Today’s News 17th February 2018

  • Falsehoods And Lies: Inciting War Is A War Crime

    Via The Strategic Culture Foundation,

    The torrent of reckless false accusations against Russia made by the US and its NATO allies is hitting warp speed.

    This week saw more baseless allegations of Russian cyber attacks on American elections and British industries.

    There were also crass claims by US officials that Russia was behind so-called sonic attacks on American diplomats in Cuba.

    Then a Dutch foreign minister was forced to resign after he finally admitted telling lies for the past two years over alleged Russian plans for regional aggression.

    Elsewhere, US Secretary of State Rex Tillerson claimed this week during a tour of the Middle East that “the primary goal” of his nation’s involvement in Syria is “to defeat” Islamic State (Daesh) terrorism.

    This is patently false given that the US forces illegally occupying parts of Syria are launching lethal attacks on Syrian armed forces who are actually fighting Islamic State and their myriad terrorist affiliates.

    Meanwhile, US ambassador to the United Nations Nikki Haley accused Russia of blocking peace efforts in Syria – another audacious falsehood to add to her thick compendium of calumny.

    Perhaps the most barefaced falsehood transpired this week when French President Emmanuel Macron candidly admitted that his government did not have any proof of chemical weapons being used in Syria.

    “Today, our agencies, our armed forces have not established that chemical weapons, as set out in treaties, have been used against the civilian population,” said Macron to media in Paris.

    His admission follows that of US Defense Secretary James Mattis who also fessed up earlier this month to having no evidence of chemical weapons being deployed in Syria.

    “We have other reports from the battlefield from people who claim it’s been used,” said Mattis to reporters at the Pentagon. “We do not have evidence of it.”

    Yet, only a few weeks ago, the French and US government were condemning Syrian President Assad for alleged use of chemical weapons by his forces. France’s Foreign Minister Jean-Yves Le Drian and US Secretary of State Rex Tillerson also accused Russia of bearing responsibility because of its alliance with Damascus.

    But now we are told that the French and US governments do not, in fact, have any evidence concerning chemical weapons in Syria.

    This is in spite of US President Donald Trump unleashing over 50 Tomahawk cruise missiles on the Arab country last April in purported reprisal for the “Syrian regime” dropping chemical munitions on the town of Khan Sheikhoun in Idlib Province on April 4 2o17.

    Macron went on to make the absurd declaration this week that “if” chemical weapons were found to be used then he would order military strikes on Syria.

    Both Syria and Russia have categorically and repeatedly rejected claims of using chemical weapons, pointing out that Syria’s stockpile was eliminated back in 2014 under a UN-brokered deal.

    When Mattis said “we have reports from the battlefield” he was referring to groups like the CIA covertly-sponsored terrorist outfit Al Nusra Front and their media outlet, the so-called White Helmets.

    Western news media footage over the past two weeks seemingly depicting Syrian and Russian air strikes on civilian areas is sourced from the White Helmets. This group is embedded with Al Nusra.

    The same warped narrative claiming Syrian and Russian violations during the liberation of Aleppo from the terrorists at the end of 2016 is being played out again in East Ghouta and Idlib. And again the Western news media are amplifying the dubious propaganda from the likes of the White Helmets as if it is independent, verified information.

    This week in Paris Abdulrahman Almawwas, the so-called vice president of the White Helmets, which also go by the name of Syria Civil Defense, told the Reuters news agency that France and other NATO powers must intervene in Syria.

    “It’s time to take real action and not just talk about red lines,” said Almawwas, who was clearly disappointed after hearing Macron’s admission of no evidence for chemical weapons.

    Tellingly, the White Helmets’ envoy was hosted by senior French government officials while in Paris, including Macron’s chief diplomatic advisor, according to Reuters.

    He also went on to complain – unwittingly – that the White Helmets have received less funding from foreign governments this year compared with last year.

    Reuters reported: “Almawwas said the group’s financing for 2018 from foreign governments [sic] had dropped to $12 million from $18 million a year earlier.”

    According to the White Helmets’ own website, the foreign governments whom they receive financing from include: the United States, Britain, France, Netherlands, Germany, Denmark and Canada, among others.

    In other words, this so-called humanitarian relief organization is a NATO-sponsored entity, which evidently operates freely in areas of Syria controlled by Al Nusra and other internationally proscribed terror groups.

    And this is the same “source” which has been used by the NATO governments and Western news media to disseminate claims about Syrian state forces using chemical weapons against civilians – claims which senior US and French officials are now belatedly negating.

    What we have here is demonstrable peddling of falsehoods and lies by Western governments and their news media.

    Not just with regard to the war in Syria, but on a range of other international incendiary issues, as noted above.

    Accusing Russia of aggression, nuclear threats, sabotaging elections, targeting civilian infrastructure which could  “kill thousands and thousands” (British Defense Minister Gavin Williamson last month), or any number of other wild allegations, is symptomatic of sociopathic lying by Western governments.

    The reckless falsehoods and lies espoused by the US and its European allies are made possible because of the reprehensible servility of Western media not holding to account the wild claims that they willfully disseminate.

    This relentless propagation of lies is an appalling incitement to tensions, conflict and war.

    Engaging in war fever is not only irresponsible. It is in fact a war crime, according to Nuremberg legal standards.

  • Assange Hits Back At The Intercept – Claims "Obsessive And Obscenity-Laden" Campaign Against Him

    Julian Assange hit back at The Intercept over a February 14 article claiming he backed Donald Trump’s presidential campaign in leaked group chats from a disgruntled former WikiLeaks associate who set up the chat room. 

    [I]n the fall of 2015, Trump was polling at less than 30 percent among Republican voters, neck-and-neck with neurosurgeon Ben Carson, and Assange spoke freely about why WikiLeaks wanted Clinton and the Democrats to lose the election.

    We believe it would be much better for GOP to win,” he typed into a private Twitter direct message group to an assortment of WikiLeaks’ most loyal supporters on Twitter. “Dems+Media+liberals woudl then form a block to reign in their worst qualities,” he wrote. “With Hillary in charge, GOP will be pushing for her worst qualities., dems+media+neoliberals will be mute.” He paused for two minutes before adding, “She’s a bright, well connected, sadistic sociopath.” –The Intercept

    In a series of rebuttals over Twitter, Assange notes that The Intercept’s Micah Lee failed to do basic fact checking, such as noting that the WikiLeaks account has a rotating staff (i.e. anyone could have written the controversial messages), and used “messages from late Oct 2016 when I infamously had no internet access.”

     

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    Assange also notes Lee’s long-standing grudge against the WikiLeaks co-founder, which he called “obsessive” and “obscenity laden.” 

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  • America: A Military Nation

    Authored by Jacob Hornberger via The Future of Freedom Foundation,

    Americans like to think of their country as different from those run by military regimes. They are only fooling themselves. Ever since the federal government was converted into a national-security state after World War II (without a constitutional amendment authorizing the conversion), it has been the Pentagon, the CIA, and the NSA that have run the government, just like in countries governed by military dictatorships.

    Oh sure, the façade is maintained – the façade that is ingrained in all of us in civics or government classes in high school and college: that the federal government is composed of three co-equal, independent branches that are in charge of the government.

    But just a façade. It’s fake. It’s a lie.

    It’s true that the federal government used to consist of three branches. But that quaint notion disintegrated when the federal government was converted to what is known as a “national-security state” after World War II. Even though it was done without a constitutional amendment, that conversion effectively added a fourth branch of government to the federal government — the national-security branch, which consists of the NSA, the CIA, and the Pentagon.

    The addition of that fourth branch fundamentally altered the original three-branch concept, especially because the fourth branch quickly became the most powerful branch. The reason is because ultimately government is force, and the fourth branch is where the most force was concentrated within the new, altered governmental structure.

    As law professor Michael Glennon has pointed out in his book National Security and Double Government, the result is a federal government in which the military, the CIA, and the NSA are in charge. They are the ones actually calling the shots. But they permit the other three branches to maintain the façade that they are in charge, including periodically going along with decisions in the other three branches to keep Americans thinking that everything is the same as it always has been.

    Consider the Pentagon’s and the CIA’s torture center, prison, and kangaroo tribunal system at Guantanamo Bay, Cuba. They set that up with the aim of establishing a place to hold people and do whatever they wanted to them, without any judicial interference. Guantanamo was a dream-come-true for the military and the CIA. Like most conservatives, they had long lamented those “constitutional technicalities” that let people go free. If only America stopped coddling criminals, we could finally establish order and stability in our land. Guantanamo was going to be their showcase, their model for the United States and the world for dealing with criminals.

    That model, as we now know, entailed kidnappings, bounties, torture, indefinite detention, no criminal defense attorneys, denial of speedy trial, kangaroo military tribunals, use of hearsay evidence, use of evidence acquired through torture, denial of due process of law, and other violations of long-established criminal-justice procedures that stretch back to Magna Carta in 1215.

    Contrary to what the Pentagon and the CIA and their acolytes within the mainstream press have long maintained, terrorism is a criminal offense, not an act of war. If you don’t believe me, go look up the U.S. Code. That’s where all federal crimes are listed. You’ll see that terrorism is in fact a federal criminal offense.

    Alternatively, go into any federal courtroom in the land where a federal criminal prosecution for terrorism is being held. Ask the judge why he’s hold such a trial. He will tell you that it’s because terrorism is a federal criminal offense.

    The Pentagon-CIA torture-prison-tribunal center in Cuba didn’t change that fact. It simply meant that the CIA and the Pentagon were now getting into the law-enforcement business, which would enable them to punish people they were certain were guilty of terrorism.

    Now, let’s turn to President Obama, the president who vowed to shut down this Pentagon-CIA model torture-prison-military tribunal facility. He made that vow at the very start of his presidency, if not before.

    Obama was a two-term president. That meant 8 years in office. When Obama left office, he still had not fulfilled his vow. The Pentagon-CIA torture, indefinite detention, and kangaroo center at Guantanamo was still open. It still is.

    The reaction of Obama supporters and the mainstream press? “Oh, poor President Obama. He meant well. He really wanted to shut down Guantanamo. He just wasn’t able to pull it off before his 8-year term ended.”

    What?

    Hey, this guy was commander-in-chief. No, not of the American people but of the federal government’s military and para-military forces. That means that he is supposedly the head honcho. As such, he gives the orders to everyone below him. In a military structure, the superior officer gives the orders and the subordinate officers obey and carry out the orders.

    That means that all that President Obama, as commander in chief, had to do was issue an order to his military subordinates: “Close it down. Now!”

    But that’s not what happened. The Pentagon and the CIA obviously would not let Obama issue that order. And he understood that if he did, it was a virtual certainty that they wouldn’t have obeyed it.

    Then what?

    Some Obama supporters say it was all Congress’s fault because Congress passed a law that forbade the president from bringing any Gitmo prisoners to the continental United States.

    But Obama is president. He could have vetoed that law. And even if the veto was overridden, he didn’t have to bring any prisoners to the United States. As commander-in-chief of the military and the CIA, he could have simply said, “Close it down and release them all.”

    After all, that’s how our regular constitutional system — the one whose principles the CIA and the Pentagon rejected — works. Government officials have to charge a person with a crime and try him within a reasonable period of time or they are required to release him.

    The real question is: Why was Congress so intent on keeping Gitmo open, over the president’s objections? After all, keeping a U.S. kidnapping-detention-torture-kangaroo tribunal center in place in a foreign country, over the president’s vehement objections, is not the type of thing that we would ordinarily expect from the elected representatives of the American people.

    There is only one explanation that makes sense: That the national-security establishment told Congress that it wanted Gitmo to be kept open. We know that the CIA has assets in the mainstream press. We know they have assets in state and local governments, including police departments. It would stand to reason they would have assets in Congress, ones that they can call upon whenever necessary to protect the interests of the Pentagon, CIA, and NSA.

    And there is also the matter of military bases, programs, and projects in the district of every member of Congress. Congressmen knew what would happen to them if they bucked the Pentagon and the CIA on Guantanamo. All that the Pentagon would have to do is announce a closure of major military bases or other facilities in that Congressman’s district. Immediately, the press would denounce him as an “ineffective congressman,” one who was incapable of bringing home the political bacon to his district.

    What about the Supreme Court? Early on, they rejected the Pentagon’s arguments that they had no jurisdiction over Guantanamo. The Court held it did and said that the federal courts would entertain habeas corpus cases brought by Gitmo prisoners. The Pentagon acceded to the ruling but it was all part of the façade.

    After all, given that there is no constitutional authorization for the federal government to have a bifurcated judicial system — one run by the federal courts and the other run by the military — the Court should have ordered an immediate closure of the facility and a termination of the kangaroo judicial system that the Pentagon and the CIA established.

    Instead, unwilling to cross any red lines when it came to the national-security branch of the government, the Supreme Court has left Gitmo standing. That’s why dozens of prisoners have been held there for more than 10 years without trial and without the hope of a trial, much less a fair one.

    Look at the people who surround President Trump: U.S. “Defense” Secretary: A general. National Security Council advisor: A general. Trump’s chief of staff: a general.

    Think about those flyovers and all other glorification of the military and U.S. sporting events and in U.S. airports and churches and most everywhere else. Think about how so many Americans profusely thank the troops for protecting our rights and freedoms by killing people abroad who aren’t threatening our rights and freedoms. Think about how Trump wants to have “patriotic” military parades, which would undoubtedly feature the latest missiles, rifles, tanks, and planes.

    Remember President Trump before the election? He was criticizing the Pentagon’s forever wars in Afghanistan and the Middle East. He was criticizing NATO and the UN. He was fighting a political war against the CIA. He was all for making friends with Russia.

    Today? Trump is expanding the Pentagon’s forever wars. He let the CIA continue its decades-long secrets in the JFK assassination. He’s extolling NATO. And he’s imposing sanctions on Russia. Trump has been absorbed into the national-security establishment blob.

    Consider Egypt or, for that matter, Chile under Pinochet. In Egypt, the military-intelligence establishment runs the government. Same for Chile under Pinochet. America’s system is not much different, at least not in principle. The only difference is that in Egypt, the military-intelligence role is overt, just like it was in Chile. Here in the United States, the role is more disguised, with the legislative, executive, and judicial branches being permitted to have a fig leaf of ostensible control.

    Welcome to America, one of the world’s premier military nations.

  • "Highly Unusual" Enriched Uranium Particle Detected Over Alaska

    Scientists found a “highly unusual” particle containing enriched uranium-235 during a routine sampling of the air above the Aleutian Islands in August 2016. The source of the material, typically used in nuclear fuel and bombs, remains unclear – while the particle itself is unique in that it’s the first of its kind to be detected in 20 years of plane-based observations. 

    While uranium normally occurs in the ground as the moderately radioactive isotope U-238 – and typically not floating in the air, it must be refined using various methods – typically centrifuges, in order to produce U-235. Particles containing 3-4% U-235 are considered “low enriched” for civilian reactors, while anything north of 90% is considered “weapons grade.” 

    During 20 years of aircraft sampling of millions of particles in the global atmosphere, we have rarely encountered a particle with a similarly high content of 238U [uranium-238] and never a particle with enriched 235U [uranium-235],” reads an abstract from the study. 

    The mystery particle – the bulk of which consisted of “material consistent with combustion of heavy fuel oil” and a “very small amount of enriched uranium” was discovered at an altitude of 7km (4.3 miles) – lower than Mount Everest.

    Researchers involved in the joint project between NOAA ESRL Chemical Sciences Division, the Norwegian Institute for Air Research, and UC Irvine say they were making no special attempts to sample radioactive material during the routine flight to sample the atmosphere.

    “One of the main motivations of this paper is to see if somebody who knows more about uranium than any of us would understand the source of the particle,” scientist Dan Murphy from NOAA told Gizmodo reporter Ryan F. Mandelbaum. After all, “aerosol particles containing uranium enriched in uranium-235 are definitely not from a natural source,” he writes in the paper, published recently in the Journal of Environmental Radioactivity.

    They were not intending to look for radioactive elements. “The purpose of the field campaign was to obtain some of the first global cross-sections of the concentration of trace gases and of dust, smoke, and other particles in the remote troposphere over the Pacific and Atlantic Oceans,” according to the paper. –Gizmodo

    The precise origin of the radioactive particle remains a mystery, however the abstract suggests it could have originated “from a variety of areas across Asia,” and researchers are noting its existence “in case it indicates a novel source where enriched uranium was dispersed.” 

    “It’s not a significant amount of radioactive debris by itself,” said Dan Murphy of NOAA. “But it’s the implication that there’s some very small source of uranium that we don’t understand.

    But where the particle came from is a mystery. It’s pretty clear it came from recently made reactor-grade uranium, the authors write (aka, not from Fukushima or Chernobyl). Perhaps from burnt fuel contaminated with uranium, they thought. They tried to trace it to a source using the direction of the wind—but their best estimate pointed vaguely to Asia. Higher probability areas include some parts of China, including its border with North Korea, and parts of Japan. –Gizmodo

    The NOAA scientists are hoping that other experts in the field will chime in with an answer. “We’re hoping that someone in a field that’s not intimately associated with atmospheric chemistry can say ‘a-ha!’ and give us a call.”

  • Mueller Indicts 13 Russians For Interfering In US Election

    Shortly after noon on Friday, U.S. Special Counsel Robert Mueller announced an indictment of 13 Russian nationals and three Russian entities, accusing them of interfering in the 2016 presidential election and operating fake social media accounts.

    In the indictment announced on Friday – the first criminal case to accuse Russians of seeking to influence the outcome of the U.S. election and support Donald Trump – Mueller describes a sweeping, years-long, multimillion-dollar conspiracy by hundreds of Russians aimed at criticizing Hillary Clinton and supporting Senator Bernie Sanders and Trump. He charged 13 Russian nationals and three Russian entities and accused them of defrauding the U.S. government by interfering with the political process.

    Mueller charges “defendants knowingly and intentionally conspired with each other (and with persons known and unknown to  the Grand Jury) to defraud the United States by impairing, obstructing, and defeating the lawful functions of the government through fraud and deceit for the purpose of interfering with the U.S. political and electoral processes, including the presidential election of 2016.”

    The indictment adds that the Russians “were instructed to post content that focused on ‘politics in the USA’ and to ‘use any opportunity to criticize Hillary and the rest (except Sanders and Trump—we support them)’.”

    It gets better: the defendants reportedly worked day and night shifts to pump out messages, controlling pages targeting a range of issues, including immigration, Black Lives Matter, and they amassed hundreds of thousands of followers. They set up and used servers inside the U.S. to mask the Russian origin of the accounts.

    Ultimately, and this is the punchline, the goal was to disparage Hillary Clinton and to assist the election of Donald Trump.

    In other words, anyone who was disparaging Clinton, may have “unwittingly” been a collaborator of the 13 Russian “specialists” who cost Hillary the election.

    The Russian organization named in the indictment – the Internet Research Agency – and the defendants began working in 2014 so one year before the Trump candidacy was even announced – to interfere in U.S. elections, according to the indictment in Washington. They used false personas and social media while also staging political rallies and communicating with “unwitting individuals” associated with the Trump campaign, it said.

    The Russians “had a strategic goal to sow discord in the U.S. political system,” according to the indictment in Washington.

    The Russians also reportedly bought advertisements on U.S. social media, created numerous Twitter accounts designed to appear as if they were U.S. groups or people, according to the indictment. One fake account, @TEN_GOP account, attracted more than 100,000 online followers.

    The Russians tracked the metrics of their effort in reports and budgeted for their efforts. Some, as described below, traveled to the U.S. to gather intelligence for the surreptitious campaign. They used stolen U.S. identities, including fake driver’s licenses, and contacted news media outlets to promote their activities.

    The full list of named defendants in addition to the Internet Research Agency, as well as Concord Management and Consulting and Concord Catering, include:

    • MIKHAIL IVANOVICH BYSTROV,
    • MIKHAIL LEONIDOVICH BURCHIK,
    • ALEKSANDRA YURYEVNA KRYLOVA,
    • ANNA VLADISLAVOVNA BOGACHEVA,
    • SERGEY PAVLOVICH POLOZOV,
    • MARIA ANATOLYEVNA BOVDA,
    • ROBERT SERGEYEVICH BOVDA,
    • DZHEYKHUN NASIMI OGLY ASLANOV,
    • VADIM VLADIMIROVICH PODKOPAEV,
    • GLEB IGOREVICH VASILCHENKO,
    • IRINA VIKTOROVNA KAVERZINA,
    • VLADIMIR VENKOV
    • YEVGENIY VIKTOROVICH PRIGOZHIN

    Mueller’s office said that none of the defendants was in custody.

    So how is Trump involved? Well, he isn’t, as it now seems that collusion narrative is dead, and instead Russian involvement was unilateral. Instead, according to the indictment, the Russian operations were unsolicited and pro bono, and included “supporting Trump… and disparaging Hillary Clinton,’ staging political rallies, buying political advertising while posing as grassroots U.S. groups. Oh, and communicating “with unwitting individuals associated with the Trump Campaign and with other political activists to seek to coordinate political activities.

    Defendant ORGANIZATION had a strategic goal to sow discord in the U.S. political system, including the 2016 U.S. presidential election. Defendants posted derogatory information about a number of candidates, and by early to mid-2016, Defendants’ operations included supporting the presidential campaign of then-candidate Donald J. Trump (“Trump Campaign”) and disparaging Hillary Clinton. Defendants made various expenditures to carry out those activities, including buying political advertisements on social media in the names of U.S. persons and entities. Defendants also staged political rallies inside the United States, and while posing as U.S. grassroots entities and U.S. persons, and without revealing their Russian identities and ORGANIZATION affiliation, solicited and compensated real U.S. persons to promote or disparage candidates. Some Defendants, posing as U.S. persons and without revealing their Russian association, communicated with unwitting individuals associated with the Trump Campaign and with other political activists to seek to coordinate political activities.

    Furthermore, the dastardly Russians created fake accounts to pretend they are Americans:

    Defendants, posing as U.S. persons and creating false U.S. personas, operated social media pages and groups designed to attract U.S. audiences. These groups and pages, which addressed divisive U.S. political and social issues, falsely claimed to be controlled by U.S. activists when, in fact, they were controlled by Defendants. Defendants also used the stolen identities of real U.S. persons to post on ORGANIZATION-controlled social media accounts. Over time, these social media accounts became Defendants’ means to reach significant numbers of Americans for purposes of interfering with the U.S. political system, including the presidential election of 2016

    Mueller also alleges a combination of traditional and modern espionage…

    Certain Defendants traveled to the United States under false pretenses for the purpose of collecting intelligence to inform Defendants’ operations. Defendants also procured and used computer infrastructure, based partly in the United States, to hide the Russian origin of their activities and to avoid detection by U.S. regulators and law enforcement.

    Mueller also charges that two of the defendants received US visas and from approximately June 4, 2014 through June 26, 2014, KRYLOVA and BOGACHEVA “traveled in and around the United States, including stops in Nevada, California, New Mexico, Colorado, Illinois, Michigan, Louisiana, Texas, and New York to gather intelligence, After the trip, KRYLOVA and BURCHIK exchanged an intelligence report regarding the trip.”

    * * *

    The indictment points to a broader conspiracy beyond the pages of the indictment, saying the grand jury has heard about other people with whom the Russians allegedly conspired in their efforts.

    Stocks are not happy.

    Stocks

     

    Rosenstein is expected to hold a briefing at 1:30pm ET. Watch it live below:

    Read the indictment below (link):

  • Playboy Model Details 9 Month Covert Affair With Trump: New Yorker

    In a bombshell New Yorker report from Ronan Farrow, who was the first reporter to expose Democratic donor Harvey Weinstein for his decades-long history of sexual assault, Karen McDougal, a former Playboy Model who first met President Trump in 2006 during a pool party at the Playboy mansion, shared details about her alleged relationship with the president, and his relationship with National Enquirer owner David Pecker (and holding company American Media Inc), a longtime “personal friend” who once reportedly paid her $150,000 for the exclusive rights to her story, only to let it never see the light of day.

    In the world of tabloid journalism, this process is called “catch and kill“. Though McDougal’s story was first reported in 2016 by the Wall Street Journal, Farrow’s account is the first time she’s shared her story – which she “corroborated with an eight-page handwritten account taken at the time of the affair” – in full detail.

    McDougal

    The two first met after a taping of Trump’s show, the Apprentice, at the Playboy mansion. Trump was reportedly “all over her” and one of the show’s producers even remarked “you could be his next wife.” According to the New Yorker, McDougal kept handwritten notes about the affair, which she said began in 2006, after the taping of “The Apprentice” episode.

    Over a period of nine months, Trump ferried her to meet him both in LA and around the country, taking care not to leave a paper trail. During their meetings, McDougal said she would first be led to meet Trump by Keith Schiller, his former bodyguard.

    Pecker’s relationship with Trump is an advantageous one for him, because Pecker is likely one of the few people who knows where “all the bodies are buried” for the most powerful man in the world. Trump has denied the affair.

    McDougal, in her first on-the-record comments about A.M.I.’s handling of her story, declined to discuss the details of her relationship with Trump, for fear of violating the agreement she reached with the company. She did say, however, that she regretted signing the contract. “It took my rights away,” McDougal told me. “At this point I feel I can’t talk about anything without getting into trouble, because I don’t know what I’m allowed to talk about. I’m afraid to even mention his name.”

    A White House spokesperson said in a statement that Trump denies having had an affair with McDougal:

    “This is an old story that is just more fake news. The President says he never had a relationship with McDougal.”

    American Media said that an amendment to McDougal’s contract—signed after Trump won the election—allowed her to “respond to legitimate press inquiries” regarding the affair. The company said that it did not print the story because it did not find it credible.

    Six former A.M.I. employees told me that Pecker routinely makes catch-and-kill arrangements like the one reached with McDougal. “We had stories and we bought them knowing full well they were never going to run,” Jerry George, a former A.M.I. senior editor who worked at the company for more than twenty-five years, told me. George said that Pecker protected Trump. “Pecker really considered him a friend,” George told me. “We never printed a word about Trump without his approval.” Maxine Page, who worked at A.M.I. on and off from 2002 to 2012, including as an executive editor at one of the company’s Web sites, said that Pecker also used the unpublished stories as “leverage” over some celebrities in order to pressure them to pose for his magazines or feed him stories. Several former employees said that these celebrities included Arnold Schwarzenegger, as reported by the Los Angeles Times, and Tiger Woods. (Schwarzenegger, through an attorney, denied this claim. Woods did not respond to requests for comment.) “Even though they’re just tabloids, just rags, it’s still a cause of concern,” Page said. “In theory, you would think that Trump has all the power in that relationship, but in fact Pecker has the power – he has the power to run these stories. He knows where the bodies are buried.”

    While there’s no evidence Pecker has ever used his leverage over Trump, several of his former employees said he would often use “killed” stories as leverage to get celebrities like Tiger Woods to feed him stories.

    During their relationship, McDougal noted that Trump would always order the same meal (steak and potatoes with no alcohol) and that he often would send her press clippings about himself or his children. McDougal’s account shared some amusing similarities with an account of an affair with Trump offered by former adult film actress Stormy Daniels. For instance, both Daniels and McDougal said Trump watched Discovery Channel’s “Shark Week” programming with them. Daniels famously revealed that Trump told her he hates sharks.

    After their first sexual encounter, McDougal said Trump offered to pay her – to which she declined.

    As the pool party at the Playboy Mansion came to an end, Trump asked for McDougal’s telephone number. For McDougal, who grew up in a small town in Michigan and worked as a preschool teacher before beginning her modelling career, such advances were not unusual. John Crawford, McDougal’s friend, who also helped broker her deal with A.M.I., said that Trump was “another powerful guy hitting on her, a gal who’s paid to be at work.” Trump and McDougal began talking frequently on the phone, and soon had what McDougal described as their first date: dinner in a private bungalow at the Beverly Hills Hotel. McDougal wrote that Trump impressed her. “I was so nervous! I was into his intelligence + charm. Such a polite man,” she wrote. “We talked for a couple hours – then, it was “ON”! We got naked + had sex.” As McDougal was getting dressed to leave, Trump did something that surprised her. “He offered me money,” she wrote. “I looked at him (+ felt sad) + said, ‘No thanks – I’m not ‘that girl.’ I slept w/you because I like you – NOT for money’ – He told me ‘you are special.’

    The New Yorker also described the elaborate system that was created to conceal Trump’s alleged affair:

    Afterward, McDougal wrote, she “went to see him every time he was in LA (which was a lot).” Trump, she said, always stayed in the same bungalow at the Beverly Hills Hotel and ordered the same meal—steak and mashed potatoes—and never drank. McDougal’s account is consistent with other descriptions of Trump’s behavior. Last month, In Touch Weekly published an interview conducted in 2011 with Stephanie Clifford in which she revealed that during a relationship with Trump she met him for dinner at a bungalow at the Beverly Hills Hotel, where Trump insisted they watch “Shark Week” on the Discovery Channel. Summer Zervos, a former contestant on “The Apprentice,” alleged that Trump assaulted her at a private dinner meeting, in December of 2007, at a bungalow at the Beverly Hills Hotel. Trump, Zervos has claimed, kissed her, groped her breast, and suggested that they lie down to “watch some telly-telly.” After Zervos rebuffed Trump’s advances, she said that he “began thrusting his genitals” against her. (Zervos recently sued Trump for defamation after he denied her account.) All three women say that they were escorted to a bungalow at the hotel by a Trump bodyguard, whom two of the women have identified as Keith Schiller. After Trump was elected, Schiller was appointed director of Oval Office Operations and deputy assistant to the President. Last September, John Kelly, acting as the new chief of staff, removed Schiller from the White House posts. (Schiller did not respond to a request for comment.)

    Over the course of the affair, Trump flew McDougal to public events across the country but hid the fact that he paid for her travel. “No paper trails for him,” she wrote. “In fact, every time I flew to meet him, I booked/paid for flight + hotel + he reimbursed me.” In July, 2006, McDougal joined Trump at the American Century Celebrity Golf Championship, at the Edgewood Resort, on Lake Tahoe. At a party there, she and Trump sat in a booth with the New Orleans Saints quarterback Drew Brees, and Trump told her that Brees had recognized her, remarking, “Baby, you’re popular.” (Brees, through a spokesman, denied meeting Trump or McDougal at the event.) At another California golf event, Trump told McDougal that Tiger Woods had asked who she was. Trump, she recalled, warned her “to stay away from that one, LOL.”

    Trump promised to buy McDougal a condo – which he never did – and also introduced her to members of his family.

    McDougal, who had earlier kept quiet for fear of reprisal, said she ended the affair in April 2007 because she felt “tremendously guilty” (though Trump had revealed to her that he and his wife Melania maintained separate bedrooms).

    McDougal ended the relationship in April, 2007, after nine months. According to Crawford, the breakup was prompted in part by McDougal’s feelings of guilt. “She couldn’t look at herself in the mirror anymore,” Crawford said. “And she was concerned about what her mother thought of her.” The decision was reinforced by a series of comments Trump made that McDougal found disrespectful, according to several of her friends. When she raised her concern about her mother’s disapproval to Trump, he replied, “What, that old hag?” (McDougal, hurt, pointed out that Trump and her mother were close in age.) On the night of the Miss Universe pageant McDougal attended, McDougal and a friend rode with Trump in his limousine and the friend mentioned a relationship she had had with an African-American man. According to multiple sources, Trump remarked that the friend liked “the big black dick” and began commenting on her attractiveness and breast size. The interactions angered the friend and deeply offended McDougal.

    Speaking carefully for fear of legal reprisal, McDougal responded to questions about whether she felt guilty about the affair, as her friends suggested, by saying that she had found God in the last several years and regretted parts of her past. “This is a new me,” she told me. “If I could go back and do a lot of things differently, I definitely would.”

    Trump also hooked up with McDougal at the Lake Tahoe golf tournament in 2006 where he also met Daniels. While McDougal said she voluntarily sold her story to the Enquirer, she insists that the way the deal was done was “exploitative.”

    She sold the story during the 2016 presidential election, after a friend suggested it, and brokered the transaction – though she was fearful of going public for fear that Trump’s supporters might harass her. McDougal says she is a Republican. She signed her agreement with the Enquirer on Aug. 5, 2016, about a month before the infamous “Access Hollywood” tape broke, and while Daniels was also trying to negotiate selling her story to “Good Morning America” and Slate.

  • Trump Is Disposable, He's The Doorman – "The Deep State Runs The Show"

    Authored by Jeff Thomas via InternationalMan.com,

    Picture this: A tribal leader from a distant country visits the US. He’s brought to a large apartment building in New York City. When he gets out of the car, he looks up at the great building and is quite impressed. A uniformed doorman exits the foyer and comes out on the sidewalk. The tribesman sees the gold braiding and brass buttons of his coat and immediately decides that this is a very important person. Again he looks up at the building and says to the doorman, “This is a very great home you have. You must be very important indeed.”

    Of course, if we were present, we might chuckle at the tribesman’s naiveté. The owners of such a great building would never greet people at the entrance. They leave such trivial tasks to hired servants, whilst they run the real business without ever needing any direct contact with visitors as they enter the building. And, in addition, doormen come and go – they are, after all, disposable. The owners – those who control what happens in the building – retain their positions over the long term… and may remain anonymous, if they so choose.

    We find this simple concept easy enough to understand, and yet we chronically have difficulty in understanding that, in most countries, the president, or prime minister, is not by any means the man who makes the big decisions in the running of the country.

    We assume that, because we were allowed to vote for our leader, he must actually be our leader. But, as Mark Twain has at times been credited as saying, “If voting made any difference, they wouldn’t let us do it.”

    Similarly, the man whose family took over the financing of Europe, Meyer Rothschild, said, “Permit me to issue and control the money of a nation and I care not who makes its laws.” His family has been calling the shots for centuries, but like the owners of the apartment building, they keep a low profile.

    Remarkably, most people will nod their heads at the above quotes, yet somehow still imagine their elected leader to be in charge.

    Most anyone will accept that the voting system in their country has been corrupted in one way or another and it’s even more likely that they’ll acknowledge that the central banks control the flow of money. Yet, they persist in believing that, even if elections are financed by the big banks, the military industrial complex, Big Pharma, etc., somehow, those who are elected remain loyal to the voters, not to those who paid for their election.

    And, they imagine these elected members to be running the show.

    Further, whilst they often acknowledge that the political party that they oppose is bought and paid for, they prefer to think that the one they favour is not.

    At this point, both the EU and the US are run by the Deep State. In Europe it’s a bit more obvious, as the EU is a visible, unelected body that holds sway over all of the most significant developments in Europe.

    In the US, it’s a bit less obvious, but it’s generally understood that the CIA, FBI and other similar organisations run independently of the president. (He has the power to fire a Director, but does not have the power to eliminate these organisations or change their agenda.)

    The US is run as a corporatist body – joint rule by big business and the state.

    The elected members are, like doormen, temporary. They are, of course, highly visible, which they’re intended to be, as they’re meant to distract the public eye away from those who are truly in charge.

    And, like doormen, they’re disposable. They can be unelected at four-year intervals and the agenda continues as planned. They are, in fact, largely irrelevant to the direction that the country takes.

    The president in particular falls into this category. There have been quite a few presidents, such as the present one, who rose to that post with little or no previous experience in elected office. Their election is a result of popularity. If they do a better job of creating campaign-promises than their opponents, they emerge as the winners, even if they have no political ties, associations with other legislators, or previous experience in the job.

    And yet, we somehow assume that those who really pull the strings would spend hundreds of millions of dollars on elections, then tolerate a newly-elected outsider to wash away their investment by actually taking charge.

    To be sure, there have been presidents who have bucked the Deep State, but they tend to change their tune rather quickly and get back into line. Those who have refused have sometimes found themselves on the business end of a bullet, although, more recently, the preferred tactic has been to invent accusations of corruption and indecency, then to produce questionable witnesses to discredit the leader. (A leader who has been forced out in disgrace is just as gone as one that’s been assassinated.)

    But, almost invariably, the “leader” sees that it’s in his interest to cave in to the Deep State, as, perennially, they hold the real power. Campaign promises are tossed into the dustbin and it’s back to the previous, ongoing agenda. This we’ve witnessed time after time.

    Does this mean that the president is only a mouthpiece for the Deep State? Well, no, it’s actually advantageous for him to express his own opinions, ruffle the public’s feathers and push his pet projects. It adds to the distraction that he’s in charge. However, the larger issues – particularly the flow of tax dollars into the pockets of corporations, continue exactly as planned, regardless of who’s in office.  Bankers continue to receive absurdly large bailouts when they’ve grossly mismanaged their banks. The military industrial complex continues to enjoy perpetual warfare, so that they can supply armaments to the government for unnecessary conflicts. Big Pharma enjoys legislation that forces people to be vaccinated against their will and accept outrageously high prices for medications that are generally inexpensive to produce.

    But, yes, as long as a president remains the spokesman to explain why such policies are not only tolerable, but essential, he may be allowed to occupy the oval office until the voters tire of him.

    But, if this is true, why do people so quickly and so readily accept the “leader” to actually be unilaterally responsible for every facet of every governmental policy and action?

    Well actually, nothing could be easier. It’s human nature to want to put a face to our praise and/or criticism. We can’t muster the same focus if we’re advised that we’re being ruled by a faceless group. We tend to respond more readily and more intensely to a single individual – a face we can conjure up immediately. “People desire certainty,” Doug Casey once observed to me, when discussing a related subject, and that’s exactly so. If we’re uncertain during troubled times, we’ll instantly jump at the opportunity to put a single face to the problem, to blame one individual for whatever is troubling us.

    This is evidenced by the presentation of photos of Lee Harvey Oswald and Osama bin Laden, mere hours after major events, as the certain culprits. They were immediately accepted, without any question, by a people desperately seeking certainty.

    Therefore, as soon as one leader is out and another takes his place, we’re able to immediately transfer our devotion or hatred to the replacement.

    The concept of providing a single face to the public is one that was understood by George Orwell, who created the character of “Big Brother,” who would be on the video screens incessantly, as the face of the government.

    But, in stating all of the above, it may seem that I’ve portrayed the doorman as insignificant and this is not the case. He does play quite an important role.

    He’s absolutely essential, as he, more than any other legislator, creates a suitable distraction from those who really run the show. He’s in front of the microphone, does interviews, is filmed almost on a daily basis, and is constantly credited by the media as being either the saviour or the devil, depending upon which media outlet is providing the portrayal.

    And the shakier an economy, and the greater the problems of a country, the more essential it is that the “leader” be visible. After all, when things go badly awry, someone has to serve as the fall guy.

    When this occurs, he is, of course, disposable. He leaves in disgrace or is voted out and a new puppet is voted in whose loyalty is again to the Deep State, not to the voters. And, most importantly, the real agenda continues, as planned, regardless of whatever new campaign promises got him elected.

    (This is not at all new. In 1933, Franklin Roosevelt introduced the Emergency Banking Act the day after his inauguration speech, in which he had assured the country that he would not mess with the currency.)

    Campaign promises are dumped wholesale; the demeanour of the new leader may change dramatically, and the new leader’s very principles may suddenly evaporate after election day. However, the ongoing agenda does not. Regardless of who’s elected, or what party he professes to represent, we witness a continuation of the previous directions taken by those who truly hold the power.

    What’s important to recognize is that, no matter how large the apartment building may be, no matter how impressive the presentation of the doorman may be, he is just that. He is only the front man, and he is disposable.

    The Deep State runs the show. Their presence is permanent and their agenda is both ongoing and impervious to the whims of the voting public.

