Today’s News 22nd December 2019

  • From Vietnam To Afghanistan, All US Governments Lie
    From Vietnam To Afghanistan, All US Governments Lie

    Authored by Gordon Evans via The Conversation,

    The Washington Post has, after more than two years of investigation, revealed that senior foreign policy officials in the White House, State and Defense departments have known for some time that the U.S. intervention in Afghanistan was failing.

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    Interview transcripts from the Special Inspector General for Iraq Reconstruction, obtained by the Post after many lawsuits, show that for 18 years these same officials have told the public the intervention was succeeding.

    In other words, government officials have been lying.

    Few people are shocked. That’s a stark contrast to 1971, when the Pentagon Papers, a classified study of decision-making about Vietnam, were leaked and published. The explosive Pentagon Papers showed that the U.S. government had systematically lied about the reality that the U.S. was losing the Vietnam War.

    The failure of the U.S. campaign in Afghanistan has been known for years. Virtually none of the U.S. goals have been met. These goals included a strong, democratic, uncorrupt central government; the defeat of the Taliban; eliminating the poppy fields that contribute to the world’s heroin problem; an effective military and police and creating a healthy, diversified economy.

    The Inspector General has repeatedly documented the reality in its widely available (and widely reported) audits.

    Despite this public record of failure, officials continued to trumpet political and military gains on the ground, even that the U.S. could prevail.

    Privately, they have been wringing their hands.

    Shades of Vietnam.

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    Public confidence in government was shaken by the publication of the Pentagon Papers in 1971. AP/Jim Wells

    Sad history of Vietnam

    The Pentagon Papers revealed that senior officials asserted in the 1960s that the Viet Cong were dying in record numbers, enemy leadership was decapitated and there was “light at the end of the tunnel.” Defense Secretary Robert McNamara and his commanders, who knew the reality, continuously called for even more force from 1961 to 1969.

    H.R. McMaster, in his classic study of Vietnam decision-making, excoriated the military for not bringing the truth to President Lyndon Johnson, for presenting Johnson with the “lies that led to Vietnam.”

    The U.S. was winning in Vietnam, until it was not. Right up to the moment diplomats in the U.S. embassy turned the lights off and were airlifted off the building’s roof.

    Are comparisons justified?

    Afghanistan is not Vietnam, it is said.

    Former Afghanistan Ambassador Ryan Crocker argues that the U.S. must be in Afghanistan for America’s security even if reconstruction fails. Brookings analyst Michael O’Hanlon asserts that there were no lies; officials were clear the policy was in trouble. He avoids discussing the voluminous true statements The Washington Post uncovered that were not made publicly.

    The U.S. was ignorant about both countries. Serving in the Obama transition in 2008, for example, I learned that Lt. Gen. Douglas Lute, the Bush-Obama Afghanistan coordinator, was carrying out a policy review process that led to a military surge.

    Now we learn, courtesy of The Washington Post, that, when interviewed in 2015 as part of Special Inspector General’s “Lessons Learned” project, Lute said, “We were devoid of a fundamental understanding of Afghanistan … we didn’t have the foggiest notion of what we were undertaking.”

    While Afghanistan is clearly not Vietnam, Washington is still Washington.

    Prevarication as policy

    After more than 30 years of policy work, government experience, teaching and research, I see no mystery here. Concealment, deception and outright lies have characterized U.S. national security policy for decades – from the overthrow of democratically elected governments in Iran and Guatemala to the overthrow of Saddam Hussein and more.

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    The U.S. secretly plotted and carried out the overthrow of the democratically elected leader of Iran, Mohammad Mossadeq, in 1953. Here, an Iranian protests U.S. involvement in the coup. Pahlavi Dynasty, public domain

    But Vietnam was the big lie, permanently exposing the gap between myth – the government knows everything better – and reality – that policy is failing.

    Since Vietnam, the media and congressional, think-tank and scholarly investigators have suspected something with every intervention. To the public, the truth about Afghanistan has been clear; public opinion has been way ahead of what The Washington Post revealed.

    Good reasons for lies

    Lies are an integral part of national security operations. They seek credibility for government policy. They mislead adversaries, cover up mistakes and failures.

    Above all, they are intended to secure public support for policy and defeat opposition at home. Political scientist John Mearsheimer has noted that governments don’t often lie to their allies and adversaries, “but instead seem more inclined to lie to their own people.”

    In particular, secrecy and deception convey power. As philosopher Sissela Bok says, “Deception can be coercive. When it succeeds, it can give power to the deceiver.”

    Secrecy allows policies to be tweaked outside public view. Insiders gain influence arguing for new approaches to the same goals. Even the goals can shift as interventions deteriorate. The political consequences of failure may be avoided.

    It is rare for an official to acknowledge failure and reverse policy; personal, political and national credibility may be at stake. President Johnson insisted that he was not going to be the “first president to lose a war.” Bush, Obama and even Trump did not want to “lose” Afghanistan.

    An act of political courage – like the 1960-61 Algeria departure decision of French President Charles de Gaulle, who understood France had lost its fight, is rare.

    Trust broken

    Why has The Washington Post series not been explosive?

    In part, the Pentagon Papers broke the code of secrecy; the bond of trust between the policymakers and the American people was severed forever.

    In part, the lies about Afghanistan have been in plain sight for years, courtesy of the media and the Special Inspector General.

    And in part, the public is less directly engaged. The warriors are now volunteer professionals, not conscripts drawn from the general public. Casualties are one-twentieth of what they were in Vietnam.

    Nonetheless, lying about military interventions carries a serious risk. The Pentagon Papers eroded public faith in the credibility of our democratic government. That erosion was later reinforced by the Watergate scandal. As Bok, the philosopher, wrote, “deception of this kind strikes at the very essence of democratic government.”

    British leader Winston Churchill said, “In war-time truth is so precious that she should always be attended by a bodyguard of lies.” Deception aimed at the public and the Axis was an essential part of Churchill’s war strategy.

    The Afghanistan papers reveal yet again that statesmen still believe the truth should be concealed. But the credibility of statecraft and leadership itself were seriously eroded by the Vietnam lies, weakening the fabric of democracy.

    The mild reaction to lying in plain sight about Afghanistan suggests the U.S. may be well down the road to unravelling government’s credibility and our democracy altogether.


    Tyler Durden

    Sat, 12/21/2019 – 23:30

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  • Is This Kim's "Christmas Gift"? Satellite Images Suggest North Korea Readying ICBM Tests
    Is This Kim’s “Christmas Gift”? Satellite Images Suggest North Korea Readying ICBM Tests

    Just a few short days after Pyongyang warned it is entirely up to the US what Christmas gift it will select to get” after N.Korea test-fired two short-range missiles on Thanksgiving Day, and then one just days before, it appears Kim is repeating an all too familiar pattern of doing threatening things on American holidays.

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    As we noted previously, the north has launched dozens of “short-range” missiles since May, but has largely stuck to its word that it would refrain from ICBM tests, despite occasional disputes about the precise the nature of some of the tests.

    “We’re watching it very closely,” Trump said this week, noting he would be “disappointed” if that happens.

    But tonight, NBC News reports, citing new satellite images shared by Jeffrey Lewis, director of the East Asia Nonproliferation Program at the Middlebury Institute of International Studies, that North Korea has begun fresh work at a factory involved in the development and production of intercontinental ballistic missile launchers.

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    Lewis said Saturday Pyongyang is expanding work at the March 16 Factory in Pyongsong, where North Korean leader Kim Jong-un “watched preparations” for the 2017 test of the Hwasong-15 missile, which was theoretically capable of reaching the U.S. mainland.

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    “The site makes trucks to transport and launch ICBMs, so this is a long-term development,” Lewis told Axios via email.

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    “But what it shows is that North Korea is broadly expanding its missile capabilities.” 

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    “We believe North Korea erects this structure when the facility is involved in producing or modifying ICBM launchers,” Lewis concluded in a written analysis.

    “There is activity at a number of locations indicating that North Korea is laying the groundwork for an expansion of their ICBM program — more systems, more buildings, more capabilities,” he said.

    Gen. Charles Brown, commander of Pacific Air Forces and air component commander for U.S. Indo-Pacific Command said this week:

    “What I would expect is some type of long-range ballistic missile would be the gift. It’s just a matter of does it come on Christmas Eve, does it come on Christmas Day, does it come after the New Year.”

    Suggesting he knows what to expect as North Korea’s “Christmas gift” to Washington: a long-range ballistic missile test.

    When North Korea conducted a series of long-range missile tests in 2017, Trump threatened the nation with “fire and fury.”

    “The only option is to accept the reality that North Korea is a nuclear-armed state that holds the U.S. at risk,” Lewis said.

    “The Trump administration had an opportunity, and I think they’ve blown it.”

    How will Trump respond this time, given his “beautiful” relationship with Kim (and leverage on phase one trade deal details with China – Kim’s apparent puppetmaster – now off the table)?


    Tyler Durden

    Sat, 12/21/2019 – 23:00

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  • The 12 Strongest Arguments That Douma Was A False Flag
    The 12 Strongest Arguments That Douma Was A False Flag

    Authored by Caitlin Johnstone via Medium.com,

    There have been many US military interventions that were based on lies. This is not a conspiracy theory. It is not some kooky blogger’s opinion. It is an extensively documented and indisputable fact.

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    Nothing has ever been done to address this extensively documented and indisputable fact. No laws were ever changed. No war crimes tribunals were ever held. No policies or procedures were ever revised. No one was ever even fired. No changes were implemented to prevent the Iraq deception from happening again, and, when it happened again, no changes were implemented to prevent the Libya deception from happening again.

    When you make a mistake, you take measures afterward to ensure that you never make the same mistake again. When you do something on purpose, and you intend on doing it again, you do not take any such measures.

    There is a large and growing body of evidence that we have been lied to about Syria to an extent and to a level of sophistication that may be historically unprecedented. One particular aspect of the US-centralized empire’s military involvement in that nation, the 2018 airstrikes by the US/UK/France alliance and the alleged chemical weapons incident which preceded it, has been subject to intense scrutiny ever since it took place. And with good reason: there are many pieces of evidence indicating that the Douma incident was staged to falsely implicate the Syrian government.

    I don’t claim to know exactly who would have been involved in such a staging and to what extent. It is technically possible, as the UK’s Admiral Lord West speculated at the time, that it was perpetrated independently by the vicious al-Qaeda-linked Jaysh al-Islam forces who’d been occupying Douma, a last-ditch attempt to provoke a western military response that might save them from the brink of defeat at the hands of the surging Syrian Arab Army. Jaysh al-Islam has an established record of deliberately massacring civilians, and of using civilians as military leverage by locking them in cages on rooftops in strategic Douma locations to prevent airstrikes. The narrative management operation known as the White Helmets would also have been involved to some extent, and it’s very possible that Saudi Arabia, who backs Jaysh al-Islam, was involved as well.

    Any number of other allied intelligence agencies could have also been involved to some degree (perhaps with the more expanded goal of ensuring continued US military commitment in Syria during an administration that is vocally opposed to it), and it’s unknown if anyone involved would have had direct contact with any part of any US government agency regarding any of this. All we know for sure is that there’s a growing mountain of evidence that the Syrian government was not involved, and that this raises extremely important questions about (A) who really killed those civilians in Douma and (B) how seriously any future demands for military action should be taken from the US power alliance.

    That mountain of evidence includes the following 12 items. Taken individually they are reason enough to be skeptical of the narratives that are being promoted by a government with a known history of using lies, propaganda and false flags to advance preexisting military agendas. Taken together, and looked at with intellectual honesty, they are enough to obliterate anyone’s trust in what we’ve been told about Douma.

    1. A leaked OPCW Engineering Assessment concluded that the gas cylinders on the scene were manually placed there.

    The Organisation for the Prohibition of Chemical Weapons (OPCW) is a purportedly neutral and international watchdog group dedicated to eliminating the use of chemical weapons around the world. In May of this year, a leaked internal OPCW document labeled “Engineering Assessment of Two Cylinders Observed at the Douma Incident” was published by the Working Group on Syria, Propaganda and Media. The Engineering Assessment was signed by a South African ballistics expert named Ian Henderson, whose name is seen listed in expert leadership positions on OPCW documents from as far back as 1998 and as recently as 2018, and its authenticity was quickly confirmed by the OPCW in a statement sent to multiple journalists that it was “conducting an internal investigation about the unauthorised release of the document in question.”

    Henderson ran some experiments and found no scientifically grounded theory for how the cylinders could possibly have been dropped vertically from the air while being found in the condition and locations that they were found in, concluding instead that they were manually placed on the scene. This is a huge difference, since the Assad coalition was the only side with aircraft and Jaysh al-Islam were the only forces on the ground.

    “The dimensions, characteristics and appearance of the cylinders, and the surrounding scene of the incidents, were inconsistent with what would have been expected in the case of either cylinder being delivered from an aircraft,” Henderson wrote. “In each case the alternative hypothesis produced the only plausible explanation for observations at the scene.”

    “In summary, observations at the scene of the two locations, together with subsequent analysis, suggest that there is a higher probability that both cylinders were manually placed at those two locations rather than being delivered from aircraft,” Henderson concludes.

    This is unsurprising, since the hypothetical physics of the empire’s airdrop narrative make no sense to anyone with any understanding of how material objects move. To get a simple explanation of this, watch the breakdown in this three-minute animation. For a more in-depth look, check out this long Twitter thread by Climate Audit’s Stephen McIntyre.

    The existence of Henderson’s report was kept secret from the public by the OPCW, which might make more sense after we get through #2 on this list.

    2. US officials reportedly pressured the OPCW to find evidence of Assad’s guilt.

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    In addition to whoever leaked the Henderson report in May, a second whistleblower going by the pseudonym of “Alex” emerged in October to give a presentation before the whistleblower’s advocacy group Courage Foundation exposing far more plot holes in the official Douma narrative. This same whistleblower also spoke with award-winning British journalist Jonathan Steele, who published a bombshell report on Alex’s revelations in CounterPunch last month.

