- London Bans Extinction Rebellion Protests After Blackrock Offices Targeted
London Bans Extinction Rebellion Protests After Blackrock Offices Targeted
London has become the first city in the world to ban environmental alarmist group Extinction Rebellion just one day after reports that they were targeting Blackrock offices in the progressive city.
Any assembly linked to the Extinction Rebellion ‘Autumn Uprising’ must now cease their protest(s) within London (Metropolitan Police Service, and City of London areas) by 2100 hours on Monday 14th October 2019.https://t.co/f3e0sozVAG pic.twitter.com/kYA7NOYwmX
— MPS Events (@MetPoliceEvents) October 14, 2019
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Supporters of the group – which made headlines last week for causing gridlock in New York’s Times Square when they superglued themselves to a boat – call London’s decision massive “overreach,” according to CNN.
#ExtinctionRebelion Mob rocking up outside Blackrock Offices. Looks like a lost Drama School Trip. pic.twitter.com/NhBNJdXTrf
— Matthew Jones (@the_mjones) October 14, 2019
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“There have been draconian policing methods e.g. (in) Brisbane, and water cannons and violence used by police in Belgium. But this is the first ban,” extiction rebellion spokeswoman Zion Lights told CNN, adding “We are worried by this erosion of democracy while the real criminals continue to destroy the health of our planet.”
According to the report, the ban is intended to prevent “ongoing serious disruption to the community.”
That said, activists do not appear to be backing down.
But, by Tuesday morning, the environmental campaigners had made it clear that they wouldn’t back down. Many activists returned to Trafalgar Square in defiance of the ban and the group said it would be pursuing legal action against the police force’s decision.
The movement’s co-founder, Gail Bradbrook, staged a demonstration at the UK Department of Transport, climbing atop the entrance as other activists glued themselves to the building below.
Referring to trees that are scheduled to be felled in the building of the UK’s HS2 high-speed rail project, Bradbrook said: “I do this for the beautiful pear tree at Cubbington Woods, 250 years old they have no rights… I do this in fierce love of the 108 ancient woodlands threatened by HS2, this climate crime of a project. I do this in the spirit of what Emmeline Pankhurst called ‘the noble art of window smashing.'”
Bradbrook was arrested shortly afterwards. –CNN
In a report released over the summer, a former head of counterterrorism for Scotland Yard warned that Extinction Rebellion should be treated as an extremist anarchist group.
Tyler Durden
Wed, 10/16/2019 – 02:45 - Germany Ignores EU Warning On Huawei 5G Security Risk
Germany Ignores EU Warning On Huawei 5G Security Risk
Authored by Mike Shedlock via MishTalk,
German Chancellor Angela Merkel ignored an EU risk assessment and allows Huawei’s 5G technology.
The Wall Street Journal reports EU Warns of 5G Risks Amid Scrutiny of Huawei.
The European Union has identified a series of specific security threats posed by foreign vendors of telecommunications equipment, significantly heightening the bloc’s scrutiny of suppliers like Huawei Technologies Co., according to officials familiar with the matter and a privately circulated risk assessment prepared by European governments.
Earlier in the week, the EU released a public report warning that hostile states or state-backed actors posed a security threat to new 5G mobile networks being rolled out around the world. 5G promises faster connection speeds and the ability to link lots of devices—from cars to pacemakers—to the internet.
“These vulnerabilities are not ones which can be remedied by making small technical changes, but are strategic and lasting in nature,” said a person familiar with the debate inside the European Council, the bloc’s top political policy-making body.
The analysis also said member states had reported the risk of “uncontrolled software updates, manipulation of functionalities, inclusion of functions to bypass audit mechanisms, backdoors, undocumented testing features left in the production version, among others.”
The report says vendors or operators that were linked to a nation-state “with a high geopolitical risk profile would increase the risk of espionage, especially where there were no democratic and legal restrictions in place.”
Huawei and China
The report did not specifically name Huawei or China but it’s clear what the report was all about.
It seems everyone is afraid of incurring the wrath of China, especially Angela Merkel.
Germany Won’t Ban Huawei or any 5G Supplier Up Front
Please consider Germany Won’t Ban Huawei or any 5G Supplier Up Front
Germany is resisting US pressure to shut out Chinese tech giant Huawei from its 5G networks — saying it will not ban any supplier for the next-gen mobile networks on an up front basis, per Reuters.
“Essentially our approach is as follows: We are not taking a pre-emptive decision to ban any actor, or any company,” government spokesman, Steffen Seibert, told a news conference in Berlin yesterday.
German business newspaper Handelsblatt, which says it has reviewed a draft of the incoming 5G security requirements, reports that chancellor Angela Merkel stepped in to intervene to exclude a clause which would have blocked Huawei’s market access — fearing a rift with China if the tech giant is shut out.
Does Merkel’s Position Make Sense?
Actually, I believe it does, for several reasons.
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Trump
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Germany’s Infrastructure
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US Spying
Trump: Trump calls Huawei a security threat but is willing to allow it’s technology as part of a trade agreement. Either Huawei is a security threat or it isn’t. If it is, then it should not be used as a bargaining chip in negotiations. Trump says one thing and does another.
Infrastructure: Germany’s infrastructure is already highly dependent on Huawei’s 4G technology. It has a smooth transition to Huawei’s 5G. Switching vendors would make a mess of things for years.
US Spying: Who can trust the US anyway?
New Security Threat
Edward Snowen, the hero who disclosed US spying on allied including Angela Merkel, reports Without Encryption, We Will Lose All Privacy. This is Our New Battleground.
In the midst of the greatest computer security crisis in history, the US government, along with the governments of the UK and Australia, is attempting to undermine the only method that currently exists for reliably protecting the world’s information: encryption. Should they succeed in their quest to undermine encryption, our public infrastructure and private lives will be rendered permanently unsafe.
I know a little about this, because for a time I operated part of the US National Security Agency’s global system of mass surveillance. In June 2013 I worked with journalists to reveal that system to a scandalised world. Without encryption I could not have written the story of how it all happened – my book Permanent Record – and got the manuscript safely across borders that I myself can’t cross.
When I came forward in 2013, the US government wasn’t just passively surveilling internet traffic as it crossed the network, but had also found ways to co-opt and, at times, infiltrate the internal networks of major American tech companies.
Donald Trump’s attorney general, William Barr, who authorised one of the earliest mass surveillance programmes without reviewing whether it was legal, is now signalling an intention to halt – or even roll back – the progress of the last six years. WhatsApp, the messaging service owned by Facebook, already uses end-to-end encryption (E2EE): in March the company announced its intention to incorporate E2EE into its other messaging apps – Facebook Messenger and Instagram – as well. Now Barr is launching a public campaign to prevent Facebook from climbing this next rung on the ladder of digital security. This began with an open letter co-signed by Barr, UK home secretary Priti Patel, Australia’s minister for home affairs and the US secretary of homeland security, demanding Facebook abandon its encryption proposals.
