- Video Shows Tampering with "Evidence" of Syrian Chemical Weapons Attack
Preface: We spoke for quite a while with Dr. Postol by phone, and find him to be an ethical, honest, patriotic American man. He's made some interesting discoveries debunking the Syrian chemical weapons propaganda, and so we're helping to spread his findings.
By Theodore A. Postol, professor emeritus of science, technology, and national security policy at MIT. Postol’s main expertise is in ballistic missiles. He has a substantial background in air dispersal, including how toxic plumes move in the air. Postol has taught courses on weapons of mass destruction – including chemical and biological threats – at MIT. Before joining MIT, Postol worked as an analyst at the Office of Technology Assessment, as a science and policy adviser to the chief of naval operations, and as a researcher at Argonne National Laboratory. He also helped build a program at Stanford University to train mid-career scientists to study weapons technology in relation to defense and arms control policy. Postol is a highly-decorated scientist, receiving the Leo Szilard Prize from the American Physical Society, the Hilliard Roderick Prize from the American Association for the Advancement of Science, and the Richard L. Garwin Award from the Federation of American Scientists.
This is my third report assessing the White House intelligence Report of April 11, 2017. My first report was titled A Quick Turnaround Assessment of the White House Intelligence Report Issued on April 11, 2017 about the Nerve Agent Attack in Khan Shaykhun, Syria and my second report was an Addendum to the first report.
This report provides unambiguous evidence that the White House Intelligence Report (WHR) of April 11, 2017 contains false and misleading claims that could not possibly have been accepted in any professional review by impartial intelligence experts. The WHR was produced by the National Security Council under the oversight of the National Security Advisor, Lieutenant General H. R. McMaster.
This image was extracted from a video of a worker during midday (note shadows) on April 5, 2017 next to the crater where sarin was allegedly released according to the White House Intelligence Report (WHR) issued of April 11, 2017.
The WHR asserts that it reviewed commercial video evidence and concluded that sarin came from the crater next to a man. Other video frames show unprotected workers in the crater showing no evidence of sarin poisoning at the same time the dead birds are being packaged. The URLs to this and a related video are contained in this report.
The evidence presented herein is from two selected videos which are part of a larger cache of videos that are available on YouTube. These videos were uploaded to YouTube in the time period between April 5, 2017 and April 7, 2017. Analysis of the videos shows that all of the scenes taken at the site where the WHR claims was the location of a sarin release indicate significant tampering with the site. Since these videos were available roughly one week before the White House report was issued on April 11, this indicates that the office of the WHR made no attempt to utilize the professional intelligence community to obtain accurate data in support of the findings in the report.
The video evidence shows workers at the site roughly 30 hours after the alleged attack that were wearing clothing with the logo “Idlib Health Directorate.” These individuals were photographed putting dead birds from a birdcage into plastic bags. The implication of these actions was that the birds had died after being placed in the alleged sarin crater. However, the video also shows the same workers inside and around the same crater with no protection of any kind against sarin poisoning.
These individuals were wearing honeycomb face masks and medical exam gloves. They were otherwise dressed in normal streetwear and had no protective clothing of any kind.
The honeycomb face masks would provide absolutely no protection against either sarin vapors or sarin aerosols. The masks are only designed to filter small particles from the air. If there were sarin vapor, it would be inhaled without attenuation by these individuals. If the sarin were in an aerosol form, the aerosol would have condensed into the pours in the masks, and would have evaporated into a highly lethal gas as the individuals inhaled through the mask. It is difficult to believe that such health workers, if they were health workers, would be so ignorant of these basic facts.
In addition, other people dressed as health workers were standing around the crater without any protection at all.
As noted in my earlier reports, the assumption in WHR that the site of the alleged sarin release had not been tampered with was totally unjustified and no competent intelligence analyst would have agreed that this assumption was valid. The implication of this observation is clear – the WHR was not reviewed and released by any competent intelligence experts unless they were motivated by factors other than concerns about the accuracy of the report.
The WHR also makes claims about “communications intercepts” which supposedly provide high confidence that the Syrian government was the source of the attack. There is no reason to believe that the veracity of this claim is any different from the now verified false claim that there was unambiguous evidence of a sarin release at the cited crater.
The relevant quotes from the WHR are collected below for purposes of reference:
The United States is confident that the Syrian regime conducted a chemical weapons attack, using the nerve agent sarin, against its own people in the town of Khan Shaykhun in southern Idlib Province on April 4, 2017.
We have confidence in our assessment because we have signals intelligence and geospatial intelligence, laboratory analysis of physiological samples collected from multiple victims, as well as a significant body of credible open source reporting
We cannot publicly release all available intelligence on this attack due to the need to protect sources and methods, but the following includes an unclassified summary of the U.S. Intelligence Community’s analysis of this attack.