    Among the most stunning revelations in Steele’s article was Alex’s report that US officials attempted to pressure OPCW inspectors during the Organisation’s drafting of its Interim Report on their Douma investigation in July 2018, and that this intercession was facilitated by an OPCW official named Bob Fairweather.

    “On July 4 there was another intervention,” Steele writes. “Fairweather, the chef de cabinet, invited several members of the drafting team to his office. There they found three US officials who were cursorily introduced without making clear which US agencies they represented. The Americans told them emphatically that the Syrian regime had conducted a gas attack, and that the two cylinders found on the roof and upper floor of the building contained 170 kilograms of chlorine. The inspectors left Fairweather’s office, feeling that the invitation to the Americans to address them was unacceptable pressure and a violation of the OPCW’s declared principles of independence and impartiality.”

    It’s unknown what forces were at play that enabled the US government to insert itself into into an ostensibly impartial OPCW investigation with the help of an OPCW official, but it wouldn’t be the first time the US government leveraged the Organisation into facilitating preexisting regime change agendas against a disobedient Middle Eastern nation. In 2002 Mother Jones reported that the US government, spearheaded by John Bolton, had used the threat of withdrawing its disproportionately high percentage of funding from the Organisation if it didn’t oust its then-Director General Jose Bustani. The popular Bustani, who’d previously been unanimously re-elected to his position, had been hurting the case for war with his successful negotiations with Saddam Hussein’s Iraq. In March 2018, after Bolton was selected as Trump’s National Security Advisor, The Intercept revealed that the campaign to remove Bustani had also included Bolton personally threatening his children.

    Bolton was operating at the highest levels of the Trump White House throughout the entire duration of the OPCW’s Douma investigation. He was Trump’s National Security Advisor from April 9, 2018 to September 10, 2019. The OPCW’s Fact-Finding mission didn’t arrive in Syria until April 14 2018 and didn’t begin its investigation in Douma until several days after that, with its final report being released in March of 2019.

    3. Levels of chlorinated organic chemicals didn’t indicate any chlorine gas attack took place.

    “The main point is that chlorine gas degrades rapidly in the air,” Jonathan Steele told Tucker Carlson last month detailing what was told to him by Alex. “So coming in two weeks later, you wouldn’t find anything. What you would find is that the gas contaminates or affects other chemicals in the natural environment. So-called chlorinated organic chemicals [COCs]. The difficulty is they exist anyway in the natural environment and water. So the crucial thing is the levels: were there higher levels of chlorinated organic chemicals found after the alleged gas attack than there would have been in the normal environment?”

    “When they got back to the Netherlands, to The Hague where the OPCW has its headquarters, samples were sent off to designated laboratories, then there was a weird silence developed,” Steele continued. “Nobody told the inspectors what the results of the analysis was. It was only by chance that the inspector found out through accident earlier the results would come in and there were no differences at all. There were no higher levels of chlorinated organic chemicals in the areas where the alleged attack had happened where there is some suspicious cylinders had been found by opposition activists. So it didn’t seem possible that there could have been a gas attack because the levels were just the same as in the natural environment.”

    “[Alex] got sight of the results which indicated that the levels of COCs were much lower than what would be expected in environmental samples,” Steele reported in CounterPunch. “They were comparable to and even lower than those given in the World Health Organisation’s guidelines on recommended permitted levels of trichlorophenol and other COCs in drinking water. The redacted version of the report made no mention of the findings.”

    “Had they been included, the public would have seen that the levels of COCs found were no higher than you would expect in any household environment”, Alex told Steele.

    This inconvenient fact was omitted from both the OPCW’s Interim Report in July 2018 and its Final Report in March 2019.

    4. Many signs and symptoms of alleged chlorine gas poisoning weren’t consistent with chlorine gas poisoning.

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    The OPCW’s Final Report on Douma in March 2019 assures us that the team found “reasonable grounds that the use of a toxic chemical as a weapon took place. This toxic chemical contained reactive chlorine. The toxic chemical was likely molecular chlorine.” A leaked internal OPCW email, featuring an inspector voicing objections to the aforementioned Bob Fairweather over vital information being omitted from the developing Interim Report on Douma, contradicts this assurance, saying observed symptoms weren’t consistent with chlorine gas poisoning.

    “In this case the confidence in the identity of chlorine or any choking agent is drawn into question precisely because of the inconsistency with the reported and observed symptoms,” the email reads. “The inconsistency was not only noted by the FFM [Fact-Finding Mission] team but strongly noted by three toxicologists with expertise in exposure to CW [Chemical Weapons] agents.”

    So the OPCW’s investigative team as well as three toxicologists said what was observed didn’t match chlorine gas poisoning symptoms. This information was, of course, hidden from us by the OPCW.

    leaked first draft of the Interim Report on Douma, before OPCW officials started cutting out chunks which didn’t suit the US narrative, gives more detail. Here are some excerpts (emphases mine):

    “Some of the signs and symptoms described by witnesses and noted in photos and video recordings taken by witnesses, of the alleged victims are not consistent with exposure to chlorine-containing choking or blood agents such as chlorine gas, phosgene or cyanogen chloride. Specifically, the rapid onset of heavy buccal and nasal frothing in many victims, as well as the colour of the secretions, is not indicative of intoxication from such chemicals.”

    “The large number of decedents in the one location (allegedly 40 to 45), most of whom were seen in videos and photos strewn on the floor of the apartments away from open windows, and within a few meters of an escape to un-poisoned or less toxic air, is at odds with intoxication by chlorine-based choking or blood agents, even at high concentrations.”

    “The inconsistency between the presence of a putative chlorine-containing toxic chocking or blood agent on the one hand and the testimonies of alleged witnesses and symptoms observed from video footage and photographs, on the other, cannot be rationalised. The team considered two possible explanations for the incongruity:
    a. The victims were exposed to another highly toxic chemical agent that gave rise to the symptoms observed and has so far gone undetected.
    b. The fatalities resulted from a non-chemical-related incident.”

    5. A doctor in Douma told journalist Robert Fisk that there was no gas poisoning.

    Shortly after the Douma incident a video was circulated online and redistributed on news media around the world featuring people being hosed down with water in a hospital and an infant receiving a respiratory treatment. A doctor who worked in the hospital Assim Rahaibani gave the following account to journalist Robert Fisk days after the incident, saying those in the video were actually just suffering from hypoxia due to dust inhaled after a conventional bombing:

    “I was with my family in the basement of my home three hundred metres from here on the night but all the doctors know what happened. There was a lot of shelling [by government forces] and aircraft were always over Douma at night — but on this night, there was wind and huge dust clouds began to come into the basements and cellars where people lived. People began to arrive here suffering from hypoxia, oxygen loss. Then someone at the door, a ‘White Helmet’, shouted ‘Gas!’, and a panic began. People started throwing water over each other. Yes, the video was filmed here, it is genuine, but what you see are people suffering from hypoxia — not gas poisoning.”

    Lest anyone accuse Fisk of having any special loyalties to the Syrian government, in this same report he says it “is indeed a ruthless dictatorship.”

    6. A BBC reporter said he has proof that the hospital scene was staged.

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    The BBC, another establishment that can hardly be accused of Assad loyalism, saw its Syria producer Riam Dalati claiming earlier this year that he had proof beyond a doubt the aforementioned hospital scene was staged. While holding to the establishment line that the attack did happen, Dalati expressed uncertainty as to what if any chemical would have been used and said “everything else around the attack was manufactured for maximum effect.” Emphases mine:

    “The ATTACK DID HAPPEN, Sarin wasn’t used, but we’ll have to wait for OPCW to prove Chlorine or otherwise,” Dalati tweeted. However, everything else around the attack was manufactured for maximum effect. After almost 6 months of investigations, i can prove without a doubt that the Douma Hospital scene was staged.”

    “No fatalities occurred in the hospital,” Dalati continued. “All the White Helmets, activists and people i spoke to are either in Idlib or Euphrates Shield areas. Only one person was in Damascus. Russia and at least one NATO country knew about what happened in the hospital. Documents were sent. However, no one knew what really happened at the flats apart from activists manipulating the scene there. This is why Russia focused solely on discrediting the hospital scene.”

    In other words, Russia knew that these “activists” were staging the scene for the news media, and understandably focused on discrediting their work.

    “I can tell you that Jaysh al-Islam ruled Douma with an iron fist,” Dalati added. “They coopted activists, doctors and humanitarians with fear and intimidation.”

    Dalati set his account to private for an extended period after these extremely controversial statements got him a flood of attention, but the thread is up on Twitter as of this writing (here’s an archive in case they vanish again).

    7. More evidence the Douma scene was knowingly staged for media.

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    Riam Dalati also tweeted evidence after the attack that people had staged the corpses of two children to make it appear as though they died hugging each other for the purpose of emotional manipulation. If you’ve got a strong stomach (seriously think hard about whether this is something you want in your head before diving in), Stephen McIntyre also compiled some disturbing proof of dead infants being physically placed on top of other corpses in between video shoots of the Douma incident’s aftermath.

    Whoever was positioning these bodies for the cameras clearly had a goal of generating an emotional response from the outside world. Which would be precisely the goal of staging a false chemical weapons attack.

    8. Witness testimony at The Hague.

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    Seventeen Syrian civilians, including medical personnel and some of the “victims” seen in the aforementioned hospital footage, spoke at the OPCW headquarters in The Hague saying that no chemical weapons attack took place. RT reports:

    “There were people unknown to us who were filming the emergency care, they were filming the chaos taking place inside, and were filming people being doused with water. The instruments they used to douse them with water were originally used to clean the floors actually,” Ahmad Kashoi, an administrator of the emergency ward, recalled. “That happened for about an hour, we provided help to them and sent them home. No one has died. No one suffered from chemical exposure.”

    The briefing was boycotted by the US and 16 of its allies and was smeared as an unconscionable Russian hoax by media outlets ranging from Sky News to Al Jazeera to The Guardian to The Intercept, apparently for no other reason than that what these Syrians were saying didn’t match the unsubstantiated claims being promoted by the political/media class of the US-centralized empire. If you want to just listen to what the Syrians themselves say and make up your own mind, RT has an English translation video here:

    9. The first OPCW Director General finds the glaring irregularities and omissions from the OPCW’s Douma report “very disturbing”.

    After the aforementioned Courage Foundation presentation given by Alex this past October, the aforementioned former OPCW Director General Jose Bustani (the one whose kids John Bolton threatened) had this to say:

    “The convincing evidence of irregular behaviour in the OPCW investigation of the alleged Douma chemical attack confirms doubts and suspicions I already had. I could make no sense of what I was reading in the international press. Even official reports of investigations seemed incoherent at best. The picture is certainly clearer now, although very disturbing”

    “I have always expected the OPCW to be a true paradigm of multilateralism. My hope is that the concerns expressed publicly by the Panel, in its joint consensus statement, will catalyse a process by which the Organisation can be resurrected to become the independent and non-discriminatory body it used to be.”

    10. This OAN reporter literally just walking around asking people in Douma what they saw.

    11. MIT Professor Emeritus Theodore Postol speaking about the plot holes and irregularities in scientific protocol with the Douma investigation.

    12. Common sense: Assad stood nothing to gain from launching a chemical attack, while Jaysh al-Islam fighters stood everything to gain by faking one.

    This is the initial reason why critical thinkers were so skeptical of the establishment Douma narrative: from the very beginning, it made no sense at all.

    Click this hyperlink to read a BBC article dated five days before the Douma incident, describing how the Syrian government “appears poised to regain control” of the town and how Jaysh al-Islam fighters were already evacuating. The battle was won. Assad would have stood absolutely nothing to gain from tempting a retaliation from western powers (which could have been far more severe than it ended up being) all to drop a couple of cylinders of chlorine gas, which incidentally is a highly ineffective weapon that ordinarily takes a very long time to kill.

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    Jaysh al-Islam (and whoever else they may have been working with), on the other hand, would have stood everything to gain by murdering a few of the civilians they had been holding captive in the town they’d invaded in the hopes that western forces would become their airforce for a bit and hold off the Syrian Arab Army from reclaiming Douma.

    “Why would Assad use chemical weapons at this time? He’s won the war,” Major General Jonathan Shaw told The Mail on Sunday at the time. “That’s not just my opinion, it is shared by senior commanders in the US military. There is no rationale behind Assad’s involvement whatsoever. He’s convinced the rebels to leave occupied areas in buses. He’s gained their territory. So why would he be bothering gassing them?”

    “The jihadists and the various opposition groups who’ve been fighting against Assad have much greater motivation to launch a chemical weapons attack and make it look like Assad was responsible,” the ex-SAS and Parachute Regiment commander added. “Their motivation being that they want to keep the Americans involved in the war — following Trump saying the US was going to leave Syria for other people to sort out.”

    Admiral Lord West made similar comments on the BBC around the same time, prompting BBC host Annita McVeigh to flip into frantic narrative management mode suggesting that he’s “muddying the waters” during an “information war with Russia”.

    “President Assad is in the process of winning this civil war, and he was about to take over Douma, all that area,” West said. “He’d had a long, long, long slog slowly capturing that area of the city, and there just before he goes in and takes it all over, apparently he decides to have a chemical attack. It just doesn’t ring true. It seems extraordinary, because clearly he would know that there’s likely to be a response from the allies. What benefit is there for his military? Most of the rebel fighters, this disparate group of Islamists, had withdrawn, there were a few women and children left around. What benefit was there militarily in doing what he did? I find that extraordinary.”

    “Whereas we know that in the past some of the Islamo groups have used chemicals, and of course there’d be huge benefit in them labeling an attack as coming from Assad, because they would guess quite rightly that there would be a response from the US as there was last time, and possibly from the UK and France,” West added.

    “If I were advising some of the Islamist groups, many of whom are worse than Daesh,” West said, “I would say look, we’ve got to wait until there’s another attack by Assad’s forces, particularly if they’ve got a helicopter overhead or something like that and they’re dropping barrel bombs, and we set off some chlorine. Because we’ll get the next attack from the allies. And there’s no doubt that if we believe he’s done a chemical attack we should do that. And those attacks will get bigger, and it’s the only way they’ve got, actually, of stopping the inevitable victory of Assad.”

