• Major Developments Strongly Suggest The End Of Unipolar World Order

  Authored by Federico Pieraccini via The Strategic Culture Foundation,

  With Moon Jae-In’s victory in South Korea, the period of tension on the Korean Peninsula is likely to end. With the rise to power of the new president, South Korea can expect a sharp decline in hostilities with North Korea as well as a resumption of dialogue with China.

  An expected and highly anticipated victory was confirmed in South Korea on May 9, with candidate Moon winning South Korea's presidential race over his rivals Hong Joon-pyo (Liberty Korea Party) and Ahn Cheol-soo (People's Party). After the resignation and arrest of former President Park Geun-hye over an immense corruption scandal, public opinion turned away from her party in favour of the main opposition representative, a center-left lawyer specializing in humanitarian issues.

  Moon spent several years in the opposition party advocating for greater cooperation in the region and dialogue with Pyongyang as well as with Beijing, representing quite a contrast to Guen-Hye's pro-Americanism. Along the lines of Duterte in the Philippines, Moon intends to resume dialogue with all partners in order not to limit his options in the international arena. Such an approach reflects the essence of the multipolar world order: cooperation and dialogue with all partners in order to achieve a win-win outcome.

  Looking at the situation in the region, the victory of a politician who seems to have every intention of negotiating an agreement rather than supporting military escalation seems to provide for a hopeful future for China and her neighbors. The level of cooperation and trade between South Korea and China is fundamental to the economy of both countries, so a return to the negotiating table over the issues surrounding the deployment of THAAD are a hopeful sign that the business communities of China and South Korea value deeply.

  Duterte Strategy

  The United States is again faced with a Filipino-like scenario. Historically, South Korea and the Philippines have always been two fundamental US allies, more concerned with Washington's interests than their own national political agendas. Over the last few decades, both countries have been governed by politicians careful not to upset the sensibilities of US policy makers. South Korea and the Philippines are at the heart of the political strategy Obama called the Asian Pivot, more explicitly, a policy aimed at containing China and its expansion as a regional hegemon in Asia.

  Following the Trump administration's focus and threats against North Korea in recent weeks, war has seemed more likely on the peninsula. But with Moon’s victory, it has probably been permanently excluded as a possibility. In several interviews weeks prior to the election, Moon stated that a war between the US and the North Korea would constitute an impossible burden for South Korea to sustain. Moon is very realistic about the conventional deterrence that North Korea possesses, maybe even more so than the nuclear development.

  Even though Trump has said he is willing to meet with Kim Jong-un, most of his decisions seem to depend on the hawks surrounding him. Looking at the first hundred days of the Trump administration shows a remarkable departure from electoral promises, with the influence of generals he nominated, leading to various escalations in the hot regions of the world. Bottom line is, Trump’s intentions and words matter to a certain extent as US posture in the region seems to be guided by military generals and inner circle family members. Fortunately for the world, the tentative moves in Syria and Afghanistan have not amounted to much, such as with the bombing of the Shayrat airbase or the show in Afghanistan involving the MOAB.

  THAAD to Divide

  The deployment of the THAAD system continues as part of a belligerent attitude towards North Korea. The strong and firm rhetoric of Pyongyang is justified and not surprising given the context and the threats facing the country in wake of US provocations. The deployment of THAAD has had consequences, such as increasing tensions between South Korea and China. Moon’s victory goes contrary to the goal of the US policy-makers in Washington to isolate China. In this light, the hurried deployment of THAAD before the South Korean election obliged the probable winner, Moon, to be faced with an accomplished fact. This first step makes it clear what Washington's attitude towards the new South Korean president will be.

  The THAAD has also been deployed to antagonize the most frustrating point between Seoul and Beijing: North Korea. The measure was intentionally taken by Washington to pressure Seoul. THAAD has all the characteristics of a Trojan horse. Placed to reassure an ally (Seoul) against a fake-threat (Pyongyang), it becomes a weapon against China that puts in place a system, only a few hundred miles from its border, potentially able to affect China's strategic nuclear forces. The US military accelerated the deployment of THAAD in the knowledge that this would immediately place the future president in a difficult situation, in that removing THAAD would not be easy in the face of huge American pressure. This may perhaps be Moon's first challenge; to use the dismantling of THAAD as a means of exchange with Beijing to return to a normal relationship of co-operation. If Beijing wants to believe Moon's goodwill in eliminating the THAAD system, it may begin to loosen some of the measures imposed on Seoul as retaliation for the deployment of the US system.

  Multipolar world to the rescue

  In this scenario, one must not make the mistake of believing that Moon's victory means that a major US ally will cease its support for Washington. As always, in this era of transition from a unipolar to a multipolar world, the pressure that Washington will decide to apply to South Korea will affect the nature of the US-ROK alliance. The United States will have to abandon the warlike posture so dear to Mattis, McMaster and Admiral Harris (the commander of the US Pacific Fleet). In this Tillerson as a realist might be the right man at the right place to negotiate with Moon. Potentially it could be possible to solve the problem in whole by dealing with North Korea, although that seems unlikely given the pressures the deep state will put on the administration to continue using North Korea to create instability in the region.

  This is why much of the region's future will remain subordinated to potential negotiations between Beijing, Pyongyang and Seoul on the Korean peninsula, especially after Moon's victory. If these three nations succeed in finding common ground on which to set upon a path of reconciliation, the region will benefit greatly. Of course, in this context, the one most likely to lose influence is the United States. If Washington wants to remain relevant, it should abandon the Chinese containment plan through the Korean peninsula by exploiting North Korean problems. If they instead decide to try to sabotage any peace agreement in the peninsula, this will only push Seoul and Pyongyang even closer together, to Beijing's great pleasure.

  Recent years have seen a mounting showdown between the old world order configuration based on chaos and destruction and led by Washington, and the new multipolar order that focuses on win-win opportunities, dialogue and sincere cooperation. If Washington decides not to accept the new rules of the game, where it can no longer dictate the law, it will end up producing more damage against itself than any foreign country could actually do, in actual fact accelerating the formation of the multipolar world and putting to bed the unipolar world order for good.

