Aug 26

Today’s News 26th August 2017

  • Sebastian Gorka Resigns From White House Post

    A week after the White House pushed out former chief strategist Steve Bannon, the Trump administration has lost another controversial staffer. The departee this week is Sebastian Gorka, a deputy assistant to the president and former Breitbart employee who was closely allied with the White House’s rapidly shrinking anti-globalist faction. News of Gorka’s resignation was first reported by the Federalist, and later confirmed by Axios and a host of other news outlets.

    As with Bannon’s ouster last week, the storyline of who said what when has gotten muddled: Gorka claimed he resigned, while the White House insinuated that he was pushed out.

    News of Gorka’s ouster broke shortly after Trump announced that he would be pardoning sheriff Joe Arpaio, a decision that was widely expected after Trump hinted that he “wouldn’t do it tonight” at a rally in Phoenix earlier this week. It also comes as Hurricane Harvey, which has been upgraded to a category four hurricane, is threatening to lay waste to the southwest.

    In a copy of Gorka’s bluntly worded resignation, which he leaked to the Federalist, the former staffer “expressed dissatisfaction with the current state of the Trump administration.”

    “[G]iven recent events, it is clear to me that forces that do not support the MAGA promise are – for now – ascendant within the White House,” Gorka wrote. “As a result, the best and most effective way I can support you, Mr. President, is from outside the People’s House.”

    In the letter, Gorka blamed the president's failure to outline a plan for exiting Afghanistan after “16 years of disastrous policy decisions" for being the final straw. He also criticized the president and his military advisers for omitting any mention of Radical Islam from the president's statement on Afghanistan, delivered earlier this week.

    “Regrettably, outside of yourself, the individuals who most embodied and represented the policies that will ‘Make America Great Again,’ have been internally countered, systematically removed, or undermined in recent months. This was made patently obvious as I read the text of your speech on Afghanistan this week…


    “The fact that those who drafted and approved the speech removed any mention of Radical Islam or radical Islamic terrorism proves that a crucial element of your presidential campaign has been lost…


    “Just as worrying, when discussing our future actions in the region, the speech listed operational objectives without ever defining the strategic victory conditions we are fighting for. This omission should seriously disturb any national security professional, and any American who is unsatisfied with the last 16 years of disastrous policy decisions which have led to thousands of Americans killed and trillions of taxpayer dollars spent in ways that have not brought security or victory.”

    Echoing comments made by Bannon following his ouster last week, Gorka reportedly told the president that he could better serve his America First agenda from the outside: "[I]t is clear to me that forces that do not support the MAGA promise are – for now – ascendant within the White House…"

    That's probably not far from the truth. As Axios points out, Gorka, a self styled national security and counterterrorism expert, was best known for his fiery television appearances, his only real contribution to the administration, and the quality that initially endeared him to the president. Gorka can easily keep up his TV schedule from outside of the West Wing. Gorka was widely reviled by Trump opponents because of his reputed affiliation with Hungarian nationalist group Vitezi Rend.  

    According to Axios, Gorka's resignation is a sign that Chief of Staff John Kelly is tightening control of the White House's sprawling, unaccountable fiefdoms.

    The White House communications department confirmed that Gorka was no longer employed at the White House, but wouldn't comment on whether he was fired or left voluntarily, according to ABC.

    "I can confirm he no longer works at the White House,” the official said.

    His ouster brings the number of officials who have been fired or otherwise departed the Trump administration to 14:

    Finally, with the ouster of Bannon, the list of high-ranking personnel fired by Trump rises to 14. They are:

    Sally Yates
    Michael Flynn
    Katie Walsh
    Preet Bharara
    James Comey
    Michael Dubke
    Walter Shaub
    Mark Corralo
    Sean Spicer
    Micheal Short
    Reince Priebus
    Anthony Scaramucci
    Steve Bannon
    Sebastian Gorka

    Maybe Trump will start putting weekly firings on the White House calendar?

  • Philly AntiFa 'Cell' Calls For All-Out Revolution, Demands "Gender Abolition", "Expropriate Land From Rich"

    Authored by Ian Miles Cheong via,

    An armed Antifa group is launching a new cell in Philadelphia, with support from the “alt-left” alternative media.

    The group currently hosts anti-police workshops called “Our Enemies in Blue.” The group draws inspiration from convicted murderers and calls for violence against the police, theft of goods, and armed insurrection.

    Antifa websites like It’s Going Down, Sub.Media and Insurrection News have been promoting the group, which calls itself the Revolutionary Abolitionist Movement, calling on their readers to donate to a Fundrazr account for the creation of the new cell.