    *  *  *

    The Deep State’s quiet control on the US financial system has pushed it to the brink. Find out how to protect yourself in our Guide to Surviving and Thriving During an Economic Collapse. Click here to download your free PDF copy now.

  • Deutsche: "Nobody Can Understand What's Going On With The Dollar… The Answer Is Simple"

    Earlier this week, the bizarre, unexplainable, ongoing plunge in the dollar and US bond prices in the aftermath of the stronger than expected CPI print which also sent equities surging, prompted at least one trader at Citi to explode: “Wake Up Folks, It’s Not Risk Positive

    Then again, maybe it is not all that unexplainable.

    As Deutsche’s FX strategist, George Saravelos, writes, he has been getting numerous inquiries as to how can it be that US yields are rising sharply, yet the dollar is so weak at the same time?

    He believes the answer is simple: the dollar is not going down despite higher yields but because of them. Higher yields mean lower bond prices and US bonds are lower because investors don’t want to buy them, or as he puts it “this is an  entirely different regime to previous years.”

    Below we repost his simple explanation, while highlighting that maybe…

    … just maybe, the bottom for the dollar is now in?

    From Deutsche Bank:

    Blame the dollar on yields

    We are well into 2018 and our feedback from recently attending the TradeTech FX conference in Miami is that the market is still struggling to understand or embrace dollar weakness. How can it be that US yields are rising sharply, yet the dollar is so weak at the same time? The answer is simple: the dollar is not going down despite higher yields but because of them. Higher yields mean lower bond prices and US bonds are lower because investors don’t want to buy them. This is an entirely different regime to previous years.

    Dollar weakness ultimately goes back to two major problems for the greenback this year. First, US asset valuations are extremely stretched. As we argued in our 2018 FX outlook a combined measure of P/E ratios for equities and term premia for bonds is at its highest levels since the 1960s. Simply put, US bond and equity prices cannot continue going up at the same time. This correlation breakdown is structurally bearish for the dollar because it inhibits sustained inflows into US bond and equity markets.

    The second dollar problem is that irrespective of asset valuations the US twin deficit (the sum of the current account and fiscal balance) is set to deteriorate dramatically in coming years. Not only does the additional fiscal stimulus recently agreed by Congress push the fair value of bonds even lower via higher issuance and inflation risk premia effects, but the current account that also needs to be financed will widen via import multiplier effects. When an economy is stimulated at full employment the only way to absorb domestic demand is higher imports.  Under conservative assumptions the US twin deficit is set to deteriorate by well over 3% of GDP over the next two years.

    The mirror image to all of this is that the flow picture into both Europe and Japan has been improving dramatically anyway. We have previously written about the positive flow dynamics in Europe as the flow distortions caused by extremely unconventional ECB policy are starting to adjust. But the Japanese basic balance has also shot up to a 4% surplus in recent years helped by a big improvement in the services balance (Chinese tourists) and a collapse of Japanese inflows into the US: treasuries simply do not provide enough duration compensation any more. To conclude, embrace dollar weakness, it has more to run.

  • Peter Thiel "Makes A Killing" With Massive Vol-Spike Bet

    While Thiel is best known for venture investments like those in Facebook and PayPal,  Bloomberg writes that it was his macro strategy that positioned him to make a killing on last week’s spike in market volatility.

    Outspoken Silicon Valley billionaire Peter Thiel was along for the ride in the world’s great short-volatility trade with a $404 million bet as recently as the end of 2014.

    But in the latest filings from Thiel Macro, it appears Thiel changed his mind in the latter half of last year and reversed his position into a massive bet on volatility jumping…

    While he maintained a small $6.5mm VXX Put position (short-volatility bet), he added a massive $244mm SVXY Put position (long-volatility bet).

    If you’re wondering why Thiel’s sudden change of heart, perhaps this will explain it.

    The following, recorded secretly from EqDerivatives Conference in May 2017, exposes Chris Cole of Artemis and Mike Green of Thiel Macro arguing with XIV-creator Nick Cherney, specifically about the Termination Event in XIV.

    The action starts in the Q&A session after the anti-short-volatility keynote by Cole and Green (move forward to around 37-38mins on for a heated argument!!!!)

    https://platform.twitter.com/widgets.js

    Cherney insults them for being (correctly) anti-XIV… and Cole and Green pretty much eviscerate his logic, XIV, and the entire short-vol trade, and explain to him why his own product is doomed to fail.

    It seems they were right… and Thiel Macro made a killing!!

    As Bloomberg reports, the options, which entitle the holder to sell the underlying shares at a set price in the future, increase in value when those underlying shares decline. Thiel Macro still held the put options on 1.9 million shares of the ETF as of Dec. 31, according to the filing. The face value of those shares was $244 million.

    After closing at $121.67 a share on Feb. 1, the ETF collapsed in the ensuing days, hitting a low of $9.58 a week later. The shares covered by Thiel’s put options lost about $213 million of market value during that week.

    It is unknown at what strike these options were bought, but no matter, if Thiel held onto the options, his gains would equal some portion of the $213 million decline.

    For a sense of context, at-the-money SVXY Puts from mid Q4 exploded in price from around $9 to $108 in the last two weeks… a 1000% gain!!!

    Of course, we await another article akin to The Guardian’s from last week, “Making millions from chaos: the fund cashing in on the stock market collapse” villifying those who dared not be all-in, levered long to the US stock market.

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Today’s News 16th February 2018

  • Solar Storm Will Strike Earth Tonight, "Weak Power Grid Fluctuations" Possible

    Authored by Mac Slavo via SHTFplan.com,

    The NOAA Space Weather Prediction Center forecasts an aurora could light up the sky above areas in the United State including Michigan and Maine.  A solar storm, which occurred Monday, is expected to strike Earth tonight.

    On Monday, the sun spit out a slew of charged particles in a moderate solar flare. These particles are now making their way towards Earth. The planet’s magnetic field will block most of the particles, but some will make it into Earth’s atmosphere. The particles collect at the north and south poles and interact with atmospheric gases to create the aurora borealis or the Northern Lights. And some say this show could be quite spectacular.

    Solar flares have been known to cause power grid failures, but it looks like we’ll only get the light show this time. Although a grid failure is possible, it is unlikely.

    According to Seeker, the forecast calls for a high probability of a G-1 or “minor” storm, which could strengthen to a G-2 or “moderate” storm depending on how the stream of particles hit the Earth. Geomagnetic storms are ranked on a scale, with G at the bottom, R in the middle, and S as the most severe. Forecasts now say the particles will give our planet a glancing blow.

    Although this storm has been categorized as “G-1,” which means it is minor, it could still cause some havoc down on Earth. Solar flares and particle ejections are associated with sunspots — dark areas on the sun’s surface — that host intense magnetic activity. As the magnetic fields in a sunspot cross, NASA stated, this can cause a sudden energy explosion, also known as a solar flare. This sends radiation out into space, and that radiation can be hurled toward the Earth.

    G1-level storms, such as Monday’s, may affect migratory animals, and can cause “weak power grid fluctuations.”

    The barrage of particles may even have a minor impact on satellites.  A gird failure would almost immediately fling the United States into a state of panic, and it’s always good to be prepared just in case. But it doesn’t look like there will be any serious damage to the power grid because of this storm as of right now.

  • Visualizing The The Rising Speed Of Technological Adoption

    Technological progress is not the only thing rising at an exponential rate.

    Visual Capitalists’s Jeff Desjrdins points out that the rate at which newly commercialized technologies get adopted by consumers is also getting faster, too.

    In the modern world, through increased connectivity, instant communication, and established infrastructure systems, new ideas and products can spread at speeds never seen before – and this enables a new product to get in the hands of consumers in the blink of an eye.

    VISUALIZING TECHNOLOGICAL ADOPTION

    Today’s dynamic chart comes to us from Our World in Data, and it allows you to compare the adoption rates of new technologies over the period of more than a century.

    In addition to the technologies you’ll find embedded on the initial chart above, you can also use the “Add technology” tab of the chart (bottom left) to list up to 40 tech data series on the chart in total. This allows you to gauge adoption rates for everything from color televisions to washing machines, while giving you an idea of the trajectory of many common technologies today.

    A BLAST FROM THE PAST

    To get the full impact of the chart, it’s worth removing more modern technologies like smartphones, social media, tablets, cellular phones, and the internet from the list.

    Here’s a look at adoption rates for the household appliances and products today that we would consider pretty essential, over a period of more than 120 years:

    The telephone was invented in 1876, but it wasn’t until a century later that landlines reached a saturation point in households.

    For this to happen, massive amounts of infrastructure had to be built and network effects also needed to accumulate to make the product worthwhile for consumers. Further, the telephone suffered from the “last-mile problem”, in which the logistics get tougher and more expensive as end-users get hooked up to a network.

    As a result, it wasn’t until the 1960s that 80% of U.S. households had landlines in them.

    NEW ADOPTION SPEEDS

    Now, here’s a chart with many older technologies removed – keep in mind that the x axis has changed to a much shorter timespan (~65 years):

    Microwaves, cell phones, smartphones, social media, tablets, and other inventions from the modern era all show fast-rising adoption rates. Standing out most on the chart is the tablet computer, which went from nearly 0% to 50% adoption in five years or so.

    Why do newer technologies get adopted so quickly? It seems partly because modern tech needs less infrastructure in contrast with the water pipes, cable lines, electricity grids, and telephone wires that had to be installed throughout the 20th century.

    However, it also says something else about today’s consumers – which is that they are connected, fast-acting, and not afraid to adopt the new technologies that can quickly impact their lives for the better.

  • The World Embraces Debt At Exactly The Wrong Time

    Authored by John Rubino via DollarCollapse.com,

    Self-destruction usually happens in stages.

    At first there’s a binge in which the thrill outweighs the sense of transgression. This is usually followed by remorse, acknowledgement of risks, and an attempt to reform.

    But straight-and-narrow is exhausting, and because of this is frequently just temporary, eventually giving way to a kind of capitulation in which the addict drops even the pretense of self-control.

    2018 is apparently the year in which the world enters this final stage of its addiction to debt. Wherever you look, leverage is soaring as governments, corporations and individuals just give up and embrace the idea that borrowing is no longer a necessary evil, but simply necessary. Some recent examples:

    China January new loans surge to record 2.9 trillion yuan, blow past forecasts

    (Reuters) – China’s banks extended a record 2.9 trillion yuan ($458.3 billion) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policymakers aim to sustain solid economic growth while reining in debt risks.

    Net new loans surpassed the previous record of 2.51 trillion yuan in January 2016, which is likely to support growth not only in China but may underpin liquidity globally as major Western central banks begin to withdraw stimulus.

    Corporate loans surged to 1.78 trillion yuan from 243.2 billion yuan in December, while household loans rose to 901.6 billion yuan in January from 329.4 billion yuan in December, according to Reuters calculations based on the central bank data.

    Outstanding yuan loans grew 13.2 percent in January from a year earlier, also faster than an expected 12.5 percent rise and compared with an increase of 12.7 percent in December.

    ———————–

    Total US household debt soars to record above $13 trillion

    (CNBC) – Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data report released Tuesday.

    Mortgage debt balances rose the most in the December quarter rising by $139 billion to $8.88 trillion from the previous quarter. Credit card debt had the second largest increase of $26 billion to a total of $834 billion.

    ———————–

    Trump’s budget balloons deficits, cuts social safety net

    (Chicago Tribune) – President Donald Trump unveiled a $4.4 trillion budget plan Monday that envisions steep cuts to America’s social safety net but mounting spending on the military, formally retreating from last year’s promises to balance the federal budget.

    The president’s spending outline for the first time acknowledges that the Republican tax overhaul passed last year would add billions to the deficit and not “pay for itself” as Trump and his Republican allies asserted.

    Trump’s plan sees a 2019 deficit of $984 billion, though White House Budget Director Mick Mulvaney admits $1.2 trillion is more plausible after last week’s congressional budget pact and $90 billion worth of disaster aid is tacked on. That would be more than double the 2019 deficit the administration promised last year.

    source: tradingeconomics.com

    So far, the financial markets are responding pretty much according to script:

    US bonds sell off on inflation scare

    (CNBC) – U.S. government debt yields hit session highs Wednesday after the government reported inflation in January rose more than expected.

    The yield on the benchmark 10-year Treasury note jumped to 2.882 percent as of 10:03 a.m. ET. It hit a four-year high of 2.902 percent on Monday. The yield on the 30-year bond was last seen higher at 3.146 percent. Bond yields move inversely to their prices.

    Schwab’s Kathy Jones argued that the latest reading could mean that the yield on the benchmark 10-year note could test 3 percent in the next few months.

    ———————–

    Gold Gains $20 On Stock Market Volatility, Weakening U.S. Dollar

    (Kitco) – Gold prices are posting sharp gains of around $20 an ounce in late-morning action Wednesday. A volatile day in the U.S. stock market is helping to boost safe-haven gold. U.S. stock indexes were poised to open the U.S. day session modestly up, but then dropped sharply in the immediate aftermath of a hotter-than-expected U.S. consumer inflation report. Since then the stock indexes have bounced back above unchanged. Meantime, the U.S. dollar index has lost good early gains to trade lower on the day, and that is also helping out the precious metals market bulls. April gold was last up $21.10 at $1,351.40.

    Does the end of this process have a name? Yes, a really scary one: “crack-up boom.”

    From Investopedia:

    What is a ‘Crack-Up Boom’

    A crack-up boom is the crash of the credit and monetary system due to continual credit expansion and price increases that cannot be sustained long-term. Often, banks will attempt to prevent a crack-up boom by halting credit expansion, which ends up backfiring and yielding the same results that the boom would have caused. Both scenarios result in an economic depression when the bubble finally bursts and the economic system crashes.

    How Does It Happen?

    When the economy is down, one way to give it a temporary revival is to feed extra money into the system – AKA economic stimulus. Providing people with credit makes them feel richer and more inclined to spend their money, which in turn feeds more money into the system. When people spend money, they tend to want to continue this trend and continue to buy, despite the fact that their extra cash isn’t coming from actual savings. The problem comes when the government continuously pours more and more money into the system and the actual economy beneath the false expansion cannot keep up.

    Feeding money into the economy is a quick way to give it a short-term boost, but this practice isn’t sustainable over the long term. If credit expansion continues without limit, prices continue to rise until they reach the point at which the entire system collapses because it can no longer sustain itself. People can no longer afford the high prices, so credit must expand even more to accommodate these prices, which pushes them even higher.

    What Type of Economy Can Be Hit by a Crack-Up Boom?

    A crack-up boom is something that can only happen in an economy that relies on paper money rather than the gold standard, or electronic systems of monetary transaction rather than physical. In a gold standard economy, interest rates cap out at around 3 to 6%, since credit is based on actual saved money, instead of being adjustable depending on the circumstances. However, in a system that revolves around paper money, more cash can be printed at any time and introduced into the system. This affects the value of each dollar and affects the prices of market commodities. When the government introduces into the economy money that doesn’t really exist (in the form of false credit) it’s only a matter of time before the economy is damaged, even if the original intention was to boost it.

     

  • Chinese New Year Will See Billions Of Digital Cash Gifts

    As the world’s biggest migration begins, over a billion people are expected to celebrate Chinese New Year tomorrow.

    Many have been preparing for the celebrations for days and, as Statista’s Niall McCarthy notes, a key aspect of the holiday involves people cleaning their homes, a tradition called “sweeping the dust” which symbolizes the removal of misfortune and the welcoming of something new.

    When all of the cleaning is finally complete, homes are decorated with posters and red lanterns before revellers enjoy spectacular fireworks and firecrackers.

    Technology is playing an increasingly important role in the world’s biggest party with red envelopes or hóngbāo central to the festivities.

    In China and other Southeast Asian societies, a red envelope is a monetary gift exchanged during holidays or special occasions.

    Over the past couple of the years, the tradition has gone digital with Tencent and Alibaba both offering virtual red envelopes.

    Infographic: Chinese New Year Will See Billions Of Digital Cash Gifts | Statista

    You will find more infographics at Statista

    The digital version has caught on and last year, the number exchanged on WeChat was an impressive 46.6 billion – the equivalent of 33 envelopes full of cash for every person in China.

    That’s a huge increase on 2016 when the red envelope count came to 8 billion.

  • The Genius Of Trump's Food Stamp Proposal: You're Not Supposed To Like Being On Welfare

    Authored by Dan Calabrese

    Incentives.

    If I was on food stamps, I wouldn’t like this either… I think that’s the point.

    If you can’t afford to buy your own food and you need the government to provide it for you, then you get it on the government’s terms.

    That’s usually what happens when someone else is supplying your needs.

    Don’t like it? Take every available action to get off food stamps and achieve independence, at which point you can buy whatever you want at the grocery store with your own money that you earned.

    Until then, enjoy your Harvest Box:

    Under the USDA America’s Harvest Box proposal, all Supplemental Nutrition Assistance Program (SNAP) participating households receiving $90 per month or more in benefits will receive a package of nutritious, 100-percent U.S. grown and produced food. Approximately 16.4 million households, or about 81 percent of SNAP households would be impacted by this proposal.

    The amount of food received per household would be scaled to the overall size of the household’s SNAP allotment, ultimately representing about half of their benefits. SNAP participants would receive domestically-sourced and produced food in lieu of a portion of their SNAP benefits.

    USDA would utilize a model similar to that currently used to distribute USDA Foods to other nutrition assistance programs to provide staple, shelf-stable foods (such as shelf-stable milk, juice, grains, ready-eatcereals, pasta, peanut butter, beans, canned meat, poultry or fish, and canned fruits and vegetables) to SNAP households at approximately half the retail cost.

    This proposal creates a new approach to nutrition assistance that combines retail-based SNAP benefits with delivery of USDA America’s Harvest Boxes supporting the President’s leadership on Buy American. This proposal is cost-effective, enhances the integrity of SNAP, and provides for states’ flexibility in administration of the program.

    The remainder of the household’s benefits will still be provided via the current Electronic Benefit Transfer card.

    The Department of Agriculture estimates the change would save taxpayers $129 billion over 10 years by switching to defined packages that would presumably have a predictable, consistent cost. I’m guessing it would actually save a lot more than that precisely because people would hate being restricted to the Harvest Boxes, and at least a significant percentage of them would respond to the added incentive to improve their situations.

    And of course, I’m sure part of the idea here is that people can’t trade or sell their food stamps or find some clever way to use them to get booze, cigarettes, drugs, etc.

    Yes, the government would be picking out your food for you. Yes, that would be frustrating and no fun.

    The point of food stamps is not to treat you to gourmet meals. It’s to prevent you from starving to death while you get out of the trouble you’ve gotten yourself in, whether that takes the form of unemployment, underemployment or some other type of financial mess. We want you to have food. We want you to live. But if you want the kind of food you prefer, that’s going to require you to earn your own money and buy it.

    That is not an unreasonable proposition. You’re not supposed to like dependence on the government. You’re supposed to want to get off it as quickly as you can. If you get stuck with the Harvest Box and you still don’t make the changes necessary to improve your life, well . . . at least you’re saving the rest of us some money.

  • Brandon Smith: Central Banks Will Let The Next Crash Happen

    Authored by Brandon Smith via Alt-Market.com,

    If you have been following the public commentary from central banks around the world the past few months, you know that there has been a considerable change in tone compared to the last several years.

    For example, officials at the European Central Bank are hinting at a taper of stimulus measures by September of this year and some EU economists are expecting a rate hike by December. The Bank of England has already started its own rate hike program and has warned of more hikes to come in the near term. The Bank of Canada is continuing with interest rate hikes and signaled more to come over the course of this year. The Bank of Japan has been cutting bond purchases, launching rumors that governor Haruhiko Kuroda will oversee the long overdue taper of Japan’s seemingly endless stimulus measures, which have now amounted to an official balance sheet of around $5 trillion.

    This global trend of “fiscal tightening” is yet another piece of evidence indicating that central banks are NOT governed independently from one another, but that they act in concert with each other based on the same marching orders. That said, none of the trend reversals in other central banks compares to the vast shift in policy direction shown by the Federal Reserve.

    First came the taper of QE, which almost no one thought would happen. Then came the interest rate hikes, which most analysts both mainstream and alternative said were impossible, and now the Fed is also unwinding its balance sheet of around $4 trillion, and it is unwinding faster than anyone expected.

    Now, mainstream economists will say a number of things on this issue — they will point out that many investors simply do not believe the Fed will follow through with this tightening program. They will also say that even if the Fed does continue cutting off the easy money to banks and corporations, there is no doubt that the central bank will intervene in markets once again if the effects are negative.  I would say that this is rather delusional thinking based on a dangerous assumption; the assumption that the Fed wants to save markets.

    When mainstream economists argue that the Federal Reserve could conceivably keep low interest rates and stimulus going for decades if necessary, they often use the example of the Bank of Japan as some kind of qualifier. Of course, what they fail to mention is that yes, the BOJ has spent decades increasing its balance sheet which now sits at around $4.7 trillion (U.S.), but the Fed exploded its balance sheet to around $4.5 trillion in only eight years. That is to say, the Fed inflated a bubble as large if not larger than the Bank of Japan in less than half the time.

    Frankly, the comparison is idiotic. And clearly according to their own admissions, the Fed is not going to be continuing stimulus measures anyway. People cling to this fantasy because they WANT to believe that the easy money party will never end.  They are sorely mistaken.

    I have been battling this delusion for quite some time.  When I predicted that the Fed would taper QE, I received a predominantly negative reaction. The same thing occurred when I predicted the Fed would begin hiking interest rates. Now, I’m finding it rather difficult to break through the narrative that the Fed will intervene before the next crash takes place.

    There is something so intoxicating about the notion that central banks will stop at nothing to prop up stock markets and bond markets. It generates an almost crazed cult-like fervor in the investment world; a psychedelic high that makes financial participants think they can fly. Of course, what has really happened is that these people have jumped off the roof of their overpriced condo; they think they are flying but they are really falling like a brick weighted down with stupidity.

    Former Fed chairman Janet Yellen upon exiting her position stated:

    “If stock prices or asset prices more generally were to fall, what would that mean for the economy as a whole?”

    “I think our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system.”

    Yellen also said when asked about high stock prices:

    “Well, I don’t want to say too high. But I do want to say high. Price/earnings ratios are near the high end of their historical ranges…”

    “Now, is that a bubble or is too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”

    Since the middle of last year, the Fed has been calling the stock market overpriced and “vulnerable.” This rhetoric has only become bolder over the past several months. Dallas Fed president Robert Kaplan dismissed concerns over the affect rate hikes might have on markets and hinted at the potential for MORE than the three hikes planned for 2018. The Dow fell 666 points that same day.

    New York Fed’s Bill Dudley shrugged off concerns over recent volatility, saying that an equity rout like the one that occurred in recent days “has virtually no consequence for the economic outlook.”

    Jerome Powell, the new Fed chairman, has said while taking the chair position that he will continue with the current Fed policy of rate hikes and balance sheet reductions,  and reiterated his support for more rate hikes this past week (while the mainstream media hyperfocused on his lip service promise to watch stock behavior closely).  This indicates once again that it does not matter who is at the wheel of the Fed, its course has already been set, and the Chairman is simply there to act as the ship’s parrot mascot. The Fed is expected to raise interest rates yet again in March.

    Now, all the evidence including the Fed’s surprise balance sheet reduction of $18 billion in January shows that at least for now, the central bank no longer cares about stocks and bonds.

    In the meantime, 10 year Treasury Yields are spiking to the ever present danger level of 3% after a hotter than expected inflation report, and the dollar index is plunging.  Showing us perhaps the first signs of a potential stagflationary crisis. 

    Bottom line – markets are not long for this world if yields pass 3% and the falling dollar provides yet another excuse for faster interest rate hikes.  More rate hikes means eventually cheap loans will become expensive loans.

    My question is, if the Fed is not going to feed cheap fiat into banks and corporations to fuel stock buybacks, then WHO is going to buy equities now?

    What about corporations? Nope, not going to happen. With corporate debt skyrocketing to levels far beyond that seen just before the 2008 crash, there is no chance that they will be able to sustain stock buybacks without aid from the Fed.

    What about retail investors? I doubt it.  Retail investors are the primary pillar boosting stocks at this stage in the game, but as we saw during the panic last week, it is unlikely that retail investors will maintain hands strong enough to refrain from selling at the first sign of trouble. They do tend to hastily jump back into markets to buy every dip because for many years this simplistic strategy has worked, but if the Fed continues to back away from stimulus and we seen a few more incidences like the 1,000+ point drops of recent days, investor conditioning will be broken, and blind faith will be replaced by doubt.

    What about the American consumer?  Will consumer profits boost companies and give them and they stock shares a solid foundation? I can barely write that question without laughing out loud. There was a time (it seems like so long ago) when company innovation and solid business strategies actually meant something when it comes to equities. Those days are over. Now, everything is based on the assumption of central bank intervention, and as I already noted, central banks are pulling the plug on life support.

    Beyond that, U.S. consumers are now buried in historic levels of personal debt.

    What about the Trump administration’s latest $1.5 trillion infrastructure plan? Will this act as a kind of indirect stimulus program picking up where the Fed left off? Unlikely.

    Perhaps if such a plan had been implemented eight years ago in place of the useless bank bailouts and TARP, it might have made a difference. Though, a similar strategy did not work out very well for Herbert Hoover. In fact, many of the Hoover-era infrastructure projects were not paid off for decades after initial construction. Hoover was also a one term Republican president that oversaw the beginning of the Great Depression.

    The system is too far into debt and too far gone for infrastructure spending to make any difference in the economic outcome. Add to that the fact that Treasury yields are liable to continue their upward trajectory due to the increased deficit spending, putting more pressure on stocks.

    Interestingly, Trump’s budget director has even admitted that the plan will lead to even faster increases in interest rates, and Fed officials have been using this as a partial rationale for why they plan to continue cutting off stimulus measures.

    I think anyone with any sense can see the narrative that is building here. The Federal Reserve is going to let markets crumble in 2018. They are going to continue raising interest rates and reducing their balance sheet faster than originally expected. They will not step in when equities crash. And, they don’t really need to. Trump continues to set himself up as the perfect scapegoat for a bubble implosion that had to happen eventually anyway. Now, the central banks can sufficiently avoid any blame.

    *  *  *

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  • Mueller Flips Third Witness In Russia Probe

    Just hours after NBC News reported that former White House Chief Strategist Steve Bannon met with Special Counsel Robert Mueller and his team multiple times to answer questions for “20 hours” this past week, CNN dropped the first serious bombshell in the investigation.

    According to CNN, Mueller is about to flip Paul Manafort’s former No. 2 man, Rick Gates – though it’s unclear what Gates’ role will be, or what evidence Mueller has on him.

    Gates

    Rick Gates

    The effort is under seal, so the details aren’t available, but a few days ago it was reported that Gates was working with a new lawyer who, speculation had it, would be more amenable to striking a plea deal.

    Former Trump campaign adviser Rick Gates is finalizing a plea deal with special counsel Robert Mueller’s office, indicating he’s poised to cooperate in the investigation, according to sources familiar with the case.

    Gates has already spoken to Mueller’s team about his case and has been in plea negotiations for about a month. He’s had what criminal lawyers call a “Queen for a Day” interview, in which a defendant answers any questions from the prosecutors’ team, including about his own case and other potential criminal activity he witnessed.

    Gates’ cooperation could be another building block for Mueller in a possible case against President Donald Trump or key members of his team.

    Once a plea deal is in place, Gates would become the third known cooperator in Mueller’s sprawling probe into Russian interference in the 2016 presidential election. It would also increase the pressure to cooperate on Gates’ co-defendant Paul Manafort, Trump’s former campaign chairman, who has pleaded not guilty to Mueller’s indictment and is preparing for a trial on alleged financial crimes unrelated to the campaign. Gates pleaded not guilty on October 30 alongside Manafort.

    “Nobody (who’s charged) goes in to provide incriminating information to the government unless it’s part of plea negotiations,” said a criminal defense attorney who represents a witness in the case. In a Queen for a Day interview, a defendant can typically admit to crimes with little additional consequences, unless he or she lies.

     

    After the interview, there’s a very small chance a defendant could turn back toward fighting the charges, according to several lawyers who specialize in federal criminal cases.

    Gates probably didn’t work close enough with Trump to have direct knowledge of misdeeds, but Gates could be valuable in pressuring Manafort to roll on his former boss. Gates’ deal will likely be announced in the coming days, and could also coincide with the filing of new, tax related charges that could increase the amount of prison time he could face. Right now, he’s facing up to 10 years.

    The White House sees little sign that Gates’ cooperation could pose any risk to the President. “There’d be no anxiety here” if Gates cooperated with Mueller in exchange for a plea deal, one White House official said.

    It’s still unclear what Gates, who outlasted Manafort in the campaign and later worked on the Trump inaugural efforts, could share that would be of value to the Russian collusion investigators, outside the Manafort case. The value of what a defendant says factors into the plea negotiation as both sides finalize the deal.

    After an interview, prosecutors typically investigate the information a defendant provides. They then negotiate the defendant’s ultimate charges or potential sentence.

    Gates’ plea deal could be announced in the next few days, given that he’s asked a judge for an extension until Wednesday to discuss his in-flux legal representation.

    At the same time, investigators with the special counsel’s office are preparing to file new charges against him, according to people familiar with the probe. The additional charges are tax-related, these people say, which could increase the fines and prison time Gates faces in court. More charges are also being prepared against Manafort related to his work before he joined the Trump campaign, according to another source familiar with the case.

    The threat of new charges could be used in the negotiation to pressure Gates into cooperating and pleading. With his current set of eight charges, Gates could face 10 or more years in prison if found guilty.

    The options in a criminal case are “either trial or plea,” said Brian Stolarz, a white collar lawyer who specializes in federal cases.

    “You have to have the heart, the stomach and the wallet to proceed with the trial.”

    Gates’ decision to cooperate shouldn’t come as a surprise to the White House; developments in his case would suggest that his lawyers haven’t been preparing for a trial, CNN said.

    Several developments of the past months have pointed to Gates pursuing a different path than a trial – from Gates’ lack of focus in court on fighting the charges to his financial situation at home.

    His court case since then has barely focused on trial preparations, which Judge Amy Berman Jackson noted in court on Wednesday as she urged the lawyers to set a trial date.

    Gates’ legal team quibbled over his bail terms and house arrest for more than two months after his indictment. Recently, they’ve been focused on a question of who will represent him in court. The three trial lawyers who took on Gates’ case shortly after his indictment asked to part ways with their client on February 1. The legal team drama culminated in two long sealed hearings in front of the judge last week and on Wednesday. The two-and-a-half hours spent on that topic suggest the lawyers’ situation with Gates is more complicated than a typical attorney changeover.

    Interestingly, one reason Gates may be cooperating is because he’s received little support from GOP donors who were supposed to help with legal fees…

    Working separately from Gates’ trial lawyers is the well-known Washington defense attorney Thomas Green. Green, who has known Mueller personally for years, is negotiating Gates’ plea deal, according to people familiar with the case. He has visited the special counsel’s office multiple times in the last several weeks. Green appeared with Gates yesterday in court, but is not handling his trial situation.

    The judge has already acknowledged that Gates could not show he had $5 million in assets to secure his bail. His financial situation is further hampered by assets he would have to forfeit to the government if found guilty of money laundering charges. A complex criminal case such as this could cost a defendant more than a million dollars in legal fees, especially if he were to go to trial, according to several people familiar with the legal industry.

    The stress has taken a toll on Gates’ young family, who have urged him to do what is necessary to conclude these proceedings, a source said. Gates lives in Richmond, Virginia, with his wife and four children.

    Gates traveled with Trump, so he could’ve been privy to some misdeeds, but it’s unlikely. Mueller has already flipped George Papadopoulos – a former adviser of questionable influence during the campaign who reportedly offered to set up a meeting between the Trump campaign and a representative of the Russian government – and former National Security Adviser Michael Flynn.

    Now we await more details about what Mueller had on Gates…

  • Home Prices Hit Record Highs In Two-Thirds Of US Cities As Manhattan Rents Collapse

    Even as sellers in high-end markets like Manhattan, London  and Greenwich, Conn. are being forced to pull their inventory from the market because of a paucity of offers (this despite the “wealth effect” that one might’ve expected to arise from rallies in stocks and bitcoin), home prices in two-thirds of US cities climbed to record highs during the fourth quarter as developers’ preoccupation with luxury housing has left buyers in mid-priced markets battling it out for a record-low supply of listings…

    Prices for single-family homes climbed 5.3% from a year earlier nationally, reaching a peak in 64% of metropolitan areas, according to the National Association of Realtors. Of the 177 regions in the group’s survey, 15% had double-digit price growth, up from 11% in the third quarter.

    Home

    Meanwhile, Bloomberg claims the steadily improving job market has helped drive prices higher (we imagine the flood of money-creation by central banks also had something to do with it).

    Here’s Bloomberg:

    Home values have grown steadily as the improving job market drives demand for a scarcity of properties on the market. While prices jumped 48 percent since 2011, incomes have climbed only 15 percent, putting purchases out of reach for many would-be buyers.

    The consistent price gains “have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation,” Lawrence Yun, the Realtors group’s chief economist, said in a statement. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

    Sales of previously owned homes, including single-family houses and condos, increased 4.3% to a seasonally adjusted rate of 5.62 million in the fourth quarter, the Realtors said. At the end of December, only 1.48 million existing homes were available for sale, 10.3% less than a year earlier.

    Predictably, the most expensive markets were in densely populated coastal areas where job growth and wealth creation since the financial crisis have largely clustered…

    The most expensive markets were San Jose, California, where the median price was $1.27 million, followed by San Francisco, the Irvine, California, area, Honolulu and San Diego.

    The San Jose area had a 26 percent increase in prices, the biggest of any region, followed by Reno, Nevada, and the Putnam/Dutchess County area, north of New York City. The biggest decline was in Glens Falls, New York, where prices dropped almost 12 percent. Cumberland, Maryland, and Elmira, New York, followed.

    In a demonstration of the extent to which the correlation between the most expensive urban markets and the rest of the country (a trend that will no doubt be exacerbated by the Trump tax plan, which caps SALT deductions) landlords in Manhattan, one of the country’s most expensive rental markets, were forced to slash rents to their lowest levels in 2014 as a massive flood of new supply swamped the market.

     

  • China's Rapid Military Modernization Is "Remarkable," Set To Challenge West On Several Fronts

    China’s rapid military modernization is “remarkable,” and is no longer merely “catching up” with the West, reports the International Institute for Strategic Studies in their annual report on global military capabilities. 

    China’s emerging weapons developments and broader defence-technological progress mean that it has become a global defence innovator” says Dr. John Chipman, Director-General and Chief Executive of the London-based think tank. 

    Of note, Chipman points out that China’s Chengdu J-20 low-observable combat aircraft is set to challenge America’s “monopoly on operational stealthy combat aircraft.” As we reported yesterday, the J-20 is rumored to have already been deployed to the South China Sea along with several of China’s Su-35s, to take part in a joint combat patrol over the region, according to the Chinese Ministry of Defense whose release did not mention the J-20.

    a

    A spokesman for the People’s Liberation Army (PLO), Shen Jinke, said that the J-20 would “help the air force better shoulder the sacred mission of safeguarding national sovereignty, security and territorial integrity,” adding that the air force was in the middle of a modernization program in order to fight enemies on all fronts.

    a

    The IISS report also notes that China’s expanding array of advanced guided-weapons projects, such as the PL-15 extended range air-to-air missile which could enter service this year. “This weapon appears to be equipped with an active electronically scanned array radar, indicating that China has joined the few nations able to integrate this capability on an air-to-air missile,” reports Chipman.

    a

    Also of concern is China’s ambitions at sea, as Beijing continues its ever-expanding fleet. 

    Since 2000, China has built more submarines, destroyers, frigates and corvettes than Japan, South Korea and India combined. To put this further into perspective, the total tonnage of new warships and auxiliaries launched by China in the last four years alone is significantly greater than the total tonnage of the French navy. –IISS

    Moreover, China’s navy is deploying further from home, including Europe, while their base in the Eastern African country of Djibouti will enable more naval deployments. 

    China’s military computing technology is also rapidly growing, as vast resources have been sunk into “extremely high-performance computing and quantum communications,” which, along with their weapons advancements and overall defense capabilities mean the country is no longer merely “catching up” with Western progress. 

    All of these developments have meant a rising defense budget, which has been pegged to GDP growth at 6-7% since 2016:

    a

    While China’s rapid military advances are significant, all is not lost for the West, which will need to remain agile and adaptable:

    Western governments still have it in their power to maintain an edge. Their military forces will need to be agile and adaptable, better at working with partners inside and outside government, and able to make flexible use of technological developments. Some governments in the West will look to ‘leap-ahead’ technologies to augment and deliver military power.

    Chipman concludes that Western states need to plan for responses to persistent competition, and stresses the importance of “anticipating and detecting ambiguous as well as proximate threats.”  This means more than just better defense and better weapons; societies need to be made more psychologically resilient, “and resistant to attempts to erode their cohesion and will in peacetime as well as war.”

    Translation; Despite our current military superiority, the West needs to solve the man-child epidemic, solidify alliances, and prepare to show the enemy our war faces at a moment’s notice – lest we lose what our ancestors so bravely fought for. 

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Today’s News 15th February 2018

  • Paul Craig Robert Asks "Do Financial Markets Still Exist?"

    Authored by Paul Craig Roberts,

    For many decades the Federal Reserve has rigged the bond market by its purchases. And for about a century, central banks have set interest rates (mainly to stabilize their currency’s exchange rate) with collateral effects on securities prices. It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals, and to push prices back up in keeping with a decade of money creation.

    No one should find this a surprising suggestion.  The Bank of Japan has a long tradition of propping up the Japanese equity market with large purchases of equities. The European Central Bank purchases corporate as well as government bonds.  In 1989 Fed governor Robert Heller said that as the Fed already rigs the bond market with purchases, the Fed can also rig the stock market to stop price declines. That is the reason the Plunge Protection Team (PPT) was created in 1987.

    Looking at the chart of futures activity on the E-mini S&P 500, we see an uptick in activity on February 2 when the market dropped, with higher increases in future activity last Monday and Tuesday placing Tuesday’s futures activity at about four times the daily average of the previous month.  Futures activity last Wednesday and Thursday remained above the average daily activity of the previous month, and Friday’s activity was about three times the previous month’s daily average. The result of this futures activity was to send the market up, because the futures activity was purchases, not sales.

    Who would be purchasing S&P equity futures when the market is collapsing from under them?

    The most likely answer we can come up with is that the Fed is acting for the PPT. The Fed can actually stop a market decline without purchasing a single futures contract. All that has to happen is that a trader recognized as operating for the Fed or PPT enters a futures bid just below the current price. The traders see the bid as the Fed establishing a floor below which it will not let the market fall.  Expecting continuing declines to make the bid effective, they front-run the bid, and the hedge funds algorithms pick it up, and up goes the market.

    Is there another explanation for the shift in the market from decline to rise?  Are retail investors purchasing dips?  Not according to this report in Bloomberg that last week a record $23.6 billion was removed from the world’s largest ETF, the SPDR S& 500 index fund. Here we see retail investors abandoning the market.

    If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals?

    As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?

  • US Missile Defense Agency Wants Laser-Drones & Hypersonic-Weapons In Biggest-Ever Budget Boost

    The U.S. Missile Defense Agency (MDA) has requested the largest-ever budget increase of $9.9 billion in funding for the 2019 fiscal year, citing growing intercontinental-range ballistic missile (ICBM) threats from North Korea and ballistic missile threats from Iran.

