Nov 15

Today’s News 15th November 2017

  • How to Instantly Prove (Or Disprove) Russian Hacking of U.S. Election

    It’s newsworthy that CIA head Mike Pompeo recently met with Bill Binney – who designed the NSA’s electronic surveillance system – about potential proof that the DNC emails were leaked rather than hacked.

    It’s also noteworthy that the usual suspects – Neocon warmongers such as Max Boot – have tried to discredit both Binney and Pompeo.

    But there’s a huge part of the story that the entire mainstream media is missing …

    Specifically, Binney says that the NSA has long had in its computers information which can prove exactly who hacked the DNC … or instead prove that the DNC emails were leaked by a Democratic insider.

    Remember – by way of background – that the NSA basically spies on everyone in America … and stores the data long-term.

    After the story of Pompeo’s meeting with Binney broke, Binney told Washington’s Blog:

    Here’s what they would have from the programs you list [i.e. NSA’s Fairview, Stormbrew and Blarney spying programs, which Edward Snowden revealed] plus hundreds if not thousands of trace route programs embedded in switches in the US and around the world.


    First, from deep packet inspection, they would have the originator and ultimate recipient (IP) of the packets plus packet series 32 bit number identifier and all the housekeeping data showing the network segments/path and time to go though the network.  And, of course, the number of packet bits. With this they would know to where and when the data passed.


    From the data collection, they would have all the data as it existed in the server taken from.  That’s why I originally said if the FBI wanted Hillary’s email, all they have to do is ask NSA for them.


    All this is done by the Narus collection equipment in real time at line rates (620 mbps [mega bits per second,] for the STA-6400 and 10 gbps [giga bits per second] for the Insight equipment).

    Binney explained what these numbers mean:  Each Narus Insight device can monitor and record around 1,250,000 emails each second … or more than 39 trillion emails per year.

    Wired reported in 2006:

    Whistle-blower Klein allegedly learned that AT&T was installing Narus boxes in secure, NSA-controlled rooms in switching centers around the country.

    Binney told us there are probably 18 or so Narus recording systems throughout the U.S. deployed by the NSA at AT&T facilities, drawing our attention to the following NSA document leaked by Edward Snowden:

    Fairview At a Glance - Snowden

    And this AT&T graphic:

    AT&T Global Internet Centers

    (Binney has figured out their locations from publicly-available sources. He has also mapped out similar monitoring systems at Verizon facilities.)

    Binney also sent me hard-to-find company literature for Narus.  Here are some interesting excerpts:

    NarusInsight …

    • Provides full visibility into network traffic
    • Analyzes at macro or micro level targeting specific or aggregate full-packet data for forensic analysis


    Universal data collection from links, routers, soft switches, IDS/IPS, databases, etc. provides total network view across the world’s largest IP networks.

    Binney also pointed me towards a couple of network engineering principles that show that figuring out who hacked the emails (or proving they were leaked) is well within NSA’s capabilities.

    Initially, when data is transmitted online, it is sent using the TCP/IP Packet format.  Put simply, data is not sent in a vacuum, but rather as part of a bundle containing a lot of other information.

    Here’s the TCP part of the bundle:

    And here’s the IP part of the bundle:

    So any data analyst can learn a tremendous amount about the source address of the sender, the destination address of the receiver and a boatload of other information by using a “packet sniffer” to  inspect the “packets” of information being sent over the web.

    Additionally, it’s simple to conduct “traceroute” searches. “Traceroute” is a computer network diagnostic tool for displaying the route and measuring transit delays of packets across an Internet Protocol network.

    Wired reported in 2006:

    Anything that comes through (an internet protocol network), we can record,” says Steve Bannerman, marketing vice president of Narus, a Mountain View, California, company. “We can reconstruct all of their e-mails along with attachments, see what web pages they clicked on, we can reconstruct their (voice over internet protocol) calls.”

    So NSA can easily basic packet sniffers and traceroutes, And see this.

    Remember, Edward Snowden says the NSA could easily determine who hacked the Democratic National Committee’s emails:

    Binney told us:

    Snowden is right and the MSM is clueless.




    Do they have evidence that the Russians downloaded and later forwarded those emails to wikileaks? Seems to me that they need to answer those questions to be sure that their assertion is correct.



    You can tell from the network log who is going into a site.  I used that on networks that I had.  I looked to see who came into my LAN, where they went, how long they stayed and what they did while in my network.


    Further, if you needed to, you could trace back approaches through other servers etc. Trace Route and Trace Watch are good examples of monitoring software that help do these things.  Others of course exist … probably the best are in NSA/GCHQ and the other Five Eyes countries.  But, these countries have no monopoly on smart people that could do similar detection software.

    He explained:

    If it were the Russians, NSA would have a trace route to them and not equivocate on who did it.  It’s like using “Trace Route” to map the path of all the packets on the network.  In the program Treasuremap NSA has hundreds of trace route programs embedded in switches in Europe and hundreds more around the world.  So, this set-up should have detected where the packets went and when they went there.

    He added:

    As Edward Snowden said, once they have the IP’s and/or other signatures of 28/29 [the supposed Russian hacking groups] and DNC/HRC/etc. [i.e. the DNC and Hillary Rodham Clinton], NSA would use Xkeyscore to help trace data passing across the network and show where it went. [Background.]


    In addition, since Wikileaks is (and has been) a cast iron target for NSA/GCHQ/etc for a number of years there should be no excuse for them missing data going to any one associated with Wikileaks.




    Too many words means they don’t have clear evidence of how the data got to Wikileaks.

    And he stressed:

    If the idiots in the intelligence community expect us to believe them after all the crap they have told us (like WMD’s in Iraq and “no we don’t collect data on millions or hundreds of millions of Americans”) then they need to give clear proof of what they say. So far, they have failed to prove anything.


