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Apr 20

Today’s News 20th April 2017

  • A Ukraine On The Verge Of Disaster Benefits No One

    Authored by Federico Pieraccini via The Strategic Culture Foundation,

    In the past three months, the lines of contact between Ukraine and the forces in Donbass have seen an escalation of considerable tension. Both the republics of Lugansk and Donetsk have suffered violent attacks at the hands of Kiev’s military forces. Of course all these violations are in stark contrast to what was established in the Minsk II agreements, in particular as regards the use of certain weapons systems.

    In addition to the military issues between Donbass and Ukraine, Kiev faces important internal struggle between oligarchs regarding economic issues. Symptomatic of this were the clashes in Avdeevka, then the attempts to capture the water filtration plant in Donetsk, and finally the blockade of coal transit from Donbass to Ukraine. All these have further deepened divisions between the components of the Ukrainian state’s power. The consequences of these events have led to greater instability in the country and decisive moves by the nationalist fringe alongside the Ukrainian SBU and other components of the military, who are the authors of the blockade of the railway lines between the Donbass and the rest of Ukraine. Intensifying the divisions within the country, the meeting between Tymoshenko and Trump has further increased tensions, with Prime Minister Volodymyr Groysman defining Timoshenko as the source of all problems, both economic as well are regarding corruption. Ukraine is politically divided, exacerbated by disputes between Poroshenko and Timoshenko, and these divisions are being exploited by foreign actors like Israel and Turkey, propping up the nationalist and banderist fringe within the National Guard battalion.

    External pressure is clearly exerted indirectly on the Poroshenko administration in order to force it to keep the extreme factions of the nationalist battalions under control. For his part, Trump, by meeting with Tymoshenko, has sent a clear signal that in the case of excessive chaos in Kiev, the succession of power has already been decided. In the same way, the IMF exerts pressure on Kiev, slowing down the funding necessary for Ukraine to survive.

    The danger that Western planners see is at the same time simple and delicate. On the one hand, there is a need to avoid a failure of the Ukrainian state, and nearly $18 billion of IMF aid serves that purpose. On the other hand, the withholding of IMF funding is applied whenever there is a need to get something done by the government in Kiev. An example can be easily seen with the escalation in Avdeevka that indirectly led the IMF to reduce the overall aid package, with the justification being that corruption remains high in the country. The goal was actually to avoid a complete breakdown of the Minsk II agreements and put a halt to the Ukrainian operation on Avdeevka. Even in the meeting between Tymoshenko and Trump, the strong signal sent to Poroshenko was clear: stop the nationalists and their provocations or there will be consequences.

    The subtle game that is being played in Ukraine sees many components involved, often with diverse objectives and methods. The nationalist component hardly responds to the oligarchs in Kiev and to the central authority. They are often the first to receive training and weapons from western colleagues serving in NATO. American and British instructors have for more than two years provided their services to this component in the country. The National Guard received the blessings of the neoconservative factions of American power, as confirmed by the presence of Lindsey Graham and John McCain in Ukraine a few months ago. In addition to support from the Atlantic networks and the local Ukrainian intelligence service (SBU), these battalions have Turkish support, which involves Islamic extremists in the National Guard. Moreover, they receive both political and economic support from infamous oligarch Igor Kolomoisky. Going straight to the problem, one can see that the National Guard, despite strong political and economic support is not able to deliver a decisive blow to the Donbass and inflict any significant damage, let alone organize an efficient offensive. The problem is therefore clear that the alliance between nationalists loyal to NATO/neocons, Turkish extremists, and Israeli oligarchs like Kolomoisky enable the nationalists to carry out provocations but not to organize a serious military offensive against well-fortified and organized positions of the Donbass republics. To attempt an offensive of this kind would at least need a real army that is well organized and motivated.

    Ukraine is back to the usual problems that emerged in 2014 and now plague military planners in Kiev. The Ukrainian army, essential to achieving a real push towards Donbass, lacks the motivation needed to fight. These considerations were already clearly known three years ago at the beginning of the infamous anti-terrorist operation (ATO) Kiev carried out in the east of the country. Two years later, Donbass is much stronger. Thanks to a variety of military acquisitions from Russia, as well as targeted training and an important fortification of their defensive positions, Donbass now has a defensive capability that must be taken into account.

    In this situation, there are multiple dangers that can unfold for Kiev. Poroshenko must give the nationalists and international networks connected to them the ability to operate virtually without restrictions in Ukraine. He was put in power exactly for that purpose. When this does not happen, as seen in Avdeevka and with the water-supply center in Donetsk, where National Guard battalions had to pull back, there are consequences. In his sense, the National Guard blockade on Donbass is, other than being part of the usual provocations between oligarchs, an explicit message aimed at Kiev, causing considerable economic damage. No wonder Poroshenko sent the army to remove the blockade, which, unsurprisingly, did not actually change the situation.

    The blockade actually obliged Kiev to buy coal from Russia, which was ironically left the only supplier. This fact was exploited by the same nationalists who created the blockade in the first place, blasting the Kiev government for buying coal from their enemy. In this mess, the Kiev government and Poroshenko should be aware of the consequences of excessive provocations against Donbass by the National Guard battalions. The ability of the Donbass to provide a firm response to any further aggression should be pondered by Kiev, even as tensions within Poroshenko’s inner circle continue to rise. The Ukrainian president is forced to support the nationalists and their rhetoric against "terrorists in the east" to ward off new Maidan.