    In fact, the request for the 2019 fiscal year is the single most significant request from the Agency since 1985, when President Reagan first established the Strategic Defense Initiative.

    MDA fully supports President Trump’s National Defense Strategy of increased deficit spending, which allows the nation to: “Compete, Deter, and Win,” in the next world war.

    The agency also wants to spend $269 million on laser drones to shoot North Korean ICBMs out of the sky, along with upgrading the nation’s defense systems against hypersonic threats.

    The increase in MDA funding will allow the continued developments and deployments of integrated, layered missile defense systems to combat against missiles threats on the homeland.

    MDA highlights their ten easy steps to intercepting a missile headed for the continental United States:

    An ICBM can travel at extremely high speeds—at times more than 15,000 mph, or almost 20 times the speed of sound. Kinetic energy interceptors can travel fast enough to create closing speeds exceeding 25,000 mph. The speeds, trajectories, and points of launch that must be considered always change. In missile defense, everything is about precision. The BMDS must not only work in terms of milliseconds, but the missiles and warheads the system is targeting have bull’s-eyes measured in centimeters.

    “Recent escalation of the threat from North Korea has demonstrated an advanced and accelerated capability,” the Agency’s Budget Estimates report notes. “North Korea is committed to developing a long-range, nuclear-armed missile that is capable of posing a direct threat to the United States.”

    “Iran is fielding increased numbers of theater ballistic missiles, improving its existing inventory, and is developing technical capabilities to produce an ICBM, and this effort is benefiting from its ballistic missile and space launch vehicle programs,” the Agency’s report wrote. Iran’s ballistic missile program has not tested any missile capable of striking intercontinental ranges, but its rockets can strike as far as southeastern Europe which is concerning to NATO forces.

    To combat the threats of North Korea and Iran, the MDA states the United States must continue developing new defense capabilities to tackle the future of risks. That means increasing investments in advanced technologies that bring upgraded capacities to the warfighter.

    • Technology Maturation Initiatives (PE 0604115C):  MDA requests $148.8 million to build on the foundational successes in Weapons Technology and Discrimination Sensor Technology. MDA will integrate an advanced sensor into the tactically proven Multispectral Targeting System and MQ-9 combination to address precision track and discrimination performance of this technology with the goal of eventually migrating to a space sensor layer. MDA’s plan is to continue the design to begin fabrication of a UAV-borne laser to address boost phase missile defense risks. Scalable, efficient, and compact high-energy lasers can be game –changing capabilities within missile defense architectures.

    • Hypersonic Defense (PE 0604181C): MDA is requesting $120.4 million in FY 2019. MDA will execute a rigorous systems engineering process, identify and mature full kill chain technology, provide analysis and assessment of target of opportunity events, and execute near term sensor and command and control capability upgrades to address defense from hypersonic threats. This effort will execute the Defense Science Board’s recommendations to develop and deliver a set of material solutions to address and defeat hypersonic threats informed by a set of near-term technology demonstrations. An integrated set of enhancements will provide incremental capability measured by progress and knowledge points in the following areas: establishment of systems engineering needs and requirements to identify alternative material solutions; execution of a series of sensor technology

    The Hill outlines where the MDA plans on spending the remainder of its budget on modernizing the nuclear arsenal and missile defense systems across the United States.

    That would buy 43 Aegis interceptors for $1.7 billion, four Ground-based Midcourse Defense (GMD) interceptors and 10 silos for $2.1 billion, 82 Terminal High Altitude Area Defense interceptors for $1.1 billion and 240 Patriot Advanced Capability Missile Segment Enhancement interceptors for $1.1 billion.

    The Pentagon also says the budget would allow it to develop an additional missile field in Alaska for the GMD and puts it on track to have a total of 64 deployed and operational GMD interceptors by 2023, 20 more than it has now.

    The GMD is the system in Alaska and California that would defend against a long-range missile attack such as from North Korea. The system’s most recent test last year was successful, though critics have said it is too costly and has a spotty testing record.

    And lastly, we will leave you with David Stockman, the former Director of the Office of Management and Budget under President Ronald Reagan, who warned that the out of control spending at the United States military will contribute to the coming economic problems in America.

    The fact that the US military is “conducting seven wars that we don’t need to have,” said Stockman, is why there are the troubles with the military readiness that warmongering politicians are using to justify further war spending increases.

  • Is John Brennan The Mastermind Behind Russiagate?

    Authored by Mike Whitney via Unz.com,

    The report (“The Dossier”) that claims that Donald Trump colluded with Russia, was paid for by the DNC and Hillary Clinton campaign.

    The company that claims that Russia hacked DNC computer servers, was paid by the DNC and Hillary Clinton campaign.

    The FBI’s counterintelligence probe into Trump’s alleged connections to Russia was launched on the basis of information gathered from a report that was paid for by the DNC and Hillary Clinton campaign.

    The surveillance of a Trump campaign member (Carter Page) was approved by a FISA court on the basis of information from a report that was paid for by the DNC and Hillary Clinton campaign.

    The Intelligence Community Analysis or ICA was (largely or partially) based on information from a report that was paid for by the DNC and Hillary Clinton campaign. (more on this below)

    The information that was leaked to the media alleging Russia hacking or collusion can be traced back to claims that were made in a report that was paid for by the DNC and Hillary Clinton campaign.

    The entire Russia-gate investigation rests on the “unverified and salacious” information from a dossier that was paid for by the DNC and Hillary Clinton Campaign. Here’s how Stephen Cohen sums it up in a recent article at The Nation:

    “Steele’s dossier… was the foundational document of the Russiagate narrative…from the time its installments began to be leaked to the American media in the summer of 2016, to the US “Intelligence Community Assessment” of January 2017….the dossier and subsequent ICA report remain the underlying sources for proponents of the Russiagate narrative of “Trump-Putin collision.” (“Russia gate or Intel-gate?”, The Nation)

    There’s just one problem with Cohen’s statement, we don’t really know the extent to which the dossier was used in the creation of the Intelligence Community Assessment. (The ICA was the IC’s flagship analysis that was supposed to provide ironclad proof of Russian meddling in the 2016 elections.) According to some reports, the contribution was significant. Check out this excerpt from an article at Business Insider:

    “Intelligence officials purposefully omitted the dossier from the public intelligence report they released in January about Russia’s election interference because they didn’t want to reveal which details they had corroborated, according to CNN.” (“Mueller reportedly interviewed the author of the Trump-Russia dossier — here’s what it alleges, and how it aligned with reality”, Business Insider)

    Bottom line: Despite the denials of former-CIA Director John Brennan, the dossier may have been used in the ICA.

    In the last two weeks, documents have been released that have exposed the weak underpinnings of the Russia investigation while at the same time revealing serious abuses by senior-level officials at the DOJ and FBI. The so called Nunes memo was the first to point out these abuses, but it was the 8-page “criminal referral” authored by Senate Judiciary Committee Chairman Chuck Grassley and Senator Lindsey Graham that gave credence to the claims. Here’s a blurb from the document:

    “It appears the FBI relied on admittedly uncorroborated information, funded by and obtained for Secretary Clinton’s presidential campaign, in order to conduct surveillance of an associate of the opposing presidential candidate. It did so based on Mr. Steele’s personal credibility and presumably having faith in his process of obtaining the information. But there is substantial evidence suggesting that Mr. Steele materially misled the FBI about a key aspect of his dossier efforts, one which bears on his credibility.”

    There it is. The FBI made a “concerted effort to conceal information from the court” in order to get a warrant to spy on a member of a rival political campaign. So –at the very least– there was an effort, on the part of the FBI and high-ranking officials at the Department of Justice, to improperly spy on members of the Trump team. And there’s more. The FBI failed to mention that the dossier was paid for by the Hillary campaign and the DNC, or that the dossier’s author Christopher Steele had seeded articles in the media that were being used to support the dossier’s credibility (before the FISA court), or that, according to the FBI’s own analysts, the dossier was “only minimally corroborated”, or that Steele was a ferocious partisan who harbored a strong animus towards Trump. All of these were omitted in the FISA application which is why the FBI was able to deceive the judge. It’s worth noting that intentionally deceiving a federal judge is a felony.

    Most disturbing is the fact that Steele reportedly received information from friends of Hillary Clinton. (supposedly, Sidney Blumenthal and others) Here’s one suggestive tidbit that appeared in the Graham-Grassley” referral:

    “…Mr. Steele’s memorandum states that his company “received this report from REDACTED US State Department,” that the report was the second in a series, and that the report was information that came from a foreign sub-source who “is in touch with REDACTED, a contact of REDACTED, a friend of the Clintons, who passed it to REDACTED.”

    It is troubling enough that the Clinton campaign funded Mr. Steele’s work, but that these Clinton associates were contemporaneously feeding Mr. Steele allegations raises additional concerns about his credibility.” (Lifted from The Federalist)

    What are we to make of this? Was Steele shaping the dossier’s narrative to the specifications of his employers? Was he being coached by members of the Hillary team? How did that impact the contents of the dossier and the subsequent Russia investigation?

    These are just a few of the questions Steele will undoubtedly be asked if he ever faces prosecution for lying to the FBI. But, so far, we know very little about man except that he was a former M16 agent who was paid $160,000 for composing the dubious set of reports that make up the dossier. We don’t even know if Steele’s alleged contacts or intermediaries in Russia actually exist or not. Some analysts think the whole thing is a fabrication based on the fact that he hasn’t worked the Russia-scene since the FSB (The Russian state-security organization that replaced the KGB) was completely overhauled. Besides, it would be extremely dangerous for a Russian to provide an M16 agent with sensitive intelligence. And what would the contact get in return? According to most accounts, Steele’s sources weren’t even paid, so there was little incentive for them to put themselves at risk? All of this casts more doubt on the contents of the dossier.

    What is known about Steele is that he has a very active imagination and knows how to command a six-figure payoff for his unique services. We also know that the FBI continued to use him long after they knew he couldn’t be trusted which suggests that he served some other purpose, like providing the agency with plausible deniability, a ‘get out of jail free’ card if they ever got caught surveilling US citizens without probable cause.

    But that brings us to the strange case of Carter Page, a bit-player whose role in the Trump campaign was trivial at best. Page was what most people would call a “small fish”, an insignificant foreign policy advisor who had minimal impact on the campaign. Congressional investigators, like Nunes, must be wondering why the FBI and DOJ devoted so much attention to someone like Page instead of going after the “big fish” like Bannon, Flynn, Kushner, Ivanka and Trump Jr., all of whom might have been able to provide damaging information on the real target, Donald Trump. Wasn’t that the idea? So why waste time on Page? It doesn’t make any sense, unless, of course, the others were already being surveilled by other agencies? Is that it, did the NSA and the CIA have a hand in the surveillance too?

    It’s a moot point, isn’t it? Because now that there’s evidence that senior-level officials at the DOJ and the FBI were involved in improperly obtaining warrants to spy on members of the opposite party, the investigation is going to go wherever it goes. Whatever restrictions existed before, will now be lifted. For example, this popped up in Saturday’s The Hill:

    “House Intelligence Committee lawmakers are in the dark about an investigation into wrongdoing at the State Department announced by Chairman Devin Nunes (R-Calif.) on Friday. …Nunes told Fox News on Friday that, “we are in the middle of what I call phase two of our investigation. That investigation is ongoing and we continue work toward finding answers and asking the right questions to try to get to the bottom of what exactly the State Department was up to in terms of this Russia investigation.”…

    Since then, GOP lawmakers have been quietly buzzing about allegations that an Obama-era State Department official passed along information from allies of former Secretary of State Hillary Clinton that may have been used by the FBI to launch an investigation into whether the Trump campaign had improper contacts with Russia.

    “I’m pretty troubled by what I read in the documents with respect to the role the State Department played in the fall of 2016, including information that was used in a court proceeding. I am troubled by it,” Gowdy told Fox News on Tuesday.” (“Lawmakers in dark about ‘phase two’ of Nunes investigation”, The Hill)

    So the State Department is next in line followed by the NSA and, finally, the Russia-gate point of origin, John Brennan’s CIA. Here’s more background on that from Stephen Cohen’s illuminating article at The Nation:

    “….when, and by whom, was this Intel operation against Trump started?

    In testimony to the House Intelligence Committee in May 2017, John Brennan, formerly Obama’s head of the CIA, strongly suggested that he and his agency were the first, as The Washington Post put it at the time, “in triggering an FBI probe.” Certainly both the Post and The New York Times interpreted his remarks in this way. Equally certain, Brennan played a central role in promoting the Russiagate narrative thereafter, briefing members of Congress privately and giving President Obama himself a top-secret envelope in early August 2016 that almost certainly contained Steele’s dossier. Early on, Brennan presumably would have shared his “suspicions” and initiatives with James Clapper, director of national intelligence. FBI Director Comey… may have joined them actively somewhat later….

    When did Brennan begin his “investigation” of Trump? His House testimony leaves this somewhat unclear, but, according to a subsequent Guardian article, by late 2015 or early 2016 he was receiving, or soliciting, reports from foreign intelligence agencies regarding “suspicious ‘interactions’ between figures connected to Trump and known or suspected Russian agents.”

    In short, if these reports and Brennan’s own testimony are to be believed, he, not the FBI, was the instigator and godfather of Russiagate.” (“Russiagate or Intelgate?”, Stephen Cohen, The Nation)

    Regular readers of this column know that we have always believed that the Russiagate psyops originated with Brennan. Just as the CIA launched its disinformation campaigns against Saddam Hussein and Muammar Gadhafi, so too, Russia has emerged as Washington’s foremost rival requiring a massive propaganda campaign to persuade the public that America faces a serious external threat. In any event, the demonizing of Russia had already begun by the time Hillary and Co. decided to hop on the bandwagon by blaming Moscow for hacking John Podesta’s emails. The allegations were never persuasive, but they did provide Brennan with some cover for the massive Information Operation (IO) that began with him.

    According to the Washington Times:

    “It was then-CIA Director John O. Brennan, a close confidant of Mr. Obama’s, who provided the information — what he termed the “basis” — for the FBI to start the counterintelligence investigation last summer….Mr. Brennan told the House Intelligence Committee on May 23 that the intelligence community was picking up tidbits on Trump associates making contacts with Russians.”

    It all started with Brennan. After Putin blocked Brennan’s operations in both Ukraine and Syria, Brennan had every reason to retaliate and to use the tools at his disposal to demonize Putin and try to isolate Russia. The “election meddling” charges (promoted by the Hillary people) fit perfectly with Brennan’s overall strategy to manipulate perceptions and prepare the country for an eventual confrontation. It provided him the opportunity to kill two birds with one stone, to deliver a withering blow to Putin and Trump at the very same time. The temptation must have been irresistible.

    But now the plan has backfired and the investigations are gaining pace. Trump’s allies in the House smell the blood in the water and they want answers. Did the CIA surveil members of the Trump campaign on the basis of information they gathered in the dossier? Who saw the information? Was the information passed along to members of the press and other government agencies? Was the White House involved? What role did Obama play? What about the Intelligence Community Assessment? Was it based on the contents of the Steele report? Will the “hand-picked” analysts who worked on the report vouch for its conclusions in or were they coached about what to write? How did Brennan persuade the reluctant Comey into opening a counterintelligence investigation on members in the Trump campaign when he knew it would be perceived as a partisan attempt to sabotage the elections by giving Hillary an edge?

    Soon the investigative crosshairs will settle on Brennan. He’d better have the right answers.

  • The World's Largest Migration Is About To Begin

    This Friday, China is going to celebrate its new year, kicking off one of the planet’s great migrations.

    Also known as Spring Festival or Lunar New Year, Statista’s Niall McCarthy notes that this the event sees hundreds of millions of people leave their cities in order to visit their families in more rural parts of the country. In fact, practically all of China takes holiday at once, making the new year the biggest human event on earth.

    Infographic: The World's Largest Migration Is About To Begin  | Statista

    You will find more infographics at Statista

    This year, the number traveling to welcome the Year of the Dog will be approximately 385 million, marking a 12 percent increase on 2017 according to China News. 

    Comparing China’s largest annual migration with North America’s is a good way to gauge its sheer size.

    Thanksgiving 2017 saw 50.9 million travelers negotiate long tailbacks on the interstate and overcrowded airports. Even though Thanksgiving is a major travel event, China’s new year is still seven times bigger, with its massive population making a big difference of course.

    Known as “chunyun”, the annual new year migration in China also easily surpasses the world’s biggest pilgrimages in scale with Arba’een and the Hajj not even coming close.

  • Williams: "It's The Long-Term Insolvency Of The US Government That Markets Don't Like"

    Authored by Mac Slavo via SHTFplan.com,

    Economist John Williams sat down with USA Watchdog‘s Greg Hunter to discuss the dire state of the dollar and United States economy.  The monetary path the US is on is out of control, and the unwillingness of government officials to reduce the deficit and stop spending money will cause major problems in the very near future.

    Years of socialist policies and reckless spending will eventually end in a complete collapse. Williams is not the only economist to sound the alarm either. As the tax cuts are always positive (people keeping more of their money is always good for the economy) the unwillingness to decrease the size and scope of the government with an expanded deficit will be the downfall of a once great nation.

    The interview with Williams begins with him declaring the drop in the stock market to be the fault of the federal reserve. “Did the Fed trigger this most recent round of selling?” asks Hunter.

    “It looks like it. If you recall, the story was, bond yields are rising. Rising bond yields means someone’s selling bonds. The Fed wasn’t actually selling bonds, they just were not rolling over the bonds that they normally would…I think you’re gonna see the dollar selling off very rapidly and gold rallying as a flight to safe haven.”

    Then the discussion of the tax cuts comes up, as Hunter asks Williams to deliver his take on the lower taxes.

    The tax cuts are generally positive. Anytime you cut taxes that is generally a plus for the economy. The problem is the average guy is still not making ends meet. Anything that increases the disposable income is a plus. This does not necessarily go to the guys at the lower end of the income scale, at the moment, but generally there should be a little economic pick up here from it. The problem is what happens to the budget deficit. We just went through a round of the government shutdown and a package that supposedly lays things out for the next two years, but it widens the deficit.

    The deficit is beyond control…We have $100 trillion in unfunded liabilities. That means you need $100 trillion in hand right now to cover the federal obligations going forward…

    Printing money to meet obligations is what happened in the Weimar Republic in Germany. This happened in Zimbabwe. This kind of thing eventually gives you a hyperinflation. . . . Ongoing budget deficit and debasing of the dollar will give you global selling pressures in the currency markets. . . . We haven’t seen much selling in the dollar, but that is going to change. You are going to see flight from the dollar and flight from the markets as well.”

    Hunter then said that the government must make massive and deep cuts to salvage the economy, but no one in Washington wants to make the difficult decision.

    “It’s the long-term insolvency of the US government that the markets don’t like.”

    Then Hunter asked if Williams thinks there’s a “pretty severe hit” to the economy coming because of the expanding deficit, which will expand the national debt by $10 trillion. Because there are no plans to cut the deficit, Williams simply responds, “right.”

  • North Korea Defector: Kim Fears US Preventative Strike, Is Buying Time To Complete Nuclear Program

    On Wednesday, The Wilson Center hosted a discussion on U.S. national security and the Korean Peninsula, which included the perspective of Ri Jonh-ho, a former senior ranking official of the Kim Jong-un regime, a professor of St Petersburg University, and a renowned author on issues related to North Korea at a conference hosted jointly with the Institute for Corean-American Studies (ICAS).

    According to Yonhap News Agency, Ri said that North Korean leader Kim Jong-un has been communicating with officials in South Korea out of the fear the United States will launch a pre-emptive strike on his country.


    North Korean defector Ri Jong-ho (R) and interpreter at a forum in Washington

    Kim Jong-un is afraid that the U.S. will launch a preventative strike, and he is trying to buy time to complete his nuclear and missile programs,” said Ri, who served for three decades in Office 39 of the North’s ruling Workers’ Party. The office is responsible for raising funds for the ruling elite of North Korea.

    https://platform.twitter.com/widgets.js

    Last year, CNN reported that Ri Jong-ho raised somewhere in the neighborhood of “$50 million and $100 million during his career.

    Life was good. Ri helped bring in somewhere between $50 million and $100 million for North Korean elites, and was handsomely rewarded with luxuries most North Koreans couldn’t dream of in years past: a car, a color TV and some extra cash on the side, once rarities in the communist state but more commonplace now in the capital, Pyongyang.

    Yonhap details Ri Jong-ho perspective of the current situation in North Korea, and surprisingly praises Trump’s recent adversarial efforts, saying the issue of human rights abuses is a powerful “weapon” against Kim and “the most effective means to resolve the North Korean standoff.”

    “Kim Jong-un is struggling under the strongest-yet sanctions and military and diplomatic pressure, so he is trying to improve the situation by putting on a false front,” Ri said.

    Allegations that sanctions are having no impact on the regime are untrue because the measures of the past year are the toughest in 25 years, and Kim is trying to “create a hole” in that sanctions regime, he added

    Ri defected to South Korea in 2014 while running the Dalian, China, branch of a North Korean trading company. In 2016, he resettled in the U.S. state of Virginia.

    “Depending on the circumstances, North Korea could hold South Koreans hostage and continue its threatening provocations,” he claimed.

    Citing Pyongyang’s track record of extracting money from Seoul in return for progress in inter-Korean ties, Ri also alleged that the two sides struck a similar underhand deal this time.

    He praised U.S. President Donald Trump’s recent efforts to highlight human rights abuses by the Pyongyang regime, saying the issue is a powerful “weapon” against Kim and the most effective means to resolve the North Korean standoff.

    Earlier in the day, U.S. Navy Adm. Harry Harris – the senior officer overseeing military operations in the Pacific –  warned lawmakers on Capitol Hill that Kim’s goal is to reunify the Korean Peninsula under his rule. “I do think that he is after reunification under a single communist system,” Harris told the House Armed Services Committee.

    “So he’s after what his grandfather failed to do and his father failed to do and he’s on a path to achieve what he feels is his natural place.”

    https://platform.twitter.com/widgets.js

    Of course, the odds of that ever happening are zero, which is why – with nothing left to lose – Kim just could become increasingly more irrational one the NKorean nuclear program is complete.

    Meanwhile, in preparation for the worst, three days before the Winter Olympics in South Korea, the South Korean press reported that the Chinese government had deployed 300,000 troops and multiple mobile strike groups to the North Korean border.

    According to South Korea’s Chosun Ilbo news, “China is preparing for a potential war on the Korean Peninsula by reinforcing missile defenses near the border with North Korea” citing a report from Radio Free Asia. “Military units in Yanbian were relocated from Heilongjiang Province, thus adding 300,000 troops along the border.” The reason for the increased missile presence is that Chinese troops in the border area could be swept away if the North tore down the banks of the reservoirs or they were destroyed by missiles or air strikes, the source added.   

    For now the world appears to have forgotten the red-knuckled military tension involving the nuclear-capable rogue state. However, when the Olympics end on February 25, and when the mask of fake diplomacy falls, it is virtually certain that the geopolitical tensions will resume right where they left off, most likely with another ICBM launch.

  • New Data Shows Yellowstone Supervolcano "Strained" – Magma Chamber Under Immense Pressure

    Authored by Mac Slavo via SHTFplan.com,

    According to a group of seismologists who are monitoring the potentially catastrophic supervolcano, Yellowstone is “under strain.” This new report has reignited fears that the caldera could erupt at any moment.

    Experts were alerted to the volcano’s strain after noticing deformation. This process, where subsurface rocks subtly change shapes, is occurring beneath the surface of Yellowstone right now. Researchers state deformation occurs when there is a change in the amount of pressure in the magma chamber and experts are keeping an eye on the development.

    Seismologists from UNAVCO, a non-profit university-governed consortium, are using “Global Positioning System (GPS), borehole tiltmeters, and borehole strainmeters” to measure minute changes in deformation at Yellowstone. In an article for the Billings Gazette, David Mencin and Glen Mattioli, geodesists with UNAVCO, say “the strain signal is larger than would be expected if the crust under Yellowstone were completely solid.”

    “What that means, at least in their eyes, is that there’s lava flowing that’s allowing pressure to build in the chamber,” says Joe Joseph of The Daily Sheeple.  “I don’t know if this is good or bad!”

    These independent observations agree with other instruments at Yellowstone, like seismometers, that indicate a zone of semi-molten rock starting about 3 miles beneath the surface. The term “semi-molten” is used because the entire zone contains only between 5 and 15 percent liquid rock that occupies small pockets of space between the solid rock.

    But the scientists want to assure the public that these observations are no cause for alarm. “Of course, they’re always gonna say that,” says Joseph. “It’s about 700,000 years ago they say when it erupted and it’s long overdue. So here we are, Yellowstone, yet again, thrust into the news because of some of this new data coming out…,” Joseph said.

    If the Yellowstone volcano nestled mostly in  Wyoming were to erupt, an estimated 87,000 people would be killed immediately and two-thirds of the USA would instantly be made uninhabitable.  The large spew of ash into the atmosphere would block out sunlight and directly affect life beneath it creating a “nuclear winter.”

    Is this a cause for alarm? Maybe, maybe not. But it’s interesting this new Yellowstone information is coinciding with news that a pole reversal is near, the Ring of Fire is waking up, and the sun is approaching its solar minimum which could cause a mini ice age.

  • Trump Surprises Democrats, Supports 25 Cent Federal Gas Tax Hike

    President Trump surprised a group of lawmakers during a Wednesday meeting at the White House by repeatedly mentioning a 25-cent-per-gallon increase on federal gasoline and diesel tax in order to help pay for upgrading America’s crumbling infrastructure by addressing a serious shortfall in the Highway Trust Fund, which will become insolvent by 2021.

    The tax increase was first pitched by the U.S. Chamber of Commerce in January, while the White House had originally been lukewarm towards the idea.

    The federal gasoline and diesel tax has been at 18.4 and 24.4-cents-per-gallon respectively since 1993, with no adjustments for inflation. It currently generates approximately $35 billion per year, while the federal government spends around $50 billion annually on transportation projects.

    Senator Tom Carper (D-DE), the top Democrat on the Senate Environment and Public Works Committee, seemed pleasantly surprised at Trump’s repeated mention of the tax as a solution to pay for upgrading American roads, bridges and other public works. 

    While there are a number of issues on which President Trump and I disagree, today, we agreed that things worth having are worth paying for,” Carper said in a statement. “The president even offered to help provide the leadership necessary so that we could do something that has proven difficult in the past.”

    Rep. Peter DeFazio (D-OR) – the top Democrat on the House Transportation and Infrastructure Committee was also present at the meeting, in which he says President Trump told lawmakers he would be willing to increase federal spending beyond the White House’s $200 billion, 10-year proposal.

    “The president made a living building things, and he realizes that to build things takes money, takes investment,” DeFazio said.

    GOP Support?

    Rep. Bill Shuster (R-PA), chairman of the House Transportation and Infrastructure Committee, is encouraging his GOP colleagues to support the increased gas tax as a way to keep the Highway Trust Fund solvent beyond 2021. The fund finances road, bridge and transit projects. 

    “He understands that we’ve got to figure out the funding levels and where the money’s coming from, make sure it’s not smoke and mirrors,” Shuster said of the president.

    The Highway Trust Fund has been flirting with bankruptcy for the better part of a decade, while the Senate passed a bill in 2015  to boost highway spending without a solution to fund it. Lawmakers eventually passed a 6-year transportation measure which keep the trust fund solvent for another three years. 

    Republican leaders have already rejected the idea, however, along with various other entities tied to billionaire industrialists Charles and David Koch. 

    “Our organizations worked hard over the past year to support your efforts and the efforts of tax-cutters in Congress to provide American families much-needed and long-overdue tax relief,” reads a letter from executives of the Koch-affiliated Freedom Partners Chamber of Commerce and Americans for Prosperity. “But increasing the gas tax would effectively undermine recent tax cuts by clawing back hundreds of billions of dollars — roughly 25 percent of the total benefit from tax reform.”

    “The American people are just beginning to feel the benefits of the recently passed tax cuts bill,” said Brent Gardner of Americans for Prosperity in a Wednesday statement. “Instead of undermining the relief taxpayers just received, the president and Congress should focus on smarter spending and breaking through the regulatory gridlock that delays projects and drives up costs.”

    Republican Senator Chuck Grassley (R-IA) doesn’t think the gas tax has any chance of even coming up for a vote in the Senate. “He’ll never get it by McConnell,” said Grassley, referring to Senate Majority Leader Mitch McConnell.

    Sen. John Barrasso (R-WY), Chairman of the Senate Environment and Public Works Committee opposes the gas tax hike on the grounds that collected funds wouldn’t all go towards repairing and restoring infrastructure. 

    “Today was the first of many conversations about the president’s infrastructure plan and how to fund it,” Barrasso said in a statement. “Ultimately, the final decision will be made by Congress as a whole.”

    Industry Support

    Several groups including the American Trucking Associations and the U.S. Chamber of Commerce support the gas tax as the easiest and most efficient way to generate money for projects. 

    “We support the president’s big and bold vision for strengthening American infrastructure,” Chris Spear, president and chief executive officer of the American Trucking Associations, said in a statement. “Because it is a user fee, the fuel tax is the most conservative, cost-effective and viable solution to making that vision a reality.”

    One has to wonder – considering that Congress is unlikely to pass the proposed hike – if President Trump is simply buying a little political capital with Congressional Democrats. 

  • Terrified Of Bitcoin – Banks Forced To Innovate For First Time In 40 Years

    Authored by Simon Black via SovereignMan.com,

    Yesterday morning, several banks in Australia started rolling out a new payment system they’re calling NPP, or “New Payments Platform.”

    Until now, sending a domestic funds transfer in Australia from one bank to another could take several days. It was slow and cumbersome.

    With NPP, payments are nearly instantaneous.

    And rather than funds transfers being restricted to the banks’ normal business hours, payments via NPP can be scheduled and sent 24/7.

    You can also send money via NPP to mobile phones and email addresses. So it’s a pretty robust system.

    Across the world in the United States, the domestic banking system has been working on something similar.

    Domestic bank transfers in the Land of the Free typically transact through an electronic network known as ACH… another slow and cumbersome platform that often takes 2-5 days to transfer funds.

    It’s pretty ridiculous that it takes more than a few minutes to transfer money. It’s 2018! It’s not like these guys have to load satchels full of cash onto horse-drawn wagons and cart them across the country.

    (And even if they did, I suspect the money would reach its destination faster than with ACH…)

    Starting late last year, though, US banks very slowly began to roll out something called the Real-time Payment system (RTP), which is similar to what Australian banks launched yesterday.

    [That said, the banks themselves acknowledge that it could take several years to fully adopt RTP and integrate the new service with their existing online banking platforms.]

    And beyond the US and Australia, there are other examples of banking systems around the world joining the 21st century and making major leaps forward in their payment system technologies.

    It seems pretty clear they’re all playing catch-up with cryptocurrency.

    The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it’s possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.

    Combined with other new technologies like Peer-to-Peer lending platforms, fundraising websites, etc., consumers are now able to perform nearly every financial transaction imaginable– deposits, loans, transfers, etc.– WITHOUT using a bank.

    And it’s only getting better for consumers… which means it’s only getting worse for banks.

    All of these threats from competing technologies have finally compelled the banks to innovate– literally for the FIRST TIME IN DECADES.

    I’m serious.

    When the CEO of the company launching RTP in the US announced the platform, he admitted that the “RTP system will be the first new payments system in the U.S. in more than 40 years.”

    That’s utterly pathetic. The Internet has been around for 25 years. Even PayPal is nearly 20 years old.

    Yet despite the enormous advances in technology over the past several decades, the last major innovation in bank payments was back when Saturday Night Fever was the #1 movie in America.

    Banks have been sitting on their laurels for decades, enjoying their monopoly over our savings without the slightest incentive to improve.

    Cryptocurrency has proven to be a major punch in the gut. The entire banking system keeled over in astonishment over Bitcoin’s rise, and they’ve been forced to come up with an answer.

    And to be fair, the banks have reclaimed the advantage for now.

    NPP, RTP, and all the other new protocols are faster and more efficient than most cryptocurrencies.

    Bitcoin, for example, can only handle around 3-7 transactions per second. Ethereum Classic maxes at around 15 transactions per second. Litecoin isn’t much better.

    By comparison, there were 25 BILLION funds transfers in 2016 using the ACH network in the US.

    Based on the typical holiday schedule and the banks’ 8-hour working days, that’s an average “throughput” of roughly 3500 transactions per second.

    So, now that banks have finally figured out how to conduct thousands of transactions per second in real-time, they clearly have superiority.

    But that superiority is unlikely to last.

    It takes banks decades to innovate. They have enormous bureaucratic hurdles to overcome. They have endless committees to appease, including the Federal Reserve’s “Faster Payments Task Force.”

    And most importantly, given that most banks are still using absurdly antiquated software, any new systems they develop have to be carefully designed for backwards compatibility.

    Cryptofinance and other financial technology companies have no such limitations.

    As my colleague Tama mentioned in the podcast we released yesterday, the cryptocurrency space sort of exists in ‘dog years’.

    Things move so quickly that one year in crypto is like 7 years for any other industry.

    Right now there is almost a unified push across the crypto sector to solve the ‘scalability’ problem, i.e. to securely transact a near limitless number of transactions in real time.

    Those solutions will almost undoubtedly come from technologies that you haven’t heard very much about yet.

    Hashgraph and Radix, for example, are two such ventures working on extremely elegant payment solutions that break the mold of previous cryptos.

    Rather than build upon standard cryptocurrency concepts like blockchain, Proof of Work, and Proof of Stake, both Hashgraph and Radix have created their own algorithms from scratch.

    This is the bleeding edge of the bleeding edge of a massively disruptive sector that has existed for less than a decade.

    And there are literally dozens of other companies and technologies aiming for similar heights.

    Some of them will undoubtedly succeed. And still other ventures that won’t even be conceived for years will have yet more disruptive power in the future.

    The banks don’t stand a chance. The future of finance absolutely belongs to crypto.

    *  *  *

    And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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Today’s News 14th February 2018

  • Apple Shipped More Watches Than Switzerland In Q4 2017

    Despite the fact that the Apple Watch is consistently playing second (or third) fiddle to the iPhone in terms of public attention, the evidence suggesting that Apple has yet another hit product on its hands is piling up.

    According to estimates by market research firm Canalys, the Apple Watch had its best quarter ever in Q4 2017. Driven by the release of the Series 3 model including (optional) LTE support, Apple shipped 8 million watches between October and December, bringing its total for the year to more than 18 million units.

    As Statista’s chart illustrates, that puts Apple ahead of the entire Swiss watch industry (think Rolex, Swatch etc.) for the quarter, supporting the company’s claims that the Apple Watch became the top-selling watch in the world some time in 2017.

    Infographic: Apple Shipped More Watches Than Switzerland in Q4 2017 | Statista You will find more infographics at Statista

    For all of 2017, BI reports that the Swiss exported more watches than Apple shipped, and the Chinese still make far more watches than anyone. But as the data indicates, Apple is rapidly gaining ground.

  • The Brutal Truth About Violence When The SHTF

    Selco interviewed by Daisy Luther via The Organic Prepper blog,

    Are you prepared for the extreme violence that is likely to come your way if the SHTF? No matter what your plan is, it’s entirely probable that at some point, you’ll be the victim of violence or have to perpetrate violence to survive. As always, Selco is our go-to guy on SHTF reality checks and this thought-provoking interview will shake you to your core.

    If you don’t know Selco, he’s from Bosnia and he lived through a year in a city that was blockaded with no utilities, no deliveries of supplies, and no services. In his interviews, he shares what the scenarios the rest of us theorize about were REALLY like.  He mentioned to me recently that most folks aren’t prepared for the violence that is part and parcel of a collapse, which brings us to today’s interview.

    How prevalent was violence when the SHTF in Bosnia?

    It was wartime and chaos, from all conflicts in those years in the Balkan region Bosnian conflict was most brutal because of multiple reasons, historical, political and other.

    To simplify the explanation why violence was common and very brutal, you need to picture a situation where you are “bombarded” with huge amount of information (propaganda) which instills in you very strong feelings of fear and hate.

    Out of fear and hate, violence grows easy and fast, and over the very short period of time you see how people around you (including you) do things that you could not imagine before.

    I can say that violence was almost an everyday thing in the whole spectrum of different activities because it was a fight for survival.

    Again, whenever (and wherever) you put people in a region without enough resources, you can expect violence.

    We were living a normal life, and then suddenly we were thrown in a way of living where if you could not “negotiate” something with someone, you solve the problem by launching a rocket from an RPG through the window of his living room.

    Hate stripped down the layers of humanity and suddenly it was “normal” to level an apartment building with people inside with shells from a tank or form private prisons with imprisoned civilians for slave work or sex slaves.

    Nothing that I saw or read before could have prepared me for the level of violence and blindness to it, for the lives of kids, elders, civilians, and the innocent.

    Again, the thing that is important for readers is that we were a modern society one day, and then in few weeks it turned into carnage.

    Do not make the mistake of saying “it cannot happen here” because I made that mistake too.

    Do not underestimate power of propaganda, fear, hate, and the lowest human instincts, no matter how modern and good your society is right now and how deeply you believe that “it can not happen here”.

    You’ve mentioned warlords and gangs in several of your articles. Were they responsible for the majority of the violence or was it hungry families?

    Fighting of the armies through the whole period of war brings violence in terms of constant shelling from a distance from different kind of weapons.

    For example a few multiple rocket launchers (VBR) could bring in 30 seconds the destruction in an area of 3-4 apartment buildings, and being there in that moment and surviving it gives you a completely new view on life.

    Snipers were a constant threat and over time you simply grow a way of living that you constant scan area in front of you where your next steps gonna be. Are you gonna be visible and from where? Etc.

    Most brutal violence was actually lawlessness and complete lack of order between different factions and militias, so in some periods there were militias or gangs who simply ruled the cities or part of the city where they were absolutely masters of everything in terms of deciding of taking someone’s life.

    In lawlessness, you as one person could be really small and not interesting, or join some bigger group of people to be stronger, some family or militia or gang.

    An example of a gang would be group of people of some 300 or 500 people who “officially” were a unit or militia and operate for some faction, but in reality they operate mostly for themselves.

    That included owning part of the black market, having prison (for forced labor or ransom), attacking people and houses for resources, smuggling people from dangerous areas.

    Violence from those kinds of group was the most immediate violence, the most visible in terms of SHTF talking.

    If those people came on your door you could obey, fight, or negotiate, but mostly you could not not ask for help from any kind of authority, because there was no real authority.

    In any society, no matter where you are living, there are a great number of people who are waiting for the SHTF to go out and do violent things. Small time criminals or simply violent persons who are not openly violent because system is there to punish them for that. It is like that.

    Some gang leaders that I knew were actually completely sick people with a strange type of charisma that makes people follow them, weird situations that can happen only in a real collapse.

    They are people who just waited for their time to rise.

    Those kinds of people together with criminal organization that are already there in any city in the world will be the backbone of SHTF gangs.

    Who were the most likely victims?

    A very simple answer would be that the most likely victims were people who had interesting things without enough defense.

    But it was not always that simple.

    For example one of the first houses that got raided in my neighborhood, right at the beginning of collapse while there was still some kind of order, was a rich family’s home.

    They had a nice house with bars on the windows, a pretty good setup for defense, and they had enough people inside so they could give pretty good resistance to the mob.