  

  

  

• A Bumper Under that Silver Elevator, Report 14 May, 2017

  If you can believe the screaming headline, one of the gurus behind one of the gold newsletters is going all-in to gold, buying a million dollars of mining shares. If (1) gold is set to explode to the upside, and (2) mining shares are geared to the gold price, then he stands to get seriously rich(er).

  We are not mining experts, but we will address (2) by saying that mining shares only go up if the input costs don’t go up as much as the price of gold. And if the company keeps efficiency up, and costs down. And if local tax authorities don’t get greedy. And if mine labor unions don’t get violent, environmental regulators don’t make expensive demands, etc. And if the company finds new ore bodies at the same rate it depletes them.

  Here is a graph showing the price of the VanEck Vectors Gold Miners ETF (GDX) against the price of gold. We have plotted both price as a percentage of the start price to put them both on the same scale.

  GDX vs Gold
  

  You can see the problem. The price of gold from late May 2006 through present. In five years, the price of gold rose to 288% of its starting level. GDX was more than 100% behind, at only 170%. Note that the GDX is more than 40% down from its level in 2006. For comparison, the price of gold is just under double over the same period.

  If this is gearing, then it looks like the gear box was bolted on backwards.

  To bet big on gold mining shares now, your bet includes another conditional: (3) if the gearing has since been fixed…

  Anyways, this is not really our wheelhouse. We focus our commentary on (1). Did something change in the market, that will drive the price much higher? Before that can happen, we would have to see something happen to put a bumper under that falling silver elevator.

  Below is the only true look at the supply and demand fundamental of the metals, but first, the price and ratio charts.

  The Prices of Gold and Silver
  

  Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It began the week moving up, but then reversed and ended lower.

  Last week, we said:

  “If it breaks above 76, then the next resistance looks to be 80.”

  It did not break 76. It closed Monday at 75.7, but ended the week below 75.

  The Ratio of the Gold Price to the Silver Price
  

  For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

  Here is the gold graph.

  The Gold Basis and Cobasis and the Dollar Price
  

  Note that the June contract has just a touch of backwardation, with the cobasis now at + 0.01%. Back in early 2013, we dubbed this new normal behavior, when each contract would go into backwardation before it expired, temporary backwardation. That is all this is, and not a very impressive specimen either.

  Yes, it is true that the scarcity of gold has been rising for about a month (look at the red line, the cobasis). However, that corresponds to the rise in the price of the dollar (which is the inverse of what most people measure, the price of gold in dollars). On April 12, the dollar was 24.18 milligrams gold, corresponding to a price of gold at $1286. The cobasis—our measure of scarcity—was at -0.81%. Since then, it has been a run up on the price of the dollar (which most people perceive as a run down in the price of gold), to 25.52mg gold (which people generally think of as a price of gold of $1,219).

  When we see such a clear correlation between the price of the dollar and the cobasis, we know that the move is just speculators repositioning (in this case, obviously selling). The more the price of gold is down, the more speculators liquidate their futures, the scarcer the metal becomes.

  Our calculated fundamental closed the week up $3, to $1,254. While this may be welcome news for gold speculators after a few weeks when it fell, it’s hardly the stuff of making million-dollar bets.

  Far be it from us to get in the way, when there’s serious money to be made. It’s a (more or less) free market. Where there’s an opportunity, people will take it. We refer, of course, to the newsletter hawkers and their explosive upside call. We assume this is a lucrative business.

  However, unlike the opportunity to sell newsletters to gold speculators who don’t know what most newsletters have been promising over the last 6 years, the opportunity to bet on a gold price increase looks rather less likely, at the moment.

  Now let’s look at silver.

  The Silver Basis and Cobasis and the Dollar Price
  

  Silver does not yet show any backwardation, though it’s close at -0.03%.

  However, the sharp and sustained rise of the cobasis is notable—along with the sharp and sustained rise in the dollar. Measured in silver, the dollar has risen from 1.68 grams of silver to 1.92 grams earlier this week. That’s a big run up (i.e. run down in the price of silver as popularly perceived).

  We have been talking about an ongoing flush in the silver speculators. The price fell through Wednesday, then rallied sharply on Thursday and Friday. Perhaps that elevator has found a rubber bumper?

  Significantly, our calculated fundamental price rose a buck this week. From around $15 last week, it’s now $16.

  We will end on an amusing note. Last week, we said:

  “We saw a technical analysis trader write a note this weekend. He said he plans to short silver on Monday. When the technicals and then fundamentals align, that can make for an interesting week.”

  Assuming he shorted it early on Monday morning, he might have top-ticked it at $16.40. On Tuesday, he could have closed at $16.05, for a gain of 2.1%. There has to be an easier way to earn a few bucks (and we never recommend naked-shorting gold or silver).

  Keith will be speaking at the Metal Writers Conference in Vancouver, at the end of the month. And at the Mining Investment Europe event in Frankfurt in mid-June.

  © 2017 Monetary Metals

  

• Worried About 'WannaCry'? You Should Have Listened To Julian Assange

  Authored by Adam Currie via TheDuran.com,

  A widespread computer virus attack known as ‘WannaCry’ has been compromising computers with obsolete operating systems across the world. This should be the opening sentence of just about every article on this subject, but unfortunately it is not.

  The virus does not attack modern computer operating systems, it is designed to attack the Windows XP operating system that is so old, it was likely used in offices in the World Trade Center prior to September 11 2001, when the buildings collapsed. Windows XP was first released on 25 August, 2001.

  Furthermore, early vulnerabilities in modern Windows systems were almost instantly patched up by Microsoft as per the fact that such operating systems are constantly updated.

  The obsolete XP system is simply out of the loop.

  A child born on the release date of Windows XP is now on the verge of his or her 17th birthday. Feeling old yet?