The true explanation for why the US, UK and Australian governments want to do away with end-to-end encryption is less about public safety than it is about power: E2EE gives control to individuals and the devices they use to send, receive and encrypt communications, not to the companies and carriers that route them. This, then, would require government surveillance to become more targeted and methodical, rather than indiscriminate and universal.
US Seeks a Backdoor
Snowden disclosed US spying on allies, including Angela Merkel.
Now, the US wants Google, Facebook, WhatsApp and everyone else to put in a backdoor that it can exploit. And it will. And backdoors are not secure, on purpose, by definition.
If the US can exploit a backdoor, so can others, as soon as they figure it out, and someone will.
Can anyone trust the US to not put in 5G backdoors?
Of course not.
But we can trust the US, UK, and EU to keep a very close eye on what Huawei is doing.
That does not solve all the issues, but as long as the US cannot be trusted, Merkel may as well trust but monitor Huawei instead of totally not trusting the US at all.
Sadly, the US is nothing but the very surveillance state we accuse others of being.
Tyler Durden
Wed, 10/16/2019 – 02:00 -
- Escobar: Kurds Face Stark Options After US Pullback
Escobar: Kurds Face Stark Options After US Pullback
Authored by Pepe Escobar via The Asia Times,
Forget an independent Kurdistan: They may have to do a deal with Damascus on sharing their area with Sunni Arab refugees
In the annals of bombastic Trump tweets, this one is simply astonishing: here we have a President of the United States, on the record, unmasking the whole $8-trillion intervention in the Middle East as an endless war based on a “false premise.” No wonder the Pentagon is not amused.
Trump’s tweet bisects the surreal geopolitical spectacle of Turkey attacking a 120-kilometer-long stretch of Syrian territory east of the Euphrates to essentially expel Syrian Kurds. Even after Turkish President Recep Tayyip Erdogan cleared with Trump the terms of the Orwellian-named “Operation Peace Spring,” Ankara may now face the risk of US economic sanctions.
You will find more infographics at Statista
The predominant Western narrative credits the Syrian Democratic Forces, mostly Kurdish, for fighting and defeating Islamic State, also known as Daesh. The SDF is essentially a collection of mercenaries working for the Pentagon against Damascus.
But many Syrian citizens argue that ISIS was in fact defeated by the Syrian Arab Army, Russian aerial and technical expertise plus advisers and special forces from Iran and Hezbollah.
As much as Ankara may regard the YPG Kurds – the “People’s protection units” – and the PKK as mere “terrorists” (in the PKK’s case aligned with Washington), Operation Peace Spring has in principle nothing to do with a massacre of Kurds.
Facts on the ground will reveal whether ethnic cleansing is inbuilt in the Turkish offensive. A century ago few Kurds lived in these parts, which were populated mostly by Arabs, Armenians and Assyrians. So this won’t qualify as ethnic cleansing on ancestral lands. But if the town of Afrin is anything to go by the consequences could be severe.
Into this heady mix, enter a possible, uneasy pacifier: Russia. Moscow previously encouraged the Syrian Kurds to talk to Damascus to prevent a Turkish campaign – to no avail. But Foreign Minister Sergey Lavrov never gives up. He has now said: “Moscow will ask for the start of talks between Damascus and Ankara.” Diplomatic ties between Syria and Turkey have been severed for seven years now.
With Peace Spring rolling virtually unopposed, Kurdish Gen. Mazloum Kobani Abdi did raise the stakes, telling the Americans he will have to make a deal with Moscow for a no-fly zone to protect Kurdish towns and villages against the Turkish Armed Forces. Russian diplomats, off the record, say this is not going to happen. For Moscow, Peace Spring is regarded as “Turkey’s right to ensure its security,” in the words of Kremlin spokesman Dmitry Peskov. As long as it does not turn into a humanitarian disaster.
No independent Kurdistan
From Washington’s perspective, everything happening in the volatile Iran-Iraq-Syria-Turkey spectrum is subject to two imperatives:
1) geopolitically, breaking what is regionally regarded as the axis of resistance: Iran, Iraq, Syria, Hezbollah; and
2) geostrategically, breaking the Chinese-led Belt and Road Initiative from being incorporated in both Iraq and Syria, not to mention Turkey.
When Erdogan remarked that the trilateral Ankara summit last month was “productive,” he was essentially saying that the Kurdish question was settled by an agreement among Russia, Turkey and Iran.
Diplomats confirmed that the Syrian Constitutional Committee will work hard towards implementing a federation – implying that the Kurds will have to go back to the Damascus fold. Tehran may even play a role to smooth things over, as Iranian Kurds have also become very active in the YPG command.
The bottom line: there will be no independent Kurdistan – as detailed in a map previously published by the Anadolu news agency.
From Ankara’s point of view, the objective of Operation Peace Spring follows what Erdogan had already announced to the Turkish Parliament – that is, organizing the repatriation of no fewer than two million Syrian refugees to a collection of villages and towns spread over a 30km-wide security zone supervised by the Turkish army.
Yet there has been no word about what happens to an extra, alleged 1.6 million refugees also in Turkey.
Kurdish threats to release control of 50 jails holding at least 11,000 ISIS/Daesh jihadis are just that. The same applies to the al-Hol detention camp, holding a staggering 80,000 ISIS family members. If let loose, these jihadis would go after the Kurds in a flash.
Veteran war correspondent and risk analyst Elijah Magnier provides an excellent summary of the Kurds’ wishful thinking, compared with the priorities of Damascus, Tehran and Moscow:
The Kurds have asked Damascus, in the presence of Russian and Iranian negotiators, to allow them to retain control over the very rich oil and gas fields they occupy in a bit less than a quarter of Syrian territory. Furthermore, the Kurds have asked that they be given full control of the enclave on the borders with Turkey without any Syrian Army presence or activity. Damascus doesn’t want to act as border control guards and would like to regain control of all Syrian territory. The Syrian government wants to end the accommodations the Kurds are offering to the US and Israel, similar to what happened with the Kurds of Iraq.
The options for the YPG Kurds are stark. They are slowly realizing they were used by the Pentagon as mercenaries. Either they become a part of the Syrian federation, giving up some autonomy and their hyper-nationalist dreams, or they will have to share the region they live in with at least two million Sunni Arab refugees relocated under Turkish Army protection.
The end of the dream is nigh. On Sunday, Moscow brokered a deal according to which the key, Kurdish-dominated border towns of Manbij and Kobane go back under the control of Damascus. So Turkish forces will have to back off, otherwise, they will be directly facing the Syrian Arab Army. The game-changing deal should be interpreted as the first step towards the whole of northeast Syria eventually reverting to state control.
The geopolitical bottom line does expose a serious rift within the Ankara agreement. Tehran and Moscow – not to mention Damascus – will not accept Turkish occupation of nearly a quarter of sovereign, energy-rich Syrian territory, replacing what was a de facto American occupation. Diplomats confirm Putin has repeatedly emphasized to Erdogan the imperative of Syrian territorial integrity. SANA’s Syrian news agency slammed Peace Spring as “an act of aggression.”