    At the same time, he needs to by all means avoid a military response from the two separatist republics. Kiev is aware that it does not possess the capacity to conquer the Donbass in terms of personnel and equipment, and is also aware that if the conflict got out of hand, with the complete collapse of the Minsk II agreements, the DPR and LPR would have the capability to extend their boundaries decidedly to the south, setting their sights on the Ukrainian coastline along the Black Sea.

    Realistically, this scenario would be a nightmare for all the actors opposing the Donbass, especially for NATO and Poroshenko. Mariupol and Odessa appear to be the likely targets of a hypothetical new advance of the Donbass should the Minsk II agreements collapse. The Russian Federation and Donbass have made it amply clear that any new aggression from Ukraine will be met with a firm response. While this would not involve a direct attack on Kiev, it would establish a larger buffer zone that could include Mariupol and maybe even Odessa. This posture intends to create the necessary awareness in Kiev, and even in NATO, that it is not in their interests for an all-out war to be waged against Donbass.

    The consequences of these actions call directly into question the NATO strategy in the Black Sea. The ultimate purpose of NATO is not to save Ukraine from a non-existent Russian threat but rather to put continuous pressure on the Russian Federation in every possible way. The objective is not even to reconquer Donbass, something that is also unfeasible for the military planners in Brussels, but the continuum of tension on Russia’s borders, occupying the attention of Moscow and continuously creating hotbeds of tension on its borders. In this regard, the Ukrainian access to the Black Sea is fundamental for NATO. The continued presence of NATO ships in the Black Sea to carry out joint exercises with Ukraine violates the Treaty of Montreux and is done to exert pressure on Russia from the sea. To bypass the Montreux convention and have a semi-permanent presence, the United States intends to donate a couple of ships to the Ukraine Navy in order to change the flag of the vessels, thus ensuring NATO’s legal permanent presence in the Black Sea without violating the Montreux Treaty. The port of Odessa is central in these calculations and it is of no particular surprise that in the event of a Novorossiya offensive following a Ukrainian attack, both Odessa and Mariupol would be difficult to defend for the Ukrainian army. Already in 2014, both Mariupol and Odessa had been calculated as possible targets of a wider strategy to liberate the cities from Kiev’s forces.

    The bottom line is that the Kiev government is between two fires. On one side, the oligarchs battle each other, without regard for the life of Ukrainian citizens or the residents of Donbass, solely focussed on enriching themselves. On the other side, the western components in Ukraine (known as neoconservatives) fan the flames of conflict with military trainers and equipment banned by the Minsk II agreements, providing them to the Azov battalion, the most extremist wing of the National Guard. At the same time, Germany, and especially Russia, is gravely concerned over a possibility of the Ukraine economy defaulting, and of what that could mean in terms a huge wave of migration towards both countries, a situation Berlin would struggle to digest after all the migration coming from the Middle East over the last two years.

    A potential default of the Ukrainian economy, and resulting destruction of the country, overshadows any struggles between oligarchs, and even the battle against Donbass. Options for Putin, Trump and Merkel all seem to be on the table with economic (nationalization of industries in the Donbass, slowdown in lending by the IMF), political (Trump meets Tymoshenko, a rival of Poroshenko) and military pressure (strong Russian presence behind the two separatist republics) applied in every way to prevent an all-out war in Ukraine.

    The main danger is now clear to everyone involved – to Russia, the Donbass, NATO and Kiev. A new war between Donbass and Ukrainian would result in the defeat of Ukrainian forces, with consequences for NATO, since Donbass would hardly stop outside Mariupol and would instead proceed to Odessa. Kiev has a very weak capacity to mobilize motivated forces ready to sacrifice their lives for what are deeply corrupt oligarchs. This situation would cause an internal dilemma for NATO as was the case in 2014. Would NATO deploy its forces alongside those of Kiev to defend the ports in question, especially Odessa? If doubts where high three years ago, hardly anything has changed in recent years. NATO will not rally to the Kiev’s side. And the reasons remain the same, namely the risk of a direct confrontation with Russian troops, although Trump's recent actions in Syria have raised much concern in Moscow in relation to the Ukrainian situation. A war against Donbass could easily lead to a wider conflict between superpowers, something impractical for even the most hyped warmongers on the Atlantic sphere. Realistically, Donbass troops, after repulsing Ukrainian aggression, would go on the offensive, and enjoying clear superiority in the region, thanks to Russia as well as to a higher level of motivation, would probably make their way all the way up to Odessa, securing the entire coastline.

    The consequences of such a defeat would lead to the collapse of the central authority in Kiev, to an open war between oligarchical factions, to an end of loans from the International Monetary Fund, condemnation from European and American politicians, and to a definitive collapse of the Ukrainian economy. This would spell the end of business for Poroshenko and other business oligarchs, both in Kiev and in the West. Again, no one is interested in seeing such a scenario coming to fruition.

    It is also important not to underestimate the partial unwillingness of Moscow to support an open war on the offensive by the Donbass army, especially given the political and economic consequences that the West would visit on Moscow.

    The economic assistance that the Donbass would require from Moscow is another important consideration and something that the Russian Federation would prefer to avoid. It should, however, be stressed that in the unlikely event that Ukraine does not hold at bay its eagerness to wage war in Donbass, Moscow would openly side in favor of the Donbass, and the consequences for Ukraine and NATO would be disastrous, as we have seen. There would be enormous concern in such a scenario from Moscow, and the Russian Federation would take every step to avoid such a scenario, but if things got worse, Putin would be ready to support the advance of Novorossiya up to Odessa in order to secure once and for all the republics of Donetsk and Lugansk.