    These are not Assad sympathizers or Kremlin assets saying this. These are not a bunch of hippie dippie anti-imperialists. These are lifelong military men, thinking in military terms, describing what they were seeing. And what they were seeing is the thing that a false flag is.

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    This isn’t just some idle philosophical question. People died. A massive war crime occurred and the more minutes tick by before a legitimate investigation is launched — with full transparency and accountability this time — the less available evidence there will be. Which is why establishment narrative managers on Syria go full dead-weight when asked if they support a full criminal investigation into what happened. They don’t actually believe it will go their way, and rightly so.

    Meanwhile the illegal occupation of Syria drags on, perhaps until Trump can be replaced with a more compliant puppet, and we’re all basically just sitting around waiting to be deceived again.

    This cannot continue. This must not continue.

    *  *  *

    Thanks for reading! The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, checking out my podcast on either YoutubesoundcloudApple podcasts or Spotify, following me on Steemit, throwing some money into my hat on Patreon or Paypalpurchasing some of my sweet merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. Everyone, racist platforms excluded, has my permission to republish or use any part of this work (or anything else I’ve written) in any way they like free of charge.

    Bitcoin donations:1Ac7PCQXoQoLA9Sh8fhAgiU3PHA2EX5Zm2


    Tyler Durden

    Sat, 12/21/2019 – 22:30

  • Secretive California Military Base Rattled By Five Earthquakes In One Day
    Secretive California Military Base Rattled By Five Earthquakes In One Day

    Five months after the biggest earthquake in two decades, a swarm of smaller quakes rattled a secretive Navy base in the Mojave Desert Thursday afternoon and before dawn on Friday, according to the US Geological Survey.

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    Five quakes magnitudes over 2.5 struck Naval Air Weapons Station China Lake between 3 p.m. Thursday and 3.30 a.m. Friday in Ridgecrest, CA, according to the Fresno Bee.

    The base, deep in the California desert near Death Valley National Park, is where the Navy develops and tests its newest weapons.

    A massive 7.1 magnitude earthquake on July 6 was also centered on the base and forced the evacuation of the massive installation, according to KLTA.

    That was the biggest earthquake in the area in two decades, according to the USGS. –Fresno Bee

    In July, a series of back-to-back earthquakes in the Mojave Desert stoked fears over ‘the big one’ hitting the area.

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    Tyler Durden

    Sat, 12/21/2019 – 22:00

  • Against Silicon Valley
    Against Silicon Valley

    Authored by Ian Miles Cheong via HumanEvents.com,

    Big Tech amplified the culture war: now it is putting its thumb on the scale.

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    The early days of the internet were rife with optimism about the future of the technological society. Techno-utopians naively hoped that a society running on the so-called “Information SuperHighway” would be armed with facts, and civic life would evolve past the tired dialectic of partisan politics.

    Of course what they predicted, and what ended up happening, are two very different things. Far from enlightenment, we’re confronting a world of conspiracy theories and alternative narratives produced within echo chambers and widely disseminated through social media—some of which are downright dangerous.

    Before we can understand why things are the way they are, it is necessary to recall what happened in the first two decades of the 21st century. That’s likely what motivated Joe Bernstein’s recent retrospective on BuzzFeed. For all the utopianism and hope that defined the end of the 20th century, we still haven’t ended starvation and inequality, accomplished world peace, or established a colony on Mars. Instead, we have the culture war and a myriad of trivialities that threaten to ensconce the human race in low-stakes concerns like preferred pronouns and microaggressions.

    Bernstein, who’s very much a “normie,” laments the ways in which the new age of enlightenment, driven by technological progress, failed to deliver. But the utopia he grieves for is very much a product of Big Tech’s monocultural hegemony. Big Tech, which has engineered the current state of political discourse, has been subsumed by leftist beliefs—both from within and without.\

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    Mark Zuckerberg.

    THE TWIN HISTORY OF SILICON VALLEY LIBERALISM AND MAGA-NET

    Remember Usenet? You probably don’t. In the ‘90s, Usenet was a series of message boards that existed on an alternate network before the dominance of the “world wide web.” Usenet and other disparate networks existed alongside the web—and continue to do so. Usenet was something anyone with a client could access, the same way you can access the world wide web through browsers like Google Chrome, Safari, or Firefox today. This decentralized network of message boards—“newsgroups”—served as sounding boards for people to have conversations. They were run very much like forums are these days, dedicated usually to singular topics or fields of interest.

    Many of the terms used these days by the LGBT+ or social justice community first emerged or took on prominence through these Usenet communities, including the term “cisgender” (the opposite of transgender). The concept was never really a thing until the denizens of these newsgroups made their way to proto-social media sites like LiveJournal, and eventually dominated social media platforms. Now these concepts, which were incubated in echo chambers, have proliferated mainstream political discourse. Democratic politicians announce their pronouns. It’s kind of crazy to think about.

    But just as radical left-wing ideas began to trickle out of the insular Usenet intelligentsia, so too did the counter-establishment on imageboards—the first of which was 4chan. This counter-establishment aligned itself around conservatism.

    True, it’s a mode of conservatism that’s no doubt different from what the Founding Fathers and the classical liberals of the Age of Enlightenment would have identified with. “Reject modernity. Embrace tradition,” or so the slogan goes. It is a shibboleth often spoken and then regurgitated ad nauseam by disconnected self-declared conservatives who regard the present state of conservatism as “progressivism in slow motion.” Unhappy with the way things are, the disenfranchised turn towards a form of cultural neo-fundamentalism, laden with a sense of nostalgia for things that never were.

    The “manosphere” exists in tandem with social justice activists who also imagine the world is against them—and that is the shared history that the soft-critics of Big Tech like Bernstein conveniently ignore. It’s easier for them to blame GamerGate and individual actors for expressing their “toxicity” on the internet than blame the internet for capturing our expressive life the way that it has.

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    Video games.

    GAMERGATE: SILICON VALLEY LIBERALISM’S WHIPPING BOY

    Bernstein blames Big Tech for disempowering people, but he understands this disempowerment through the problem of harassment. Harassment, he says, is a significant issue in today’s social media landscape. If you’re being shouted down by a racist who’s making fun of your IQ, and you can’t punch him through the monitor, it’s understandable why you’d feel actively disempowered.

    “Try to imagine every woman and every nonwhite, non-Christian and LGBTQ human who has been threatened with death, torture, rape, or worse, on a major social platform. Add up all of those feelings of anger and powerlessness, against the backdrop of a $24 billion company that wouldn’t take it seriously for the longest time.”

    And, as if on cue, Bernstein blames a singular event—GamerGate in 2014—for the current cultural climate:

    “I first reported on the jilted 24-year-old who started an unlikely social movement with a seething blog post about the behavior of his ex-girlfriend, an obscure game developer. Gamergate! It was so stupid and about nothing and quickly became so scary and about everything. An entire culture of alienated posters and clever scammers cohered around it, around the impulse that something needed to be protected and some people needed to be attacked. What you think doesn’t count very much anymore. Some of these young men were trolls, others neo-Nazis.”

    The fact of the matter is that GamerGate was a symptom of the cultural hegemony permeating out of Silicon Valley. It was a counter-establishment reaction.

    That’s not to justify the behavior of people who behave badly online, or even to demonize those who behave badly online as necessarily wrong-thinkers. We are all entitled to our opinions, and how we behave in the real world is usually, if not always, based on how others react to our actions. On the internet, you can be as antisocial as you want to be, and invite other antisocial people to form a sort of antisocial collective with you, ritualistically throwing fuel on the rest of society.

    But the existence of a counter-establishment demonstrates something that Bernstein and his peers are quick to ignore.

    Today, leftist thought permeates throughout the mainstream, in part because of the vast amount of cultural capital that technologists have amassed alongside their wealth and have been able to export globally. Many of these technoliberal ideas are distinctively anti-male, and to an extent, anti-white.

    For example, look to transgender feminist Coraline Ada Ehmke’s Contributor Covenant—a legally codified set of do’s and don’ts for an inclusive (read: “woke”) workplace. It has seen widespread adoption in Silicon Valley. The author of the Covenant also co-authored the Post-Meritocracy Manifesto, a pledge to repeal principles that “mainly benefit those with privilege, to the exclusion of underrepresented people in technology.” The fight against “white supremacy,” while valid perhaps in the 1940s up to the 1990s, is an older, now obsolete paradigm that only serves to inflict damage on the fabric of society in the present day. Silicon Valley’s brand of liberalism, however, is obsessed with immutable characteristics like race, gender, and sexual orientation. And through that political orientation, Big Tech chooses to disenfranchise white men.

    This rhetoric—ironically promoted by white men within Big Tech who want to prove their allyship—promotes a system that values identity over merit. This, in turn, has led to young men coming together around their identity, trying to find empowerment in all the wrong places—in movements like the alt-right and incel forums, where they find mutual solace in their sense of shared victimhood. It’s hard to blame them when the media and Big Tech bombards them with messaging that extol the evils of their demographic.

    As difficult as it is to swallow, it’s not entirely the fault of these arguably disempowered men who seek to regain their place in society (some of whom do want supremacy, as opposed to equality—if only out of revenge). Nor is it explicitly the fault of leftists or social justice activists that anyone is feeling disempowered. And it’s just not productive to lay the blame entirely at their feet.

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    Social media.

    BIG TECH WANTS BIG EXPRESSION—BUT ONLY FOR A SMALL MINORITY

    There is a culture war that’s happening beneath the shadow of Big Tech, which, for all its pandering to “free speech” or to “diversity,” refused to take a side until it affects its bottom line. And, given how its stakeholders and investors come from the same coastal wealth as the engineers who design these platforms are, it’s no surprise that it takes the side against counter-establishment values.

    Beyond spectacles like the Damore incident, we have to be mindful of how Big Tech, which remains poised to spread its tentacles throughout every aspect of our lives, governs our interactions with others on social media. While condemning all forms of bigotry, and bragging about its ability to empower people to express their right to free speech, it surreptitiously concentrates the governance of where and how this speech occurs in the hands of a few coastal elites. And they love it—they make money off of it. Platforms weaponize our very human desire to express—making small gestures to make people feel personally empowered (the report tool, for instance), and thriving off of the viral potential of cancel culture and mean-spirited “debate.” But ultimately, efforts are merely an illusion to keep us distracted in our rage towards our political and ideological opponents.

    For all its virtue signaling, Big Tech still takes investments from the Chinese totalitarian state, and sells user data to governments all over the world. We are asleep, naive, and unaware of the creep of Big Tech. People like Bernstein want us to focus our rage on disenfranchised white men or expressions of counter-culture—meanwhile, we’re being strangled by Silicon Valley’s myriad tentacles, slaves to the technological society.


    Tyler Durden

    Sat, 12/21/2019 – 21:30

  • "I Find It Very Troubling" – Most Americans Lack Savings
    “I Find It Very Troubling” – Most Americans Lack Savings

    The economy might be strong in the U.S., but, as Statista’s Maria Vultaggio details below, nearly 70 percent of Americans have less than $1,000 stashed away, according to GOBankingRates’ 2019 savings survey. The poll, released December 16, revealed 45 percent have nothing saved. The survey questioned 846 respondents November 25 to 26.

    Infographic: Most Americans Lack Savings | Statista

    You will find more infographics at Statista

    The discovery baffled Bruce McClary, the spokesman for the National Foundation for Credit Counseling.

    “It’s puzzling to me that if the economy is doing so well and that we’re so close to full employment, that consumer confidence is up … that we haven’t seen the numbers move much in people’s ability to save,” McClary told Yahoo Finance.

    “I find it very troubling that people can’t come up with $1,000 in a savings account to cover expenses without borrowing money.”

    As he faces impeachment, President Donald Trump has lauded the strong U.S. economy, saying the American people care more about the economy than the impeachment inquiry.

    “The Stock Market hit another Record High yesterday, number 133 in less than three years as your all time favorite President, and the Radical Left, Do Nothing Democrats, want to impeach me. Don’t worry, I have done nothing wrong. Actually, they have!” he tweeted December 17.

    “The new USA Today Poll, just out, has me leading all of the Democrat contenders. That’s hard to believe since the Fake News & 3 year Scams and Witch Hunts, as phony as they are, just never seem to end. The American people are smart. They see the great economy, & everything else!”


    Tyler Durden

    Sat, 12/21/2019 – 21:00

  • We Live In Hysteric Times: What Trump's Impeachment Really Means
    We Live In Hysteric Times: What Trump’s Impeachment Really Means

    Authored by James George Jatras via The Strategic Culture Foundation,

    “America is a corpse being consumed by maggots. Liberals are rooting for the maggots. Conservatives are rooting for the corpse.”

    @Vendee_Rising

    For a century and a half American political life has been the exclusive preserve of the duopoly of Democrats and Republicans, also known as the Evil Party and the Stupid Party. (If something is both Evil and Stupid, we call that “Bipartisan.”) But the familiar Evil-Stupid dichotomy doesn’t even begin to describe the descent into national dysfunction and galloping irrationality that characterizes the Trump impeachment hysteria.

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    Media chatter now centers on the nuts-and-bolts questions of “what’s next?” Will House Speaker Nancy Pelosi send the articles of impeachment over to the Senate? (Yes. Even one of the legal “scholars” enrolled in the impeachment lynch mob avers that Trump isn’t actually impeached until the Senate receives the articles.) Who will be the trial managers? (Who cares.) Will there be a “real trial,” with witnesses? (It hardly matters.) Will Trump be removed? (Unlikely unless some bolt from the blue flips 20 GOP Senators.) Will impeachment be the Democrats’ albatross going into November 2020? (Most polls show independents are turned off, but there’s still almost a year to go.)

    None of these questions, which are meaningful only in a mental universe of the Evils and the Stupids shadowboxing over a partisan allocation of political spoils, touch upon the grim – and occasionally sardonic – symptoms of America’s seemingly unstoppable terminal slide.

    With Trump’s impeachment it’s time to say goodbye to yesteryear’s Team Evil and Team Stupid. Say hello in 2020 to Team Maggot and Team Corpse!

