Jan 11

Today’s News 11th January 2018

  • Israel Confirms It Has Spies Operating Inside Iran

    In a rare admission an Israeli intelligence chief confirmed early this week that Israel has spies currently operating on the ground in Iran.

    Yossi Cohen, the director of Israel’s Mossad – the country’s powerful national intelligence and special operations agency, addressed Israeli policy and the recent Iran protests at a closed session of the Finance Ministry on Tuesday. In the midst of a talk assessing the “Iran threat” to Israeli security Cohen bluntly stated, “We have eyes and ears, even inside Iran.” 

    This stunning confirmation from Israel’s top intelligence official came the same day Iran’s supreme leader lashed out at the country’s foreign enemies, saying according a Reuters summary of his statements that “Iran has foiled attempts by its foreign enemies to turn legitimate protests into an insurgency to overthrow the Islamic Republic.” The thrust of Cohen’s speech, according to Arutz Sheva news, warned of increased Iranian hegemonic ambition across the region as Tehran is “gaining footholds across the Middle East,” which Israeli defense officials as well as Prime Minister Benjamin Netanyahu have long identified the chief threat to regional stability and Israel’s security, even above the threat of ISIS.

    Image source: Express UK

    “The Iranians are spreading across the Middle East with a vast array of forces, and there is little holding them back,” said Cohen. Iran has very nearly realized “its dream of creating what almost amounts to a land and air bridge allowing them to dump troops across the Middle East.” But as we reported in November of last year, this “land bridge” has already become a reality as the rapid demise of the Islamic State resulted in the anticipated linking up of Iraqi and Syrian troops at the shared border, along with their Shia paramilitary allies (foremost, the Iraqi Popular Mobilization Units/PMU and Lebanese Hezbollah, the prime ground ally of the Syrian Army).

    Both Israel and Washington’s past decade of Iran and Syria policy has been driven by fears of this so-called “Shia crescent” or Iranian land bridge which would conceivably connect Tehran with the Mediterranean in a continuous arch of influence (Tehran-Baghdad-Damascus-Beirut). More recently Israeli and US officials have spotlighted claims that Iran is intervening in both Yemen and Lebanon against Saudi Arabia and Israel – both unlikely allies who’ve lately acknowledged an intelligence sharing relationship aimed at rolling back Iranian influence.


    And with the onset of mass anti-regime protests in Iran two weeks ago (initially driven by economic grievances), which have since ceased as both security forces cracked down and demonstrators’ momentum generally waned, many analysts have speculated on the degree to which outside intelligence services may have covertly intervened to steer to protests toward Tehran regime overthrow – an accusation which the Iranian authorities have explicitly and repeatedly made.

    During the Israeli national security talk, Cohen acknowledged Israeli intelligence’s long term desire to see regime change in Iran, saying “We don’t need to start speculating, even though I would, of course, be very happy to see a social revolution in Iran. That’s something that could perhaps happen in the future.”

    Meanwhile, PM Netanyahu reportedly made an outrageous claim leveled against Iran during a lunch with NATO ambassadors in Jerusalem this week, saying “As part of Iran’s plans of conquest and colonization of Syria, they want to bring in as many as 100,000 Shias, Shia fighters… not Iranians, under Iranian command.” Netanyahu has issued repeat warnings over the past months that Israel would not allow Iran to establish and enduring presence in Syria. 

    At the same time (on Tuesday), Iran’s supreme leader Ayatollah Ali Khamenei published a series of statements via twitter alleging a covert externally driven plot to destabilize Iran, and promising “this won’t be left without a response.” He said, “Once again, the nation tells the U.S., Britain, and those who seek to overthrow the Islamic Republic of Iran from abroad that ‘you’ve failed, and you will fail in the future, too’.”

    Khamenei also expressly accused the Israelis and an opposition militant group, the MEK [a controversial exiled opposition group, People’s Mujahedin of Iran, which has long been favored by Washington and has launched assassination campaigns targeting Iranian scientists] of secretly fueling the unrest which left at least 21 dead – among them Iranian intelligence personnel and a police officer.


    In response to prior tweets by President Trump condemning the Tehran government while expressing support for protests, Khamenei further addressed the White House and Trump directly by saying, “this man who sits at the head of the White House – although, he seems to be a very unstable man – he must realize that these extreme and psychotic episodes won’t be left without a response.”