    All the provocateurs in Ukraine should be aware that playing the nationalist card can be dangerous and can even result in a defeat that, when compared to 2014-2015, would be dramatically worse, condemning Ukraine to an economic, social and political crisis without precedent or a way out. It literally could be the beginning of the disintegration of Ukraine as we know it today.

  • Elliott Management Releases Klaus Kleinfeld's "Veiled Extortion" Letter

    Three days ago Arconic's CEO Klaus Kleinfeld was fired unceremoniously for "showing poor judgment," in a letter sent to Paul Singer, founder of hedge fund Elliott Management. Elliott has just released the letter and its response which claims Kleinfeld made "veiled suggestions that he might intimidate or extort Mr. Singer" over his behavior at a 2006 soccer match… involving "singing in the rain… in a fountain" and an indian head-dress.

    Mr Kleinfeld wrote…

    Dear Mr Singer,

     

    In the last eighteen months, we have enjoyed the unique attention and unlimited pleasure of multiple exchanges with various representatives of yours in every such way remarkable firm. Unfortunately. we have not yet had the pleasure to meet. More than once have I been wondering what a special person the founder of such a firm must be.

     

    It was much to my delight when I recently learned from Berlin what a phenomenal soccer enthusiast you must be. Quite a few people who accompanied you in Berlin in 2006 during and especially after the many matches you attended are still full of colorful memories about this obviously remarkable time; it indeed seems to have the strong potential to become lastingly legendary. How you celebrated your soccer enthusiasm and the "great time" you must have had in your Berlin weeks – unforgettable without a doubt – left a deep impression on them.

     

    As a token of my appreciation to learn about this completely "other side" of you, I allow myself to send you a little souvenir, which might bring back some "vivid (hopefully positive) memories": The official match ball of the FIFA World Championships 2006 (called "Teamgeist", in English "Team spirit"). I would be honored if it found an adequate place on your memorabilia shelfs.

     

    Sincerely,

     

    Klaus Kleinfeld

     

    PS: If I manage to find a native American Indian's feather head-dress I will send this additional essential part of the memories. And by the way: "Singing in the rain" is indeed a wonderful classic — even though I have never tried to sing it in a fountain.

    Which seems innocent enough until you read the response from Elliott's chief counsel to Arconic's board…

    Dear Directors of Arconic Inc. ("Arconic" or the "Company"):

     

    I am the General Counsel and Chief Legal Officer of Elliott Management Corporation. On April 11, Paul Singer received the attached letter and a soccer ball, both apparently sent to him by Klaus Kleinfeld.

     

    As for the letter, it appears to have been sent from Dr. Kleinfeld because it is on stationery with his name printed on it, it appears to bear his signature, it was sent from Arconic's offices at 390 Park Avenue, and it was delivered by an Arconic messenger. Assuming therefore that the letter is from Dr. Kleinfeld, we find it to be an irresponsible and inappropriate communication. While much of what it says doesn't make sense, we do understand Dr. Kleinfeld to be making veiled suggestions that he might intimidate or extort Mr. Singer based on Mr. Singer's family trip to Germany in 2006 when he attended the World Cup. This is highly inappropriate behavior by anyone and certainly by the CIO of a regulated, publicly traded company, in the midst of a proxy contest, and it raises a number of obvious issues. Further, we assume that: (I) Dr. Kleinfeld was not authorized by the Board to make this communication, and (2) you will assess with your counsel, as we will, the implications of this unusual communication to a dissenting shareholder in the context of a proxy process.

     

    Dr. Kleinfeld should understand that this conduct will not inhibit Elliott's efforts on behalf of shareholders. We are interested in shareholder value and putting Arconic on the right track, not games and false innuendo even if couched in clever ambiguities.

     

    If the letter is not from Dr. Kleinfeld, as unlikely as that seems, then I think he and the Board need to know that someone purporting to be him, using your building and messenger service, is behaving in an irresponsible manner. I am certain that you would want to know about that and stop it. Of course, we expect that you will let us know if this is not in fact a letter from Dr. Kleinfeld and tell us what steps you are taking so that we may likewise take appropriate steps.

     

    Yours truly,

     

    Richard B. Zabel

    We can only imagine what shenanigans Mr. Singer was up to. But this does indeed reflect crushingly on Mr. Kleinfeld – is this really the way the world works?

    Full original letters here.

  • Is World War The Twisted Cure For A Doomed Economy? "Signals for War Are Fiscal"

    Authored by Mac Slavo via SHTFplan.com,

    The march to war is deafening.

    But the reasons for it go beyond the elements of military conflict and political intrigue.

    Underlying it all, the reasons are economic.

    With a nothing-doing economy that has long dragged on the American soul, there is a growing temptation to wipe the slate clean, and launch a wider war – all with the wider aim of igniting a new economic engine.

    Theoretically, the economy would spruce up on the same gin that fueled WWII – and not only delivered a victory, but solidified America a prosperous superpower while vanquishing the Great Depression.

    The thought is twisted, and perhaps more and more likely everyday. Something like economic gains off of spilling blood – true military industrial complex stuff.

    I hope they know what there doing, and that the rest of the country can maintain a strong moral fiber, because if that scenario is green-lighted, things could get pretty grim, pretty quick.

    The constant Greg Hunter of USAWatchdog.com speaks with economist Martin Armstrong, who sees war coming as a result of the bad economy:

    Former hedge fund manager Martin Armstrong, who is an expert on economic and political cycles, says, “You have to understand what makes war even take place? It does not unfold when everybody is fat and happy. Simple as that. You turn the economy down, and that’s when you get war. It’s the way politics works.”