  The fact of the matter is that governments and businesses around the world should not only feel old, they should feel humiliated and disgraced.

  With the amount of money governments tax individuals and private entities, it is beyond belief that government organisations ranging from some computers in the Russian Interior Ministry to virtually all computers in Britain’s National Health Service, should be using an operating system so obsolete that its manufacturer, Microsoft, no longer supports it and hasn’t done for some time.

  Perhaps in order to save money, governments should also use prop-planes from the 1940s to conduct recon missions?

  The scathing reality of this attack is that Julian Assange warned both private and public sectors to be on guard against known vulnerabilities in such systems, vulnerabilities Wikileaks helped to expose. Assange even offered to help companies to get their digital security up to date.

  The fact that Assange’s plea fell on deaf ears must bring further shame to all those impacted by the ‘WannaCry’ attacks who refused to listen to Assange and get with the times.

  As it is, the technology used in the hacking/malware incident was created by America’s National Security Agency (NSA).

  World famous whistle-blower Edward Snowden had something to say about that,

  If NSA builds a weapon to attack Windows XP—which Microsoft refuses to patches—and it falls into enemy hands, should NSA write a patch? https://t.co/TUTtmc2aU9

  — Edward Snowden (@Snowden) May 12, 2017

  //platform.twitter.com/widgets.js

  The fact is that, if only governments and mega-corporations took precautions to ensure actual safety measures were in place, rather than engaging in bogus fear-mongering in order to conceal their own incompetence and lack of modern technology, the people that such bodies are supposed to protect would be safe rather than misled and exposed to threats.

  The blame for today’s attack can and should be equally shared by the hackers themselves and by those who patently ignored the warnings of Julian Assange, who advised the wider world to get clever, get secure and get modern upon the release of Vault 7 by Wikileaks.

  When there is a wolf at your door, it is unwise to blame the person pointing out the presence of the hungry wolf. Those who attack Julian Assange for pointing out the wolf of un-secured computer systems are doing just that.

  In real democracies, people would be brought before tribunals to justify their supreme dereliction of duty. In the apathetic corporatist liberal west, the story will be swept under the rug.

  

  

• "Peak China": Chinese Data Misses Across The Board As Housing Bubble Returns

  Following months of warnings that China’s economy is slowing down as a result of not only a collapse in China’s credit impulse but also tighter monetary conditions, as well as rolling over loan growth which has pressured both CPI and PPI – i.e., the global “reflation trade” – as the following chart from Bloomberg’s David Ingels shows…

  

  … and culminating over the weekend with a warning in no uncertain terms from Citi, which said that at least four key economic indicators are “starting to wave red flags” among which:

  • The Markit PMI is starting to turn over
  • China’s Inflation Surprise Index – a leading indicator to global inflation metric – has posted a recent sharp drop
  • China’s import trade has likewise tumbled after surging recently
  • Chinese Iron Ore imports into Qingado port have plunged

  

  … moments ago China’s National Bureau of Statistics validated the mounting fears, when it reported misses across all key economic categories for the month of April, as follows:

  • Retail Sales 10.7% Y/Y, Exp. 10.8%, Last 10.9%
  • Fixed Asset Investment 8.9% Y/Y, Exp. 9.1%, Last 9.2%
  • Industrial Output 6.5% Y/Y, Exp. 7.0%, Last 7.6%
  • Industrial Production YTD 6.7% Y/Y, Exp. 6.9%, Last 6.8%

  

  Additionally, confirming that China is backsliding into its old, “polluting, excess industrial capacity ways, China’s coal output rose to 294.5m tons last month, or up 9.9% Y/Y despite China’s so-called production curbs for “dirty industries”, even as oil processing declined by 0.6% Y/Y while out output fell 3.7% Y/Y, confirming that more pain may be in store for OPEC as Chinese demand continues to wane, forcing OPEC to cut even more output. In a sliver of silver lining, the NBS also reported that April power output rose +5.4% to 476.7b kwh while natgas output rose +15% to 12.2b cubic meters.

  Finally, in yet another indication that Chinese bubble creation and capital misallocation is back front and center, the NBS also reported that new property construction in April surged 482MM square meters, or +11.1%Y/Y for the Jan-April YTD period, while April home sales jumped 7.7% Y/Y.

  Bottom line: the economy is once again slowing down as China’s unprecedented excess liquidity is once again focusing on blowing bubbles, whether in old, inefficient industries or more disturbingly, housing.

  It also means that the PBOC is once again trapped, as any attempts to ease monetary conditions will result in a blow off top in China’s housing bubble, its third for the past 4 years, which also risks yet another housing hard-landing, wiping out trillions in “household net worth” for China’s citizens.

  

  

• America Doesn't Need Global Perpetual War To Prove We Love Liberty

  Authored by Joey Clark via TheAntiMedia.org,

  I can forgive a man who loses his temper, but to lose one’s temperance lock, stock, and barrel? That is a damnable offense. Without a sense of moderation, even the most courageous and prudent man will fail in his quest for justice and may even become that which he wishes to destroy.

  Yet, “moderation” has come to mean something wholly different than temperance in American politics. Rather than restraint, American moderates insist our shared classically liberal ideals call for the prodigal spending of our wealth, as well as bellicose and bloody actions abroad — not only on behalf of the American people but also on behalf of the liberty of all people on the face of the earth.

  'Don' McCain

  “Human rights exist above the state and beyond history. They cannot be rescinded by one government any more than they can be granted by another. They inhabit the human heart, and from there, though they may be abridged, they can never be extinguished,” writes Senator John McCain in an op-ed for the New York Times, wherein he chastises Secretary of State Rex Tillerson for suggesting the United States government cannot always act simply with its ideals and values in mind.

  That the U.S. must show restraint — a sort of realist, “first do no harm” foreign policy in advancing its ideals with the many diverse nations around the globe – McCain considers to be a type of retreat of American values that can only lead the oppressed peoples of the world to despair that America is no longer their champion.