By 12:15 PM [April4, 2017] local time, broadcasted local videos included images of dead children of varying ages.
… at 1:10 PM [April4, 2017] local … follow-on videos showing the bombing of a nearby hospital …
Commercial satellite imagery from April 6 showed impact craters around the hospital that are consistent with open source reports of a conventional attack on the hospital after the chemical attack.
Moscow has since claimed that the release of chemicals was caused by a regime airstrike on a terrorist ammunition depot in the eastern suburbs of Khan Shaykhun.
An open source video also shows where we believe the chemical munition landed [Emphasis Added]—not on a facility filled with weapons, but in the middle of a street in the northern section of Khan Shaykhun. Commercial satellite imagery of that site from April 6, [Emphasis Added] after the allegation, shows a crater in the road that corresponds to the open source video.
Observed munition remnants at the crater and staining around the impact point are consistent with a munition that functioned, but structures nearest to the impact crater did not sustain damage that would be expected from a conventional high-explosive payload. Instead, the damage is more consistent with a chemical munition.
Russia’s allegations fit with a pattern of deflecting blame from the regime and attempting to undermine the credibility of its opponents.
Summary and Conclusions
It is now clear from video evidence that the WHR report was fabricated without input from the professional intelligence community.
The press reported on April 4 that a nerve agent attack had occurred in Khan Shaykhun, Syria during the early morning hours locally on that day. On April 7, The United States carried out a cruise missile attack on Syria ordered by President Trump. It now appears that the president ordered this cruise missile attack without any valid intelligence to support it.
In order to cover up the lack of intelligence to supporting the president’s action, the National Security Council produced a fraudulent intelligence report on April 11 four days later. The individual responsible for this report was Lieutenant General H. R. McMaster, the National Security Advisor. The McMaster report is completely undermined by a significant body of video evidence taken after the alleged sarin attack and before the US cruise missile attack that unambiguously shows the claims in the WHR could not possibly be true. This cannot be explained as a simple error.
The National Security Council Intelligence Report clearly refers to evidence that it claims was obtained from commercial and open sources shortly after the alleged nerve agent attack (on April 5 and April 6). If such a collection of commercial evidence was done, it would have surely found the videos contained herein.
This unambiguously indicates a dedicated attempt to manufacture a false claim that intelligence actually supported the president’s decision to attack Syria, and of far more importance, to accuse Russia of being either complicit or a participant in an alleged atrocity.
The attack on the Syrian government threatened to undermine the relationship between Russia and the United States. Cooperation between Russia and the United States is critical to the defeat of the Islamic State. In addition, the false accusation that Russia knowingly engaged in an atrocity raises the most serious questions about a willful attempt to do damage relations with Russia for domestic political purposes.
We repeat here a quote from the WHR:
An open source video also shows where we believe the chemical munition landed—not on a facility filled with weapons, but in the middle of a street in the northern section of Khan Shaykhun [Emphasis Added]. Commercial satellite imagery of that site from April 6, after the allegation, shows a crater in the road that corresponds to the open source video.
The data provided in these videos make it clear that the WHR made no good-faith attempt to collect data that could have supported its “confident assessment.” that the Syrian government executed a sarin attack as indicated by the location and characteristics of the crater.
This very disturbing event is not a unique situation. President George W. Bush argued that he was misinformed about unambiguous evidence that Iraq was hiding a substantial store of weapons of mass destruction. This false intelligence led to a US attack on Iraq that started a process that ultimately led to the political disintegration in the Middle East, which through a series of unpredicted events then led to the rise of the Islamic State.
On August 30, 2013, the White House produced a similarly false report about the nerve agent attack on August 21, 2013 in Damascus. This report also contained numerous intelligence claims that could not be true. An interview with President Obama published in The Atlantic in April 2016 indicates that Obama was initially told that there was solid intelligence that the Syrian government was responsible for the nerve agent attack of August 21, 2013 in Ghouta, Syria. Obama reported that he was later told that the intelligence was not solid by the then Director of National Intelligence, James Clapper.
Equally serious questions are raised about the abuse of intelligence findings by the incident in 2013. Questions that have not been answered about that incident is how the White House produced a false intelligence report with false claims that could obviously be identified by experts outside the White House and without access to classified information. There also needs to be an explanation of why this 2013 false report was not corrected. Secretary of State John Kerry emphatically testified before the Senate Foreign Relations Committee repeating information in this so-called un-equivocating report.