    Thus far the Iranian authorities have only responded internally as CNN and many other outlets are now reporting as many as over 3,500 arrests following the ten days of protests. Tehran authorities have alleged that provocateurs in league with foreign sponsors drove the demonstrations to violence. There are also multiple allegations of torture and new reports of prison detainees committing suicide surfacing; however, the bulk of such reports are unverifiable and sourced to opposition activists.  

    Thus far Trump hasn’t responded to Iran’s top Muslim cleric accusing the president of “psychotic episodes” though it will be interesting to see what the next Trump tweet on Iran has to say. 

  • Protecting The Belt And Road Initiative From US-Led Terrorism: Will China Send Troops To Syria?

    Authored by Federico Pieraccini via The Strategic Culture Foundation,

    An interesting theme concerning Syria is the involvement of the People’s Republic of China in the conflict. While China’s diplomatic and economic assistance has been constant, its military contribution to Syria is less known. It is important for China and Russia to contain and defeat the terrorist phenomenon in the Middle East, as well as to defang the strategists in the US deep state who are unceasing in their efforts to employ jihadism as a weapon to destabilize Eurasia’s integration projects.



    The Jihad International, under the economic and strategic guidance of the United States, has recruited tens of thousands of terrorists over the years and sent them to Syria. Among these, a significant number come from the Uighur ethnic group, situated in the autonomous Chinese province of Xinjiang, particularly from the city of Kashgar, geographically located in the extreme west and close to the borders of Kyrgyzstan and Tajikistan.

    The employment of ethnic and religious minorities to destabilize the majority of a given population has been an ancient artifice repeatedly relied upon by great powers. We thus remember how radical Islam was used in Chechnya to strike the Russian Federation at its “soft underbelly” in the south-west of the country. Two wars and repeated terrorist attacks show the area has yet to be fully pacified. The Wahhabis, a Sunni (anti-) Islamic minority, have shown themselves to be the perfect spark to ignite the tensions between Shiites and Sunnis in the Middle Eastern region and beyond. The case of the Uighur Islamist extremists in Xinjiang is no exception, and the Chinese central government is well aware of the potential danger from an internal uprising or targeted sabotage in the region. Not surprisingly, there has been a tightening of security measures in the region, with exercises against terrorist attacks and riots carried out by police and paramilitary groups. Beijing does not underestimate the danger posed by populations susceptible to foreign manipulation.

    While the economic support for Uyghur Islamist separatists more likely derives from Turkey than Saudi Arabia (for historical reasons), it is worth highlighting the highly proactive attitude of China in addressing the issue. As well as beefing up internal security and having a policy of zero tolerance towards such extremist ideologies, Beijing has since 2011 been contributing economically and diplomatically to the Syrian war against the jihadists.

    Official estimates place about 5,000 Chinese Uyghur terrorists in Syria, and Beijing’s strategy has reflected the one already implemented in the Russian Federation. Rather than waiting for highly trained killers to return home, it is better to confront the danger in a foreign land, thereby gaining a strategic and tactical advantage over those financing and manipulating terror, which is to say the American deep state and its military and security apparatus.

    Thus far, there has been a continuous support of the Syrian government coming from Beijing, both economic and diplomatic. However, rumour over the last few weeks has it that Chinese special forces and war veterans will be deployed to Syria to eliminate the Islamist threat breathing down on China’s western border.

    As always, when Beijing decides to move, it does so under the radar, with extreme caution, especially militarily. Chinese military strategists intend not only to act pre-emptively against internal destabilization, but to also respond asymmetrically to American involvement in the South China Sea and other areas lying within the China’s sphere of influence. The insertion of Chinese troops into the Middle East (albeit in limited numbers) would signal an epochal change in the region, a change that was instigated by the Saudi-Israeli-American trio in an effort to employ controlled chaos through Islamist terrorism but which is proving to be a chaos that they are incapable of controlling.

    Preventing the spread of terrorism in Asia, and more generally in Eurasia, is understandably an important goal for Russia and China, especially in view of ambitious infrastructure projects like the Belt and Road Initiative (BRI). Much of the success of this project will depend on how well the Chinese government and its partners (Pakistan, Afghanistan and Turkey in particular) will be able to prevent destabilization through the fanning of ethnic and religious tensions along the route of the BRI, such as in Pakistan.

    China’s foray into Syria will involve a few special-forces units, namely: the Shenyang Military Region Special Forces Unit, known as the “Siberian Tigers”; and the Lanzhou Military Region Special Forces Unit, known as the “Night Tigers”. These units will have responsibilities for advising, training and conducting reconnaissance. Similar to the Russian engagement in Syria, Chinese involvement will remain as hidden and limited as possible. The Chinese goal, unlike the Russian one, concerns the gaining of urban-warfare experience, in addition to hunting jihadists, and more generally, to test Chinese military readiness in war conditions, experience of which is lacking in Beijing’s recent experience.