    Even though Trump has not turned out to be the transformative and restorative president that many of his supporters might have hoped for, he certainly will be (assuming he survives impeachment, which he probably will) the lesser of evils in November 2020 compared to whoever ends up as the Maggot Party nominee. Worse from his opponents’ point of view, he remains a toxic avatar of the old America they thought would be well and truly laid to rest for ever and ever, amen, when Hillary Clinton came into her kingdom. That having misfired in 2016, partisans of that legacy America’s marginalization, displacement, and eventual extinction can’t breathe easy while Trump remains in office lest he, however unlikely in view of his failures of performance, serve as a catalyst for revival of the historic American nation facing loss of its birthright: an organic, uncontrived, living ethnos characterized by European, mainly British origin (a/k/a, “white”); Christian, mainly Protestant; and English-speaking, as augmented by members of other groups who have totally or partially assimilated to it. The certified victim classes standing on the threshold of the permanent, total power that eluded them three years ago are haunted by the knowledge that there’s still lots of them Muricans in red MAGA hats rallying to Trump out there in Flyover Country ….

    In short, Democrats hate Trump not so much for what he’s done (which, contrary to what his passionate supporters think based on his Tweets, isn’t much) but as an expression of an amorphous dread that by some mysterious populist alchemy he might still breathe life back into the Corpse Party’s deplorable base.

    With that in mind, here are a few things to note as we cruise on into Bizarro World:

    What do you mean ‘we,’ white man? 

    As the impeachment spectacle unfolded in the House, one could not fail to be touched by the hushed, heartfelt reverence with which Democrat after Democrat cited the sage words of the Founding Fathers: Madison especially, but also Jefferson and Washington. No doubt they can hardly wait for this spectacle to be over so they can go back to denouncing the Founders as dead, racist, Christian, patriarchal, “Anglo,” and (presumably) heterosexual slaveholders in wigs and knee-breeches whose memory should be expunged from the historical record. It’s instructive to glance at the members of the House Judiciary Committee who – solemnly, reluctantly, and prayerfully, they assure us! – voted out articles of impeachment in the name of “the American people.” But which “people” might that be? Of the 23 Democrats who voted, only four even arguably fit the heritage American, male profile of the Founding Fathers. The “gender balance” (as it’s ungrammatically called nowadays) on the voting majority side of the Committee is 12-11. That’s not quite up to Barack Obama’s exhortation that “every nation on earth” should be “run by women,” but it’s progress in that direction! (Just imagine how much more serene the world would be if all countries were ruled by peaceniks like Hillary Clinton, Madeleine Albright, Condi Rice, Susan Rice, Samantha Power, Anne-Marie Slaughter, Michèle Flournoy, Evelyn Farkas, etc., plus a bevy of Deep State Democrats now installed in Congress.) By contrast, the 17 Republicans on the Committee have approximately the same demographic composition they’d have had in 1950 – and aside from the inclusion of two women, that of the First Congress seated in 1789.

    In short, in the Congressional Maggot Caucus the approaching Dictatorship of Victims defined by race, sex, ethnicity, sexual orientation, language, religion, migratory status, etc., is already becoming a reality, and they voted to get rid of Trump. Members of the Corpse Caucus defending him still belong demographically and morally to the declining legacy America, though they’d never, ever admit it. Impeachment is thus more than just the latest iteration of the years-long anti-constitutional coup to overturn a presidential election, though it is that too. Even more fundamentally, it’s a coup against the people whose identity, traditions, and values the Constitution was intended to ensure for themselves and their posterity.

    Foreign interference in our deMOCKracy.

     Even more absurd than Democrats’ presumption in lip-synching the venerable principles of an American constitutional tradition they despise almost as much as they loathe the ethnos that ordained and established it is their feigned horror – horror! – that Trump’s phone chat with Ukraine’s Volodymyr Zelensky realized the Founders’ worst fears of foreign influence over American domestic politics. Leaving aside the fact that Ukraine under Zelensky’s predecessor, Petro Poroshenko, did try to queer the 2016 election in favor of Hillary, and that Hunter and Joe Biden are crooks, the Maggoteers’ ability to maintain a straight face of shocked indignation smack in the middle of a souk, a flea market, a bazaar where both domestic and foreign interests buy, sell, and trade favors like vintage baseball cards is nothing less than heroic.

    While the bipartisan leadership has not yet taken up the helpful suggestion that barcodes be affixed to legislators’ foreheads so that interested persons and organizations can conveniently scan prices and self-checkout, they have provided a helpful guide to what are called “Congressional Member Organizations (CMOs),” also called coalitions, study groups, task forces, or working groups. Memberships in many but not all CMOs serve as virtual barcodes for potential (mostly legal) campaign donors, including, in the case of “friends of” this or that foreign country, contributions from ethnic compatriots who are US citizens, or at least are supposed to be. Here’s a partial selection:

    Argentina Caucus, Armenian Issues Caucus, Azerbaijan Caucus, Bangladesh Caucus, Bosnia Caucus, Brazil Caucus, Cambodia Caucus, Central America Caucus, Colombia Caucus, Congressional Caucus on Bulgaria, Croatian Caucus, Czech Caucus, Ethiopian-American Caucus, Ethnic and Religious Freedom in Sri Lanka, EU Caucus, Friends of Australia Caucus, Friends of Denmark Caucus, Friends of Egypt Caucus, Friends of Finland Caucus, Friends of Ireland Caucus, Friends of Liechtenstein Caucus, Friends of New Zealand Caucus, Friends of Norway Caucus, Friends of Scotland Caucus, Friends of Spain Caucus, Friends of Sweden Caucus, Friends of the Dominican Republic Caucus, Friends of Wales Caucus, Georgia Caucus, Hellenic Caucus, Hellenic Israel Alliance Caucus, House Baltic Caucus, Hungarian Caucus, India and Indian Americans Caucus, Iraq Caucus, Israel Allies Caucus, Israel Victory Caucus, Kingdom of Netherlands Caucus, Korea Caucus, Kyrgyzstan Caucus, Macedonia and Macedonian-American Caucus, Moldova Caucus, Mongolia Caucus, Montenegro Caucus, Morocco Caucus, Nigeria Caucus, Pakistan Caucus, Peru Caucus, Poland Caucus, Portuguese Caucus, Qatari-American Strategic Relationships Caucus, Republican Israel Caucus, Romania Caucus, Serbian Caucus, Slovak Caucus, Sri Lanka Caucus, Taiwan Caucus, UK Caucus, Ukraine Caucus, U.S.-Bermuda Friendship Caucus, U.S.-China Working Group, U.S.-Japan Caucus, U.S.-Kazakhstan Caucus, U.S.-Lebanon Friendship Caucus, U.S.-Philippines Friendship Caucus, U.S.-Turkey Relations and Turkish American, Uzbekistan Caucus, Venezuela Democracy Caucus

    Recalling Your Working Boy’s years at the State Department – where there still exists no “American Interests Section” – the reader can search the above in vain for anything that looks remotely like “Friends of the United States of America.”

    Russia! Russia! Russia!

     In fact, the Democrats’ core impeachment narrative – Russia bad, Ukraine good – is itself an example to which American policy is in the grip of foreign antipathies and attachments against which the Father of Our Country warned us in his 1796 farewell address:

    “[N]othing is more essential than that permanent, inveterate antipathies against particular nations, and passionate attachments for others, should be excluded; and that, in place of them, just and amicable feelings towards all should be cultivated. The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest.”

    In his closing statement before the impeachment vote House Judiciary Chairmaggot Adam “Captain Ahab” Schiff, in his frenzied hunt for the Great Orange Whale, provided a textbook example of what Washington feared:

    “[W]e should care about our allies. We should care about Ukraine. We should care about a country struggling to be free and a Democracy. We used to care about Democracy. We used to care about our allies. We used to stand up to Putin and Russia. We used to. I know the party of Ronald Reagan used to. ‘Why should we care about Ukraine?’ But of course it’s about more than Ukraine. It’s about us. It’s about our national security. Their fight is our fight. Their defense is our defense. When Russia remakes the map of Europe for the first time since World War II by dint of military force [JGJ: Well, there was Kosovo, but never mind …] and Ukraine fights back, it is our fight too.”

    Indeed, one wonders how hysterical Democrats missed accusing Trump outright of treason, which actually is specified as grounds for impeachment in Article II, Section 4. After all, as described by Schiff, didn’t Trump’s actions constitute (under Article III, Section 3) “adhering” to our evil enemies the Russians, and “giving them aid and comfort”? It’s an open and shut case of a capital crime – and the House Majority Whip is ready to get the rope! (Really, how did the Democrats miss this? Maybe GOP stupidity has migrated to the other side of the aisle…)

    It is noteworthy that not a single House Republican dared or even cared to question Schiff’s framing of the issue, which was bolstered by witnesses from the permanent military, intelligence, and diplomatic establishment, including Trump’s appointees. Nor is any Republican Senator likely to point out the inconvenient truth that we have no defense treaty with Ukraine, which thus is not really our “ally.” Partisanship is the variable; Russophobia is the constant. The sole retort from Trump’s establishment defendersHe released the aid to Ukraine, including the Javelin missiles Obama denied them! He’s every bit the warmonger you want him to be! So there!

    Thus, even with Trump’s almost (at this point) certain survival of a Senate impeachment trial, the relevant foreign inveterate antipathies and passionate attachments will remain entrenched. (Not just in the case of Ukraine/Russia but with respect to the rest of the world our habitual hatreds and fondnesses remain firmly in place and are unlikely to change for the balance of Trump’s presidency, if ever. Trump’s Korea initiative is on life support. Israel/Iran is a flashpoint that could explode at any time: “Israel, even less than the US, cannot take casualties. A couple of bull’s eyes, a lot of Israelis go back to Brooklyn. The 82 million people in Iran have no place else to go.”)

    Senate Demaggotic Leader Chuck Schumer gave the game away when he demanded that the World Greatest Deliberative Body receive testimony from cashiered National Security Adviser John Bolton and acting White House Chief of Staff Mick Mulvaney but not from the man at the center of the whole Ukraine “drug deal” (as Bolton described it): Rudy Giuliani. Why wouldn’t the assembled Maggotrats jump at the chance to grill him under oath? Because he’d dole out the real dirt on Ukraine and its legendary corruption that would make a Nigerian prince blush. For the same reason, Corpsublicans won’t want to hear from him either, any more than they’re interested in whether the “sub-sources” of the Steele Dossier – whose identity the US Justice Department knows and who were available to the IG’s investigators – really had anything to do with the Russian government. We wouldn’t want to debunk all that yammering about “fake Kremlin dirt,” would we.

    Meanwhile, back in what remains of America, regardless of how impeachment turns out, the lines of irreconcilable division deepen. Whether or not Trump is reelected (the politics look good for him, the demographics don’t) he will eventually be gone, whether in 2020, 2021, or 2025. He will almost certainly be the last Republican president, depending on when Texas goes the way of Virginia. One way or the other, we’ll soon see whether the corpse has any fight left in it.


    Tyler Durden

    Sat, 12/21/2019 – 20:30

  • $3 Billion, 300-Acre MegaCity Envisioned For California's Record Homeless… But There's A Twist
    $3 Billion, 300-Acre MegaCity Envisioned For California’s Record Homeless… But There’s A Twist

    Ask any San Franciscan what the state of California has an excess of and the most likely answer will be homeless people (and their excrement, especially with the liberal mecca recording as many as 16,000 “feces complaints” in one week ). Actually, ask just about anyone and the answer will be the same: after all with 130,000 homeless, California is now home to more than a quarter of the nation’s homeless population.

    That all may soon change, however, if a new crowdfunding effort succeeds in its effort to solve the US homeless crisis by building a 300-acre city open exclusively for those without a home. Daune Nason, founder of the Folsom-based Citizens Again, released details Thursday of his plans for an estimated $3 billion private city equipped with amenities and services for a 150,000 “high-needs” population, CBS LA reports.

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    Artist’s impression of the Citizens Again “Homeless City

    “Qualified citizens” – those who meet as-yet undisclosed criteria – will be allowed to live in the city and are free to leave whenever they wish, says Nason, who adds, “Some might want to stay forever.”

    According to a press release, the all-inclusive city which hopes to overtake San Francisco as the mecca of America’s homeless, will offer high-density housing in dormitories consisting of sleeping quarters and communal bathrooms with private showers. Additionally, residents would be provided RFID-enabled wristbands to be tracked constantly gain access to their dorm rooms as well as perform tasks such as job check-in, purchasing items with credits, medicine consumption, and more.

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    In describing his vision, Nason says that each of the four neighborhoods will have their own cafeteria and kitchen and multiple scheduled eating times to accommodate a 150,000-person population. And since the homeless are probably not best known for their ironclad work ethic, the neighborhoods will also be fitted with tiered seating for residents to watch TV in “a community setting” within their neighborhood.

    According to the Citizens Again website, other aspects of the homeless city will include:

    • Hospitals
    • Dental and Vision Services
    • Mental Health
    • Movie Theatres
    • Bowling Alleys
    • Sports Courts
    • Hotels for visiting family
    • Dog parks and kennels
    • Perimeter staff housing
    • Job Training
    • GED certificates
    • Housing & Job Placement

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    TV Pods are semi-enclosed rooms with tiered seating for citizens to watch TV in a community environment within their neighborhood. Each TV Pod will play a unique channel, giving the entire 1-acre floor many viewing options.

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    Citizens will scan their Wristbands through Access Turnstiles to gain entry to their residential building, their dorm rooms, and venues, as well as perform tasks such as job check-in, purchase items with credits, check their daily schedule, account for meals, log medicine consumption, and more.

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    Dorm rooms are similar concepts to college dorm rooms and sleeping rooms in long-distance passenger trains: they’re a safe, comfortable place to sleep and rest.

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    Tunnels under the City will be used to minimize disruption of Citizen life. Deliveries and logistics can be performed without clogging city streets; city workers can quickly get to job sites; and infrastructure maintenance and upgrades can be performed without tearing up paved city streets

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    Citizens live in the dorms, which consist of sleeping rooms, and communal bathrooms with private showers. Each building consists of 16 floors, 5 wings per floor, with 40 rooms per wing. That equates to 3,200 rooms per building.

