016
Age: 47
Tour: 26 years

Sergeant Al Lopez suffered a fatal heart attack while responding to assist other deputies who were involved in a high speed pursuit in Compton at approximately 5:20 am.

Shortly after he responded from the station a citizen came into the lobby and advised deputies that a patrol car had crashed at the intersection of Myrrh Street and Willowbrook Avenue and the driver was unresponsive. Deputies responded to location and began performing CPR on on Sergeant Lopez. He was transported St. Francis Medical Center where he passed away.

It is believed that Sergeant Lopez suffered a fatal heart attack prior to his vehicle colliding with a fence at low speeds. The pursuit he was responding to was terminated shortly after it began due to the dangerously high speeds of the fleeing vehicle.

Sergeant Lopez had served with the Los Angeles County Sheriff's Department for 26 years and was assigned to the Compton Station. He is survived by his wife and two adult children.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

Officer Down

Deputy Sheriff Jack Hopkins
Modoc County Sheriff's Office, California
End of Watch: Wednesday, October 19, 2016
Age: 31

Deputy Sheriff Jack Hopkins was shot and killed while responding to a disturbance call near the intersection of County Road 115 and County Road 170 at approximately 10:30 am.

Other responding officers took the subject into custody approximately 30 minutes later.

Deputy Hopkins had served with the Modoc County Sheriff's Office for approximately one year and had previously served with the Alturas Police Department.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

STRATFOR: The Real Currency War, April 28, 2016

The Real Currency War

Summary

Editor's Note: This is the fourth installment of a five-part series authored by ETM Analytics, an economic and financial advisory firm with offices in the United States and South Africa. The analysis contained herein reflects the views of ETM and not of Stratfor. In fact, as you will see, it is different from our existing worldview in some significant ways. We are sharing this with our readers because it is good work, produced using rigorous analytic tools and methodology. As always, we look forward to receiving comments and feedback. At the end of the series, we will share what we hear from you along with Stratfor's thoughts on how our view differs from ETM's.

Disagreement came to the global financial system when the control over reserve currency became a matter of privilege rather than responsibility. That struggle has since become a morass of monetary expansion and conflict as states have pursued their own, often incompatible currency goals. The battle of the currencies has left widespread financial instability in its wake, weakening the state-centric currency model that ruled the monetary order for the past century. Now, a different type of money — digital currency — is making a play to become the new standard. If successful, the politics of money could radically change, and with it, the power of states themselves. And though the U.S. dollar has reigned supreme for decades, its primacy and its stability are no longer guaranteed.

Analysis

The notion of a global reserve currency has come to mean very different things since the Bretton Woods systemstarted in the 1940s — and particularly after it ended in the 1970s. Under the classical gold standard, which was in place from 1815 to 1914, gold served as the principal asset underpinning the reserve currency: the British pound sterling. As the world's chief superpower and creditor nation, Britain was the system's custodian, backing the pound with gold at a rate of 4.25 pounds per ounce. Other countries' banks held both gold and pounds in reserve as well. Because customers could exchange currency for gold at any time, bank runs were still a threat, keeping in check any undue credit and bank note expansion or abuse of financial power. For Britain, controlling the world's reserve currency was more a matter of responsibility than of privilege.

But throughout the early 20th century, three developments fundamentally changed the system altogether. First, European powers and the budding United States began to threaten Britain's hegemony, setting in motion a decadeslong redistribution of power that would be settled only after the conclusion of World War II. Second, Washington and Wall Street established the Federal Reserve in 1913. Two decades later, President Franklin Roosevelt passed the Emergency Banking Act of 1933, confiscating gold and weakening its ties to the United States' monetary and payments system. Then, the New Gold-Exchange Standard, one of the key byproducts of the Bretton Woods agreement, eliminated citizens' ability to redeem national currencies in gold, reserving that privilege for governments and their central banks.