    Which suggests they don’t have proof and just want to war monger the US public into a second cold war with the Russians.

    After all, there’s lots and lots of money in that for the military-industrial-intelligence-governmental complex of incestuous relationships.




    If you recall, a few years ago they pointed to a specific building in China that was where hacks on the US were originating. So, let’s see the same from the Russians. They don’t have it. That’s why they don’t show it. They want to swindle us again and again and again. You can not trust these intelligence agencies period.

    And he told Newsweek:

    U.S. officials “know how many people [beyond the Russians] could have done this but they aren’t telling us anything. All they’re doing is promoting another cold war.”


    Binney … compared allegations about Russian hacks to previous U.S. fabrications of intelligence to justify the invasion of Iraq in 2003 and the bombing of North Vietnam in 1964.


    “This is a big mistake, another WMD or Tonkin Gulf affair that’s being created until they have absolute proof” of Russian complicity in the DNC hacks, he charged during a Newsweek interview. He noted that after the Kremlin denied complicity in the downing of a Korean Airlines flight in 1983, the U.S. “exposed the conversations where [Russian pilots] were ordered to shoot it down.” Obama officials “have the evidence now” of who hacked the DNC, he charged. “So let’s see it, guys.“

    NSA either doesn’t have solid evidence of Russian hacking of DNC emails – which means the Russians didn’t do it – or those with the power to demand NSA produce the evidence simply haven’t asked the right questions.

  • ‘The Atlantic’ Commits Malpractice, Selectively Edits To Smear WikiLeaks

    Originally published on Medium by Caitlin Johnston (@Caitoz). This must-read rebuke of ‘The Atlantic’ republished with permission.


    ‘The Atlantic’ Commits Malpractice, Selectively Edits To Smear WikiLeaks

    Everyone was buzzing about the shocking, bombshell new report by The Atlantic yesterday, which revealed that Donald Trump Jr. and the WikiLeaks Twitter account had engaged in a “largely one-sided” conversation in private messages over the course of several months.

    Don Jr. actually comes off looking fairly normal in the report, while WikiLeaks comes off looking weird and sleazy in a way that will likely damage its reputation even further than the mainstream media campaign to smear the outlet already has. WikiLeaks is seen asking for favors Trump never fulfilled, making recommendations Trump Jr. didn’t act upon, and asking for leaks Trump Jr. never gave them, which when you step back and think about it are actually fairly normal things for a leak outlet to do, all things considered. But the following passage from the Atlantic report makes the whole thing look far darker:

    It is the third reason, though, Wikileaks wrote, that “is the real kicker.” “If we publish them it will dramatically improve the perception of our impartiality,” Wikileaks explained. “That means that the vast amount of stuff that we are publishing on Clinton will have much higher impact, because it won’t be perceived as coming from a ‘pro-Trump’ ‘pro-Russia’ source.”

    See that full stop at the end of the last sentence there? That’s journalistic malpractice. We learned this when Donald Trump Jr. published the entirety of his private messages with WikiLeaks in response to the Atlantic article:

    The author of the Atlantic article, Julia Ioffe, put a period rather than a comma at the end of the text about not wanting to appear pro-Trump or pro-Russia, and completely omitted WikiLeaks’ statement following the comma that it considers those allegations slanderous. This completely changes the way the interaction is perceived.

    This is malpractice. Putting an ellipsis (…) and then omitting the rest of the sentence would have been sleazy and disingenuous enough, because you’re leaving out crucial information but at least communicating to the reader that there is more to the sentence you’ve left out, but replacing the comma with a period obviously communicates to the reader that there is no more to the sentence. If you exclude important information while communicating that you have not, you are blatantly lying to your readers.

    There is a big difference between “because it won’t be perceived as coming from a ‘pro-Trump’ ‘pro-Russia’ source” and “because it won’t be perceived as coming from a ‘pro-Trump’ ‘pro-Russia’ source, which the Clinton campaign is constantly slandering us with.” Those are not the same sentence. At all. Different meanings, different implications. One makes WikiLeaks look like it’s trying to hide a pro-Trump, pro-Russian agenda from the public, and the other conveys the exact opposite impression as WikiLeaks actively works to obtain Donald Trump’s tax returns. This is a big deal.

    And it made a difference in the way WikiLeaks was perceived, as evidenced by the things people who read the article are saying about Ioffe’s version:

    At first I wasn’t sure who was responsible for this highly egregious omission. It could have been Ioffe, an editor, the source of the leaked DMs or an intermediary deliverer who cut out the rest of the sentence. But then I read in The Guardian’s version of this story that Ioffe had actually tweeted to Don Jr. erroneously accusing him of excluding “a couple of missing pages” from his three-part release of his DMs with WikiLeaks. Ioffe eventually deleted the tweet, after it had been seen and reported on by many people, and clarified her error.

    From The Guardian,



    “My bad,” she says. Cute.

    What Ioffe’s tweets tell us is that she had full copies of the DMs, since she knew that there were more pages missing from the single tweet by Don Jr. that she had read. The deceitful omission that is the subject of this article was clarified in the first Don Jr. tweet she replied to. She read it, she analyzed it enough to figure out what was missing, but she said nothing about the fact that there were a lot more words in the sentence that she selectively edited out to convey the exact opposite of its meaning.

    I’m no detective, but it sure looks like this was a willful omission on Ioffe’s part made deliberately with the intention of damaging WikiLeaks’ reputation. I have been attempting to contact Ioffe, whose other work for the Atlantic includes such titles as “The History of Russian Involvement in America’s Race Wars” and “The Russians Are Glad Trump Detests the New Sanctions”; I will update this article if she has anything she’d like to say.

    Also worth noting is Ioffe’s omission of the fact that we’ve known since Julythat WikiLeaks had contacted Donald Trump Jr., as well as the fact that Julian Assange’s internet was cut at the time some of the Don Jr. messages were sent, meaning they may have been sent by someone else with access to the WikiLeaks account.