    Martin Armstrong-Economic Downturn Will Take World to War

    Startlingly, there were reports (albeit unconfirmed) in the foreign press back in 2008 – in the immediate wake of the economic crisis – that the RAND Corporation was suggesting that a new world war could be started in order to jump start and revive the economy.

    It named Russia, China, Iran or another Middle Eastern country and/or North Korea as potential opponents, though the latter was considered too small time for a real economic boost.

    Nine years after that crisis, the economy has not recovered, and remains in the doldrums, it seems that the option for further has gone full-blown.

    As Paul Watson and Yihan Dai wrote back in 2008:

    According to reports out of top Chinese mainstream news outlets, the RAND Corporation recently presented a shocking proposal to the Pentagon in which it lobbied for a war to be started with a major foreign power in an attempt to stimulate the American economy and prevent a recession.

     

    China’s biggest media outlet, Sohu.com, speculated that the target of the new war would probably be China or Russia, but that it could also be Iran or another middle eastern country. Japan was also mentioned as a potential target for the reason that Japan holds the most U.S. debt.

     

    North Korea was considered as a target but ruled out because the scale of such a war would not be large enough for RAND’s requirements.

     

    […]

     

    One would hope that good people, or at least sane people who don’t wish to start a global nuclear war, will oppose the RAND proposal, such as top the military generals who threatened to quit if Bush ordered an attack on Iran. Admiral William Fallon, the head of US Central Command, quit in March last year as a result of his opposition to Bush administration policy on Iran.

    Now that we are seeing a plan long in action playing out, there’s a good chance that our time is up.

    Do you think that Wall Street has already planned the after party?

  • Subprime Pet Rental Company Files For Bankruptcy

    Two months ago, Bloomberg’s Patrick Clark penned an article that promptly went viral as it touched on a rather unorthodox topic: a pet leasing, or rather rental, company aimed at subprime borrowers who could not afford to buy their pet outright.

    The company in question is Wags Lending, a/k/a Bristlecone, was founded by Dusty Wunderlich in 2003. A brief background from the original BBG piece:

    Wunderlich dreamed up Wags Lending in 2013, then used the pet-leasing business to launch an improbable collection of financing vehicles—writing leases against furniture, wedding dresses, hearing aids, and custom auto rims. In a little more than three years, his company has originated 66,000 leases for just over $100 million. He once worked out a plan to lease cattle to dairy farmers, though plummeting commodity prices soured the economics. (He got far enough to decide that if a cow gave birth during the terms of the lease, the lessee got to keep the calf.) In another idea that never reached the market, he explored lease financing for funerals. “We like niches where we’re dealing with emotional borrowers,” Wunderlich said.

    But mostly pest: “Because dogs can be expensive, and not everyone who wants a fancy one can afford to pay cash or use a credit card. Because others, like Sabins, are more eager to bring home their new furry friend than to read the fine print of their contract. But mostly because—thanks to a 36-year-old Nevadan who ditched a career in private equity to help subprime borrowers finance purebred pets—they can.”

    Dusty Wunderlich

    The 36-year-old in question had one simple idea: in the future nobody will own anything, everything will be leased:

    “When I take a good hard look at what the world will be like in 10 years, I think most things are going to be on lease,” said Dusty Wunderlich, chief executive officer of Bristlecone Holdings LLC, the Reno, Nevada-based company that operates Wags Lending.

    To be sure, Wunderlich certainly practiced what he preached:

    Wunderlich rents his apartment. He leases his car. He owns his horse. He’s drawn to the rugged individualism expressed in the novels of Ayn Rand and the blog Cowboy Ethics, but he hastens to argue that while he profits off high-cost lending, he’s also improving the lives of subprime borrowers. He is, he writes in a mission statement on his personal website, “living in a Postmodern culture while maintaining my old American West roots and Christian values.”

    Taking his idea further, he decided to target one particular niche of subprime clients: pet buyers who have a less than pristine credit rating. Which is why the article quickly became known as the “subprime pet leasing” piece.

    On the surface, Wunderlich had a great, and lucrative, idea even if the loss provisions were sure to be quite high. There was just one problem, as the company’s financially troubled clients soon found out: what was a $2,400 dog purchase would end up costing $5,800 when accounting for total interest outlays. There was another problem: the clients would quickly realize that hidden in the small print was the interest: a whopping 70% APR, double more than double the average credit card.

    The Sabins had bought their new dog, Tucker, with financing offered at the pet store through a company called Wags Lending, which assigned the contract to an Oceanside, California-based firm that collects on consumer debt. But when Dawn tracked down a customer service rep at that firm, Monterey Financial Services Inc., she learned she didn’t own the dog after all.

     

    “I asked them: ‘How in the heck can I owe $5,800 when I bought the dog for $2,400?’ They told me, ‘You’re not financing the dog, you’re leasing.’ ‘You mean to tell me I’m renting a dog?’ And they were like, ‘Yeah.’ ”

     

    Without quite realizing it, the Sabins had agreed to make 34 monthly lease payments of $165.06, after which they had the right to buy the dog for about two months’ rent. Miss a payment, and the lender could take back the dog. If Tucker ran away or chased the proverbial fire truck all the way to doggy heaven, the Sabins would be on the hook for an early repayment charge. If they saw the lease through to the end, they would have paid the equivalent of more than 70 percent in annualized interest—nearly twice what most credit card lenders charge.