    The press release the group published in far-left media is filled with hyperbolic claims about how “mosques are being ruthlessly bombed” and how “LGBTQ are being battered.”

    “The destruction of black life continues unabated as millions languish in the plantations of the modern day slave system,” the group states.

    Taking pride in the “legacy” of “Philadelphia’s rich revolutionary tradition,” RAM cites Mumia Abu Jamal, the Black Panther activist who shot and killed Philadelphia police officer Daniel Faulkner in 1981.

    It also cites Russell Shoats, who shot a police officer in the back five times in 1970. Similar to Antifa, the actions of the Black Panthers have been described as having a “very undefined purpose of assaulting police officers.”

    Like other Antifa groups, RAM claims to oppose the usual -isms and white supremacy, but a quick look at the organization’s “Political Foundation” page, as highlighted by Far Left Watch, notes the inclusion of several alarming points, including the “Abolition of Gender,” and the “Expropriation and the Cooperative Economy.”

    Revolutionary Abolitionist Movement (Screenshot: RAM website)

    The latter calls on members to “expropriate” or “take away” goods, lands, and tools to “begin the revolutionary process.” Expropriation is another way of saying “seize” or “steal.”

    The organization models itself after the so-called Rojava Revolution, a leftist guerilla movement currently active in northern Syria. RAM states that the communists offer a “foundation in communal and council based political organization and militant defense.”

    The organizations within the Rojava Revolution are currently involved in combat against ISIS.

    Far Left Watch notes that RAM has been hosting a variety of anti-police workshops including a “Legal Training” workshop, a class on the “Introduction to Anarchism,” and one called “Our Enemies in Blue,” which deals with anti-police action–or how to handle police officers during violent clashes.

    Despite active calls for violence against law enforcement and revolution against the government, the liberal media has been surprisingly lenient in its coverage of Antifa, depicting them as righteous crusaders against the rise of white supremacy.

  • Korea, Afghanistan, And The Never-Ending War Trap

    Authored by Pepe Escobar via Asia Times,

    While the US-backed 'Hunger Games' in South Korea plow on, a 'new strategy' for Afghanistan is really all about business. But China is already there…

    There are more parallels between an unfinished 1950s war in Northeast Asia and an ongoing 16-year-old war in the crossroads between Central and South Asia than meet the eye.

    Let’s start with North Korea.

    Once again the US/South Korea Hunger Games plow on. It didn’t have to be this way.

    Russian Foreign Minister Sergey Lavrov explained how: “Russia together with China developed a plan which proposes ‘double freezing’: Kim Jong-un should freeze nuclear tests and stop launching any types of ballistic missiles, while US and South Korea should freeze large-scale drills which are used as a pretext for the North’s tests.”

    Call it sound diplomacy. There’s no conclusive evidence the Russia-China strategic partnership floated this plan directly to the administration of US President Donald Trump. Even if they did, the proposal was shot down. The proverbial “military experts” lobbied hard against it, insisting on a lopsided advantage to Pyongyang. Worse, National Security Adviser H R McMaster consistently lobbies for preventative war – as if this is any sort of serious conflict “resolution”.

    Meanwhile, that “plan for an enveloping fire” around Guam remains on Kim Jong-un’s table. It is essential to remember the plan was North Korea’s response to Trump’s “fire and fury” volley. Kim has stated that for diplomacy to work again, “it is necessary for the US to make a proper option first”. As in canceling the Ulchi-Freedom Guardian war games – featuring up to 30,000 US soldiers and more than 50,000 South Korean troops.   

    South Korean President Moon Jae-in dutifully repeats the Pentagon mantra that these Hunger Games, lasting until August 31, are “defensive”. Computer simulations gaming a – very unlikely – unilateral Pyongyang attack may qualify as defense. But Kim and the Korean Central News Agency interpret the war games in essence for what they are: rehearsal for a “decapitation”, a pre-emptive attack yielding regime change.

    No wonder the KCNA insists on a possible “catastrophe”. And Beijing, crucially, concurs. The Global Times reasonably argued that “if South Korea really wants no war on the Korean Peninsula, it should try to stop this military exercise”.

    Can’t pack up our troubles

    It would be a relief to defuse the drama by evoking that great World War I marching song; “Pack up your troubles in your old kit bag/ And smile, smile, smile.”

    But this is extremely serious. A China-North Korea mutual defense treaty has been in effect since 1961. Under this framework, Beijing’s response to Trump’s “fire and fury” was a thing of beauty. If Pyongyang attacks, China is neutral. But if the US launches a McMaster-style pre-emptive attack, China intervenes – militarily – on behalf of Pyongyang.

    As a clincher, Beijing even made it clear that its preference is for the current status quo to remain. Checkmate.