And so, gold was systematically and deliberately shifted from private hands to the control of states. It could no longer act as a market-based check on the expansionary policies of governments and banks. The system of fully nationalized fiat currencies that emerged in its place in the early 1970s gave states — especially the United States — the ability to expand their power to its fullest, using a near-unlimited number of financing tools unconstrained by the gold standard. Controlling the global reserve currency then became more a matter of privilege than of responsibility.

The Battle for Currency Supremacy

Now, the United States' infallibility and the pillars that once supported the dollar's pre-eminence have been shaken. The harder Washington fights to hold onto its exorbitant monetary privilege, the more it leverages its position by expanding its debt-based growth model and its preference for fiscal and monetary palliatives over painful but necessary structural reforms. Meanwhile, lesser global powers are becoming less willing to allow Washington its privilege if it cannot or will not pay for it through hegemonic dominance, stable state finances and monetary dependability.

Still, challenges to the dollar's supremacy have not been particularly successful. Europe tried to wrestle the United States' exorbitant privilege away, but the apparent failure of the European project has called into question the euro's ability to unseat the dollar. The United States' other major challenger, China, is a productive nation with far-reaching trade ties and the capability to draw others into its currency zone by extending offshore loans. But China is going to get old before it gets rich, and its politics continue to focus inward while its finances remain fragile. To cultivate international trust in the yuan, Beijing would have to open its trade and capital accounts, allocate resources more efficiently and rid itself of debt — reforms that may create more political instability than the government would prefer.  

Two Brutal Fronts

The shift in currency reserve status from custodial responsibility to exorbitant privilege has imbued the global monetary system with a self-destructive impetus that potentially inheres toward instability. This instability is caused by the world's major powers pursuing two incompatible goals: currency debasement (lowering the value of money) and fostering currency confidence. As the biggest reserve currency power, the United States means to instill confidence in the dollar so that it can maintain its privilege. But to reap the benefits of its privilege, the United States tends to adopt inflationary policies that erode confidence over time.

Other major powers, feeling the need to show that they can play minor reserve currency roles or potentially usurp the dollar, have tried to wrest back some privilege of their own through monetary inflation. After all, the essence of monetary privilege is the ability to print money without having it sold into oblivion by the rest of the world. The United States' privilege was on full display from 2008 to 2014 as it printed trillions of dollars without devaluing its currency. (Zimbabwe and Venezuela, by comparison, have tried to tap their privilege with far less success.)

The tension between the United States and other powers has set the scene for currency trench warfare on two brutal fronts. On the first, states are mounting inflationary insurrections to gather as many resources as they can before foreigners discount their currencies. Money printing, bank credit expansion and deficit spending are the weapons used in these raids, which are simply manifestations of the tragedy of the monetary commons that has arisen from the fluctuating fiat currency system.

On the second front, states vie for reserve currency stature, a battle that can be fought in one of two ways. A state can tighten its monetary policies, reduce national debt and raise productivity, an option that requires painful internal adjustment and surrender on the first front. The alternative is to create economic, financial and military dependency on itself — or leverage dependency where it already exists — to encourage other countries to adopt its currency. Trade policies, the military-industrial complex and global financing institutions are the weapons of choice on this front.

States that can fortify an advantageous position in the reserve currency battle can gain cover for inflationary raids, but that does not mean they are clear of danger; if they expend too many resources on raids, their reserve currency positions will be put in jeopardy. But striking the right balance is easier said than done, and all too often clashes break out, breeding tremendous financial and economic volatility that leaves many casualties in its wake.

Far From Assured

Part 1 of this series examined how the dollar came to be the world's reserve and trade currency. For any currency to reach that point, the state that holds it (in the dollar's case, of course, it was the United States) must be geopolitically and productively superior to other major powers. It must also be a creditor nation that can build trust and necessity into the use of its currency. Today's other important currencies, and the states that control them, fall well short of these responsibilities. Though the incumbent dollar is impaired and the United States' reliability has diminished, its prospective challengers are too embroiled in their own troubles to become viable alternatives.