    It wasn’t just the Sabins:

    “There is just no way I should pay over $5000 for a $2000 puppy,” wrote one customer in an April 2014 complaint collected by the Federal Trade Commission after financing a Yorkshire terrier from a Kennesaw, Georgia, pet store with a lease from Wags Lending. (That complaint and the others that follow were directed at Monterey Financial by customers who had financed high-end pets through Wags Lending.) “The rep … told me the payments I had been making are rental [fees],” wrote another surprised lessee. “For a dog?? They are renting animals?? No way! Yes it’s true!”

    Which goes back to square one: “The complaints raise a valid question: Why would anyone walk into a pet store to buy an animal and decide, instead, to lease?” Well, because some people can be fooled all the time. There was another reason:

    Wunderlich considered various credit models before he landed on the closed-end lease, which gave him free rein from usury laws in all 50 states. It seemed well-suited to an era when the housing crisis was threatening to sour Americans permanently on mortgages, credit card loans, even the concept of ownership.

    Despite the growing customer complaints, the idea seemed so good, the money flowed in.

    In 2014, [Wunderlich] landed a meeting with SenaHill Partners LP, a New York-based merchant bank firm that invests in financial technology startups. It didn’t take long for Justin Brownhill, a partner at SenaHill, to sense an opportunity in the company’s data-driven lending model and point-of-sale marketing strategy. Five minutes into the meeting, Brownhill excused himself. “I walked out and grabbed my three other partners and said, ‘I think we have something special here,’ ” Brownhill said.

     

    Wunderlich parlayed that meeting into a seed round of $1.1 million. SenaHill also connected him with a firm that furnished Bristlecone with a $75 million line of credit, lowering Bristlecone’s borrowing costs.

    For a while everything was going great. As Clark concluded his March 2017 piece, “For now, Wunderlich is still focused on launching new credit products. He recently finalized a deal with a Utah-based bank that helps online lenders use the state’s lender-friendly laws to make loans elsewhere. That will let Bristlecone expand its product offerings to include term loans, allowing it to extend more enticing rates to borrowers with better credit profiles and to finance services like veterinary care, elective surgery, even funerals—not just tangible assets like dairy cows and Labradoodles.”

    “We’ve gone a long way to making sure that what we’re doing is within the confines of the law,” Wunderlich said. “Is there a regulator one day that’s going to just absolutely not like what we do and pick a fight with us? Probably. And we’ll have to hash it out.”

    Which brings us to today, when just 7 weeks after these words were put to html, something went terminally wrong, and it didn’t even involve a regulator cracking down on the predatory pet renter. It was a good old fashioned bankrutpcy, because overnight, Wags – the up and coming subprime pet renter – admitted that its business model was terminally flawed when it filed for Chapter 11 bankruptcy protection.

    And yet, even in bankruptcy, the company remained shady because unlike other corporations which file Chapter due to an excessive debt burden, listed a modest $50,000-100,000 in liabilities owed to less than 50 creditors…

    … even as it disclosed assets up to 5 times as high. Why not just sell assets to cover liabilities and continue operating instead of impairing vendors such as Affordable Pups, All Pets Club, American Dog Club, Bark Avenue Puppies and so on?

    Perhaps we will get some answers when the affidavit in support of the bankruptcy is filed, but somehow we doubt it.

    In any case, keep an eye on the subprime entrepreneur Dusty Wunderlich: we are confident that after the “subprime pet rental” venture implosion, he will reappear soon with some new idea, one whose APR this time may be in the triple digits.

  • What A War With North Korea Would Probably Look Like

    Authored by Brandon Smith via Alt-Market.com,

    Back in 2013 during the last major flare up between the U.S. and North Korea I wrote an extensive analysis on the North Korean wild card and how it could be used by globalists as a catalyst for international economic instability titled 'Will Globalists Use North Korea To Trigger Catastrophe?' As I have warned consistently over the years, like Syria, North Korea is a longstanding chaos box; a big red button that the elites can press any time they wish to instigate a chain of greater geopolitical tensions. The question has always been, will they actually use it?

    Well, it appears that under the Trump administration the establishment might go for broke. I have not seen U.S. war rhetoric so intense since the second invasion of Iraq, and all over missile tests which have been standard fare for North Korea for many years. With whispers by Trump aides of a possible 50,000 boots on the ground in Syria, and open discussion of preemptive strikes in North Korea, this time kinetic conflict is highly likely.

    Yes, we have seen such military pressures before, but this time feels different. Why is an aimless quagmire war with massive potential global financial repercussions more likely under Trump? Because Trump ran under a nationalist conservative banner, and he will forever be labeled a nationalist conservative even if his behavior appears to be more globalist in nature. Rhetoric is often more psychologically powerful in the minds of the masses than action. Therefore, EVERYTHING Trump does from now on will also be labeled a product of the “nationalist conservative” ideology; including all of his screw-ups. And, with Trump in office the establishment is perfectly happy to pursue actions once considered taboo, because demonizing conservatives and liberty proponents is one of their primary objectives.

    When the real insanity starts, liberty movement activists will gnash their teeth and scream at the top of their lungs that Trump is “not acting like a conservative,” so how can conservative thinking be blamed by extension? But these people just don’t grasp the thought processes of the human mind. No matter how much we try to separate ourselves from the Trump-train if (or when) he goes full-bore globalist, our efforts will be futile. The mainstream media has spent considerable time and effort making sure that all of us are lumped in with the so-called “alt-right.”  Remember, I tried to warn the movement about this long before Trump won the election.