  “Our values are our strength and greatest treasure,” McCain writes. “We are distinguished from other countries because we are not made from a land or tribe or particular race or creed, but from an ideal that liberty is the inalienable right of mankind and in accord with nature and nature’s Creator.”

  Yes, John, America purports to stand for universal human rights and the liberty of all, but does this love of liberty require us to threaten and actually wage war as long as there are monsters abroad to destroy?

  Does our zeal for our libertarian ideals really behoove us to be forever tilting at windmills? Or, could this Quixotic quest actually be counterproductive to spreading the seed of liberty around the world?

  Could the love of power and the constant use of fear and force to advance liberty, in fact, pervert the cause of liberty?

  The Perversions of War

  Aggressive wars, even wars prosecuted in the name of liberty, have a way of sowing discord and devastation, both abroad and at home. The loss of life, the wasting of wealth, the destruction of social institutions, and the corroding of the commercial, liberal, limited government spirit — these are only some of the effects of war.

  War should be a last resort not only because of its costs in terms of blood and treasure but also because war always requires the sacrifice of liberty, e.g. today’s intrusive surveillance state. Furthermore, we should be wary of liberty becoming synonymous with American military intervention and global rule (even under the imprimatur of the “international liberal order.”)

  Are we truly prepared to say the bloody military misadventures in Vietnam, Iraq, Libya, and beyond represent America’s best ideals? Or, were these wars for democracy and human rights really just another episode of Americans, as Aldous Huxley observed of politics long ago, exercising their will to power dressed up by political gentlemen in the noble toga of American ideals?

  Changing Hearts and Minds

  No, liberty needs much more than tough talk and the toppling of tyrants to blossom. We must recognize that the spontaneous order of a free society cannot be built by war or centrally planned by Washington. Liberty must first occur in the hearts and minds of foreign peoples themselves before they are encouraged to rebel.

  As John Adams noted of the American revolution:

  “The Revolution was effected before the War commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments of their duties and obligations …This radical change in the principles, opinions, sentiments, and affections of the people, was the real American Revolution.”

  Whether it be Russia or Saudi Arabia, North Korea or Syria or China, many tyrannical governments operate based on cultures going back centuries. It will be largely up to their own people to effect the change needed in their cultures and political institutions. America’s role in this struggle must be to serve as an example of a free society, as well as a well-wishing persuader. How tragic it would be to see those with a revolutionary zeal for liberty, in losing their temperance, give into an imperial mindset and use of imperial means.

  Liberty has never been something to be imposed by immense, let alone imperial power. We would be foolish to think simply cutting the head off the snake (or threatening to do so) will usher in new Jeffersons, Franklins, and Paines in foreign lands. No, such societies, when thrown into the maelstrom of war, tend not to be incubators for liberty, but rather, fertile ground for vengeful and power-hungry tyrants in waiting. Accordingly, we must be patient in our efforts to bring liberty to all.

  As Rex Tillerson said to Marco Rubio in his confirmation hearing to be secretary of state regarding the Kingdom of Saudi Arabia:

  “I share all the same values that you share and want the same things for people the world over in terms of freedoms. But, I’m also clear-eyed and realistic about dealing in cultures—these are centuries long cultures, cultural differences. It doesn’t mean we can’t affect them and affect them to change. In fact, over the many, many years that I’ve been traveling to the Kingdom, although the pace has been slow, slower than any of us wish, there is a change underway in the Kingdom of Saudi Arabia. How and if they ever arrive at the same value system we have, I can’t predict that….what I wouldn’t want to do is to take some kind of a precipitous action that suddenly causes the leadership in the Kingdom of Saudi Arabia to have to interrupt that.”

  Dare I say, what a temperate stance by the now Secretary of State Rex Tillerson. If the United States acts too brutishly on the world stage, we may very well experience an unwanted, illiberal backlash. In the future, it may serve Tillerson well, at least for the sake of eloquence, to recite a well-known presidential sentiment to neoconservatives such as McCain and Rubio, that “Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.”

  Beware the American Colossus

  In the meantime, Senator McCain and his ilk should be wary. If the United States government continues as it does today, bestriding the narrow world like a colossus, it will most likely be stabbed through the heart by daggers inscribed with the nation’s founding principles, the words “life, liberty, and the pursuit of happiness” shedding salty tears of blood from sullied steel. I worry an American Colossus — full of dissonance, full of sound and fury, full of fear and vaunting — will not inspire a love of liberty but a fear and resentment of America’s power.

  Indeed, Senator McCain, we can see the world for what it is and then seek to make it better, but we must first keep our temperate wits about us, else our courage, prudence, and passion for justice and liberty for all may very well turn us into the monsters we seek to destroy.

  

  

• Microsoft Slams NSA For Letting Its Hacking Tools Cause Global Malware Epidemic

  In early April, when we reported that the hacker group known as the Shadow Brokers had released the password to NSA’s “Top Secret Arsenal” of tools that allowed anyone to “back door” into virtually any computer system (in what it claimed was a protest of Trump’s betrayal), few people noticed. On Friday, however, the entire world did notice when an unknown group of hackers reportedly used the same set of NSA-created tools to launch a global malware cyberattack using the WannaCry ransomware virus, holding at least 200,000 computer systems around the globe hostage, and demanding a payment of $300 in bitcoin to unlock infected computers, or else threatening to wipe out the contents of the host machine.

  The crippling, global attack prompted Europol to warn that Monday could be a dark day for an unknown number of Windows XP-based systems which could simply fail to start, leading to massive productivity losses around the globe, while others predicted that the spread of the worm could accelerate in the coming days once the hackers bypass the temporary measure that prevented further distribution of the worm over the weekend.

  Meanwhile, on Sunday afternoon, Microsoft itself got involved in the global hacking scandal and criticized the NSA for its role in spreading the WannaCry epidemic; specifically the tech giant urged governments to use and store their cyber warfare tools responsibly.

