Feb 11

Today’s News 11th February 2018

  • Pentagon's Nuclear Doctrine – Retrograde and Reckless

    Via The Strategic Culture Foundation,

    In its latest Nuclear Posture Review (NPR), the American Pentagon declares at one point in the document that the Cold War is long over. Apart from that fleeting mention, however, one would think from reading the entire review that the Cold War, for Washington, has never been so palpable.

    It is a fear-laden document, relentlessly portraying the world as fraught with existential danger to US national security.

    Russia and China, as with two other recent strategic policy papers out of Washington, are again painted as adversaries who must be confronted with ever-greater US military power.

    The latest NPR asserts that since the last such review in 2010, “America confronts an international security situation that is more complex and demanding than any since the end of the Cold War.”

    It is clear from reading the 74-page document that Russia and China are the main source of security concern for the Pentagon – albeit the reasons for the concern are far from convincing. Indeed one might say downright alarmist.

    Washington accuses Russia and China of pursuing nuclear weapons development which is threatening. It accuses Russia in particular of violating arms controls treaties and threatening American allies with its nuclear arsenal. There are several other such unsubstantiated claims made by the Pentagon in the document.

    Russia and China responded by condemning the aggressive nature of the Pentagon’s latest doctrine, as they have done with regard to two other recent strategic papers published by the Trump administration.

    It is deplorable that Washington seems to go out of its way to portray the world in such bellicose terms. The corollary of this attitude is the repudiation of diplomacy and multilateralism.

    Washington, it seems, is a hostage to its own imperative need to generate a world of hostile relations in order to justify its rampant militarism, which is, in turn, fundamental to its capitalist economy.

    The lamentable, even criminal, danger of this strategy is that it foments unnecessary tensions and animosity in world relations. Russia and China have repeatedly called for normal, multilateral relations. Yet, remorselessly, Washington demonizes the two military powers in ways that are retrograde and reckless.

    The Pentagon’s latest nuclear doctrine goes even further in its provocations. Based on dubious accusations of Russia’s threatening behavior (“annexation of Crimea”, “aggression in Ukraine”), the Pentagon has declared it will rely more on nuclear force for “deterrence”.

    That can be taken as a warning that Washington is, in effect, lowering its threshold for deploying nuclear weapons. It overtly states that it will consider use of nuclear weapons to defend American interests and allies from “nuclear and conventional threats”. The language is chilling. It talks about inflicting “incalculable” and “intolerable” costs on “adversaries”. This is nothing short of Washington terrorizing the rest of the world into conforming to its geopolitical demands.

    Another sinister development is that Washington has now declared that it will be acquiring “low-yield” nuclear weapons. These so-called “mini-nukes” will again lower the threshold for possible deployment of nuclear warheads in the misplaced belief that such deployment will not escalate to strategic weapons.

    What’s disturbing is that the US is evidently moving toward a policy of greater reliance on nuclear force to underpin its international power objectives. It is also broadening, in a provocative and reckless way, what it considers “aggression” by other adversaries, principally Russia. Taken together, Washington is increasingly setting itself on a more hostile course.

    Some 57 years ago, in 1961, then US President Dwight Eisenhower gave a farewell address to the nation in which he issued a grave forewarning about the growing control of the “military-industrial complex” over American life. Back then, the American military-industrial complex could disguise its insatiable appetite with the pretext of the Cold War and the “Soviet enemy”.

    Today, the American federal government spends about $700 billion a year on military – over half its discretionary budget. The US spends more on military than at any time during the Cold War – in constant dollar terms.

    The US military-industrial complex has become a voracious monster way beyond anything that Eisenhower may have feared. It is no longer a threat merely to American life. It is a threat to the life of the entire planet.

    Objectively, the US has no foreign enemy endangering its existence; neither Russia nor China. Not even North Korea, despite its anti-American rhetoric, poses a direct threat to the US.

    The Pentagon – on behalf of the military-industrial complex – is stretching credulity when it depicts the world as a more threatening place. Fingering Russia and China is absurd.

    In order to try to shore up its scare-mongering with a semblance of credibility, the Pentagon is escalating the rhetoric about nuclear weapons and the need to deploy them. There is no objective justification for this nuclear posturing by the US, only as a way to dramatize alleged national security fears, in order to keep the military-industrial racket going.

    The despicable danger from this retrograde Cold War strategy is that the US is recklessly pushing the world toward war and possibly nuclear catastrophe.

    Fortunately, Russia and China have highly developed military defenses to keep American insanity in check. Nevertheless, American belligerence is pushing the world to combustible tensions.

    The problem is that American rulers have become a rogue state. The American people need to somehow sack their rogue rulers and their military madness, and return the nation to a democratic function.

    Until then, Russia and the rest of the world must be on guard.

  • AK-47 Rifles, Claymore Mines, & Grenade Launchers Discovered On Mexico Border

    According to Breitbart Texas, the federal government of Mexico recently deployed thousands of Mexican soldiers, Marines, and police officers to the Gulf region of the Mexico-United States border, as drug cartel violence spirals out of control.

    Rival factions of the Gulf Cartel are in an all-out war against each other for the control of drug trafficking and human smuggling routes into Texas. Breitbart Texas describes how drug cartels are using military weapons in daily skirmishes in the border region.

    During a series of recent military operations by the Mexican Army, soldiers honed in on various rural areas near the Rio Grande. According to exclusive information provided to Breitbart Texas via the Mexican Army, soldiers found a “series of weapons caches that had been buried”– leading to the arrest of three suspects.

    What the soldiers found next is mind-numbing. According to Breitbart Texas, “soldiers unearthed two Claymores, a grenade launcher, two Barrett .50 caliber rifles, 17 AK-47 rifles, ballistic plates, ammunition, and magazines.”

    It has been reported that the Gulf Cartel and other Mexican organized crime units have used Russian-made assault rifles and rocket-propelled grenades in past battles, this appears to be the first case of a U.S. military-grade directional anti-personnel mine found near the border.