    As part of his plans for the homeless mecca, Nason also envisions building underground tunnels by which deliveries can be made and city workers can commute to job sites in order to “minimize disruption of citizen life.” And when those living in the city are prepared to leave, they’ll be provided with job and life skills training along with counseling and therapy, Nason said although it was unclear if the tree will also be growing Magic Money Trees that fund all these lofty civic goals.

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    Proposed city map

    “It will be a city they’ll want to live in, a community they’ll want to be part of, and for those that desire, an opportunity to gain life skills to integrate back into society,” according to the Citizens Again website.

    Or maybe it won’t be, and the whole homeless city “vision” is just a giant online fundraising scam.

    Consider this woke, noble mission statement that Nason has proudly penned on his $50,000 gofundme campaign:

    A new and unique solution for every chronic homeless adult is coming.

    For decades, our government has been building small shelters all across America to house our chronic homeless. But at the current placement rate, it will take about 200 years to house them all.

    It’s time to think differently: instead of building 4,000 more shelters, Citizens Again will build 1 city, catering towards America’s entire chronic adult homeless population. It will cost billions less than current efforts; be built in about 11 years; and the homeless will want to live there.

    … and yet just a few lines below we read:

    Launching a crowdfunding campaign during the holidays is not ideal, but I have no choice. By not taking a salary for the last few years, I have exhausted all financial means to get this project launched, and I am now many months behind on my mortgage payment and all bills, with no cash or credit left. Every donation – and clicking the share button – truly matters for this project, myself, my family, and eventually for the people I’m trying to help

    How appropriate that one man’s noble “vision” for a homeless city is nothing more than a giant online pandhandling campaign, one which has so far raised $570 of the $50,000 goal to make Nason’s life more palatable.

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    Tyler Durden

    Sat, 12/21/2019 – 20:00

  • The Hidden Military Use Of 5G Technology
    The Hidden Military Use Of 5G Technology

    Submitted by Manlio Dinucci, of Global Research,

    At the London Summit, the 29 member countries of NATO agreed to “guarantee the security of our communications, including 5G”. Why is this fifth generation of mobile data transmission so important for NATO?

    While the earlier technologies were perfected to create ever more advanced smartphones, 5G is designed not only to improve their performance, but mainly to link digital systems which need enormous quantities of data in order to work automatically. The most important 5G applications will not be intended for civil use, but for the military domain.

    The possibilities offered by this new technology are explained by the Defense Applications of 5G Network Technology, published by the Defense Science Board, a federal committee which provides scientific advice for the Pentagon –

    “The emergence of 5G technology, now commercially available, offers the Department of Defense the opportunity to take advantage, at minimal cost, of the benefits of this system for its own operational requirements”.

    In other words, the 5G commercial network, built and activated by private companies, will be used by the US armed forces at a much lower expenditure than that necessary if the network were to be set up with an exclusively military goal. Military experts foresee that the 5G system will play an essential role for the use of hypersonic weapons – missiles, including those bearing nuclear warheads, which travel at a speed superior to Mach 5 (five times the speed of sound). In order to guide them on variable trajectories, changing direction in a fraction of a second to avoid interceptor missiles, it is necessary to gather, elaborate and transmit enormous quantities of data in a very short time. The same thing is necessary to activate defences in case of an attack with this type of weapon – since there is not enough time to take such decisions, the only possibility is to rely on 5G automatic systems.

    This new technology will also play a key role in the battle network. With the capability of simultaneously linking millions of transceivers within a defined area, it will enable military personnel – departments and individuals – to transmit to one another, almost in real time, maps, photos and other information about the operation under way.

    5G will also be extremely important for the secret services and special forces. It will enable control and espionnage systems which are far more efficient than those we use today. It will improve the lethality of killer drones and war robots by giving them the capacity of identifying, following and targeting people on the basis of facial recognition and other characteristics. The 5G network, as a weapon of high-tech capacity, will also become the target for cyber-attacks and war actions carried out with new generation weapons.

    As well as the United States, this technology is under development by China and other countries. The international disagreement concerning 5G is therefore not only commercial. The military implications of 5G are almost entirely ignored, because the critics of this technology, including many scientists, are concentrating their attention on its toxic affects for health and the environement, due to exposure to very low-frequency electromagnetic fields. This engagement is of course of the greatest importance, but must be linked to research on the military use of this  technology, financed indirectly by ordinary users. One of its greatest attractions, which favors the dissemination of 5G smartphones, will be the possibility of participating, by subscription, in war games of impressive realism in direct contact with players from all over the world. In this way, without realising it, the players will be financing the preparation for war – but this time it will be a real war.


    Tyler Durden

    Sat, 12/21/2019 – 19:30

  • Sorry Dems, US Employees Are The World's Happiest
    Sorry Dems, US Employees Are The World’s Happiest

    Despite the likes of Elizabeth Warren and AOC constantly complaining about the desperate state of American workers, and how miserable they are under the ‘monarchic’ rule of President Trump, Statista’s Maria Vultaggio points out that, according to a new poll by Mindspace, workers in the U.S. are the happiest in the world.

    Infographic: U.S. Employees Are The Happiest | Statista

    You will find more infographics at Statista

    More than 5,000 employees worldwide were questioned, with 1,000 people from the U.S. being surveyed. While assessing workplace culture, respondents were asked about wellness, overall happiness at work and engagement.

    Less happy, 73 percent of U.K. workers said they were happy in the workplace, falling at the bottom of the list, which surveyed five other countries, including the Netherlands, Poland, Romania, Germany and Israel.

    Happiness at work among Americans is seemingly congruent with job growth. In November, the unemployment rate dipped to 3.5 percent from 3.6 percent, CNBC reported on December 6. More, over 266,000 jobs were created, besting the prediction of 187,000, as originally projected by economists questioned by Dow Jones.


    Tyler Durden

    Sat, 12/21/2019 – 19:00

    Tags

  • 2019 – The Year Of Manufactured Hysteria
    2019 – The Year Of Manufactured Hysteria

    Authored (satirically) by CJ Hopkins via OffGuardian.org,

    Well, it looks like we’ve somehow managed to survive another year of diabolical Putin-Nazi attacks on democracy.

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    It was touch-and-go there for a while, especially coming down the home stretch, what with Jeremy Corbyn’s desperate attempt to overthrow the UK government, construct a British version of Auschwitz, and start rounding up and mass-murdering the Jews.

    That was certainly pretty scary… but then, the whole year was pretty scary.

    The horror began promptly in early January, when Rachel Maddow revealed that Putin was projecting words out of Trump’s mouth in real-time, i.e., literally using Trump’s head like a puppet, or one of those Mission Impossible masks. And that was just the tip of the iceberg, as, despite the best efforts of Integrity InitiativeBellingcat, and other such establishment psyops, Internet-censoring sites like NewsGuard, and an army of mass hysteria generators, Putin’s legion of Russian “influencers” was continuing to maliciously influence Americans, who were probably also still under attack by brain-eating Russian-Cubano crickets!

    While Resistance members were still wrapping their heads in anti-cricket aluminum foil, Putin (i.e., Russian Hitler) ordered Trump (i.e., Russian-asset Hitler) to launch a coup in Venezuela (i.e., Russian Hitler’s South American ally), probably to distract us from “Smirkboy Hitler” and his acne-faced gang of MAGA cap-wearing Catholic high-school Hitler Youth, who were trying to invade and Hitlerize the capital. Or maybe the coup was meant to distract us from the un-American activities of Bernie Sanders, who had also been deemed a Russian asset, or a devious “Kremlin-Trump operation,” or was working with Tulsi Gabbard to build an army of blood-drinking Hindu nationalists, genocidal Assadists, and American fascists to help the Iranians (and the Russians, of course, and presumably also Jeremy Corbyn) frontally assault the State of Israel and drive the Jews into the sea.

    As if all that wasn’t horrifying enough (and ridiculous and confusing enough), by early Spring there was mounting evidence that Putin had somehow gotten to Mueller, possibly with one of those FSB pee-tapes, and was sabotaging the “Russiagate” coup the Intelligence Community, the Democratic Party, the corporate media, and the rest of the Resistance had been methodically preparing since 2016. Liberals’ anuses began puckering and unpuckering as it gradually became clear that the “Mueller Report” was not going to prove that Donald Trump had colluded with Putin and Julian Assange to steal the presidency from Hillary Clinton and transform the United States of America into a genocidal Putin-Nazi Reich.

    Meanwhile, the anti-Semitism pandemic that had mysteriously erupted in 2016 (i.e., right around the time Trump won the nomination) was raging unchecked throughout the West. Jews in Great Britain were on the brink of panic because approximately 0.08 percent of Labour Party members were anti-Semitic, as opposed to the rest of the British public, who have never shown any signs of anti-Semitism (or any other kind of racism or bigotry), and are practically a nation of Shabbos goys. Clearly, Corbyn had turned the party into his personal neo-Nazi death cult and was planning to carry out a second Holocaust just as soon as he renationalized the British railways!

    And it wasn’t just the United Kingdom. According to corporate media virologists, idiopathic anti-Semitism was breaking out everywhere. In France, the “Yellow Vests” were also anti-Semites. In the U.S.A., Jews were facing “a perfect storm of anti-Semitism,” some of it stemming from the neo-fascist fringe (which has been a part of the American landscape forever, but which the corporate media has elevated into an international Nazi movement), but much of it whipped up by Ilhan Omar, who had apparently entered into a “Red-Brown” pact with Richard Spencer, or Gavin McInnes, or some other formerly insignificant idiot.

    Things got very confusing for a while, as Republicans united with Democrats to denounce Ilhan Omar as an anti-Semite (and possibly a full-fledged Islamic terrorist) and to condemn the existence of “hate,” or whatever. The corporate media, Facebook, and Twitter were suddenly swarming with hordes of angry anti-Semites accusing other anti-Semites of anti-Semitism. Meghan McCain couldn’t take it anymore, and she broke down on the Joy Behar Show and begged to be converted to Judaism, or Zionism, right there on the air. This unseemly display of anti-anti-Semitism was savagely skewered by Eli Valley, an “anti-Semitic” Jewish cartoonist, according to McCain and other morons.

    Then it happened … perhaps the loudest popcorn fart in political history. The Mueller Report was finally delivered. And just like that, Russiagate was over. After three long years of manufactured mass hysteria, corporate media propaganda, books, T-shirts, marches, etc., Robert Mueller had come up with squat. Zip. Zero. Nichts. Nada. No collusion. No pee-tape. No secret servers. No Russian contacts. Nothing. Zilch.

    Cognitive dissonance gripped the nation. There was beaucoup wailing and gnashing of teeth. Resistance members doubled their anti-depressant dosages and went into mourning. Shell-shocked liberals did their best to pretend they hadn’t been duped, again, by authoritative sources like The Washington PostThe New York TimesThe Guardian, CNN, MSNBC, et al., which had disseminated completely fabricated stories about secret meetings which never took placepower grid hackings that never happenedRussian servers that never existedimaginary Russian propaganda peddlers, and the list goes on, and on, and on … and hadn’t otherwise behaved like a bunch of mindless, shrieking neo-McCarthyites.

    Except that Russiagate wasn’t over. It immediately morphed into “Obstructiongate.” As the corporate media spooks explained, Mueller’s investigation of Trump was never about collusion with Russia. No, it was always about Trump obstructing the investigation of the collusion with Russia that the investigation was not about, and that everyone knew had never happened. In other words, Mueller’s investigation was launched in order to investigate the obstruction of his investigation.

    Or whatever…

    It didn’t really matter, because, by this time, Assange had been arrested for treason, or for jumping bail, or for smearing poo all over the walls of the Ecuadorean embassy, and The New York Times was reporting that a veritable “constellation” of social media accounts “linked to Russia and far-right groups” was disseminating extremist “disinformation,” and Putin had unleashed the Russian spywhale, and “Jews were not safe in Germany again,” because the Putin-Nazis had formed an alliance with the Iranian Nazis and the Syrian Nazis, who were backing the Palestinian Nazis that Antifa was fighting on behalf of Israel, and Jews were not safe in the UK either, because of Jeremy Corbyn, who Donald Trump (who, let’s all remember, is literally Hitler) was conspiring with a group of “unnamed Jewish leaders” to prevent from becoming prime minister, and Iran was conspiring with Hezbollah and al Qaeda to amass an arsenal of WMDs to launch at Israel and Saudi Arabia, and other peaceful Middle Eastern democracies, and Trump was finally going to go full-Hitler and declare martial law on the Fourth of July, and he was operating literal “concentration camps” where immigrants were being forced to drink out of toilets, which looked almost exactly the same as the “detention facilities” Obama had operated, except for … well, you know, the “fascism.”

    So who had time to worry about the corporate media colluding with an attempted Intelligence Community coup?

    Then, in August, right on cue, some racist whack job murdered a bunch of people, and so now, as if the mass hysteria hadn’t already been jacked up to the max, America had “a white nationalist terrorist problem,” or was in the throes of a “white nationalist terrorism crisis.” Trump was now officially our “Nihilist-in-Chief,” and “a white supremacist who inspires terrorism” and was basically no different than Anwar al-Awlaki. It was time to take some extraordinary measures along the lines of the Patriot Act, except focused on potential white supremacist terrorists, or anyone the Editorial Board of The New York Times might deem a “threat.”

    This sudden outbreak of “Trump-inspired terrorism” and the manufactured “fascism” hysteria that followed got the Resistance through end of the Summer and into the Autumn, which was always when the main event was scheduled to begin. See, these last three years have basically been a warm-up for what is about to happen … the impeachment, sure, but that’s only one part of it.

    If you thought the global capitalist ruling classes and the corporate media’s methodical crushing of Jeremy Corbyn was depressing to watch … well, prepare yourself for 2020.

    The Year of Manufactured Mass Hysteria was not just the Intelligence Community and the corporate media getting their kicks by whipping the public up into an endless series of baseless panics over imaginary Russians and Nazis. It was the final phase of cementing the official “Putin-Nazi” narrative in people’s minds.

    For the sake of anyone new to my columns, here’s how the Putin-Nazi narrative works …

    The Putin-Nazi narrative has two basic parts, or messages, which are constantly repeated:

    1. “Russia is attacking our democracy!; and

    2. “fascism is spreading like wildfire!,”

    …both of which parts are essentially fictions.