    Currently, there are questions as to whether or not a naval task force is en route to North Korea.  I would not trust the latest reports that all units are headed to Australia when Vice President Mike Pence is in Japan yesterday saying "the sword stands ready".  Could this be more posturing or a precursor to a strike scenario? I am reminded of the U.S.S. Maddox which was sent to patrol the waters off of Vietnam, the same destroyer that reported an attack by North Vietnamese torpedo boats which was used as justification for the initiation of the Vietnam War. As it turned out, no such attack actually occurred.

    The presence of a U.S. fleet off North Korea could only be intended to instigate further aggression, not defuse the situation.

    So, if war with North Korea is inevitable given the circumstances, what would such a war look like? Here are some elements I think are most important; elements that make the war almost unwinnable, if winning is even the purpose

    North Korean Air Defense

    The North Koreans spent the better part of the last war with the U.S. being heavily battered by air bombardments. They have had plenty of time since then to consider this problem and prepare. Even the most gung-ho American military minds are forced to admit that using only air based attacks in North Korea is not practical. And where we have been spoiled by steady video streams of laser guided hell dropped on Iraqi and Afghani targets in the past, don’t expect things to go so easily in North Korea.

    While North Korea is still rife with economic problems (like every other communist and socialist nation), they still have an industrial base and produce many of their own arms. This includes and extensive missile net backed by a maze of radar systems. Their air force is by all accounts obsolete, but as I have mentioned in the past, advanced missile defense is the wave of the future. It’s cheaper and can render expensive enemy air force and naval units impotent.

    North Korea uses an indigenous built surface-to-air missile (SAM) system called the KN-06 which is as capable as some Russian SAM systems. They also field huge numbers of MANPAD (man-portable air defense) units against planes and helicopters attempting to dodge radar defenses at low altitudes. This is layered on top of a vast array of anti-aircraft artillery. And, most of this anti-air apparatus is either mobile or based underground.

    What this means is, a ground invasion is the ONLY way to attack North Korea effectively and make room for air units to strike interior targets.

    Underground Facilities

    The Pentagon estimates at least 6,000 to 8,000 underground military facilities in North Korea. New bases are being discovered all the time.  While “bunker buster” bombs can possibly damage these facilities, it is unlikely that they would be completely destroyed or rendered ineffective. There is also an estimated 84 large tunnels through mountains on the southern border which would allow an immediate invasion by North Korean ground forces into South Korea. Only four of these tunnels exits have been found and blocked by South Korea.

    It is important to remember that underground infrastructure has always been the bane of the modern western military. These facilities will not be taken by air. They will have to be taken the hard way — with ground troops.

    North Korean Infantry

    In 2013 the Department of Defense reported North Korean ground forces at around 950,000. This, of course, does not count their nearly 8 million infantry reserves. They also boast over 200,000 highly trained paramilitary soldiers. North Korea has no means whatsoever to project these forces overseas against the U.S. or anyone else other than South Korea. The only way they can do damage to U.S. forces is if we show up on their doorstep.

    Since a ground invasion is the only way to proceed with what will obviously be “regime change” in North Korea, U.S. forces will be facing an endless mire of mountain warfare worse than Afghanistan with limited air support options. If it comes down to a war of attrition rather than superior technology, victory will be impossible in North Korea.

    The Nuclear Option

    The consensus view among military analysts is that North Korea will never attempt to use nukes offensively because the resulting retaliation by the U.S. would be devastating.  But you often do not hear much discussion about NK using nukes defensively, and what that would mean for an invading army.

    I agree that though the mainstream media is bombarding us constantly with images of a psychotic dictatorship, North Korea is not insane enough to use nukes against the U.S. or its allies outright. If such an event did occur, I would immediately suspect the possibility of a false flag because there would be zero gain for North Korea. That said, in the event of a ground invasion into North Korea, the use of nuclear weapons becomes highly advantageous for Pyongyang.

    Consider this, with vast numbers of U.S. ground forces operating in the region, nuclear retaliation by the U.S. is simply not going to happen.  A pullout of most troops would have to take place. North Korea needs only one nuke strike to destroy a U.S. fleet or hit a large civilian target in South Korea killing potential millions or hit a U.S. troop base in South Korea killing tens of thousands of American soldiers.

    Once we commit ground troops into the region, we make a nuclear attack USEFUL to North Korea, when it never would have been useful before. This is why the preemptive strike rhetoric based on a rational of stopping a “more nuclear capable” North Korea is either pure stupidity or an engineered crisis in the making.

    The Chinese Question

    Is China’s strange shift in support of tougher actions against North Korea legitimate? Well, if it is, then I think this would support my longtime assertion that China is NOT anti-globalist at all, but just another branch of the globalist cabal. Perhaps Trump’s refusal to label them currency manipulators is also evidence of this. That is a discussion for another time, though.

    China’s sudden softening of stance against U.S. pressures on North Korea seems to me to be the most blatant signal that an actual war is coming. If China refuses to present military or economic repercussions to act as a deterrent to invasion, then an invasion is likely to happen.  This does not mean, though, that a future crisis between the U.S. and China is not scheduled.

    In fact, an invasion by America into North Korea opens numerous doors to all kinds of crisis events the establishment can exploit. For example, how many people are naive enough to expect that U.S. air maneuvers will respect Chinese air space restrictions? I hope not many.  Having American military units in a war stance so close to the Chinese border is a recipe for disaster, and I am not necessarily referring to military disaster.