    China’s involvement in Syria is less obvious than that of the Russian Federation. The strategic objectives of the Chinese vary greatly from that of the Russians, especially vis-a-vis the Russian ability to project forces a long way from home.

    The Chinese and Russians are increasing their operational capabilities, both in terms of defending their territorial boundaries as well as in their ability to project their power as a result of increased naval and aerospace capabilities. Syria offers Beijing the perfect opportunity to include itself in the global fight against terrorism, thereby preventing possible terrorist insurgencies at home. Further, it serves to send a clear message to rivals like the United States who might have thoughts of using Islamic terrorists to destabilize China. Beijing is aware of the perverse employment of terrorism to advance geostrategic goals by its Western adversaries and has no intention of succumbing to waves of attacks or chaos coordinated by the Western powers. Prevention is better than cure, and Russia and China seem to have completely embraced this philosophy by deciding, in different ways, to assist allies like Syria, Egypt and Libya to fight terrorism.

    In terms of diplomacy and economic aid, the Sino-Russian contribution could prove decisive in linking the Middle East and North Africa to major projects under development, such as the BRI (Belt and Road Initiative) and the Eurasian Union. We are still at the preliminary stage for the time being, even as 2018 could end up being the year that major conflicts in the Middle East and North Africa (MENA) region end, with the prospect of economic reconstruction being at the forefront.

  • 2017 Summarized (In 2.8 Billion Tweets)

    One incredible thing about the big data era is that it allows us to crunch the numbers on pretty much anything.

    Whether it’s analyzing a database of 50 million chess moves made during actual tournament gameplay, or developing a deep learning AI that sifts through billions of sensor inputs to learn how to drive a car with full autonomy, Visual Capitalist’s Jeff Desjardins points out that we can power nearly any analysis or algorithm with mountains of data.

    Like the above examples, today’s infographic from Echelon Insights uses massive amounts of data to paint a picture of the news that wasn’t possible 10 or 20 years ago. By analyzing the words in over 2.8 billion tweets, the end result is a convincing set of visualizations that showcase the most talked about topics over the course of 2017

    Courtesy of: Visual Capitalist

    THE TALK OF 2017

    Not surprisingly, the conversation in 2017 on Twitter revolved mainly around one person – and you may have heard of him.



    According to Echelon Insights, Trump was mentioned 901.8 million times on Twitter in the United States over the duration of the year.

    Here’s how that compares to some other notable politicians:



    Trump was mentioned about 30x more often than his VP, and 7x more often than his one-time election opponent, Hillary Clinton.

    And incredibly, Trump was the number one topic of daily conversation for 95% of the year, above every other issue and topic:

    There were only 17 days in 2017 where Donald Trump was NOT the top topic of conversation, and he was the #1 story every week for every audience.

    – Echelon Insights, The Year in News 2017

    But putting Trump aside, here are the specific narratives that received the most attention by users in the U.S. Twitterverse.



    The Russia story dominated headlines on an ongoing basis.

    The alleged collusion was a constant in the news cycle from February until August, and then it picked up again in November.

    It was also the top story for two of the major groups that Echelon Insights tracks, the “Liberal Base”, as well as the “Conservative Base”. However, Russia was only the second most important story for the group “Beltway Elites”, falling behind the much-discussed topic of healthcare.

  • South Korea Prepares Bill To Ban Cryptocurrency Trading, Raids Largest Exchanges For Tax Evasion

    Update: Reuters is now piggybacking on the previous report from Bloomberg, with the news that South Korea’s justice ministry said on Thursday it was preparing a bill to ban cryptocurrency trading through its exchanges.

    “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park Sang-ki at a press conference, according to the ministry’s press office.

    He added that he cannot disclose details about the proposed shutdown of virtual currency exchanges but will jointly work with the government task force.

    Ripple is down 25% today and now down 20% YTD…



    * * *


    While the earlier report  from Bloomberg that South Korea is preparing a Crypto-exchange shutdown bill has yet to be confirmed, moments ago Reuters reported that in the latest crackdown against thr frothy sector, South Korea’s largest cryptocurrency exchanges, including Bithumb and Coinone, were raided by police and tax agencies this week for alleged tax evasion.