  “We have seen vulnerabilities stored by the CIA show up on WikiLeaks, and now this vulnerability stolen from the NSA has affected customers around the world,” Microsoft President and Chief Legal Officer Brad Smith wrote in a blog post this afternoon. “This attack provides yet another example of why the stockpiling of vulnerabilities by governments is such a problem.”

  Ahead of the Shadow Brokers’ leak of the NSA hacking tools, Microsoft had released a patch against the vulnerability one month prior, on March 14, which indicates that the company was notified by the US intelligence agency that their tools using that particular backdoor had been compromised. However, older, unsupported operating systems such as Windows XP were not included in the update, in addition to millions of used who do not update their systems regularly. As a result, the WannaCry malware infected more than 200,000 unpatched computers, and was threatening to spread to countless more as the hacker further weaponized their virus.

  Needless to say, Microsoft was not happy.

  “Repeatedly, exploits in the hands of governments have leaked into the public domain and caused widespread damage” Smith wrote, adding that an “an equivalent scenario with conventional weapons would be the U.S. military having some of its Tomahawk missiles stolen. And this most recent attack represents a completely unintended but disconcerting link between the two most serious forms of cybersecurity threats in the world today – nation-state action and organized criminal action.”

  Microsoft’s Chief Legal Officer also said the latest attack should serve as a “wake-up call” to world governments who should urgently establish a common set of strategies to deal with cyber threats.

  “The governments of the world should treat this attack as a wake-up call. They need to take a different approach and adhere in cyberspace to the same rules applied to weapons in the physical world,” Smith wrote. “We need governments to consider the damage to civilians that comes from hoarding these vulnerabilities and the use of these exploits.”

  Smith also acknowledged Microsoft’s responsibility for failing to prevent the attack by not notifying all customers to install the patch on time, but noted that cybersecurity is a “shared responsibility” between tech companies and customers.

  “We take every single cyberattack on a Windows system seriously, and we’ve been working around the clock since Friday to help all our customers who have been affected by this incident,” MSFT’s President added.

  Meanwhile, a global manhunt is currently underway to determine the source of the cyberattack. According to the European Cybercrime Centre, Europol is “working closely” with countries affected by the blitz to identify the culprits. Microsoft too is contributing to the investigation. “Working through our Microsoft Threat Intelligence Center (MSTIC) and Digital Crimes Unit, we’ll also share what we learn with law enforcement agencies, governments, and other customers around the world,” Smith wrote.

  As we reported earlier, the narrative is already set to determine that the culprits were most likely Russians.

  The full blog post by the Microsoft President and Chief Legal Officer can be found here.

  

  

• Bharara Joins The Trump "Resistance": Asks If Any Public Servants Will Dare Say No To The President

  It appears the so-called 'resistance' is coalescing around a number of fired-by-Trump formerly powerful Obama administration officials desperate to maintain the tyrannical Trump narrative. The latest is infamous non-prosecutor of Wall Street's worst Preet Bharara who questions: Are there still public servants who are prepared to say no to the president?

  

   

  The U.S. attorney for the Southern District of New York from 2009 until he was fired by Trump this March takes to The Washington Post's echo chamber to pen an opinion piece proclaiming Trump's actions over Comey's firing (his old boss and friend) as damaging to faith in the rule of law, suggesting some ideas to fix his tyrannical ways…

  He begins with an anecdote to set the scene for historical precedent

  The most dramatic hearing I helped to arrange as chief counsel to a Senate subcommittee took place 10 years ago Monday, when James B. Comey, then deputy attorney general in the George W. Bush administration, described how he and FBI Director Robert Mueller intervened at the hospital bedside of Attorney General John Ashcroft.

   

  The encounter occurred in 2004, after White House Chief of Staff Andrew H. Card Jr. and White House Counsel Alberto R. Gonzales tried to overrule Comey’s and Mueller’s legal objection to a secret terrorist surveillance program.

   

  When the White House nonetheless sought the ailing Ashcroft’s blessing to proceed, Comey prepared to resign. Ultimately, Comey and Mueller prevailed.

  And then explains how terrible things have become…

  Jim Comey was once my boss and remains my friend. I know that many people are mad at him. He has at different times become a cause for people’s frustration and anger on both sides of the aisle. Some of those people may have a point. But on this unsettling anniversary of that testimony, I am proud to know a man who had the courage to say no to a president.

   

  in the tumult of this time, the question whose answer we should perhaps fear the most is the one evoked by that showdown: Are there still public servants who are prepared to say no to the president?

  So having raised that question spuriously, let's go back to yet another instance of an event in which a Republican White House did something the so-called progressive left did not appreciate…

  Now, as the country once again wonders whether justice can be nonpolitical and whether its leaders understand the most basic principles of prosecutorial independence and the rule of law, I recall yet another firestorm that erupted 10 years ago over the abrupt and poorly explained firing of top Justice Department officials in the midst of sensitive investigations.

   

  The 2007 affair was not Watergate, the more popular parallel invoked lately, but the lessons of that spring, after the Bush administration inexplicably fired more than eight of its own U.S. attorneys, are worth recalling.

   

  When the actions became public, people suspected political interference and obstruction. Democrats were the most vocal, but some Republicans asked questions, too. The uproar intensified as it became clear that the initial explanations were mere pretext, and the White House couldn’t keep its story straight. Public confidence ebbed, and Congress began to investigate.

   

  In response, the Senate launched a bipartisan (yes, bipartisan) investigation into those firings and the politicization of the Justice Department. Early on, the then-deputy attorney general — Comey was gone by then — looked senators in the eye and said the U.S. attorneys were fired for cause; although such appointees certainly serve at will, this assertion turned out to be demonstrably false. We learned that the U.S. attorney in New Mexico, David C. Iglesias, was fired soon after receiving an improper call from Republican Sen. Pete V. Domenici pushing him to bring political corruption cases before the election. We learned that Justice Department officials in Washington had improperly applied a conservative ideological litmus test to attorneys seeking career positions, to immigration judges and even to the hiring of interns.