    As happens every single time these pro-establishment manipulations take place, the rest of the mainstream media is picking up the Atlantic’s deceitful omission and running with it as fact. GQ ran with it quoting the selectively edited text. ABC and CBS both ran with the same fake quote even after including Don Jr.’s tweets which make it clear that text was omitted. The Guardian went so far as to use the Atlantic’s selectively edited quote, and then publish an update saying that Julian Assange had “suggested that the Atlantic had selectively edited the messages” without updating the original selectively edited quote or publishing the omitted text.

    What percentage of Guardian readers do you think went and read the private messages published by Don Jr. for themselves and learned that they’d been manipulated? One percent? Half of one percent? Why would they go read the published DMs if their trusted Guardian was presenting itself as conveying the full truth?

    The Atlantic’s senior editor is neocon David Frum, who is credited with coining the phrase “axis of evil” used in George W Bush’s jingoistic schtick, and its editor-in-chief is the neocon Jeffrey Goldberg. Its corporate owner, Atlantic Media Company, is chaired by New America’s David G. Bradley. New America is a DC think tank whose team includes representatives from Northrop Grumman and Raytheon along with big name media and corporate giants like CNN and Walmart, and whose top donors include Bill Gates, Google’s Eric Schmidt, and the US State Department.

    So this immoral manipulation is not exactly surprising. These are virulently pro-establishment people.


    Every time. This happens literally every single time there’s a new “bombshell” report on the Russiagate phenomenon, without exception. Twitter explodes, I’m bombarded with social media notifications telling me “HAHAHA I BET YOU FEEL LIKE AN IDIOT NOW”, then it turns out to be a basically innocuous revelation dishonestly blown up into something explosive by liars and manipulators in the establishment media. It’s fueled entirely by Trump derangement syndrome, not by facts.

    And people ask why I’m skeptical of the establishment Russia narrative. I’m skeptical because we’re being lied to every single step of the way by the news media who claim to be helping the public discover the truth. Trump lies because he’s a corrupt billionaire who knows he can get away with it, but that doesn’t make him a Russian agent. The media lies because they’re bolstering the stranglehold of America’s unelected power establishment, and that makes them traitors to our species.

    I stand with WikiLeaks. They’re doing more than anyone else to shake loose the nuts and bolts of the omnicidal death machine that is driving our species toward extinction, and that’s why that same death machine pours so much energy into tarnishing their reputation so their leaks will be dismissed. Even my fellow leftists have been largely won over by the ongoing psyop to paint Assange as an evil Nazi, and I simply have no respect for that perspective. When there’s such a massive, concerted effort by America’s unelected government to sabotage someone’s reputation, your belief that they’re bad is probably a deliberate and artificial construct.

    The mainstream media is not your friend, America. It’s time to send them the way of the dinosaur before they do the same to us.

    UPDATE 5 PM EST 11/14/17: Surprise, surprise, here’s Chris Hayes on MSNBC regurgitating Ioffe’s selectively edited quote on MSNBC. There will be others. There is no way to undo the damage that was done by this lie. At the end of the clip Ioffe actually asserts that her story confirms Russia-WikiLeaks collusion, without at any time acknowledging that the only thing in the story that makes it look that way is her selectively-edited quote.


    If Russiagate was valid, the people selling it to us wouldn’t have to lie about it every single step of the way.


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  • Sweden: The World's Biggest Housing Bubble Cracks

    Sweden’s property bubble is probably the world’s biggest, despite which it gets relatively little coverage in the mainstream financial media – although that might be about to change. Warnings about this bubble are not new. In March 2016, Moody’s issued a very explicit warning that Sweden’s negative interest rates were propagating an unsustainable housing bubble.

    The central banks of Switzerland, Denmark and Sweden (all rated Aaa stable) have been among the first to push policy rates into negative territory. A year into this novel experience, Moody's Investors Service concludes that, from among the three countries, Sweden is most at risk of an – ultimately unsustainable – asset bubble…


    "The Riksbank has not been successful in engineering higher inflation, while Sweden's GDP growth continues to be among the strongest in the advanced economies," says Kathrin Muehlbronner, a Senior Vice President at Moody's.


    "At the same time, the unintended consequences of the ultra-loose monetary policy are becoming increasingly apparent – in the form of rapidly rising house prices and persistently strong growth in mortgage credit", adds Ms Muehlbronner. In Moody's view, these trends will likely continue as interest rates will remain low, raising the risk of a house price bubble, with potentially adverse effects on financial stability as and when house prices reverse trends.

    In October 2016, the Riksbank’s Governor, Stefan Ingves, spoke in grave terms to the FT about the impact of negative rates on house prices.

    But despite a lack of drama so far, Mr Ingves remains worried about a bad ending due to risks over financial stability.


    He said: “It remains an issue because we are mismanaging our housing market. Our housing market isn’t under control, in my view.” The ratio of household debt to disposable income in Sweden is one of the highest in the world at more than 180 per cent and the Riksbank estimates it will continue to rise in the coming years.

    Last month, we revisited Sweden’s housing bubble (see here) pointing out.

    …nowhere would the bursting of Sweden's unprecedented asset bubble be more concerning than in the country's home prices.


    And to get a sense of just how bad it could get, here is a chart from Nordea's Andreas Wallstrom, showing nearly 140 years of real house prices in Sweden's capital, Stockholm, with an emphasis on the exponential surge in the past 2 decades. As Wallstromg sarcastically points out, the big irony in this is that "the current monetary policy regime, which aims for "price stability", started in 1995." Ah yes, presenting "price stability", aka the world's biggest housing bubble.

    On Monday, Reuters reported that SEB’s Housing Price Indicator suffered its second biggest ever drop this month.