    An official at Coinone, one of the country’s largest crypto exchanges, told Reuters that “a few officials from the National Tax Service raided our office this week.” He added that “local police also have been investigating our company since last year, they think what we do is gambling,” said the official, who spoke on condition of anonymity. He said Coinone was cooperating with the investigation.

    On Wednesday tax authorities also raided, Bithumb, the second largest virtual currency operator in South Korea.

    “We were asked by the tax officials to disclose paperwork and things yesterday,” an official at Bithumb said, requesting anonymity due to the sensitivity of the issue.

    To be sure, this is not the first time the South Korean government has cracked down on potential money-laundering and tax evasion. Authorities previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.

    The crackdown on Seoul-based operators of some of the world’s busiest virtual currency exchanges comes as the government attempts to calm frenzied demand for cryptocurrency trading in Asia’s fourth largest economy.

    Two weeks ago, the entire sector plunged following news that South Korea would require cryptocurrency transactions to name participants and ban banks from offering virtual accounts, and that the government may also direct law enforcement officials to close some exchanges.

    Separately, Bloomberg reports that officials at South Korea’s Justice Ministry are looking at various steps to regulate cryptocurrencies due to their “seriousness and riskiness,” a spokesman says by phone. SBS TV earlier reported the ministry will begin discussions with other ministries as early as this week after preparing a bill that would shut down cryptocurrency exchanges

    As a result of Bitcoin’s record surge last year, demand for cryptocurrency in South Korea has exploded, drawing college students to housewives and sparking concerns about a gambling addiction. We profiled the plight of the nation’s bitcoin trading addicts in “A Stunning Look Inside The World Of South Korea’s “Bitcoin Zombies”.

    For now, the double whammy of news out of South Korea has had a modest impact on cryptocurrency prices, but nowhere near the 40% plunge observed two weeks ago.



  • Second Developer Of WikiLeaks-Inspired "SecureDrop" Commits Suicide At 36

    A second member of a three-man team who created a secure system for whistleblowers to submit information to news outlets has committed suicide at the age of 36, reports the Freedom of the Press Foundation. Software engineer James Dolan took his own life nearly five years to the day after the death of “SecureDrop” co-creator and Reddit co-founder Aaron Swartz.

    James Dolan

    Dolan, a former Marine, helped create the system in 2012 along with Swartz and Wired editor Kevin Poulsen – who spearheaded the project first known as “StrongBox” and later “DeadDrop.” The trio’s secure submission system has been used by The New Yorker, the Washington Post, The New York Times, the Associated Press and Gizmodo – allowing “highly secure communication between journalists and sources in possession of sensitive information or documents,” per Gizmodo

    Co-creator Kevin Poulsen described Dolan’s role in the project’s creation in the New Yorker in 2013:

    In New York, a computer-security expert named James Dolan persuaded a trio of his industry colleagues to meet with Aaron to review the architecture and, later, the code. We wanted to be reasonably confident that the system wouldn’t be compromised, and that sources would be able to submit documents anonymously—so that even the media outlets receiving the materials wouldn’t be able to tell the government where they came from. James wrote an obsessively detailed step-by-step security guide for organizations implementing the code. “He goes a little overboard,” Aaron said in an e-mail, “but maybe that’s not a bad thing.”

    Co-creator Aaron Swartz committed suicide on January 11, 2013 at the age of 26. Swartz left no suicide note in his New York apartment, however some have noted that he was depressed and was facing jail time under the Computer Fraud and Abuse Act for hacking into MIT’s computer network and stealing copies of 4.8 million academic papers


    Swartz’s father believes the government “indirectly killed” Swartz, while his girlfriend at the time, Taren Stinebrickner-Kauffman think Swartz was driven to suicide by a two-year prosecution over the MIT hacking case which had “drained all of his financial resources”  – despite not fitting any of the signs of clinical depression and associated disorders.

    Aaron Swartz

    After Swartz’s death, co-creator Kevin Poulsen donated the SecureDrop project to the Freedome of the Press Foundation, while James Dolan was “literally the only person in the world who knew all the ins and outs of the system, how to install it, and how to make it better” according to the FPF. 

    He had a high-paying computer security job at a large company by then, but I asked him if he’d be willing to come work for us so we could try to get SecureDrop into more newsrooms. We had hardly any money at the time, yet he immediately agreed—even though it meant taking an 80% pay cut. (Later, he would even refuse to accept a raise, insisting that we use any new funding to hire additional people to work on the project instead.)

    In a tribute post, the Freedom of the Press Foundation said that Dolan had “long suffered from PTSD from his time serving in the Marines during the Iraq war,” adding “It was an experience that affected him in multiple ways. He often cited the Iraq War as his inspiration for wanting to help journalists and whistleblowers; it made him realize governments needed to be much more transparent and accountable.”