    Special Operations.com explains the deadly power behind the M18A1 Claymore mine:

    Unlike traditional land mines, which direct their explosive upward, the Claymore is what is called a “directional mine.” This means that the user points the mine by using a crude sight on top, and steadies it with twin scissor-like anchors which can be pressed into the ground, or stand free on their own. A wire is then unfurled a safe distance back to the user’s position were a detonator in the form of a clacker is squeezed to initiate the explosion. Since the Claymore has a curved rectangular shape, once fired, plastic explosive hurls 700 steel balls out in a 60° radius. Anything exposed within a 50 yard distance is bound to become a casualty. This only increases by magnitude the closer to the detonation. The function is rather like dozens of shotguns going off at once. There is nothing like it on the battlefield.

    Watch the destructive force of the M18A1 Claymore mine destroying a truck body…

    Last month, we reported that the U.S. State Department warned all U.S. citizens and U.S. government employees to exercise increased caution while traveling in Mexico, and even restricted some regions from access because of “violent crime, such as homicide, kidnapping, carjacking, and robbery.”

    Exercise increased caution in Mexico due to crime. Some areas have increased risk. Read the entire Travel Advisory. Violent crime, such as homicide, kidnapping, carjacking, and robbery, is widespread. The U.S. government has limited ability to provide emergency services to U.S. citizens in many areas of Mexico as U.S. government employees are prohibited from travel to these areas. U.S. government employees are prohibited from intercity travel after dark in many areas of Mexico. U.S. government employees are also not permitted to drive from the U.S.-Mexico border to or from the interior parts of Mexico with the exception of daytime travel on Highway 15 between Nogales and Hermosillo.

    U.S. State Department discouraged all travel to 31 Mexican states and even issued five states to Level 4, otherwise known as a war-zone like some countries in the Middle East.

    The U.S. State Department defines Level 4 as :

    Do Not Travel: This is the highest advisory level due to greater likelihood of life-threatening risks. During an emergency, the U.S. government may have very limited ability to provide assistance. The Department of State advises that U.S. citizens not travel to the country or leave as soon as it is safe to do so. The Department of State provides additional advice for travelers in these areas in the Travel Advisory. Conditions in any country may change at any time. 

    For example in Colima, the U.S. State Department warns:

    U.S. government employees are prohibited from travel to Tecoman or within 12 miles of the Colima-Michoacán border and on Route 110 between La Tecomaca and the Jalisco border.

    Do not travel due to crime. Armed groups operate independently of the government in many areas of Guerrero. Members of these groups frequently maintain roadblocks and may use violence towards travelers.

    Do not travel due to crime. Violent crime, such as murder, armed robbery, carjacking, kidnapping, extortion, and sexual assault, is common. Gang activity, including gun battles, is widespread. Armed criminal groups target public and private passenger buses traveling through Tamaulipas, often taking passengers hostage and demanding ransom payments. Local law enforcement has limited capability to respond to violence in many parts of the state.

    Perhaps, President Trump’s border wall is a good idea as drug cartels on the Mexico-United States border are stockpiling military grade weapons.

  • Iran's Revolutionary Guard Vows "Hell To The Zionists" As Putin Warns Netanyahu

    Iran has called reports that they sent a UAV into Israeli airspace “ridiculous,” while an Iranian commander warns that they could unleash “hell” on the “Zionist regime” by destroying all US bases in the area. 

    “The claim about the flight of an Iranian drone and Iran’s involvement in the downing of a Zionist fighter jet is so ridiculous that it does not merit a comment,” said Iranian Foreign Ministry spokesman Bahram Qassemi, while claiming that Iranian officials are only advising the Syrians “at the request of the… legitimate and lawful government.”

    Moreover, any “aggressive actions” by Israel would trigger a serious response by Iran, creating “hell for the Zionists” according to Brigadier General Hossein Salami, deputy head of Iran’s elite Revolutionary Guards. His statement below:

    The Zionist regime in the Muslim world was shaped by the will of the United States and Britain, and they built a cemetery from the Islamic world. You have heard the story of the domination of the world of arrogance after World War II, the tragic story of Muslim slaughter in the wars that Britain has launched and know the role of the United States and Britain in the formation of the Zionist regime, or aware of the defeats of the Arab armies of the Zionist regime by American support.

    The United States was banning us and wanted to be paralyzed, but we advanced, and today, from this point on, today we can destroy all American bases in the region and create hell for Zionists.

    Today, the Islamic Republic of Iran is more powerful than ever. We trust in God; this was a confession two years ago when we seized the American Marines and the American inability to confront us. –Gen. Hossein Salami via Tasnim News (translated)

    Gen Hossein Salami

    Meanwhile, Russian President Vladimir Putin warned Israeli Prime Minister Benajamin Netanyahu in a Saturday phone call to avoid an escalation of the situation in Syria, reports Reuterswhile Netanyahu asserted Israel’s right to “defend against aggression.”


    They discussed the situation around the actions of the Israeli air force, which carried our missile strikes on targets in Syria,” Interfax quoted the Kremlin as saying.

    The phone conversation took place less than two weeks after a face-to-face meeting between the Israeli and Russian leaders in Moscow, the duo’s seventh face to face meeting in two years, in which the two leaders who are currently reshaping the middle east in the power vacuum left by the US, were said to have discussed military cooperation on Syria and Iran’s influence in the region. It is unclear whether today’s events were part of the talking points.

    Netanyahu also spoke with US Secretary of State Rex Tillerson on Saturday where he reiterated Israel’s stance. Tillerson is about to embark this weekend on a five-nation tour of the Middle East, visiting Turkey, Egypt, Kuwait, Jordan and Lebanon.

    “Our policy is clear,” said Netanyahu. “Israel will defend itself against any aggression and any attempt to violate its sovereignty,” adding “Iran undertook such attempt today. It violated our sovereignty, and infiltrated its drone into Israeli airspace from Syria.”