On August 30, 2013 Secretary of State Kerry made the following statement from the Treaty Room in the State Department:
Our intelligence community has carefully reviewed and re-reviewed information regarding this attack [Emphasis added], and I will tell you it has done so more than mindful of the Iraq experience. We will not repeat that moment. Accordingly, we have taken unprecedented steps to declassify and make facts available to people who can judge for themselves.
It is now obvious that this incident produced by the WHR, while just as serious in terms of the dangers it created for US security, was a clumsy and outright fabrication of a report that was certainly not supported by the intelligence community.
In this case, the president, supported by his staff, made a decision to launch 59 cruise missiles at a Syrian air base. This action was accompanied by serious risks of creating a confrontation with Russia, and also undermining cooperative efforts to win the war against the Islamic State.
I therefore conclude that there needs to be a comprehensive investigation of these events that have either misled people in the White House White House, or worse yet, been perpetrated by people to protect themselves from domestic political criticisms for uninformed and ill-considered actions.
Sincerely yours, Theodore A. Postol
Professor Emeritus of Science,
Technology, and National Security Policy
Massachusetts Institute of Technology
Video Evidence That Reveals the White House Intelligence Report
Issued on April 11, 2017 Contains Demonstrably False Claims about a Sarin Dispersal Crater Allegedly Created
in the April 4, 2017 Attack in Khan Sheikoun, Syria
Dead Birds Video:
Note: Please see original .pdf uploaded here for more organized presentation of the screenshots.
VIDEO # 2:
Idlib Health Directorate Tampering with Alleged Sarin Dispersal Site Video
- Chinese Media Almost Sets Off Military Action With Erroneous North Korea Headline
As expected – and feared – during the annual “Day of the Sun” celebration parade (celebrating the birth of the nation’s founder), Bloomberg blasted a headline that Chinese news agency Xinhua reported that North Korea has fired a projectile.
- NORTH KOREA FIRES PROJECTILE, MEDIA SAYS: XINHUA
On its website, Bloomberg immediately picked up the story, and ran with “North Korea Fires Projectile Media, Says Xinhua” (at a url which still reads: “https://www.bloomberg.com/news/articles/2017-04-15/north-korea-fires-projectile-media-says-xinhua“)
However, it appears that the headline scanning algos made a collosal error, and that Xinhua interpreted events quite incorrectly as it was, as CBC and Reuters reports, the appearance of a new submarine-launched missile at the parade for the first time:
- NORTH KOREA SUBMARINE-LAUNCHED BALLISTIC MISSILE SEEN AT MILITARY PARADE FOR FIRST TIME: RTRS
North Korea displayed its submarine-launched ballistic missiles (SLBM) for the first time on Saturday ahead of a massive military parade in the capital, Pyongyang.
State TV showed images of the Pukkuksong-2 SLBMs on trucks waiting to be paraded in front of leader Kim Jong-un.
Immediately after, Xinhua – and Bloomberg – rushed to issue a clarification to avoid what may be a military confrontation.
- XINHUA CLARIFIES HEADLINE ON NORTH KOREAN MISSILE
- N.KOREA DISPLAYS BALLISTIC MISSILE AT MILITARY PARADE: XINHUA
As a result, the BBG headline – with a URL that still says that “North Korea fires a projectile” – now reads the following:
And that’s how World War 3 almost occurred.
As CNN reports, a military parade in the heart of Pyongyang is underway where it’s expected the North Korean regime will show off some of its latest arsenal. Pictures on state television showed thousands of soldiers marching in formation alongside tanks, balloons and enormous crowds. Leader Kim Jong Un was shown clapping and smiling from a reviewing box.
At one point, the soldiers directed a chant toward him. “We will die for you!” they yelled, CNN’s Will Ripley, who was at the event, reported. For North Koreans, April 15 is an auspicious date that sees millions celebrate the birth of the nation’s founder.
- These Are America's Most Creative Cities
Much has been written about the role of the creative economy as a key indicator of economic health. As Visual Capitalist's Nick Routley writes, the “rise of the creative class” and “creative clusters” are concepts that inform the larger conversation on cities as the economic drivers of regions. As a result, everyone from academics to governments are increasingly looking for ways to measure the scope and size of the creative economy.
According to the U.S. Bureau of Economic Analysis, the creative economy accounts for 4.2% of the GDP and is valued at $704 billion. It’s also a segment of the economy that’s still growing. For example, art director and graphic design jobs are growing across the country at rates of 9% and 13%, respectively.
While there is no consensus on where to draw the line on what jobs or sectors are “creative”, we do know that cities are the primary places where measurable creative activities take place.