    Hunger Games apart, the rhetorical war in the Korean Peninsula did decrease a substantial notch after China made its position clear. According to a Beltway intel source, that shows “the US and Chinese militaries, as the US and the Russians in Syria, are coordinating to avoid a war”.

    Evidence may have been provided by a very important meeting last week between the chairmen of the US and Chinese Joint Chiefs of Staff, General Joseph Dunford and General Fang Fenghui. They signed a deal that the Pentagon spun as able to “reduce the risk of miscalculation” in Northeast Asia.

    Among the prodigious fireworks inherent to his departure as White House chief strategist, Steve Bannon nailed it: “There’s no military solution, forget it. Until somebody solves the part of the equation that shows me that 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.”

    And extra evidence in the “they got us” department is that B-1B heavy bomber “decapitation” practice runs – out of Andersen Air Force Base in Guam – have been quietly “suspended”. This crucial, largely unreported fact in the air supersedes rhetoric from Secretary of State Rex Tillerson and Pentagon head James “Mad Dog” Mattis, who previous to Bannon’s exit were stressing  “strong military consequences if North Korea chooses wrongly”.  

    Once again, it’s all about The Belt & Road Initiative

    Now let’s move to Afghanistan.

    “Mad Dog” Mattis once famously said it was fun to shoot Taliban fighters. “Known unknowns” Don Rumsfeld was more realistic; he moved out of Afghanistan (toward Iraq) because there were not enough good targets to bomb.

    Anyone who spent time working/reporting on the Afghan Hindu Kush and the southwestern deserts knows why the proverbial “there’s no military solution” applies. There are myriad reasons, starting with the profound, radicalized Afghan ethnic divide (roughly, 40% are mostly rural, tribal Pashtun, many recruited by the Taliban; almost 30% are Tajik, a great deal of them urban, literate and in government; more than 20% are Hazara Shiites; and 10% are Uzbek).

    The bulk of Washington’s “aid” to Kabul throughout these past 16 years has been on the bombing, not the economy, front. Government corruption is cataclysmic. Warlords rule. The Taliban thrive because they offer local protection. Much to Pashtun ire, most of the army is Tajik. Tajik politicians are mostly close to India while most Pashtun favor Pakistan (after all, they have cousins on the other side of the Durand line; enter the dream of a future, reunited Pashtunistan).

    On the GWOT (Global War on Terror) front, al-Qaeda would not even exist if the late Dr Zbig “Grand Chessboard” Brzezinski had not come up with the idea of a sprawling, well-weaponized private army of demented jihadis-cum-tribal Afghans fighting the communist government in Kabul during the 1980s. Add to this the myth that the Pentagon needs to be on the ground in Afghanistan to prevent jihadis from attacking America. Al-Qaeda is extinct in Afghanistan. And Daesh does not need territory to concoct/project its DIY jihad.

    When the myth of the US in Afghanistan as a categorical imperative is exposed, that may unveil what this is all about: business.

    And we’re not even talking about who really profits from large-scale opium/heroin trade.

    Two months ago the Afghan ambassador to Washington, Hamdullah Mohib, was breathlessly spinning how “President Trump is keenly interested in Afghanistan’s economic potential”, as in “our estimated $1 trillion in copper, iron ore, rare-earth elements, aluminum, gold, silver, zinc, mercury and lithium”. This led to the proverbial unnamed  “US officials” telling Reuters last month that what Trump wants is for the US to demand some of that mineral wealth in exchange for “assisting” Kabul.

    A US Geological Survey study a decade ago did identify potential Afghan mineral wealth – gold, silver, platinum, iron ore, uranium, zinc, tantalum, bauxite, coal, natural gas and copper – worth as much as US$1 trillion, with much spin dedicated to Afghanistan as “the Saudi Arabia of lithium”.

    And the competition – once again, China – is already there, facing myriad infrastructure and red-tape problems, but concentrated on incorporating Afghanistan, long-term, into the New Silk Roads, aka Belt and Road Initiative (BRI), along with its security cooperation arm, the Shanghai Cooperation Organization.

    It’s no secret the Russia-China strategic partnership wants an Afghan solution hatched by Afghans and supervised by the SCO (of which Afghanistan is an observer and future full member). So from the point of view of neocon/neoliberalcon elements of the War Party in Washington, Afghanistan only makes sense as a forward base to harass/stall/thwart BRI.

    What Russia and China want for Afghanistan – yet another node in the process of Eurasia integration – is not much different from what Russia, China and South Korea want for North Korea: increased connectivity as in a future Trans-Korean Railway linked to the Trans-Siberian.