Which brings us to Idlib. Idlib is a poor, rural province crammed with ultra-hardcore Salafi jihadis – most linked in myriad levels with successive incarnations of Jabhat al-Nusra, or al-Qaeda in Syria. Eventually, Damascus, backed by Russian airpower, will clear what is in effect the Idlib cauldron, generating an extra wave of refugees. As much as he’s investing in his Syrian Kurdistan safe zone, what Erdogan is trying to prevent is an extra exodus of potentially 3.5 million mostly hardcore Sunnis to Turkey.
Turkish historian Cam Erimtan told me, as he argues in this essay, that it’s all about the clash between the post-Marxist “libertarian municipalism” of the Turkish-Syrian PKK/PYD/YPG/YPJ axis and the brand of Islam defended by Erdogan’s AKP party:
“The heady fusion of Islamism and Turkish nationalism that has become the AKP’s hallmark and common currency in the New Turkey, results in the fact that as a social group the Kurds in Syria have now been universally identified as the enemies of Islam.”
Thus, Erimtan adds, “the ‘Kurds’ have now taken the place of ‘Assad’ as providing a godless enemy that needs to be defeated next door.”
Geopolitically, the crucial point remains that Erdogan cannot afford to alienate Moscow for a series of strategic and economic reasons, ranging from the Turk Stream gas pipeline to Ankara’s interest in being an active node of the Belt & Road as well as the Eurasia Economic Union and becoming a full member of the Shanghai Cooperation Organization, all geared towards Eurasian integration.
‘Win-win’
And as Syria boils, Iraq simmers down.
Iraqi Kurdistan lives a world apart, and was not touched by the Iraqi protests, which were motivated by genuine grievances against the swamp of corrupt-to-the-core Baghdad politics. Subsequent hijacking for a specific geopolitical agenda was inevitable. The government says Iraqi security forces did not shoot at protesters. That was the work of snipers.
Gunmen in balaclavas did attack the offices of plenty of TV stations in Baghdad, destroying equipment and broadcast facilities. Additionally, Iraqi sources told me, armed groups targeted vital infrastructure, as in electricity grids and plants especially in Diwaniyah in the south. This would have plunged the whole of southern Iraq, all the way to Basra, into darkness, thus sparking more protests.
Pakistani analyst Hassan Abbas spent 12 days in Baghdad, Najaf and Karbala. He said heavily militarized police dealt with the protests, “opting for the use of force from the word go – a poor strategy.” He added: “There are 11 different law enforcement forces in Baghdad with various uniforms – coordination between them is extremely poor under normal circumstances.”
But most of all, Abbas stressed: “Many people I talked to in Karbala think this is the American response to the Iraqi tilt towards China.”
That totally fits with this comprehensive analysis.
Iraq did not follow the – illegal – Trump administration sanctions on Iran. In fact it continues to buy electricity from Iran. Baghdad finally opened the crucial Iraq-Syria border post of al-Qaem. Prime Minister Adel Abdel Mahdi wants to buy S-400 missile systems from Russia.
He also explicitly declared Israel responsible for the bombing of five warehouses belonging to the Hashd al-Shaabi, the people mobilization units. And he not only rejected the Trump administration’s “deal of the century” between Israel and Palestine but also has been trying to mediate between Iran and Saudi Arabia.
And then there’s – what else? – China. On a state visit to Beijing on September 23, Mahdi clinched a proverbial win-win deal: plenty of oil supplies traded with investment in rebuilding infrastructure. And Iraq will be a certified Belt & Road node, with President Xi Jinping extolling a new “China-Iraq strategic partnership”. China is also looking to do post-reconstruction work in Syria to make it a key node in the New Silk Roads.
It ain’t over till the fat (Chinese) lady sings while doing deals. Meanwhile, Erdogan can always sing about sending 3.6 million refugees to Europe.
What’s happening is a quadruple win.
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The US performs a face saving withdrawal, which Trump can sell as avoiding a conflict with NATO alley Turkey.
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Turkey has the guarantee – by the Russians – that the Syrian Army will be in control of the Turkish-Syrian border.
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Russia prevents a war escalation and keeps the Russia-Iran-Turkey peace process alive.
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And Syria will eventually regain control of its oilfields and the entire northeast.
Tyler Durden
Wed, 10/16/2019 – 00:15 -
- "Worst Slump In A Generation": China Auto Sales Continue Historic Collapse
“Worst Slump In A Generation”: China Auto Sales Continue Historic Collapse
Auto sales in China have fallen for the 15th month out of 16 months in September. It’s the “worst slump in a generation”, according to Bloomberg, as the key Asian market continues to be the poster child for the global automotive recession.
The market fell 6.6% to 1.81 million total units, according to the China Passenger Car Association. The auto industry continues to be weighed down by a slowing global economy, the trade war and stricter emissions rules. The China Association of Automobile Manufacturers is forecasting a drop in vehicle deliveries to dealers in 2019, despite China trying several types of stimulus to drum up demand.
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Both local manufacturers and global manufacturers have experienced these headwinds in China.
General Motors said late last week that third quarter deliveries in China were down 18% and local Chinese manufacturer BYD said sales were lower in September by 15%.
Additional data from Marklines shows that names like Mitsubishi, Mazda and Nissan continued mid-single digit declines, while Toyota and Honda were able to (barely) buck the trend.
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Nissan announced on October 10 that it sold 134,713 units in September in China, reflecting a 4.6% y/y decrease in sales. September sales of the 7th-generation Altima, Lannia, Tiida, Kicks and Qashqai increased. Year-to-date (YTD) sales from January to September totaled 1,090,983 units, reflecting a 0.4% y/y decrease.
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Toyota sold 143,100 units in September, reflecting a 1.6% y/y increase. YTD sales totaled 1,181,300 units, reflecting an 8.4% y/y increase.
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Honda announced that its September sales were 138,056 units, reflecting a y/y increase of 4.0%. Sales of the Civic and Accord exceeded 20,000 units. Sales of the Accord, Odyssey, CR-V, Inspire and Elysion, all of which are equipped with the SPORT HYBRID, a highly efficient double-motor hybrid power system, totaled 13,270 units. YTD sales totaled 1,123,570 units, reflecting a 16.4% y/y increase.
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Mazda announced that sales in September reached 20,619 units, reflecting a 5.9% y/y decrease. YTD sales totaled 161,742 units.
Additional data on Chinese auto numbers for September will be forthcoming, and we will update this post when applicable.
Tyler Durden
Tue, 10/15/2019 – 23:55 -
- DC's Atlantic Council Raked In Funding From Hunter Biden's Ukrainian Employer While Courting His VP Father
DC’s Atlantic Council Raked In Funding From Hunter Biden’s Ukrainian Employer While Courting His VP Father
Authored by Max Blumenthal via Consortium News,
With its relentless focus on corruption in Russia and Ukraine, the Atlantic Council has distinguished itself from other top-flight think tanks in Washington. Over the past several years, it has held innumerable conferences and panel discussions, issued a string of reports, and published literally hundreds of essays on Russia’s “kleptocracy” and the scourge of Kremlin disinformation.