Today’s infographic from Homes.com measures the number of creative jobs, creative schools, performing arts companies, and motion picture and video companies, to create the Creative City Index. While not comprehensive, it is an interesting snapshot of the creative economy of the country.Courtesy of: Visual Capitalist
Perhaps surprisingly to some, St. Louis ranked highly in multiple categories, including education, with a high number of creative schools per capita. St. Louis also has a healthy motion picture and video editing sector.
As housing in larger cities continues to rise out of reach for many artists and creative professionals, smaller creative hubs like St. Louis and Minneapolis could benefit from an influx of people seeking a more affordable lifestyle.
New York ranked as not only America’s top creative city, but the world’s top creative hub according to a report by UNESCO and EY. As the chart below demonstrates, the creative sector is the fastest-growing segment of NYC’s economy, outpacing many traditional economic drivers.
Not surprisingly, New York City dominates in specific creative categories. For example, 28% of the nation’s fashion designers reside in the five boroughs.
As it turns out, creative economies in larger cities benefit immensely from specialization. In the visualization below, orange dots represent creative jobs in sectors more unique to that metro area. The yellow dots represent more common creative jobs. Essentially, Boston’s creative jobs are tied to industries that are unique to that region, while a city like Las Vegas (which ranked low in the index) offers creative jobs that are less specialized.
The pathway to a robust creative economy requires creative jobs to grow alongside other specialized non-creative industries. This is a major reason cities with a strong technology industry presence also tended to rank well on the Creative City Index.
- Pompeo Declines to Offer Proof that Assad Gassed His Own People, Say Putin is a Liar
Our new CIA director, Mike Pompeo, made a few comments today regarding claims by both Assad and Putin that the chemical attack in Idlib was staged.
He declined to provide proof that could put this debate to rest, saying ‘there are things that were used to form the base of our conclusions that we can’t reveal.’ Then he went on to discredit Putin, by pointing to previous instances when the Russian leader was less than forthcoming — such as eastern Ukraine and the Malaysian airliner incident.
Pompeo also discussed Julian Assange’s Wikileaks, saying: ‘This absurd definition would have all serious media organizations (with the exception of state owned media) transformed into ‘non-state intelligence services’– with the explicitly stated goal of stripping constitutional protections for publishers.’
Assange replied with a mic drop tweet.
Called a “non-state intelligence service” today by the “state non-intelligence agency” which produced al-Qaeda, ISIS, Iraq, Iran & Pinochet.
— Julian Assange (@JulianAssange) April 14, 2017
Content originally published at iBankCoin.com
- Tillerson In Moscow: Is World War III Back On Track?
If anyone is worried whether the prospect of a major war, which many of us considered almost inevitable if Hillary Clinton had attained the White House, is back on track, Secretary of State Rex Tillerson’s visit to Moscow was cold comfort. From his remarks together with his counterpart Sergey Lavrov, there is now little reason to expect any improvement in US-Russia ties anytime soon, if ever, and much reason to expect them to get worse – a lot worse.
There has been a great deal of speculation as to why President Donald Trump, who promised a break with the warmongering policies Hillary would have implemented, and which characterized the administrations of Barack Obama, George W. Bush, and Bill Clinton, would have bombed Syria’s Shayrat airbase in retaliation for a supposed chemical weapons (CW) strike without evidence or authorization from either Congress or the UN Security Council.
(I won’t bore anyone familiar with Balkan affairs with the almost certain origin of the gas attack in Idlib. The odds that it was a false flag by the jihadists far, far outweigh any chance of a CW attack by Syrian government forces. To cite the «Markale market massacres» is enough. Ghouta September 2013 wasn’t the first such deception in Syria, and Idlib April 2017 won’t be the last. American media condemning Assad for the CW attack and demanding justice for the victims never mention that the site is held by al-Qaeda and that they themselves have a CW capability. Nor that the jihadists likely knew when and where Syrian planes would be operating, since the Russians would have notified the US under the deconfliction agreement. This is not to rule out the Russian explanation that the release was due to Syrian bombing of the jihadists’ CW cache but I consider the planned provocation more likely based on the timing. Predictably, an amateurish four-page paper issued by the US intelligence community to justify accusations against Assad contained zero evidence.)
Among the reasons speculated for President Trump’s abrupt reversal of his campaign positions:
- Trump actually believes Assad was responsible, based on false intelligence fed to him by National Security Adviser H.R. McMaster and others, or on an emotional appeal from his daughter, Ivanka, based on sensational media coverage.
- Trump doesn’t believe it but someone gave him The Talk: «Do what you’re told, Mr. President, or you and Barron will end up like Jack Kennedy.»