    But they got raided simply because they were known that they are rich, so they were attacked with enough force to be overwhelmed.

    It was not only about how much manpower you had and how well-organized defense of your home was, it was also about how juicy a target you were.

    If you are faced with 150 angry people attacking your home because they are sure you have good stuff inside your chances are low, no matter how good and tough you are.

    People who were alone were a pretty easy target and old people without support of family or friends.

    It was not always about killing someone or violence. For example, if you were alone and without resources but you had something else valuable like some kind of skill or knowledge you could easily be “recruited” for some faction or group, not by your will of course.

    What were some ways to prevent yourself from becoming a victim of violence? How do you recommend that people prepare themselves for the possibility of violence?

    It can be done in steps, or in layers.

    Do not be interesting (or attract attention) when the SHTF.

    This means a lot of things, for this article I can give a few examples with shortened explanations because it is a huge topic:

    • Do not look like a prepper (before or after SHTF). There is no sense in announcing that you are prepping for EMP, civil collapse, apocalypse, or whatever. With that you are risking the probability that when the SHTF, people will remember that you have interesting things in your home
    • Your home should look ordinary. For example, if you are living in the city on a street where all houses look similar, there is not  much sense in making your home look like a fortress. You’ll just attract attention.
    • Your defense should be based on more subtle means. Some examples are having means to reinforce doors and windows quickly when you need it, or to reinforce them from inside. Make changes in your yard to funnel possible attackers where you want them to be (trees, fence, bush…). You can make your home look abandoned or already looted.

    Think about what survival is!

    Survival is about staying alive, it is not about being comfortable at the expense of losing your life.

    I have seen many times people lose their lives simply because they were too attached to their belongings (house, car, land, goods…) so they simply did not want to leave something and run in a particular moment.

    Everything can be earned and bought again except life.

    Forget about statements like “I will defend it with my life” or “over my dead body” or similar because the real SHTF is usually not heroic or noble. It is hard and brutal. When you are gone you are gone and there might be nobody to take care of your family just because you have been stubborn or trusted in movies when it came to violence.

    To rephrase it: Be ready to leave your home in a split second if that means you and your family will survive, no matter how many good things you have stored there.

    Be mentally ready for violence

    In a way, it is impossible to be ready for violence, especially widespread violence when the SHTF, but you can minimize shock when that happens with some things.

    If you are not familiar with what violence is, you can try to get yourself close” to it today (in normal times). It can be done, for example, by doing some voluntary work for example in a local hospital, ER or similar… or simply by working with homeless people.

    Sounds maybe strange but activities like this can get you a bit of a feeling of what it is all about, not to mention that you can learn some practical and useful skills for SHTF.

    Have means and skills  (physically) to defend – or to do violence

    No matter how old or young you are, your gender or religion I assure you that you are capable of doing violence. It is only a matter of the situation and how far you are going to be pushed.

    It is not just “some people are capable of violence.” Everybody is capable. Not everybody enjoys doing it or is willing to do it so easily.

    In today (normal times) you can learn some violence skills and you should do it, again no matter if you are a woman or old or young.

    You should own a weapon and know how to use it. You should practice with it, or have at least some basic knowledge about hand-to-hand combat.

    The worst case scenario is to have a weapon that you try for the first time when SHTF.

    Be familiar with your means for defense, let your family members know what they need to do in case of attack of your home, have plan, and go through it.

    Only through practice will you minimize chances for mistakes.

    Use common sense

    I know lot of survivalists almost dream about how they are going to use weapons against bad guys when SHTF, and that they will be something like super heroes from movies, saving innocents and killing villains.

    Truth is that in a real collapse, a lot of things are kind of blurred and you are not sure who the bad guys are. Good guys turn out to be lunatic gang members who want to bring food to their kids.

    There are no super heroes when SHTF, and if some of them show up they end up dead quickly.

    There is only you and your skills and mindset and what you prepared.

    Use  violence as a last resort because of the simple fact that by using violence you are risking of getting killed or hurt. Remember when SHTF there is maybe no doctor or hospital to take care of your wound.

    It is a time when even a small cut can eventually kill you through infection and lack of proper care.

    I’m a single mom with a household full of girls. In an SHTF situation, what would our best strategies be to remain safe?

    Just like I have mentioned before, strategy is always same for any part of survival, and shooting from the rifle is pretty similar no matter are you man or woman.

    Being single mom with household full of girls on first look make you as a ideal target in some situations, but we are talking here in prepper terms so there is no reason not to be perfectly well prepared as a single mom with girls.

    But yes I admit it is not perfect situation, even if you are prepared well, some things are sure, you need to connect with other people even more.

    House with couple of girls will always look like easy prey for some people.

    It is like that.

    Were people in the city safer than people in the country? Can you tell us more about rural living during this time?

    In my case definitely no.

    In the essence it always come to the resources and people.

    City meant more people less resources, country (rural) meant less people more resources, and because that level of violence simply was lower. That was most important reason.

    There are few more reasons why it was much better in the country.

    People in the country (rural settings) were much more “connected to ground”  they were more tough if you like, they grew their own food, had cattle, lived more simple life prior SHTF and when everything collapsed they had less problems getting use to it.

    Yes they also did not have electricity and phones, running water or connection to other places but they adapted easier to the new life because they had more useful skills then people in the city.

    Life was harder for them too than prior to the collapse, but they had means to get resources: land, woods, river…

    Another thing is that people in small rural communities “in the country” were more connected to each other, people knew their neighborhood and some things were easier to organize, like community security watch, help in case of diseases and similar.

    What types of weapons did people have for self-defense?

    It was different political system prior the collapse where it was not so usual to own a weapon legally. And to own one illegally could mean a lot of troubles.

    Right prior to SHTF, it became possible to buy different weapons on the black market but still, a majority of people did not own weapons.

    When it all collapsed, it was possible to get a weapon through trade.

    Because of the military doctrine here prior to the collapse, we used “East Bloc” weapons. A favorite was AK-47 in all different kind of editions, or older weapons like M-48 rifle, SKS rifle, 22 and similar.

    People used what they had, so in one period you would be lucky if you had any kind of pistol and knife.

    Later through the different channels weapon become more available so people had them more. A lot of that was actually junk that some warlords somehow “imported”.

    Weapons 50-60 years old without proper ammunition, or not in operating condition. A lot of people simply did not have a clue how to use any kind of weapon so a lot of accidental deaths happened.

    I remember people storming abandoned army barracks that was mostly looted, but they found in one building a lot of RPGs while other part of the same building was burning.

    Two guys were trying to figure out a single-use RPG, and while they were messing with it clearly not knowing how that thing worked, they accidentally armed it and launched a rocket that flew through the crowd, not hurting anyone and exploding in wall 100 meters from where they stood.

    They were smiling, clearly happy because they thought they figured out how that thing worked.

    What weapons do you suggest to have for SHTF?

    It is a never-ending discussion and a favorite prepper topic, and I must say that whole discussion is overrated.

    I have used them in a real situation, and tried and tested lot of different kind of weapons and what works for me may simply not work for you.

    For example, here for me good choice is AK-47 rifle, maybe for you wherever you are it is very bad choice.

    Good advice is : you need to have a weapon that most people have around you because of multiple reasons: spare parts, repairing, ammunition availability, possibility that you can pick that rifle from other people and you know how to use it.

    What caliber and similar is a matter of discussion again. I am talking from the point of owning a rifle.

    Another thing is that you need to know how that weapon works. Luckily, most of my readers live in an area where gun laws are great comparing to region where I am.

    You have much more choices when it comes to owning a weapon and practicing with it. Use that.

    And do not forget that using weapon in a real life situation is not like shooting at beer bottles with your friends after a barbecue.

    In real life you might be in a situation to use a weapon while you are tired, dirty, and hungry and while someone is screaming next to you.

    It is going to be maybe when you are not ready to do that, maybe in pitch dark, maybe after you have been awake for 48 hours.

    At least think about that.

    When should you use violence?

    Contrary to some popular beliefs in the prepper community, the point is to use violence only as a last solution.

    The reason is as I mentioned already, the risk that you can be hurt or killed too, but also once you do violence you change your own rules, or push it more forward, and it is easy to get lost in violence.

    There are consequences to that, and you are not going to be the same person ever again.

    Violence is a tool, not a toy. You need to know how to use it as best as possible, but also to avoid using it when it is not necessary.

    It is a good idea to set up a clear set of rules (mentally too) when you are gonna use violence and to try to stick to it.

    For example you will use weapon if someone tries to break your home and attack you, and you need to be ready to do that without hesitation.

    What else should we know about post-collapse violence?

    Think with your head and research.

    One thing that is absolutely important when it comes to understanding how violent it is going to be and what can you expect in your own case of SHTF, is to understand how much media can influence people in making their decisions about violence.

    In my case, the media built up situation where people feared so much from other people that they actually hated them. They hated them so much that they actually strip them down from humanity.

    In a real-life example, it works in a way that people killed other people, including kids and women, because they hated them so much because media told them.

    It may look ridiculous and not possible to you, and you might again think “that can not happen here” but please trust your own resources, look for independent information, not mainstream media, in order to get the right information about what is really happening in the beginning of collapse.

    Do not be pulled into “popular opinion” just because the “man from TV” (whoever he might be) told you so.

    It is easier today. Because of the internet, you have much more choices for correct information than in my time. But still be careful, you might find yourself rioting together with 500 people just because you trusted some media.

    *  *  *

    More from Selco 

    More information about Selco

    Selco survived the Balkan war of the 90s in a city under siege, without electricity, running water, or food distribution.

    In his online works, he gives an inside view of the reality of survival under the harshest conditions. He reviews what works and what doesn’t, tells you the hard lessons he learned, and shares how he prepares today.

    He never stopped learning about survival and preparedness since the war. Regardless what happens, chances are you will never experience extreme situations like Selco did. But you have the chance to learn from him and how he faced death for months.

    Real survival is not romantic or idealistic. It is brutal, hard and unfair. Let Selco take you into that world.

    Read more of Selco’s articles here: https://shtfschool.com/blog/

    And take advantage of a deep and profound insight into his knowledge and advice by signing up for the outstanding and unrivaled online course. More details here: https://shtfschool.com/survival-boot-camp/

  • Tiny Canadian Bank Unveils Digital Vault For Bitcoins

    VersaBank, a tech-based, all-digital Canadian chartered bank, is developing a n ultra high-tech “Blockchain-based digital safety deposit box” for cryptocurrencies and other digital assets.

    Last week, the firm announced the hiring of Gurpreet Sahota as Chief Architect of Cyber Security, a former Principal Architect of Cyber Security at BlackBerry Limited, to supervise a team of engineers in developing a novel Blockchain-based digital safety deposit box, known as the VersaVault. The service will be available by June and will serve as a means to store cryptocurrencies, according to the company’s latest press release.

    VersaBank describes the VersaVault as the “world’s first blockchain-based safety deposit box,” which will soon be available on a global scale.

    Your digital assets are just as valuable as any family jewelry, property deed or stock certificate, but protecting them isn’t nearly as simple. No storage device or commercial cloud service is completely safe, and most blockchain-based secure storage is only for crypto-currency… and offered by companies you’ve never heard of, in places you don’t know. VersaVault is the solution your digital wealth has been waiting for: the impenetrable security and absolute privacy of blockchain encryption, created and managed by a chartered bank in one of the world’s most trusted financial markets. Like a safety deposit box, only you have access to what’s inside, and like a safety deposit box, it’s been built by an institution you can trust to be there for the long run.

    It is common that physical assets such as precious metals be stored in Switzerland, Hong Kong, and even Singapore, but when it comes to digital assets, could the country of choice soon be Canada? President and CEO David Taylor sure hopes so, and has positioned the bank to become a global leader in digital asset security from the perspective of safety.

    Last month, Coincheck, a Japanese cryptocurrency exchange, told financial authorities that it had lost 500 million NEM cryptocurrency coin, which at January 26 exchange rate amounted to roughly $400 million. By far, this was the most significant crypto theft in history.

    “We’re using what banks are all about — safety and security — only what we’re doing now is saying that physical box in the basement is getting obsolete,” Taylor said in an interview at Bloomberg’s Toronto office. “Most people’s really valuable assets are contained in some sort of digital format, whether it be a deed or a contract or a cryptocurrency.”

    Our differentiator in this market is to be secure and super private,” added Taylor, 65. “The bank wouldn’t have any kind of back door to open up the vault, we’re just providing the facility that folks could put their digital keys in.”

    Taylor said large financial institutions are showing interest in storing their digital assets in VersaVault since the company’s latest press release. He told Bloomberg that pricing has yet to be released, but he did indicate that it will be expensive.

    Bloomberg notes that VersaBank is an early mover in the digital asset security space. However, VersaBank is not alone in the space with firms in Asia, Canada, and the United States, who have also made claims to digital asset secuity services.

    South Korea’s Shinhan Bank said in November it planned to start a bitcoin vault by mid-year. Outside banking, Palo Alto, California-based Xapo Inc. has offered clients secure storage for Bitcoin for about four years, while Goldmoney Inc., a Toronto-based firm that lets clients buy, sell and store precious metals in vaults in seven countries, started offering Bitcoin storage in September.

    Bloomberg explains  that Taylor’s decision to incorporate Blockchain technology into the bank will enable it to rapidly grow in size in a short period of time.

    VersaBank, with a market value of about C$158 million ($126 million), 80 employees and C$1.73 billion in assets, has outperformed Canada’s big banks, with shares soaring 24 percent this year versus the 2.9 percent decline of the eight-company S&P/TSX Commercial Banks Index. Last year VersaBank rose 19 percent compared to the 11 percent gain of the banks index. Taylor is now eyeing a bit more growth while staying the course.  

    “I’m happy to be a niche player, but can probably double the size we are in assets,” he said. “I think C$3 billion is kind of a nice number.”

    It remains to be seen just how much safer a “blockchain-based” crypt will be compared to traditional air-gapped hard drives. Until then, we are confident that the world’s cryptobillionaires will stick to more conventional options, such as this “secret” Swiss bunker where the ultra rich hide their bitcoins.

  • Army Major Slams Trump's Toy-Soldier Fantasy

    Authored by Army Major Danny Sjursen via TruthDig.com,

    When fascism comes to America, it will be wrapped in the flag and carrying a cross.
    —Provenance unknown; sometimes erroneously attributed to author Sinclair Lewis

    You’ve got to give it to the guy. He sure has a set on him. President Trump is impenetrable and far from subtle.

    On Tuesday, Americans were treated to the news that Trump has ordered the Pentagon to plan a “big” military parade. We should hardly be surprised. Our president—he of bone spurs and other Vietnam draft deferments—loves martial displays. We’ve already watched him gleefully sword dance with Saudi Arabian princes and marvel at a triumphant Bastille Day parade in Paris. He really liked the French procession.

    In fact, according to a Pentagon spokesman, “The marching orders were: I want a parade like the one in France.”

    The man possesses the military maturity of a sophomore from his alma mater, a New York military boarding school in the Hudson Valley, but he sure knows what he wants.

    In the coming days, you’ll no doubt be treated to dozens of columns about Trump’s latest request, or, more accurately, his latest order. Expect much discussion of the logistical difficulties inherent in such a cavalcade and speculation about the parade’s monetary cost. But the crisis is deeper still.

    The parade is just a symptom. It centers on persistent American militarism and our pariah status in the eyes of the world.

    The Trump administration, like the two that proceeded it, possesses not even the semblance of a coherent foreign policy. Who needs strategy when you’ve got pomp, and who better to usher in the show than America’s first reality-TV president?

    Make no mistake: This is spectacle, not strategy, pageantry, not prudence. In that sense, nothing better defines our unique militarist moment.

    Everything is in play in the martial culture wars waged among Americans. The National Football League is a battleground. Soldiers a-marching and jets a-flying used to be saved for Memorial Day or Veterans Day. Now, it’s a regular Sunday spectacle. Presidents, politicians and “patriots” nearly faint with pride and adulation—a new, compulsory, American ritual. The few African-American players with the audacity to kneel in protest during the national anthem are pilloried, attacked from the very pinnacle of government. It’s a war, in our heads and in our hearts. Militarism is winning.

    *  *  *

    Trump didn’t invent the misappropriation of military members for partisan political gain. Oh, no. That’s a well-worn trick of the trade. Heck, George W. Bush landed a plane on a damn aircraft carrier. Even Barack Obama was hardly above speeches and photo-ops with the troops. Still, you have to admit that only Trump could elevate this sort of spectacle into an art form, albeit a gaudy one.

    Like so much else in Trump’s governing style, this is pure distraction. He’ll entertain the sentimental masses with shiny, low-hanging patriotic fruit while whisking Paul Ryan’s agenda (with a sprinkle of Stephen Miller nativism) through Congress. After all, there’s lots from which to distract in contemporary America. From militarized police patrolling the streets of black and brown neighborhoods to record income inequality, to sporting the highest per capita incarceration rate in the world, in a nation where black men are imprisoned at five times the rate of whites. Take your pick.

    Zooming out a bit, how do you think America’s upcoming martial parade will play in the rest of the world, especially the Greater Middle East, Uncle Sam’s favorite playground of late?

    Let’s take an imaginary tour. I’m not sure the people of Yemen—starving and disease ridden under United States-backed Saudi terror bombing—will find much to celebrate in the U.S. military. The Kurds, America’s erstwhile allies in Syria, might resent Trump’s decision to abandon them to the machinations of Turkey, their sworn enemy. Palestinians won’t be impressed either, seeing as this administration broke with the rest of the world and 70 years of precedent to unilaterally sign away their capital, Jerusalem, to Israel.

    Afghans can’t be bothered with U.S. victory parades. After all, their capital city is suffering under regular bombing attacks, and a record number of provinces are now controlled by the Taliban. This after a 17-year string of U.S. military “victories.”

    The Nigerians, South Sudanese, Somalis and Yemenis suffering under what experts call the catastrophic “four famines” are liable to ask whether the U.S. military couldn’t provide a bit less terror-chasing and a bit more humanitarian assistance before they and their families starve to death. And, finally, imagine the shock of millions of Mideast refugees blocked from entering the U.S. when they find out the American military is celebrating “victory” in the very wars (think Iraq, 2003) that destabilized their region.

    *  *  *

    The truth is that most Americans, especially those in Trump’s peculiar coalition—war hawks, tax-cut-hungry CEOs, struggling Rust Belt white males and (strangely, considering their support for a thrice-married New Yorker) evangelical Christians—couldn’t care less about any other countries.

    This is now the “America First,” “Make America Great Again” Republican Party, remember? No one in the president’s iron alliance of (40 percent of) Americans is going to worry about how the image of a U.S. military parade plays on the “Arab street.” Self-awareness is not a common American virtue, more’s the pity.

    Anyway, the parade will come and go. America’s military will obediently spin its logistical wheels to give the president what he wants—a spectacle to match that of his favorite nemesis doppelganger in North Korea. Half the country will cheer our passing American “heroes.” The other half will grumble about Trumpian narcissism. When it’s all over, most everyone will ignore the creeping militarism that infects American society.

    This veteran, for one, will pass on watching Trump’s carnival display. It’s a sad day indeed when one pines for the unrest of the late 1960s, when hundreds of thousands of peace activists, frustrated veterans and even Gold Star mothers regularly descended on Washington to protest an immoral and failing war.

    Now, that would be a parade worth watching.

  • China Rolls Out J-20 Stealth Fighter, Navy Calls "Serious Threat" To US Assets

    As tensions mount over the South China Sea shipping corridor which handles $5 trillion in annual trade, China has finally rolled out its Chengdu J-20 stealth fighter jet which some have compared to the United States’ F-22 Raptor.  

    The new jet is rumored to have already been deployed to the South China Sea along with several of China’s Su-35s, to take part in a joint combat patrol over the region, according to the Chinese Ministry of Defense whose release did not mention the J-20.

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    The fourth-generation medium and long-range fighter jet made it’s maiden flight in 2011 and was first shown to the public at a November, 2016 air show in Zhuhai, Guangdong Province. 

    A spokesman for the People’s Liberation Army (PLO), Shen Jinke, said that the J-20 would “help the air force better shoulder the sacred mission of safeguarding national sovereignty, security and territorial integrity,” adding that the air force was in the middle of a modernization program in order to fight enemies on all fronts.

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    While the jet’s combat service was announced on Friday, the J-20 was officially entered military service last September – and conducted nine days of drills along with older J-16 and J-10C fighters last month, according to the air force. 

    The J-20 was designed for stealth and manoeuvrability and is powered by two jet engines, giving it extra power as well as the ability to survive engine failure, according to the Washington-based Centre for Strategic and International Studies.

    The US Naval Institute said the aircraft was likely to be a serious threat to US aircraft, ships and bases, because the PLA might be able to put more of them into the sky. –scmp.com

    Senior analyst at the Australia Strategic Policy Institute, Malcom Davis, told Business Insider that the J-20 is a “fundamentally different sort of aircraft than the F-35”

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    Davis characterized the J-20 as “high-speed, long-range, not quite as stealthy (as US fifth-gen aircraft), but [the Chinese] clearly don’t see that as important.” According to Davis, the J-20 is “not a fighter, but an interceptor and a strike aircraft” that doesn’t seek to contend with US jets in air-to-air battles.

    Instead, “the Chinese are recognizing they can attack critical airborne support systems like AWACS (airborne early warning and control systems) and refueling planes so they can’t do their job,” Davis said. “If you can force the tankers back, then the F-35s and other platforms aren’t sufficient because they can’t reach their target.

    Retired US Air Force Lt. Gen. David Deptula agrees. In a November assessment for Defense & Aerospace ReportDavis said “The J-20, in particular, is different than the F-22 in the context that, if you take a look and analyze the design, it may have some significant low-observable capabilities on the front end, but not all aspects — nor is it built as a dogfighter,” adding “But quite frankly, the biggest concern is its design to carry long-range weapons.

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    A senior scientist at Lockheed told Business Insider that China made serious missteps in their attempt to integrate stealth into the J-20.

    “It’s apparent from looking at many pictures of the aircraft that the designers don’t fully understand all the concepts of LO design,” said the scientist.

  • FBI Scandal Unraveling: Susan Rice Email From Inauguration Day Is "Disturbing"

    Authored by Mac Slavo via SHTFplan.com,

    As if rational-minded humans needed any other evidence that the “Russian collusion” narrative was fabricated, a disturbing email from Susan Rice has surfaced, adding fuel to that fire. Rice was Barack Obama’s ambassador to the United Nations and is most known for her lying in the aftermath of the Benghazi scandal.

    Rice has been neck deep in several scandals, including the “unmasking” ordeal that unfolded shortly after Donald Trump beat Hillary Clinton in the 2016 election. Senator Lindsey Graham has now described one of Rice’s newly discovered emails as “disturbing,” flinging her head first into the invented Russian collusion scandal.

    The recently revealed Inauguration Day email from Susan Rice detailed former President Barack Obama’s guidance at a high-level meeting about how law enforcement should investigate Russian interference in the 2016 election.

    According to Fox News, the email first surfaced Monday, when Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, and Graham, R-S.C., sent the Obama national security adviser a letter, pressing for answers about the email by next week.

    “She’s sending herself an email talking about a conversation on January 5 with the president, reassuring herself, and I guess the president, that this would be done by the book,” Graham said Monday night on Fox News’ The Story with Martha MacCallum.

    “I think that’s odd and disturbing because we know the investigation regarding the Trump campaign was anything but by the book.”

    Rice’s email, which she sent to herself on January 20, 2017, seemed to document a January 5, 2017, meeting in the Oval Office with Obama, then-Vice President Joe Biden, former FBI Director James Comey, then-Deputy Attorney General Sally Yates, and herself.

    In writing to Rice, Grassley and Graham said, “It strikes us odd that, among your activities in the final moments on the final day of the Obama administration, you would feel the need to send yourself such an unusual email purporting to document a conversation involving President Obama and his interactions with the FBI regarding the Trump/Russia investigation.”

     The two senators also noted that while Rice said that Obama instructed Comey to proceed ‘by the book,’ the Republicans claim that ‘substantial questions have arisen about whether officials at the FBI, as well as the Justice Department and the State Department, actually did proceed “by the book.”‘

    This major scandal and subsequent mainstream media coverup is slowly unraveling, and it seems there are few high-powered Democrats that aren’t caught up in the corruption.

  • "All Public Pollsters Should Be Shot" Says Former Obama Campaign Manager

    Former Obama campaign manager Jim Messina has violent opinions about public pollsters – telling MSNBC’s Joe Scarborough “Joe, you know how I feel about public polls… I think all public pollsters should be shot.

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    The former White House senior staffer who ran President Obama’s 2012 campaign was discussing the value of polling so far out from the election when he made the comment – telling Scarborough that he is more interested in how amped up voters are vs. generic polls.

    What you care more about is passionate intensity. When I ran President Obama s campaign, the number I looked at everyday was intensity. Are my voters more motivated than Republican voters? Don t go generic. It s going to jump all over the place.

    Pre-election polling from a variety of forecasters put Hillary Clinton’s chance of beating Donald Trump anywhere from 70% to as high as 99% – pegging her as the overwhelming favorite to win several states such as Wisconsin and Pennsylvania that ended up voting for Trump. 

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    The fact that so many forecasts were off-target was particularly notable given the increasingly wide variety of methodologies being tested and reported via the mainstream media and other channels. The traditional telephone polls of recent decades are now joined by increasing numbers of high profile, online probability and nonprobability sample surveys, as well as prediction markets, all of which showed similar errors. –Pew

    Some have suggested that the overly-optimistic (totally wrong) polls gave Democratic voters a false sense of security, leading to lower turnout. 

    The Pew Research center had some thoughts on what may have actually happened.

    Nonresponse bias: Poor white Trump voters didn’t pick up the phone and participate in surveys. “The problem is if you get what pollsters call nonresponse bias, people are less likely to take your call or stay on the phone with you,” explained Claudia Deane, Vice President of research at Pew. 

    “Shy Trumper” effect: Fearing judgement from others, closeted Trump supporters told pollsters they were going to vote for Clinton, when in fact they voted for Trump. 

    Likely voter error: People who tell pollsters over the phone that they’ll turn out to vote, when in fact they don’t. “You might get 70 or 80% of the people on the phone telling you they’re going to vote because maybe that day they do plan to vote,” when in reality maybe 50 – 55% of people actually go to the polls.

    Perhaps pollsters will figure it out before the next election. If not, they risk being shot by President Obama’s campaign manager – or perhaps someone inspired by him to take matters into their own hands.

  • USDJPY Plunges To Lowest Since Nov 2016 After Weakest Japanese GDP In 2 Years

    USDJPY tumbled to 107.01 – the lowest since Trump’s election in Nov 2016 – after a disappointing GDP print signaled the beginning of the end of the ‘global synchronous recovery’…

    As Goldman Sachs writes, Japanese real GDP growth slowed sharply to +0.5% qoq annualized, representing a sharp slowdown from July-September (+2.2%) and coming in below the market forecast (+1.0%).

    This is the weakest Japanese GDP growth since Q4 2015…

    The GDP deflator turned negative qoq annualized (-0.8%, 0.0% yoy), resulting in a sharp slowdown in nominal GDP at -0.1%, from +2.6% in July-September.

    Private demand remains solid, despite a sharp fallback of external demand and private inventories: The breakdown of real GDP shows private inventories and external demand, which substantially boosted July-September real GDP, made a negative contribution to October-December GDP. Despite this, however, private demand remains solid.

    The reaction was swift, with USDJPY legging lower, stalling briefly at Sept 2017 lows, before tumbling to 107.01…

     

    Yen is the strongest since November 14th 2016 against the dollar…

     

    Of course, the perfectly correlated price action of US equity futures to USDJPY has decoupled amid this collapse…

    Perhaps because the machines are too busy working overtime preparing for tomorrow’s – likely to be historic – VIX options expiration.

    As DataTrekResearch’s Nicholas Colas notes, tomorrow could prove volatile as monthly VIX contracts will expire.

    The VIX tends to experience wider intraday moves during monthly expirations than days when contracts don’t mature.

    The Cboe Volatility Index tends to have bigger swings on days its contracts mature, with intraday moves of 13 percent on average on the past 12 monthly expirations. That compares with a mean daily fluctuation of 10 percent in the year through January. Of course, that was before this month, when a record VIX surge on Feb. 5 sent its average intraday move for February to almost 60 percent.

  • James Montier: This Is A "Greater Fool Bubble" And I'm Getting Out

    Last August, we were delighted to point out the latest quirk of this incredibly manipulated and centrally-planned “market”: in “Record Number Of Fund Managers Say “Stocks Are Overvalued” As They Rush To Buy Nasdaq”, we noted a paradox whereby on one hand a record number, or 46%, of Wall Street fund manager respondents to the BofA monthly survey said stocks are “overvalued”…

    even as virtually all remained fully invested in equities.

    Today, half a year later, the same paradoxical observation forms the basis for the latest note by Jeremy Grantham’s colleague, GMO’s James Montier, titled “The advent of a cynical bubble“, in which he uses the exact same survey and makes the exact same observations to reach our conclusion:

    A recent Bank of America ML survey showed the highest level of those citing “excessive valuation” ever. Yet despite this, the same survey showed fund managers to still be overweight in equities.

    To Montier this combination was not paradoxical per se,as much as exposing a the existence of that strangest of creatures: “the fully-invested bear.”

    The most common rationale for such a cognitively dissonant stance is “the fear of missing out on the upside”(aka FOMO – fear of missing out). As I think Seth Klarman pointed out long ago, this isn’t really fear at all, but rather greed.

    How does one explain the existence of this particular “greedy bear”? To Montier the cognitive dissonance noted above is a function of the Fed-reflated bubble the US finds itself in: the near rational – or cynical – bubble, also known as the greater fool bubble. Here’s Montier:

    I am not a great fan of this nomenclature as it suggests a veneer of respectability that I find undeserved. To me  these are really better described as greater fool markets. They are cynical bubbles in that those buying the asset in question don’t really believe they are buying at fair price (or intrinsic value), but rather are buying because they want to sell to someone else at an even higher price before the bubble bursts. Chuck Prince, the former CEO of Citibank, aptly demonstrated the typical cynical bubble mentality when in July of 2007 he uttered those fateful words, “As long as the music is playing, you’ve got to get up and dance. We are still dancing.”

    If the presence of the proposed buyer of last resort rings a bell, it’s because that’s precisely the market environment the Fed has created: there is no longer any risk not because fundamentals are strong or the economy is improving, but because the Fed will always step in and rescue the market when things turn south. Montier agrees:

    I would suggest that this is exactly the sort of market we are observing at the current juncture. Fund managers for the most part all agree that the US market is expensive but still they choose to own equities – a cynical career-risk-driven position if ever there was one. I have been amazed by the number of meetings I’ve had recently where investors have said they simply “have to own US equities.”

    While such a bubble can make speculators extremely wealthy if only for a period of time – because putting money into what everyone knows is a ridiculous valuation is not investing, it’s speculation, and as Montier admits “that the US equity market is obscenely overvalued can hardly be news to anyone” – it only works as long as there is at least one more greater fool to sell to.

    Indeed, Montier concedes that “cynical bubbles are based on a belief that one can get out before everyone else. Obviously, this is simply impossible. Like a game of musical chairs played at a child’s birthday party, when the chairs are increasingly rare, the competition for them gets fiercer. Crowded exits don’t end well – inevitably some are crushed in the stampede.”

    Which brings us to Montier’s conclusion, one shared with the movie war games in which the only winning move is “not to play” any longer. As the GMO strategist, who admits he can’t time bubbles, admits, “perhaps you are skilled at picking the managers with great timing ability, and perhaps those managers do have great timing ability, in which case, good luck.”

    As for me, I prefer to leave the party early, in the knowledge that I can walk away with ease.

    Monitor’s conclusion: an aptly appropriate excerpt from JM Keynes himself:

    It is the nature of organized investment markets, under the influence of purchasers largely ignorant of what they are buying and speculators who are more concerned with forecasting the next shift of market sentiment than with a reasonable estimate of future yield of capital – assets, that, when disillusion falls upon an over-optimistic and over-bought market, it should fall with sudden and catastrophic force.

    We saw an example of this “sudden and catastrophic force” last week. We will see it again soon, once the “greater fools” realize there are no more left and the cynical bubble finally bursts.

    Source: GMO

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Today’s News 13th February 2018

  • It's Officially Now Illegal To Accuse Poland Of Complicity In Nazi War Crimes

    Authored by Geneviève Zubrzycki via TheConversation.com,

    On Jan. 26, the eve of International Holocaust Remembrance Day, the Polish parliament voted in favor of a bill making it illegal to accuse Poland of complicity in Nazi crimes.

    ‘Anti-Semitism is treatable’ – a banner at a Warsaw demonstration.

    This caused immediate outrage around the world and nowhere more so than in a country that has been, until now, a close ally of Poland: Israel. Prime Minister Benjamin Netanyahu described the bill as “distortion of the truth, the rewriting of history and the denial of the Holocaust.

    And yet, 10 days later, Poland’s president, Andrzej Duda, signed the bill into law retorting that “the historic truth is that there was no systematic institutionalized participation among Poles [in the Holocaust].”

    What is happening? Why, over 70 years since the end of the Second World War, is this argument taking place?

    I am a sociologist who has studied controversies around the memory of the Holocaust in Poland. For me, this dispute is more than a crisis in Polish-Jewish relations. It is, above all, a crisis in Poland’s national identity.

    The memory of World War II in Poland

    This is not the first time the Poles have legislated against what they see as defamation of Poland’s record in World War II, but it is certainly the most wide-reaching. Under this new law, the punishment for people claiming that “the Polish Nation or the Republic of Poland is responsible or co-responsible for Nazi crimes committed by the Third Reich” carries a possible prison sentence of up to three years.

    The timing of the vote was no accident. The government used the occasion of International Holocaust Remembrance Day as a platform to denounce the misnomer “Polish death camps” that some – including former President Barack Obama – have used to refer to Nazi concentration camps in occupied Poland.

    The Polish government, along with other Polish organizations, has been fighting the use of that expression in foreign media for several years, and with considerable success. Most American newspapers and other major media outlets have updated their stylebooks to stop those words being used.

    Nevertheless, given the growing controversy, the German minister of foreign affairs took it upon himself to declare that the Germans bore the entire responsibility for the extermination camps. But then he added that “the actions of individual collaborators do not alter that fact.”

    And therein lies the rub.

    Many Poles find it difficult to accept they could have played a role in the Holocaust. That is because, unlike many other nations, the Polish state did not collaborate with the Nazis. Considered an inferior race by the Nazis, Poles were targeted for cultural extermination to facilitate German expansion to the East. Polish elites were systematically murdered. Tens of thousands of Poles were imprisoned in concentration camps or were forced into slave labor.

    The Old Town burns during the Warsaw Uprising, August 1944. Museum of Warsaw

    Poland’s losses in World War II were enormous: Approximately 6 million Polish citizens were killed in the war, over half of whom were Jewish. Warsaw was left in ruins, and its 1944 uprising alone cost the lives of about 150,000 citizens.

    The dominant Polish narrative of World War II is, therefore, about victimhood, which fits squarely into its broader national mythology of martyrdom.

    Adam Mickiewicz (1798-1855) Unknown

    Repeatedly invaded by its powerful neighbors, the Polish state disappeared from the European map for over a century – from 1795 to 1918. Poland’s national bard, the 19th century poet Adam Mickiewicz, described his country as a “Christ among nations.” In this telling Poles are a chosen people, innocent sufferers at the hands of evil oppressors.

    “Revelations” of crimes committed against Jews by Poles tarnish this narrative and shake Polish national identity to its core.

    Narrative shock

    The fact is, however, as historians have shown, crimes committed against Jews by Poles were much more prevalent and widespread than most people realized.

    Perhaps the most controversial and impactful research is that of the Polish-born Princeton University professor, Jan T. Gross.

    In his 2000 book “Neighbors,” Gross recounts in painful detail the violent murders of Jews by their ethnically Polish neighbors in the small town of Jedwabne on July 10, 1941.

    The book marked a watershed in the public debate about Polish-Jewish relations.

    On July 10, 2001, roughly a year after the publication of Gross’ book, the Polish government acknowledged the murders and erected a monument at the site where several hundred Jews were forcibly brought to a barn and burned alive. Although the monument’s inscription fails to explicitly indicate that it was ethnic Poles and not Germans who committed the crime, the official apology by then-President Aleksander Kwaśniewski was unequivocal. “Here in Jedwabne,” he said, “citizens of the Republic of Poland died at the hands of other citizens of the Republic of Poland.”

    The Jedwabne memorial. Genevieve Zubrzycki, Author provided

    Such was the shock the story of Jedwabne caused that it is possible to distinguish between Poland “before and after” the appearance of Gross’ book. As leading Catholic journalist Agnieszka Magdziak Miszewska put it: “Facing up to the painful truth of Jedwabne is … the most serious test that we Poles have had to confront in the last decade.”

    Law and Justice’s politics of history

    It is that test, arguably, that the ruling Law and Justice party is failing.

    In the battle over Polish collective memory, the party has been promoting the stories of the Poles who rescued Jews – and who are honored by Israel as the “Righteous Among Nations” – by creating museums and monuments in their name.

    Through the new “Holocaust Law,” the government is, in effect, trying to repress knowledge of crimes committed against Jews by Poles. The defense of the law, however, goes one step further. In a remarkable case of what I would describe as manipulating the message, Prime Minister Mateusz Morawiecki issued a video statement claiming that it is the Poles who are the guardians of historical truth and fighters against hatred.

    And yet, the same politicians remain silent when their supporters express anti-Semitic and anti-refugee views. On Feb. 5, for example, demonstrators impatient for President Duda to sign the Holocaust law gathered in front of the Presidential Palace chanting anti-Semitic slogans and demanding that he “remove [his] yarmulke and sign the law!”

    The president did sign the law, but he also sent it to the country’s constitutional court for examination.

    Those Poles opposed to the law – and there are many, judging by the number of organizations and public figures denouncing it and the number of petitions circulating – hope that it will be deemed unconstitutional because it represses freedom of speech and could significantly curtail academic research.

    Regardless of the ultimate outcome, however, the government’s politics of history will continue to be waged on many other fronts. What is at stake, in my view, is nothing less than the definition of Polish national identity. This is why, for all the international outrage, the controversy about the Holocaust law is hottest inside Poland, among Poles who are now debating what it means to be Polish and where Poland is going.

  • Dutch Finance Minister Admits He Lied About Putin's Plans For A "Greater Russia"

    In a shocking admission, Dutch Foreign Minister Halbe Zijlstra said he lied when he claimed to have heard President Vladimir Putin describing an ambition to unify Russia, Ukraine, Belarus, the Baltic states and Kazakhstan into a single super-state to rival the influence of the former Soviet Union.

    Zijlstra claimed at a party conference in 2016 that he had overheard Putin outlining the grand plan for a “Greater Russia” in 2006 during a gathering of businessmen. At the time, Zijlstra was working at Shell, RT reports.

    Dutch

    In the original retelling of the story, Zijlstra said he had been in a back room of a dacha (country house) when he heard Putin define “Great Russia” as “Russia, Belarus, Ukraine and the Baltic states,” adding that “Kazakhstan was nice to have.”

    The story was questioned by the newspaper Volkskrant, however, which quickly discovered that Zijlstra had not even attended the 2006 business meeting in Russia, despite being part of the Shell delegation. When confronted about this, the minister acknowledged that he had lied, and said he was simply trying to protect a source.