    War, contrary to popular belief, is not good for the economy. In fact, war is the perfect poison for economic trade and production. The U.S. in particular is utterly dependent on the international use of the dollar as the world reserve currency. Without this status, the American economy is dead in the water. China is a central pillar in global trade and could, with the help of a few other nations, kill the dollar's reserve status very quickly.

    If you are curious as to why international financiers would be interested in undermining the U.S. economy in such a way, I suggest you read my article The Economic End Game Explained. The greater point is this — a war with North Korea would have nothing to do with North Korea. It would only be a means to a greater end. There are those people out there who claim to be "conservative" that always weasel out of the woodwork in times like these to pound the war fever drum.  But if you think that forced regime change overseas is America's job or duty you are not a conservative, you are a statist.

    I also cringe at the crowd of dupes that constantly bubbles to the surface claiming this time around, the invasion will be "easy", parroting the party line.  "Done in two months!", they say.  The delusion inherent in this thinking is astounding, and comes from the old-guard Republican/Neo-Con ideology.  Remember how quick and cheap they said Iraq and Afghanistan would be?  At bottom, there is little or nothing to be gained by Americans in this kind of conflagration.  So we should be asking ourselves, who actually would gain from it?

  • No Obamacare In Most Of Iowa, Tennessee – What Happens? Fallback Plans?

    Authored by Mike Shedlock via MishTalk.com,

    Nearly the entire state of Tennessee has a single Obamacare provider. In sixteen counties, none of this year’s providers want to do business.

    Mississippi, Alabama, South Carolina, Oklahoma, Alaska, and Wyoming are states where there is only a single provider for the entire state. Iowa is likely to be covered by a single provider next year. Most of North Carolina, Florida, Missouri, and Arizona are also in a single-provider situation.

    Enrollment for 2018 starts in November. Will the problem be fixed by then? If not, What Happens if Places Have No Obamacare Insurers?

    The markets created by the Affordable Care Act have always relied on the voluntary participation of private companies. If the government set up the right conditions for the market, the thinking went, insurers would want to jump in. But, as Sarah Kliff at Vox.com has reported, the law contained no real backup plan if that vision didn’t work out.

     

    So far, there are parts of Tennessee where none of this year’s insurers want to sell insurance next year. Other counties have only one carrier, and in some of them, that carrier is looking shaky.

     

    If insurers do all decide to exit a market, no one is exactly sure what will happen next. Some experts have brainstormed about possible workarounds, but all would entail uncharted legal territory.

     

    Senator Lamar Alexander of Tennessee, the state currently at greatest risk of bare counties, has introduced a bill that would create options for customers shut out of their Obamacare market. But even if Congress passed such a law, regulators would have to work very fast to make anything happen before next year’s enrollment period, which begins in November.

    No Backup Plan

    Vox asks What if Obamacare Insurers Falls to Zero?

    Multiple sources tell me that White House staff held a meeting today to discuss cost-sharing reduction subsidies — that $8 billion Obamacare program whose fate still hangs in limbo. Ending these payments could “blow up” the health law’s marketplaces, but President Trump has so far waffled on what he’ll do about the issue. The meeting didn’t include any outside advisers or industry officials, only administration staff.

     

    Right now there are 16 counties in Tennessee where no health insurer wants to sell Obamacare coverage. Iowa could be next: Half its Obamacare insurers announced this month that they would no longer participate in the marketplace. That leaves 94 of the state’s 99 counties with just one insurer — and regulators there aren’t totally sure that plan, Medica, will stick around.

     

    “We don’t have any commitment from the two carriers that remain that they will be there,” says Doug Ommen, Iowa’s insurance commissioner. “They’re not required to file with us until June. Certainly we’re hopeful, but unless Congress acts, our market will continue to be very unstable.”

     

    What happens if no one wants to sell coverage? Does the law have any fallback plan? The short answer is no. There is no backup plan for places where no insurer wants to sell Obamacare coverage.

     

    Even before the election, some big insurers had decided that the Obamacare marketplaces were not good for their bottom lines. Aetna and UnitedHealth mostly withdrew in 2016, leaving lots of places with just one insurer.

     

    Since the election, health insurers have only gotten more skittish. Humana announced in February that it would no longer participate. That left those 16 Tennessee counties without any plans, and many more counties with just one option.

    Ryan’s Folly

    The articles mentioned that Trump could call up providers and bully them into offering coverage. But does that make any sense from a party that wants to Kill Obamacare?

    The system is set up to implode and there is no point to doing anything until it does. After an implosion, there will be bipartisan support to do something. Right now there is no bipartisan support to do anything.

    The folly of House Speaker Paul Ryan’s ill-fated attempt to fix the problem is readily apparent.

    His poor decision to attempt to fix the unfixable accomplished nothing useful, but it did move partial ownership of the problem to Republicans.

  • Latest In Silicon Valley 'Fringe Benefits': Paid Time Off To Protest Trump

    Silicon Valley’s tech giants are world renowned for their random employee ‘perks’ which include everything from free lunches prepped by expensive chefs, to free massages, nap pods and tricked out game rooms.

    SV

     

    But the latest trend in Silicon Valley ‘fringe benefits’, which includes unlimited time off to protest the Trump administration, feels a little bit less like an attempt to attract and retain talent as it is an attempt to push a political agenda.

    Nevertheless, as the Washington Post points out today, companies like Fauna of San Francisco are offering their employees unlimited paid time off to protest Trump in any way they see fit.