- Whether or not he believes Assad is to blame for the CW attack, Trump wants to improve ties with the Russians and work together with them to defeat the jihadists in Syria and end the war, and perhaps cut a «grand bargain» that includes Ukraine, but he can’t because of the domestic pressure from the media, the Deep State, almost all of the Democrats, and a lot of Republicans on the evidence-free charge that Moscow tried to skew the 2016 election. (That seems to be partly working, with many formerly harsh critics now praising him. On the other hand, his own base is now split between those cheer any jingoistic use of force and those who see that another optional war will doom his domestic priority to «Make America Great Again!») The one piece of evidence that supports this conjecture is the extremely limited pinprick nature of the US strike on Shayrat.
- Related to the previous point, given the power of the domestic forces conspiring against him, Trump needed to project strength. (My guess is that Moscow, Beijing, and others will conclude just the opposite: he is weak and not even master in his own house.)
- Trump is impulsive and lacking in substance, so he goes for the quickest and easiest path to what he perceives to be current advantage. The praise of his former detractors – mainly those who have denigrated and derided him – will prove short-lived. At the earliest opportunity those hailing him now as «presidential» will be the first to call for his head.
- Trump’s real priority was to impress the Chinese on Korea, with a show of force during President Xi Jinping’s summit in the US. Sending an aircraft carrier group to the waters near Korea with a barrage of bellicose rhetoric that the US will resolve the North Korea issue if China doesn’t reinforces this theory, at least in part. Whether Xi was impressed the way Trump might have intended it is another conjecture.
Whatever the motives, the real question is what comes next. Aside from when another false flag may occur – which Washington in effect invited with threats of a further, more devastating military action against Syria – it matters whether behind closed doors Tillerson’s proposals differed from his public comments.
Broadly speaking, there are two possibilities:
1. Tillerson may have said, in effect, that Trump has laid down a marker, neutralized domestic critics, and shown he’s a big dog – now let’s get down to business. All the accusatory language is just for show, so Trump will have greater flexibility of action. In the weeks prior to the Idlib CW attack, Washington and Moscow had seemed to be coordinating on plans for an offensive against Daesh in Raqqa and airstrikes against al-Qaeda in Idlib. The US and Russia together need to find a way to wrap up this war that defeats the enemy Trump campaigned against: radical Islamic terrorism. It’s up to the Syrian people to work out who their leaders should be. If there are security concerns America’s Israeli, Turkish, and Sunni friends have, let’s find a way to address them within that larger context –
2. Tillerson’s private comments were consistent with his public statements, amounting to imposing the US Deep State’s agenda on Moscow. That diktat gives priority to blocking some mythical «Shia Crescent» to keep our Sunni «allies» and Israel happy. Assad must go on some specified timetable, though we may grandly allow him so preside over a rump Alawite state in western Syria on a temporary basis; if Assad goes along, we’ll let him retire to Moscow, but if he waits until the next chemical provocation it’s off to The Hague or we’ll kill him ourselves. Syria must be partitioned: we will allow Moscow to participate in a marginal role on the «defeat» of Daesh with a blitzkrieg on Raqqa but then create a «Sunnistan» (or maybe more than one) in eastern Syria, run by some hand-picked jihadi group friendly to the Saudis – basically Daesh with new hats and flag: Islamic State «lite.» To limit Kurdish aspirations Turkey might be awarded a «Turkmen» zone in the new Syria, as well as primacy over a neighboring al-Qaeda-administered area. Also we can anticipate a demand that Russia be prepared to step aside and not oppose an operation for regime change in Tehran.
Even the first message might have been a hard sell given how poisoned the well is and the depth of the abyss of Russian mistrust of the United States. No matter how positive anything Tillerson might have said privately, can anyone in Moscow now believe anything from Washington?
But if the message was the second one, as I believe it was, the Russians would have little choice but to conclude that a major war may be unavoidable and they will plan accordingly. (China would reach the same conclusion.) Plans being made when it was assumed Hillary Clinton was going to win but tentatively mothballed with Trump’s election will be pulled out and updated. Paradoxically, Moscow might still acquiesce to Tillerson’s demands on Syria but only in the spirit of August 1939 – a temporary expedient to buy time and space for what must come.
I of course hope the message was the first but fear it was the second. The white-hot rhetoric coming out of Washington is far in excess of that needed to position US opinion for a reasonable deal with Moscow. Quite to the contrary, it seems calculated to burn any bridges back from anything but regime change and more war. Once again, as has been the case since the Cold War ended in 1991 – but only on the Russian side – US goals look to be geopolitical and ideological, not based on American national interest. The agendas of the Deep State and our regional «allies» will continue to set US policy. Russia must be destroyed as an independent power, right after Syria, Iran, and North Korea but before China. (In a Balkan sideshow, Trump this week signed the NATO accession of Montenegro, effectively completing encirclement of Serbia. At a White House meeting with Jens Stoltenberg, Trump praised NATO.) As was the case in Bosnia, Kosovo, and Libya, and today in Syria, the US is happy to use jihadists as proxies while coldly watching them eliminate centuries-old Christian communities.