    “I made the decision that this is an important geopolitical story with serious implications,” he said.

    I put myself in the story to make sure that the revelations weren’t about the person who was actually there. Because that could have had implications for him or his company.”

    Zijlstra insisted he was told as much from a source whom he refused to name. The newspaper itself says the source was Jeroen van der Veer, who was the CEO of Shell at the time.

    The revelation comes at an awkward time for the foreign minister. Zijlstra, who took office in October 2017, is set to visit Moscow this week to meet with his Russian counterpart, Sergey Lavrov. Geert Wilders’ opposition right-wing Party for Freedom has called for a parliamentary debate about Zijlstra’s integrity before he leaves. Zijlstra told Volkskrant that he informed Prime Minister Mark Rutte about his conduct several weeks ago.

    “Greater Russia” is an amorphous term usually used to describe the historic core of the Russian state, roughly corresponding to the territory of medieval Russia in the 16th century – the beginning of the reign of Ivan the Terrible, who was the first of Russia’s great expansionist rulers. The word “greater” is meant as a description of spiritual significance rather than physical size. The same term was applied to the core territories of some other countries, like Greater Armenia, Greater Walachia or Greater Poland.

  • Free Speech And Social Engineering In The "Land Of The Free"

    Authored by Mac Slavo via SHTFplan.com,

    A disturbing trend has been going on for quite some time now, and that’s the destruction of free speech.  Many college campuses even have safe spaces now, where certain speech is banned so college students can snuggle blankets.

    Free speech is now the topic of several debates and they all revolve around social engineering/social tyranny. Take this article from The Week, for example.

    On many college campuses, groups of left-leaning students insist that free speech should be conditional on speakers adhering to explicit standards of diversity and avoiding the infliction of emotional harm on the members of marginalized groups through the spreading of “hate.”

    From the opposite ideological direction, President Trump believes that the government should “take a strong look” at libel laws to keep news organizations from subjecting his own administration to negative coverage.

    Finally, from the center-left come calls to use anti-discrimination law to punish organizations that oppose the legitimacy of same-sex marriage and accommodations for transgender people. If that happens — either by passing new laws that explicitly add to existing anti-discrimination statutes or by courts treating the members of these groups as protected classes covered by existing law — the result will almost certainly be a significant constriction of speech, as those holding more conservative views will face sanction for expressing them in public. –The Week

    The article asks the question: Is America Having Second Thoughts About Free Speech?  But Joe Joseph with The Daily Sheeple answers the question perfectly.

    “NO! America’s NOT having second thoughts about free speech. But the social engineers are cramming it down our throat like this is what we want.  But really, nobody wants it! It’s unfreakin’ believeable!”

    Joseph’s take reflects all those who are individual minded.  Even offensive speech is only offensive to the emotionally weak. “I can’t believe that we’re even having this conversation in the land of the FREE!!!! What the heck is going on…. are we in the “Twilight Zone”? When did we go from a nation of bad ass mo fo’s to a nation of pansies?” says the caption on Joseph’s latest news shot video.

    “How about we do this…how about these media organizations actually follow through with what their code of ethics say. How about they actually do what they say they’re gonna do! How about you practice the rules you’re taught day one in journalism school!” says Joseph about the media.

    He goes on to say laws dictating what speech is acceptable, and what type of speech is not acceptable, are not designed to fix the problem.  They are designed to divide the people and amplify the problems.

    There should never be a question of whether or not humans have free speech. It’s a natural right to think and say whatever you want.  Words don’t do physical damage, and until someone is hurt or their property is damaged, no crime has been committed.

  • Pentagon Sending Heavily Armed Marine Units To East Asia To "Counter China Threat"

    According to a recent report by the Wall Street Journal, the Pentagon is considering plans to transfer heavily armed, versatile Marine Corps Expeditionary Units (MEU) to East-Asia, citing the rapidly expanding Chinese influence in the region.

    After 16-years of military embarrassments in the Middle East, the Pentagon appears to have realized that its misfortunes in the area have transformed into nothing more than Vietnam 2.0; alternatively it is merely provoking Asian superpowers into a new race for military dominance in the region.

    Washington’s drive for regional militarization (and constant wars feeding the MIC) appears is shifting away from the Middle East and onto China and Russia’s playground. President Trump’s newly issued National Defense Strategy report highlights “our [Pentagon] competitive military advantage has been eroding” throughout the world, as it has now become a national security threat. Further, the report labels, the South China Sea and the Korean Peninsula, as areas of an “increasingly complex security environments,” which the Pentagon will start transferring military assets to the region, to combat the threat because it is jeopardizing the American empire.

    “Today, we are emerging from a period of strategic atrophy, aware that our competitive military advantage has been eroding. We are facing increased global disorder, characterized by decline in the long-standing rules-based international order—creating a security environment more complex and volatile than any we have experienced in recent memory. Inter-state strategic competition, not terrorism, is now the primary concern in U.S. national security.”

    “China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea. Russia has violated the borders of nearby nations and pursues veto power over the economic, diplomatic, and security decisions of its neighbors. As well, North Korea’s outlaw actions and reckless rhetoric continue despite United Nation’s censure and sanctions.”

    The Wall Street Journal says the Pentagon intends to boost its military appearance in the East Pacific with the deployment of Marine Expeditionary Units. A Marine expeditionary unit (MEU, pronounced “Mew”), is a group of 2,200 marines who are part of the quick reaction force and are usually deployed to a region for an upcoming or immediate crisis. A unit deploys about 2,200 marines who operate amphibious assault ships, aircraft, helicopters, tanks, heavy weapons, and other military assets. Each MEU is equipped with:

    Officials said these shifts are “major muscle movements,” as the Pentagon transfers military equipment and personnel redeployments, and are aimed at “a global resetting of forces” rather than a “buildup for war.”

    “We have enduring interests here, and we have an enduring commitment and we have an enduring presence here,” Gen. Joe Dunford, chairman of the Pentagon’s Joint Chiefs of Staff, who spoke about America’s reshuffling of armed forces during an eight-day visit through Asia last week.

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    MEUs deploy in seven-month rotations on Tarawa-class amphibious assault ships operated by the United States Navy; they may stay offshore for the entire time of deployment or come ashore for small periods of time to conduct training exercises. General Robert Neller said MEUs sent to Asia would jump right into military patrols and joint activities with allies.

    “We have to be present and engaged to compete,” Gen. Neller said. The new defense strategy “will shape our future naval presence, especially in the Indo-Pacific region.”

    WSJ says MEUs have recently been deployed to various theaters in the Middle East but will be soon departing from their native ports on the West Coast of the United States to Asia.

    MEUs based on the West Coast have traveled from the U.S. to the Middle East for wars in Iraq, Afghanistan and most recently, Syria, all in the area of responsibility of U.S. Central Command. MEUs, designed to be a quick reaction force, were among the first units to arrive near northern Iraq in 2016 to set up for a campaign to free the city of Mosul from Islamic State.

    Pentagon officials said they hope their new strategy on East Asia will persuade Pacific nations to stand with the U.S. “I believe the [National Defense Strategy] and other guidance requires us to adopt a more global posture and this will shape our future naval presence, especially in the Indo-Pacific region,” said Gen. Neller.

    Kelly Magsamen, a former Pentagon and State Department policy official, said the new military strategy, when more fully implemented, will require careful diplomacy and a robust economic approach: “Follow through on strategy is essential, but so is close communication and coordination with our allies and friends,” said Ms. Magsamen, now vice president national security and international policy at the Center for American Progress.

    In keeping with the Pentagon’s party line, the WSJ warns that depleting military resources in the Middle East could enable Russia and China to “bolster their presence” in the region.

    Some officials argue that withdrawing resources from the Middle East could allow Russia and China to bolster their presence there. Russia backs Syria’s ruler and both countries are seeking to expand their influence elsewhere in the region.

    https://platform.twitter.com/widgets.js

    Take Guam, an American territory in Micronesia in the Western Pacific, which has about 3,831 American soldiers on the island stationed at Anderson air force base. Last month, we reported, the B-1B Lancer bombers, the B-2 Spirit stealth bombers, and the B-52H Stratofortress bombers are now ‘temporarily’ stationed at Andersen Air Force Base. Nevertheless, the show of force wound down this month, when the B-1Bs return to Ellsworth Air Force Base in South Dakota.

    Curiously, the Pentagon’s military build-up in Asia comes as Pyongyang and Seoul are making some progress towards engaging in dialogue over North Korea’s reckless nuclear and rocket programs. Further, the United States is becoming increasingly worried about Beijing’s drive to militarize the heavily disputed artificially-created islands it controls in the South China Sea.

    America’s legacy of failed wars in the Middle East is quietly being swept under the carpet. The Pentagon is now vocally repositioning itself for the next boogeyman being Russia, China, and North Korea, as highlighted in the 2018 National Defense Strategy. It is likely that the Trump administration with the Pentagon will condition the American people through psychological operations, about how America’s competitive military advantage is eroding, and the need to transfer military assets to the Asia Pacific is critical for America’s survival. This alarming trend will continue for at least President Trump’s first term, and if he gets elected again, it will definitely persist until the next World War starts.

    Meanwhile, Beijing is preparing for the next global conflict with a new era of modernization of the country’s armed forces, the largest in the world, including AI-Enabled Nuclear Submarines, fifth-generation fighters, and hypersonic weapons.

  • A President Held Hostage?

    Authored by Justin Raimondo via Antiwar.com,

    They’ve got him surrounded…

    As Vice President Mike Pence made a fool both of himself, and the country he is supposed to be representing, at the Olympic Games by refusing to stand for the athletes of any nation other than the US, back at home the Washington Post was reporting on a President Trump who appears to have nothing in common either with Pence or with the White House staff. The piece, entitled “Trump’s favorite general: Can Mattis check an impulsive president and still retain his trust?” tells a story that pits a President inclined to challenge the War Party against a Praetorian Guard determined to nullify his electoral mandate to keep out of foreign wars and put “America first”:

    “Although Trump has given the military broad latitude on the battlefield, he also has raised pointed questions about the wisdom of the wars being fought by the United States. Last year, after a delegation of Iraqi leaders visited him in the Oval Office, Trump jokingly referred to them as ‘the most accomplished group of thieves he’d ever met,’ according to one former U.S. official.”

    Truer words were never spoken, but of course this leak is designed to embarrass Trump and put him at odds with those very thieves. Mattis was presumably horrified by this truism, since the General is an even bigger thief, having successfully manipulated Congress into appropriating 15.5 percent more money for the military than Trump asked. The Post piece goes on to detail the President’s many heresies:

    He has repeatedly pressed Mattis and McMaster in stark terms to explain why US troops are in Somalia. ‘Can’t we just pull out?’ he has asked, according to US officials.

    “Last summer, Trump was weighing plans to send more soldiers to Afghanistan and was contemplating the military’s request for more-aggressive measures to target Islamic State affiliates in North Africa. In a meeting with his top national security aides, the president grew frustrated. ‘You guys want me to send troops everywhere,’ Trump said, according to officials in the Situation Room meeting. ‘What’s the justification?’”

    Oh, the shocked silence in that room must have lasted for what seemed like forever. Then Mattis came up with the same old bullshit:

    “‘Sir, we’re doing it to prevent a bomb from going off in Times Square,’ Mattis replied.”

    Trump didn’t fall for it: “The response angered Trump, who insisted that Mattis could make the same argument about almost any country on the planet.” And the President wasn’t alone in his skepticism: “Attorney General Jeff Sessions echoed Trump’s concerns, asking whether winning was even possible in a place such as Afghanistan or Somalia.”

    Here’s the scary part, which concludes the piece:

    “It was Mattis who made the argument that would, for the moment at least, sway Trump to embrace the status quo – which has held for the past two presidents.

    “‘Unfortunately, sir, you have no choice,’ Mattis told Trump, according to officials. ‘You will be a wartime president.’”

    Really? Why is that? And which war is Mattis specifically referring to? Afghanistan? We’re largely out of Iraq. Syria – the latest addition to our interventionist folly? We aren’t told, but in my view it’s not any foreign war Mattis is referring to, but – perhaps unconsciously – he’s referencing the war at home, i.e. the one being conducted by his own government against the President of the United States.

    We read about it every day in the media: the Russia-gate hoax is still being flogged, despite growing evidence of its utter falsity. Robert Mueller is still on the prowl, looking for a pretext to take Trump down. The media, a longtime adjunct of the national security bureaucracy, is openly working in tandem with the intelligence services to take out Trump – and if you want to know why, just re-read the reporting on Trump’s reluctance to go along with the War Party’s murderous agenda.

    So once they take him down, who will be Trump’s replacement? It’ll be Mike Pence, of course, the same person doing everything in his power to destroy the possibility of peace on the Korean peninsula – quite against Trump’s expressed hope that “we can make a deal” with North Korea.

    The War Party cannot tolerate a President who questions the most basic premises of the American Empire: “You guys want me to send troops everywhere!” Of course they do. However, Trump was elected to carry out a very different mandate: to start putting America first. He railed against regime change. And now the regime-changers want to carry out a change of regime against him.

    Just look at the reporting by James Risen in The Intercept: the FBI/CIA/NSA cabal paid a Russian operative $100,000 as a down payment on a total of a million to get compromising material on Trump. Isn’t this kind of thing only supposed to happen in places like Tadjikistan? Oh, it was all done under the pretext of getting back our stolen cyber-war tools, but really – how valuable are they if the Russians already have them? Sure, we could find out what was stolen – we still don’t know – but the long involved process described by Risen is really about getting rid of Trump. That’s all they really care about right now, and they’ll stop at nothing – including, I believe, assassination – to pull it off.

    There’s too much money riding on the continued existence and expansion of our worldwide empire to let Trump ruin their scam. Too many careers are based on it, too much prestige is at stake, too many “allies” are dependent on the largesse it affords them. They’re boxing him in, despite his noninterventionist instincts, and they’re compiling “dossiers,” and they’re mobilizing all their forces for the final assault on the Oval Office. In an important sense, Trump is being held hostage: they have limited his policy options in every important sphere of the national security/foreign policy realm, The “swamp” Trump talks about is an international miasma, and swamp creatures of diverse nationalities are crawling out of the muck, their claws aimed straight for the presidential throat.

    The War Party plays for keeps. The question is: does Donald Trump? We shall see.

  • Prison Chaplain Fired By Muslim Boss, Says Inmates Converting To Islam For Protection

    A London prison chaplain claims he was fired from his job of 20 years by his Muslim boss, Mohammed Yusuf Ahmed, after he was accused of “extreme” Christian views that were deemed “too radical.”

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    Paul Song (left), Mohammed Yusuf Ahmed

    Paul Song, 48, now says that the “Christian faith is not equal” in South London’s Brixton prison, and that “some people have been forced to convert with violence,” adding “How do I know? Because three or four people came up to me to tell me. This is a very sensitive issue.” 

    One inmate who served time in Brixton in 2015 has come even come forward and offered a signed a statement declaring that prisoners were forced to convert to Islam.

    “There seems to be a very troubling lack of transparency and due process around the decision to expel this chaplaincy volunteer,” says Ian Acheson, who led an independent review of Islamist extremism within prisons which found significant concerns over “the operation of some prison chaplaincies in the London area and the risks of radicalization.”

    “That sort of arbitrary action is only defensible in the case of very serious allegations. So it is baffling why he has been told that he is free to operate in any other prison, just not Brixton.”

    Acheson added: “I made a number of recommendations after repeated concerns were raised about bullying and favoritism from imams in the field. In the light of these revelations, I would urge the new ministerial team to assure itself that the dismissal of this chaplain was fair and proportionate.”

     

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    Song, a former police officer in his native South Korea, says that his firing last August came on the heels of a false accusation from a Muslim inmate, who claims the chaplain referred to him as a “terrorist.” 

    Mr Song said his position at HMP Brixton came under scrutiny after Mohammed Yusuf Ahmed became managing chaplain in 2015. 

    He told the Sunday Express: ‘I never said those things. I would never make those comments. I have worked in the prisons for many years with many faiths and there were no complaints.  –Daily Mail

    Song claims his boss, Mr. Ahmed, said that he was set on changing the “Christian domination” within HMP Brixton, according to the Sunday Times. The Ministry of Justice said there was “no evidence or intelligence to support this.”

     

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    HMP Brixton

    We find this strange, as a 2016 report by the UK’s Ministry of Justice shows that while Muslims make up just one in 20 Britons, the religion accounts for one in seven inmates. One of those, the Daily Mail reports, is the case of Levi Bellfield, a convicted child rapist and murderer who converted to Islam for protection while in prison:

    At least that’s what Rahim — a man who will be familiar to most by his real name, Levi Bellfield — hoped would happen when he converted to the Muslim faith not long after being sentenced to life for the murder and rape of schoolgirl Milly Dowler.

    ‘He found out a paedophile had been slashed in Wakefield and thought he would be next: he was a marked man after he was convicted,’ revealed his sister Ann-Marie Bellfield. ‘He said they were good boys and would look after him … he got friendly with Islamic guys and didn’t have a problem.

    “These gangs use their faith as a cover for violence and intimidation, threatening non-Muslims and pressuring them to convert to Islam,” said Steve Gillan, general secretary of the Prison Officers Association. “I have got many prisoners who are so fearful of Muslims that they feel they need to form alliances with them for protection,’ one prison governor recently revealed.

    Former prison officer Joe Chapman who is now a prison law consultant thinks that so-called “convenience conversions” are on the rise. 

    ‘This job takes me to 40 or 50 prisons over the year, throughout the country,’ he said. ‘It has become obvious to me that it’s a growing problem.

    About half a dozen of my clients have directly reported problems with being forced to convert — those who weren’t Muslim when they came in, and those who were and have been forced to look at more radical ideas about their faith.’

    Meanwhile, Song’s treatment comes as the latest HM Chief Inspector of Prisons report on Brixton, published in March last year, stated that some Christian classes had been dropped because the prison had been “unable to recruit a full-time Anglican chaplain since 2015,” reports The Times

    The report said that there were eight Christian leaders, including a full time Catholic with the rest part time – as well as four Muslims, two of whom were full time. 

    Several prisoners wrote affidavits on Song’s behalf, describing how he helped them turn away from a life of crime. 

    To call this Christian who has served without a blemish for almost 20 years an extremist defies belief,” says Andrea Williams, CEO of the Christian Legal Center which has been advising for Song. 

    Perhaps Song can look to London’s Mayor, Sadiq Kahn for help – or maybe Song is just living in the wrong country to be a Christian prison chaplain these days. 

  • The Dollar – From Bohemia To Bust

    Authored by Egon von Greyerz via Gold Switzerland,

    Virtually no investor studies history and the few who do always think it is different today. The most important lesson is that people never learn. If they did, they wouldn’t be invested in a stock market that on any criteria is now at a bubble extreme. And they wouldn’t be invested in a global debt market which has grown exponentially in recent decades and which will become worthless in the next few years as debtors default. Nor would anyone hold paper money which is down 97-99% in the last 100 years and which is guaranteed to soon fall the final bit to take the value to zero.

    The history of money clearly illustrates that “Plus ça change, plus c’est la même chose” (the more it changes, the more it is the same thing). The most constant factor in the history of money is the cycle of boom and bust or euphoria and despair. Cycles are part of nature just like the change of seasons.

    But throughout history, mankind has always believed that they know better than previous generations and can eliminate the cycle of boom and bust. This is what the British prime minister Gordon Brown proudly declared before the economy collapsed in 2007. And the Nobel Prize winner in Economics, Paul Krugman, also believes that eternal prosperity can be generated by creating endless debt and printing unlimited money.

    But history has time and time again turned hubristic know-it-alls into humbled has-beens.

    FOR 6,000 YEARS GOLD HAS OUTLIVED ALL CURRENCIES

    Whenever mankind has deviated from sound money, the consequences have without fail been catastrophic. The only money which has survived since it first came into use around 6,000 years ago is gold. All other money has been destroyed by greed and economic mismanagement. I believe I have quoted Voltaire for over 20 years and will continue to do so: “Paper Money Eventually Returns to its Intrinsic Value – ZERO”. Whether we go back 100 years, 300 years or 2,000 years, those superb 9 words is the most exact and scientific definition of economic history. This is the most important lesson that any student of Economics should learn. Armed with that knowledge, anyone can forecast the likely outcome of an economic cycle and especially the current one.

    TULIP BULBS AND BITCOINS WILL NEVER PRESERVE WEALTH

    So why are investors not taking heed and protecting themselves against risks that on a global scale have never been greater. The first reason is greed. Whether it is stocks, tulip bulbs or bitcoins, people never learn. Greed takes over and numbs any rational thinking. And that is why most investors will ride the bubble markets until they are virtually worthless.

    Experience and a long professional life is a great advantage when it comes to understanding risk. Nothing beats personally experiencing major market crashes of 50% or more like in 1973, 1987, 2000 and 2007. This certainly makes you more aware of risk and therefore also the necessity to preserve wealth.

    STOCKS ALWAYS GO UP!

    Looking back at say the Dow since 1971, it is up 29x or 2,800 percent. So why worry because “stocks always go up”. Yes, it is absolutely true that in the last 47 odd years since Nixon took away the gold backing of the dollar, asset markets have boomed. But most of these gains have been illusory and due to credit expansion, money printing and currency debasement.

    So investors are still certain that stocks will continue to grow over time. But they don’t realise what will happen to their investments when the punchbowl is taken away and interest rates increase substantially. Because that is what we will see in the next few years. Stocks have been going up only because of credit expansion and artificially low interest rates. These two factors are unlikely to be in play in coming years. Yes, central banks will panic and print unlimited amounts of money but the market will soon realise that this money is worthless and therefore will have no effect.

    What investors don’t realise is that it can take a very long time for stocks to climb back up that high wall of worry after a big fall. In 1929 the Dow peaked at 481 and then fell 90% over less than three years to bottom at 40 in 1932. But what few investors realise is that it took 26 years before the Dow was back to the 1929 high.

    THE DOW TOOK 26 YEARS TO GET BACK TO 1929 PEAK

    The almost 1,000 points drop in the Dow last Monday was a foretaste of things to come. We might not see the end of the multi decade bull market quite yet but risk is today colossal. Once the bear market starts, the Dow will experience days of several thousand points decline.

    The 1929 crash was 90% but since the current bubble is so much greater by any measure, the coming fall of US stock markets is likely to be at least 95%.

    NIKKEI STILL 40% BELOW 1989 PEAK

    A more recent example of a stock market not recovering is the Nikkei which topped at 39,000 in 1989. Today, 29 years later the Nikkei is still 40% below that level after having been down as much as 80% from the high. In spite of massive money printing with debt well over Yen 1 quadrillion and zero or negative interest rates for most of the last 29 years, the Japanese stock market is still in the doldrums. The most likely outcome for Japan is that the economy will collapse with stocks going down 95% or more with the value of debt going to zero followed by the Yen which will also go to zero.

    THE DOLLAR HAS BEEN FALLING FOR HALF A CENTURY

    Looking at the dollar since 1971, it has lost 78% against the Swiss franc and 56% against the DMark/Euro.

    If we measure against real money – gold – the dollar has lost 98% in the last 100 years. Most of that fall took place after Nixon’s fatal decision in 1971.

    PAPER MONEY – FROM 100 TO ZERO IN ONE CENTURY

    It is clear that the dollar will lose the additional 3% against gold to make it reach ZERO intrinsic value. But we must remember that this means the dollar will fall 100% from current level. And that fall is virtually guaranteed. It is only a question of how long it will take. The biggest part of the dollar decline could happen very rapidly, within 3 to 7 years. At the same time US debt will go to zero and interest rates will reach infinity.

    THE DOLLAR – FROM BOHEMIA TO OBSCURITY

    Interestingly, the word dollar came from the Czech Kingdom of Bohemia where silver coins were minted in the early 1500s.

    The area was called Joachimsthal (Joachim’s valley) and the money Joachimsthaler shortened to Thaler or Daler (Dollar). This word for money was used in many countries in the world. It came to America as the Spanish American Peso which became the Spanish dollar. In 1785 it was adopted in the US as the official currency – the American dollar. When the US dollar collapses in coming years, it will be interesting to see how long it will take for the dollar to totally disappear just as the Denarius did when the Roman Empire collapsed.

    THE DENARIUS – FROM SILVER TO DUST

    The silver coin Denarius was first minted in 211 BC.

    As the finances of the Roman Empire deteriorated, the Denarius was gradually debased. During the 100 year period, 180 to 280 AD the silver content of the Denarius went from 87% to 0%. This is exactly what is happening to the currency system today with all major currencies down 97-99% measured in nature’s money – Gold. But we still have the final 1-3% to come which will be extremely painful for the world.

    WORLD ECONOMY – FROM EUPHORIA TO DYSPHORIA

    We are now in the final phase of manic euphoria. Within the next 6 to 18 months the euphoria will turn into dysphoria as 100 years of economic mismanagement and manipulation come to an end. It will not only severely affect financial markets and the world economy but also the fabric of society in most countries. I have talked about this many times and it certainly is a depressing scenario. The world is likely to experience very high unemployment, no or little money for most people, disease, famine, no social security, no pension, little medical care, social unrest, wars etc.

    No one, absolutely no one, can prepare fully for this or avoid it. We will all suffer. As I have stressed many times, the circle of family and friends is the best protection and more important than anything else. For the few who are privileged to have savings, it is still not too late to acquire some physical gold and silver. As the financial system crashes, precious metals will resume their role as money. Not only will gold and silver become extremely valuable and desired, but more importantly, it will maintain purchasing power as it has for 6,000 years.

    Investors must not be influenced by short term fluctuations in the gold and silver price. Without warning gold will one day start moving up 100s of dollars and silver 10s of dollars over a very short period. Gold and silver must be acquired today at current low prices. When the real move starts, it will be impossible to get hold of physical gold and silver at any price.

  • Comey: FBI Agents (Including Peter Strzok) Didn't Think Flynn Lied

    FBI investigators who interviewed Michael Flynn last January – one of which was anti-Trumper Peter Strzokthought Flynn was telling the truth about his conversations with Russian ambassador Sergey Kislyak, and that any inaccuracies in his answers were unintentional – according to accounts of a closed-door March 2017 briefing given to lawmakers by former FBI Director James Comey.

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    According to two sources familiar with the meetings, Comey told lawmakers that the FBI agents who interviewed Flynn did not believe that Flynn had lied to them, or that any inaccuracies in his answers were intentional. As a result, some of those in attendance came away with the impression that Flynn would not be charged with a crime pertaining to the January 24 interview. –Washington Examiner

    This new revelation from the closed-door briefing held nearly a year ago (apparently leaks which benefit conservatives take much longer), complicates an already murky case considering that Flynn pleaded guilty nine months later to one count of making a false statement to the FBI.

    To briefly review; Flynn and Russian Ambassador Sergey Kislyak had a phone conversation in late December, 2016. On its face, there was absolutely nothing wrong with an incoming National Security Advisor having a conversation with a Russian government official. Following the conversation, which was surveilled by the Obama administration and then leaked to the press

    The first thing to remember is that it appears Flynn did nothing wrong in having those talks. As the incoming national security adviser, it was entirely reasonable that he discuss policy with representatives of other governments and Flynn was getting calls from all around the world. –Washington Examiner

    What happened next is strange; on January 12, WaPo columnist and deep-state news conduit David Ignatius reported that Flynn and Kislyak had talked – implying some type of malfeasance. Days later, on January 15, Vice President-elect Mike Pence denied that Flynn had discussed sanctions with the Russian ambassador. The on January 24, Obama holdover and acting Attorney General Sally Yates sent two FBI agents to interview Flynn without a lawyer present.  

    Two days later, on January 26, Yates and a colleague visited the White House to tell White House counsel Don McGahn that Flynn may have violated the obscure logan act, and in fact discussed sanctions with Kislyak – possibly subjecting Flynn to blackmail.

    Yates then explained to McGahn her theory that Flynn might be vulnerable to blackmail. The idea was that Flynn had discussed sanctions with Kislyak, which of course the Russians knew. And then if Flynn lied to Pence, and Pence made a public statement based on what Flynn had told him, then the Russians might be able to blackmail Flynn because they, the Russians, knew Flynn had not told the vice president the truth. –Washington Examiner

    Meanwhile, on January 23, the Washington Post reported that they had “not found any evidence of wrongdoing or illicit ties to the Russian government,” after having reviewed the leaked conversation

    Even stranger is the fact that Flynn’s sentencing has been delayed at the request of Special Counsel Robert Mueller, with an agreement to revisit the matter no later than May 1, 2018. 

    Due to the status of the Special Counsel s investigation, the parties do not believe that this matter is ready to be scheduled for a sentencing hearing at this time, the document, signed by Mueller and Flynn attorneys Robert Kelner and Stephen Anthony, said. 

    Some have speculated that Mueller’s request indicates Flynn is cooperating with his investigation. Others, such as former federal prosecutor Joe diGenova, think that “It may very well be that the guilty plea cannot stand” after D.C. Judge Rudolph Contreras – who also sits on the FISA court – recused himself days after he was assigned Flynn’s case.

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    Judge Rudolph Contreras

    Others yet have speculated that the FBI conducted an illegal interview of Flynn by not announcing that he was actually under investigation, and did not have an attorney present (which Byron York notes Flynn should have known to do). 

    On January 27, 2017, Flynn resigned. 

    So – if FBI agent Peter Strzok didn’t think Flynn had lied, and the Washington Post – which reviewed a conversation (leaked by the Obama administration) concluded that Flynn did nothing wrong, then why did Flynn apparently lie to Mike Pence? 

    Is it possible that Flynn told Pence the truth and Pence lied due to the optics of the ongoing Trump-Russia “witch hunt” that was kicking into high gear? 

    Whatever the case, the Flynn story is now murkier than ever…

  • Ron Paul Warns 'E-Verify' Threatens Us All

    Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

    In addition to funding for a border wall and other border security measures, immigration hardliners are sure to push to include mandatory E-Verify in any immigration legislation considered by Congress.

    E-Verify is a (currently) voluntary program where businesses check job applicants’ Social Security numbers and other Information — potentially including “biometric” identifiers like fingerprints — against information stored in a federal database to determine if the job applicants are legally in the United States.

    Imagine how much time would be diverted from serving consumers and growing the economy if every US business had to comply with E-Verify. Also, collecting the relevant information and operating the mandatory E-Verify system will prove costly to taxpayers.

    Millions of Americans could be denied jobs because E-Verify mistakenly identifies them as illegal immigrants. These Americans would be forced to go through a costly and time-consuming process to force the government to correct its mistake. It is doubtful employers could afford to keep jobs open while potential hires went through this process.

    A federal database with Social Security numbers and other identifying information is an identify thief’s dream. Given the federal government’s poor track record for protecting personal information, is there any doubt mandatory E-Verify would put millions of Americans at risk for identity theft?

    Some supporters of E-Verify deny the program poses any threat to civil liberties, as it will only be used to verify citizenship or legal residency. They even claim a system forcing individuals to have their identities certified by the government is not a national ID system. These individuals are ignoring the history of government programs sold as only affecting a particular group or being used for a limited purpose being expanded beyond initial targets. For example, Americans were promised that only the wealthiest Americans would ever pay income taxes. And some of the PATRIOT Act’s worst provisions that we were told would only be used against terrorists are routinely used to investigate drug crimes.

    E-Verify almost certainly will be used for purposes unrelated to immigration. One potential use of E-Verify is to limit the job prospects of anyone whose lifestyle displeases the government. This could include those accused of failing to pay their fair share in taxes, those who homeschool or do not vaccinate their children, or those who own firearms.

    Unscrupulous government officials could use E-Verify against those who practice antiwar, anti-tax, anti-surveillance, and anti-Federal Reserve activism. Those who consider this unlikely should remember the long history of the IRS targeting the political enemies of those in power and the use of anti-terrorism laws to harass antiwar activists. They should also consider the current moves to outlaw certain types of “politically incorrect” speech, such as disputing the alleged “consensus” regarding climate change.

    Claiming that mandatory E-Verify is necessary to stop illegal immigration does not make it constitutional. Furthermore, having to ask the federal government for permission before obtaining a job is a characteristic of authoritarian societies, not free ones. History shows that mandatory E-Verify’s use will expand beyond immigration enforcement and could be used as a tool of political repression. All those who value liberty should oppose mandatory E-Verify.

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Today’s News 12th February 2018

  • Intel's New "Smart Glasses" Shoot Laser Beam Directly Into Your Retina

    For anyone who wanted a pair of Google glasses but didn’t want to look like a lazy Borg cosplay, Intel may have just what you need. Just one catch; you have to be OK with a laser firing photons directly into your retina. 

    Consummate techie and Executive Editor at The VergeDeiter Bohn, took Intel’s Vaunt smart glasses for a test drive – which he says are “virtually indistinguishable from regular glasses,” and are the “first pair of smart eyeglasses I’ve tried that doesn’t look ridiculous.”

    The smart glasses – which weigh less than 50 grams – work by projecting a very low-powered laser (a VCSEL), which shines a “red, monochrome image somewhere in the neighborhood of 400 x 150 pixels” on to a holographic reflector on the right lens of the glasses – which is then reflected directly into your eyeball and onto your retina.

    Intel swears it’s safe. 

     “It is a class one laser. It’s such low power that we don’t [need it certified],” he says, “and in the case of [Vaunt], it is so low-power that it’s at the very bottom end of a class one laser.” –Mark Eastwood, Director of Industrial Design, Intel NDG group

    We use a holographic grading embedded into the lens to reflect the correct wavelengths back to your eye. The image is called retinal projection, so the image is actually ‘painted’ into the back of your retina,” says Jerry Bautista, the team lead for wearable devices at Intel’s NDG. Due to the fact that the glasses project images directly onto the retina, the projected image is in focus on both prescription and non-prescription lenses. 

    In addition to the micro-electro-mechanical (MEMS, or “Pico”) projector, the glasses also pack hardware and software for Bluetooth communication with your phone, as well as an accelerometer and a compass. Future models may even include a microphone for use with virtual assistants such as Alexa and Siri.

    And of this, along with batteries, are contained within a remarkably compact chassis. 

    Requiring a custom fitting to each user, the glasses project a stream of information on what Bohn says looks like a screen, delivering a wide variety of information:

    At its core, Vaunt is simply a system for displaying a small heads-up style display in your peripheral vision. It can show you simple messages like directions or notifications. It works over Bluetooth with either an Android phone or an iPhone much in the same way your smartwatch does, taking commands from an app that runs in the background to control it.

    When looking down, the Vaunt glasses project a “rectangle of red text and icons down in the lower right of your visual field,” however, when the wearer is not glancing down in that direction, the display shuts off – as it was designed to be “nonintrusive,” according to Bohn. 

    ”We didn’t want the notification to appear directly in your line of sight,” says Eastwood. “We have it about 15 degrees below your relaxed line of sight. … An LED display that’s always in your peripheral vision is too invasive. … this little flickering light. The beauty of this system is that if you choose not to look at it, it disappears. It is truly gone.” –The Verge

     

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    Bohn says he adapted to the glasses very quickly – writing that it became “natural within less than an hour to glance over at it to make it appear, or ignore it and focus on the person I was speaking with.” 

    Or, as it turns out, not focus on the person you’re speaking with:

    So I’m talking to you right now and you feel like you mean so much,” says Ronen Soffer, general manager for software products at NDG, “but I’m actually playing a trivia game right now.” (He wasn’t actually doing that, to be clear.) But after a day of playing around with the Vaunt prototypes, I completely believe that sort of thing is not just possible soon, but probably inevitable. Intel is thinking about those implications, too. Soffer wryly jokes: “You can ignore people more efficiently that way.”

    While it was unclear how users might interact with the Vaunt glasses, some have suggested that voice recognition, head gestures or both could activate it – or one could “trust the AI to show you what you need to know in the moment,” perhaps things such as nearby gas stations if you’ve failed to notice that your fuel light has been on for the last 12 miles. 

    Imagine walking down the street, looking at a shop or a restaurant, and instantly checking out Yelp reviews. Or perhaps the system could be used to project player stats in real time while at a sporting event. Whatever the case, Intel’s Brian Soffer says the company’s AI might just know exactly what you need to see. 

    “Listen, sometimes a better way to succeed is to make the problem smaller,” says Soffer. Intel’s AI for figuring out what to show you is “focused on certain types of moments, and we’ve been developing this technology for five or six years now to focus on those wearable, out-and-about moments.”

    Developing the platform

    Intel will be launching an “early access program” later this year so that developers can begin to tinker with the Vaunt system – developing apps for both phones and the glasses themselves. 

    The Verge‘s Bohn speculates that apps may directly stream content to the Vaunt glasses from the cloud, presumably to minimize on-board processing requirements – similar to how a Google Cast-enabled TV works as an endpoint for streaming video. When asked if this was the plan, Intel said “we’ll talk about that at a later date,” adding that “it really is built as an open platform … built from the ground up to be a mobile platform that accesses the internet. And a wearable device gets really powerful when it changes the way you access the internet.”

    While it’s unclear if Intel will bring the Vaunt glasses to market or find a partner to bring them to retail, The Verge notes that Intel is reportedly looking to sell a majority stake in its augmented reality business, according to Bloomberg

    Intel has a reputation for showing off ideas that never turn into real products. It comes up with a cool concept, proves out the technology, then hopes to convince others to take that idea and turn it into a real product. CEO Brian Krzanich comes on a CES stage, talks about a charging bowl (or hey, smart eyeglasses!), and then we wait to see if they’ll come to market. Often (maybe even usually), they don’t.

    I think the intention with Vaunt is a little different from Intel’s usual playbook. For one thing, Bloomberg’s report confirms that Intel is looking for partners with “strong sales channels … rather than financial backers.” For another, Bautista and I spoke a bit about how the sales channels for eyeglasses work now back in December.

    ”There’s something on the order of 2.5 billion people that require corrective lenses,” he says. “They get their glasses from somewhere. Sixty percent of them come from eye care providers. … We would say these glasses belong in those kinds of channels. People are going to buy them like they buy their glasses today.” The Verge

    While the Vaunt glasses are lighter, better looking, and possibly have a longer battery life than other smart glasses such as Magic Leap or HoloLens, they also project less information to the user. That said, as Bohn notes, the Vaunt is the “first pair of smart eyeglasses I’ve tried that doesn’t look ridiculous.” 

    Now let’s see what developers can do to make them rock and roll. Someday we’ll be telling our grandchildren about the days before laser beams were projected into our retinas. Hopefully we won’t be blind in one eye. 

  • 'Russiagate' Delusion Dies – Who Is 'Bill' Priestap?

    Via TheConservativeTreehouse.com,

    The game is over. The jig is up. Victory is certain… the trench was ignited… the enemy funneled themselves into the valley… all bait was taken… everything from here on out is simply mopping up the details.  All suspicions confirmed.

    Why has Devin Nunes been so confident?  Why did all GOP HPSCI members happily allow the Democrats to create a 10-page narrative?  All questions are answered.

    Fughettaboudit.

    House Permanent Select Committee on Intelligence member Chris Stewart appeared on Fox News with Judge Jeanine Pirro, and didn’t want to “make news” or spill the beans, but the unstated, between-the-lines, discussion was as subtle as a brick through a window.  Judge Jeannie has been on the cusp of this for a few weeks.

    Listen carefully around 2:30, Judge Jeanine hits the bulls-eye; and listen to how Chris Stewart talks about not wanting to make news and is unsure what he can say on this…

    …Bill Priestap is cooperating.