    As for Washington and the proverbially bombastic, failed futurists  across the Beltway, do they even know what is the end game of “investing” in two never-ending wars with no visible benefits?

  • These Are The States Where $1 Million Lasts The Longest

    If you had a million dollars, would you retire?

    For most Americans, the answer to that question would be no. Which is especially problematic for millennials, who, having been permanently scarred by the financial crisis, are investing at lower rates than members of Generation X or the Baby Boomers, making it more difficult for them to build wealth. Furthermore, the generation that now comprises the largest share of working Americans is having trouble saving money, thanks in no small part to their $1.3 trillion in student debt.

    Their present financial predicaments suggest that millennials probably won’t retire in the large numbers that members of their parents’ generation will, primarily out of necessity. Even for some baby boomers, perennially low interest rates since the crisis – and possibly from here on out – have made things more difficult for conservative savers who may now need to redo their longstanding retirement plans to make do with less.

    For workers in this situation, choosing a location where they can stretch their money the furthest in retirement is paramount. Enter a new study by GoBankingRates that measures how long $1 million will last in different locations around the country.

    “A new report from GOBankingRates measures how long a million dollars would last for retirees 65 and older, state by state. It did that by multiplying the Bureau of Labor Statistics’ mean annual expenditures for that age group by a cost-of-living measure for each state, provided by the Missouri Economic Research and Information Center. The tally separated out annual spending on health care, housing, groceries, transportation, and utilities.”

    The upshot is unsurprising: Retirees hoping to squeeze the maximum value from their dollars should head down south:

    In Mississippi, retirees can stretch a million dollars for more than 26 years – the longest of any US state, according to the study. Arkansas, Michigan, Tennessee, Georgia, Missouri, Texas, Indiana and Alaska are also states where a million dollars can last for longer than 24 years.

    The state where $1 million will be consumed most quickly is, unsurprisingly, California.  

    According to Bloomberg, the study’s figures are conservative.

    “These are conservative figures. They don’t factor in any entertainment or travel, which would make for a pretty grim retirement. Nor do they take into account how inflation might cut into purchasing power as we age. Inflation can take a bigger bite for seniors, because medical costs, which may account for a bigger chunk of expenses, have an inflation rate significantly higher than that for the broad economy.”

    And while health-care costs are projected to rise, the study also doesn’t factor in any investment returns on the $1 million.

    “Health-care costs for retirees will rise at an average annual rate of 5.5 percent over the next decade, according to HealthView Services, which makes retirement health-care cost projection software. To put that in perspective, from 2012 to 2016, the average annual broad inflation rate in the U.S. was 1.9 percent."

    Of course, to many young people, one day having $1 million in assets seems like an impossible dream. One recent study suggested that 70% of millennials have less than $1000 in savings. But this is just one more reason why they should start thinking about retirement now.

  • Watch Live: Trump Declares Disaster As Harvey Barrels Into Texas

    Update: Hurricane Harvey slammed into southwestern Texas Friday night as the storm's "eyewall" – the area where storm-related damage is typically the heaviest – battered communities along the coastline as the storm headed straight toward densely populated Corpus Christi, according to the National Weather Service. The storm arrived  more quickly than some expected, leaving hundreds of thousands of Texans scrambling to evacuate from towns and cities in the storm's path.

    According to ABC, a station at Aransas Pass run by the Texas Coastal Observing Network sustained winds were reported to be over 100 mph, with over 120 mph gusts.

    President Donald Trump made a disaster declaration Friday night – a decision that he touted on his twitter feed, claiming that it would unleash "the full force of government help!"

    One live feed in coastal Galveston, Texas depicted heavy rains and wind.

    …and another feed from the Galveston seawall:


    Trump has left for Camp David for the weekend, but he will continue to be briefed on the storm by his advisers.In a statement, the White House urged citizens to heed voluntary and mandatory evacuation orders.

    Read the full text of the statement below:

    "President Donald J. Trump continues to closely monitor Hurricane Harvey and the preparedness and response efforts of State, local, and Federal officials.  Today, the President received a briefing from Federal Emergency Management Agency (FEMA) Administrator Brock Long, Acting Secretary of Homeland Security Elaine Duke, his Homeland Security and Counterterrorism Advisor Thomas P. Bossert, and his Chief of Staff John F. Kelly.  Yesterday, the President spoke with Governors Greg Abbott of Texas and John Bel Edwards of Louisiana and committed to providing assistance as appropriate.  
    This storm will likely be very destructive for several days.  The President encourages people in the path of this dangerous storm to heed the advice and orders of their local and State officials.  The President’s highest priority is the safety of the public and of first responders.  Those who ignore evacuation orders could be putting both themselves and first responders in danger.  We encourage all Americans in the affected areas to be prepared, including by visiting, which provides preparedness plans and important links to information."