In short, the usual. If such a path has been chose by Trump, as appears likely, it may well doom his presidency to failure. But in context, that would be the least of our worries.
I would be very, very glad to be proved wrong.
- U.S. Insurers Sue Saudis For $4.2 Billion Over 9/11
Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack.
The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack.
"But for the assistance provided by defendants," the lawsuit said, "al Qaeda could not have successfully planned, coordinated, and carried out the September 11th attacks, which were a foreseeable and intended result of their material support and sponsorship of al Qaeda."
The 10 defendants in the lawsuit include Al Rajhi Bank, aviation contractor Dallah Avco, the Mohamed Binladin Co, the Muslim World League, and other charities, but the biggest target is the Saudi National Commercial Bank, which is majority state-owned. The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law.
While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups.
Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.
- Heavily-Armed Swamp Critters – Did Trump Ever Stand A Chance?
By our calculation, it took just 76 days for President Trump to get on board with the Clinton-Bush-Obama agenda.
Now there can be no doubt where he’s headed. He’s gone Full Empire.
Not that it was unexpected. But the speed with which the president abandoned his supporters and went over to the Deep State is breathtaking.
Among the noise and hubbub of the election campaign, there was one message coming from the Trump team that was music to our ears.
Middle East wars?
He was against them, he said.
He claimed to have opposed the 2003 attack on Iraq. He said it was one of the “worst mistakes” the country ever made.
As for further involvement, why waste American lives and American wealth on wars you can’t win?
“America First,” he said.
This was a refreshing position. It put the Republican neocons and Establishment Republicans against him; many went over to Hillary rather than risk giving up their think tank grants and consulting fees.
A 2013 poll showed 52% of Americans thought the U.S. should “mind its own business internationally.”
But the elite gained power and money from foreign wars; they weren’t going to give them up. Non-entitlement spending in the swamp goes largely to cronies in the military-security industry.
But Donald Trump promised a “new foreign policy.”
No more trying to be the world’s policeman. No more fighting other people’s battles… and making things worse. No more wasting American money and American lives on foolish, unwinnable wars.
Ending America’s pointless and unsettling romp in the desert would be a good first move.
The bill for these misadventures is now said to be $7 trillion. As to Syria, Trump was typically direct. Don’t attack the country, he warned Barack Obama in a 2013 tweet, or “MANY VERY BAD THINGS WILL HAPPEN…”
But then, last week… the last great hope for the Trump administration blew up in Syria. Now the neocons are delighted. And the cronies. And the zombies, too.
Here’s the outlook: no real change to O’care. No cutbacks in entitlements. No attempt to balance the budget. No belt-tightening at the pudgy Pentagon. (Instead, it will get more money.)
And now this: The wars in the Middle East will not only go on… they will accelerate.
For now, the U.S. is not only fighting terrorists. It is also fighting the people who are fighting the terrorists.
It’s a perfect Deep State war: It is guaranteed neither to win nor to lose, but simply to go on indefinitely. This gives the insiders more and more of the nation’s wealth to piddle away in absurd wars in preposterous places.
Meanwhile, Congress adjourned. When it returns in two weeks, it will confront another crisis of its own making.
Government funding expires on April 28, which will give Congress five days to unveil, debate, and pass an enormous spending bill… or trigger a government shutdown.
“What a mess,” said Paul Brace, a congressional expert at Rice University in Houston, offering his own pessimistic view of the unified Republican control of the House and Senate so far under President Donald Trump. “It was so much easier when all you had to do was oppose Obama.” […]
House Republicans “have differences of opinion. And they aren’t just political differences. They are policy differences,” said Republican Senator Rob Portman of Ohio.
It will be tough for Congress to come to terms with its budget. The debate will open old wounds and gouge new ones.
Already, the federal budget deficit is expected to average $1 trillion a year over the next 10 years.
Mr. Trump will want to spend more. We need to spend more on infrastructure, on the military… and to revive the economy… he’ll argue.
Many House Republicans, especially the idealists in the Freedom Caucus, will find it difficult to go along.
Some will notice, cynically, that the whole program – including the attack on Syria – is little different from what Hillary had offered.
Consumer prices are already rising, others will note. Besides, who wants to go back to his home district after having signed on to $30 trillion of U.S. debt?
Others, the activists, will want to back Trump. The Obama years have been disastrous, they will say. The typical household is little better off than it was at the bottom of the last recession.
Half of Americans are living paycheck to paycheck. And there are 66 million working-age adults without jobs, they’ll report.