   

  Ultimately, amid the drumbeat of revelations, every top leader of the department stepped down under a cloud. Finally, Gonzales himself resigned. Strict protocols were put in place severely limiting White House contacts with Justice officials on criminal matters. The blow to the morale and reputation of the department was incalculable.

  First things first, may we suggest that "the country" for which you speak of is not busily wondering "whether justice can be nonpolitical" – instead they are busily wondering where the next paycheck is coming from, how they will pay soaring healthcare costs and put a shelter over their families heads.. but of course, thats' not the Washington narrative-du-jour. Which brings us back to today…

  For me, the past week has been deja vu all over again. To restore faith in the rule of law, three obvious things must happen:

   

  First, we need a truly bipartisan investigation in Congress. That means no partisan nonsense — just a commitment to finding the facts, whatever they may be, proving (or disproving) Russian interference in our election and anything related. Congress is a check and a balance, and never more important than when a bullying chief executive used to his own way seems not to remember the co-equal status of the other two branches.

   

  Second, the new FBI director must be apolitical and sensitive to the law-enforcement mission, not someone with a long record of reflexive partisanship or commentary on the very investigative issues that will come before the bureau. Unfortunately, some of the candidates paraded by cameras this past weekend reality-show style fall into that category. I can’t think of anything worse for FBI morale, for truth-finding or for public trust. More than ever the FBI needs a strong and stabilizing hand, which means somebody who has not spent most of his or her career pandering for votes, groveling for cash or putting party over principle.

   

  Finally, I join in the common-sense call for an independent and uncompromised special counsel to oversee the Russia investigation. Given the manner of Comey’s firing and the pretextual reasons proffered for it, there is no other way. My former colleague, now-Deputy Attorney General Rod J. Rosenstein, is a respected career prosecutor but has mostly deserved the doubts he generated with his peculiar press-release-style memo purporting to explain Comey’s sudden sacking. He can still fix it. The move would not only ensure the independence of the investigation, but also provide evidence of Rosenstein’s own independence.

  Bharara ends strong with some 'constitutional'-sounding rhetoric that leaves one questioning everything about American life if Trump is left to run wild over 'law and order' – like trying to enforce immigration laws, trade agreements, and

  History will judge this moment. It’s not too late to get it right, and justice demands it.

  Chilling words of self-reinforcing terror.

  *  *  *

  As a reminder, here are some recent thoughts on Mr Bharara from respected journalist Jesse Eisenger – who is not afraid to throw a few punches of truthiness about the former prosecutor…

  After his election in 1968, President Richard Nixon asked Robert Morgenthau, the US Attorney for the Southern District of New York, to resign. Morgenthau refused to leave voluntarily, saying it degraded the office to treat it as a patronage position.

  Nixon’s move precipitated a political crisis. The president named a replacement. Powerful politicians lined up to support Morgenthau. Morgenthau had taken on mobsters and power brokers. He had repeatedly prosecuted Roy Cohn, the sleazy New York lawyer who had been Senator Joe McCarthy’s right-hand man. (One of Cohn’s clients and protégés was a young New York City real estate developer named Donald Trump.) When Cohn complained that Morgenthau had a vendetta against him, Morgenthau replied, “A man is not immune from prosecution merely because a United States Attorney happens not to like him.”

  Morgenthau carried that confrontational attitude to the world of business. He pioneered the Southern District’s approach to corporate crime. When his prosecutors took on corporate fraud, they did not reach settlements that called for fines, the current fashion these days. They filed criminal charges against the executives responsible.

  Before Morgenthau, the Department of Justice focused on two-bit corporate misdeeds—Ponzi schemes and boiler room operations. Morgenthau changed that. His prosecutors went after CEOs and their enablers—the accountants and lawyers who abetted the frauds or looked the other way. “How do you justify prosecuting a nineteen-year old who sells drugs on a street corner when you say it’s too complicated to go after the people who move the money?” he once asked.

  Morgenthau’s years as United States Attorney were followed by political success. He was elected New York County District Attorney in 1974, the first of seven consecutive terms for that office.

  There are parallels between Morgenthau, and Preet Bharara, the U.S. attorney for the Southern District who was fired by President Trump this weekend.

  Like Morgenthau, the 48-year old Bharara leaves the office of US Attorney for the Southern District celebrated for taking on corrupt and powerful politicians. Bharara prosecuted two of the infamous “three men in a room” who ran New York state: Sheldon Silver, the Democratic speaker of the assembly and Dean Skelos, the Republican Senate majority leader.

  He won convictions of a startling array of local politicians, carrying on the work of the Moreland Commission, an ethics inquiry created and then dismissed by New York’s Gov. Andrew Cuomo. (This weekend, Bharara cryptically tweeted that “I know what the Moreland Commission must have felt like,” a suggestion that he was fired as he was pursuing cases pointed at Trump or his allies.)

  But the record shows that Bharara was much less aggressive when it came to confronting Wall Street’s misdeeds.

  President Obama appointed Bharara in 2009, amid the wreckage of the worst financial crisis since the Great Depression. He inherited ongoing investigations into the collapse, including a probe against Lehman Brothers.

  He also inherited something he and his young charges found more alluring: insider-trading cases against hedge fund managers. His office focused obsessively on those. At one point, the Southern District racked up a record of 85-0 in those cases. (Appeals courts would later throw out two prominent convictions, infuriating him and dealing blows to several other cases.)

  Hedge funds are safer targets. The firms aren’t enmeshed in the global financial markets in the way that giant banks are. Insider trading cases are relatively easy to win and don’t address systemic abuses that helped bring down the financial system.

  Even there his record was more mixed than is popularly understood. As Sheelah Kolhatkar demonstrates in her propulsive and riveting “Black Edge,” when it came to bringing his biggest whale to justice, Steve Cohen of SAC Capital, the Southern District blinked. They did not charge him, only securing a guilty plea from his firm.