    As we reported earlier, Anti-aircraft fire downed an Israeli F-16 returning from a bombing raid on an Iranian UAV facility early Saturday.

  • On The Syria Occupation And The New Face Of Imperialism

    Authored by Caitlin Johnstone via Medium.com,

    US forces have attacked the Syrian military, reporting over a hundred deaths. The Syrian Ministry of Foreign Affairs is calling the air strike a massacre, a war crime, and a crime against humanity.

    The US is an invading, occupying force that is in Syria without the permission of its government, yet it is claiming that the air strike was an act of “self-defense” against an “unprovoked attack” upon the US-backed SDF, a mostly Kurdish militia which had occupied an area of Syrian land. No Americans suffered any injuries or deaths in the attack. The SDF suffered a single reported injury.

    It’s a bit like saying you broke into someone’s house and strangled them from behind with a garotte in self-defense.

    Believe it or not, it appears very likely that the US military’s latest act of butchery waged upon Middle Easterners on their own land was not about self-defense at all, but about oil. The always insightful Moon of Alabamamakes a compelling case that not only is America’s version of events full of plot holes, but that the whole thing could very well have been “a trap” to sabotage a local deal that had been made for the SDF to turn over an oil and gas field to the Syrian government in the near future.

    This would fit in perfectly with comments Professor Joshua Landis made about the attack, saying that America’s plan is to keep Syria weak, poor and divided in order to disadvantage US/Israel/Saudi rivals Iran and Russia. It would also clarify US Secretary of State Rex Tillerson’s assertion a few weeks ago that thousands of American troops are being kept in Syria to prevent Assad from regaining control of areas that have been liberated from ISIS.

    This is what the new imperialism looks like.

    When the Russian Federation annexed Crimea in 2014, everyone lost their minds. Countries don’t just annex territory from other countries anymore! It’s so barbaric! It’s so… 20th century.

    That’s simply not how we do things in the modern world. We don’t expand our geopolitical power by blatant land grabs, we expand it with treaties, alliances, intelligence/surveillance deals, trade agreements, corporate contracts, secret pacts, and occupations of key strategic locations under the pretense of fighting terrorism. Like civilized people.

    In the old days, an empire would expand itself by invading a weaker territory, killing its people until they gave up, and planting its flag there. We’d change the maps so that everyone could see that the region was now under the control of Rome or the British Crown or Napoleon or whomever, and the power structures would align themselves accordingly. It was all relatively simple and transparent.

    The new imperialism doesn’t do that.

    You will never see Syria made into the 51st state.

    Since the end of the second World War it has been increasingly taboo for a government to overtly invade a country and add it to that government’s official territory, and many international laws were locked into place to reflect that. And yet world power has arguably never been more consolidated than it is right now. The US, the UK, the EU, Saudi Arabia, Israel, Canada, Australia and many other nations tend to march more or less in lockstep with one another on a vast array of subjects ranging from neoliberalism to surveillance to which “regime” is in need of more crushing sanctions on a given day. The alignment isn’t perfect, but it’s too close to perfect to deny.

    Here in Australia we joke about being America’s 51st state, but, like Syria, we never will be. We don’t need to be. We’re already answerable to the same corporatist powers which control the US, so we trot right along into every US war, every US trade deal, and operate as a US intelligence asset just the same as we would if they’d planted the stars and stripes on our capitol buildings and called us Wisconsota. Through military alliance, intelligence alliance, corporatist agreements, and a good old-fashioned coup staged by the CIA and MI6, we transitioned smoothly from subservience under the old form of imperialism to subservience under the new. A whole continent full of McDonald’s-eating sheep.

    In the new imperialism, countries keep their borders, keep their names, and on paper keep their own sovereign governments as well. Australia remains Australia, Syria remains Syria. But the power dynamics are all bent to funnel toward the favor of the same vast power conglomerate.

    You can’t see the new empire on a map, so people assume that it isn’t there, but the only reason you can’t see it on the maps we were trained to read in school is because the new empire isn’t in any way limited by geography. It is unconcerned with the little lines drawn between the countries on our plastic classroom globes, or the different colors their manufacturers painted the different nations with. The nationless band of plutocrats who use governments as tools and weapons are not limited by those things. They don’t think in those terms. They don’t care about land and governments, they care about money, power, and influence. And none of those things are geographically confined.

    So they’re content to control a few strategic locations in Syria to wage a disruption campaign against rivals of the empire. They don’t need to annex Syria in order to do that, or even oust Assad. They’re not interested in the country, they’re interested in the nonlocalized new empire. They’ll control a few oil fields, secure a few shady alliances, unleash a few terrorist armies, all to funnel more and more power into the new empire, one contract at a time. Corporations and banks are not limited by national borders, and neither are the oligarchs who own them.

    Nations and governments don’t exist anymore. Not in the sense that they used to, anyway. The notion of meaningfully separate, sovereign governments is at this time a fairy tale told to the masses to keep us from realizing that we’re all being thrown into the gears of an exploitative threshing machine that only exists to feed the avaricious agendas of a few ruling elites.

    This has all been made possible by an ongoing war on the societal concept of sovereignty. Our concept of sovereignty is now so weakened that a powerful government can get away with invading another country and claiming “self defense” when it kills the people there, so weakened that constant domestic surveillance by secretive and unaccountable intelligence agencies is now considered normal, so weakened that the public will ferociously defend a police officer that guns down a civilian who reached for his wallet a little too fast.

    If society found some way to restore sovereignty to nations, governments, and above all to human beings, the ecocidal, omnicidal new empire which depends upon blurred lines and ignored boundaries would be unable to survive. And that would be great, in my opinion.

    *  *  *

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  • After The Historic Risk Parity & CTA Crash, What's Next?