    When you understand how central E.W. “Bill” Priestap was to the entire 2016/2017 ‘Russian Conspiracy Operation‘, the absence of his name, amid all others, created a curiosity.  I wrote a twitter thread about him last year and wrote about him extensively, because it seemed unfathomable his name has not been a part of any of the recent story-lines.

    E.W. “Bill” Priestap is the head of the FBI Counterintelligence operation.  He was FBI Agent Peter Strozk’s direct boss.  If anyone in congress really wanted to know if the FBI paid for the Christopher Steele Dossier, Bill Priestap is the guy who would know everything about everything.

    FBI Asst. Director in charge of Counterintelligence Bill Priestap was the immediate supervisor of FBI Counterintelligence Deputy Peter Strzok.

    Bill Priestap is #1. Before getting demoted Peter Strzok was #2.

    The investigation into candidate Donald Trump was a counterintelligence operation. That operation began in July 2016. Bill Priestap would have been in charge of that, along with all other, FBI counterintelligence operations.

    FBI Deputy Peter Strzok was specifically in charge of the Trump counterintel op. However, Strzok would be reporting to Bill Priestap on every detail and couldn’t (according to structure anyway) make a move without Priestap approval.

    On March 20th 2017 congressional testimony, James Comey was asked why the FBI Director did not inform congressional oversight about the counterintelligence operation that began in July 2016.

    FBI Director Comey said he did not tell congressional oversight he was investigating presidential candidate Donald Trump because the Director of Counterintelligence suggested he not do so. *Very important detail.*

    I cannot emphasize this enough. *VERY* important detail. Again, notice how Comey doesn’t use Priestap’s actual name, but refers to his position and title. Again, watch [Prompted]

    FBI Director James Comey was caught entirely off guard by that first three minutes of that questioning. He simply didn’t anticipate it.

    Oversight protocol requires the FBI Director to tell the congressional intelligence “Gang of Eight” of any counterintelligence operations. The Go8 has oversight into these ops at the highest level of classification.  In July 2016 the time the operation began, oversight was the responsibility of this group, the Gang of Eight:

    Obviously, based on what we have learned since March 2017, and what has surfaced recently, we can all see why the FBI would want to keep it hidden that they were running a counterintelligence operation against a presidential candidate.   After all, as FBI Agent Peter Strzok said it in his text messages, it was an “insurance policy”.

    REMINDER – FBI Agent Strzok to FBI Attorney Page:

    “I want to believe the path you threw out for consideration in Andy’s office that there’s no way he gets elected – but I’m afraid we can’t take that risk. It’s like an insurance policy in the unlikely event you die before you’re 40.”

    So there we have FBI Director James Comey telling congress on March 20th, 2017, that the reason he didn’t inform the statutory oversight “Gang of Eight” was because Bill Priestap (Director of Counterintelligence) recommended he didn’t do it.

    Apparently, according to Comey, Bill Priestap carries a great deal of influence if he could get his boss to NOT perform a statutory obligation simply by recommending he doesn’t do it.

    Then again, Comey’s blame-casting there is really called creating a “fall guy”.  FBI Director James Comey was ducking responsibility in March 2017 by blaming FBI Director of Counterintelligence Bill Priestap for not informing congress of the operation that began in July 2016. (9 months prior).

    At that moment, that very specific moment during that March 20th hearing, anyone who watches these hearings closely could see FBI Director James Comey was attempting to create his own exit from being ensnared in the consequences from the wiretapping and surveillance operation of candidate Trump, President-elect Trump, and eventually President Donald Trump.

    In essence, Bill Priestap was James Comey’s fall guy.  We knew it at the time that Bill Priestap would likely see this the same way.  The guy would have too much to lose by allowing James Comey to set him up.

    Immediately there was motive for Bill Priestap to flip and become the primary source to reveal the hidden machinations.  Why should he take the fall for the operation when there were multiple people around the upper-levels of leadership who carried out the operation.

    Our suspicions were continually confirmed because there was NO MENTION of Bill Priestap in any future revelations of the scheme team, despite his centrality to all of it.

    Bill Priestap would have needed to authorize Peter Strzok to engage with Christopher Steele over the “Russian Dosssier”; Bill Priestap would have needed to approve of the underlying investigative process used for both FISA applications (June 2016, and Oct 21st 2016). Bill Priestap would be the person to approve of arranging, paying, or reimbursing, Christopher Steele for the Russian Dossier used in their counterintelligence operation and subsequent FISA application.

    Without Bill Priestap involved, approvals, etc. the entire Russian/Trump Counterintelligence operation just doesn’t happen. Heck, James Comey’s own March 20th testimony in that regard is concrete evidence of Priestap’s importance.

    Everyone around Bill Priestap, above and below, were caught inside the investigative net.

    Above him: James Comey, Andrew McCabe and James Baker. 

    Below him: Peter Strzok, Lisa Page, Jim Rybicki, Trisha Beth Anderson and Mike Kortan. 

    Parallel to Priestap in main justice his peer John P Carlin resigned, Sally Yates fired, Mary McCord quit, Bruce Ohr was busted twice, and most recently Dave Laufman resigned.  All of them caught in the investigative net…. Only Bill Priestap remained, quietly invisible – still in position.

    The reason was obvious.

    Likely Bill Priestap made the decision after James Comey’s testimony on March 20th, 2017, when he realized what was coming.  Priestap is well-off financially; he has too much to lose.  He and his wife, Sabina Menschel, live a comfortable life in a $3.8 million DC home; she comes from a family of money.

    While ideologically Bill and Sabina are aligned with Clinton support, and their circle of family and friends likely lean toward more liberal friends; no-one in his position would willingly allow themselves to be the scape-goat for the unlawful action that was happening around them.

    Bill Priestap had too much to lose… and for what?

    With all of that in mind, there is essentially no-way the participating members inside the small group can escape their accountability with Mr. Bill Priestap cooperating with the investigative authorities.

    Now it all makes sense.  Devin Nunes interviewed Bill Priestap and Jim Rybicki prior to putting the memo process into place.  Rybicki quit, Priestap went back to work.

    (page 5 pdf)

    Bill Priestap remains the Asst. FBI Director in charge of counterintelligence operations.

    It’s over.

    I don’t want to see this guy, or his family, compromised.  This is probably the last I am ever going to write about him unless it’s in the media bloodstream. I can’t fathom the gauntlet of hatred and threats he is likely to face from the media and his former political social network if they recognize what’s going on.  BP is Deep-Throat x infinity… nuf said.

    The rest of this entire enterprise is just joyfully dragging out the timing of the investigative releases in order to inflict maximum political pain upon the party of those who will attempt to excuse the inexcusable.

    Then comes the OIG Horowitz report.

    Then the grand jury empaneled (if not already); and while Democrats attempt to win seats in the 2018 election, arrests and indictments will hit daily headlines.

    Oh, lordy…

  • L.L. Bean Eliminates Lifetime Return Policy After Abuses

    Freeport, Maine bootmaker L.L. Bean is getting rid of its no-questions-asked lifetime return policy, thanks to growing abuse of the generous program, says the company.

    All returns must now be made within one-year of purchase, executives announced on Friday, adding that the policy, which has been in effect for over a century, was never meant to be used as an unlimited replacement scheme. 

    “Increasingly, a small, but growing number of customers has been interpreting our guarantee well beyond its original intent,” said L.L. Bean chairman Shawn Gorman in Friday a letter. “Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”

    Gorman says the policy should only affect a small percentage of returns, and that if a customer finds a product to be defective after one year, the company will make efforts to reach a “fair solution,” he said.

    “We stand behind all our products and are confident that they will perform as designed,” states the new return policy on the L.L. bean website. “After one year, we will consider any items for return that are defective due to materials or craftsmanship.”

    That said, customers who are known for “past habitual abuse” of the return policy can take their broken boots and pound sand, as they will not be allowed to return or exchange products even within one year of purchase, according to the site. 

    To protect all our customers and make sure that we handle every return or exchange with reasonable fairness, we cannot accept a return or exchange (even within one year of purchase) in certain situations, including:

    • Products damaged by misuse, abuse, improper care or negligence, or accidents (including pet damage)

    • Products showing excessive wear and tear

    • Products lost or damaged due to fire, flood, or natural disaster

    • Products with a missing label or label that has been defaced

    • Products returned for personal reasons unrelated to product performance or satisfaction

    • Products that have been soiled or contaminated, until they have been properly cleaned

    • Returns on ammunition, either in our stores or through the mail

    On rare occasions, past habitual abuse of our Returns Agreement

    Slate author Justin Peters is exactly the type of person responsible for the crackdown. In a Friday article, Peters brags about having ripped off L.L. Bean for the past six years – often bringing his mother along for what she called his “scam.” 

    “I needed new shoes, and so I went to L.L. Bean to buy a new pair of the same ones that had served me well for a year. Imagine my surprise and delight when the sales associate told me of the store’s generous return policy and invited me to exchange my old shoes for new ones, free of charge. What’s more, I also got a $10 gift card because of an in-store promotion of some sort. Not only did I get free shoes, I also got free money. Six years later, I still count this as one of the greatest days of my life.

    I haven’t spent a dollar on closed-toe shoes since then. Every year, around Christmas, I would drive to the L.L. Bean store in the Old Orchard Mall in Skokie, Illinois, near where I grew up, to exchange my old shoes for new ones.  Over the years, it became a cherished family outing. My mother, who is amused by my sense of thrift, insists on accompanying me on what she refers to as my “scam.” “You’d better not tell anyone about your scam,” she routinely warned me. “If too many people catch on, they’ll stop doing it.”

    I feel no guilt about taking L.L. Bean up on its offer. If they didn’t want people to take the swap, they shouldn’t have offered it!”  –Justin Peters

    Thanks Justin, good to know you’ll abuse an honor-based policy at the drop of a hat instead of paying for yourself like a responsible adult. 

    You too Meagan:

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  • "Make Sports, Not War"

    Authored by Eric Margolis via LewRockwell.com,

    Considering that a nuclear conflict over North Korea appeared imminent in recent weeks, the winter Olympics at Pyeongchang, South Korea, is a most welcome distraction – and might even deter a major war on the peninsula.

    The highlight of the games was the arrival of Kim Yo-jong, the younger sister of North Korea’s ruler, Kim Jong-un. This was the first time a member of North Korea’s ruling Kim dynasty had come to South Korea. Her handshake with South Korea’s president, Moon Jae-in was a historic and welcome moment.

    So too the planned joint marches by North and South Korean athletes under a new reunification flag.  For all Koreans, this was a deeply emotional and inspiring ceremony.

    But not for US Vice President Mike Pence, who was sent by Trump to give the Olympics the evil eye.  He even refused to stand for the joint marchers in a surly act that spoke volumes about his role.  Whether he meets President Moon or Kim Yo-jong remains to be seen. Even a cup of tea between Pence and Kim could end all the crazy talk about nuclear war. Does anyone in Washington know that North Korea lies between China and Russia?

    All this drama is happening as the Trump White House is advocating giving North Korea a `bloody nose.’  Meaning a massive bombing campaign that could very likely include nuclear weapons.  Trump, who received a reported five exemptions from military service because of a little bone spur in his foot, revels in military affairs and thinks a ‘bloody nose’ will warn Kim Jong-un to be good. Trump is planning a big military parade at which he will take the salute.

    This writer went through US Army basic and advanced infantry training with a broken bone in my foot, and has no sympathy with the president’s militaristic pretensions.

    South Korea’s able president Moon is moving heaven and earth to prevent a war in which his nation would be the main victim. 

    Some 2-3 million Korean civilians died in the 1950-53 Korean War.  All North Korea and much of South Korea were bombed flat by US air power.  Now, as tensions surge, US heavy bombers and nuclear weapons ring North Korea, ready to flatten the north and make the rubble bounce.

    North Korea’s thousands of heavy guns dug into mountains just north of the DMZ (I’ve seen them) could flatten all of South Korea’s capitol, Seoul, north of the Han River, killing millions, not counting nukes and poison gas.  South Korea, the world’s eleventh industrial power, would again pay the terrible price for a new war on the peninsula.

    One of VP Pence’s main missions is to whip up support among rightwing South Koreans who bitterly oppose any peace deal between the two Koreas and support attacking the north.  Many on South Korea’s hard right are evangelical Christians.  It’s no coincidence that Mike Pence, an ardent fundamentalist Protestant, was sent to show the flag and rally opposition to any détente with North Korea.  Whatever happened to ‘turn the other cheek?’

    Washington does not want a lessening of tensions between the two Koreas.  And much less, talk of potential reunification.  If the two Koreas came to peace, what justification would the US have for keeping powerful air, land and naval forces in strategic South Korea, often called ‘America’s unsinkable aircraft carrier.’  Japan is no more favorable to a united Korea.

    South Korean President Moon has been calling for a new, positive era in north-south relations. He has been adamant in opposing any chance of war on the peninsula.  But Washington has simply ignored Moon or brushed aside his objections to threats of war against North Korea.  The North Koreans routinely accused the south of being ‘American puppets.’  Pyongyang is the only ‘legitimate, truly independent Korean government,’ charges the north.

    Interestingly, in the event of war, South Korea’s 655,000-man active armed forces and 4 million-man reserves come under the command of a four-star US general.  US nuclear weapons can be moved through South Korean bases.  The so-called joint US-South Korea joint command is mere window dressing.

    It’s hard to say how close the US was to attacking North Korea.  Trump certainly backed himself into a corner by all his foolish threats to unleash ‘fire and fury’ on North Korea. 

    The Olympics delayed the rush to war against North Korea. But once they are over, the war drums will resume beating.

    President Trump is probably thinking about a dandy parade after a short, devastating attack on North Korea – provided, of course, that the troublesome northerners don’t manage to retaliate by landing a few nuclear warheads on Japan and Washington.

  • Treasury Yields Jump After Trump Budget Director Admits Interest Rates May "Spike" On Soaring Deficit

    In a bizarre warning coming from president Trump’s own budget director, one that could accelerate the sharp market selloff which so infurated Trump last week he tweeted about it on several occasions, lashing out against those who sell stocks on “good news” claiming it is a “big mistake“, Mick Mulvaney warned that the U.S. will post a larger budget deficit this year and could see a “spike” in interest rates as a result.


    White House budget director Mick Mulvaney.

    Of course, traders have already experienced the spike, or at least a part of it: it’s one of the key catalysts that moved the 10Y from 2.60% to 2.90% since payrolls Friday (coupled with the inflationary impulse from the jump in hourly wages).

    Earlier in the day, Mulvaney spoke on “Fox News Sunday,” a day before the White House is expected to release 2019 spending proposals – and after weeks in which financial markets have been spooked by prospects for rising inflation tied to higher deficits and lower taxes.

    “This is not a fiscal stimulus; it’s not a sugar high,” Mulvaney said on of the president’s economic program, including the $1.5 trillion tax cut passed in late 2017. “If we can keep the economy humming and generate more money for you and me and for everybody else, then government takes in more money and that’s how we hope to be able to keep the debt under control,” Mulvaney said.

    In a separate interview on CBS News’s “Face the Nation,” Mulvaney said rising budget deficits are “a very dangerous idea, but it’s the world we live in.”

    As Bloomberg notes, his comment echoed Trump’s Feb. 9 tweet that Republicans “were forced to increase spending on things we do not like or want” to secure Democratic votes for the sharp buildup in military spending wanted by the White House and the Pentagon.

    “What they said was they would not give us a single additional dollar for defense unless we gave them dollars for social programs,” he said. “They held the Defense Department hostage, and we had to pay that ransom.”

    Shockingly, Mulvaney also acknowledged he would “probably not” have voted for the deal when he served in the House of Representatives and was known as a fiscal hawk. “Keep in mind I’m not Congressman Mick Mulvaney anymore,” he said. “My job as the director of the Office of Management Budget is to try to get the President’s agenda passed.”   

    * * *

    The next set of numbers – and potential catalyst for further rate upside – will be unveiled on Monday, when Mulvaney’s OMB will updating the 2018 budget released last year and its 2019 request, due Monday, in response to the two-year budget deal the president signed into law on Friday morning. That agreement, which ended an hours-long partial government shutdown, will boost government spending by another $300 billion, which will have to be directly funded with more debt. Mulvaney said that in his previous job as a fiscally-conservative congressman representing South Carolina, he would “probably not” have voted for the bill.

    The additional spending could increase the deficit to about $1.2 trillion in 2019, and there’s a risk that interest rates “will spike” as a result, Mulvaney said.

    And while Mulvaney said that lower deficits are possible over time based on sustained economic growth, in an even more bizarre development, the WaPo reported that Trump’s Budget to be unveiled tomorrow won’t project a balance in 10 years, and instead Trump’s request will abandon the long-held Republican goal of eliminating deficit in budget projections, even over a decade.

    In other words, those concerned that yields may spike further tomorrow – and slam stocks – have good reason: the OMB may unveil the first republican non-balancing budget. Actually, one look at the 30Y Treasury shows that the selling has already begun.

  • JPMorgan Publishes The "Bitcoin Bible"

    Five months after Jamie Dimon’s infamous outburst, in which the JPM CEO called Bitcoin a fraud, and threatened any JPMorgan trader caught trading cryptocurrencies with immediate termination “for being stupid”, which was followed by JPM’s head quant alleging bitcoin was a pyramid scheme, the largest US bank has released what can only be called the “Bitcoin Bible“: 71 pages of excruciating detail on everything from the technology of cryptocurrencies, to their applications and challenges. 

    While there is too much in the report – which was published on the same day that the NY Fed admitted that in “A Dystopian World, Bitcoin Would Dominate Payment Methods” which of course is the whole point behind cryptos which as a contingency plan to the collapse of fiat currencies – to be summarized in one post, and instead we will focus on the key points over the next few days, below we republish the Executive Summary from the report, highlighting the key sections.

    Executive Summary

    Introduction

    • J.P. Morgan researchers from across a wide range of expertise analyze various aspects of Cryptocurrency (CC) to gain insight on this market and its potential evolution in this report. CCs’ extremely rapid growth, and then fall, both in terms of number of CCs and prices and their challenge to the current financial infrastructure, are forcing all market participants to closely monitor and understand this new market.
    • Cryptocurrencies are virtual currencies that are created, stored and governed electronically by an open,  decentralized, cryptography system. CCs can be used to exchange money, to buy certain goods/services or as an investment. There are over 1,500 cryptocurrencies with a market cap of some $400bn as of February 8, 2018, with Bitcoin being the largest representing a third of the market according to CoinMarketCap.
    • Launched in early 2009, Bitcoin (BTC) is the dominant cryptocurrency with a market cap of $140 billion (representing one-third of the CC market) and nearly 17 million BTC units in circulation (capped at 21 million). Bitcoin was the first major cryptocurrency and has spawned many competing CCs and technologies, many of which still fall back to Bitcoin as a support currency. Bitcoin itself has split into two cryptocurrencies, Bitcoin and Bitcoin Cash, to improve liquidity.

    Technology

    • Cryptocurrencies are the face of the innovative maelstrom around the Blockchain technology that is bringing both massive price volatility and a constant trial-and-error of new product try-outs and failures.
    • CCs are unlikely to disappear completely and could easily survive in varying forms and shapes among players who desire greater decentralization, peer-to-peer networks and anonymity, even as the latter is under threat. The underlying technology for CCs could have the greatest application in areas where current payments systems are slow, such as across borders, as payment, reward tokens or funding systems for other Blockchain innovations and the Internet of Things, as well as parts of the underground economy.

    Applications

    • There are over 1,500 CCs with a market cap of $400bn. Transactions in the three largest CCs average $550bn per month and come mostly from individuals. Ownership is highly concentrated. The opportunity set around direct CC trading appears relatively limited for banks, while the two Bitcoin futures recently launched are seeing only $140mn in daily trading.
    • Blockchain saw its first expression through Bitcoin – the first CC – but is more likely to ultimately see its greatest application outside of CCs across other financial and non-financial transactions, even as Blockchain itself looks set to evolve fast as the market learns about what works best.
    • There is the potential for increased usage of Blockchain in cross-border payments, settlement/clearing/collateral management as well as the broader world of TMT, Transportation and Healthcare but only where any cost efficiencies offset regulatory, technical and security hurdles.
    • Hedge funds have been moving into this market making up most of the 175 CC funds but AUM remains only a few billion dollars. Asset managers are experiencing limited success in bringing products to market and have not been able to launch CC funds or ETFs without support from the SEC or major distributors.
    • While about half of the early CC transactions happened in the underground economy, the share of this is declining,  with investing and speculation now taking a much larger share.

    Challenges

    • It will be extremely hard for CCs to displace and compete with government-issued currencies, as dollars to euros and yuan are virtual natural monopolies in their regions and will not easily give up their seigniorage profits.
    • CCs are experiencing heightened volatility and will face challenges from both technology (such as rising mining costs and hacking) and regulators who are concerned about anti-money laundering and investor protection, as CC payments are irreversible and there is no recourse.
    • Security concerns have mounted in Bitcoin exchanges as hackers have infiltrated a number of CC exchanges generating large losses, while regulators are challenging anonymity.

    Below are some of the JPM team’s observations on what the future could bring for cryptos, with highlights, however the most notable admission is JPM stating that cryptocurrencies “could potentially have a role in diversifying one’s global bond and equity portfolio“, a far cry from Jamie Dimon’s emotional appeal that all cryptos are a giant fraud.

    In the early stages of innovation, usually set off by new technology — in this case Blockchain — the market experiments with many different approaches to see what shape and form will stick and end up offering the most economic value-added. We would note that it is not pre-ordained that cryptocurrencies will succeed as there are valid concerns about what economic value they really contribute. But in a time of rapid innovation, many new products will are often-and-errored. We believe the potential disruption from Blockchain cannot be ignored.

    The excitement of innovation typically also leads to price booms and then crashes among the early movers, before more realistic prices emerge among the eventual survivors. Much of this is what we see today with exponential price gains and losses, growth and diversity among cryptocurrencies. Given the amount of speculation in these markets, technical signals can be very useful in gauging market direction and they have been sending the right signals in recent months. Fundamentals are a lot less informative here, although it can be useful to look at the cost of mining CCs, even as one must also account for the elasticity of supply.

    Cryptocurrencies are both a new technology — Blockchain — and a new currency (many new ones). The new shape and form of the CC market in the future will likely ultimately depend on what economic value they are perceived to add. We would expect the marketplace and regulators to ultimately weed out what are perceived the negative, less useful characteristics of CCs and retain the positive elements that add economic value.

    As discussed more in detail below, the Blockchain technology driving CCs offers transparency to transactions and allows them to be virtual and peer-to-peer. Distributed ledger technology has the potential to offer regulators greater degrees of transparency, higher levels of resiliency and shorter settlement times, reducing counterparty and market risk.

    Allen similarly discusses various efforts under way with, for example, a number of payment processing firms increasingly partnering with technology firms/Blockchain providers to offer an alternative settlement engine to various payment participants. We expect various Blockchain-based ecosystems to coexist and compete with each other (similar to Payments networks in the current environment), with success predicating on technology capabilities (such as API features), number of participants on the network and ease of adoption. Given the hurdles, CCs are more likely to be used as ancillary payment methods rather than gaining traction as a primary source of exchange.

    While seeing a potential for the deployment of the underlying Blockchain technology in payments, we do not see cryptocurrencies competing with central bank-issued money for lawful transactions. We note that CCs have not attained the relative stability of value to make them useful as money for everyday transactions. The current set of government-issued fiat currencies — such as the dollar and the euro — provide efficient media of exchange, stores of value and units of account. Some of the early buyers of CC were clearly dismayed by ballooning balance sheets of the major central banks in the aftermath of the global financial crisis (GFC), but the lack of any meaningful inflation since, in both developed markets (DM) and emerging markets (EM), has surely reduced concerns about fiat (legal tender issued by a central bank) money.

    In addition, we find that local legal tender money tends to be a natural monopoly with only extreme hyperinflation leading people to seek out a monetary alternative. To add, we do not find that CCs are currently meeting the standards of what constitutes money as the huge volatility of CC has made use of it as a unit of account impractical. Finally, given the huge returns from running a central bank (seigniorage), governments will be quite possessive of their legal tender role and will likely put up a fight if CCs were to gain broader traction domestically.

    Some EMs, such as Venezuela and Russia, appear to be considering issuing CCs as a way to improve international funding and evade US sanctions. Aziz is quite dubious about whether any of this will work as CCs face regulatory headwinds and are neither better than fiat money in establishing policy credibility nor in providing liquidity during crises.

    Several central banks, as discussed in Feroli, are investigating whether they should issue CCs in their own currency, but are very far from actually doing so, as any increased efficiency in payments technology does not appear to be that obvious. In addition, the issuance of crypto dollars, for example, would give non-banks access to the Fed balance sheet, and thus could endanger the economically and socially important financial intermediation function of commercial banks.

    In market economies, commercial banks manage the largest part of what we call money through their deposit
    base that they in turn lend out to the economy, after holding back a fraction as reserves at the central bank. If cryptocurrencies were seen as superior to bank deposits, prompting a wholesale shift into cryptocurrencies, then a much larger share of savings would go to the central bank’s assets (government debt) and less to commercial banks loans, thus potentially dramatically increasing private credit risk premia and reducing the flow of credit to the private sector. Fractional reserve banking was a tremendous innovation that surely contributed greatly to global growth over the last two centuries, and we would expect that central banks would think twice before disturbing this source of capital to the private sector.

    We examine the potential role of CCs in terms of offering diversification in a global portfolio, given both their high returns over the past several years and their low correlation with the major asset classes, offsetting some of the cost of high volatility. If past returns, volatilities and correlations persist, CCs could potentially have a role in diversifying one’s global bond and equity portfolio. But in our view, that is a big if given the astronomic returns and volatilities of the past few years. If CCs survive the next few years and remain part of the global market, then they will likely have exited their current speculative phase and would then have more normal returns, volatilities (both much lower) and correlations (more like that of other zero-return assets such as gold and JPY). Based on its historical performance, CCs can be 10 times more volatile than core assets like stocks, or than portfolio hedges, like commodities. Liquidity is also well below most other potential hedges. Extraordinary returns can be generated in the price discovery phase, only to be followed by several years of mean-reversion toward the eventual, long-term average level. In the current market conditions, we do not believe that an allocation to Cryptocurrencies as insurance should be a portfolio’s main or only hedge. Note that even though CCs have improved risk-adjusted returns over the past several years, they have not prevented portfolio drawdown during periods of acute market stress, like the equity flash crashes of August 2015 and February 2018.

    Below we highlight some of the key charts from the JPM “cryptobible”:

    What a typical bitcoin transaction flow looks like:

    Cryptocorrelation with other asset classes: virtually nil, i.e., a perfect diversifier.

    Cryptocurrency liquidity in the context of all other major asset classes.

    Current state of cryptocurrency regulation around the globe.

    Market liquidity: average bid/ask spread to buy 10 BTC:

    Cryptocurrency concentration of hodlers:

    Monthly trading volumes by market cap:

    Speed and cost per transaction:

    Bitcoin ETFs pending approval:

    Bitcoin mining cost-curves, i.e, where should you mine for bitcoin:

  • Rand Paul Accuses GOP Critics Of "Hypocrisy" For Agreeing To Bipartisan Budget Deal

    After Rand Paul’s “principled stand’ against a budget bill that would add nearly $300 billion to the deficit over two years forced his colleagues in the House and Senate to stay up all night Thursday, just to pass an essentially unchanged bill that could’ve easily passed 12 hours earlier if it weren’t for the Kentucky Senator’s dedication to libertarian principles compulsive need for media attention, it seemed like his colleagues were rushing to be the first to issue an insulting quote about Paul to any reporter who’d listen.

    One of Paul’s colleagues said he sympathized with a neighbor of Paul’s who famously tackled the senator while he was mowing his lawn, cracking a few of his ribs. Another dryly noted that “there aren’t a lot of books written about the great political points of history” – a jab at Paul, who voted for the White House’s $4.5 trillion budget resolution and then supported Trump’s deficit-expanding tax package.

    Already one of the most ubiquitous guests on the so-called Sunday Shows, Paul took to Face the Nation this weekend to explain and defend his decision to hold up the vote and trigger another government shutdown – even if it only lasted a few hours.

    During his interview with Major Garrett, Paul said Republicans need to reconcile their commitment to limit government spending and cut down on the deficit with their tendency to overspend on the military. Paul added that the US has accomplished about all it possible can in Afghanistan, and that now is the time to bring our troops home. The US is actively at war in about seven countries, Paul said. Yet none of those interventions were authorized by Congress.

    MAJOR GARRETT: And now we have deficits projected to be a trillion dollars again and yet they’re growing non-recessionary economy or are you troubled by that?

    SENATOR RAND PAUL: Yeah, I’m very worried and I think one of the questions the Republicans I think are not willing to ask themselves is can you be fiscally conservative and be for unlimited military spending. There’s sort of this question, “Is the military budget too small or maybe is our mission too large around the world?” And because Republicans are unwilling to confront that they want more, more, more for military spending. And so to get that they have to give the Democrats what they want which is more and more and more for domestic spending and the compromise while some are happy with bipartisanship. Well if the bipartisanship is exploding the deficit I’m not so sure that’s the kind of bipartisanship we need.

    MAJOR GARRETT: From your point of view, Senator, on the defense side of the equation is the spending and the mission, are they reckless?

    SENATOR RAND PAUL: I think the mission is- is beyond what we need to be we’re actively in war in about seven countries. And yet the Congress hasn’t voted on declaring or authorizing the use of military force in over 15 years now. So I’ve been one that’s been bugging the Senate and Congress to say how can we be at war without ever voting on it don’t the American people through their representatives get a chance to say when we go to war. I think the Afghan war is long past its mission. I think we killed and captured and disrupted the people who attacked us on 9/11 long ago. And I think now it’s a nation building exercise. We’re spending 50 billion dollars a year. And if the president really is serious about infrastructure, a lot of that money could be spent at home. Instead of building bridges and schools and roads in Afghanistan or in Pakistan. I think we could do that at home and the interesting thing is I think the president’s instincts lean that way but –

    But when confronted about inconsistencies in his own voting record – such as his decision to support both the budget agreement and the Trump tax plan – Paul insisted he could “only control how I vote”.

    MAJOR GARRETT: And that’s sort of the way, Senator, because you know where the votes are. You know the votes are there for tax cuts. You know they’re not there for spending cuts. So, isn’t there any part of your voting pattern that is irresponsible?

    SENATOR RAND PAUL: I don’t think so because you know I can only control how I vote. So I voted for the tax cuts and I voted for spending cuts. The people who voted for tax cuts and spending increases. I think there is some hypocrisy there and it shows they’re not serious about the debt. But all throughout my career I’ve always voted for spending cuts and I’m happy to offset cuts in taxes with cuts in spending. So no I think that I’ve had a consistent position in being very concerned about the debt and I want to shrink the size of government. So, the reason I’m for tax cuts is I to return more of the money to the people who own that who- who actually deserve to have their money returned to them. But it also shrinks the size of government by cutting taxes or should if you cut spending at the same time.

    This, of course, begs the question: Was Paul in some sort of fugue state when he voted for the Trump tax bill last year?

    If so, he might want to get that checked out.

  • Just One Number Matters In This Coming Week

    Stock may have suffered through one of their most volatile weeks in years triggered by the unexpectedly large (if miscalculated) spike in January wages, the highest since 2009, resulting in the biggest volquake in history, and come this Wednesday it may be time for round 2, because at 8:30am on Valentine’s Day, the U.S. inflation report – far more closely watched than the payrolls release – will hold the key to the next phase.

    Indeed, as Deutsche Bank notes:

    “it’s hard to remember a data point as eagerly anticipated as next Wednesday’s January CPI report in the US. With rates, equities and vol selling off aggressively and markets on edge, the strong January average hourly earnings print this time last week has caused havoc in the market over the last few days.”

    Why is the fate of the market suddenly in the hands of the otherwise trivial CPI number? Because, as we showed every day last week, every single time the 10-year Treasury approached or surpassed the four-year high of 2.85% last week, equities investors panicked and yanked bids amid fears the specter of higher inflation would accelerate the pace of Fed rate hikes, crushing the nearly 10 year artificial bull market in stocks bought with nearly $20 trillion in central bank liquidity. This is shown in the BBG chart below.

    And with average hourly earnings reportedly breaking out, there is suddenly a threat that core CPI may surprise to the upside, and not just modestly, but materially enough for the Fed – which is already expecting to hike rates 3 times in 2018 – to precipitate its tightening intentions, and if nothing else, certainly not intervene during the current market correction.

    “What’s happening now is just price discovery between bonds and equities — how far can the bond market push yields up before the equity market cracks?” T. Rowe Price’s Stephen Bartolini told Bloomberg . “The big fear in risk markets is that we get a big CPI print and it validates the narrative that inflation is coming back and the Fed is going to have to move faster.

    While the re-emergence of wage growth – long considered the missing link in an economic recovery that’s driven the jobless rate to near record lows – took the market by surprise, what is more curious is that at least on paper, the Fed’s intentions had been widely priced in: just before the stocks meltdown, traders were allegedly in sync with FOMC projections of three rate increases in 2018. However, the recent spike in longer-yields was the result of the bipartisan Senate plan, which would boost spending by an addition $300 billion, an increasing Treasury issuance even further, and beyond the $1 trillion projected this year.

    Stocks have not taken that well.

    That said, bond bulls remain: “The Treasury market is pricing in the most bearish scenarios that were on the docket for 2018, and still 10-year yields remain stubbornly below 3 percent,” BMO Capital Markets strategists Ian Lyngen and Aaron Kohli wrote in a Feb. 9 note. To the BMO due there’s a greater risk of yields declining over the next several months than rising.

    However, skeptics will be silenced promptly on Wednesday should the CPI/Core print higher than the expected, in which case a 3% on the 10Y becomes virtually certain, and unless stocks find some pressure outlet to relieve concerns of rising inflation – ideally a statement by some central banker – the next sharp move lower in stocks will immediately follow. As Bloomberg notes, at least some speculators expect such an outcome: Block trades in puts on 10-year Treasury futures Friday pointed toward demand for protection against yields rising to that level by March 23.

    So with that in mind, and with everyone’s eyes on Wednesday’s CPI report, here is what else to look for in the coming week:

    • Feb. 12: Monthly budget statement
    • Feb. 13: NFIB small business optimism; revisions to producer price index
    • Feb. 14: CPI; MBA mortgage applications; retail sales; real average weekly and hourly earnings; business inventories
    • Feb. 15: Empire manufacturing; initial jobless claims and continuing claims; PPI; Philadelphia Fed business outlook; industrial production; capacity utilization; Bloomberg consumer comfort; NAHB housing market index; Treasury International Capital flows
    • Feb. 16: Import and export price indexes; housing starts; building permits; University of Michigan survey data

    And summarized courtesy of Barclays:

    * * *

    Below is Deutsche Bank’s take:

    It’s hard to remember a data point as eagerly anticipated as next Wednesday’s January CPI report in the US. With rates, equities and vol selling off aggressively and markets on edge, the strong January average hourly earnings print this time last week has caused havoc in the market over the last few days.

    Current market expectations are for a +0.4% mom headline reading and +0.2% mom core reading, which translate into +2.0% and +1.7% yoy readings (both a decline of one-tenth from December). Meanwhile the other potentially big event next week is in Washington with President Trump expected to release a $1.5tn infrastructure plan (which will kick off the process for producing legislation) and also his 2019 budget blueprint.

    There is other important data out in the US next week too with the January PPI report on Thursday another significant inflation reading, while Wednesday will also see January retail sales released. January industrial production (Thursday), January housing starts and building permits (Friday) and the preliminary February University of Michigan consumer sentiment survey (Friday) will also be released. In Europe we’ll get final January CPI revisions in the UK (Monday) and Germany (Tuesday) while second readings of Q4 GDP will be out in Germany and the Euro area on Wednesday. Late on Tuesday we’ll also get Japan’s Q4 GDP print.

    It’s also looking like a busy week for ECB speakers with Weidmann (Wednesday), Mersch (Wednesday and Thursday), Praet (Thursday) and Coeure (Friday) all scheduled to speak. The Fed’s Mester will speak on Tuesday.

    Finally it’s worth noting that Chinese New Year kicks off on Thursday, with mainland markets subsequently shut until February 21st.

    What to look out for next week?

    • Monday: With data fairly thin on Monday all eyes will instead be on the White House with President Trump expected to release a $1.5tn infrastructure plan, along with his 2019 budget blueprint. Away from that the only data of note is  the January monthly budget statement in the US. Heineken will report earnings.
    • Tuesday: A busier day for data with the January CPI/PPI/RPI report in the UK the main focus. In the US the January NFIB small business optimism print will be released while in Japan the preliminary Q4 GDP print will be out in the late evening. Away from data the Fed’s Mester is due to speak in the afternoon on monetary policy and the economic outlook. Pepsico will release earnings.
    • Wednesday: Front and centre on Wednesday is the January CPI report in the US, while January retail sales will also be released alongside. December business inventories is the other data release due in the US while in Europe we’ll get Q4 GDP in Germany (second estimate) and the final January CPI revisions, along with Q4 GDP for the Euro area (second estimate). Away from data the Bundesbank’s Weidmann is due to speak in the morning, followed by the ECB’s Mersch. German Chancellor Merkel is also due to speak at a CDU event. CISCO, and Credit Agricole will report earnings.
    • Thursday: Another busy day for data with January PPI, January industrial production, February empire manufacturing, February Philly Fed PMI, February NAHB housing market index and the latest weekly initial jobless claims readings all due in the US. In Europe Q4 employment data in France and the December trade balance for the Euro area are due. The ECB’s Mersch and Praet are also slated to speak at an event in Paris. It’s with noting that New Year celebrations in China will also begin on Thursday, with mainland markets subsequently shut until the 21st. Nestle will report earnings.
    • Friday: The end of the week will see January retail sales data released in the UK, along with the January import price index, January housing starts and building permits and the preliminary February University of Michigan consumer sentiment reading in the US. The ECB’s Coeure will also speak in the morning. Coca-Cola, and Kraft Heinz will all report earnings.

    * * *

    Finally, here is Goldman with its breakdown of key US events together with consensus forecasts:

    The key economic releases next week are CPI and retail sales on Wednesday and Industrial production on Thursday. There is one speaking engagement from a Fed official this week, on Tuesday.

    Monday, February 12

    • 02:00 PM Monthly budget statement, January (consensus -$51.0bn, last -$23.2bn).

    Tuesday, February 13

    • 08:00 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will speak at a breakfast event hosted by the Dayton Area Chamber of Commerce. Audience and media Q&A are expected.