    * * *

    Gartman has done it again.

    Yesterday, on CNBC the world-renowned commodities guru predicted that Hurricane Harvey would be a mostly a non-event, saying that he "doubts Harvey gets much past a Category 1 hurricane",  and that "this is going to be a short-term event."

    The storm "could be very serious. My guess is that it shan't be," he said…

    … to which our response was simply "bye Texas":

    24 hours later the Gartman curse has hit again, because with Hurricane Harvey barreling toward Corpus Christi, and just hours away from landfall, moments ago the NHC said that it upgraded Harvey to a Category 4 (out of 5) hurricane with maximum sustained winds of 130 mph


    Forecasters are labeling it a “life-threatening storm.” The storm quickly grew Thursday from a tropical depression into a Category 1 hurricane, and then developed into a Category 2 storm early Friday. By Friday afternoon, it had become a Category 3 storm before strengthening to a Category 4. It’s forecast to make landfall in Texas late Friday or early Saturday.

    The storm is 45 miles (72 kilometers) east of Corpus Christi.

    Here is the latest update from the NHC on the hurricane which is now so powerful, the damage across the coastline and energy infrastructure will likely be in the tens of billions:

    Hurricane Harvey Tropical Cyclone Update
    NWS National Hurricane Center Miami FL       AL092017
    600 PM CDT Fri Aug 25 2017


    Air Force Reserve Reconnaissance aircraft data indicate that Harvey has become a category 4 hurricane with maximum sustained winds of 130 mph (215 km/h).

    A station at Aransas Pass run by the Texas Coastal Observing Network recently reported a sustained wind of 74 mph (119 km/h) with a gust to 96 mph (154 km/h).

    LOCATION…27.7N 96.7W

  • Is Bitcoin Really Anonymous? IRS Moves To Track Cryptocurrencies With New Chain Analysis Tools

    Authored by Mac Slavo via,

    Last month founder Brandon Smith warned that Bitcoin may not be all that it’s cracked up to be in terms of its purported anonymity:

    For years, one of the major original selling points of bitcoin was that it was “anonymous.” It always surprised me that so many people in the liberty movement bought into this scam.


    Surely after the revelations exposed by Edward Snowden and organizations like Wikileaks, it is utterly foolish to believe that anything in the digital world is truly “anonymous.”


    The feds have been proving there is no anonymity, even in bitcoin, for some time, as multiple arrests using bitcoin tracking have indeed occurred when the FBI decided it was in their interest. Meaning, when the feds want to track bitcoin transactions, they can, and it does not matter how well the people involved covered their actions.

    Because every transaction exists on a public blockchain ledger, an enterprising organization – say like the NSA or IRS – could conceivably implement blockchain analysis tools to track down Bitcoin fund transfers around the globe. These days most bitcoin transactions are originated on “trusted” exchanges that exist in Western nations, where governments have always found new and innovative ways to ensure citizens have no privacy whatsoever, especially when it comes to personal finances. This means that there is more than likely a record of your original Bitcoin transaction, perhaps involving a credit card or bank transfer, and if regulators ask an exchange to turn over the information you can bet they’ll do so in order to avoid unwanted government scrutiny. Moreover, most exchanges now require a driver’s license, passport and even a phone number in order to approve your account for trading.

    The point is, for government investigators with a bone to pick, your crypto currency activities online may not be as anonymous and private as you may think.

    In fact, so exposed is the blockchain to Big Brother monitoring and interference, that the Internal Revenue Service has now implemented blockchain analysis tools to help them track down individuals who are profiting off the crypto currency and not declaring these profits on their tax returns.


    According to a contract recently obtained by the Daily Beast, the IRS can now track bitcoin and other cryptocurrency addresses. They can do this to route out potential tax evaders. They purchased software from the blockchain analysis group Chainalysis.

    The document details that “criminals” have used digital currencies to launder money, deal drugs, and commit other unlawful behavior. However, criminals have also been using digital currencies to ignore tax liabilities and evade responsibility. The Daily Beast article elaborated:

    The document highlights how law enforcement isn’t only concerned with criminals accumulating bitcoin from selling drugs or hacking targets, but also those who use the currency to hide wealth or avoid paying taxes.

    Reason for IRS Crackdown; Tracking Bitcoiners


    The reason the IRS is cracking down on digital currencies appears to be because only 802 people declared bitcoin profits or losses in 2015. The Daily Beast article suggests that many people may have not expected the IRS to collect on digital currencies. Others may have just thought they could easily sidestep this alleged obligation.