    Last Sunday, following the Friday post-payrolls flush, but before the Monday volocaust, which was the consequence of the concurrent historic vol squeeze of inverse VIX ETF funds, coupled with the sharp deleveraging by CTAs, risk parity and various other quant funds, we predicted that recent events were a “recipe for disaster” and that “while everyone may have an opinion on what happens next” one thing that is very likely is that “risk-parity funds – those who benefit as long as both stocks and bond yields act in tandem – are set to suffer the biggest hit.”

    This is what else we said:

    Friday’s equity market collapse and simultaneous bond market bloodbath was the biggest combined loss since December 2015, but perhaps more ominously, the week’s combined loss in bonds and stocks was the worst since Feb 2009.

    And as we further noted, judging by the major correlation regime shift between stocks and bonds that started on Monday, this is something considerably more worrisome for investors…

    … and especially risk-parity traders, who already saw their worst weekly performance since the Taper Tantrum…

    … and will be forced to significantly delever in the coming days – to the tune of tens of billions in net exposure – if the vol surge persists.

    What the above means is that, with all due respect to JPM’s head quant Marko Kolanovic who last week explicitly stated that he is not concerned about a quant puke as “the move was not large enough to trigger broad deleveraging” and “equity price momentum is positive and trend followers are not likely to reduce equity exposure”, we disagree, if for no other reason than the macro correlation regime had flipped. Visually, the regime change is shown in the chart below:


    One week later, with the market nearly 10% lower, vol funds around the globe in shambles, retail vol sellers crushed, the risk-parity blow up took place as predicted, in what now looks like the worst quant-quake since the summer of 2007.

    So what happens next?

    One answer comes from JPMorgan’s Nikolaos Panigirtzoglou, whose latest Flows and Liquidity analysis traces the contours of last week’s events, and who writes that “our analysis suggests that both CTAs and Risk Parity funds have been at the core of the recent correction”, confirming what we said, and then posits what may happen next.

    First, a recap at last week’s tumultuous events:

    Figure 1 shows the performance of various types of investors so far in February vs. last month. CTAs and Risk Parity funds appear to have suffered the biggest losses over the past week, more than erasing their previous January gain. Balanced mutual funds also suffered a heavy loss, more than erasing their previous January gain. In contrast, discretionary hedge funds such as Discretionary Macro or Equity Long/Short funds managed to preserve half or more of their previous January gains. This is especially true with Discretionary Macro hedge funds which appeared to have lost only -0.4% over the past week. This confirms our previous thesis that neither Discretionary Macro nor Equity Long/Short hedge funds were very long equities ahead of the correction.

    Why have CTAs, Risk Parity Funds and Balanced mutual funds suffered by so much more? A simultaneous selloff of equities, bonds and commodities is the worst possible backdrop for multi asset investors such as risk parity and balanced mutual funds. Indeed looking at the performance of a hypothetical Balanced fund 60:40 Equity:Bond portfolio, we find that the period over the past week saw the worst drawdown since the Fed taper tantrum of May/June 2013. Since January 26th the drawdown of a 60:40 balanced portfolio has been -6.6%, surpassing the -6.2% drawdown seen during the Fed taper tantrum of May/June 2013 (Figure 2). And the increase in 3M rolling realized vol at 3.3% has also been bigger than that seen during the Fed taper tantrum.

    The pressure on Risk Parity funds, which are stricter vol targeters than Balanced Mutual funds, to delever has been exacerbated not only by the shift in bond-equity correlation into positive territory, but also by the recent rise in equity/commodity correlation as commodity prices collapsed over the past few days along with equities.

    Here is another way of visualizing the risk-parity crash:

    And while we pointed out the rising bond-stock correlation, JPM notes that a new potential threat is that the commodity/equity correlation has also starting creeping up – yet another potential risk-parity deleveraging risk factor  – rising from just above zero at the end of January to +25% currently.

    This, JPM cautions, raises fears about further de-risking by Risk Parity funds.  But here’s the good news. In fact, it was so good, it sent the market soaring when the JPM note hit at 3:30pm on Friday.

    According to Panigirtzoglou, “we believe that any further derisking by Risk Parity funds will be more limited from here as they have de-risked already quite significantly.

    Specifically, “Risk Parity funds underperformed their hypothetical benchmark by 3.7%. This underperformance is even bigger than that seen during the Fed taper tantrum and is comparable to their previous de-risking seen into the US election.”

    Meanwhile, that other group of vol-targeting funds, CTAs, got absolutely annihilated last week, hit far worse than risk parity funds. JPM explains:

    As we have been highlighting over the previous weeks, the momentum signal of several futures contracts was reaching extreme levels during January, raising the risk of mean reversion signals being triggered, i.e. profit taking from certain CTAs that employ mean reversion signals along with momentum signals. The first futures contract to get  extreme was oil in mid-January, the week after were those of the S&P500 and MSCI EM indices, and then the euro and the pound at the last week of January. So it is possible that profit taking by those CTAs that employ mean  reversion along with momentum signals might have contributed in starting the correction. But as the correction  started unfolding, pure trend following CTAs were suffering from trend reversal, hitting stop losses on their momentum positions which they were forced to unwind. In a typical CTA, stop orders are placed for all open positions, i.e. when a trade goes against the fund, positions are automatically stopped out for a precalculated, limited loss. In addition, if there is high volatility, CTAs will scale down the size of their positions to main a relative stable VaR This combination of stop losses and rising volatility most likely triggered the most intense position unwinding by CTAs in the post Lehman period.

    Actually, make that the most intense position unwinding by CTAs ever. According to the SG CTA Index, overall CTAs lost 6.9% in four days from Feb 1st to Feb 7th. And, as JPM notes, “pure trend following CTAs did even worse losing 9.2% during these four days. In fact, the negative 4-day return for CTAs is unprecedented” as shown in the chart below.

    So between the violent deleveraging among risk-parity funds, and the biggest loss by CTA funds ever, what is left?