At the same time, this institution has posed as a faithful partner to Ukraine’s imperiled democracy, organizing countless programs on the urgency of economic reforms to tamp down on corruption in the country.
But behind the curtain, the Atlantic Council has initiated a lucrative relationship with a corruption-tainted Ukrainian gas company, the Burisma Group, that is worth as much as $250,000 a year. The partnership has paid for lavish conferences in Monaco and helped bring Burisma’s oligarchic founder out of the cold.
This alliance has remained stable even as official Washington goes to war over allegations by President Donald Trump and his allies that former Vice President Joseph Biden fired a Ukrainian prosecutor to defend his son’s handsomely compensated position on Burisma’s board.
As Biden parries Trump’s accusations, some of the former vice president’s most ardent defenders are emerging from the halls of the Atlantic Council, which featured Biden as a star speaker at its awards ceremonies over the years. These advocates include Michael Carpenter, Biden’s longtime foreign policy advisor and specialist on Ukraine, who has taken to the national media to support his embattled boss.
Even as Burisma’s trail of influence-buying finds its way into front page headlines, the Atlantic Council’s partnership with the company is scarcely mentioned. Homing in on the partisan theater of “Ukrainegate” and tuning out the wider landscape of corruption, the Beltway press routinely runs quotes from Atlantic Council experts on the scandal without acknowledging their employer’s relationship with Hunter Biden’s former employer.
This case of obvious cronyism has not been overlooked because the Atlantic Council is a big player, but because of its success in leveraging millions from foreign governments, the arms and energy industries, and Western-friendly oligarchs to bring its influence to bear in the nation’s capital.
NATO’s Think Tank in Washington
The Atlantic Council functions as the semi-official think tank of NATO in Washington. As such, it cultivates relationships with well-established policymakers who take a hard line against Russia and support the treaty organization’s perpetual expansion.
Biden has been among the think tank’s most enthusiastic and well-placed allies.
In 2011, then-Vice President Biden delivered the keynote address at the Atlantic Council’s distinguished leadership awards. He returned to the think tank again in 2014 for another keynote at its “Toward A Europe Whole and Free” conference, which was dedicated to expanding NATO’s influence and countering “Russian aggression.” Throughout the event, speakers like Zbigniew Brzezinski, a former U.S. national security adviser, sniped at President Barack Obama for his insufficiently bellicose posture toward Russia, while former Secretary of State Madeleine Albright fretted over polls showing low public support for U.S. interventionism overseas.
In his own comments, Biden emphasized the need to power Europe with non-Russian sources of natural gas. This provided a prime opportunity to Ukrainian suppliers like Burisma and U.S. energy titans. Many of these energy companies, from Chevron to Noble Energy, also happen to be top donors to the Atlantic Council.
“This would be a game-changer for Europe, in my view, and we’re ready to do everything in our power to help it happen,” Biden promised his audience.
Joe Biden, second from right, while U.S. vice president, at 2011 Atlantic Council distinguished leadership awards ceremony. At the time, the Atlantic Council was pushing to ramp up the proxy war against pro-Russian forces in Ukraine. In 2015, for instance, the think tank helped prepare a proposal for arming the Ukrainian military with offensive weaponry like Javelin anti-tank missiles.
Given that the Atlantic Council has been funded by the two manufacturers of the Javelin system, Raytheon and Lockheed Martin, this created at least the appearance of a conflict of interest. In fact, the think tank presented its Distinguished Business Leadership Award to Lockheed CEO Marillyn Hewson that same year.
Dubious arrangements like these are not limited to arms manufacturers. Anders Aslund, a neoliberal economist who helps oversee the Atlantic Council’s programming on Russia and Eastern Europe, was quietly paid by a consortium of Latvian banks to write an October 2017 paper highlighting the supposed progress they had made in battling corruption.
Aslund was asked to write the piece by Sally Painter, a longtime lobbyist for Latvian financial institutions who was appointed to the Atlantic Council board in 2017. At the time, one of those banks was seeking access to the U.S. market and facing allegations that it had engaged in money laundering.
Pay-for-play collaborations have helped grow the Atlantic Council’s annual revenue from $2 million to over $20 million in the past decade. In almost every case, the think tank has churned out policy prescriptions that seem suited to its donors’ interests.
Government contributors to the Atlantic Council include Gulf monarchies, the U.S. State Department and various Turkish interests.
In May 2017, Turkish President Recep Erdogan was filmed watching as his personal guards brutalized Kurdish protesters in Washington, D.C.; lost in the headlines was the fact that he was on his way into an event at the Turkish ambassador’s residence hosted by the Atlantic Council.
#Erdoğan‘ın korumaları kavgaya karıştı https://t.co/gsi1iQ68Ye #amerikaninsesi pic.twitter.com/Jv3g5E7AVA
— Amerika’nın Sesi (@VOATurkish) May 17, 2017
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Among the think tank’s top individual contributors is Victor Pinchuk, one of the wealthiest people in Ukraine and a prolific donor to the Clinton Foundation. Pinchuk donated $8.6 million to the Clintons’ non-profit throughout Hillary Clinton’s tenure as secretary of state.
Asked if Pinchuk was lobbying the State Department on Ukraine, his personal foundation told The Wall Street Journal, “this cannot be seen as anything but a good thing.”
Obama’s ‘Point Person’ on Ukraine
In mainstream media reports about the Bidens, scarcely any attention is given to the critical role that Joe Biden and other Obama administration officials played in the 2013-2014 Maidan revolt that replaced a fairly elected, Russian-oriented government with a Western vassal. In a relatively sympathetic New Yorker profile of Hunter Biden, for example, the regime change operation was described by reporter Adam Entous as merely “public protests.”
During the height of the “Revolution of Dignity” that played out in Kiev’s Maidan Square, then-Assistant Secretary of State Victoria Nuland boasted that the U.S. had “invested $5 billion” since 1991 into Ukrainian civil society. On a December 2013 tour of the Maidan, Nuland personally handed out cookies to protesters alongside Geoffrey Pyatt, U.S. ambassador to Ukraine at the time.
In a phone conversation that leaked two months later, the two U.S. diplomats could be heard plotting out the future government of the country, discussing Ukrainian politicians as though they were chess pieces. “I think Yats is the guy who’s got the economic experience,” Nuland said, essentially declaring Arseniy Yatsenyuk the next prime minister. Frustrated with the European Union’s reluctance to inflame tensions with Moscow, Nuland exclaimed, “Fuck the EU.”
By February 2014, the Maidan revolt had succeeded in overthrowing President Viktor Yanukovich with the help of far-right ultra-nationalist street muscle. With a new, U.S.-approved government in power, Biden assumed a personal role in dictating Ukraine’s day-to-day affairs.
“No one in the U.S. government has wielded more influence over Ukraine than Vice President Joe Biden,” Foreign Policy noted. The Atlantic Council also described Biden as “the point person on Ukraine in the Obama administration.”
“Ukraine was the top, or one of the top three, foreign policy issues we were concentrating on,” said Carpenter, Biden’s foreign policy adviser. “[Biden] was front and center.”