    Swedes turned less optimistic on the housing market in November, a report showed, after figures suggesting a long run of price rises may be coming to an end amid signals that authorities will squeeze mortgage borrowers to reduce the risk of a crash.


    Monday’s Housing Price Indicator from banking group SEB posted its second biggest drop ever, declining by 39 points and lagging only a steeper fall 10 years ago. According to SEB, 43 percent of households expect prices to rise over the coming year, down from 66 percent the previous month. The number expecting prices to decline doubled to 32 percent.

    The Reuters piece quoted SEB saying that the indicator signaled a slowdown but “does not yet signal outright declines”. A day later and we have clear evidence of outright declines. Here is a summary of the key prices changes for October 2017 versus the previous month in the NASDAQ OMX Valueguard-KTH Housing Index – known as the HOX.

    • Prices for housing prices in Sweden as a whole declined by 3.0% versus September;
    • House prices in Sweden fell by 3.2% and apartment prices by 2.8%;
    • Stockholm house prices fell 4.0% in October and apartment prices by 3.4%; and
    • Gothenburg house prices fell by 1.6% and apartment prices by 1.2%.

    With the market starting to crack, we can rely on the regulators, as usual, to take action after the fact. From a Reuters report yesterday.

    Sweden’s financial watchdog has proposed a further tightening of mortgage repayment rules to keep a lid on spiralling debt that could spell danger for the cooling property market and the wider economy. A surge in building and tougher mortgage rules have put the brakes on a 20-year bull run in the Swedish property market, but authorities remain concerned that debt levels among the highest in Europe are still rising. The country’s Financial Supervisory Authority (FSA) on Monday proposed new rules to force the biggest borrowers to make larger mortgage repayments in an effort to reduce risks.


    “Prices have risen more than 30 percent in the past three years and the risk level is elevated,” FSA chief economist Henrik Braconier told reporters.

    Reuters reported this comment from Braconier.

    “It is not a catastrophe if prices fall a little.”

    And we agree…but what if they fall a lot.

  • The White House Is Being Warned: North Korea Is Planning A "Devatstaing EMP Attack" On America

    Marine Corps veteran Tommy Waller, director of special projects at the Center for Security Policy, has warned President Trump about the EMP threat facing the United States.

    "Winston Churchill once said, 'History will be kind to me for I intend to write it'…


    The surest way for history to be kind to President Trump is for him to write it, by being the first leader to truly address the existential threat of EMP.


    The first and foremost thing he must write is an Executive Order establishing his own EMP Commission in the White House – a task force that draws from the experience of the previous EMP Commission."

    The grim warning is directed at North Korea and their ambitions to unleash a devastating atmospheric nuclear explosion above the United States that would collapse the nation’s power grid.

    Most are aware by now that North Korea has successfully tested ICBM missiles and detonated nuclear devices throughout 2017. Put two and two together, and this is a dangerous cocktail fueling the regime in North Korea. It’s also a perfect recipe for Waller to further his agenda and urge President Trump to create a special commission to prepare for an EMP attack, such as the Manhattan Project in the 1940s in developing the nuclear bomb.

    Here is what he had to say:

    For those able to execute an unconstrained analysis of today’s threat environment, the single most urgent concern for America is what threatens her electric grid. Without electricity, the America we know today ceases to exist – and our enemies know this.


    Elites in the U.S. government know this too, but most have chosen to ignore these threats and to ridicule, silence, and stymie anyone willing to speak the truth about them.

    Waller also warns the whole system of 16 critical infrastructure components are dependent upon electricity and the idea an EMP could wipe out critical systems would be devastating for the survival of the empire.

    America’s 16 Critical Infrastructures range from Water & Wastewater Systems to Food & Agriculture to Nuclear Reactors, Materials & Waste – and all of them depend upon electricity.


    America’s need for electricity creates the ideal conditions by which an adversary can take advantage of Sun Tzu’s “Supreme art of war,” which is “to subdue your enemy without fighting.”


    In 1999, with full recognition of this reality and enraged with American policy in the Balkans, Vladimir Lukin (the head of the Russian State Duma’s Foreign Affairs Committee) threatened a U.S. Congressional delegation by stating: “If we really wanted to hurt you with no fear of retaliation, we would launch a Submarine-launched Ballistic Missile (SLBM), [and] we would detonate a nuclear weapon high above your country and shut down your power grid.”  

    With fear in place, Waller is pushing for the first Executive order, establishing his own EMP Commission in the White House.

    What’s very interesting is that the Obama administration already did this by passing an Executive Order on October 2016 preparing the nation for ‘Space Weather Events’, which would contribute to a total power grid collapse.

    Here is snippet of section 1 of the executive order:   

    Space weather events, in the form of solar flares, solar energetic particles, and geomagnetic disturbances, occur regularly, some with measurable effects on critical infrastructure systems and technologies, such as the Global Positioning System (GPS), satellite operations and communication, aviation, and the electrical power grid. Extreme space weather events — those that could significantly degrade critical infrastructure — could disable large portions of the electrical power grid, resulting in cascading failures that would affect key services such as water supply, healthcare, and transportation. Space weather has the potential to simultaneously affect and disrupt health and safety across entire continents. Successfully preparing for space weather events is an all-of-nation endeavor that requires partnerships across governments, emergency managers, academia, the media, the insurance industry, non-profits, and the private sector.

    What’s even more peculiar are that high ranking officials are speculating a total power grid collapse across the United States is nearing,  but as mentioned above the Obama administration’s Executive Order is emphasizing ‘Space Weather Events’. On the other-hand, Waller is stressing that a total grid collapse will be due to a ‘North Korean EMP’.

    The question: Who will be right? 

    At this moment, the source of the total power grid collapse is unclear and conflicting —all depending on who you talk to, but there is one clear message. A total grid collapse in the United States is coming and it’s evident in the information above. 