    This official Putin-Nazi narrative was introduced in the Summer of 2016, and replaced the official “War on Terrorism” narrative, which had run for fifteen years, and which was just as fictional.

    It has been methodically reinforced and repeated by the neoliberal establishment, the corporate media (and, more recently, the alternative media, and even by extremely intelligent anarchist anthropologists like David Graeber) for the last three years on a daily basis.

    At this point it has become our “reality,” just as the War on Terror became our “reality” … as the Cold War had previously been our “reality.”

    When I say that this narrative has become our “reality,” I mean that it is now virtually impossible to refute it in any mainstream forum without being dismissed as a “conspiracy theorist,” or an “anti-Semite,” or a “Russian asset.” It has become axiomatic and is taken for granted that we are experiencing an explosion of anti-Semitism, and fascism, and that Russia is out to get us (so axiomatic that someone like Graeber falls into the trap of defending Corbyn by relying on, and thus reifying, the very “fascism” hysteria that was used to destroy him).

    Never mind that the entire planet continues to be ruled by global capitalism, transnational corporations, and supra-governmental bodies, and that most of it is occupied by the U.S. military, NATO, and other GloboCap allies, and assorted corporate military contractors. Never mind that Russia isn’t “attacking” anyone, and that the “Nazis” haven’t taken over anything, and that no one is rounding up and murdering the Jews, or the Mexicans, or anyone else for that matter … because when have facts had anything to do with maintaining an official narrative?

    The answer, in case you were wondering, is “never.” We are, all of us, living in a fiction. A fiction authored by those in power to serve the interests of those in power. That’s what an official narrative is. It makes no difference whether we believe it or not. It functions as “reality” regardless. If you doubt that … well, just ask Jeremy Corbyn. Or watch as the Labour “anti-Semitism crisis” evaporates into thin air, as the War on Terror did in 2016, once it no longer served a useful purpose.

    As for 2020, I’m afraid the manufactured mass hysteria is only going to get worse. The global capitalist ruling classes are determined to snuff out this populist rebellion, and to make sure it never happens again, or at the very least not on this scale. Anyone who gets in the way is going to be branded an “anti-Semite,” or a “fascist,” or a “Russian asset.” Politicians who do not toe the line are going to have their political careers and personal reputations destroyed. (Did you notice how it took less than two days after the crushing of Jeremy Corbyn for the smearing of Sanders as an anti-Semite or “soft on anti-Semitism” to begin?)

    Mainstream journalists who dare to question the official Putin-Nazi narrative, even in the most respectful way, are going to come under increasing pressure to tone it down or suffer the consequences. Putin-Nazi paranoia will metastasize. Dissident websites will be deplatformed and demonitized. The Internet will be increasingly monitored for any and all forms of non-conformity. Dissent will be increasingly stigmatized. “Reality” will be increasingly policed. It’s all going to get extremely unpleasant, and that’s assuming that civil war doesn’t break out.

    And as for me, I’m just a political satirist with a barely respectable cult-sized following, so they’ll probably let me get away with continuing to cover the whole ugly show (as long as no one starts to take me seriously). I’ll try to find the humor in it, but honestly, just between you and me, what’s coming may not be all that funny.


    Tyler Durden

    Sat, 12/21/2019 – 18:30

    Tags

  • China Faces "Systemic Risk" From Debt Cross-Default "Chain Reaction", Top Central Bank Advisor Warns
    China Faces “Systemic Risk” From Debt Cross-Default “Chain Reaction”, Top Central Bank Advisor Warns

    Just days after China’s “moment of reckoning” in the dollar bond market arrived, when China was rocked by not only the biggest dollar bond default in two decades but also the first default by a massive state-owned commodities trader and Global 500 company, when Tianjin’s Tewoo Group announced the results of its “unprecedented” debt restructuring which saw a majority of its bondholders accepting heavy losses, and which according to rating agencies qualified as an event of default, last week a top adviser to China’s central bank warned of a possible “chain reaction” of defaults among the country’s thousands of local government financing vehicles after one of these entities nearly missed a payment this month.

    As the FT reported, Ma Jun, an external adviser to the People’s Bank of China, called on the government to introduce “intervention mechanisms” to contain the risk associated with LGFVs — special entities used in the country to fund billions of dollars of roads, bridges and other infrastructure.

    “Among the tens of thousands of platform-style institutions nationwide, if only a few publicly breach their contracts it may lead to a chain reaction,” Ma said in an interview published on Wednesday in the state-controlled Securities Times newspaper, adding that “measures should be created as soon as possible to prevent and resolve local hidden debt risks to effectively prevent the systemic risks of platform default and closure.”

    Ever since Beijing allowed local corporations to fail, China has seen a surge in corporate defaults in local currency and US dollar bonds as economic growth grinds to a 30-year low. As we reported recently, China is set to hit another dismal milestone in 2019 when a record amount of onshore bonds are set to default, confirming that something is indeed cracking in China’s financial system and testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt.

    After a brief lull in the third quarter, a burst of at least 20 new defaults since the start of November have sent the year’s total to 131 billion yuan ($18.7 billion), eclipsing the 121.9 billion yuan annual record in 2018.

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    While this still represents a tiny fraction of China’s $4.4 trillion onshore corporate bond market, the bad news is that the rapidly rising number is approaching a tipping point that could unleash a default cascade, and in the process fueling concerns of potential contagion as investors struggle to gauge which companies have Beijing’s support. As Bloomberg notes, policy makers have been walking a tightrope as they try to roll back the implicit guarantees that have long distorted Chinese debt markets, without dragging down an economy already weakened by the trade war and tepid global growth.

    Meanwhile, that “tipping point” could arrive much faster if a surge in government-linked defaults creates a crisis of confidence in China debt markets, which have long been protected by implicit state guarantees.

    Besides the record number of default in the local bond market and the recent groundbreaking default of the dollar bonds issued by the state-owned Tewoo, concern has grown in recent months over the vast accumulation of debt in LGFVs, especially after the near default of one such financing platform, Hohhot Economic and Technological Development Zone Investment Development Group, in the Chinese autonomous region of Inner Mongolia earlier this month.

    To avoid a cascading collapse in confidence among China’s creditors, Ma proposed one potential measure to allow for distressed LGFVs to be taken over by healthier one, very much similar to how a record number of China’s small and medium banks were “resolved” in 2019, despite at least two bank runs being triggered last month as previously reported.

    The comments by Ma, a former Deutsche Bank economist, come as concerns grow in China’s central government about rising systemic risk. At a high-level planning session in Beijing earlier this month, at which many of the next year’s economic challenges are discussed among senior officials, the avoidance of systemic risk was listed as a priority.

    “At the meeting, China’s top policymakers stressed stable macro policy with flexible fine-tuning, and pledged to prevent systematic financial risks,” Mizuho Securities economist Serena Zhou said in a report to investors this month, noting that “such a pledge came the same day as Hohhot Economic and Technological Development Zone Investment Development Group, a LGFV 100 per cent owned by the Hohhot local government, reportedly missed its bond payment.”

    And while the Hohhot group’s repayment deadline was eventually extended after the group failed to repay a 1 billion yuan ($142 million) privately placed bond earlier this month, the situation grabbed the attention of both creditors in other similar LGFV situations as well as analysts.

    As the FT notes, China’s LGFVs have been key drivers of economic growth in China since the mid-1990s, backing many of the local infrastructure projects that have boosted growth rates in recent years. But they are also closely connected to China’s shadow banking sector, making it difficult for central authorities to fully assess the risk connected to the groups.

    Meanwhile, adding to Beijing’s list of “default domino” default woes, in addition to rising fears about the stability of LGFVs, Bloomberg points out that the rising default tide is now impacting even one of China’s wealthiest provinces, namely Shandong, where six privately owned companies have defaulted on their debt or come close to doing so in the last three months. With 68.1 billion yuan ($9.7 billion) in outstanding debt among those six companies alone, “the distress in Shandong has rattled even seasoned investors.”

    Of course, the problem isn’t the defaults themselves, as many other provinces have seen more and worse – just last month we showed how cash-strapped Tianjin could soon be ground zero for a Chinese default quake in 2020. The far greater risk as Bloomberg notes, is the practice common among Shandong companies of guaranteeing each others’ debts. As firms don’t have to make public such “off balance sheet” liabilities, investors are left in the dark who’s on the hook and for how much. And with China’s once-strong industrial economy flagging, the murky ties between the province’s private companies threaten to drag them all down together.

    And with a sharp rise in defaults in both the local and dollar bond markets, and LGFVs teetering, it’s still unclear how the government will intervene in Shandong and elsewhere. Policy makers have been increasingly willing to let weak companies fail, but they’re also under pressure to keep the economy growing and the markets stable.

    As of now, Shandong’s city and local governments have stepped in with piecemeal relief. It’s uncertain whether the provincial government will do the same. As a result, the province’s firms risk entering a vicious cycle that “spreads solvency risks to the entire region, swamping the good credits along with the bad,” according to an October report from S&P Global Ratings.

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    While the default rate for bonds issued by non-state companies across China jumped to a record 4.5% in the first 10 months of 2019, Fitch Ratings warned in a Dec. 3 report that the figure might understate the true level of defaults given that some borrowers settle with bondholders privately rather than through clearing houses. The rate for state-owned companies was just 0.2% thanks to financial support from the government and better access to funding from banks, Fitch said, but even that is set to surge in 2020 following the closely-followed Tewoo bankruptcy.

    As Bloomberg notes, Shandong is one of China’s oldest economic centers, built first on trade, then agriculture, mining and oil drilling. Not long ago, the economy was still booming, credit was cheap and private firms were on a spending spree, restrained only by limited access to capital. In communist-run China, state-owned banks tend to favor state-owned companies for loans.

    So city governments encouraged the private sector to support itself. Cross-guarantees were one solution. They also concentrated the financial risks, says S&P analyst Cindy Huang.

    “Cross-guarantees tend to be clustered around certain cities and regions rather than across the province,” she said. “They’re often between private, unlisted companies from either the same city, same sector or where CEOs know one another.”

    So to loosely paraphrase Ernest Hemingway, “How did you go bankrupt? Two ways: Gradually and then suddenly… and when you do, you take down all your friends down with you.”

    That’s precisely what China has in store for bondholders of its massive $40 trillion financial sector in the coming years.

     


    Tyler Durden

    Sat, 12/21/2019 – 18:00

  • Gundlach On The Biggest Risk Facing Bond Investors And The Likely Next President
    Gundlach On The Biggest Risk Facing Bond Investors And The Likely Next President

    Authored by Robert Huebscher via AdvisorPerspectives.com,

    Fear among bond investors is focused on rising rates, but Jeffrey Gundlach says you should worry about something more sinister. In his webcast this week, he also offered his updated 2020 presidential election prediction.

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    Gundlach is the founder and chief investment officer of Los Angeles-based DoubleLine Capital. He spoke via a webcast with investors on December 10. His talk was titled, “A Rolling Loan Gathers No Moss,” and the focus was on his firm’s flagship mutual fund, the DoubleLine Total Return Fund (DBLTX). The slides from his presentation are at the bottom of this note.

    His talk’s title is a play on the phrase, “A rolling stone gathers no moss.” Gundlach said his title was originally coined by the hedge fund investor, Kyle Bass, to signify that investors will continue to be paid on the bonds they own as long as issuers can keep rolling over their debt.

    The credit worthiness of corporate debt is the number one risk that should concern bond investors. Gundlach issued his strongest warnings ever over the leverage taken on by U.S. corporations and the unrealistically favorable ratings that debt has been given.

    Based on Morgan Stanley research, he said that 39% of the bond universe should be rated “junk” and 10% of it rated single-B or lower.

    “There is a lot of potential for downgrades,” he said, which would be amplified if foreigners start selling the debt they own and the dollar weakens.

    “This is the biggest risk facing bond investors,” Gundlach said.

    As for U.S. politics, Gundlach said the field of Democratic nominees is in such disarray that Trump will likely win reelection. Readers may recall that Gundlach was among the few who predicted Trump’s victory in 2016. But Gundlach did not endorse Trump or any other candidate.

    I’ll come back his comment on bonds and politics, but let’s start with what he said about the September 17 incident when repo rates spiked to abnormally high levels.

    The great repo fiasco revisited

    Gundlach called that incident the “overnight funding dust up,” but that characterization belies his concerns. He said there is growing sentiment over whether “we will ever get back to whatever we think was normal,” specifically a global bond market free of negative interest rates. Excluding the U.S., 34% of the Barclay’s global aggregate index is negative-yielding debt. It was more than half earlier this year, he said.

    “It is clear that sustained negative rates have changed attitudes and behavior in Europe,” Gundlach said. “People are wondering whether bonds should be excluded from asset-allocation decisions,” because of their negative yields. On his recent trip to Europe, Gundlach told investors not to own them.

    Fed Chair Jay Powell understands that negative rates in the U.S. would be “devastating for the global financial system,” Gundlach said. “The system could not survive very long.”

    He said the repo crisis was blamed on a “timing need” to cover tax payments. But that need was known before September 17. He said the crisis was a “very bad sign,” showing lack of liquidity to accommodate the repo market.

    “This overnight repo thing is a harbinger of lack of liquidity,” Gundlach said.

    The addition of repo reserves to address the problem reversed 40% of the quantitative tightening (QT) the Fed hoped to achieve.

    The dollar and global “yield starvation”

    The U.S. is not planning on fighting its next economic downturn with negative interest rates, according to comments by Powell that Gundlach cited. But Gundlach criticized other Fed actions, such as the stopping of QT and starting a form of quantitative easing (QE), after promising four rate hikes at the beginning of the year. Gundlach said the Fed plans large-scale asset purchases in the event of a downturn, which could create a buying opportunity for investors prior to that move.

    In the next downturn, he said rates will be higher on the long end. He based that on the history of the three-month to 10-year yield spread. It steepened during QE1 when the Fed was buying bonds and stimulating the economy. In QE2 and QE3 the spread behaved the same way. During QT, he said, the yield curve flattened. With the repo facility expansion, he said the yield curve is steepening again.