    Dolan’s friends and supporters were heartbroken over Twitter:




    Timm, FPF’s Executive Director, wrote “It is impossible to overstate how fundamentally important James Dolan was to the development of both Freedom of the Press Foundation and SecureDrop.”

  • Party While You Can – Central Banks Are Ready To Pop The 'Everything' Bubble

    Authored by Brandon Smith via Alt-Market.com,

    Many people do not realize that America is not only entering a new year, but within the next month we will also be entering a new economic era. In early February, Janet Yellen is set to leave the Federal Reserve and be replaced by the new Fed chair nominee, Jerome Powell. Now, to be clear, the Fed chair along with the bank governors do not set central bank policy. Policy for most central banks around the world is dictated in Switzerland by the Bank for International Settlements. Fed chairmen like Janet Yellen are mere mascots implementing policy initiatives as ordered.  This is why we are now seeing supposedly separate central banking institutions around the world acting in unison, first with stimulus, then with fiscal tightening.



    However, it is important to note that each new Fed chair does tend to signal a new shift in action for the central bank. For example, Alan Greenspan oversaw the low interest rate easy money phase of the Fed, which created the conditions for the derivatives and credit bubble and subsequent crash in 2008. Ben Bernanke oversaw the stimulus and bailout phase, flooding the markets with massive amounts of fiat and engineering an even larger bubble in stocks, bonds and just about every other asset except perhaps some select commodities. Janet Yellen managed the tapering phase, in which stimulus has been carefully and systematically diminished while still maintaining delusional stock market euphoria.

    Now comes the era of Jerome Powell, who will oversee the last stages of fiscal tightening, the reduction of the Fed balance sheet, faster rate increases and the final implosion of the ‘everything’ bubble.

    As I warned before Trump won the election in 2016, a Trump presidency would inevitably be followed by economic crisis, and this would be facilitated by the Federal Reserve pulling the plug on fiat life support measures which kept the illusion of recovery going for the past several years. It is important to note that the mainstream media is consistently referring to Jerome Powell as “Trump’s candidate” for the Fed, or “Trump’s pick” (as if the president really has much of a choice in the roster of candidates for the Fed chair). The public is being subtly conditioned to view Powell as if he is an extension of the Trump administration.

    This could not be further from the truth. Powell and the Fed are autonomous from government.

    As Alan Greenspan openly admitted years ago, the Fed does not answer to the government and can act independently without oversight.

    So, why is the media insisting on misrepresenting Powell as some kind of Trump agent? Because Trump, and by extension all the conservatives that support him, are meant to take the blame when the ‘everything’ bubble vaporizes our financial structure. Jerome Powell is “Trump’s guy” at the Fed; so any actions Powell takes to crush the recovery narrative will also be blamed on the Trump administration.



    But, is it a certainty that Powell will put the final nail in the coffin of “economic recovery?” Yes. Last Friday the Fed finally released the transcripts of its monetary policy meetings in 2012, and in those transcripts are some interesting admissions from Powell himself. After reading these transcripts I am fully convinced that Powell is the man who will stand as the figurehead of the central bank during the final phase of U.S. decline.

    Here are some of the most astonishing quotes by Powell from those transcripts along with my commentary. These quotes are yet another piece of evidence that vindicates my position on the Fed as an economic saboteur and my position on the historic market bubble the bank has created:

    Powell: “I have concerns about more purchases. As others have pointed out, the dealer community is now assuming close to a $4 trillion balance sheet and purchases through the first quarter of 2014. I admit that is a much stronger reaction than I anticipated, and I am uncomfortable with it for a couple of reasons.

    First, the question, why stop at $4 trillion? The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated. And we will be able to tell ourselves that market function is not impaired and that inflation expectations are under control. What is to stop us, other than much faster economic growth, which it is probably not in our power to produce?”

    Assessment: By all indications the Fed did do more, MUCH more. Including QE3, various stimulus packages and incessantly low interest rates for years, the Fed has essentially stepped in every time stock markets in particular were about to crash back to their natural state of decline. Powell is being rather honest in his estimation here that these stopgaps are in fact temporary and that the Fed cannot produce true economic growth to support the market optimism they have created through their interventions. He is stating openly that markets will only remain optimistic so long as they are assured that the Fed will continue to intervene.

    This is probably why it took almost six years before these transcripts were released.

    Powell: “When it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.”