    In a blog post on Ripon Forum, the magazine of the moderate GOP Ripon Society, Waller wrote:

    After massive intelligence failures grossly underestimating North Korea’s long-range missile capabilities, number of nuclear weapons, warhead miniaturization, and proximity to an H-Bomb, the biggest North Korean threat to the U.S. remains unacknowledged — nuclear EMP attack.


    North Korea confirmed the EMP Commission’s assessment by testing an H-Bomb that could make a devastating EMP attack, and in its official public statement: “The H-Bomb, the explosive power of which is adjustable from tens of kilotons to hundreds of kilotons, is a multi-functional thermonuclear weapon with great destructive power which can be detonated even at high altitudes for super-powerful EMP attack according to strategic goals.”


    The Pentagon and some states have started to take action to protect the electric grid from an EMP attack, but the administration and Congress have largely shrugged off the concerns, according to EMP advocates.


    Previous congressional testimony has suggested that 90 percent of humans within the area of an EMP attack would die in a year, either from hunger, lack of water and health care, and violence.

    What would the aftermath of an EMP attack look like?

  • Financial Tyranny: "We The People" Are The New Permanent Underclass In America

    Authored by John Whitehead via The Rutherford Institute,

    Americans can no longer afford to get sick and there’s a reason why.

    That’s because a growing number of Americans are struggling to stretch their dollars far enough to pay their bills, get out of debt and ensure that if and when an illness arises, it doesn’t bankrupt them.

    This is a reality that no amount of partisan political bickering can deny.

    Many Americans can no longer afford health insurance, drug costs or hospital bills. They can’t afford to pay rising healthcare premiums, out-of-pocket deductibles and prescription drug bills.

    They can’t afford to live, and now they can’t afford to get sick or die, either.

    It’s a gamble any way you look at it, and the medical community is not helping.

    Healthcare costs are rising, driven by a medical, insurance and pharmaceutical industry that are getting rich off the sick and dying.

    Appallingly, Americans spend more than any developed country on healthcare and have less to show for it. While Obamacare (a.k.a. the Affordable Care Act) may have made health insurance more accessible to greater numbers of individuals, it has failed to make healthcare any more affordable.

    Indeed, health care in America has become just another way of making corporations rich at consumer expense.

    This is how the middle classes, who fuel the nation’s economy and fund the government’s programs, get screwed repeatedly.

    We’re living a financial nightmare.

    We have no real say in how the government runs, or how our taxpayer funds are used, but that doesn’t prevent the government from fleecing us at every turn and forcing us to pay for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

    If you have no choice, no voice, and no real options when it comes to the government’s claims on your property and your money, you’re not free.

    Consider: The government can seize your home and your car (which you’ve bought and paid for) over nonpayment of taxes. Government agents can freeze and seize your bank accounts and other valuables if they merely “suspect” wrongdoing. And the IRS insists on getting the first cut of your salary to pay for government programs over which you have no say.

    Unsurprisingly, the government has used its tax powers under the 16th Amendment to the Constitution to advance its own imperialistic agendas and the courts have repeatedly upheld the government’s power to penalize or jail those who refused to pay their taxes.

    All the while the government continues to do whatever it likes—levy taxes, rack up debt, spend outrageously and irresponsibly—with little thought for the plight of its citizens.

    If Americans managed their personal finances the way the government mismanages the nation’s finances, we’d all be in debtors’ prison by now.

    Still, the government remains unrepentant, unfazed and undeterred in its money grabs.

    While we’re struggling to get by, the police state is spending our hard-earned tax dollars to further entrench its powers and entrap its citizens.

    For instance, American taxpayers have been forced to shell out $5.6 trillion since 9/11 for the military industrial complex’s costly, endless so-called “war on terrorism.” The 16-year war in Afghanistan, which now stands as the longest and one of the most expensive wars in U.S. history, is about to get even longer and more costly, thanks to President Trump’s promise to send more troops over.

    In this way, the military industrial complex will get even richer, and the American taxpayer will be forced to shell out even more funds for programs that do little to enhance our lives, ensure our happiness and well-being, or secure our freedoms.

    This is no way of life.

    Yet it’s not just the government’s endless wars that are bleeding us dry.

    We’re also being forced to shell out money for surveillance systems to track our movements, money to further militarize our already militarized police, money to allow the government to raid our homes and bank accounts, money to fund schools where our kids learn nothing about freedom and everything about how to comply, and on and on.

    Are you getting the picture yet?

    The government isn’t taking our money to make our lives better. Just take a look at the nation’s failing infrastructure, and you’ll see how little is being spent on programs that advance the common good.

    We’re being robbed blind so the governmental elite can get richer.

    This is nothing less than financial tyranny.

    “We the people” have become the new, permanent underclass in America.

    It’s tempting to say that there’s little we can do about it, except that’s not quite accurate.

    There are a few things we can do (demand transparency, reject cronyism and graft, insist on fair pricing and honest accounting methods, call a halt to incentive-driven government programs that prioritize profits over people), but it will require that “we the people” stop playing politics and stand united against the politicians and corporate interests who have turned our government and economy into a pay-to-play exercise in fascism.

    We’ve become so invested in identity politics that label us based on our political leanings that we’ve lost sight of the one label that unites us: we’re all Americans.

    As I make clear in my book Battlefield America: The War on the American People, the powers-that-be want to pit us against one another. They want us to adopt an “us versus them” mindset that keeps us powerless and divided. Trust me, the only “us versus them” that matters anymore is “we the people” against the police state.

    We’re all in the same boat, folks, and there’s only one real life preserver: that’s the Constitution and the Bill of Rights.

    The Constitution starts with those three powerful words: “We the people.”

    The message is this: there is power in our numbers.

    That remains our greatest strength in the face of a governmental elite that continues to ride roughshod over the populace. It remains our greatest defense against a government that has claimed for itself unlimited power over the purse (taxpayer funds) and the sword (military might). As Patrick Henry declared in the last speech before his death, “United we stand, divided we fall.”