Biden made his first visit to the post-Maidan government of Ukraine in April 2014, just as Kiev was launching its “anti-terrorist operation” against separatists who broke off from the new, NATO-oriented Ukraine and its nationalist government and formed so-called people’s republics in the Russophone Donbass region. The fragmentation of the country and its grinding proxy war flowed directly from the regime-change operation that Biden helped oversee.
Addressing the parliament in Kiev, Biden declared that “corruption can have no place in the new Ukraine,” stating that the “United States has also been a driving force behind the IMF, working to provide a multi-billion package to help Ukraine.” That same month, Hunter Biden was appointed to the board of Burisma.
Hunter Biden starred at one of Burisma’s energy conferences in Monaco, which are today sponsored by the Atlantic Council.
Burisma Recruits Hunter Biden
The ouster of Yanukovych put the founder and president of Burisma, Mykola Zlochevsky, in a delicate spot. Zlochevsky had served as the environment minister under Yanukovych, handing out gas licenses to cronies. Having watched the president flee Ukraine for his life, currying favor with the Obama administration was paramount for Zlochevsky.
He was also desperate to get out of legal trouble. At the time, a corruption investigation in the U.K. had resulted in the freezing of $23 million of Zlochevsky’s assets. Then, in August 2014, the oligarch was forced to follow Yanukovych into exile after being accused of illegally enriching himself.
The need to refurbish Burisma’s tattered image, as well as his own, prompted Zlochevsky to resort to a tried and true tactic for shadowy foreign entities: forking over large sums of money to win friends in Washington. Hunter Biden and the Atlantic Council were soon to become two of his best friends.
Hunter Biden was no stranger to trading on his father’s name for influence. He had served on the board of Amtrak, the train line his father famously rode more than 8,000 times, earning himself the nickname “Amtrak Joe.” Somehow, he also rose to senior vice president at MBNA, the bank that was the top contributor to Joe Biden’s Senate campaigns.
Moreover, the vice president’s son reaped a board position at the National Democratic Institute, a U.S.-funded “democracy promotion” organization that was heavily involved in pushing regime change in Ukraine. And then there was Burisma, which handed him a position on its board despite his total lack of experience in the energy industry and in Ukrainian affairs.
Hunter Biden tried to repay the $50,000-a-month gig Zlochevsky had handed him by enlisting a top D.C. law firm, Boies, Schiller, and Flexner, where he served as co-counsel, to help “improve [Burisma’s] corporate governance.” By the following January, Zlochevsky’s assets were unfrozen by the U.K.
Back in Washington, the arrangement between the son of the vice president and a less than scrupulous Ukrainian oligarch was raising eyebrows. During a May 13, 2014, press conference, Matt Lee of the Associated Press grilled State Department spokesperson Jen Psaki about Hunter Biden’s role on Burisma’s board.
“Does this building diplomatically have any concerns about potential perceptions of conflict or cronyism – which is what you’ve often accused the Russians of doing?” Lee asked Psaki.
“No, he’s a private citizen,” Psaki responded, referring to Hunter Biden.
In a December 2015 op-ed, the editorial board of The New York Times took both Bidens to task for the unseemly business arrangement: “It should be plain to Hunter Biden that any connection with a Ukrainian oligarch damages his father’s efforts to help Ukraine. This is not a board he should be sitting on.”
For a paper that had firmly supported the installation of a U.S.-aligned government in Kiev, this was a striking statement.
Hunter Biden maintained that he had only a brief conversation with his father about his work at Burisma. “Dad said, ‘I hope you know what you are doing,’ and I said, ‘I do,’” Hunter recalled to The New Yorker.
Despite his constant focus on Ukraine, the elder Biden claimed this September that he never spoke to his son about his business dealings in the country.
Disaster for Ukrainians, Boon for the Bidens
On Jan. 12, 2017, the criminal probes of Zlochevsky and Burisma were officially closed under the watch of a new Ukrainian prosecutor.
Less than a week later, Biden returned to Ukraine to make his final speech as vice president. By this point, three years after the Maidan uprising overthrew Yanukovych, it was clear that the national project the vice president personally had presided over was a calamitous failure.
As even the Atlantic Council’s Aslund was willing to admit, Ukraine had become the poorest country in Europe. The country had also become the top recipient of remittances in Europe, with a staggering percentage of its population migrating abroad in search of work.
Meanwhile, Amnesty International stated: “Ukraine is descending into chaos of uncontrolled use of force by radical [far-right] groups. Under these conditions, no person in Ukraine may feel safe.” As the country’s proxy conflict with pro-Russian separatists dragged on, it transformed into a supermarket for the international arms trade.
Meanwhile, Biden’s son Hunter was making a small fortune by simply warming a seat on Burisma’s board of directors.
During his 2017 press conference in Kiev, Biden seemed oblivious to the trends that were driving Ukraine into ruin. He encouraged Ukraine’s leadership to continue on an IMF-led path of privatization and austerity.
He then urged Kiev to “press forward with energy reforms that are eliminating Ukraine’s dependence on Russian gas,” once again advancing policy that would serve as a boon to the energy firms plowing their cash into the Atlantic Council.
Burisma Recruits the Atlantic Council
Even with Hunter Biden on his company’s board, Zlochevsky was still seeking influential allies in Washington. He found them at the Atlantic Council in 2017, literally hours after he was cleared of corruption charges in Ukraine.
On Jan. 19, 2017 — just two days after the investigation of Zlochevsky ended — Burisma announced a major “cooperative agreement” with the Atlantic Council. “It became possible to sign a cooperative agreement between Burisma and the Atlantic Council after all charges against Burisma Group companies and its owner [Mykola] Zlochevskyi were withdrawn,” the Kyiv Post reported at the time.
Mykola Zlochevsky, former employer of Hunter Biden and current partner of the Atlantic Council. The deal was inked by the director of the Atlantic Council’s Eurasia program, a former U.S. ambassador to Ukraine named John Herbst.
Since then, Burisma helped bankroll Atlantic Council programming, including an energy security conference held this May in Monaco, where Zlochevsky currently lives.
“[Zlochevsky] invited them purely for whitewashing purposes, to put them on the façade and make this company look nice,” Daria Kaleniuk, executive director of Ukraine’s Anti-Corruption Action Center, said of the Monaco event to The Financial Times.
At one such conference in Monaco, then-Burisma board member Hunter Biden declared, “One of the reasons that I am proud to be a member of the board at Burisma is that I believe we are trying to figure out the way to create a radical change in the way we look at energy.” (Hunter Biden left Burisma with $850,000 in earnings when his father launched his presidential campaign this year).
While the Atlantic Council was bringing Burisma in from the cold, the company was still too toxic for much of the business world to touch.
As The Financial Times noted, the American Chamber of Commerce in Ukraine had rejected Burisma’s application for membership. “We’ve never worked with them for integrity reasons. Never passed our due diligence,” a Western financial institution told the newspaper.
“The company just does not pass the smell test,” a businessman in Ukraine told The Financial Times. “Their reputation is far from squeaky clean because of their baggage, the background and attempts to whitewash by bringing in recognizable Western names on to the board.”