Still, the geopolitical order abhors the exorbitant privilege afforded by the reserve currency and that superpowers tend to wield their full influence to maintain that privilege — even at the risk of exacerbating international imbalances. The system then becomes bogged down by inflationary insurrections and conflict as other states try to secure resources and project power to encourage greater foreign reliance on them. Eventually, the monetary order must undergo radical shifts to adjust to the tension. These shifts cause financial instability worldwide, undermining the integrity of national currencies and even the state-centric currency model itself.

The real war being waged, then, is between the political forces of centralized money and the market forces of decentralized finance. This war has been waged for centuries, if not millennia, and it has always pitted the sovereign's imperative for money nationalization against the market's imperative for monetary innovation. Currency centralization serves the state's purposes, enabling it to extract profits through seigniorage (the face value of money minus the cost of physically creating it), finance wars, regulate the banking system, control transactions and levy taxes. Decentralization does the opposite, protecting citizens from state resource predation through inflation, diminishing the state's control of transactions and curtailing the state's overall financial power. In this way, the relationship between the state and its people is profoundly affected by the orientation of the global monetary system.

Since the first half of the 20th century, the forces of centralization have emerged victorious, placing the control of currencies firmly into states' hands. But now this model is failing, and it will continue to fail as long as states keep accumulating debt and printing money. The rise of regional and non-state actors, coupled with digital technology's subversive assault on national currencies, will only put greater pressure on a system already buckling under the weight of reckless fiscal and monetary activism.

In a hyper-digital online world, gold — a stateless resource that has dramatically and profoundly returned to private hands — can be traded instantly and cheaply, reviving its practical use as a monetary medium. Meanwhile, blockchains and cryptocurrencies such as bitcoin have opened up a brave new world of transactional possibilities, and the latter is attracting waves of funding from investors who see its potential to revolutionize the monetary system.

States that wage currency wars are all the more susceptible to these new market forces seeking a share of monetary influence. Their disruptive presence could profoundly affect the world's monetary policies, banking systems, political stability, business cycles and so much more. If the market-based currency revolution is here to stay, what will the world it brings about look like? Though it is a difficult question to answer, one conclusion is clear: The future of the U.S. dollar, long the world's dominant currency, is far from assured.

The Real Currency War is republished with permission of Stratfor.

SNL is still in shock...

I've often called Saturday Night Live one of my guilty pleasures. I record it and generally look over the introduction and Weekend Update. The sometimes have great musical guest.

I was wondering how they would handle the Trump victory last week, I was expecting something in the first few minutes. But there was no acting, but music. Kate McKinnon, the actress who plays Hillary Clinton, preformed an excellent cover of the late Leonard Cohen's (OTS, another reason to say "Screw you 2016!") “Hallelujah,” and just said, “I’m not giving up, and neither should you.”

I'm a little confused here. What is she not "giving up" on or for? She's not clear.

Here is the piece. It's not that long but beautifully done.


I would remind the producers of Saturday Night Live they are in a business to entertain the American people and please, have fun with Trump, etc. But don't take yourselves too seriously. As the NFL is discovering, you insult your client base (current and potential) you will lose them. Trump won, they will take you calling him our on his failures, even slandering him. But don't forget, we're here to be entertained, not be lectured.

Sometimes it's too funny

People often don't like cops, but generally they are young and stupid. Then again, stupid can endure over the ages and here is a great example:

WARNING: LANUGAGE


I have to say excellent restraint by the officers, I would have put her ugly ass in jail for the trespass (probably different standards for the charge than Texas).

Officer Down

Police Officer Aaron J. Christian
Chesapeake Police Department, Ohio
End of Watch: Tuesday, October 18, 2016
Age: 24
Tour: 1 year
Badge # 602
Cause: Automobile accident
Incident Date: 9/18/2016

Police Officer Aaron Christian succumbed to injuries sustained in a single vehicle crash on September 18th, 2016, at approximately 2:30 am.

He was traveling on south on the 3900 block of Route 7 when his patrol car left the roadway. The vehicle struck a tree, utility pole, and guardrail before overturning in an adjacent creek. Officer Christian was ejected from the vehicle and landed face down in the creek. Two citizens who witnessed the crash pulled Officer Christian from the creek and away from the burning vehicle.