    This holds true whether you’re talking about health care, war spending, or the American police state.

  • SocGen On China's Slowdown In The Making

    As we highlighted (see here), China’s macro data for October 2017 was disappointing with retail sales and industrial production missing consensus estimates, fixed asset investment was in line and inflation surprised on the upside. There was some impact from state-driven efforts to reduce pollution, but this issue will be an ongoing headache for decades. In big picture terms, the challenge for the Chinese leadership is to deflate a credit bubble in an orderly fashion, something which we’re not aware has ever been done on this scale. Notwithstanding the reach of China’s famed central planners, we doubt that they will be successful, a view which seems to be shared by the outgoing PBoC Governor who recently warned of a “Minsky moment”.

    In the following charts of GDP, industrial production, retail sales and fixed asset investment, we showed that growth rates in key macro indicators are currently around the lowest they’ve been since the crisis or, in the case of the fixed asset investment, as low as they’ve been for nearly two decades.

    Commenting after the October data releases, SocGen is getting equally bearish. To wit.

    China’s activity growth decelerated more than expected in October for the most part, while inflation surprised on the upside. Supply constraints imposed by the air pollution reduction programme clearly played a role, while demand slowdown emerged only a little. However, the seeds have been sown for a full-fledged growth slowdown in 2018. Housing tightening has bitten deeper into housing sales; persistent cost-push inflation may dampen the private sector’s appetite for capex; and, most importantly, credit growth – which did not really slow much in October – is poised to trend further lower amid the resumption of financial deleveraging policies.

    SocGen notes that while the slowdown in industrial production growth in October 2017 was concentrated in higher value-added sectors, traditional areas of upstream strength are locked in a deeper contraction.

    IP growth dropped to 6.2% in October from 6.6% in the previous month. The high value added sectors – automobiles, electrical machinery and computers, telecommunication & other electronics (CTE) – accounted for most of the slowdown in the headline figures, although growth rates in these three sectors were still in the high double-digits. The anti-pollution campaign also left its mark on upstream material sectors, where part of the production was suspended during winter. Production growth of coking coals, cement, steel and aluminium were all in a deeper contraction.

    The property sector has obviously been white hot in the latest phase of the Chinese credit bubble, although Xi Jinping’s warning at the recent Party congress that “Housing is for living rather than speculation” is beginning to look prescient. SocGen notes that housing acts as a leading indicator and, while it weakened in October 2017, the decline remains fairly most so far.

    Housing sales – one of the best leading indicators – indisputably weakened further. Floor space sold dropped 6% in October, after a 1.1% increase in 3Q. Sales revenue growth turned negative for the first time in 31 months, dropping to -1.7% in October from 3.9% in 3Q. While the sales slowdown at the moment is unequivocally bad news for housing construction in 2018, housing supply indicators did not really deteriorate as much as they appeared to in October. Yoy growth of new starts fell to -4.3% in October from 0.4% in 3Q, but the mom rate was largely in line with the historical average for this month. Similarly, property investments slowed to 5.4% from 7.4% in 3Q, albeit against a negative base effect.

    The bull case for China rests on rebalancing the economy from investment-led growth to consumption-led growth. While the slowdown in retail sales is a concern, it’s too early to gauge whether October’s weakness will be sustained in the coming months due to this month’s Singles Day distortion.

    Domestic demand softened somewhat. Nominal retail sales growth eased to 10% in October from 10.3%, despite stronger inflation. Adjusted for price effects, retail sales grew 8.6% yoy in October, down from 9.2% in 3Q. Automobile sales – the biggest category – saw its volume growth down to 2% from 5.7%, which seemed to be behind the softer production number in the IP data. However, given the strong increase in online sales at the 11 November sales events (the “Double 11” or the Singles’ Day), part of the weakness in October might be due to delayed shopping.

    While SocGen notes the October 2017 credit data undershot estimates, it remains fairly sanguine on the immediate implications.

    Although the credit and monetary data came in below market expectations, there was little deceleration in credit stock growth, which means that the much smaller monthly increases in bank loans and total social financing (TSF) were mostly seasonal. While new yuan loans dropped by almost half to CNY663bn in October from CNY1,270bn in September, growth in the bank loan stock softened by only 0.1pp to 13%, which a faster rate than in 1H17. Growth in total credit to non-financial sectors (= TSF – net equity financing + net increases in government bonds) ticked up a little to 14.4% from 14.3% in the previous month.

    However, the bank sees three driving a looming deceleration in credit growth.

    1. Housing-related credit tightening seems to be succeeding. Short-term borrowing by households cooled substantially to CNY79bn in October from over CNY200bn in the previous four months, indicating that regulators’ efforts to weed out the taking out of consumption loans for property purchases has started to work;
    2. Formal bank lending is likely to be constrained by loan quotas. Reportedly, big banks have either completely or nearly used up their loan quotas for 2017, and there is widely shared expectations among banks that the 2018 quotas1 are unlikely to be much bigger; and
    3. As financial deleveraging continues, banks’ options to extend shadow lending will be increasingly limited. “Equity and other investments” – the asset item of banks that is most closely related to shadow lending – has dropped by about CNY1trn from its peak in February 2017 (after increasing by CNY19trn since 2014).

    Most importantly, financial deleveraging is poised to pick up soon. In addition to talks by senior policymakers of more regulation, the Financial Stability and Development Committee, the high profile body in charge of this project and headed by a vice premier, has concluded its first gathering and reconfirmed the policy direction only two weeks after the Party Congress. The expectation of tighter regulations has already driven up bond yields onshore.

    After the Chinese leadership permitted the credit engine to be revved up again from early 2016 through to the early part of 2017, most commentators have put fears about China to the back of their minds, preferring to focus on the synchronised global growth narrative. The reality is that massive credit bubbles are not only dangerous, but we suspect, inherently fragile, when central planners try to fine tune them.