    Assessment: And here we have Powell’s shocking admission, clarifying his previous point — the “strong response” that Powell is referring to is a market reversal, or bubble implosion. He even admits the existence of the Fed’s “short position on volatility.” This explains the strange behavior of the VIX index, which has plunged to record lows as “someone” continually shorts VIX stocks in order to interfere with any decline in markets.

    This interference in the VIX has conjured an aberration, a market calm and investor confidence that is artificial. Such overconfidence, when optimism turns into mania, has happened before. In fact, the end of the Greenspan era was awash in such exuberance. And this delusion always ends the same way — with crisis.

    I would also like to mention here that I have seen some disinformation being planted on Powell’s statements in 2012, asserting that he was “not talking about stock markets” specifically. Obviously he is, as you will see in other parts of his statement, but to reinforce the point, here is a quote from another Fed member who spilled the beans, Richard Fisher:

    “What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.

    It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow.”

    Fisher went on to hint at his very reserved view of the impending danger:

    “I was warning my colleagues, Don’t go wobbly if we have a 10 to 20 percent correction at some point… Everybody you talk to… has been warning that these markets are heavily priced.” [In reference to interest rate hikes]

    So, what happens when the Fed stops shorting volatility and ends the easy money being pumped into markets? Well, again, I think Powell and Fisher have just told you what will happen, but let’s continue.

    Powell: “My third concern — and others have touched on it as well — is the problems of exiting from a near $4 trillion balance sheet. We’ve got a set of principles from June 2011 and have done some work since then, but it just seems to me that we seem to be way too confident that exit can be managed smoothly. Markets can be much more dynamic than we appear to think.

    When you turn and say to the market, “I’ve got $1.2 trillion of these things,” it’s not just $20 billion a month — it’s the sight of the whole thing coming. And I think there is a pretty good chance that you could have quite a dynamic response in the market.”

    Assessment: The Fed balance sheet is being reduced NOW, and Powell as chairman will only continue the process if not expedite it. Some people may argue that Powell is displaying an attitude that would suggest he is not on board with tightening policies. I disagree. I believe Powell will make the argument that the band-aid must be ripped off and that stock markets need some “tough love”.

    In fact, Fed members including Yellen and former member Alan Greenspan (is there such a thing as a “former” member of the Fed?) have already been fielding the notion that stock markets are suffering from “irrational exuberance” and that something must be done to “temper inflation.”

    Powell is also acknowledging the mass-psychological aspect of investors, now trained like Pavlovian dogs to salivate over stock tickers instead of thinking critically on the implications of equities that “can’t lose”.  When they finally begin to realize that equities can indeed lose, and that the Fed is going to let them lose, what will the result be, I wonder?

    Powell: “I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.”

    Assessment: Wow! And there you have it. The new Fed chair’s own prognostications. He even used the dreaded “B” word  bubble. Yes, as I have been arguing for quite some time, the Fed will continue to raise rates and cut off the low cost money supply to banks and corporations that has helped boost stock markets as well as numerous other asset classes.  And now we discover after six years a Fed official, soon to be the Fed chairman, telling you EXACTLY what is about to happen within American markets, reinforcing my long held position.

    Powell even mentions that “this is their strategy.” Now, that could be interpreted a few ways, but I continue to hold that the Fed plans to deliberately crash markets and that this will be a controlled demolition of the U.S. economy.

    Trump may actually clash with Powell over these measures in the near future, considering Trump has thoroughly taken credit for the insane stock market rally that has dominated since his election. But, this will only add to the fake drama. Imagine, the very man Trump “picked” as the new head of the Federal Reserve undermining the market bubble which Trump boasts about on his Twitter account. The Kabuki theater will be phenomenal.

    All the while, the true culprits behind the bubble and the crash, the international financiers and banks, will escape almost all scrutiny as the public mindlessly follows the political soap opera played out in the mainstream media.

  • China Calls Bloomberg Treasury Report "Fake News", Yields Slide

    Less than 24 hours after Bloomberg headlines rang around the world proclaiming China would “slow purchases” of US Treasuries, China’s State Administration of Foreign Exchange, SAFE, pushes back on the report, saying it is “fake news.”

    As Blooomberg reports, SAFE says its investment in Treasuries is based on market conditions and its needs, and adds that it always diversifies investment of FX reverses.

    Additionally, SAFE says the earlier report may have quoted a wrong source.

    Reuters headlines provide a little more color:


    Following is a translation of a statement from China’s State Administration of Foreign Exchange in response to a report that said China may slow or halt purchases of U.S. treasuries.