In fact, a year before the Atlantic Council initiated its partnership with Burisma, the think tank published a paper describing Zlochevsky as “openly on the take” and deriding board members Hunter Biden and former Polish President Aleksander Kwasniewski as his “trophy foreigners.” (Kwasniewski is today a member of the Atlantic Council’s international advisory board).
For Herbst, however, Burisma’s generosity seemed too hard to resist.
“If there are companies that want to support my work, if those companies are not doing anything that I know to be illegal or unethical, I’ll consider their support,” Herbst stated in reply to questions about the Burisma partnership from the Ukrainian news site, Hromadske.
“They’ve been good partners,” he added.
Men of Integrity
The Atlantic Council has provided more than just a web of influence for figures like Biden and Zlochevsky. It extended into the Trump administration, through a former employee who served as the president’s lead envoy to Ukraine.
On the sidelines of a September 2018 Atlantic Council event in New York City, Burisma adviser Vadym Pozharskyi held a meeting with Kurt Volker, then the State Department’s special liaison to Ukraine. A former senior adviser to the Atlantic Council and national security hardliner, Volker had earned praise from Biden as a “solid guy.”
At the time, Volker also served as the executive director of the McCain Institute, named for the senator, John McCain, who authored the congressional provision requiring the U.S. to budget 20 percent of all aid to Ukraine for offensive weapons. As I reported in 2017, the McCain Institute’s financial backers included the BGR group, whose designated lobbyist, Ed Rogers, was a lobbyist for Raytheon – the company that produced the Javelin missiles that both Volker and the Atlantic Council wanted sold to Ukraine.
Following his abrupt resignation this September, Volker was called to testify before the House of Representatives Committee on Foreign Affairs on the so-called Ukrainegate affair. There, he defended Biden as “a man of integrity and dedication to our country” who would never be “influenced in his duties as Vice President by money for his son…”
Key Biden Adviser Joins Atlantic Council
Throughout Biden’s tenure as the “point person” on Ukraine, one figure was constantly by his side: Michael Carpenter, a former Pentagon specialist on Eastern Europe who became a key adviser to Biden on the National Security Council. When Carpenter traveled with Biden to Ukraine in 2015, he helped provide the vice president with talking points throughout his trip.
Once Trump was inaugurated, Carpenter followed fellow members of the Democratic foreign policy apparatus into the think tank world. He accepted a fellowship at the Atlantic Council, and assumed a position as senior director of newly founded Penn Biden Center for Diplomacy and Global Engagement, which provided office space to Biden when he was in Washington.
At the Jan. 23, 2018 Council on Foreign Relations event where Biden made his now-notorious comments about threatening the Ukrainian government with the withdrawal of a one billion dollar loan if it did not fire Ukrainian Prosecutor General Viktor Shokin – “well son of a bitch, he got fired!” Biden exclaimed – Carpenter was by his side, rattling off tough talking points about Russian interference. [Shokin testified under oath that Biden had him fired because he was investigating Burisma.]
On stage at @CFR_org right now, Joe Biden pushing a distinctly neocon line on Russia. A blunt defense of his role in pushing NATO expansion, dismissal of its role in antagonizing Russia and calls for encouraging/backing internal opposition to Putin. https://t.co/SfogBggWk6 pic.twitter.com/t5QPxYMulP
— Max Blumenthal (@MaxBlumenthal) January 23, 2018
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Since then, Carpenter has remained engaged in Ukrainian politics, throwing his weight behind some of the country’s most hardline elements. In July 2018, for instance, he helped welcome Andriy Parubiy, the speaker of the Rada (the Ukrainian parliament), to a series of meetings on Capitol Hill.
Parubiy is the founder of the Social-National Party, which The Washington Post’s Eugene Robinson described as “openly neo-fascist.” In fact, Parubiy appeared in a Nazi-style uniform, packing a pistol beneath a Wolfsangel symbol on the cover of his Mein Kampf-style memoir, “A View From The Right.”
After the Senate meeting with Parubiy, I challenged Carpenter over bringing the far-right politician to Capitol Hill. “Andriy Parubiy is a conservative nationalist who is also a patriot who cares about his country,” Carpenter told me. “I don’t think he has any neo-Nazi inclinations, nor background.” He went on to dismiss the basis of my question as “mostly Russian propaganda.”
Months later, Carpenter staged a meltdown on Twitter over the incident, fabricating quotes by me, branding me as a “sleeze” [sic] and “pro-Asad and pro-Putin scumbag,” while falsely and baselessly claiming I “enlist[ed] RT,” the Russian-backed news network, “to do an exposé on him.”
Asked by The Grayzone about Carpenter’s work for a think tank funded by Burisma while simultaneously involving himself in Biden’s political machine, Atlantic Council media relations deputy director Alex Kisling stated, “Council staff and fellows are free to participate in election activity as individuals and on their own time, provided they do so in a way that could not be seen as acting as a representative of the Council or implying Council endorsement of their activity or views. Michael’s affiliations and previous service are on our website. (He is not part of our full time staff).”
The Penn Biden Center did not respond to a question on whether it supported Carpenter’s work at the Burisma-backed Atlantic Council.
Beltway Press Scrubs Burisma’s Ongoing Influence-Buying
As the scrutiny of Biden’s dealings in Ukraine intensifies, Carpenter has thrust himself into the media limelight to defend his longtime boss.
In an Oct. 7 Washington Post op-ed denouncing Trump’s “smear campaign” against Biden, Carpenter insisted that Biden had gone to great lengths to remove the Ukrainian prosecutor, Shokin, for his failure to take action against Burisma. That evening, Carpenter took to Rachel Maddow’s show on MSNBC to reinforce the message that Biden moved against “corrupt players” in Ukraine, presumably referring to Burisma.
At no point did he mention that Burisma was funding the think tank that hosted him as a senior fellow.
In publishing an “explainer” purporting to debunk the charges against Biden, the Atlantic Council also failed to mention its ongoing relationship with Burisma. Atlantic Council media relations deputy director Kisling dismissed the non-disclosure, telling The Grayzone, “The Council discloses its funding from Burisma on its website and whenever asked.” (Ironically, the Atlantic Council has pushed for greater transparency in political advertising on Facebook, one of the top donors to the think tank).
Perhaps the most absurd omission took place in a GQ article about Ukrainegate by reporter and Russia-watcher Julia Ioffe. In painting Ukraine — the largest nation entirely located in Europe — as a “small country” drowning in corruption, Ioffe noted, “the best way to launder one’s shady reputation and shine for international investors is to hire big-name Western consultants – as Burisma did.”
In the very next paragraph, Ioffe quoted Daniel Fried, a former State Department official now serving as a senior fellow at the Atlantic Council. “It’s a country where there’s a lot of freelance money and a lot of competing interests,” Fried remarked.
Revealingly, Ioffe failed to acknowledge that Fried was one of those “big-named Western consultants” helping to launder Zlochevsky and Burisma’s “shady reputation” through the Atlantic Council.