Officer Christian was transported to Cabell Huntington Hospital in Huntington, West Virginia, where he remained until succumbing to his injuries on October 18th, 2016.

Officer Christian had served with the two-person Chesapeake Police Department for one year and had previously served with the Coal Grove Police Department. He was survived by his daughter.

Rest in Peace Bro…We Got The Watch

Nemo me impune lacessit

Day is done, Gone the sun, From the lake, From the hills, From the sky. All is well, Safely rest, God is nigh. 

STRATFOR: Exit the Dragon, April 27, 2016

Exit the Dragon

(Stratfor)

Summary

Editor's Note: This is the third installment of a five-part series authored by ETM Analytics, an economic and financial advisory firm with offices in the United States and South Africa. The analysis contained herein reflects the views of ETM and not of Stratfor. In fact, as you will see, it is different from our existing worldview in some significant ways. We are sharing this with our readers because it is good work, produced using rigorous analytic tools and methodology. As always, we look forward to receiving comments and feedback. At the end of the series, we will share what we hear from you along with Stratfor's thoughts on how our view differs from ETM's.

China is not as economically secure as it seems. Convulsions in its financial markets have heightened global investor risk aversion and have added volatility in recent quarters. Try as they may, Chinese policymakers have been unable to stem the massive outflow of capital brought on by the current winter of dollar liquidity. Beijing seems perfectly content to bide its time, pumping audacious and improbable amounts of credit into the system, much as it has done in the past. But this time, neither the markets nor the Chinese people are confident that such aggressive stimulus policies will work. The veneer of Beijing's efficient, competent and formidable autocracy has fractured, and through the cracks seep China's geostrategic ambition — and the integrity of its currency.

But here's the problem: The size and reach of a country such as China confers on its domestic economy enormous influence over the global economy. Because China is so critical to the international system, Beijing's debt, rightly or wrongly, is the world's problem to share.

Analysis

The 2008 financial crisis hit China hard, and every policy Beijing enacted thereafter promoted internal credit and investment into an economy already at overcapacity. The failure of economic officials to maintain stability in China's once insulated equity and currency markets has perhaps shocked some of China's more complacent observers. But those who have been paying attention know that officially, growth is slowing; unofficially, it may have stopped altogether.

The Flight of Chinese Capital

It's clear that the Chinese economy is in a cyclical downturn. Growth is weak, and markets are volatile. But is it clear that the downturn will turn into a meltdown? Many Chinese are not hanging around to find out.

In fact, capital has started to flee China. Nearly $1 trillion is believed to have left the country in 2015, with the rate of outflow accelerating in the final quarters. Much of that money has found its way to foreign real estate markets. In one stark anecdote, the National Bank of Canada says buyers from China accounted for one-third of all purchases in Vancouver's housing market in 2015.

Though reliable statistics are hard to come by, several signs appear to corroborate the flight of Chinese capital. Import/export discrepancies with Hong Kong have widened, and there have been more errors and omissions logged in the current account. Gaps and inconsistencies in current account data suggest covert efforts to expatriate capital, bypassing China's rigid capital account controls, and they imply that capital outflow may be even higher than estimated.

However capital leaves the country, capital flight is taking its toll on China's reserves, pegged as the yuan exchange rate is. At first glance, the fall seems modest, especially considering that reserves still stand at some $3.2 trillion. But as a proportion of yuan money supply and commercial bank assets, reserves are in a free-fall, having already decreased by 50 percent. And since relatively little is truly known about the details of the reserves, they may well be tied up in sovereign wealth holdings or covering nonperforming loans. More still could be in highly illiquid assets. The U.S. Treasury, for its part, records only about $1.2 trillion of its liquid securities in Chinese possession. And so, if one could feasibly dismiss half of the reserve pile, then that pile is much less impressive in the face of a potential $100 billion-per-month depletion.