    Well, as the following chart showing a historic unwind in futures open interest over the past two weeks…

    … the position unwinding by the CTA universe has been so severe since the end of January, “that any position unwinding from here should be limited”, JPM argues, especially if one assumes that stop losses have been triggered already.

    Which then leads directly to the following silver lining which, as we noted above, was sufficient to send markets surging in the last hour of trading:

    In all, our analysis suggests that both CTAs and Risk Parity funds have been at the core of the recent correction, and that the position unwinding that both suffered from has been so severe that any further position unwinding should be limited from here.

    In other words, out of the quants’ ashes a new calm may emerge.

    Or maybe not: after all to relieve investor fears that more selling wouldn’t emerge, on February 1, JPM’s top quant Marko Kolanovic stated that  Equity price momentum is positive and trend followers are not likely to reduce equity exposure.” Oops, because what followed was arguably the biggest equity exposure reduction in history. So yes, JPMorgan has a tendency to see things in a somewhat optimistic light now and then.

    There is another risk: echoing his warning from a week ago, which we described in “the worst case scenario“, Panigirtzoglou concludes that the last great unknown risk is what retail investors do next.

    [The position unwinding], combined with the low equity exposures of Discretionary Macro and Equity Long/Short hedge funds, leaves retail investors as the residual risk for equity markets going forward. Retail investors had poured more than $100bn into equity ETFs during January. Of that $100bn, $40bn was invested into US equity ETFs. US equity ETFs, which have been at the epicenter of the fund outflows over the past week, lost $25bn so far. So more than half of the $40bn that had entered US equity ETFs in January has been withdrawn already. So again, the picture we are getting in the US equity ETF space is one of advanced rather than early stage de-risking.

    Furthermore, in another confirmation of the “worst case scenario”, we wrote on Friday that just two weeks after record inflows, equity funds saw their biggest weekly outflow in history as retail investors panicked to get the hell out of Dodge.

    Which then reduces the question posed in the title: “what next” to a simple binary scenario: either Friday’s mini meltup will be sufficient to give retail investors confidence that the crash is over, or it won’t, in which case Bank of America may be right on the money that once the selling resumes on Monday…

    … the only thing that stops it will be central bank intervention.

  • $20 Billion Hidden In The Swamp: Feds Redact 255,000 Salaries

    Submitted by Adam Andrzejewski

    The only thing the bureaucratic resistance hates more than President Trump is the disclosure of their own salaries. It’s a classic case of the bureaucracy protecting the bureaucracy, underscoring the resistance faced by the new administration.

    Recently, Open the Books filed a Freedom of Information Act request with the U.S. Office of Personnel Management (pictured) for all federal employee names, titles, agencies, salaries, and bonus information.

    We’ve captured and posted online this data for the past 11 years. For the first time, we found missing information throughout the federal payroll disclosures. Here’s a sample of what we discovered from the FY2017 records:

    • 254,839 federal salaries were redacted in the federal civil service payroll (just 3,416 salaries were redacted in FY2016).
    • 68 federal departments redacted salaries. Even small agencies like the National Transportation Services Board and the Federal Deposit Insurance Corporation redacted millions of dollars in salaries.
    • $20 billion in estimated payroll now lacks transparency.
    • A 7,360 percent increase in opacity hides one out of every five federal salaries.

    Who’s the bureaucrat in charge? Not a Trump appointee – the president doesn’t even have a current nominee at OPM. So, the buck stops with new acting Director Kathleen McGettigan, a 25-year staffer who assumed the position because she was the next in line, not because the White House appointed her.

    Trump has the power to replace her at any time. This lack of transparency is apparently a result of the president’s failure to appoint his people to executive positions. Trump knows controlling the human resource department is key to managing the federal bureaucracy. In fact, Trump forecast this type of institutional resistance in his inaugural address.

    “The establishment protected itself but not the citizens of our country. Their victories have not been your victories.… And while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land. That all changes starting right here and right now.”

    The decision to redact 255,000 federal salaries for $20 billion in payroll harms oversight. The American people deserve to know who makes how much, in what position, employed by which agency.

    For example, more than 6,600 salaries were redacted at the Department of Veterans Affairs. At an agency where hiring priorities have been repeatedly questioned, transparency is crucial. In recent years, just one in 10 new hires at the VA was a doctor. In FY2017, the VA hired 8,727 new employees and just 561, or 6 percent, were doctors.

    In December 2017, our “OpenTheBooks Oversight Report – Mapping the Swamp, a Study of the Administrative State” found $114 billion in compensation paid to 1.35 million federal civil service employees (excluding the U.S. Post Office) in fiscal year 2016. We found 165 percent growth in bureaucrats making $200,000 or more; 30,000 bureaucrats out-earning all 50 governors at $190,000; and the average salary at 78 large federal agencies exceeding $100,000.

    At OpenTheBooks.com, citizens have the tools to investigate their local piece of the federal bureaucracy. We have literally mapped the swamp, pinning all federal disclosed bureaucrats plus post office employees by employer location ZIP Code on our interactive map.

    But not this year. Our organization can’t properly quantify the FY2017 payroll because of the massive salary redactions. After all, we can’t map what we can’t see.

    Make no mistake – even under the Obama administration, too much information was redacted.

    Last year, we complained about the 314,890 redacted employee names, including all 77,000 employees at the Internal Revenue Service and the $1.1 billion in “performance bonuses” shielded by federal union agreements (FY2016). We worked with Congressman Ron DeSantis on The Taxpayer-Funded Pension Disclosure Act, which would open the books on $125 billion in federal pension data.

    This year’s massive increase in redactions wasn’t a result of new policy, but a reinterpretation of existing policy. The OPM didn’t even mention the change in its FOIA response letter, making no legal argument for the 255,000 new redactions. It wasn’t until we asked the agency about the missing information that a representative issued the following response:   

    “On an ongoing basis, OPM reviews its methods for creating data files to ensure consistency with its Data Release Policy governing the release of records related to federal employees in positions or agencies that require location information to be redacted. Because the Adjusted Basic Salary field contains locality pay, OPM recently began redacting this information for certain classes of employees, hence the drop that your IT department noticed.”