    Wednesday, February 14

    • 8:30 AM CPI (mom), January (GS +0.38%, consensus +0.3%, last +0.20%): Core CPI (mom), January (GS +0.22%, consensus +0.2%, last +0.24%); CPI (yoy), January (GS +1.98%, consensus +1.9%, last +2.1%); Core CPI (yoy), January (GS +1.71%, consensus +1.7%, last +1.8%): We estimate a 0.22% increase in January core CPI (mom sa), which would lower the year-over-year rate to +1.7%. Our forecast reflects a boost from January seasonality, and likely continued strength in shelter inflation. On the negative side, we expect a small drag from telephone hardware methodological changes. We estimate a 0.38% increase in headline CPI, reflecting firm consumer energy and food prices in January.
    • 08:30 AM Retail sales, January (GS +0.2%, consensus +0.2%, last +0.4%); Retail sales ex-auto, January (GS +0.4%, consensus +0.5%, last +0.4%); Retail sales ex-auto & gas, January (GS +0.3%, consensus +0.4%, last +0.4%); Core retail sales, January (GS +0.3%, consensus +0.4%, last +0.3%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a 0.3% pace in January. While the growth pace likely remains solid—reflecting a boost from strong service sector data and the January stock market rally— we anticipate some correction in the nonstore retailers category after a strong holiday shopping season. Given the further rise in (sa) gasoline prices and the decline in auto SAAR, we estimate 0.4% and 0.2% respective increases in the ex-auto and headline measures.
    • 10:00 AM Business inventories (consensus +0.3%, last +0.4%)

    Thursday, February 15

    • 08:30 AM PPI final demand, January (GS +0.2%, consensus +0.4%, last -0.1%); PPI ex-food and energy, January (GS +0.1%, consensus +0.2%, last -0.1%); PPI ex-food, energy, and trade, January (GS +0.1%, consensus +0.2%, last +0.1%): We estimate a 0.2% increase in headline PPI in January, reflecting a slight uptick in gasoline prices. We expect a smaller 0.1% increase in in the PPI ex-food, energy, and trade services category. In the December report, the producer price index was weaker than expected, reflecting softness in both core measures as well as in food and energy prices.
    • 08:30 AM Philadelphia Fed manufacturing index, February (GS +21.3, consensus +20.6, last +22.2): We estimate the Philadelphia Fed manufacturing index edged down in February. It is possible the decline in January partially reflected the Bomb Cyclone storms. Commentary from industrials remains encouraging, and we expect the index to remain at expansionary levels.
    • 08:30 AM Empire manufacturing survey, February (consensus +17.9, last +17.7)
    • 08:30 AM Initial jobless claims, week ended February 10 (GS 230k, consensus 228k, last 221k); Continuing jobless claims, week ended February 3 (consensus 1,928k, last 1,923k): We estimate initial jobless claims ticked up by 9k to 230k in the week ended February 10. Continuing claims – the number of persons receiving benefits through standard programs – declined in the previous week and may continue their general downward trend since early January.
    • 09:15 AM Industrial production, January (GS +0.5%, consensus +0.2%, last +0.9%); Manufacturing production, January (GS +0.4%, consensus +0.3%, last +0.1%); Capacity utilization, January (consensus 78.0%, last 77.9%): We estimate industrial production rose +0.5% in January, as the utilities category likely rose further and manufacturing rebounded from last month’s soft report. We expect manufacturing production rose +0.4%, reflecting strength in non-auto manufacturing.
    • 01:00 PM NAHB homebuilder sentiment, February (consensus 72, last 72)

    Friday, February 16

    • 08:30 AM Housing starts, January (GS +4.0%, consensus +3.3%, last -8.2%); We estimate housing starts rebounded 4.0% in January, reflecting a catch-up with the recently more resilient single-family permits, partially offset by unseasonably cold weather.
    • 08:30 AM Import price index, January (consensus +0.6%, last +0.1%)
    • 10:00 AM University of Michigan consumer sentiment, February preliminary (GS 94.8, consensus 95.5, last 95.7): We estimate the University of Michigan consumer sentiment index edged down 0.9pt to 94.8 in the preliminary estimate for February. We note the possibility of the recent stock market selloff over the last week to weigh on surveys conducted last week. The report’s measure of 5- to 10-year inflation expectations was 2.5% in January, near the middle of its 12-month range.

    Source: Barclays, DB, Goldman

  • Stock & Bond Investors Are Now Paying The Price For The Fed's Dangerous Experiment

    Authored by Vitaliy Katsenelson via ContrarianEdge.com,

    The Federal Reserve’s changing of the guard — the end of the Janet Yellen’s tenure and the beginning of the Jerome Powell era — has me remembering what it was like to grow up in the former Soviet Union.

    Back then, our local grocery store had two types of sugar: The cheap one was priced at 96 kopecks (Russian cents) a kilo and the expensive one at 104 kopecks. I vividly remember these prices because they didn’t change for a decade. The prices were not set by sugar supply and demand but were determined by a well-meaning bureaucrat (who may even have been an economist) a thousand miles away.

    If all Russian housewives (and house-husbands) had decided to go on an apple pie diet and started baking pies for breakfast, lunch, and dinner, sugar demand would have increased but the prices still would have been 96 and 104 kopecks. As a result, we would have had a shortage of sugar — a common occurrence in the Soviet era.

    In a capitalist economy, the invisible hand serves a very important but underappreciated role: It is a signaling mechanism that helps balance supply and demand. High demand leads to higher prices, telegraphing suppliers that they’ll make more money if they produce extra goods. Additional supply lowers prices, bringing them to a new equilibrium. This is how prices are set for millions of goods globally on a daily basis in free-market economies.

    In the command-and-control economy of the Soviet Union, the prices of goods often had little to do with supply and demand but were instead typically used as a political tool. This in part is why the Soviet economy failed — to make good decisions you need good data, and if price carries no data, it is hard to make good business decisions.

    When I left Soviet Russia in 1991, I thought I would never see a command-and-control economy again. I was wrong.

    Over the past decade the global economy has started to resemble one, as well-meaning economists running central banks have been setting the price for the most important commodity in the world: money.

    Interest rates are the price of money, and the daily decisions of billions of people and their corporations and governments should determine them. Like the price of sugar in Soviet Russia, interest rates today have little to do with supply and demand (and thus have zero signaling value).

    For instance, if the Federal Reserve hadn’t bought more than $2 trillion of U.S. debt by late 2014, when U.S. government debt crossed the $17 trillion mark, interest rates might have started to go up and our budget deficit would have increased and forced politicians to cut government spending. But the opposite has happened: As our debt pile has grown, the government’s cost of borrowing has declined.

    The consequences of well-meaning (but not all-knowing) economists setting the cost of money are widespread, from the inflation of asset prices to encouraging companies to spend on projects they shouldn’t.

    But we really don’t know the second-, third-, and fourth derivatives of the consequences that command-control interest rates will bring. We know that most likely every market participant was forced to take on more risk in recent years, but we don’t know how much more because we don’t know the price of money.

    Quantitative easing: These two seemingly harmless words have mutated the DNA of the global economy. Interest rates heavily influence currency exchange rates. Anticipation of QE by the European Union caused the price of the Swiss franc to jump 15% in one day in January 2015, and the Swiss economy has been crippled ever since.

    Americans have a healthy distrust of their politicians. We expect our politicians to be corrupt. We don’t worship our leaders (only the dead ones). The U.S. Constitution is full of checks and balances to make sure that when (often not if) the opium of power goes to a politician’s head, the damage he or she can do to society is limited.

    Unfortunately, we don’t share the same distrust for economists and central bankers. It’s hard to say exactly why. Maybe we are in awe of their Ph.D.s. Or maybe it’s because they sound really smart and at the same time make us feel dumber than a toaster when they use big terms like “aggregate demand.” For whatever reason, we think they possess foresight and the powers of Marvel superheroes.

    Warren Buffett — the Oracle of Omaha himself — admitted that he doesn’t know how the QE experiment will end. And if you think well-meaning economists running central banks know, you may have another thing coming.

    Alan Greenspan — the ex-pope of the Federal Reserve — in a 2013 interview with the Wall Street Journal said that he “always considered [himself] more of a mathematician than a psychologist.” But after the 2008-09 financial crisis and the criticism he received for contributing to the housing bubble, Greenspan went back and studied herd behavior, with some surprising results. “I was actually flabbergasted,” he admitted. “It upended my view of how the world works.”

    Just as the well-meaning economists of the Soviet Union didn’t know the correct price of sugar, nor do the good-intentioned economists of our global central banks know where interest rates should be. Even more important, they can’t predict the consequences of their actions.

    *  *  *
    Vitaliy Katsenelson is the CIO at Investment Management Associates, which is anything but your average investment firm. (Seriously, take a look.) He wrote two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. 

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Today’s News 11th February 2018

  • Pentagon's Nuclear Doctrine – Retrograde and Reckless

    Via The Strategic Culture Foundation,

    In its latest Nuclear Posture Review (NPR), the American Pentagon declares at one point in the document that the Cold War is long over. Apart from that fleeting mention, however, one would think from reading the entire review that the Cold War, for Washington, has never been so palpable.

    It is a fear-laden document, relentlessly portraying the world as fraught with existential danger to US national security.

    Russia and China, as with two other recent strategic policy papers out of Washington, are again painted as adversaries who must be confronted with ever-greater US military power.

    The latest NPR asserts that since the last such review in 2010, “America confronts an international security situation that is more complex and demanding than any since the end of the Cold War.”

    It is clear from reading the 74-page document that Russia and China are the main source of security concern for the Pentagon – albeit the reasons for the concern are far from convincing. Indeed one might say downright alarmist.

    Washington accuses Russia and China of pursuing nuclear weapons development which is threatening. It accuses Russia in particular of violating arms controls treaties and threatening American allies with its nuclear arsenal. There are several other such unsubstantiated claims made by the Pentagon in the document.

    Russia and China responded by condemning the aggressive nature of the Pentagon’s latest doctrine, as they have done with regard to two other recent strategic papers published by the Trump administration.

    It is deplorable that Washington seems to go out of its way to portray the world in such bellicose terms. The corollary of this attitude is the repudiation of diplomacy and multilateralism.

    Washington, it seems, is a hostage to its own imperative need to generate a world of hostile relations in order to justify its rampant militarism, which is, in turn, fundamental to its capitalist economy.

    The lamentable, even criminal, danger of this strategy is that it foments unnecessary tensions and animosity in world relations. Russia and China have repeatedly called for normal, multilateral relations. Yet, remorselessly, Washington demonizes the two military powers in ways that are retrograde and reckless.

    The Pentagon’s latest nuclear doctrine goes even further in its provocations. Based on dubious accusations of Russia’s threatening behavior (“annexation of Crimea”, “aggression in Ukraine”), the Pentagon has declared it will rely more on nuclear force for “deterrence”.

    That can be taken as a warning that Washington is, in effect, lowering its threshold for deploying nuclear weapons. It overtly states that it will consider use of nuclear weapons to defend American interests and allies from “nuclear and conventional threats”. The language is chilling. It talks about inflicting “incalculable” and “intolerable” costs on “adversaries”. This is nothing short of Washington terrorizing the rest of the world into conforming to its geopolitical demands.

    Another sinister development is that Washington has now declared that it will be acquiring “low-yield” nuclear weapons. These so-called “mini-nukes” will again lower the threshold for possible deployment of nuclear warheads in the misplaced belief that such deployment will not escalate to strategic weapons.

    What’s disturbing is that the US is evidently moving toward a policy of greater reliance on nuclear force to underpin its international power objectives. It is also broadening, in a provocative and reckless way, what it considers “aggression” by other adversaries, principally Russia. Taken together, Washington is increasingly setting itself on a more hostile course.

    Some 57 years ago, in 1961, then US President Dwight Eisenhower gave a farewell address to the nation in which he issued a grave forewarning about the growing control of the “military-industrial complex” over American life. Back then, the American military-industrial complex could disguise its insatiable appetite with the pretext of the Cold War and the “Soviet enemy”.

    Today, the American federal government spends about $700 billion a year on military – over half its discretionary budget. The US spends more on military than at any time during the Cold War – in constant dollar terms.

    The US military-industrial complex has become a voracious monster way beyond anything that Eisenhower may have feared. It is no longer a threat merely to American life. It is a threat to the life of the entire planet.

    Objectively, the US has no foreign enemy endangering its existence; neither Russia nor China. Not even North Korea, despite its anti-American rhetoric, poses a direct threat to the US.

    The Pentagon – on behalf of the military-industrial complex – is stretching credulity when it depicts the world as a more threatening place. Fingering Russia and China is absurd.

    In order to try to shore up its scare-mongering with a semblance of credibility, the Pentagon is escalating the rhetoric about nuclear weapons and the need to deploy them. There is no objective justification for this nuclear posturing by the US, only as a way to dramatize alleged national security fears, in order to keep the military-industrial racket going.

    The despicable danger from this retrograde Cold War strategy is that the US is recklessly pushing the world toward war and possibly nuclear catastrophe.

    Fortunately, Russia and China have highly developed military defenses to keep American insanity in check. Nevertheless, American belligerence is pushing the world to combustible tensions.

    The problem is that American rulers have become a rogue state. The American people need to somehow sack their rogue rulers and their military madness, and return the nation to a democratic function.

    Until then, Russia and the rest of the world must be on guard.

  • AK-47 Rifles, Claymore Mines, & Grenade Launchers Discovered On Mexico Border

    According to Breitbart Texas, the federal government of Mexico recently deployed thousands of Mexican soldiers, Marines, and police officers to the Gulf region of the Mexico-United States border, as drug cartel violence spirals out of control.

    Rival factions of the Gulf Cartel are in an all-out war against each other for the control of drug trafficking and human smuggling routes into Texas. Breitbart Texas describes how drug cartels are using military weapons in daily skirmishes in the border region.

    During a series of recent military operations by the Mexican Army, soldiers honed in on various rural areas near the Rio Grande. According to exclusive information provided to Breitbart Texas via the Mexican Army, soldiers found a “series of weapons caches that had been buried”– leading to the arrest of three suspects.

    What the soldiers found next is mind-numbing. According to Breitbart Texas, “soldiers unearthed two Claymores, a grenade launcher, two Barrett .50 caliber rifles, 17 AK-47 rifles, ballistic plates, ammunition, and magazines.”

    It has been reported that the Gulf Cartel and other Mexican organized crime units have used Russian-made assault rifles and rocket-propelled grenades in past battles, this appears to be the first case of a U.S. military-grade directional anti-personnel mine found near the border.

    Special Operations.com explains the deadly power behind the M18A1 Claymore mine:

    Unlike traditional land mines, which direct their explosive upward, the Claymore is what is called a “directional mine.” This means that the user points the mine by using a crude sight on top, and steadies it with twin scissor-like anchors which can be pressed into the ground, or stand free on their own. A wire is then unfurled a safe distance back to the user’s position were a detonator in the form of a clacker is squeezed to initiate the explosion. Since the Claymore has a curved rectangular shape, once fired, plastic explosive hurls 700 steel balls out in a 60° radius. Anything exposed within a 50 yard distance is bound to become a casualty. This only increases by magnitude the closer to the detonation. The function is rather like dozens of shotguns going off at once. There is nothing like it on the battlefield.

    Watch the destructive force of the M18A1 Claymore mine destroying a truck body…

    Last month, we reported that the U.S. State Department warned all U.S. citizens and U.S. government employees to exercise increased caution while traveling in Mexico, and even restricted some regions from access because of “violent crime, such as homicide, kidnapping, carjacking, and robbery.”

    Exercise increased caution in Mexico due to crime. Some areas have increased risk. Read the entire Travel Advisory. Violent crime, such as homicide, kidnapping, carjacking, and robbery, is widespread. The U.S. government has limited ability to provide emergency services to U.S. citizens in many areas of Mexico as U.S. government employees are prohibited from travel to these areas. U.S. government employees are prohibited from intercity travel after dark in many areas of Mexico. U.S. government employees are also not permitted to drive from the U.S.-Mexico border to or from the interior parts of Mexico with the exception of daytime travel on Highway 15 between Nogales and Hermosillo.

    U.S. State Department discouraged all travel to 31 Mexican states and even issued five states to Level 4, otherwise known as a war-zone like some countries in the Middle East.

    The U.S. State Department defines Level 4 as :

    Do Not Travel: This is the highest advisory level due to greater likelihood of life-threatening risks. During an emergency, the U.S. government may have very limited ability to provide assistance. The Department of State advises that U.S. citizens not travel to the country or leave as soon as it is safe to do so. The Department of State provides additional advice for travelers in these areas in the Travel Advisory. Conditions in any country may change at any time. 

    For example in Colima, the U.S. State Department warns:

    U.S. government employees are prohibited from travel to Tecoman or within 12 miles of the Colima-Michoacán border and on Route 110 between La Tecomaca and the Jalisco border.

    Do not travel due to crime. Armed groups operate independently of the government in many areas of Guerrero. Members of these groups frequently maintain roadblocks and may use violence towards travelers.

    Do not travel due to crime. Violent crime, such as murder, armed robbery, carjacking, kidnapping, extortion, and sexual assault, is common. Gang activity, including gun battles, is widespread. Armed criminal groups target public and private passenger buses traveling through Tamaulipas, often taking passengers hostage and demanding ransom payments. Local law enforcement has limited capability to respond to violence in many parts of the state.

    Perhaps, President Trump’s border wall is a good idea as drug cartels on the Mexico-United States border are stockpiling military grade weapons.

  • Iran's Revolutionary Guard Vows "Hell To The Zionists" As Putin Warns Netanyahu

    Iran has called reports that they sent a UAV into Israeli airspace “ridiculous,” while an Iranian commander warns that they could unleash “hell” on the “Zionist regime” by destroying all US bases in the area. 

    “The claim about the flight of an Iranian drone and Iran’s involvement in the downing of a Zionist fighter jet is so ridiculous that it does not merit a comment,” said Iranian Foreign Ministry spokesman Bahram Qassemi, while claiming that Iranian officials are only advising the Syrians “at the request of the… legitimate and lawful government.”

    Moreover, any “aggressive actions” by Israel would trigger a serious response by Iran, creating “hell for the Zionists” according to Brigadier General Hossein Salami, deputy head of Iran’s elite Revolutionary Guards. His statement below:

    The Zionist regime in the Muslim world was shaped by the will of the United States and Britain, and they built a cemetery from the Islamic world. You have heard the story of the domination of the world of arrogance after World War II, the tragic story of Muslim slaughter in the wars that Britain has launched and know the role of the United States and Britain in the formation of the Zionist regime, or aware of the defeats of the Arab armies of the Zionist regime by American support.

    The United States was banning us and wanted to be paralyzed, but we advanced, and today, from this point on, today we can destroy all American bases in the region and create hell for Zionists.

    Today, the Islamic Republic of Iran is more powerful than ever. We trust in God; this was a confession two years ago when we seized the American Marines and the American inability to confront us. –Gen. Hossein Salami via Tasnim News (translated)

    a
    Gen Hossein Salami

    Meanwhile, Russian President Vladimir Putin warned Israeli Prime Minister Benajamin Netanyahu in a Saturday phone call to avoid an escalation of the situation in Syria, reports Reuterswhile Netanyahu asserted Israel’s right to “defend against aggression.”

    a

    They discussed the situation around the actions of the Israeli air force, which carried our missile strikes on targets in Syria,” Interfax quoted the Kremlin as saying.

    The phone conversation took place less than two weeks after a face-to-face meeting between the Israeli and Russian leaders in Moscow, the duo’s seventh face to face meeting in two years, in which the two leaders who are currently reshaping the middle east in the power vacuum left by the US, were said to have discussed military cooperation on Syria and Iran’s influence in the region. It is unclear whether today’s events were part of the talking points.

    Netanyahu also spoke with US Secretary of State Rex Tillerson on Saturday where he reiterated Israel’s stance. Tillerson is about to embark this weekend on a five-nation tour of the Middle East, visiting Turkey, Egypt, Kuwait, Jordan and Lebanon.

    “Our policy is clear,” said Netanyahu. “Israel will defend itself against any aggression and any attempt to violate its sovereignty,” adding “Iran undertook such attempt today. It violated our sovereignty, and infiltrated its drone into Israeli airspace from Syria.”

    https://platform.twitter.com/widgets.js

    As we reported earlier, Anti-aircraft fire downed an Israeli F-16 returning from a bombing raid on an Iranian UAV facility early Saturday.

  • On The Syria Occupation And The New Face Of Imperialism

    Authored by Caitlin Johnstone via Medium.com,

    US forces have attacked the Syrian military, reporting over a hundred deaths. The Syrian Ministry of Foreign Affairs is calling the air strike a massacre, a war crime, and a crime against humanity.

    The US is an invading, occupying force that is in Syria without the permission of its government, yet it is claiming that the air strike was an act of “self-defense” against an “unprovoked attack” upon the US-backed SDF, a mostly Kurdish militia which had occupied an area of Syrian land. No Americans suffered any injuries or deaths in the attack. The SDF suffered a single reported injury.

    It’s a bit like saying you broke into someone’s house and strangled them from behind with a garotte in self-defense.

    Believe it or not, it appears very likely that the US military’s latest act of butchery waged upon Middle Easterners on their own land was not about self-defense at all, but about oil. The always insightful Moon of Alabamamakes a compelling case that not only is America’s version of events full of plot holes, but that the whole thing could very well have been “a trap” to sabotage a local deal that had been made for the SDF to turn over an oil and gas field to the Syrian government in the near future.

    This would fit in perfectly with comments Professor Joshua Landis made about the attack, saying that America’s plan is to keep Syria weak, poor and divided in order to disadvantage US/Israel/Saudi rivals Iran and Russia. It would also clarify US Secretary of State Rex Tillerson’s assertion a few weeks ago that thousands of American troops are being kept in Syria to prevent Assad from regaining control of areas that have been liberated from ISIS.

    This is what the new imperialism looks like.

    When the Russian Federation annexed Crimea in 2014, everyone lost their minds. Countries don’t just annex territory from other countries anymore! It’s so barbaric! It’s so… 20th century.

    That’s simply not how we do things in the modern world. We don’t expand our geopolitical power by blatant land grabs, we expand it with treaties, alliances, intelligence/surveillance deals, trade agreements, corporate contracts, secret pacts, and occupations of key strategic locations under the pretense of fighting terrorism. Like civilized people.

    In the old days, an empire would expand itself by invading a weaker territory, killing its people until they gave up, and planting its flag there. We’d change the maps so that everyone could see that the region was now under the control of Rome or the British Crown or Napoleon or whomever, and the power structures would align themselves accordingly. It was all relatively simple and transparent.

    The new imperialism doesn’t do that.

    You will never see Syria made into the 51st state.

    Since the end of the second World War it has been increasingly taboo for a government to overtly invade a country and add it to that government’s official territory, and many international laws were locked into place to reflect that. And yet world power has arguably never been more consolidated than it is right now. The US, the UK, the EU, Saudi Arabia, Israel, Canada, Australia and many other nations tend to march more or less in lockstep with one another on a vast array of subjects ranging from neoliberalism to surveillance to which “regime” is in need of more crushing sanctions on a given day. The alignment isn’t perfect, but it’s too close to perfect to deny.

    Here in Australia we joke about being America’s 51st state, but, like Syria, we never will be. We don’t need to be. We’re already answerable to the same corporatist powers which control the US, so we trot right along into every US war, every US trade deal, and operate as a US intelligence asset just the same as we would if they’d planted the stars and stripes on our capitol buildings and called us Wisconsota. Through military alliance, intelligence alliance, corporatist agreements, and a good old-fashioned coup staged by the CIA and MI6, we transitioned smoothly from subservience under the old form of imperialism to subservience under the new. A whole continent full of McDonald’s-eating sheep.

    In the new imperialism, countries keep their borders, keep their names, and on paper keep their own sovereign governments as well. Australia remains Australia, Syria remains Syria. But the power dynamics are all bent to funnel toward the favor of the same vast power conglomerate.

    You can’t see the new empire on a map, so people assume that it isn’t there, but the only reason you can’t see it on the maps we were trained to read in school is because the new empire isn’t in any way limited by geography. It is unconcerned with the little lines drawn between the countries on our plastic classroom globes, or the different colors their manufacturers painted the different nations with. The nationless band of plutocrats who use governments as tools and weapons are not limited by those things. They don’t think in those terms. They don’t care about land and governments, they care about money, power, and influence. And none of those things are geographically confined.

    So they’re content to control a few strategic locations in Syria to wage a disruption campaign against rivals of the empire. They don’t need to annex Syria in order to do that, or even oust Assad. They’re not interested in the country, they’re interested in the nonlocalized new empire. They’ll control a few oil fields, secure a few shady alliances, unleash a few terrorist armies, all to funnel more and more power into the new empire, one contract at a time. Corporations and banks are not limited by national borders, and neither are the oligarchs who own them.

    Nations and governments don’t exist anymore. Not in the sense that they used to, anyway. The notion of meaningfully separate, sovereign governments is at this time a fairy tale told to the masses to keep us from realizing that we’re all being thrown into the gears of an exploitative threshing machine that only exists to feed the avaricious agendas of a few ruling elites.

    This has all been made possible by an ongoing war on the societal concept of sovereignty. Our concept of sovereignty is now so weakened that a powerful government can get away with invading another country and claiming “self defense” when it kills the people there, so weakened that constant domestic surveillance by secretive and unaccountable intelligence agencies is now considered normal, so weakened that the public will ferociously defend a police officer that guns down a civilian who reached for his wallet a little too fast.

    If society found some way to restore sovereignty to nations, governments, and above all to human beings, the ecocidal, omnicidal new empire which depends upon blurred lines and ignored boundaries would be unable to survive. And that would be great, in my opinion.

    *  *  *

    Thanks for reading! My work here is entirely reader-funded so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following me on Twitter, bookmarking my website, throwing some money into my hat on Patreon or Paypal, or buying my new book Woke: A Field Guide for Utopia Preppers.

  • After The Historic Risk Parity & CTA Crash, What's Next?

    Last Sunday, following the Friday post-payrolls flush, but before the Monday volocaust, which was the consequence of the concurrent historic vol squeeze of inverse VIX ETF funds, coupled with the sharp deleveraging by CTAs, risk parity and various other quant funds, we predicted that recent events were a “recipe for disaster” and that “while everyone may have an opinion on what happens next” one thing that is very likely is that “risk-parity funds – those who benefit as long as both stocks and bond yields act in tandem – are set to suffer the biggest hit.”

    This is what else we said:

    Friday’s equity market collapse and simultaneous bond market bloodbath was the biggest combined loss since December 2015, but perhaps more ominously, the week’s combined loss in bonds and stocks was the worst since Feb 2009.

    And as we further noted, judging by the major correlation regime shift between stocks and bonds that started on Monday, this is something considerably more worrisome for investors…

    … and especially risk-parity traders, who already saw their worst weekly performance since the Taper Tantrum…

    … and will be forced to significantly delever in the coming days – to the tune of tens of billions in net exposure – if the vol surge persists.

    What the above means is that, with all due respect to JPM’s head quant Marko Kolanovic who last week explicitly stated that he is not concerned about a quant puke as “the move was not large enough to trigger broad deleveraging” and “equity price momentum is positive and trend followers are not likely to reduce equity exposure”, we disagree, if for no other reason than the macro correlation regime had flipped. Visually, the regime change is shown in the chart below:

     

    One week later, with the market nearly 10% lower, vol funds around the globe in shambles, retail vol sellers crushed, the risk-parity blow up took place as predicted, in what now looks like the worst quant-quake since the summer of 2007.

    So what happens next?

    One answer comes from JPMorgan’s Nikolaos Panigirtzoglou, whose latest Flows and Liquidity analysis traces the contours of last week’s events, and who writes that “our analysis suggests that both CTAs and Risk Parity funds have been at the core of the recent correction”, confirming what we said, and then posits what may happen next.

    First, a recap at last week’s tumultuous events:

    Figure 1 shows the performance of various types of investors so far in February vs. last month. CTAs and Risk Parity funds appear to have suffered the biggest losses over the past week, more than erasing their previous January gain. Balanced mutual funds also suffered a heavy loss, more than erasing their previous January gain. In contrast, discretionary hedge funds such as Discretionary Macro or Equity Long/Short funds managed to preserve half or more of their previous January gains. This is especially true with Discretionary Macro hedge funds which appeared to have lost only -0.4% over the past week. This confirms our previous thesis that neither Discretionary Macro nor Equity Long/Short hedge funds were very long equities ahead of the correction.

    Why have CTAs, Risk Parity Funds and Balanced mutual funds suffered by so much more? A simultaneous selloff of equities, bonds and commodities is the worst possible backdrop for multi asset investors such as risk parity and balanced mutual funds. Indeed looking at the performance of a hypothetical Balanced fund 60:40 Equity:Bond portfolio, we find that the period over the past week saw the worst drawdown since the Fed taper tantrum of May/June 2013. Since January 26th the drawdown of a 60:40 balanced portfolio has been -6.6%, surpassing the -6.2% drawdown seen during the Fed taper tantrum of May/June 2013 (Figure 2). And the increase in 3M rolling realized vol at 3.3% has also been bigger than that seen during the Fed taper tantrum.

    The pressure on Risk Parity funds, which are stricter vol targeters than Balanced Mutual funds, to delever has been exacerbated not only by the shift in bond-equity correlation into positive territory, but also by the recent rise in equity/commodity correlation as commodity prices collapsed over the past few days along with equities.

    Here is another way of visualizing the risk-parity crash:

    And while we pointed out the rising bond-stock correlation, JPM notes that a new potential threat is that the commodity/equity correlation has also starting creeping up – yet another potential risk-parity deleveraging risk factor  – rising from just above zero at the end of January to +25% currently.

    This, JPM cautions, raises fears about further de-risking by Risk Parity funds.  But here’s the good news. In fact, it was so good, it sent the market soaring when the JPM note hit at 3:30pm on Friday.

    According to Panigirtzoglou, “we believe that any further derisking by Risk Parity funds will be more limited from here as they have de-risked already quite significantly.

    Specifically, “Risk Parity funds underperformed their hypothetical benchmark by 3.7%. This underperformance is even bigger than that seen during the Fed taper tantrum and is comparable to their previous de-risking seen into the US election.”

    Meanwhile, that other group of vol-targeting funds, CTAs, got absolutely annihilated last week, hit far worse than risk parity funds. JPM explains:

    As we have been highlighting over the previous weeks, the momentum signal of several futures contracts was reaching extreme levels during January, raising the risk of mean reversion signals being triggered, i.e. profit taking from certain CTAs that employ mean reversion signals along with momentum signals. The first futures contract to get  extreme was oil in mid-January, the week after were those of the S&P500 and MSCI EM indices, and then the euro and the pound at the last week of January. So it is possible that profit taking by those CTAs that employ mean  reversion along with momentum signals might have contributed in starting the correction. But as the correction  started unfolding, pure trend following CTAs were suffering from trend reversal, hitting stop losses on their momentum positions which they were forced to unwind. In a typical CTA, stop orders are placed for all open positions, i.e. when a trade goes against the fund, positions are automatically stopped out for a precalculated, limited loss. In addition, if there is high volatility, CTAs will scale down the size of their positions to main a relative stable VaR This combination of stop losses and rising volatility most likely triggered the most intense position unwinding by CTAs in the post Lehman period.

    Actually, make that the most intense position unwinding by CTAs ever. According to the SG CTA Index, overall CTAs lost 6.9% in four days from Feb 1st to Feb 7th. And, as JPM notes, “pure trend following CTAs did even worse losing 9.2% during these four days. In fact, the negative 4-day return for CTAs is unprecedented” as shown in the chart below.

    So between the violent deleveraging among risk-parity funds, and the biggest loss by CTA funds ever, what is left?

    Well, as the following chart showing a historic unwind in futures open interest over the past two weeks…

    … the position unwinding by the CTA universe has been so severe since the end of January, “that any position unwinding from here should be limited”, JPM argues, especially if one assumes that stop losses have been triggered already.

    Which then leads directly to the following silver lining which, as we noted above, was sufficient to send markets surging in the last hour of trading:

    In all, our analysis suggests that both CTAs and Risk Parity funds have been at the core of the recent correction, and that the position unwinding that both suffered from has been so severe that any further position unwinding should be limited from here.

    In other words, out of the quants’ ashes a new calm may emerge.

    Or maybe not: after all to relieve investor fears that more selling wouldn’t emerge, on February 1, JPM’s top quant Marko Kolanovic stated that  Equity price momentum is positive and trend followers are not likely to reduce equity exposure.” Oops, because what followed was arguably the biggest equity exposure reduction in history. So yes, JPMorgan has a tendency to see things in a somewhat optimistic light now and then.

    There is another risk: echoing his warning from a week ago, which we described in “the worst case scenario“, Panigirtzoglou concludes that the last great unknown risk is what retail investors do next.

    [The position unwinding], combined with the low equity exposures of Discretionary Macro and Equity Long/Short hedge funds, leaves retail investors as the residual risk for equity markets going forward. Retail investors had poured more than $100bn into equity ETFs during January. Of that $100bn, $40bn was invested into US equity ETFs. US equity ETFs, which have been at the epicenter of the fund outflows over the past week, lost $25bn so far. So more than half of the $40bn that had entered US equity ETFs in January has been withdrawn already. So again, the picture we are getting in the US equity ETF space is one of advanced rather than early stage de-risking.

    Furthermore, in another confirmation of the “worst case scenario”, we wrote on Friday that just two weeks after record inflows, equity funds saw their biggest weekly outflow in history as retail investors panicked to get the hell out of Dodge.

    Which then reduces the question posed in the title: “what next” to a simple binary scenario: either Friday’s mini meltup will be sufficient to give retail investors confidence that the crash is over, or it won’t, in which case Bank of America may be right on the money that once the selling resumes on Monday…

    … the only thing that stops it will be central bank intervention.

  • $20 Billion Hidden In The Swamp: Feds Redact 255,000 Salaries

    Submitted by Adam Andrzejewski

    The only thing the bureaucratic resistance hates more than President Trump is the disclosure of their own salaries. It’s a classic case of the bureaucracy protecting the bureaucracy, underscoring the resistance faced by the new administration.

    Recently, Open the Books filed a Freedom of Information Act request with the U.S. Office of Personnel Management (pictured) for all federal employee names, titles, agencies, salaries, and bonus information.

    We’ve captured and posted online this data for the past 11 years. For the first time, we found missing information throughout the federal payroll disclosures. Here’s a sample of what we discovered from the FY2017 records:

    • 254,839 federal salaries were redacted in the federal civil service payroll (just 3,416 salaries were redacted in FY2016).
    • 68 federal departments redacted salaries. Even small agencies like the National Transportation Services Board and the Federal Deposit Insurance Corporation redacted millions of dollars in salaries.
    • $20 billion in estimated payroll now lacks transparency.
    • A 7,360 percent increase in opacity hides one out of every five federal salaries.

    Who’s the bureaucrat in charge? Not a Trump appointee – the president doesn’t even have a current nominee at OPM. So, the buck stops with new acting Director Kathleen McGettigan, a 25-year staffer who assumed the position because she was the next in line, not because the White House appointed her.

    Trump has the power to replace her at any time. This lack of transparency is apparently a result of the president’s failure to appoint his people to executive positions. Trump knows controlling the human resource department is key to managing the federal bureaucracy. In fact, Trump forecast this type of institutional resistance in his inaugural address.

    “The establishment protected itself but not the citizens of our country. Their victories have not been your victories.… And while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land. That all changes starting right here and right now.”

    The decision to redact 255,000 federal salaries for $20 billion in payroll harms oversight. The American people deserve to know who makes how much, in what position, employed by which agency.

    For example, more than 6,600 salaries were redacted at the Department of Veterans Affairs. At an agency where hiring priorities have been repeatedly questioned, transparency is crucial. In recent years, just one in 10 new hires at the VA was a doctor. In FY2017, the VA hired 8,727 new employees and just 561, or 6 percent, were doctors.

    In December 2017, our “OpenTheBooks Oversight Report – Mapping the Swamp, a Study of the Administrative State” found $114 billion in compensation paid to 1.35 million federal civil service employees (excluding the U.S. Post Office) in fiscal year 2016. We found 165 percent growth in bureaucrats making $200,000 or more; 30,000 bureaucrats out-earning all 50 governors at $190,000; and the average salary at 78 large federal agencies exceeding $100,000.

    At OpenTheBooks.com, citizens have the tools to investigate their local piece of the federal bureaucracy. We have literally mapped the swamp, pinning all federal disclosed bureaucrats plus post office employees by employer location ZIP Code on our interactive map.

    But not this year. Our organization can’t properly quantify the FY2017 payroll because of the massive salary redactions. After all, we can’t map what we can’t see.

    Make no mistake – even under the Obama administration, too much information was redacted.

    Last year, we complained about the 314,890 redacted employee names, including all 77,000 employees at the Internal Revenue Service and the $1.1 billion in “performance bonuses” shielded by federal union agreements (FY2016). We worked with Congressman Ron DeSantis on The Taxpayer-Funded Pension Disclosure Act, which would open the books on $125 billion in federal pension data.

    This year’s massive increase in redactions wasn’t a result of new policy, but a reinterpretation of existing policy. The OPM didn’t even mention the change in its FOIA response letter, making no legal argument for the 255,000 new redactions. It wasn’t until we asked the agency about the missing information that a representative issued the following response:   

    “On an ongoing basis, OPM reviews its methods for creating data files to ensure consistency with its Data Release Policy governing the release of records related to federal employees in positions or agencies that require location information to be redacted. Because the Adjusted Basic Salary field contains locality pay, OPM recently began redacting this information for certain classes of employees, hence the drop that your IT department noticed.”

    This didn’t make much sense, so we asked again. You can read the agency’s third attempt at a response via its spokesperson here.

    Facing resistance like this, the president has to work hard to deliver on his promises. The administrative state was designed to resist reform. Without a constant effort, the bureaucracy always wins.

  • Meet The US Army's Latest Killer-Robotic Humvees

    In the coming months, the United States Army is sending its first robotic Humvee to a field training exercise to see if the autonomous combat vehicle can accurately destroy targets, as part of a new experimental program to weaponize robots.

    The killer Humvee, which is called the ‘Wingman,’ is part of the Joint Capability Technology Demonstration, or JCTD program, where engineers have developed autonomously piloted weaponized vehicles in hopes it will provide direct and indirect fire support for ground troops trapped in dangerous situations on the battlefield.

    According to the Army Tank Automotive Research Development and Engineering Center, or TARDEC program, the goal behind the “Wingman” is to train soldiers and weaponized robotic vehicles to work together on the battlefield to confront America’s enemies. Army engineers say it will be Soldiers, not computers, which decide when the robotic Humvee fires a round.

    “You’re not going to have these systems go out there like in ‘The Terminator’ [film],” said Thomas B. Udvare, deputy chief of the program. “For the foreseeable future, you will always have a Soldier in the loop.”

    The Army Armaments Research Development and Engineering Center, or ARDEC, and the Naval Surface Warfare Center Dahlgren Division are also partners in the program, which was launched last year and funded with roughly $20 million after years of positive testing.

    Popular Mechanics explains how the Wingman system works,

    Right now, two Humvees make up the Wingman experiment: a manned M151 Humvee and the unmanned M1097 Wingman vehicle. Inside the crewed vehicle, three soldiers are assigned to take over key Wingman tasks. One of them handles Wingman’s target detection and laser range-finding, the second drives the vehicle if necessary, and the third pulls the trigger on the Wingman’s gun.  

    The Army highlights a significant issue with the current Wingman’s armament system. Engineers indicate the program will be upgrading legacy gas-powered M2 .50-caliber machine gun and M240 7.62-millimeter machine gun to an electrically-driven weapon that does not jam like the gas-driven machine gun.

    “One of the more significant upgrades will be to the weapon system with the addition of ARDEC’s Advanced Remote Armament System to solve an issue with its previous weapon, the M240B machine gun. While the ARAS system remains the same caliber, it is an electrically-driven gun that does not jam like the gas-driven machine gun.”

    “Obviously if you’re a kilometer away from your vehicle, jams are not good,” Udvare said. “What’s nice about their electrically-driven system is that the incidents of jamming are greatly reduced.”