Parodic Excess

But from Beijing's perspective, there is an even darker side to the drawdown in reserves: It drains liquidity from the banking system, effectively tightening domestic monetary conditions. This is a problem for the People's Bank of China, whose No. 1 priority is to keep the debt-saturated financial system afloat and issuing more credit. It is the pursuit of that priority that has led the bank to actually lower interest rates (and to generally keep financial conditions accommodative) despite the outflow of capital. In 2016, the bank has shied away from cutting interest rates further for fear that doing so would increase capital outflows and negative yuan speculation. But given China's increasing amount of debt and the current risks of deflation, policymakers are likely to cut those rates, and as they do they will drag the People's Bank of China into the same zero-interest quagmire in which their Western counterparts dragged their banks.

Falling interest rates, coupled with rising capital outflows, show that China is as addicted to debt as any of the other major world economies. Since 2008, Chinese bank loans have increased by more than the entire stock of U.S. banking assets to fund the massive expansion of infrastructure and industry. (Bill Gates once marveled that China has used more concrete since 2011 than the United States did in the entire 20th century.) But bad investments abound. An official government study estimated that around half of Chinese internal investment since 2008 — a staggering $7 trillion — was probably misallocated. China's now famous ghost cities are an obvious but by no means exclusive sign of its parodic excess.

Such an enormous and rapid buildup of bank loans has never ended well for any country. The past 10 years of China's money supply growth corresponds with the scale of excess in the 10 years before the Asian crisis of the late 1990s. If history is any guide, capital simply cannot be allocated efficiently in such large quantities over such a short time. Clusters of error inevitably turn a boom into bust. Instead of getting rid of debt, China has taken on more.

An Indispensible Component

And as China accrued all this debt, its currency held firm, at least for a while. JP Morgan's emerging market exchange rate index was recently down nearly 30 percent since the start of 2014. The yuan, however, depreciated by only 9 percent in 2015, when it reached the height of its weakness. When gauged by a real trade-weighted basket, the yuan's 11-year bull market has merely been tempered, not reversed.

But the yuan's peg to the dollar is under duress. Capital outflows, plummeting reserves, increasingly loose monetary policy and an overstretched banking system are a recipe for a currency crisis. Beijing insists that it will not let the yuan depreciate despite its current overvaluation and despite calls to float it.

The reason for Beijing's intransigence is simple: An overvalued yuan helps to achieve several strategic imperatives. Devaluation would sink many firms loaded up on dollar debt, risking a systemic debt crisis. And with China trying to transition away from an export-oriented economic model to one geared toward consumption, currency strength guards the purchasing power of tens of millions of newly minted middle-class households. Beijing needs to keep this upwardly mobile, asset-owning constituency politically in its corner. While maintaining an overvalued yuan creates real estate and equity deflation risk, a credit crisis sparked by devaluation could create a complete collapse in household net worth.

Externally, China is trying to spread its influence into Eurasia, fund military expansion, acquire strategic foreign assets and build up trust in the yuan as a stable reserve asset. Beijing is arguably also buying time for elites to diversify their wealth through the acquisition of offshore assets. Yuan weakness would seriously undermine these objectives.

To reap the benefits of an overvalued currency without forcing systemic deflation, the People's Bank of China has to keep pumping money and credit into asset markets. Maintaining buoyant asset price inflation in housing and equity markets is the indispensible component of China's central economic plan. Running fiscal stimulus while getting state-compliant banks to keep readily cheerleading the debt binge is thus not only the path of least resistance for Beijing but also the path of near-term political stability.

China has a strategy in place. But is Beijing in full control of its fate? The uncertainty surrounding this question has caused investors to discount the premium they had once placed on Chinese exceptionalism. A lot could go wrong if China stumbles. A disorderly Chinese financial crisis and yuan devaluation would show that the stability in the monetary and financial system remains unresolved, potentially prompting global market panic and a rush into safe-haven assets such as gold, high-quality real estate and undervalued blue-chip stocks.

An old market adage about the dollar is that it is America's currency but the world's problem. The ensnaring frostbite of the dollar liquidity winter is bearing this out. Similarly, it may be China's debt, but it's everyone's problem.

"Exit the Dragon is republished with permission of Stratfor."