    “We are also aware of the news through some media reports. We think the report might have cited wrong sources or may be fake news.

    China has always managed its forex reserves investments in accordance with the principle of diversification, to ensure the overall safety of FX assets, to maintain and increase their value. Like other investments, FX reserves investments in U.S. treasuries is managed in a professional way according to market conditions and investment needs. China’s FX reserves management department is a responsible investor both for the FX reserves and for the market in which it participates. China’s investments have promoted the stability of international financial markets and the preservation and appreciation of China’s foreign exchange reserves.”

    US 10Y Yields immediately tumbled 2bps, well below the pre-China-headlines levels from this morning…



    And Treasury futures volume surged…



    Presumably, Beijing’s message was heard loud and clear (and acknowledged) in Washington.

  • Canadian Pensions Eager To "Re-Risk" After Rule Change Allows Greater Speculative Bets

    So, what do you do when your pension funds are hopelessly underfunded and haven’t a chance of ever reaching breakeven again?  Well, you just change national laws to allow them to swing for the fences by loading up on risky investments and hope for the best.  Who cares…the losses are backstopped by taxpayers anyway, right?

    According to Pensions & Investments, that is precisely what legislators in Canada have decided to do and it has sparked an asset rotation wave toward risky “alternative investments.”

    Canadian pension plan executives are starting 2018 expecting to invest more in alternative investments, specifically infrastructure and real estate, as the easing of funding rules in Ontario gives plans more opportunity to take on risk, sources said.

    “This funding rule change is a game-changer,” said Manuel Monteiro, partner and head of the financial strategy group at Mercer (Canada), Toronto. “It could change plan design, change investment strategies and should impact funding strategies.”


    Martin Leclair of Phillips, Hager & North has even coined a new term to describe the asset rotation among Canadian pension funds: “rerisking“….presumably because ‘investing in the highest beta garbage possible at the highest valuation multiples of all time’ was just too honest for marketing presentations.

    The change will make higher-yielding investments like alternatives more popular among Canadian institutional investors as more money will be freed up for riskier investments with the potential for higher return, sources said.

    “Any alternatives, infrastructure particularly,” said Ian Struthers, partner and practice lead, Aon Hewitt Investment Consulting, Toronto. “We expect growth in those asset classes to continue, particularly among the large pension plans. It’s easy for plans the size of Canada Pension Plan to do; they have long time horizons and huge asset inflows. But for small to midsize plans, they can take on more exposure to alternatives through diversified investments with external managers. But there’s a lot of money looking for infrastructure and for real estate. There will be more interest in less vanilla kind of investments to add value, like brownfield projects.”

    Martin Leclair, portfolio manager at Phillips, Hager & North ​ Investment Management, Toronto, said the move to those strategies already is happening. “What we’re seeing from the solvency rule changes is a lot of rerisking. That’s already happening. It’s more about yield than about risk. So fundamentally, yes, there will be a lot of rerisking.”

    Leclair continues by saying that traditional bond and equity strategies just have no place in the portfolio of a modern 2018 investor and suggests that you’ll have to be “creative” this year to “find alpha…”

    “2018 will not be the year of one strategy, it will be the year of being creative,” Mr. Leclair said. “Traditional bond and equity strategies will not get you there. You have to find alpha. These strategies are out there … I think you’ll see departures from traditional benchmark-oriented strategies, away from being a ‘closet indexer.'” PH&N Investment Management has C$90 billion in institutional assets under management, according to its website.

    Which presumably means that the retirements of 1,000s of Canadians are about to be invested in Ripple?

  • Justice Denied: The Government Is Not Going To Save Us

    Authored by John Whitehead via The Rutherford Institute,

    The U.S. Supreme Court has ruled: it will not hear the case of Young v. Borders.

    Despite the fact that a 26-year-old man was gunned down by police who banged on the wrong door at 1:30 am, failed to identify themselves as police, and then repeatedly shot and killed the innocent homeowner who answered the door while holding a gun in self-defense, the justices of the high court refused to intervene to address police misconduct.

    Although 26-year-old Andrew Scott committed no crime and never fired a single bullet or lifted his firearm against police, only to be gunned down by police who were investigating a speeding incident by engaging in a middle-of-the-night “knock and talk” in Scott’s apartment complex, the Supreme Court refused to balance the scales between justice and injustice.

    Despite the fact that police shot and killed nearly 1,000 people nationwide for the third year in a row (many of whom were unarmed, mentally ill, minors or were shot merely because militarized police who were armed to the hilt “feared” for their safety), the Supreme Court will not act to right the wrongs being meted out by the American police state.