  • The Deeper Purpose Of Trump's Asia Trip

    Authored by James Rickards via The Daily Reckoning,

    President Trump is wrapping up his historic visit to Asia today. Trump’s journey is the longest overseas trip of his presidency and the longest Asian visit of any president in 25 years.

    After a stopover in Hawaii, Trump proceeded to Japan, where he met with Japanese Prime Minister Shinz? Abe, and then to South Korea where he met with President Moon Jae-in.

    The capstone of the trip was Trump’s arrival on Nov. 8 in Beijing for meetings with Chinese President Xi Jinping. Trump then headed for Vietnam late in the week and is concluding meetings in the Philippines today.

    Much of the reporting on this trip has involved international trade, but it’s a mistake to focus on that. This trip was a prewar gathering of allies (Japan and South Korea) and potential allies (China) in a last-ditch struggle to head off a hot war with North Korea, led by the reckless Kim Jong Un.

    At this point, there are only four possible outcomes of the U.S.-North Korea confrontation over nuclear weapons:

    1.Kim Jung Un stands down and gives up his nuclear weapons program.


    2. The U.S. and China combine forces to decapitate the Kim dynasty and force regime change in North Korea.


    3. Preventive attack on North Korea by the U.S. before March 20, 2018.


    4. The U.S. accepts a nuclear-armed North Korea and relies on containment and deterrence to constrain its actions.

    Based on public statements of U.S. officials, my recent meetings in Washington with the director of the CIA and the national security adviser and other sources, I estimate the degree distribution of those possible outcomes as follows:

    • Kim stands down: 10%
    • Regime change: 20%
    • War: 70%
    • U.S. lives with nuclear North Korea: 0%.

    Trump’s visits to Japan and South Korea were about leaving the door open to negotiations in the hope that Kim would stand down while also preparing for war.

    Trump’s visit to China was about asking for assistance in regime change. Xi is unlikely to agree to help the U.S. in this regard.

    This means war. Instead, Trump and Xi no doubt discussed China’s “red lines” in North Korea so that a war between the U.S. and North Korea does not escalate into a war with China.

    Almost none of this is fully priced in public markets, although markets seemed to be getting the message last week.

    A war between the U.S. and North Korea will cause a global flight to quality assets and currencies at the expense of other asset classes.

    Here are the likely market moves as the prospect of war becomes clear: Dollars, euros and Swiss francs will rally at the expense of emerging-market currencies. U.S. Treasury bonds will rally in price, pushing yields lower.

    Gold will rally strongly, well past the $1,325 level, and then push higher.

    Curiously, U.S. stocks may rally after an initial pullback when the shooting starts. Defense contractors, tech companies, commodities producers, utilities and energy companies should all rally. War is generally good for some sectors of the economy and may finally give the Fed the inflation it’s been looking for in vain the past eight years.

    The war is likely coming in a matter of months.

  • Millions Of Millennials Could Be Trading Sex For Their Next Debt Payment – Here's How

    As the storm clouds of peak stupidity gather over the heads of the millennial generation who were conned by banks, government, and universities to take out excessive amounts of leverage in auto loans, credit cards, and student debt; millions have flocked to a new website seeking ‘Sugar Daddies’ and or even ‘Sugar Mommies’ to pay off their debt amid an economic environment where wage growth remains non-existent.

    Today’s real simple get-out-of-debt option for the broke college/post college millennial is through an unconventional dating website called

    In 2016, the website identified some 2.5 million college students who turned to the site in an act of desperation to find a ‘Sugar Daddy’ or even a ‘Sugar Mommy’ in exchange of personal time for straight cash.

    The website’s mission is to “delivers a new way for relationships to form and grow. Sugar Babies and Sugar Daddies or Mommas both get what they want, when they want it”.

    We find it hard to believe the intention of the website, when created by MIT graduate Brandon Wade in 2006, was to have 25% of the 10 million users—broke college millennials.

    According to Business Insider,

    A couple years ago, the site noticed an uptick in the number of members signing up with a university email address, Alexis Germany, a spokesperson for, told Business Insider.


    It decided to launch a marketing campaign – dubbed Sugar Baby University – targeting indebted college students and young people who are interested in college but afraid of taking on massive loans.

    In total, Americans owe more than $1.3 trillion in student loan debt to federal government agencies and or private lenders.

    As explained by UBS strategist Matthew Mish, millennials have never been more in debt and this shocking development could hint why millennials are resorting to an online dating site, in the millions to trade sex for their next debt servicing payment.

    Exploring the data from UBS, the divergence between consumer delinquencies and the unemployment rate at record lows signals wage growth is non-existent at a time when millennials’ leverage is high.

    We further summarized: “Per the charts below, when you break out rising consumer delinquencies into their individual buckets the catalyst for the trend above suddenly becomes more clear. While delinquency rates on mortgages, HELOCs and credit cards are improving, or at least not deteriorating rapidly, delinquency rates on student loans and auto loans are a completely different story."

    And lastly, who took on all those $40,000, 0%, 80-month loans all so they could drive around in a brand new BMW they couldn’t afford? Well, if you guessed millennials in the lowest quintile of wages earners in the country then you’re absolutely right!

    As Mish points out in Figure 7 below, the median debt-to-asset ratio for Americans under the age of 35 has surged over the past couple of decades from ~40% to a staggering 100%”.

    With the financial security of the millennial in grave danger, as per UBS strategist Matthew Mish’s charts, we start to get the sense of why millennials are flocking to

    First, Sugar Daddies and or Mommies have an average annual income of $250,000 and the average net worth of $1.5 million. The simple term in life: ‘follow the money’ seems to be at play here. Sugar Daddies and or Mommies have a monthly membership of $80.00 per month, meanwhile the website allows a broke college student free of charge.