    Fauna, a San Francisco-based database start-up, recently began allowing its 13 employees to take unlimited paid leave to participate in rallies, vote, write letters to elected officials and take part in other civic activities. Before February, employees could take time off on an as-needed basis. But the political climate — and polarization — after President Trump’s inauguration called for more defined measures, said Amna Pervez, director of recruiting and retention.

     

    “Since there’s been such a divide in our country, we felt we should be very explicit about our policy,” Pervez said, adding that the company also provides unlimited vacation time. “We want our employees to know that we absolutely support the betterment of our country. People can take whatever they feel like they need to make a meaningful difference.”

     

    A number of other start-ups, including Turbine Labs, Buoyant and Jelly Industries, have signed on to do the same. The new policies come as technology firms and other companies take a stand against the Trump administration’s plan to tighten restrictions for foreign workers. On Tuesday, Trump was expected to sign an executive order that would impose new restrictions on H1-B visas, a type of temporary work visa often used by firms to recruit and employ highly skilled workers.

    Meanwhile, even Facebook joined in on the trend allowing employees to take May 1st off to attend a “pro-immigration” rally…

    Facebook, for example, is allowing its employees to take time off to participate in pro-immigration rallies on May 1. The company, which relies heavily on foreign workers, informed employees and contractors last week that they would not be penalized for missing work to protest, Bloomberg News reported Tuesday.

     

    “At Facebook, we’re committed to fostering an inclusive workplace where employees feel comfortable expressing their opinions and speaking up about issues that are important to them,” a company spokesman said in an email. “We support our people in recognizing International Workers’ Day and other efforts to raise awareness for safe and equitable employment conditions.”

     

    “We will define this as we grow,” Gómez said. “But my hope is that policies like this become the norm. When Google began giving out free lunches, everyone else followed. Why should this be any different?”

    Of course, this latest trend is afflicting not just Silicon Valley but our institutions of higher learning as well.  As we pointed out last night, one ASU professor recently allowed her students to opt out of a final exam in exchange for organizing a campus protest of Trump.

    But don’t worry, there are some ground rules for Silicon Valley’s snowflakes: no violence, or activities that make others feel threatened…but what good is a disaffected liberal protest without a little property destruction to stick it to ‘the man?’

  • Russia Reveals First Pics Of Top-Secret Arctic Base Filled With Reindeer-Riding Special Forces

    After an ‘icy’ (pardon the pun) meeting between Rex Tillerson and Russia Foreign Secretary Sergei Lavrov last week in Moscow, Vladimir Putin has just released the first public photos of a giant, top-secret military base recently built on the arctic island of “Alexandra Land.”  According to media reports, the base is believed to be fully-armed with missile systems and nuclear-ready fighter jets.

    A virtual tour of the facility can be viewed here.

    Russia

     

    Per The Sun, Russian economists figure the arctic outpost could hold the key to the Kremlin unearthing almost $25 trillion of oil and gas buried deep beneath the snow.  And with that kind of money on the line, it’s only natural that the base would be heavily fortified with nuclear ready fighter jets and reindeer-riding specials forces.

    More than 150 troops will be based at the clover-shaped compound – which is decked out in the red, white and blue of the Russian flag.

     

    And more worryingly, Moscow’s defence minister Sergei Shoigu confirmed nuke-ready Su-34 fighter jets will be deployed at a nearby air base.

    Russia

     

    The 150,000 sq ft (14,000 sq m) facility is designed to house 150 personnel, on 18-month tours of duty, and includes living quarters, a cinema, a chapel, a gymnasium, a billiards room and an orangery.

     

    Meanwhile, in a heaping dose of the obvious, Defense Secretary James Mattis confirmed: “Russia is taking aggressive steps to increase its presence there.” 

     

    We’re still awaiting confirmation of whether the gallons of vodka required daily to operate such a facility will be imported or distilled on the premises.

  • John Burbank Shuts Down His Long-Short Hedge Fund

    We almost made it a full month without a prominent hedge fund shuttering – an eternity in an age when ETFs and passive vehicles soak up several billion in capital each day at the expense of “active” managers – and then Bloomberg spoiled the streak when moments ago it reported that John Burbank, one of the handful of investors who made a killing from shorting subprime, and head of the $2.4 billion Passport Capital is shutting down one of his core hedge funds, the latest in a string of closings hitting the industry.

    Passport Capital’s Long-Short Strategy Fund is winding down and will return money to investors. The fund, which had an AUM of $833 million as of December 31, and $636 million as of March 17 according to HSBC, lost 2.1% in the first two months of this year. In 2016 the Long-Short fund lost 11.8% reversing its 2015 gains, when Passport Long/Short gained 10.1%.

    A catalyst for the closure may have been a January 2017 decision by the San Bernardino employees fund to pull its funds from Passport.

    Bloomberg adds that the firm’s flagship Passport Global Strategy Fund will remain open.

    A recent report by Hedge Fund Research showed that more hedge funds closed in 2016 than in any year since the financial crisis. Also on Wednesday, Guard Capital told investors that it’s closing its $885 million macro hedge fund. Last month, former Goldman Sachs trader Eric Mindich said he’s winding down his $7 billion firm, Eton Park Capital Management, which was one of the biggest hedge fund startups when it launched 13 years ago. In September, Richard Perry threw in the towel on his almost three-decade-old hedge fund.

    Many more will follow, because as Goldman explained earlier this week, in a centrally-planned market, one which never falls, active returns are no nearly enough to prevent an LP exodus.

     

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