    This didn’t make much sense, so we asked again. You can read the agency’s third attempt at a response via its spokesperson here.

    Facing resistance like this, the president has to work hard to deliver on his promises. The administrative state was designed to resist reform. Without a constant effort, the bureaucracy always wins.

  • Meet The US Army's Latest Killer-Robotic Humvees

    In the coming months, the United States Army is sending its first robotic Humvee to a field training exercise to see if the autonomous combat vehicle can accurately destroy targets, as part of a new experimental program to weaponize robots.

    The killer Humvee, which is called the ‘Wingman,’ is part of the Joint Capability Technology Demonstration, or JCTD program, where engineers have developed autonomously piloted weaponized vehicles in hopes it will provide direct and indirect fire support for ground troops trapped in dangerous situations on the battlefield.

    According to the Army Tank Automotive Research Development and Engineering Center, or TARDEC program, the goal behind the “Wingman” is to train soldiers and weaponized robotic vehicles to work together on the battlefield to confront America’s enemies. Army engineers say it will be Soldiers, not computers, which decide when the robotic Humvee fires a round.

    “You’re not going to have these systems go out there like in ‘The Terminator’ [film],” said Thomas B. Udvare, deputy chief of the program. “For the foreseeable future, you will always have a Soldier in the loop.”

    The Army Armaments Research Development and Engineering Center, or ARDEC, and the Naval Surface Warfare Center Dahlgren Division are also partners in the program, which was launched last year and funded with roughly $20 million after years of positive testing.

    Popular Mechanics explains how the Wingman system works,

    Right now, two Humvees make up the Wingman experiment: a manned M151 Humvee and the unmanned M1097 Wingman vehicle. Inside the crewed vehicle, three soldiers are assigned to take over key Wingman tasks. One of them handles Wingman’s target detection and laser range-finding, the second drives the vehicle if necessary, and the third pulls the trigger on the Wingman’s gun.  

    The Army highlights a significant issue with the current Wingman’s armament system. Engineers indicate the program will be upgrading legacy gas-powered M2 .50-caliber machine gun and M240 7.62-millimeter machine gun to an electrically-driven weapon that does not jam like the gas-driven machine gun.

    “One of the more significant upgrades will be to the weapon system with the addition of ARDEC’s Advanced Remote Armament System to solve an issue with its previous weapon, the M240B machine gun. While the ARAS system remains the same caliber, it is an electrically-driven gun that does not jam like the gas-driven machine gun.”

    “Obviously if you’re a kilometer away from your vehicle, jams are not good,” Udvare said. “What’s nice about their electrically-driven system is that the incidents of jamming are greatly reduced.”

    The Army’s solution: the Advanced Remote/Robotic Armament System (ARAS). Popular Mechanics dissects the ARAS system and how it is a fitting upgrade to legacy gas weapons:

    ARAS is a complete 7.62-millimeter machine gun that weighs 410 lbs. including the mount and 1,500 rounds of ammunition. ARAS has a heavy, fluted barrel that can survive burning through its entire ammo supply in less than five minutes. The gun is capable of 360-degree fire, 90-degree elevation and -30-degree depression. The system can load a fresh ammo pack in just six seconds. ARAS is paired with the Autonomous Remote Engagement System, which uses vision-based automatic target detection and user-specified target selection.  

    In May, the killer robotic Humvees are expected join engineers at “Grayling, Michigan, or Fort Benning, Georgia, to become certified in daytime operations on a Scout Gunnery Table VI course,” confirmed the Army.

    In May, engineers are slated to take the two-vehicle set, which also includes a command and control Humvee manned by five personnel, to Grayling, Michigan, or Fort Benning, Georgia, to become certified in daytime operations on a Scout Gunnery Table VI course. The course is the same one used to train and qualify ground combat vehicle crews before they advance to larger warfighting exercises.

    Military personnel could get their first opportunity to work side by side with the killer robotic Humvee come October, when “engineers hope to conduct an operational user assessment at Fort Benning using Soldiers and Marines,” added the Army.

    “We saw the Table VI as an opportunity,” Udvare said. “The course may not test all of our capabilities and may not show all of our flaws, but at least it’s a beginning point to start to assess these platforms and drive technology.”

    “By 2035, advances in technology may allow a Soldier to manage multiple assets such as combat vehicles, unmanned aerial vehicles and reconnaissance vehicles at the same time in combat, Udvare said.

    “Autonomous systems aren’t going to be smart enough to be on their own for decades,” Udvare added.

    “How we make split decisions on what we process in our environment … is very complex”

    “To add autonomous platforms to the manned formations and have both the man and the machine work side-by-side to accomplish a mission is pretty powerful,” Udvare said.

  • Is The Steele Dossier Full Of "Russian Dirt" – Or British?

    Authored by James George Jatras via The Strategic Culture Foundation,

    With text messages between US Justice Department (DOJ) conspirators Peter Strzok and his adulterous main squeeze Lisa Page now revealing that then-President Barack Obama “wants to know everything we’re doing,” it now appears that the 2016 plot to subvert the rule of law and corrupt the US organs of state security for political purposes reached the very pinnacle of power.

    To call the United States today a “banana republic” increasingly may be seen as a gratuitous insult to the friendly spider-infested nations to our south.

    Still, don’t expect to see Barry Hussein Saetoro doing the perp walk anytime soon or even being deported back to Kenya. Don’t expect to see orange prison suits on Strzok, Page, former FBI Director James Comey, former Associate Deputy Attorney General Bruce Ohr, former Deputy FBI Director Andrew McCabe, and others implicated in putting a political thumb on the scales to, first, get Hillary Clinton elected, and then, when that failed, to neuter Donald Trump’s presidency with a phony Russiagate probe. Officials’ getting “former-ed” is one thing, their getting prosecuted quite another. (Just imagine if a GOP administration had similarly skewed the supposedly non-political law enforcement and intelligence services for partisan reasons. We’d have Watergate on steroids. The New York Times, Washington Post and CNN would be calling for hanging, drawing, and quartering.)