    The dollar is putting a “significant top,” Gundlach said. Its last top was in January 2017. The dollar has been “incredibly stable” this year, he said. “I expect the dollar to weaken, since the Fed is easing.” It was strong because of “yield starvation” across the globe. Foreigners need to buy U.S. bonds because of their yields, but can’t hedge their exposure back to local currencies, because it will drive their effective yields back below zero. Those investors must buy U.S. bonds “naked,” he said, driving the dollar up.

    But emerging market debt has been a good investment this year, with a 12% overall return, despite a -70% return in Argentinean bonds. High-yield bonds are up 12.6% and investment-grade bonds have done even better, with a return of 14.2%. Treasury bonds returned 7.2%.

    Gundlach showed historical data that illustrated that dollar weakness has been correlated to current account and budget deficits. When the two combined grow as a percent of GDP, he said, the dollar weakens. “As deficits continue to widen,” he said, the dollar will get “in sync” and weaken further. But, he said, it may take economic weakness in the U.S. to initiate a strong move down in the dollar.

    Retuning to a common theme in his webcasts, he said U.S. debt outstanding has “exploded” since the 1940s. Corporate debt has been “put on turbochargers” and is accelerating faster than ever. He warned about similar fiscal deficit expansion at the federal level. There is no hope that the Democratic Party will produce a nominee who would curb deficits, he said.

    Gundlach thinks the deficit will go to 13% of GDP in the next recession. That is why, he said, there will be a greater supply of bonds and higher yields.

    In previous webcasts, Gundlach has said there was 65% chance of a recession by end of 2020. But now, based on consumer confidence and the leading economic indicators (LEIs), which are above zero (and heading up), the odds are 35% by the end of 2020. Those odds, he said, are the same as the consensus.

    Germany is running a current account surplus and rest of Europe has small deficits, which led Gundlach to wonder whether positive rates in the U.S. are a result of our need to issue debt to fund our deficits.

    He noted that Greek 10-year yields are lower than those in the U.S. In 2011, they were 20% and as recently as 2016 those yields were 12%.

    The problem in corporate bonds

    In the near term, he said the long end of the curve is “heading up” and the yield curve will steepen, until the Fed decides to implement large-scale asset purchases.

    The copper-gold ratio suggests that the 10-year should be approximately 2%, according to Gundlach. Based on nominal 10-year GDP and the German bund yield, an indicator he has found to be highly reliable, the projected 10-year yield is 1.76% to 1.9%, depending on the next release of nominal GDP.

    At the end of October, Powell said that he needs to see a significant spike in inflation before raising rates. “The Fed is basically telling you it wants sustained real inflation before it would consider raising rates,” Gundlach said. “Maybe they will cut rates, but they won’t raise them. I am surprised the long end of the market isn’t weaker.”

    Foreigners have been buying U.S. assets, he said, but that is unstable. If the economy weakens, those investors will want to “get out.” A lot of “potential selling” could happen, Gundlach said. Broker dealers outside the U.S. are not regulated with the same type of circuit breakers in the U.S. that prevent rapid declines, according to Gundlach.

    In the U.S. corporate bond market, dealer inventories are “nonexistent,” Gundlach said, despite continued issuance over the last 20 years. The quality has collapsed in the last 30 years. Bonds rated single-A and above were 68% of the market in 1998, but are now only 40%. The lowest tier of investment grade (BBB) has filled the gap, according to Gundlach.

    “That’s a real problem when the next recession comes,” Gundlach said. “Those bonds are close to junk status.”

    Corporate debt as a percent of GDP went from 40% to 47% over the last decade. That ratio historically collapses in recessions, Gundlach said. “When that happens it will be very difficult to get out in the middle of it.”

    He reminded listeners that in past recessions bond downgrades outnumbered upgrades by two-to-one.

    He said that corporate leverage, based on the ratio of investment-grade and high-yield (ex-commodities) bonds to corporate EBITDA, is “very high” on a historical basis. If one were to include commodities in that ratio, “it would be much worse,” he said.

    The political outlook

    Assessing the potential Democratic nominees, Gundlach said that Joe Biden has “no chance.” Nobody will vote for him who watched what he was doing, Gundlach said, particularly that he can’t formulate sentences.

    Elizabeth Warren has completely “petered out,” he said, citing data from the betting markets (predictit). Wall Street has completely discounted the possibility that she might win and implement policies that would threaten economic growth. Gundlach said the market “foresaw her demise and got it right.”

    Pete Buttigieg is “really impressive,” he said, and the best candidate on his feet since Ronald Reagan. But he is 37 years old and “looks 21, which can’t be overcome.”

    Bernie Sanders could emerge as a nominee if he gets Warren’s support, Gundlach said, but otherwise has a small chance of getting the nomination.

    He doesn’t see Michael Bloomberg winning either.

    The strongest candidate among the Democrats is Hillary Clinton, Gundlach said. She is at 10% in the betting markets, tied with Bloomberg. But he doubts she will enter the race.

    “The base case is that Trump will win,” Gundlach said, “because the Democrats are a mess.” He added that Trump will not be removed through the impeachment process.

    *  *  *


    Tyler Durden

    Sat, 12/21/2019 – 17:30

  • De Niro Fantasizes About Forcing Trump To Huff 'Bag Of Sh*t'
    De Niro Fantasizes About Forcing Trump To Huff ‘Bag Of Sh*t’

    Robert De Niro has a dream.

    While sitting down with producer Michael Moore for his new podcast Rumble with Michael Moore, the 76-year-old actor who’s currently battling a $12 million sexual harassment lawsuit by a longtime aide over a “hostile work environment” and “gratuitous unwanted physical contact,” says that while he was totally joking about punching Donald Trump in the face, he’d love to force the Commander-in-Chief to inhale a bag of weaponized poo, then broadcast Trump’s reaction to humiliate him.

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    I’d like to see a bag of shit right in his face. Hit him right in the face like that, and let the picture go all over the world,” said De Niro, who Trump has referred to as a “very low IQ individual.”

    He needs to be humiliated,” continued the actor. “He needs to be confronted and humiliated by whoever his opponent is… They have to stand up to him, they don’t have to do it in an obvious physical way, but they have to have the formidability to confront him and to put him in his place, because the people have to see that, to see him be humiliated.”

    Listen to the entire interview below: 


    Tyler Durden

    Sat, 12/21/2019 – 17:00

  • Study: Obesity Worsens Carbon Emissions
    Study: Obesity Worsens Carbon Emissions

    Authored by Irina Slav via OilPrice.com,

    The growing human population and an increasing average body size is interfering with attempts to arrest and reduce carbon emissions, a new study has suggested – with obesity the latest carbon emissions contributor to be uncovered.

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    According to the study, published in the journal of The Obesity Society, people with higher body mass produce more carbon dioxide, which is a product of metabolism for all oxygen-consuming living organisms.

    “Also,” the authors of the research said, “maintenance of greater body weights requires more food and drinks to be produced and transported to the consumers. Similarly, transportation of heavier people is associated with increased consumption of fossil fuels.”

    As a result, obesity was estimated to generate some 700 megatons of carbon dioxide annually, which is equal to about 1.6 percent of all anthropogenic carbon emissions.

    “This study makes it clear that we pay a steep price for making it difficult to access care for obesity. Not only does obesity affect the health of the individuals who have it, untreated obesity might also contribute to environmental issues,” said Ted Kyle, founder of health organization ConscienHealth, which focuses on tackling obesity as quoted by Eurekalert.

    Incidentally, ConscientHealth recently carried a report on a study published in the New England Journal of Medicine that warned obesity rates in the United States are rising. By the end of the 2020s, the research said, half of Americans would be obese, with severe obesity now seen in as much as 25 percent of people in the U.S.

    The authors have made a point of noting, however, that their findings should not serve as a reason to stigmatize obese people. As another commentator on the study said, physical exercise also leads to higher carbon emissions—physical exertion increases the metabolic rate—but nobody is shaming actively exercising people.

    Even so, obesity is a serious problem that needs, it seems, greater attention, and its effect on emissions could become additional motivation for both sufferers and researchers in this respect.

    “Our analysis suggests that, in addition to beneficial effects on morbidity, mortality, and healthcare costs, managing obesity can favorably affect the environment as well,” said Faidon Magkos, nutritional scientist at the University of Copenhagen and corresponding author of the study. “This has important implications for all those involved in the management of obesity.”


    Tyler Durden

    Sat, 12/21/2019 – 16:30

  • Why China's CFA Applicants Call The Test "Pleasant" As Pass Rates Rise Significantly
    Why China’s CFA Applicants Call The Test “Pleasant” As Pass Rates Rise Significantly

    Everybody on Wall Street knows that the CFA is one of the most grueling tests on the street. The CFA designation after a person’s name bestows upon them an assumption of a fluent understanding of economics, derivatives, complex valuations and ethics.

    The CFA Institute warns that each of the three levels of the exam takes about 300 hours of studying to pass, according to Bloomberg. Many who seek out the CFA designation spend years studying, taking and retaking the tests. 

    The test’s difficulty is why the CFA pass rate, despite ticking up slightly over the past few years, still remains below 50%. 

    But in recent years, a curious trend has appeared. Test takers from China have seen their pass rate rise significantly, despite the language barrier. Applicants from Asia, and especially China, have been “flooding” into the exams, overtaking interest from all other regions. 

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    One of the reasons for this is that many people in China consider the CFA a cool-down exercise after taking the Gaokao, China’s infamous college entrance exam. A work ethic bar had already been set, and many applicants did not mind spending “much more” than 300 hours studying for the CFA. 

    Ranger Yu, who described the CFA test as “pleasant” after studying 18 hour days for the Gaokao, says that “diligence is key” to getting ahead in China’s financial industry. He made time to study before and after work and spent weekends in the library or in all-day class at Golden Education, one of the country’s largest CFA prep schools. Many of these schools tout pass rates of 70% or 80%, far exceeding the average global pass rate of about 45%. 

    Golden Education charges about $1,500 for its program and it starts with a “crash course” on financial English. 

    Niu Jia, a senior lecturer for the school’s CFA program said: “We have the language barrier. But there are also other challenges for Chinese test-takers. The exam relies on accounting principles and valuation models that sometimes differ than those most often taught in universities.”

    The school assigns every customer an “inspector” to track their progress (and who even prepares a lunch on exam day). ZBG Education, another school that’s based on Guangzhou, offers 15 day camps with weekend classes and online courses. They claim a 70% pass rate and recommend 400 hours of studying, instead of the normal 300.

    Jason Pi, a senior lecturer at ZBG said: “Most of the CFA takers are top students in China. For most of my students, a few hundred hours is really not a big commitment. It’s nothing compared with the efforts you need to make to squeeze in a top university in China.”

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    Nick Pollard, Asia-Pacific managing director for the CFA institute, said: “We encourage candidates to use approved prep-providers, and we provide information about how to select and research a prep-provider to meet a candidate’s learning needs on our website. CFA Institute publishes average passing rates every year, and candidates should use this information as their best guide to what is generally achievable.”

    China’s Gaokao test, formerly called the National College Entrance Examination, has been the subject of documentaries on the suffering it causes its test takers, with some students suffering from mental breakdowns, or even suicide.

    The test is administered over several days and spans a “broad range of subjects”. A sample question from the test published in 2015 asked students about the currents and wind direction if they were sailing from Fujian province to Venice, and then to Mumbai. 

    Priscilla Wang, who works at a credit rating agency in Hong Kong, said: “I had no time for fun. I had to say ‘no’ to a lot of socializing opportunities. Even when I did relax a bit, my heart was always heavy. I thought I should be studying.”


    Tyler Durden

    Sat, 12/21/2019 – 16:00

    Tags

  • 2020: The Futility Of Predictions & Understanding The Risk
    2020: The Futility Of Predictions & Understanding The Risk

    Authored by Lance Roberts via RealInvestmentAdvice.com,

    “Predictions Are Difficult… Especially When They Are About The Future” – Niels Bohr

    We can’t predict the future. If we could, fortune tellers would win all of the lotteries. They don’t, we can’t, and we are not going to try to.

    However, we can analyze what has happened in the past, weed through the noise of the present, and discern the possible outcomes of the future. The biggest problem with Wall Street, both today and in the past, is the consistent disregard of the unexpected and random events they inevitability occur.

    There was once a study done of the accuracy of “predictions.” The study took predictions from a broad range of professions from psychics to weathermen. The study came to two conclusions. The first was that “weathermen” are the MOST accurate predictors of the future. The second conclusion was that the predictive ability was only accurate out to 3-days. Beyond 3-days, and the predictive ability was no better than a coin flip.

    When it comes to trying to predict what will happen in the financial markets over the next year, which is an annual event, it is essentially an act of futility. Given the markets are affected by a broad spectrum of inputs from economics, to geopolitics, monetary policy, rates, and financial events, any prediction should be taken with a very high degree of skepticism.

    So, with that said, here is how we are preparing for 2020.

    Odds Have It

    In our portfolio management practice, we begin with the basic assumption there is a 69% chance the market will finish the coming year at a level greater than where it started. That 69% probability comes from the fact that over the last 120-years, the market has (on a total real return basis) finished the year in positive territory 83 times, and negative only 37 times.

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    Therefore, from an “odds” perspective, markets are more likely to finish positive on any given year, than not. By starting our forecast with this basic assumption, it removes all the “guess work” of what has to go “right,” leaving us with only having to focus on the things which could potentially “go wrong.” 

    At the core of our portfolio management process is a risk management thesis. That philosophy was well defined by Robert Rubin, former Secretary of the Treasury, when he said;

    “As I think back over the years, I have been guided by four principles for decision making.  First, the only certainty is that there is no certainty.  Second, every decision, as a consequence, is a matter of weighing probabilities.  Third, despite uncertainty we must decide and we must act.  And lastly, we need to judge decisions not only on the results, but on how they were made.

    Most people are in denial about uncertainty. They assume they’re lucky, and that the unpredictable can be reliably forecast. This keeps business brisk for palm readers, psychics, and stockbrokers, but it’s a terrible way to deal with uncertainty. If there are no absolutes, then all decisions become matters of judging the probability of different outcomes, and the costs and benefits of each. Then, on that basis, you can make a good decision.”