    Here are the benefits of a ‘Sugar Daddy’:


    Browsing the ‘Sugar Baby Female’ mill of broke millennials. We find this:

    Here are the disturbing ‘Sugar Daddies’ preying on broke desperate college millennials:

    Business Insider, , interviewed a broke college millennial by the name of  Christina, 29-year old, and user of

    Christina said she isn’t willing to have sex for money, but has received over $90,000 for education-related costs from her ‘Sugar Daddies’.

    The MBA student at Michigan State University living in Las Vegas said,

    That was when it finally set in and I was looking at the prices and I was looking at how much debt I was getting in and I had already started my MBA. I was like, I can’t afford this, I’m going to be paying this off for years and years and years.

    In addition, she made it clear that she isn’t interested in “one-night stands”.. We find that hard to believe.. Here’s what she said:

    I’m not a person that is interested in one-night stands with people who are visiting Vegas for a couple days – that’s not interesting to me. If that’s what you’re going to come at me with, my response is going to be, thank you for the offer, but I’m going to pass. On my profile it specifically says, I’m going to school for this, this is what I’m looking for, I would like help paying for my school and my books.

    Bottomline: The millennial generation has turned desperate with debt up to their eyes balls and it shows how this avocado and toast generation will do anything for a debt service payment.

  • Japan's Plea To Millennials: Please Buy Stocks

    Ever since the Federal Reserve first got into the business of blowing massive equity bubbles back in the 1980’s, Americans have shown a willingness to happily, if ignorantly, embrace each successive iteration to the rigged market.  Of course, as E-Trade recently confirmed via the following ad, making money in equities is a very simple two-step process: (1) get invested, (2) buy a yacht made of Cuban mahogany and party with models…why would anyone in their right mind pass that up?

    Unfortunately, at least for the central planners at the Bank of Japan who would love to be as efficient at creating asset bubbles as their U.S. counterparts, Japanese investors have a slightly longer memory than U.S. investors and have shunned stocks ever since an entire generation of wealth was wiped out in the 90’s.  After 20 years of stocks pretty much only trading in one direction, one can understand their concern.

    Moreover, given the chart above, perhaps it’s not surprising that millennials in Japan use the words “Risky”, “Gambling”, “Scary” and “Loss” most frequently to describe the idea of “investing” (chart per the Wall Street Journal).


    All that said, as the Wall Street Journal points out today, with an aging population and trillions of dollars worth of pension promises about to come due, Japan’s central planners have no option to double down on efforts to convince millennial investors to once again throw all of their money into the Nikkei slot machine.

    If anything can persuade Japanese to invest, it may be fear rather than greed. The government’s debt, more than twice the nation’s annual output, has fanned doubts about whether promised pensions will be forthcoming decades from now.


    More than half of Japan’s household wealth sits in bank deposits or cash under the mattress, according to the Bank of Japan, compared with 14% in the U.S.


    “We have to increase our assets. Otherwise we cannot survive in a super-aged society,” said Satoshi Nojiri, director of the Fidelity Retirement Institute in Japan.

    Luckily, there is even a new Robot, Theo, who will take your monthly deposit and gamble invest it for you.  Theo was created by a company called Money Design whose ‘business strategy’ is centered around targeting “smartphone users accustomed to playing games on their phones”…you know, because if you can play Angry Birds on your iPhone then you can definitely be a rock star investor.

    Money Design has a smartphone app, Theo, that aims to appeal to a cautious generation of investors accustomed to deflation. If it can unlock Japanese savers’ appetite for stocks with a click or a swipe, it would succeed at what many in Tokyo have found a nearly impossible task.


    Nao Kitazawa, a former Morgan Stanley investment banker who helps run the startup, called Money Design, does his best to distance himself from the past, with his New Balance sneakers and black T-shirt. His target is smartphone users accustomed to playing games on their phones.


    “We’ve tried to make our service cool, sharp, new,” said the 42-year-old entrepreneur. “We’re getting rid of some of the stiff formality of meeting with brokers for an hour during lunch time.”


    The Theo app pitches a small starting investment of around $100 a month, with a robo adviser selecting model portfolios based on the investor’s inflation expectations and risk appetite. Fees come to 1% of assets annually.


    “We want to provide an alternative to a bank deposit,” said Money Design’s Mr. Kitazawa.


    The business is still small: Since starting in February last year, Theo has drawn in 18,386 accounts and $106 million in assets under management as of the end of September 2017, with about half of clients in their 20s or 30s.


    Of course, efforts to get millennials in Japan to invest are nothing new and the latest such efforts even include tax exempt brokerage accounts for people willing to gamble just $3,500 per year…

    Efforts to attract new blood have fallen short before. The government a few years back created a tax exemption for small brokerage accounts in hopes of getting people to dip their toes in the market. Not many did, and government figures show half the accounts are inactive.


    This month, the government started taking applications for a new program that will start next year and be available at major brokerages. Officials said they have streamlined the process and lowered the minimum investment a year to ¥400,000 (about $3,500) from ¥1.2 million, while allowing tax benefits to last longer.


    To Japanese policy makers, stock investing isn’t just a personal choice. Bringing a new crop of risk-taking investors into the market, they say, could in turn encourage more risk-taking entrepreneurs to create the kind of companies that are driving the U.S. economy.


    Getting money to flow into stocks could “contribute to economic growth eventually,” a Financial Services Agency spokesman said. “Then we hope that through long-term, regular diversified investments, people can share the success of the securities market.”

    …The desparation almost feels like a comp from a casino way off the strip in Vegas…”free” meat loaf dinner for anyone willing to gamble away their mortgage payment this month!

    Of course, up until this morning it looked as if Japanese investors were once again getting excited about investing…and then this happened:

    So what say you?  Is this just a temporary blip or is a fragile Japanese investor base once again preparing to “sell the rip.”

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