    Indeed, it’s not even clear the Russiagate investigation itself will be impacted. After all, the narrative may have flipped on one variable – from Trump campaign collusion to Democratic and FBI collusion – but the constant remains the same: Russia. Trump’s defenders are as insistent as his detractors that the real culprit is Russia! Russia! Russia!

    Sean Hannity of Fox News has been particularly hyperventilative that the entire Steele Dossier lying at the black heart of the mess consists of “phony, fake-news Russian propaganda” and “Russian intelligence lies” from British MI6 (supposedly “former”) spymaster Christopher Steele’s “Russian sources.” Even level-headed observers like Paul Sperry and Patrick Buchanan characterize the file as a “Kremlin-aided smear job” and “Russian dirt [that] Steele was spoon-fed by old comrades in the Kremlin’s security apparatus.”

    Christopher Steele is not Russian

    But what do we really know about Steele’s claimed sources? Not much.

    Sure, maybe Vladimir Putin personally whispered every word of the dossier into Steele’s ear. Or maybe Steele invented his supposed sources from whole cloth: your clients are paying for sleaze, you give them sleaze. Or anything in between: maybe Steele consulted some imaginative Russian cranks with only a marginal, and most likely adversarial, relationship to the Russian authorities, whose “inside knowledge” Steele padded to justify his fee. (Steele claims he didn’t pay his “sources” – assuming they exist at all – but that’s no more worthy of credit than anything else he says.)

    As analyzed by Russia expert Stephen F. Cohen:

    ‘Where, then, … did Steele get his information? According to Steele and his many stenographers – which include his American employers, Democratic Party Russiagaters, the mainstream media, and even progressive publications – it came from his “deep connections in Russia,” specifically from retired and current Russian intelligence officials in or near the Kremlin. From the moment the dossier began to be leaked to the American media, this seemed highly implausible (as reporters who took his bait should have known) for several reasons:

    – ‘Steele has not returned to Russia after leaving his post there in the early 1990s. Since then, the main Russian intelligence agency, the FSB, has undergone many personnel and other changes, especially after 2000, and especially in or near Putin’s Kremlin. Did Steele really have such “connections” so many years later? [JGJIs it credible that the head of MI6’s Russian branch is on a first-name basis with top Kremlin insiders? Turn the identities around and ask whether the chiefs of the US section of Russian or Chinese intelligence are on intimate speaking terms with the US president’s top advisers or with the leadership of the CIA or FBI. Hardly.]

    – ‘Even if he did, would these purported Russian insiders really have collaborated with this “former” British intelligence agent under what is so widely said to be the ever-vigilant eye of the ruthless “former KGB agent” Vladimir Putin, thereby risking their positions, income, perhaps freedom, as well as the well-being of their families?

    – ‘Originally it was said that his Russian sources were highly paid by Steele. Arguably, this might have warranted the risk. But subsequently Steele’s employer and head of Fusion GPS, Glenn Simpson, wrote in The New York Times that “Steele’s sources in Russia…were not paid.” If the Putin Kremlin’s purpose was to put Trump in the White House, why then would these “Kremlin-connected” sources have contributed to Steele’s anti-Trump project without financial or political gain – only with considerable risk?

    – ‘There is the also the telling matter of factual mistakes in the dossier that Kremlin “insiders” were unlikely to have made, but this is the subject for a separate analysis.

    ‘And indeed we now know that Steele had at least three other “sources” for the dossier, ones not previously mentioned by him or his employer. There was the information from foreign intelligence agencies provided by Brennan to Steele or to the FBI, which we also now know was collaborating with Steele. There was … a “second Trump-Russia dossier” prepared by people personally close to Hillary Clinton and who shared their “findings” with Steele. And most intriguingly, there was the “research” provided by Nellie Ohr, wife of a top Department of Justice official, Bruce Ohr, who, according to the Republican memo, “was employed by Fusion GPS to assist in the cultivation of opposition research on Trump. Ohr later provided the FBI with all of his wife’s opposition research.” Most likely, it found its way into Steele’s dossier. (Mrs. Ohr was a trained Russian Studies scholar with a PhD from Stanford and a onetime assistant professor at Vassar, and thus, it must have seemed, an ideal collaborator for Steele.)’

    The reference to “people personally close to Hillary Clinton and who shared their ‘findings’ with Steele” dovetails with another intriguing suggestion from former Clinton insider Dick Morris, who knows the modus operandi of the Clinton lie generator better than anyone else. On the Fox News “Ingraham Angle” show, Morris suggested to host Laura Ingraham that the bulk of the dossier was invented by veteran political dirty tricksters and Clinton-machine hatchet men Sid Blumenthal and Cody Shearer, who then engaged “former” spook Steele, because of the Brit’s known relationship with the FBI, as their conduit to give their garbage credibility. (Never underestimate the residual “colonial” mentality of Yanks to find any sort of gibberish convincing if delivered with a British accent, as confirmed by the ubiquity of posh Brit voices in American advertising.)

    Andrew Wood is not Russian

    But Steele isn’t the only limey link to #Dossiergate. In late 2016, after Trump’s election victory, Andrew Wood, a former British ambassador to Russia, told US Senator John McCain about the existence of compromising material on Donald Trump, according to Wood’s account to BBC4. Wood then set up a meeting between Steele and David Kramer, an associate of McCain’s. It’s unclear whether McCain already knew about the dossier at that point or whether Wood alerted the Senator to its existence.