    It should be obvious that an honest assessment of uncertainty leads to better decisions, but the benefits of Rubin’s approach, and mine, goes beyond that. For starters, although it may seem contradictory, embracing uncertainty reduces risk while denial increases it. Another benefit of acknowledged uncertainty is it keeps you honest.

    “A healthy respect for uncertainty and focus on probability drives you never to be satisfied with your conclusions.  It keeps you moving forward to seek out more information, to question conventional thinking and to continually refine your judgments and understanding that difference between certainty and likelihood can make all the difference.”

    The reality is that we can’t control outcomes. The most we can do is influence the probability of certain outcomes through the management of risks, and investing based on probabilities, rather than possibilities, which is important to capital preservation and investment success over time.

    So, as we head into 2020, here is a short-list of the things we are either currently hedging portfolios against, or will potentially need to:

    1. China fails to comply with the terms of the “Phase One” trade deal which reignites the trade war.

    2. Earnings growth fails to recover, and valuations finally become a concern for the markets.

    3. Corporate profits, which have been essentially flat since 2014, deteriorate due to slower economic growth both domestically and globally.

    4. Excessively high consumer confidence converges with low levels of CEO Confidence as employment begins to weaken.

    5. Interest rates rise which trips up heavily leveraged consumers and corporations.

    6. Investors become concerned about excess valuations.

    7. A credit-related event causes a market liquidity crunch. (Convent-Lite, Leveraged Loans, BBB-rated downgrades all pose a potential threat)

    8. The Fed’s “repo-crisis” continues to grow and turns out to be something much more significant.

    9. Similar to 2016, a shocking election result.

    While I am not going to address all of these concerns, I do want to touch a few that we feel are significant risks heading into the first half of the decade.

    Valuations

    While valuations are a terrible market timing device, they do impact long-term returns and investment outcomes. Currently, at 30x earnings, valuations are elevated, which suggests that the next decade of returns will be significantly lower than the last. Statistically, returns in the very low single digits should be expected.

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    However, it isn’t just PE ratios which are extended, but both Price-to-Sales and Enterprise Value to EBITDA (Earnings Before Interest Taxes Depreciation Amortization) are at or near all time highs.

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    Record highs in stocks, near-record lows in bond yields, and historically tight credit spreads present significant challenges for investors. Economic data has improved, but many fundamental economic gauges remain soft relative to pre-crisis averages, and are inconsistent with current asset price levels and valuations.

    Importantly, it is worth noting that negative returns tend to cluster during periods of declining valuations. These “clusters” of negative returns are what define “secular bear markets.” 

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    Most investors do not seem at all concerned as money continues to move into risky asset classes, a classic sign of a bubble. While a defensive posture seems prudent, the technical picture remains supportive of further gains. One should respect the momentum behind these moves for the foreseeable future, but be mindful that liquidity can evaporate quickly.

    The Debt Risk

    One of the common misconceptions in the market currently, is that the “subprime mortgage” issue was vastly larger than what we are talking about currently.

    Not by a long shot. 

    Combined, there is about $1.15 trillion in outstanding U.S. leveraged loans — a record that is double the level five years ago — and, as noted, these loans increasingly are being made with less protection for lenders and investors.

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    Just to put this into some context, the amount of sub-prime mortgages peaked slightly above $600 billion or about 50% less than the current leveraged loan market.

    Of course, that didn’t end so well.

    Currently, the same explosion in low-quality debt is happening in another corner of the US debt market as well.

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    As noted by John Mauldin:

    “In just the last 10 years, the triple-B bond market has exploded from $686 billion to $2.5 trillion—an all-time high. To put that in perspective, 50% of the investment-grade bond market now sits on the lowest rung of the quality ladder.

    And there’s a reason BBB-rated debt is so plentiful. Ultra-low interest rates have seduced companies to pile into the bond market and corporate debt has surged to heights not seen since the global financial crisis.”

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    The biggest risk currently is refinancing the debt as over the next 5-years, more than 50% of the debt is maturing. A weaker economy, recession risk, falling asset prices, or rising interest rates could well lock many corporations out of refinancing their share of this $5 trillion debt. Defaults will move significantly higher, and much of this debt will be downgraded to junk.

    This is a problem the Fed can not fix with more liquidity.

    Technically Troubling

    In last week’s Technically Speaking we discussed the more extreme deviations in the market. To wit:

    The first chart shows the monthly buy/sell signals stretched back to 1995 (25 Years). As shown, these monthly ‘buy’ and ‘sell’ indications are fairly rare over that stretch. What is interesting is that since 2015 there have been two-major sell signals, both of which were arrested by Central Bank interventions.”

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    With these “buy signals” in place, and the market pushing higher on conclusions of “trade deals” and the election of the conservative party in the U.K. (which clears the way for Brexit), the markets rallied further toward our target of 3300.

    In the short-term it is entirely feasible, particularly with the Federal Reserving pushing billions of dollars into the financial system currently, the bull market could easily eclipse our target of 3300. However, in the longer-term, virtually all of our primarily technical measures are stretched to levels normally seen near market tops rather than at the beginning of a new stretch of gains.

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    There are several measures used to justify current valuations, but they sound similar to those used in the dot-com Tech bubble. The relationships between valuation and fundamentals, on which cash flows are ultimately based, are grossly dislocated. Markets may well move higher, but to advocate a full allocation to equities under current circumstances ignores warnings of bubbles past.

    Stock market cap-to-GDP, price-to-sales, margin balances, cyclically-adjusted price-to-earnings ratios, and others argue convincingly that the stock market is either near historic valuations, or well through them. Owning well-selected, single-name companies because they are fundamentally cheap, not relatively cheap, makes sense. Otherwise, limiting general equity allocation exposures is prudent until reasonable opportunities return. We suggest setting stop losses, and/or options strategies to help limit downside risk and retain any additional upside.

    Sentiment Is Excessively Bullish

    This past summer everyone was convinced a recession was near, now there is no such concern and investors are literally as “bullish” as they can get.

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    From a contrarian point of view, this is a fairly obvious warning to reduce risk in the market. However, the “Fear Of Missing Out,” is overriding investor logic at the moment. The recent market surge, which started coincidentally with the Fed’s restart of “QE, Not QE,” is very reminiscent of the surge in asset prices we saw at the end of 1999 as the Fed flooded the system with liquidity in advance of the potential “Y2K” issues.

    As noted in our RIAPRO Daily Market Commentary:

    “Today’s ‘Chart of the Day’ shows the surge in the NASDAQ index, which occurred during the last few months of 1999. Most people attribute the massive gain to the feverish pitch in the dot com bubble. We believe the real culprit was the Fed which added substantial amounts of repo liquidity to the banking sector due to concerns of Y2K and the potential for mass computer malfunctioning. Those repo funds gravitated to the financial markets.

    For more, please read the following WSJ article from 1999- Federal Reserve Clears Loan Facility Linked To Y2K Computer Problems.

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    “The graph below shows the 10x surge in repo during late 1999 and its quick removal shortly after the New Year. Note the recent surge, on the right side of the graph, dwarfs the 1999 experience and that is before an expected $500 billion spike in repo financing over the next week or two.”

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    Unlike 1999, we have our doubts as to how quickly the graph normalizes, as the Fed continues to underestimate the scope of the growing overnight funding issues.

    To quote Yogi Berra “it’s deja vu, all over again.”

    Conclusion

    Statistically speaking, the odds suggest that the market could indeed be higher in 2020. However, there are numerous risks which could derail the markets which should not be dismissed.

    This is not a “bearish forecast.” It is just an assessment of trends, statistics, and probabilities given the current monetary, financial and economic backdrop.

    If we are wrong, and stocks do post gains in the coming year, being more conservative will only mean a small relative under-performance in your portfolio next year.

    If we are right, the preservation of capital will be far more beneficial. As we have stated previously, participating in the bull market over the last decade is only one-half of the job. The other half is keeping those gains during the second half of the full market cycle.

    One of my favorite quotes is by Howard Marks and is a principle that we live by in our little shop;

    “Resisting – and thereby achieving success as a contrarian – isn’t easy. Things combine to make it difficult; including natural herd tendencies and the pain imposed by being out of step, since momentum invariably makes pro-cyclical actions look correct for a while. (That’s why it’s essential to remember that “being too far ahead of your time is indistinguishable from being wrong.”)

    Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it’s challenging to be a lonely contrarian.”

    As we enter into 2020 it may pay to be a little more cautious after such a large rise in the financial markets.

    Let me leave you with Bob Farrell’s 10 Rules:

    1. Markets tend to return to the mean over time

    2. Excesses in one direction will lead to an opposite excess in the other direction

    3. There are no new eras — excesses are never permanent

    4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

    5. The public buys the most at the top and the least at the bottom

    6. Fear and greed are stronger than long-term resolve

    7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

    8. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend

    9. When all the experts and forecasts agree — something else is going to happen

    10. Bull markets are more fun than bear markets

    Our job is managing risk to conserve principle and create absolute returns over time. What matters most to us is that we provide a disciplined management process suitable for our clients who seek long-term performance as measured by annualized and risk-adjusted returns, and conservation of investment principle.

    We wish you a prosperous 2020.


    Tyler Durden

    Sat, 12/21/2019 – 15:30

  • NYC'S Billionaire's Row Beats Out Hong Kong For Title Of World's Top Luxury Street
    NYC’S Billionaire’s Row Beats Out Hong Kong For Title Of World’s Top Luxury Street

    They call it Billionaire’s Row for a reason.

    This year, that reason was clear: 57th street in New York City saw more houses bought for $25 million or more than any other road in the world, according to Bloomberg.  

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    The area just south of Central Park beat out Mount Nicholson Road in Hong Kong’s Peak District for the title of most “ultra-prime” home sales. However, the Hong Kong area far trumped the average sale price on Billionaire’s Row, by a score of $81.8 million to New York’s $38.5 million. 

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    Meanwhile, New York is still dealing with a glut of super-luxury apartments that we have highlighted numerous times.

    Recall, in early September, we noted that 1 in 4 luxury NYC apartments remained unsold over the past 5 years. We hadbeen documenting this trend for a few years now, and according to a new report by the website StreetEasy that was cited by the New York Times a couple months ago, there were more than 16,200 condo units across 682 new buildings completed in New York City that have appeared since 2013, and 25% remain unsold, roughly 4,050, most of them in luxury buildings.

     

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    In a city where brokers are accustomed to selling condos months, and even years, before construction is finished, this sudden freeze has left many confused as to the cause.

    What’s worse, a growing share of condos sold in recent years have been quietly re-listed as rentals by the investors who bought them, the NYT reports. Just how reluctant are buyers to try their hand at flipping? Of the 12,133 new condos sold in NYC between January 2013 and August 2019, 38% have appeared on StreetEasy as rentals.

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    Regardless, developers continue to take advantage of new technology that allows “pencil-thin” towers to pop up on smaller lots. Areas with new luxury developments topped the global rankings as the wealthiest people in the world flocked to buildings with the most modern facilities.

    But the supply glut is still causing price concessions. Developers have increased the amount of concessions they are offering to entice buyers into the backlog of high priced inventory spread across the city. The glut in NYC echoes the same issue in London, where tax hikes and political uncertainty have stifled the real estate market. 

     


    Tyler Durden

    Sat, 12/21/2019 – 15:00

  • Should Research Analysts Start Learning To Code?
    Should Research Analysts Start Learning To Code?

    Submitted by Market Crumbs,

    “25 analysts started coverage of Uber. None of them think the stock is a sell.”

    “Just one day after a short seller slammed SmileDirectClub, all 10 banks on its IPO rate it a buy.”

    These are some examples of headlines from earlier this year, showcasing the groupthink among Wall Street analysts. Of course, both stocks have since plummeted. Uber has declined 36% from its high. SmileDirectClub has declined 59% from its high.

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    Given the lack of value this profession notoriously adds, this news may not cause everyone to feel sorry. Equity research headcount across 12 major banks has declined by 8% to approximately 3,500, according to research firm Coalition Development. Coalition Development’s analysis of every major bank shows this year is on track for the largest decline since they began studying the headcount data in 2012.

    As of December 31, 2012, equity research headcount at the 12 banks was approximately 4,400. As of June 30, 2019, headcount stood at approximately 3,500. That equates to roughly 1 in 5 equity research analysts losing their job over the period.

    This news isn’t completely surprising, though. Market Crumbs recently wrote at the end of 2018 New York City had 4% fewer banking, insurance, securities and real estate employees than in 2008. Not surprisingly, technology and regulations are causing the profession to shrink.

    Technology is eating away at the need for equity research analysts as passive investing continues to eat away at active investing’s market share. Passive investing is now pushing nearly 50% of all assets for U.S. stock-based funds—up from 25% a decade ago, according to Morning Star. Last December, when the market got slammed before Treasury Secretary Steve Mnuchin infamously called the PPT, investors pulled nearly $143 billion from active funds while passive funds pulled in nearly $60 billion.

    Regulations, specifically the European regulation MiFID, are also causing banks to cut back on equity research headcount. MiFID, which stands for Markets in Financial Instruments Directive, required research costs to be separated from trading fees. U.K regulators said earlier this year that buyside research spending has fallen between 20% and 30% since MiFID went into effect. While the U.S. Securities and Exchange Commission hasn’t implemented a similar rule in the U.S., some banks are paying for research costs out of pocket instead of pushing the cost on to clients.

    About half of U.S. fund managers still bundle fees, but some larger firms are beginning to unbundle them. U.S. equities commissions have declined approximately 42% since 2015, according to a Tabb Group. With banks and managers focused on winning client’s assets, they have to compete on price and equity research headcount appears to be an expense they’re not willing to pay for as they have in the past.

    With the market having evolved into an algo-driven, low volume melt-up on the heels of fake trade war news, buybacks and an accommodative Fed, the need for equity research analysts is likely to only diminish further as time goes on. After all, a recent guest on CNBC explained the current environment best, saying markets have “nothing to do with fundamentals anymore.”


    Tyler Durden

    Sat, 12/21/2019 – 14:30

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