The feds must do something! Increase spending to stimulate the economy (and not coincidentally steer a few bucks to major campaign contributors and other important hacks).
The more financially alert among members of Congress will recognize that eight years of stimulus has done little to help the real economy.
These realists will see a runaway locomotive headed to a dangerous curve.
They’ll want to know how the feds will finance huge new deficits just as the Fed tightens interest rates.
But the shrewdest among them will call their brokers.
The highest stock prices since the dot-com crash are based on the belief that, somehow, Team Trump will push through a corporate tax cut, leaving businesses with more after-tax money.
“That’s not going to happen,” they will say to themselves.
They will want to get out of the stock market before other investors catch on.
* * *
The "Deep State" is more dangerous than ever. It already controls just about every aspect of American life… from health care to education, from the food on our tables to the never-ending war on terror. In his latest warning, Doug Casey’s longtime friend and colleague Bill Bonner exposes how the cronies behind the Deep State have pushed the world to the brink of an irreversible disaster. Click here to learn how that disaster will unfold… and how it could change your life forever.
- China Just Flooded Its Economy With A Record Amount Of New Debt
China vowed that this time it was serious about finally deleveraging its economy. Once again, it lied.
First, a quick tangent: as a reminder, when it comes to the global economy, increasingly more analysts are realizing that just one number truly matters: that of the global credit impulse, which as we cautioned for the first time two months ago, had recently turned negative, mostly as a result of the recent deceleration in China’s credit creation.
Then earlier this week, in a follow up report from UBS, the Swiss bank found two material developments: the reflation trade of the past year was entirely the function of Chinese credit dynamics…
… and making matters worse, China’s credit impulse had now turned decidedly negative, suggesting a similar fate for the global credit impulse.
As a result we were particularly interested in the latest set of Chinese monetary aggregates released overnight. They confirmed that China is clearly not yet ready to surrender its position as the world’s primary drive of credit growth.
On the surface, the Chinese data was bifurcated, as Chinese new bank loan issuance was lower than expected totaling just over 1 trillion yuan, lower than the CNY1.17 trillion in February and below the consensus estimate of CNY1.2 trillion, as the government has tried to contain the risks from an explosive build-up in debt and an overheating housing market, at least when it comes to the traditional banking system. Even with the “slowdown”, banks still extended the third highest loans on record for a single quarter, totaling 4.22 trillion yuan in January-March.
Loans to households surged to 797.7 billion yuan in March, according to Reuters calculations using PBOC data, accounting for 78% of all new loans in the month. That was much higher than either January or February and even the 50% of new loans in 2016. The rise likely was due to individuals increasingly turning to alternative types of loans as banks tighten rules on traditional mortgages, said Wendy Chen, an economist at Nomura in Shanghai.
“We think (the increase in short-term loans) is possibly due to attempts to circumvent strict regulations on mortgages,” said Chen. “The high loans to households reflect that property sales are still very hot, and likely shifting from top tier cities to more third or fourth tier cities.”
As Reuters observes, a surge in household lending in March also added to worries about whether authorities will be able to get the frenzied property market under control, even as cities roll out increasingly stringent curbs on home buying. While the central bank has cautiously raised interest rates on money market instruments and special short- and mid-term loans several times in recent months, most recently just hours after the Fed hiked in mid-March to avoid another spike in capital outflows and to contain debt risks and discourage speculation, it is treading cautiously to avoid hurting economic growth.
Indeed, as China’s housing market continues to overheat, more cities have implemented strict home purchase rules, with some even restricting homeowners from “flipping” or re-selling properties they have held for only a brief time.
Yet while conventional loan issuance showed a modest moderation, it was more than offset by another dramatic surge in aggregate, or Total Social Financial, which includes both bank loans as well as off-balance sheet aka “shadow” lending, which not only rocketed in March to 2.12 trillion yuan from 1.15 trillion yuan in February and a record injection in January…
… but for the first quarter, TSF reached a new record high 6.93 trillion yuan – equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. At today’s Yuan exchange rate, China’s credit creation in Q1 amounted to just over 1 trillion US dollars.
Entrusted loans, trust loans and undiscounted banker’s acceptances – together a good indicator of shadow banking activity – increased sharply in March. Entrusted loans rose CNY203.9 billion, trust loans were up CNY311.2 billion and undiscounted bankers’ acceptances gained CNY238.7 billion, according to MNI. These gains were several times larger than the increases of CNY166 billion, CNY73.2 billion and CNY17.3 billion, respectively, during the same period last year, and boosted Total Social Financing in March to CNY2.12 trillion, nearly double the February figure of CNY1.15 billion and the second highest level since March 2016.