  Present and former prosecutors say Bharara did not give much emphasis to investigations arising from the financial meltdown, an approach shared by his boss, Attorney General Eric Holder. Justice Department insiders say many of those inquiries withered not because they were unpromising, but because they had little support.

  Bharara missed an opportunity by not bringing any significant criminal charges against individuals in the wake of the collapses of Lehman, investment bank Merrill Lynch, the insurer AIG, the mortgage securities and collateralized debt obligation businesses, or the myriad public misrepresentations from bank CEOs about their finances.

  Bharara and senior officials in Washington argue that there were no criminal cases to file after the 2008 crisis. But the U.S. attorney’s office in Manhattan did pursue significant civil cases against the banks for their mortgage activities, cases that had to proove misconduct by the “preponderance of the evidence.” And DOJ did win guilty pleas from the banks themselves, an indication that prosecutors might have been able to charge individuals for their part in crimes their institutions had acknowledged. Academics who studied those years, including Columbia’s Tomasz Piskorski and James Witkin and Chicago’s Amit Seru found widespread patterns of fraud in the mortgage business.

  The exception makes this failure all the more puzzling. As I detailed in 2014, Bharara’s office brought one case for misconduct during the financial crisis — against a mid-level banker. Prosecutors charged Kareem Serageldin of Credit Suisse with overseeing traders who knowingly misrepresented the value of mortgage securities. Serageldin pleaded guilty and went to prison.

  Serageldin’s colleagues in the industry and others familiar with Credit Suisse found it hard to believe that he was the only person involved in that particular fraud.

  Bharara’s reluctance to pursue senior executives was seen in other investigations of big banks. His office wrested a $1.7 billion fine from JPMorgan Chase over its complicity in the Bernie Madoff Ponzi scheme, but it brought no charges against individual bankers.

  One odd aspect of his tenure was the Southern District’s willingness to defer to other jurisdictions when it came to Wall Street cases.

  Historically, the SDNY has been the leading enforcers of securities laws, nicknamed the “sovereign district” for its propensity to grab corporate fraud cases from elsewhere on the flimsiest of jurisdictional pretexts. Under Bharara, the southern district let other U.S. attorneys claim investigations into residential mortgage-backed securities, the instruments at the heart of the financial crisis. Those other offices were not nearly as versed in complex financial cases as their colleagues in Manhattan. In addition, Bharara’s office ceded post-financial crisis investigations into foreign exchange and global interest rate manipulation to prosecutors working from the Justice Department’s headquarters.

  Like Morgenthau, Bharara was a prominent figure in the New York landscape, given to well-orchestrated press conferences and memorable sound bites. Like Morgenthau, he did not leave office quietly, even thought the president has a longstanding right to name his own U.S. attorneys. And like Morgenthau, he may try to parlay his martyrdom into elective office.

  But if he runs on his record of convictions, as prosecutors often do, voters might want to consider as well the list of possible targets he never pursued.

  

  

• The European Commission doesn’t agree with the ECB …

  

  In the Eurozone it’s not just the European Central Bank which publishes its forecasts on a regular basis, but the European Commission also releases its own expectations. And those don’t necessarily agree with the ECB’s assessments!

  In its Spring Economic Forecast, which was released last week, the EC is now clearly more positive about the outlook in the Eurozone as the Commission increased its GDP growth expectations by 0.1% to 1.7%, although it’s still warning for downside. This downside could be related to the decrease in inflation expectations. Yes, the official inflation rate will increase from 0.2% in 2016 to 1.6% in 2017 (thanks to the higher oil and gas prices), but according to the Commission, the inflation will start to trend down again and will fall back to 1.3% next year.

  

  Source: ec.europa.eu

  That’s an interesting view, and it shines a completely different light on the statement of the ECB, which was also released last week. As the ‘hard data’ coming out of the Eurozone are pointing in the direction of a continuously strengthening economy (with the factory orders in Germany finally picking up whilst the Netherlands and France saw a 4% and 3.5% increase in  their manufacturing production results), the ECB was finally starting to think about reducing its monthly purchases of securities on the open market.

  

  Source: ec.europa.eu

  There has been a lot of chatter lately about ‘normalizing’ the monetary policy, but the expected parameters used by the Commission might cause the ECB to ‘re-think’ its plans. The unemployment rate on the Eurozone will remain relatively high at 8% in 2017 and 7.8% in 2018 and when you compare this to the much lower unemployment rate in the USA (less than 4.5%) it’s clear the situation in the Eurozone isn’t nearly as good as in the United States. Keep in mind we have no details on the underemployment rate in the Eurozone (compared to the USA), and whilst we would expect the ratio of underemployed people to be lower, we think the total percentage of unemployed and underemployed people will be in excess of 10% in the Eurozone.

  

  Source: Danske Bank

  So, is this good enough to start to normalize the monetary policies? It’s doubtful, and the ECB has to be very careful it’s not destroying the preliminary signs of the recovery of the Eurozone’s economy. It would make sense to first start to gradually decrease the monthly asset purchases. Not only because these asset purchases would be scaled back gradually, but also because it’s the easiest measure to reinstate should stepping down the size of the purchase program result in adverse effects. Nobody would lose his or her face if there would be a temporary suspension in the buyback rate, which would be less devastating than a ‘oops’ moment when trying to ‘reset’ the benchmark interest rates. But as you can see on the previous image, Danske Bank is agreeing with our assessment the inflation expectations might not be high enough to warrant the ECB to reduce its asset repurchase rate…

  The ECB also literally said that whilst it expects its 60B EUR/month asset purchase program to run until the end of this year, its council could decide to extend this special measure until the inflation rate picks up again, and reaches the desired threshold.

  Long story short, the ECB is and will be basing its policy decisions on the inflation expectations in the Eurozone. And if the European Commission’s expectations are correct, the ECB won’t be able to reduce its asset purchase program, further inflating and increasing the size of its balance sheet…

  > Read our Guide to Gold FOR FREE!