    As a result of this failure to pay taxes, the IRS consulted with Chainalysis.


    They are now providing the IRS with tools to track bitcoin addresses through the blockchain and centralized exchanges. A Fortune article captured a screen shot of the letter:



    The tool that Chainaylsis gave the IRS is called a refactor tool. It visualizes, tracks, and analysis transactions on the blockchain. Agencies from law enforcement, IRS, and banks will be able to use the tool, according to sources.


    To date, records show the IRS has paid Chainaylsis $88,700 since 2015 for its services.


    Full article at

    Prepare for a full-out onslaught against the government’s newest enemy: crypto terrorists.

    That means YOU, if you happen to own any Bitcoin.

    Because as we highlighted in 2014, under new directives passed by the Obama Administration, concrete facts are not necessary for you to be put on any number of government watch lists:

    The recently declassified Watchlisting Guidance rule book issued in 2013 and developed by members of 19 law enforcement agencies that include the FBI, NSA, CIA, and NSA, outlines the rules for placing individuals, including American citizens, on the various watch lists currently in use. As noted by The Intercept, the rules, much like America’s secretive anti-terrorism laws, are vague and often contradict each other.

    It reveals a confounding and convoluted system filled with exceptions to its own rules, and it relies on the elastic concept of “reasonable suspicion” as a standard for determining whether someone is a possible threat.


    Because the government tracks “suspected terrorists” as well as “known terrorists,” individuals can be watchlisted if they are suspected of being a suspected terrorist, or if they are suspected of associating with people who are suspected of terrorism activity.


    “Instead of a watchlist limited to actual, known terrorists, the government has built a vast system based on the unproven and flawed premise that it can predict if a person will commit a terrorist act in the future,” says Hina Shamsi, the head of the ACLU’s National Security Project. “On that dangerous theory, the government is secretly blacklisting people as suspected terrorists and giving them the impossible task of proving themselves innocent of a threat they haven’t carried out.”

    The guidelines for who is or is not a terrorist are now so vague that any American could potentially be added to a list for something as menial as knowing someone who has committed an activity deemed to be of terrorist nature. And as has been highlighted previously, those activities could range from making a hand gesture that looks like a gun or manufacturing your own gold and silver coins.

    And now, of course, trading or owning Bitcoin.

  • Japan Sees Surge In Gold Smuggling As Yakuza & Wealthy Chinese Team Up

    In a story that was seemingly tailor-made for the tabloids, Japanese news agency Nikkei is reporting that, in an unusual but tantalizing example of financial symbiosis, wealthy Chinese investors are teaming up with Yakuza gangsters to smuggle gold into Japan. The payoff for each side is simple: Chinese investors, who are increasingly fearful that a depreciating yuan will create turbulence in local stock and bond markets, can circumvent China’s stringent capital controls and move their money out of the country. And by cheating the Japanese government out of a consumption tax, the Yakuza stand to make a healthy profit.

    “The argument goes that the rich, having lost confidence in the Chinese yuan and with investment in other assets becoming difficult, are turning to gold smuggling to move their wealth out of the country. They supposedly hire mules to carry the gold from China, as well as places like South Korea and Taiwan, into Japan, where the consumption tax increase has made it easy for them to pay off the carriers and bribe staff at Asian airports.”

    While Nikkei admits that its story is mostly based on hearsay, data show that a spike in demand for gold on the mainland has coincided with an increase in busts for gold smuggling by Japanese customs officials.

    “On the data side, statistics from World Gold Council show that while global demand for gold used in jewelry and as an investment dropped 13.3% on the year in the three months through June, China's demand rose 7.8%.


    On the anecdote side, Chinese media outlet Shenyang Daily recently reported that 21 members of a gold smuggling gang had been discovered by customs officials in Shenyang, the largest city in Liaoning Province. Six were arrested on suspicion of trying to smuggle 45kg of gold out of China, while several other members were caught in the early morning of March 21 at Shenyang's Taoxian International Airport carrying 37kg of gold. One member was sent back to Shenyang from Japan after being caught trying to smuggle in 8kg of gold in January.”

    Meanwhile, Nikkei reports that Japan is quickly becoming a popular destination for gold smugglers, as the number of cases has ballooned since the increase in Japan's consumption tax in April 2014 to 8% from 5%. While the tax hike has been a burden for consumers, it has proven to be a boon for criminals.

    “Japan is fast becoming the go-to place for gold smugglers. According to data from the Finance Ministry, fines or other punishments were handed down for 177 gold smuggling cases in the year through June 2015. To put that into context, 2012 and 2013 each saw less than 10 cases punished. The surge continued the following year, with the number of cases reaching an all-time high of 294 — and this may be only the tip of the iceberg, as authorities believe there are numerous cases that have yet to come to light.”