In fact, Fried was photographed in a one-on-one meeting with Burisma advisor Vadim Pozharskyi at a September 2018 Atlantic Council conference in New York City.
As the furor over “Ukrainegate” continues, Biden and his allies are soldiering ahead, insisting that scrutiny of his activities in Ukraine constitute nothing more than a vast right-wing conspiracy.
Meanwhile, the Beltway press shrugs at Burisma’s buying of influence at a powerful think tank intertwined with Biden’s political operation.
Russia might be a “kleptocracy” and Ukraine might endemically corrupt, but in Washington, this is all business as usual.
* * *
Max Blumenthal is an award-winning journalist and the author of books including best-selling “Republican Gomorrah,” “Goliath,” “The Fifty One Day War” and “The Management of Savagery.” He has also produced numerous print articles for an array of publications, many video reports and several documentaries including “Killing Gaza” and “Je Ne Suis Pas Charlie.” Blumenthal founded the Grayzone Project in 2015 to shine a journalistic light on America’s state of perpetual war and its dangerous domestic repercussions.
Tyler Durden
Tue, 10/15/2019 – 23:35 - Russia Announces Massive Nuclear War Games In Arctic This Week
Russia Announces Massive Nuclear War Games In Arctic This Week
We’ve been documenting how there is a new cold war flourishing across the Arctic. The US, Russia, China, and Europen countries are all attempting to militarize parts of the Arctic region. The first country to dominate the frozen frontier will become the world’s next superpower and possibly control $35 trillion worth of natural resources hiding underneath the ocean floor.
In preparation for a fierce fight in the Arctic, possibly in the late 2020s/early 2030s, Russia has launched massive nuclear war games across its Arctic Seas this week, reported The Moscow Times.
The Ministry of Defence of the Russian Federation said 12,000 Russian soldiers, 100 attack and bomber aircraft, and 200 missile launchers would be practicing offensive and defensive exercises in the Arctic to show the readiness of Russia’s strategic nuclear forces.
Navigation warnings have been posted for civilian aircraft and ships off Russia’s northern coast, located within the Arctic Circle. Submarines, battle cruisers, and aircraft are expected to test ballistic missile firing capabilities through the end of the week.
“During the drills, cruise and ballistic missiles of various types will be launched, including against the Pemboi, Chizha and Kura firing ranges,” the Defence Ministry said.
The Times says cruise missiles launched from aircraft and vessels will strike targets at the Pemboi test range in the north of Russia’s Komi Republic. Another range that will be used is in Chizha, located in the north of Arkhangelsk Oblast on the Barents Sea. Weapon tests will also be conducted on the Kamchatka Peninsula, located on the Pacific Ocean and the Sea of Okhotsk.
“With the test taking place in both the European Arctic and in the Far East, ballistic missiles are set to fly both ways across the Arctic. In the European section, missile launches would likely take place both from a Delta-IV class submarine and a Borei-class submarine aiming at the Kura range, while missiles launched from Pacific Fleet submarines in the Far East will hit the Chizha test range in Russia’s western Arctic,” The Times wrote.
The war exercise comes as Moscow and Beijing are establishing the “Polar Silk Road” in the Arctic as warming temperatures give way to new shipping lanes and economic opportunities.
The Arctic is home to at least 20-25% of the world’s untapped fossil-fuel resources, along with minerals, including gold, silver, diamond, copper, titanium, graphite, uranium, and other rare earth minerals.
Russia has been aggressively militarizing the Arctic ahead of the next global war that could be a vicious fight over Arctic resources. The first country to secure dominance in the Arctic could be the next global superpower.
Tyler Durden
Tue, 10/15/2019 – 23:15 - Shanghai Housing Sales Plunge 86% In Golden Week
Shanghai Housing Sales Plunge 86% In Golden Week
Authored by Mike Shedlock via MishTalk,
Golden Week, a seven-day Chinese holiday, is traditionally a peak period for home sales.
This year, sales plummeted.
The South China Post reports ‘Golden Week’ Property Sales Plunge in Major Chinese Cities.
Property sales in China’s major cities saw one of their worst “golden week” holidays in years, as buyers held back amid a slowing economy and tight restrictions on mortgage loans.
Sales of new homes in Beijing dropped to their lowest level since 2014 during the week following the National Day holiday, according to data from the property information portal Zhuge.com.
By area, sales of new homes in Shanghai plummeted 86 per cent to 5,000 square metres, while the capital saw a 92 per cent plunge to 2,000 sq metre, according to data from Centaline Property.
Clement Luk, a director for east China at Centaline Property, said the home-buying mood has been dampened by the tightening of mortgage lending and the prolonged US-China trade war that discouraged spending.
“People do not want to commit in big investment now, like purchasing any homes, as market sentiment has cooled quickly since March,” he said. “Most owners prefer travelling during golden week holiday instead.”
“Deals are increasingly difficult to conclude unless owners are willing to cut selling prices at big discounts,” said Guo Yi, chief analyst at Beijing-based property consultancy Heshuo Institute.
Beijing Dilemma
Beijing faces the dilemma of all speculative markets: because most real estate buying is now driven by expected price increases, when prices credibly stop rising, buyers disappear and prices begin to fall. Price stability isn’t a real option.https://t.co/quNKXtC8qX via @scmpnews
— Michael Pettis (@michaelxpettis) October 8, 2019
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When property speculation ends, property bloodbaths begin.
Tyler Durden
Tue, 10/15/2019 – 22:55 - US Jets & Apache Gunships In "Show Of Force" Against Turkish Forces Who Got "Too Close" To US Troops
US Jets & Apache Gunships In “Show Of Force” Against Turkish Forces Who Got “Too Close” To US Troops
A US official has informed Reuters that American forces in Syria on Tuesday carried out a “show of force” after Turkish-backed fighters came close to their position in northeast Syria, amid Erdogan’s ongoing ‘Operation Peace Spring’.
Reuters describes, based on the source:
The official, speaking on the condition of anonymity, said U.S. military aircraft were flown over the area after troops in northeastern Syria felt the Turkish-backed fighters were too close. The Turkish-backed fighters dispersed after the show of force, the official said.
File image of Apache gunship via Pinterest. The Pentagon did not initially confirm the incident, but it is consistent with last Friday’s dangerous close encounter wherein US special forces were fired upon, or their position ‘bracketed’, by Turkish artillery which targeted in front of and behind their location.
The new incident further reportedly involved American F-15 fighters and AH-64 Apache gunships in the “show of force,” described further as a violation of a “standing agreement” between Washington and Ankara not to threaten US troops.
“The Turkish forces violated a standing agreement with the U.S. to not get close enough to threaten U.S. troops on the ground,” the official said. “U.S. forces responded with a show of force using aircraft to demonstrate the forces were prepared to defend themselves, as well as communication with the Turkish military through formal channels to protest the risk to U.S. forces.” The unnamed official noted that no shots were fired during the incident, given the Turkish-backed forces quickly dispersed.