“The increase of entrusted loans, trust loans and undiscounted banker’s acceptances was probably caused by the restrictions on lending to companies in the real-estate sector and overcapacity industries, and many could only turn to shadow banking (for financing) even though it carries a higher interest rate,” said Li Qilin, chief macro analyst at Lianxun Securities in Shenzhen.
In addition to Qilin, for most analysts, the spike in TSF financing confirms the ongoing surge in off-balance sheet lending, primarily in the largely unregulated shadow banking system, despite repeated attempts by authorities to target riskier lending in past years. Furthermore, this shadow lending surge has raised substantial doubts about the effectiveness of official efforts so far to clamp down on risks in the financial system – especially those emanating from various shadow banking intermediaries and SPVs, profiled recently in a Deutsche Bank report which cautioned that China’s entire financial system is on the edge of an “uncontrollable liquidity event”, and has prompted the central bank to inject record amounts of liquidity to keep the system stable.
But wait, there’s more.
Loans to companies totaled 368.6 billion yuan in March, less than half the amount of household lending, PBOC data showed. That is yet another ominous signal for the economy, unless firms are finding other sources of funding (which they very likely are in the shadow banking space, suggesting the money creation process is increasingly slipping away from traditional PBOC oversight.
Nomura’s Chen said that the spike in non-bank credit growth in March may have been due to corporate borrowers turning to alternative funding channels as high demand for household loans crowded them out from traditional bank loans. She was also optimistic that the recent record surge in shadow lending will moderate:
“We don’t think the strength in shadow banking activity will continue,” Chen said, adding that regulators are expected to continue slowly clamping down on the sector.
We are not so confident, as the following charts from Deutsche Bank, and associated description suggest: “There has been a sharp rise in net claims to NBFIs from banks (Figure 33). We believe this is due to rising shadow banking transactions and also arbitrage activities with funds self-circulating within the financial sector. Clearly as shown in Figure 34, small banks are key lenders to NBFIs”
Perhaps our skepticism is unwarranted: in March for the first time, the PBOC’s quarterly inspection of banks’ books included off-balance sheet wealth management products to give authorities a better sense of potential risks to the financial system. It remains to be seen if the central bank will do anything to intervene and slowdown this unprecedented surge in reliance upon shadow funding sources.
Finally, in an ominous confirmation that this glut of new credit creation is not reaching the broader economy but is getting trapped by various asset bubbles (most notably housing) M2 money supply growth hit a more than 6-month low, growing at only 10.6% y/y in March, lower than the expected 11.1% rise and down from 11.1% in February. The government has said it expects M2 to growth about about
12% this year.
On one hand, the slowdown reflects the moderately tighter policy stance by the People’s Bank of China (PBOC), but more importantly suggesting that overall economic growth is poised for a further slowdown.
Adding to worries that the PBOC could cause a sharp imbalance in Chinese liquidity as it attempts to trek a fine line between injecting record amounts of loans on one hand, while gently tightening on the other, is that alone with bumping up some interest rates, the PBOC withdrew 705 billion yuan from the financial system through its open market operations in the first 12 weeks of this year, a 1.1 trillion yuan negative swing from a year ago, ING estimates. That said, analysts do not expect a full-blown policy rate increase this year, which could risk a knock to economic growth ahead of a key party meeting in the autumn when a new generation of leaders will be picked.
The central government has made containing financial risks a top priority this year, calling for vigilance against asset bubbles and urging companies to reduce leverage. But it has still targeted economic growth of around 6.5% this year, which will require the copious amounts of new credit that is continues to inject month after month, increasingly so via the unregulated shadow banking system.
The one silver lining: most of China’s “Big Five” banks reported last month that bad loan ratios were stabilizing, likely giving policymakers more confidence that risks from bank lending are under control, although Chinese banks, which are mostly state-owned, are notorious for misrepresenting the true state of their balance sheet. Indeed, many analysts believe Chinese NPLs are far higher than banks admit, and some China watchers warn a debt crisis may be inevitable if loan and money supply growth continues to sharply outpace the rate of economic expansion for the foreseeable future (as shown in the chart below) and that a Minsky Moment may be the inevitable outcome, with the only question being “when?“
- North Korea TV Livestream Of "Day Of The Sun" Celebrations
With the world’s attention falling squarely on North Korea, which celebrates its “Day of the sun” on Saturday – the country’s most important holiday – during which many speculate it may conduct a nuclear test having previously said it is “up for war” following a warning from the US that such a test would most likely like to military strikes, below find a live video feed from the state-run Korean Central Television (KCTV) which is live streaming today’s event.
While few details about today’s schedule have been disclosed, a military parade is expected to take place later in the day.
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