    The scam is relatively complex: With the cooperation of insider employees at budget airlines like Japan’s Vanilla Air, Japanese gangsters hide caches of gold aboard a given aircraft after it lands in China.

    Then they wait for the same plane to be used for a domestic flight, allowing them to carry the gold off the plane without risking being caught by customs officials.   

    Once the gold has been safely off-boarded, the smugglers sell it through a seemingly legitimate merchant, pocketing the consumption tax.

    “In Japan, consumption tax must be paid on gold when it is brought into the country. This amount is later tacked onto the price of the gold when it is sold, passing the cost of the tax onto the buyer. By circumventing the initial taxation process, smugglers can make a "profit" equal to the amount of that tax. Jacking up the consumption tax rate means bigger gains for smugglers.”

    Japanese officials say they’ve been surprised by the level of sophistication exhibited by the smugglers, adding that they appear to be backed by “big organizations” with “big funds.” One recent case involved members of the Inagawa-kai, who were caught smuggling 112 kilos of gold into Japan from Macau using a private jet.

    “The method using budget carriers really surprised us," a member of the Customs and Tariff Bureau said. "There was also a case in Saga Prefecture that used a method often used by drug smugglers, delivering gold by sea. Whoever is behind these cases is really putting a lot of thought into the process."


    Japanese authorities suspect "big organizations" with "big funds" are carrying out the smuggling operations, hiring different people for different phases of the act. Much of the blame falls on yakuza organized crime groups. A case in 2016 involved members related to the Inagawa-kai group who were prosecuted for smuggling 112kg of gold on their private jet from Macau. Finance Ministry statistics show that in 51% of the 294 cases that year, the perpetrators were Japanese.”

    If conditions in mainland China are any indication, incidences of gold smuggling will probably continue to rise. Early this year, the Communist Party tightened its capital controls, making it more difficult for wealthy individuals to move money offshore. Chinese authorities have also forced bitcoin exchanges, long suspected of helping customers move money out of the country, to tighten their financial controls to ensure that their customers don't violate local financial regulations.

    If there’s anything to be learned from the Nikkei report, it’s that Chinese investors are becoming increasingly desperate to move their money offshore.

    Resorting to smuggling to move money offshore certainly doesn’t signal confidence in the country’s financial system.

  • Mystery Deepens After US Confirms 16 Diplomats Suffered "Traumatic Brain Injury" In Cuban 'Sonic Attack'

    One of the most bizarre stories this week took a more sinister turn yesterday as the US State Department officially confirmed 16 US Government employees were affected by health attacks in Cuba.

    State Deaprtment spokesperson Heather Nuarte calmly explained the details, which are quite frankly stunning…


    And yet most of the mainstream media seems loathed to cover this!? Happy to focus on nazis?

    CBS News, however, did some digging, discovering from a review of medical records that the American and Canadian diplomats in Cuba have been diagnosed with mild traumatic brain injury – and central nervous damage – after an apparent attack with a sonic weapon targeted their homes.

    The diplomats complained about symptoms ranging from hearing loss and nausea to headaches and balance disorders after the State Department said “incidents” began affecting them beginning in late 2016.


    A number of diplomats have cut short their assignments in Cuba because of the attacks.


    The source says American diplomats have also been subjected other types of harassment including vehicle vandalization, constant surveillance, and home break-ins.

    As Axios reports, The State Department hasn’t explicitly identified the source of the attack or what person or entity might have carried it out.

    We hold the Cuban authorities responsible for finding out who is carrying out these health attacks on not just our diplomats but, as you’ve seen now, there are other cases with other diplomats involved,” Secretary of State Rex Tillerson told reporters earlier this month.

    The Cuban government has denied any involvement with the incident.

    Of course, while we wish these diplomats well (if recovery is possible), the big question is – what will the repurcussions be for US-Cuba relations and what response will the Trump administration unleash? As Axios notes, the severity of the apparent injuries goes far beyond what was originally reported, so it stands to reason that President Trump’s administration might choose to respond strongly given his prior rhetoric on Cuba, especially given that the report notes that the attacks on Americans are continuing.

  • Rickards Fears September Meltdown – "1000 Point Drops, Or A Closed Exchange?"

    Authored by Craig Wilson via The Daily Reckoning,

    Jim Rickards joined Alex Stanczyk at the Physical Gold Fund to discuss current destabilizing factors that could drastically impact investors. During the first part of their conversation the economic expert delved into gold positioning for the future, the expanding threats from North Korea and liquidity in global markets.