The Pentagon has confirmed most of its forces have pulled back from contested cities near the border with Turkey, such as Manbij, as the Turkish Army and its ‘rebel’ proxy units advance and simultaneous with the Kurdish-led Syrian Democratic forces cutting a historic deal with Damascus and the Syrian Army on Sunday.
A senior US official told reporters the following about the proxy force Turkey is relying on as part of its Syria invasion: “They could have used Turkish regular troops,…Instead they decided to use these thugs & bandits & pirates that should be wiped off the face of the earth”
— Ryan Browne (@rabrowne75) October 15, 2019
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Meanwhile, Moscow confirmed separately on Tuesday that Russian forces are now on the ground patrolling areas of Northern Syria which were previously occupied by US bases bolstering Kurdish partners which had since 2015 administered the region. Russian military officials said they were moving in to “fill the void left by the withdrawal of U.S. troops”.
This appears in accordance with President Trump’s ‘green light’ for such a move which drastically changes the direction of the war. “Others may want to come in and fight for one side or the other,” the president posted on Twitter on Sunday. “Let them!”
Tyler Durden
Tue, 10/15/2019 – 22:35 - "Cash Out" Refi Fever: Which Places In America Are Taking On The Most Mortgage Debt?
“Cash Out” Refi Fever: Which Places In America Are Taking On The Most Mortgage Debt?
Submitted by Priceonomics
As the trauma from the Great Recession fades from memory, are Americans increasingly embracing one of the financial maneuvers that caused a great amount of pain a decade ago – cash-out refinancing?
For those of you that are unfamiliar with types of mortgage refinancing, a bit of context might be in order. People typically refinance their existing mortgages for two reasons: to take advantage of falling interest rates, or to “cash-out” a bit of the home equity they’ve built up, typically because their home has increased in value. There’s nothing wrong with accessing this cash, but it means taking out a bigger mortgage and increasing your monthly payments.
During the last recession, these cash-out refinancing caused havoc on people’s budgets when home prices ended up falling and many people lost their jobs. The lower home prices meant that equity had actually been wiped out and the lost jobs meant people couldn’t afford their new, higher mortgages and defaulted. And the cash from the refinancing? It was usually long gone spent on something like a car or home renovation.
A decade later, we’re starting to see signs that people are using mortgage refinancing as a way to generate cash. Along with Priceonomics customer Refiguide.org, in this article we’ll show the data for the typical person refinancing their mortgage, the amount being “cashed out” is approaching Great Recession levels. And while the overall amount of money being cashed out is still substantially less than prior to the last recession, it’s rising very rapidly.
Lastly, in this article, we’ll show that the regions and states where refinancing activity is starting to surge. Cash-out refinancing now makes up 76.6% of refinances in America, with it being the highest in the South and lowest in the Northeast. Moreover, some states like Alaska and Nevada are seeing a surge of refinancing in this most recent quarter. While not necessarily a harbinger of doom, these are likely to be places that could face troubles in a future economics contraction.
***
Each quarter, Freddie Mac publishes data on mortgage refinance and cash-out refinancing. The data goes back to 1990 and most recently in the first quarter of 2019. The time frame gives us a glimpse into the relative sobriety of financing in the 1990s, the massive run-up in the 2000s, followed by the austerity following the Great Recession and then the renewed exuberance of today.
The chart below shows the percentage of refinances that are cash-out, as defined by the new mortgage being 5% or more than the amount that was previously due:
In the run-up to the Great Recession, nearly 90% of refinances were cash-out events. By 2012, that number has fallen to just 12%. From 2012 until today the percentage of refinances that are cash-outs have exploded. At the end of 2018 over 80% of refinances were cash-outs.
When people do refinance, they’re also taking out a lot more money. Below shows the percentage of people’s new refinanced mortgages that was the cash-out portion.
At the peak of financial frenzy in 2006, the cash-out portion of the refinancing was 31% of the total mortgage. Put differently, people would have had a 31% lower monthly mortgage payment if they hadn’t pulled cash out. Following the recession that amount dropped to near zero. Ominously, by the end of 2018 that number raised to 23%, approaching pre-recession levels.
Cash-out refinances are resembling levels seen in the real estate bubble of the 2000s. When people do get a refinance, they’re taking on a lot more debt. If there is a saving grace, it’s that the amount of refinances is much lower today than it was before the crisis.
So while the amount of money being cashed out is on the rise, it’s still nowhere near the previous era:
In 2006 people were cashing out over $80BN per quarter before the economy fell off a cliff. The amount cashed out prompted fell to the levels of the 1990s. By 2014 American’s were cashing out just $4BN per quarter. However, since that point, Americans total cash-out has risen 337% to over $17BN per quarter. While not at levels that preceded the economic crisis, Americans are cashing out a lot more money than they were a few years ago.
***
So where are these financings most common and which states are most at risk?
According to Freddie Mac data, 76.6% mortgage refinances are cash-out. That number is high throughout the country, but below percentages of refinanced mortgages by region that are cash-out:
Cash-out refinances are most common in the South, where they comprised 78.9% of all refinanced mortgages. Cash-out refinances are second highest out West were they make up 76.8% of mortgages. Even in the Northeast, where they are lowest, cash-outs are 73.6% of refinanced loans.
As people refinance at exuberance not seen since before the Great Recession, which states are seeing a spike in refinancing and people taking on more debt? While the state breakdown of cash-out refinancing is not available, total refinancing activity is available and most of these are cash-out.
To conclude, we decided to look at which states have had unusually high (and low) levels of refinancing activity this year. To do so, we looked at how many refinances originated in the first quarter of 2019 as a percentage of the total number of refinances in that state since 2009. States that have a high percentage of recent activity are exhibiting exuberance while those with a low percentage are showing more sobriety:
By a considerable margin, the state with the highest level of recent refinancing is Alaska where 3.7% of all refinances over the last decade took place last quarter. All of a sudden, people are refinancing their loans in Alaska and the vast majority of those involve cashing-out. In second place is Nevada, with a 1.7% recent refinance rate. Given that Nevada was ground zero of falling home prices during the last recession, the level of exuberance for new mortgages could be a cause for concern. In third place is Idaho, a state that has had tremendous real estate appreciation in the last decade, indicating that its citizens are tapping into this equity.
When it comes to refinancing, Wisconsin leads the way with the lowest recent refinancing rates, followed by Connecticut and Vermont. Despite the increase in refinances and historically low rates, citizens in these states are showing the most restraint in 2019.
***
In some ways, cash-out refinancing gets a bad rap. Your house is a financial asset and this kind of refinancing allows you to convert some of the equity to cash. That cash can be used wisely or even invested. But that cash can also evaporate if spent on a vacation or a luxury item and then you’re just left with a bigger mortgage to pay every month. That’s generally okay unless you have a financial calamity that makes it hard to pay that hefty bill, which is what happened last decade.
Over the last 5 years we’ve seen cash-out refinances explode in popularity. During this time they’ve gone from extremely rare to extremely common. Almost all refinanced mortgages today have a cash-out component, a milestone last hit in 2006. Let’s hope this time it ends differently.
Tyler Durden
Tue, 10/15/2019 – 22:15
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