    Although “knock-and-talk” policing has become a thinly veiled, warrantless—lethal—exercise by which citizens are coerced and intimidated into “talking” with heavily armed police who “knock” on their doors in the middle of the night, the Supreme Court will not make the government play by the rules of the Constitution.

    The lesson to be learned: the U.S. Supreme Court will not save us.

    No one is coming to save us: not the courts, not the legislatures, and not the president.

    According to journalist Michael Harriot:

    More people died from police violence in 2017 than the total number of U.S. soldiers killed in action around the globe (21). More people died at the hands of police in 2017 than the number of black people who were lynched in the worst year of Jim Crow (161 in 1892). Cops killed more Americans in 2017 than terrorists did (four). They killed more citizens than airplanes (13 deaths worldwide), mass shooters (428 deaths) and Chicago’s “top gang thugs” (675 Chicago homicides).

    Americans are dying at the hands of the police, and the U.S. government doesn’t care.

    Worse, the U.S. government is actively doing everything in its power to ensure that the killing spree continues.

    Take Jeff Sessions, for example.

    While the president’s conveniently-timed tweets distract the public and dominate the headlines, his attorney general continues to bulldoze over the Constitution, knocking down what scant protections remain between the citizenry and the hydra-headed police state.

    Within his first year as attorney general, Jeff Sessions has made a concerted effort to expand the police state’s power to search, strip, seize, raid, steal from, arrest and jail Americans for any infraction, no matter how insignificant.

    What this means is more militarized police, more asset forfeiture, more private prisons, more SWAT team raids, more police shootings of unarmed citizens, and more wars waged by the government against the American people.

    And while the crime rate may be falling, the death toll—casualties of the government’s war on the American people—is growing.

    Even so, it’s not just the police shootings that are cause for concern.

    We are inching ever closer to a constitutional crisis the likes of which we have never seen before, and “we the people” are woefully unprepared and ill-equipped to deal with a government that is corrupt, topsy turvy, unjust, immoral, illegal, brutal, violent, war-hungry, greedy, biased, imbalanced, unaccountable, non-transparent, fascist and as illegitimate as they come.

    Where do we go from here?

    We’ve been through troubled times before.

    In fact, it was 50 years ago this year, in 1968, when the country was buffeted by assassinations, riots and protests: “The assassinations of the Rev. Martin Luther King Jr. and Robert F. Kennedy. The riots that shook Washington, Chicago, Baltimore and other U.S. cities. Campus protests. Civil rights protests. Vietnam War protests. The Tet Offensive. The My Lai massacre. The rise of Richard Nixon and the retreat of Lyndon Johnson.”

    Fifty years later, we’re no better off.

    The nation is still being buffeted by economic instability, racial inequality, injustice, police brutality, government misconduct and a rising discontent on the part of the populace.

    I can’t help but wonder what Martin Luther King Jr. would have to say to about his dream of a world without racism, militarism and materialism: America has become a ticking time bomb of racial unrest and injustice, police militarization, surveillance, government corruption and ineptitude, the blowback from a battlefield mindset and endless wars abroad, and a growing economic inequality between the haves and have nots.

    We cannot afford to wait until it is too late to act.

    This is no time to stand silently on the sidelines. It’s a time for anger and reform. Most importantly, it’s a time for making ourselves heard. And there is no better time to act than the present.

    As Robert F. Kennedy reminded his listeners in a speech delivered at the University of Cape Town in 1966, “Hand in hand with freedom of speech goes the power to be heard, to share in the decisions of government which shape men’s lives. Everything that makes man’s life worthwhile—family, work, education, a place to rear one’s children and a place to rest one’s head—all this depends on decisions of government; all can be swept away by a government which does not heed the demands of its people.”

    What can ordinary citizens do?

    As I make clear in my book Battlefield America: The War on the American People, instead of sitting around and waiting for someone else to change things, take charge. Never discount the part that everyday citizens play in our nation’s future. You can change things, but there can be no action without education. Get educated about your rights and exercise them. Start by reading the Bill of Rights. You can do so online at www.rutherford.org. Or, if you want a copy to keep with you, email me at staff@rutherford.org and I’ll send you a free one.

    Most important of all, just get out there and do your part to make sure that your government officials hear you. The best way to ensure that happens is by never giving up, never backing down, and never remaining silent. What matters is that you do your part.

    It’s midnight in America right now. But the real question is, will there be a dawn?

    That’s up to you and me. The future is in our hands.

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