    To begin Rickards’ was prompted on his latest analysis over North Korea and the international threat the country poses going forward. The currency wars expert urged, “The fact is, the threats from North Korea, even if not to the mainland, still threaten U.S territory.  There are a lot of Americans living there. As this escalation continues in sequence the problem is not new.”

    The threat of North Korea has been going on for decades and has escalated since the mid 1990’s. Bill Clinton and George W. Bush both offered sanctions relief for the country in exchange for program reductions. The Obama administration essentially did nothing for eight years. I do think the Trump administration at least deserves credit for clarity.

    Jim Rickards is the editor of Strategic Intelligence and is the New York Times best-selling author of The Road to Ruin. Rickards’ worked on Wall Street for decades and has advised the U.S intelligence community on international finance, trade and financial warfare.

    Trump has identified that he is not willing to negotiate to arrive at negotiations. They have indicated to North Korea that if the regime wishes to come to the table what the White House must see is a verified cessation of weapons programs. In exchange they could offer potential sanctions relief and even the possibility of integrating the North Korean economy into the global economy. The North Koreans are actually very rich in natural resources and could be a commodity driven exporter.”


    The U.S is not going to be bullied. It will continue to operate in South Korea with joint military exercises. One by one the North Koreans have come to understand missile technology and it seems like they are within the final steps toward miniaturization of weapons.”


    Expanding on the threat Rickards’ highlighted that, “Kim Jong-un is very dangerous if you consider the submarine technology he is pushing for the country. His ability to launch a submarine based ballistic missile is makes him a very different threat from land based aggression. It is possible to position a submarine to within range of an intermediate ballistic missile attack where it does not have to have intercontinental ballistic technology. This situation is extremely vulnerable and growing.”

    “Because of the threat of North Korea, it could be a catalyst toward market collapse. Stocks are going toward a shock and the market has not priced it in… we could be looking at crisis as soon as next week if both of these risks converge.”

    Switching gears away from the North Korean situation, Rickards’ examined domestic destabilizers. The author of Road to Ruin highlighted the severity of the debt ceiling and what it means for the economy. Rickards went on, “There are two really big, but separate, deadlines converging on September 29th.

    "The first is the debt ceiling. This has to deal with the borrowing authority of the U.S Treasury and to be able to pay the bills of the government.”


    “That authority includes the money to cover social security, medicare, medicaid, military and all of the operations within the budget. Until it is authorized, the Treasury is essentially running on fumes. They are running out of cash. They need Congress to authorize an increase in the debt ceiling so they can borrow money so they can pay for their bills. The problem is that Congress is not functional right now.”


    “The second event converging is the budget. The budget is the authorization of government spending. September 29th, that is the last Friday of the month and the last business day that operates on the fiscal year budget. There are two ways deal with the budget. One, Congress could vote and pass a budget. The other thing that can be done is a continuing resolution (CR) and it is a vote by Congress that agrees to agency spending and delays new spending to a later date.”


    This is important to note because it faces a hard-stop on September 29. The debt ceiling does not have to happen on the same date but because of the lack of Treasury funds it is very likely that by the end of September it could run out of money. That means there are two meteors striking in Washington with the budget and debt ceiling increase. They are both subject to the same malfunctions in Washington. It is not clear that the White House would be afraid of a government shutdown. While the military and essential agency operations will still be functioning, there will be a lot of favorable agency departments that will be shut down.”


    “There will be major outflows demanded of the Treasury due to various entitlement programs by the first of the month for October. That complexity compounds on top of all of the other serious national security issues described. All of this is one more reason why investors should have allocations of gold and to also have cash on hand.”

    Rickards then turned to warn how liquidity can be frozen by governments. The New York Times best-selling author urged that, “In October 1987, the major U.S stock market, and in particular the Dow Jones, fell 22% in one day. That kind of a drop would be 4,000 Dow points. When I explain that move to investors they typically respond that there are measures in place to freeze the market and stop such a loss.

    “My immediate reaction is, which makes you feel more concerned; thousand point drops, or a closed exchange? At least with a significant point drop you can still get out at a price. If you shut the market down, that’s Ice-9. My thesis is that if you shut down one market the demand for liquidity then just moves to another market, requiring another sector shutdown.”

    Speaking on what assets people can invest in to be secure, Rickards left the path forward clear. He urged, “There is a name for a store of value that does not have counterpart risk – it’s called money. People say I have money in the bank, but they really don’t. They have a bank deposit which is an unsecured liability of an unsecured and occasionally insolvent institution. People claim to be nervous if they buy gold, but under such circumstances I would be nervous if I didn’t have any.”

    Find Part 1 and Part 2 of the interview here.

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