  

• Chris Martenson Warns "Humans Are Heading Towards Disaster"

  Authored by Chris Martenson via PeakProsperity.com,

  It’s time to be blunt: Humans are headed towards disaster. 

  Most of us already know this.  Some consciously, others unconsciously.

  Those aware to the many predicaments we face may understand them intellectually, such as through the data provided in The Crash Course. Or they may sense them intuitively as a feeling in their gut that “something is wrong." Many experience a combination of both.

  Those operating at the unconscious level may only experience a pervasive sense of dread encroaching into their lives.  Many of these people are confused because they are aware of the context and are increasingly either checking out via numbing behaviors such as drinking and opioid addiction, or they're acting out via violence and protest.

  No matter if it's consciously or unconsciously, everybody who ‘knows’ that something is terribly wrong is correct.

  A Very Different Future

  The data is obvious and the logic is clear. We cannot continue as we have been. The system is simply unsustainable.

  Unfortunately, "continuation" is the one and only plan of the state. Let's get back on track doing what we always have been (and use increasingly blunt techniques to saturate the populace with this message).  That’s the whole plan.  It boils down to: More of the same.

  But ‘the same’ is killing the planet.

  Species are disappearing at horrifying rates that have few comparisons over the past 500 million years. Soil washes to the sea creating dead zones, while humans and the animals they eat are now 95% of the terrestrial animal biomass.

  Oceans are acidifying, causing phytoplankton to disappear. Glaciers are melting and sliding away, with those in Greenland and Antarctica contributing to sea level rise, a phenomenon that is not somewhere out in the future, but right here, right now.

  Via Bloomberg:

  The impact [of sea level rise] is already being felt in South Florida. Tidal flooding now predictably drenches inland streets, even when the sun is out, thanks to the region’s porous limestone bedrock.

   

  Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean.

  That’s not a future scenario, that’s right now.  When utilities are installing giant pumps, they are not doing that because of what might happen, but because of that which is already happening.

  Pro tip:  If you own coastal property worth a bundle that’s at risk, sell now and avoid the rush.  That’s the conclusion of the Bloomberg article above, and something that insurers and underwriters might render moot by pulling your insurance coverage. How much is an uninsurable property on the coast of a rising sea worth?  The answer is: Less than its current price.

  A (very) little bit of study reveals that exponential growth on a finite planet is a bad idea, which means that perpetual exponential growth is an even worse idea, insanity defined practically.  Unfortunately, and quite obviously, perpetual exponential growth lies at the very heart of every so-called ‘modern’ economic model.  It’s what we seek as a culture, and is lauded and rewarded in every possible way.

  But it turns out that debt-based money coupled to the insatiable human desire for ever more is a very toxic combo. Both to ourselves, individually, as well as the planet as a whole — as the historically-brief past 150 years of rampant human feasting on fossil fuels has been devastating to our ecosystems.

  While you’ve probably read a dozen articles talking about the death knell of fossil fuels and demand destruction due to substitution and technology, the reality is that (outside of severe economic downturns) each year humans quite reliably consume more oil than the year before:

  

  (Source)

  This is just the what the data tells us.  More oil consumed this year than last.  While demand destruction from new technology and different choices may show up in the future, that dynamic is nowhere to be seen in the actual data yet.

  Even more worryingly, there are at least 10 and possibly as many as 20 fossil fuel calories embedded in each single food calorie we eat. Our diet is made possible only by today's surfeit of fossil fuel energy. Yet there seems to be no replacement plan and no concern for this fact outside of a few ‘fringe’ blogs and academic arenas.

  But on our current course, 8 or 9 billion people will soon be trying to produce more food from degraded soils even as fossil fuels begin to wane, in both aggregate and especially in terms of net energy.

  And that’s not some super far off date in the future. That’s in as few as 15 years, which really isn’t a lot of time given the seriousness of the predicament.

  My point here is that The future has arrived. There’s no more waiting required for those who dare to look.  Or to feel what’s in their hearts, or gut, or wherever your intuition registers.

  Our Giant Canoe

  Think of our situation as if humanity were all together in a giant canoe and nearly everybody is paddling as hard as they can.  After all, we’re trying to get somewhere: to improve ourselves, to grow our economy and increase our prosperity. There are goals to be met!

  Along the way we’ve convinced ourselves that this canoe is the best one ever built and it cannot fail us. It is the very pinnacle of achievement.  It looks great, and there are creature comforts and pleasant distractions galore.   Food has never been more abundant or easier to obtain, new gadgets keep showing up, and (in theory, at least) you can determine for yourself where you want to sit in the canoe.

  The people in the front love being there, as they feel powerful and in control. Ironically, though, it's the few people in the stern who are actually secretly and rather effortlessly steering, but nobody in the rest of the canoe seems to notice or care.

  There's only one thing wrong with this canoe. It’s headed for a gigantic waterfall, and if it tips over the lip, very few will survive. It will be like going over Niagara Falls without a barrel.

  A few in the canoe have woken up and noticed this. But their protests are limited to either pulling their paddles out of the water and refusing to propel the canoe any faster, or even trying to futilely paddle backwards against the rest of humanity’s combined efforts.

  Neither approach is a solution, mind you. But at least for these 'awake' souls, it feels better than paddling mindlessly towards the roaring falls. 

  As it stand today, humanity’s canoe is destined to speed right over the edge. Unless we consciously do something about it. Which we could, if we really wanted to.

  As there’s nothing preventing us from steering the canoe safely to land, I find this one of the most interesting and fascinating times to be alive. We are currently playing the role of our own destroyer, but the savior role is still there for the choosing.

  But what stops us?  What keeps us paddling furiously ahead even as the sound of the roaring falls gets louder and louder?  The answer is at once both very simple and devilishly hard. 

  It’s our egos.

  To save ourselves from ourselves, we have to begin doing things very, very differently.  Truthfully, the only way we can save ourselves is to shift our consciousness. 

  

  

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