    For what it is worth – not much – Wood states that McCain had obtained the documents from the Senator’s own sources. “I told him I was aware of what was in the report but I had not read it myself, that it might be true, it might be untrue. I had no means of judging really,” and that he served only to inform McCain about the dossier contents: “My mission was essentially to be a go-between and a messenger, to tell the Senator and assistants that such a dossier existed,” Wood told Fox NewsWood elsewhere relates that McCain was “visibly shocked” at his description and expressed interest in reading the full report. That doesn’t sound as though McCain had already obtained the dossier from his “own sources” but, rather, that Wood was the instigator.

    So which is it? Did McCain already know about the dossier, and if so how did it “happen” to get raised with a British diplomat? Conversely, was the initiative from Woods to induce the Senator – known to be a strong Trump critic as well as for his hostility to Russia – to pass the dossier on in Washington? Keep in mind that the dossier had already been used to secure a Foreign Intelligence Surveillance Act (FISA) warrant to monitor Carter Page, a peripheral asteroid in the Trump orbit, and that Trump had already been elected. By this time the conspiracy’s purpose had shifted from preventing Trump’s victory to tying down his incoming administration, especially with respect to blocking any opening to Moscow as Trump said he intended to do. What better way to set the cat among the pigeons than for a supposedly totally non-political British diplomat (certainly no intelligence officer, he!) to quietly peddle the material from Steele (whom Wood called a “very competent professional operator … I do not think he would make things up.”) to the right man in Washington?

    GCHQ is not Russian

    Finally, while it’s clear the dossier served to get a FISA warrant for American services to spy on the Trump campaign and later the transition team, US agencies’ might not have been the only eyes and ears monitoring them. Amid all the hubbub over Michael Wolff’s slash-and-burn Fire and Fury, little mention (other than a heated denial on the floor of the House of Commons, from the notoriously truth-challenged former prime minister Tony Blair, and from the relevant British agency itself!) has been made of the suggestion that the UK’s Government Communications Headquarters (GCHQ) – Britain’s version of the NSA – was spying on Trump and providing their sister agencies in the US with additional data.

    Keep in mind the carefully worded deflection last year from James Clapper, former Director of National Intelligence (DNI), that “there was no wiretap against Trump Tower during the campaign conducted by any part of the national intelligence community… including the FBI,” thus begging the question of whether Trump was spied on not by a US “national” agency but by one of the Anglosphere “Five Eyes” agencies – most likely GCHQ – which then passed the information back to their American colleagues. With Steele’s and Wood’s involvement, and given the virtual control of America’s manifestly corrupted agencies of their counterparts in satellite countries like the United Kingdom, involvement by GCHQ and perhaps other “friendly” foreign agencies cannot be dismissed out of hand.

    Madame Prime Minister is not Russian

    To be sure, in 2016 the majority opinion in Russia was that Donald Trump’s election would be preferable to Hillary Clinton’s for the simple reason that the former openly advocated better relations with Moscow while the latter was a notorious warmonger. But there was also a strong minority view, especially among more pro-Western elements of the Russian establishment, that Hillary – “the devil you know” – was preferable to rolling the dice on an unpredictable and unknown quantity. Plus, Hillary was delightfully corrupt, with the Clinton Foundation an open invitation for many foreign powers to buy influence.

    There was no ambiguity in the position of the British government, however. In 2016 Prime Minister Theresa May, like her German counterpart, made little effort to hide her disdain for the “just plain wrong” Trump and her preference for Hillary Clinton, whom she expected to win (as did most other observers).

    Why should anyone be surprised that her MI6 and GCHQ minions would share the same views and perhaps acted on them to provide some helping “hands across the water” to their US counterparts whose anti-constitutional conspiracy now stands exposed?


  • CIA Slams "Fictional" Report Of Payment For Trump Sex Tape, NSA Cyberweapons

    The CIA has slammed “fictional” reports in The Intercept and the New York Times alleging that American spies paid a Russian operative $100,000 last September for what they were told were stolen NSA cyberweapons and a videotape of President Trump engaged with prostitutes in a Moscow hotel room. 

    After allegedly paying the operative, The Times reports US intelligence discovered that much of much of the material had already been made public, and they had effectively been swindled out of the first installment of an agreed upon $1 million payment – whittled down from the Russian’s original demand for $10 million.


    Shortly after Pulitzer Prize winner James Risen of The Intercept published his report on Friday alleging that the US intelligence community had “opened a secret communications channel with the Russian operatives” which involved the CIA transporting cash “to the CIA’s station in Berlin to complete the transaction,” Matthew Rosenberg of the New York Times published a similar story, adding that the cash was routed through an indirect channel, and delivered in a Berlin hotel room last September. 

    Matthew Rosenberg (left), James Risen

    In reaction, the CIA called the report “fictional,” telling the Daily Caller News Foundation:

    The people swindled here were James Risen and Matt Rosenberg,” adding “The fictional story that CIA was bilked out of $100,000 is patently false”

    Rosenberg responded over twitter, attacking the CIA’s statement that the NYT said they were the source of the funds: 


    James Risen of The Intercept tells CBS News “It’s a very complicated story.” 

    “First, the CIA and the NSA were trying to recover stolen NSA documents that allow people to do very sophisticated hacks, and they were worried that those documents would allow for really horrible hacks of American systems. So that was their main focus, was to try to buy back documents from the Russians on that. And in this process of conducting a secret channel with the Russians, some of the Russians began to offer documents related to Trump and to the 2016 campaign. And the Americans were very ambivalent about whether they wanted to get these documents, because they know how explosive this whole issue is.”

    So there was a lot of back and forth between the Russians and the Americans about whether the Americans would even accept the documents about Trump,” said Risen. “And so finally it appears that they accepted some, but their primary goal all along for the CIA and the NSA was to get these documents back from a group called Shadow Brokers.”

    The Times reported that the NSA cyberweapons were designed to hack into Russian and Chinese computer networks, but wound up in the hands of a hacking collective known as the “Shadow Brokers.” Hackers have reportedly used the tools to crack into networks around the world, including businesses, hospitals and factories. 

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