    The Army’s solution: the Advanced Remote/Robotic Armament System (ARAS). Popular Mechanics dissects the ARAS system and how it is a fitting upgrade to legacy gas weapons:

    ARAS is a complete 7.62-millimeter machine gun that weighs 410 lbs. including the mount and 1,500 rounds of ammunition. ARAS has a heavy, fluted barrel that can survive burning through its entire ammo supply in less than five minutes. The gun is capable of 360-degree fire, 90-degree elevation and -30-degree depression. The system can load a fresh ammo pack in just six seconds. ARAS is paired with the Autonomous Remote Engagement System, which uses vision-based automatic target detection and user-specified target selection.  

    In May, the killer robotic Humvees are expected join engineers at “Grayling, Michigan, or Fort Benning, Georgia, to become certified in daytime operations on a Scout Gunnery Table VI course,” confirmed the Army.

    In May, engineers are slated to take the two-vehicle set, which also includes a command and control Humvee manned by five personnel, to Grayling, Michigan, or Fort Benning, Georgia, to become certified in daytime operations on a Scout Gunnery Table VI course. The course is the same one used to train and qualify ground combat vehicle crews before they advance to larger warfighting exercises.

    Military personnel could get their first opportunity to work side by side with the killer robotic Humvee come October, when “engineers hope to conduct an operational user assessment at Fort Benning using Soldiers and Marines,” added the Army.

    “We saw the Table VI as an opportunity,” Udvare said. “The course may not test all of our capabilities and may not show all of our flaws, but at least it’s a beginning point to start to assess these platforms and drive technology.”

    “By 2035, advances in technology may allow a Soldier to manage multiple assets such as combat vehicles, unmanned aerial vehicles and reconnaissance vehicles at the same time in combat, Udvare said.

    “Autonomous systems aren’t going to be smart enough to be on their own for decades,” Udvare added.

    “How we make split decisions on what we process in our environment … is very complex”

    “To add autonomous platforms to the manned formations and have both the man and the machine work side-by-side to accomplish a mission is pretty powerful,” Udvare said.

  • Is The Steele Dossier Full Of "Russian Dirt" – Or British?

    Authored by James George Jatras via The Strategic Culture Foundation,

    With text messages between US Justice Department (DOJ) conspirators Peter Strzok and his adulterous main squeeze Lisa Page now revealing that then-President Barack Obama “wants to know everything we’re doing,” it now appears that the 2016 plot to subvert the rule of law and corrupt the US organs of state security for political purposes reached the very pinnacle of power.

    To call the United States today a “banana republic” increasingly may be seen as a gratuitous insult to the friendly spider-infested nations to our south.

    Still, don’t expect to see Barry Hussein Saetoro doing the perp walk anytime soon or even being deported back to Kenya. Don’t expect to see orange prison suits on Strzok, Page, former FBI Director James Comey, former Associate Deputy Attorney General Bruce Ohr, former Deputy FBI Director Andrew McCabe, and others implicated in putting a political thumb on the scales to, first, get Hillary Clinton elected, and then, when that failed, to neuter Donald Trump’s presidency with a phony Russiagate probe. Officials’ getting “former-ed” is one thing, their getting prosecuted quite another. (Just imagine if a GOP administration had similarly skewed the supposedly non-political law enforcement and intelligence services for partisan reasons. We’d have Watergate on steroids. The New York Times, Washington Post and CNN would be calling for hanging, drawing, and quartering.)

    Indeed, it’s not even clear the Russiagate investigation itself will be impacted. After all, the narrative may have flipped on one variable – from Trump campaign collusion to Democratic and FBI collusion – but the constant remains the same: Russia. Trump’s defenders are as insistent as his detractors that the real culprit is Russia! Russia! Russia!

    Sean Hannity of Fox News has been particularly hyperventilative that the entire Steele Dossier lying at the black heart of the mess consists of “phony, fake-news Russian propaganda” and “Russian intelligence lies” from British MI6 (supposedly “former”) spymaster Christopher Steele’s “Russian sources.” Even level-headed observers like Paul Sperry and Patrick Buchanan characterize the file as a “Kremlin-aided smear job” and “Russian dirt [that] Steele was spoon-fed by old comrades in the Kremlin’s security apparatus.”

    Christopher Steele is not Russian

    But what do we really know about Steele’s claimed sources? Not much.

    Sure, maybe Vladimir Putin personally whispered every word of the dossier into Steele’s ear. Or maybe Steele invented his supposed sources from whole cloth: your clients are paying for sleaze, you give them sleaze. Or anything in between: maybe Steele consulted some imaginative Russian cranks with only a marginal, and most likely adversarial, relationship to the Russian authorities, whose “inside knowledge” Steele padded to justify his fee. (Steele claims he didn’t pay his “sources” – assuming they exist at all – but that’s no more worthy of credit than anything else he says.)

    As analyzed by Russia expert Stephen F. Cohen:

    ‘Where, then, … did Steele get his information? According to Steele and his many stenographers – which include his American employers, Democratic Party Russiagaters, the mainstream media, and even progressive publications – it came from his “deep connections in Russia,” specifically from retired and current Russian intelligence officials in or near the Kremlin. From the moment the dossier began to be leaked to the American media, this seemed highly implausible (as reporters who took his bait should have known) for several reasons:

    – ‘Steele has not returned to Russia after leaving his post there in the early 1990s. Since then, the main Russian intelligence agency, the FSB, has undergone many personnel and other changes, especially after 2000, and especially in or near Putin’s Kremlin. Did Steele really have such “connections” so many years later? [JGJIs it credible that the head of MI6’s Russian branch is on a first-name basis with top Kremlin insiders? Turn the identities around and ask whether the chiefs of the US section of Russian or Chinese intelligence are on intimate speaking terms with the US president’s top advisers or with the leadership of the CIA or FBI. Hardly.]

    – ‘Even if he did, would these purported Russian insiders really have collaborated with this “former” British intelligence agent under what is so widely said to be the ever-vigilant eye of the ruthless “former KGB agent” Vladimir Putin, thereby risking their positions, income, perhaps freedom, as well as the well-being of their families?

    – ‘Originally it was said that his Russian sources were highly paid by Steele. Arguably, this might have warranted the risk. But subsequently Steele’s employer and head of Fusion GPS, Glenn Simpson, wrote in The New York Times that “Steele’s sources in Russia…were not paid.” If the Putin Kremlin’s purpose was to put Trump in the White House, why then would these “Kremlin-connected” sources have contributed to Steele’s anti-Trump project without financial or political gain – only with considerable risk?

    – ‘There is the also the telling matter of factual mistakes in the dossier that Kremlin “insiders” were unlikely to have made, but this is the subject for a separate analysis.

    ‘And indeed we now know that Steele had at least three other “sources” for the dossier, ones not previously mentioned by him or his employer. There was the information from foreign intelligence agencies provided by Brennan to Steele or to the FBI, which we also now know was collaborating with Steele. There was … a “second Trump-Russia dossier” prepared by people personally close to Hillary Clinton and who shared their “findings” with Steele. And most intriguingly, there was the “research” provided by Nellie Ohr, wife of a top Department of Justice official, Bruce Ohr, who, according to the Republican memo, “was employed by Fusion GPS to assist in the cultivation of opposition research on Trump. Ohr later provided the FBI with all of his wife’s opposition research.” Most likely, it found its way into Steele’s dossier. (Mrs. Ohr was a trained Russian Studies scholar with a PhD from Stanford and a onetime assistant professor at Vassar, and thus, it must have seemed, an ideal collaborator for Steele.)’

    The reference to “people personally close to Hillary Clinton and who shared their ‘findings’ with Steele” dovetails with another intriguing suggestion from former Clinton insider Dick Morris, who knows the modus operandi of the Clinton lie generator better than anyone else. On the Fox News “Ingraham Angle” show, Morris suggested to host Laura Ingraham that the bulk of the dossier was invented by veteran political dirty tricksters and Clinton-machine hatchet men Sid Blumenthal and Cody Shearer, who then engaged “former” spook Steele, because of the Brit’s known relationship with the FBI, as their conduit to give their garbage credibility. (Never underestimate the residual “colonial” mentality of Yanks to find any sort of gibberish convincing if delivered with a British accent, as confirmed by the ubiquity of posh Brit voices in American advertising.)

    Andrew Wood is not Russian

    But Steele isn’t the only limey link to #Dossiergate. In late 2016, after Trump’s election victory, Andrew Wood, a former British ambassador to Russia, told US Senator John McCain about the existence of compromising material on Donald Trump, according to Wood’s account to BBC4. Wood then set up a meeting between Steele and David Kramer, an associate of McCain’s. It’s unclear whether McCain already knew about the dossier at that point or whether Wood alerted the Senator to its existence.

    For what it is worth – not much – Wood states that McCain had obtained the documents from the Senator’s own sources. “I told him I was aware of what was in the report but I had not read it myself, that it might be true, it might be untrue. I had no means of judging really,” and that he served only to inform McCain about the dossier contents: “My mission was essentially to be a go-between and a messenger, to tell the Senator and assistants that such a dossier existed,” Wood told Fox NewsWood elsewhere relates that McCain was “visibly shocked” at his description and expressed interest in reading the full report. That doesn’t sound as though McCain had already obtained the dossier from his “own sources” but, rather, that Wood was the instigator.

    So which is it? Did McCain already know about the dossier, and if so how did it “happen” to get raised with a British diplomat? Conversely, was the initiative from Woods to induce the Senator – known to be a strong Trump critic as well as for his hostility to Russia – to pass the dossier on in Washington? Keep in mind that the dossier had already been used to secure a Foreign Intelligence Surveillance Act (FISA) warrant to monitor Carter Page, a peripheral asteroid in the Trump orbit, and that Trump had already been elected. By this time the conspiracy’s purpose had shifted from preventing Trump’s victory to tying down his incoming administration, especially with respect to blocking any opening to Moscow as Trump said he intended to do. What better way to set the cat among the pigeons than for a supposedly totally non-political British diplomat (certainly no intelligence officer, he!) to quietly peddle the material from Steele (whom Wood called a “very competent professional operator … I do not think he would make things up.”) to the right man in Washington?

    GCHQ is not Russian

    Finally, while it’s clear the dossier served to get a FISA warrant for American services to spy on the Trump campaign and later the transition team, US agencies’ might not have been the only eyes and ears monitoring them. Amid all the hubbub over Michael Wolff’s slash-and-burn Fire and Fury, little mention (other than a heated denial on the floor of the House of Commons, from the notoriously truth-challenged former prime minister Tony Blair, and from the relevant British agency itself!) has been made of the suggestion that the UK’s Government Communications Headquarters (GCHQ) – Britain’s version of the NSA – was spying on Trump and providing their sister agencies in the US with additional data.

    Keep in mind the carefully worded deflection last year from James Clapper, former Director of National Intelligence (DNI), that “there was no wiretap against Trump Tower during the campaign conducted by any part of the national intelligence community… including the FBI,” thus begging the question of whether Trump was spied on not by a US “national” agency but by one of the Anglosphere “Five Eyes” agencies – most likely GCHQ – which then passed the information back to their American colleagues. With Steele’s and Wood’s involvement, and given the virtual control of America’s manifestly corrupted agencies of their counterparts in satellite countries like the United Kingdom, involvement by GCHQ and perhaps other “friendly” foreign agencies cannot be dismissed out of hand.

    Madame Prime Minister is not Russian

    To be sure, in 2016 the majority opinion in Russia was that Donald Trump’s election would be preferable to Hillary Clinton’s for the simple reason that the former openly advocated better relations with Moscow while the latter was a notorious warmonger. But there was also a strong minority view, especially among more pro-Western elements of the Russian establishment, that Hillary – “the devil you know” – was preferable to rolling the dice on an unpredictable and unknown quantity. Plus, Hillary was delightfully corrupt, with the Clinton Foundation an open invitation for many foreign powers to buy influence.

    There was no ambiguity in the position of the British government, however. In 2016 Prime Minister Theresa May, like her German counterpart, made little effort to hide her disdain for the “just plain wrong” Trump and her preference for Hillary Clinton, whom she expected to win (as did most other observers).

    Why should anyone be surprised that her MI6 and GCHQ minions would share the same views and perhaps acted on them to provide some helping “hands across the water” to their US counterparts whose anti-constitutional conspiracy now stands exposed?

     

  • CIA Slams "Fictional" Report Of Payment For Trump Sex Tape, NSA Cyberweapons

    The CIA has slammed “fictional” reports in The Intercept and the New York Times alleging that American spies paid a Russian operative $100,000 last September for what they were told were stolen NSA cyberweapons and a videotape of President Trump engaged with prostitutes in a Moscow hotel room. 

    After allegedly paying the operative, The Times reports US intelligence discovered that much of much of the material had already been made public, and they had effectively been swindled out of the first installment of an agreed upon $1 million payment – whittled down from the Russian’s original demand for $10 million.

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    Shortly after Pulitzer Prize winner James Risen of The Intercept published his report on Friday alleging that the US intelligence community had “opened a secret communications channel with the Russian operatives” which involved the CIA transporting cash “to the CIA’s station in Berlin to complete the transaction,” Matthew Rosenberg of the New York Times published a similar story, adding that the cash was routed through an indirect channel, and delivered in a Berlin hotel room last September. 

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    Matthew Rosenberg (left), James Risen

    In reaction, the CIA called the report “fictional,” telling the Daily Caller News Foundation:

    The people swindled here were James Risen and Matt Rosenberg,” adding “The fictional story that CIA was bilked out of $100,000 is patently false”

    Rosenberg responded over twitter, attacking the CIA’s statement that the NYT said they were the source of the funds: 

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    James Risen of The Intercept tells CBS News “It’s a very complicated story.” 

    “First, the CIA and the NSA were trying to recover stolen NSA documents that allow people to do very sophisticated hacks, and they were worried that those documents would allow for really horrible hacks of American systems. So that was their main focus, was to try to buy back documents from the Russians on that. And in this process of conducting a secret channel with the Russians, some of the Russians began to offer documents related to Trump and to the 2016 campaign. And the Americans were very ambivalent about whether they wanted to get these documents, because they know how explosive this whole issue is.”

    So there was a lot of back and forth between the Russians and the Americans about whether the Americans would even accept the documents about Trump,” said Risen. “And so finally it appears that they accepted some, but their primary goal all along for the CIA and the NSA was to get these documents back from a group called Shadow Brokers.”

    The Times reported that the NSA cyberweapons were designed to hack into Russian and Chinese computer networks, but wound up in the hands of a hacking collective known as the “Shadow Brokers.” Hackers have reportedly used the tools to crack into networks around the world, including businesses, hospitals and factories. 

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Today’s News 10th February 2018

  • Trump Blocks Democratic Counter-Memo Over "National Security Concerns"

    President Trump declined to release the Democrat rebuttal to a GOP-authored “FISA memo,” following the advice of the Department of Justice and the Director of National Intelligence, the White House announced.

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    President Trump is “inclined to declassify” the Democratic memo, however there are several sections which would create “especially significant concerns” for “national security and law enforcement interests,” wrote White House counsel Don McGahn in a letter to House Intelligence Committee chairman Devin Nunes (D-CA).

    While the White House ignored FBI requests to redact the names in the GOP-authored memo, the Democratic response is said to reveal sources and methods which must be concealed. 

    In a separate letter to FBI Director Christopher Wray and Deputy Attorney General Rod Rosenstein, McGahn highlighted the problematic information. The White House says it will work with the House Intelligence Committee if it wants to revise the Democratic memo and resubmit it for White House review. 

    “The president encourages the Committee to undertake these efforts,” the letter states. “The Executive Branch stands ready to review any subsequent draft of the Feb. 5th memorandum for declassification at the earliest opportunity.”

    Democrats on the House Intel Committee can now make the requested changes, or submit their memo to the full house to seek a vote to override the President’s decision. 

    The House Intelligence Committee voted earlier this week to release the 10-page Democratic memo authored by ranking minority Committee member Rep. Adam Schiff (D-CA) following the declassification and public release of a four-page “FISA memo” authored by staffers for Chairman Devin Nunes.

    In response to Trump blocking the Democratic rebuttal, Nunes said on Friday that he was not surprised that the DOJ and FBI advised against its release.

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    Rep. Devin Nunes (R-CA)

    “Ranking Member Schiff pledged to seek the input of the Department of Justice and FBI regarding the memo’s public release, and it’s no surprise that these agencies recommended against publishing the memo without redactions,” said Nunes. 

    Nunes suggested that the Democrats make the “appropriate technical changes and redactions” as recommended by the justice department “so that no sources and methods are disclosed and their memo can be declassified as soon as possible.”

    Democrats Cry Foul

    After the GOP-authored memo was released, Democrats cried foul – calling it “inaccurate” and claiming its sole purpose was to derail and obstruct the ongoing investigations into Russian interference in the 2016 election. 

    Democrats were outraged at the President’s decision. In a Friday night statement, Schiff said that Democrats had provided their memo to the F.B.I. and the Justice Department for review before it was approved for release by the committee, and that the Democrat rebuttal was drawn from the same underlying documents as the Republican one.

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    Rep. Adam Schiff (D-CA)

    “We will be reviewing the recommended redactions from D.O.J. and F.B.I., which these agencies shared with the White House,” Mr. Schiff said, “and look forward to conferring with the agencies to determine how we can properly inform the American people about the misleading attack on law enforcement by the G.O.P. and address any concerns over sources and methods.”

    Rep Terri Sewell – a Democratic member of the committee, tweeted: “Republicans and Democrats on the Intelligence Committee voted UNANIMOUSLY to release this memo. @realDonaldTrump is not interested in transparency, he is interested in protecting himself and derailing the Russia investigation.”

    Despite Democrats’ anger, McGhan said – in addition to the fact that Trump was “inclined to declassify” the document – that “The executive branch stands ready to review any subsequent draft of the Feb. 5 memorandum for declassification at the earliest opportunity.” 

  • Dalio's $13 Billion Short: Bridgewater Unveils Its Biggest Ever Short Position

    Last October, Italy’s government was angry when the world’s largest hedge fund, Ray Dalio’s Bridgewater unveiled it had amassed a sizable  $713 million short against Italian financial stocks, its biggest disclosed bearish bet in Europe.

    Then last week, and just one month before Italy’s March 4 elections – which the broader market stubbornly refuses to acknowledge are a risk factor – Bridgewater tripled down on its bearish bets against Italian banks and insurers, making the position the largest thematic short carried by the world’s biggest hedge fund.

    As we reported last Thursday, Bridgewater boosted its bearish bets against Italian companies to $3 billion and 18 firms, up four-fold from just over $713 million in early October, further infuriating Italian authorities. As Bloomberg added, Bridgewater’s bearish bets against European companies as a whole totaled $3.3 billion, spread among 20 names.  In addition to his previous negative exposure, Dalio disclosed a short position in transport-infrastructure provider Atlantia and added to its largest short bet, against lender Intesa Sanpaolo SpA.

    The growing short comes just days after Dalio told a Davos audience that “holding cash is now stupid”… and literally days before the biggest market crash since Lehman.

    Fast forward to today, when Dalio’s bearish fascination is starting to get a little concerning, because according to the latest Bloomberg summary, Bridgewater now has at least $13.1 billion in European Union shorts, quadrupling the $3.2 billion short from last week, and over 18 times more than the fund’s original position last October.

    In the past week, Bridgewater put more than $1 billion to work betting against oil giant Total SA – making it the firm’s largest disclosed short holding in Europe. 

    As Bloomberg notes, Europe’s energy titan has been riding out the biggest industry downturn in a generation by selling assets and cutting spending. The hedge fund also started a bearish Airbus SE position, investing about $381 million against the aircraft maker. Among other short positions, it disclosed wagers against BNP Paribas SA, ING Groep NV and Banco Santander SA.

    Amusingly, since the Feb. 8 regulatory filings were made public, Total fell 1% as markets slumped, while Dalio’s other shorts, Airbus, BNP Paribas, ING Groep and Banco Santander sank roughly 2%.

    A list of Bridgewater’s top 10 shorts is shown below:

    At the risk of repeating ourselves – which we think under these circumstances is worth it – we will remind readers that on January 24, Dalio told a naive, fawning Davos audience that:

    “We are in this Goldilocks period right now. Inflation isn’t a problem. Growth is good, everything is pretty good with a big jolt of stimulation coming from changes in tax laws. If you’re holding cash, you’re going to feel pretty stupid.”

    And as Dalio was dissembling, he was quietly assembling Bridgewater’s biggest ever thematic short in his fund’s history.

    So yes, perhaps if you’re holding cash, you will feel pretty stupid eventually, but not after last week’s global market plunge; however, you will certainly feel much dumber if you actually believed Dalio.

  • WSJ Asks: Why Is The Media Ignoring The Real Bombshell FISA Memo?

    Authored by Guy Benson via Townhall.com,

    We’ll bring you Wall Street Journal columnist Kimberly Strassel’s tweetstorm in a moment, but I’ll take a stab at answering her question about the media right out of the gate.  

    Three possibilities:

    (1) The GOP hyped the Nunes memo, which quickly became the center of this whole firestorm — replete with counter-memos, FBI objections, etc.  The press followed the spotlight.

    (2) As we’ve been saying, there are so many complex pieces of this larger puzzle, following the plot is difficult.  It’s not just news consumers wondering, “which memo is this now?” — it’s many of the people trying to cover this drama, too.  The document in question here is a second, less redacted, version of a Senate memo that few people have even heard of. 

    (3) The Senate memo, produced by non-bomb-throwers Chuck Grassley and Lindsey Graham, is substantially more disruptive to the Democrats’ narrative than the Nunes document.  And the press generally prefers Democratic narratives to Republican ones because most journalists are liberals. 

    My guess is that some blend of all three factors helps explain why the Grassley/Graham memo has barely registered on the national radar, even after we’ve endured multiple high-octane news cycles starring Nunes and Schiff.  But on the substance, does Strassel have a point, or is this just the latest shiny object the right-wing is waving around to distract from “the real story,” now that the Nunes memo was arguably a bit of a dud?  Here’s her case:

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    Does that all of check out?  Allahpundit digs into the document (a much more redacted version had been released previously) and seems to agree that Grassley/Graham is a significantly bigger deal than Nunes.  In our analysis of the latter document last week, we wrote that a major question was how much the DOJ relied on the Steele dossier itself to gain a FISA warrant against former Trump adviser Carter Page.  According to Grassley/Graham, the answer is a lot.  I posited that if investigators had used the unverified dossier as a starting point from which to chase down leads and produce more solid evidence to present to a FISA judge, that’d be one thing.  But if they leaned heavily on Steele’s file itself as the “evidence,” that would be sketchier.  According to the two GOP Senators, the FBI did the latter.  From AP’s excellent summary (the relevant bits of the memo itself are here and here):

    …“The bulk of the application” against Page was dossier material…

    “The application appears to contain no additional information corroborating the dossier allegations against Mr. Page.”

    In other words, they seem to have treated the dossier as evidence, not as a lead. That’s big news.

    But that’s not all. Grassley/Graham allege, based on intelligence, that the man behind the anti-Trump dossier was known to be unreliable by the FBI (they eventually severed ties with him) because he was caught lying either to US law enforcement or to British courts, telling each entity different stories about a key fact. Either way, FISA judges who approved and renewed the Page warrants weren’t told about the proven unreliability of the foreign agent whose work product was (apparently) the central basis for said warrants. The FBI might counter that Steele seemed credible at first, then they dumped him when he burned them, but that doesn’t mean their hands are clean, Allahpundit writes:

    (a) that doesn’t solve the problem that the original FISA application against Page evidently relied “heavily” on information passed from a not-very-credible foreign agent and

    (b) that doesn’t explain why the Bureau allegedly failed to tell the FISA Court in later applications to renew their surveillance of Page that Steele’s info maybe hadn’t been so credible…Grassley and Graham make another good point about Steele’s chattering to the press while his investigation was still ongoing: Once bad actors were aware that he was digging for dirt on Trump, they could have sought him out and fed him any amount of BS in hopes of it trickling through to the FBI and deepening the official suspicion surrounding Team Trump. That’s how Clinton cronies — maybe even Sid Blumenthal — got involved in this clusterfark. Because Steele was supposedly willing to accept even unsolicited tips about Trump, the Clinton team may have fed him rumors to help fill a dossier for which their boss was paying.

    Two big points there:

    Even after the FBI recognized Steele was an established liar, his dishonesty was not disclosed to judges deciding whether to keep the warrants active during renewal applications, which were largely predicated on Steele’s credibility.

    And the topic about which he apparently lied was whether he blabbed to folks in the media about his work, which could have opened up the floodgates for disinformation from shady characters eager to make the anti-Trump case as juicy and brimming with salaciousness as possible.

    That’s where Blumenthal and company, whom I wrote about here, may have come in. What a mess. Also, speaking of not revealing pertinent information to the courts, it looks like Nunes was technically incorrect that the judges weren’t made aware that the Steele dossier was paid political oppo research. But he was more broadly correct that the judges didn’t have even close to the full picture of who was behind the unverified partisan document upon which they were primarily basing the surveillance of a US citizen — who happened to be a former aide to a major presidential campaign from the out-of-power party.

    “As Nunes himself later admitted, the Bureau apparently did disclose in a footnote that the material was paid political research. It just didn’t mention who, precisely, had paid for it,” AP writes.  The memo reads, “in footnote 8, the FBI stated that the dossier information was compiled pursuant to the direction of a law firm that had hired an “identified US person” — now known as Glenn Simpson of Fusion GPS…the application failed to disclose that the identities of Mr. Simpson’s ultimate clients were the Clinton campaign and the DNC.”  

    So the disclosure came in a footnote and didn’t mention that the parties who paid for the unverified dossier were the Trump campaign’s explicit opposition.  Maybe there was no misconduct in any of this, but even as someone who believes neither that suspicion of Carter Page was unreasonable, nor that this is all part of a grand anti-Trump conspiracy (remember, the Trump angle of the Russia probe started earlier, for an unrelated reason), there’s enough in the Grassley/Graham memo to make me uncomfortable with the standards by which Page was surveilled by the US government.

  • American Hysteria Over Russia Will Lead To Nuclear War, Report

    Authored by Seraphim Hanisch via TheDuran.com,

    Russian media reacts strongly to the American Nuclear Posture Review, which tries to convince its readers that Russia is trying to take over the world…

    Russian television broadcast a dire sounding piece on February 5th that probably was rather disquieting to most Russians, and also a source of significant dismay to their hopes for a rapprochement in relations following the election of Donald Trump to the Presidency of the United States.

    The news agency “Vesti” explained that the US is preparing itself for nuclear war with Russia.

    The US Department of Defense published its 2018 Nuclear Posture Review.  This consists of at least two documents that are public domain that detail the assessment the DoD made about nuclear threats from around the world.  The language about Russia is curious, for like Russia, the US repeatedly maintains that there is no desire for anything but good relations.

    However, this is unfortunately either a blind claim or a willfully blind claim for the sake of propaganda. 

    Based on the insanity of the US government’s reaction or posture about Russia overall, with the military fears, the sanctions and the most recent incidents of the release of the “Kremlin list” of government heads and successful businessmen and women, and the close flyby of a Russian fighter jet to an American surveillance aircraft, the ever-present “RussiaGate” investigations; and the lack of visible insanity on the Russians’ side, it seems likely that the American version of what is causing the ‘need’ to resolidify ‘defenses’ is lacking in factual evidence and cannot be taken as conclusive or trustworthy.

    Not that there is any precedent for this outrageous statement… and if you believe that…

    The problem begins with a false premise:

    Russia is not the Soviet Union and the Cold War is long over. However, despite our best efforts to sustain a positive relationship, Russia now perceives the United States and NATO as its principal opponent and impediment to realizing its destabilizing geopolitical goals in Eurasia. (Emphasis mine)

    This is an extremely bold assertion, though for some of the people who influence the stance of US foreign and military policy, this is how they see it.  However, it is also rather skillful sophistry that is achieved by a combination of American desire for hegemony and also, unfortunately, by a certain level of vagueness on both sides.

    The Russian component of this vagueness largely seems to rest on the matter of Ukraine.  Ukraine itself is rightly understood as the motherland of all the Rus’ (“all the Russias”) from history that runs back over a thousand years.  It was Kiev that was the great capital of the early Russian governorate, which slowly expanded to become the Russian Empire.

    However, there is also a complicated and deeply tragic history regarding the Ukraine, notably during the Soviet era, when millions of Ukrainians perished in what some in that country now regard as an intentional genocide, perpetrated deliberately against them by the Soviets in Moscow, hence, “Russia.”

    This issue itself is complex and warrants, even begs, further exposition, but it is beyond the scope of this article. Some understanding may be gained by reading this piece, which gives an interesting survey of the history of Ukraine.  (Be aware though that it still comes from a publication with Western perspective.)

    The main point is that Ukraine’s own nationalistic wish is spawned from factors including a national memory that points at Moscow as the source of their problems.  The fact that the Russian Federation is not Communist does not deter this point of view, because although the Russian nation is no longer a dictatorship, it still does not always conduct its foreign and national affairs transparently, and the desire for a real sense of self-determination is magnified by the allure of the glittering, wealthy West. The Western powers, most notably the USA, know this and have been teasing the Ukrainians with it.

    Some of them, in Kiev and the western areas of the country (not all of which were Soviet territories at one point) have long had ties more to Europe than to Russia, and the inclusion of their territories in the Soviet Union was a source of further bitterness.  For many people in Ukraine, their history is of living in a battlefield of foreign powers.

    They are understandably almost instinctively upset about any power’s designs on their territory, but it is also easy to manipulate this characteristic, and the United States has led the current struggle for Ukraine yet again.  The allure of Western European life seems to be what drew so many to the Euromaidan struggle in 2014, but the present day economy under the pro-Western government also appears to be in a shambles.

    At any rate, the historical memory of extremely authoritarian and cruel Soviet rule in the region, plus the present day “vagueness” that seems to exist with regards to Russian foreign affairs, helps the West to cast Russia as an authoritarian nation, led by a “secret Communist”, Vladimir Putin, “who used to be a KGB agent.”

    When one gives this information to many Americans, the conclusion they draw is clear.

    The Pentagon, the central hub of US military operations.

    Now to be sure, Vladimir Putin has been extremely open and candid about his nation and his own assertions of a strong Russian nation are absolutely proper for Russia, as they are for any nation. Nationalism is held extremely strongly in the United States, and again, history plays a part.  The recent history of what amounts to world dominance, militarily, scientifically, academically, and culturally, gives a sense to Americans that it is their country which is the guardian of all that is good.

    But what are they guarding?  That greatness has shown many signs of slipping into decadence, such as happened in the waning days of the Roman Empire, where people lost their vision of becoming great, and have been self-indulgent in their perceived independence, not only of other nations and cultures, but of any power, including the Highest Power.  We have seen it become legal to call homosexual unions “marriage” and depravity, drug use, and tremendous unproductive navel-gazing have become more and more prevalent in a nation that, a mere 45 years ago, really stood as a defender of Christian freedom.

    It is not possible that a nation living in delusion about itself can have a clear view of those nations outside itself.  And Russia has moved in the opposite direction as has the West.  The struggle exists, for Russia under Communism suffered great damage to the institutions of family, marriage and Church, but the move of the Federation now is to rebuild these core values.  All this while for a time, America seemed to be engaged in self-destruction by attacking these same core values.

    Now, America’s military is in an extremely dangerous place.  The amount of sheer power the military has is greater than any in the world.  Although Russia and China also have incredibly capable military forces, the Chinese are untested in battle thus far, and the Russians are just beginning to show their own incredible capabilities.  But the United States has been at war almost continuously since at least as early as 2001, and this projection of power does create experience.

    This Nuclear Posture Review shows us the face of a country who is deluded, hysterical, as the Russian media calls it, and they are right.  Despite the issues with Russia and Ukraine or Syria, Russia’s political will does not remotely resemble the notion that Russia is in an expansionist stage and that it wants to take over the former Soviet republics and then expand into the West.  Russia does want to chart her own course, and as a great power, and one with a long history and long memory of suffering, she wants to try to protect her own people from more suffering.

    The American posture points the finger at Russia for being a threat, and then implies that Russia is a threat in very well-crafted language.  And this makes the assessment even more dangerous:

    Russia has significantly increased the capabilities of its non-nuclear forces to project power into regions adjacent to Russia and, as previously discussed, has violated multiple treaty obligations and other important commitments. Most concerning are Russia’s national security policies, strategy, and doctrine that include an emphasis on the threat of limited nuclear escalation, and its continuing development and fielding of increasingly diverse and expanding nuclear capabilities. Moscow threatens and exercises limited nuclear first use, suggesting a mistaken expectation that coercive nuclear threats or limited first use could paralyze the United States and NATO and thereby end a conflict on terms favorable to Russia. Some in the United States refer to this as Russia’s “escalate to de-escalate” doctrine. “De-escalation” in this sense follows from Moscow’s mistaken assumption of Western capitulation on terms favorable to Moscow.

    Effective U.S. deterrence of Russian nuclear attack and non-nuclear strategic attack now requires ensuring that the Russian leadership does not miscalculate regarding the consequences of limited nuclear first use, either regionally or against the United States itself. Russia must instead understand that nuclear first-use, however limited, will fail to achieve its objectives, fundamentally alter the nature of a conflict, and trigger incalculable and intolerable costs for Moscow. Our strategy will ensure Russia understands that any use of nuclear weapons, however limited, is unacceptable.

    The U.S. deterrent tailored to Russia, therefore, will be capable of holding at risk, under all conditions, what Russia’s leadership most values. It will pose insurmountable difficulties to any Russian strategy of aggression against the United States, its allies, or partners and ensure the credible prospect of unacceptably dire costs to the Russian leadership if it were to choose aggression.

    This is an amazing construction and assertion, and it is extremely dangerous for a nation with simultaneously massive power and a deluded worldview to hold.  It is also very difficult to get people who have such a suspicious point of view to back away from that suspicion. There is a great deal of bondage such belief and fear exerts on those who hold it.

    That being said, this situation helps explain what many in the alternative media do – to counter media and political bias and to report on events in a light that is hopefully objective and true.  The Vesti newspiece was in its own way as alarmist as the American document it reported is.  The real way through this is obviously through increased understanding of the truth in all matters – historical, ideological, and in our case here, geopolitical.

    The American side has taken several nasty jabs at the Russians recently, in this document and last week’s “Kremlin list”, but there is also hope that the disintegrating “Russiagate” investigation will come to the true conclusions about this matter, and so free the hands of those in America who understand that Russia is anything but an enemy or adversary.

  • Visualizing The Worst Crashes In Bitcoin History

    Compared to some of the panics during the early days of bitcoin, the pioneering cryptocurrency’s 60%+ slide since the beginning of the year hardly register at all.

    In the nine-year history of the cryptocurrency, which introduced the “revolutionary” blockchain technology to the world, osses have been as minimal as 30% and as severe as 87% during these Bitcoin panics. And compared with some of its previous dips – like the Mt. Gox-induced selloff in February 2014 that effectively ended the firs speculative bubble in the cryptocurrency after it officially went mainstream.

    The latest correction took place between Dec.17 and Feb. 6, or 48 days, in which 70% of Bitcoin value was lost. However, if you look at the period between April 10, 2013 and April 12, 2013, Bitcoin lost an astounding 83% of its value over a three-day period. Talk about a panic! The point is that crashes have become relatively common throughout the cryptocurrency market, which is known for its swift volatility. It is important to turn to data and the facts in times of turmoil, rather than relying on one’s emotions.

    Using the BitStamp Bitcoin-to-U.S.-Dollar (BTC/USD) pair, HowMuch measured the specific highs and lows of the past crashes dating back to January 2012. In the chart below, the arrow delineates the magnitude of the crash – while the number of days is listed below:

    btc

    As US stocks sold off again Friday, capping off the worst two-week selloff since 2009, bitcoin has climbed, as worries about a resurgence of inflation have rattled investors, making the inherently deflationary bitcoin that much more attractive.

  • Donald Trump's Superficial Patriotism At The Twilight Of U.S. Empire

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses.

    – Juvenal

    Despite the title, I don’t want this post to be all about Donald Trump. The truth of the matter is all politicians love superficial patriotism. It’s why they all claim to care deeply about the troops, yet allow veterans to wait weeks or months to see a doctor after sending them to fight pointless imperial overseas wars based on fabrications. All these disingenuous politicians are total frauds, but they tend sell the same destructive policies in different ways. As such, it’s important to understand how they manipulate and divide us.

    First and foremost, standing for the National Anthem, saluting the flag or cheering a military parade is not “supporting the troops.” If you think such trivial and superficial acts represent anything beyond lazy surface level virtue signaling you’re a huge part of the problem. Your thoughtlessness and fake patriotism is exactly why our young kids are being sent off to die and murder other young kids halfway across the world to pad the coffers of plutocrats and the egos of empire obsessed sociopaths in D.C. Not only are such acts not patriotism, your phony gestures help grease the wheels of global death and destruction.

    Having a strong military for national defense is a necessary thing, but the purpose of such a force should always and in all circumstances be defense. A major problem arises when you have a global empire coupled with the strongest military on earth. Such a situation results in an overwhelming temptation to use this power for offensive aggression, and that’s exactly what our so-called “elites” have used the U.S. military for throughout the 21st century. The attacks of September 11, 2001 merely provided an excuse for the most twisted people in Washington D.C. to live out their most deranged power fantasies. George W. Bush got the ball rolling, Barack Obama stuck to the script, albeit with a more slick sales pitch, and Donald Trump’s set to take us to the inevitable end, which is imperial collapse.

    In many ways, Donald Trump is the ideal President to usher in the end of U.S. empire. While the more gullible slice of his support base credulously believed he’d “Make America Great Again,” his more jaded and realistic voters merely hoped he’d just burn the whole thing down, metaphorically speaking. He needed a combination of these two groups to win, so it’s very important to not think of his voters as a monolithic entity. Many of them don’t even like Trump, they just wanted to throw a grenade into this corrupt system and knew he was the best of the two candidates to do it. In many ways, they were correct.

    They weren’t correct because Trump meant anything he said on the campaign trail. He clearly didn’t. It’s obvious Trump loves Wall Street, after all, the first thing he did was surround himself with former Goldman Sachs partners. On foreign policy, he’s embraced some of the most barbaric and despotic regimes on earth, such as Saudi Arabia, with the enthusiasm of a little boy with a grade school crush, and appears disturbingly eager to start a war with Iran. That said, Trump’s Presidency’s may still lead to the effect desired by many of his more cynical voters.

    For example, things really are coming apart at the seams, largely due to the transparently hysterical and demented reaction of neocons and neoliberals to his election. This faux “resistance” movement is such an obvious superficial sham it’s caused everyone with a somewhat functioning brain to recognize that most of the dominant aspects of this culture are shams. This realization is becoming harder and harder to deny, especially for younger generations. Which brings me to the next issue. Trump’s military parade.

    By now, I’m sure you’ve all heard about Trump’s desire for a grand military parade. This longing was apparently inspired by a trip to that paragon of global military might, France, where he witnessed such a dazzling performance it committed him to bring such a spectacle back home.

    We leaned that:

    Surrounded by the military’s highest-ranking officials, including Defense Secretary Jim Mattis and Joint Chiefs of Staff Chairman Gen. Joseph F. Dunford Jr., Trump’s seemingly abstract desire for a parade was suddenly heard as a presidential directive, the officials said.

    “The marching orders were: I want a parade like the one in France,” said a military official who spoke on the condition of anonymity because the planning discussions are supposed to remain confidential. “This is being worked at the highest levels of the military.”

    The inspiration for Trump’s push is last year’s Bastille Day celebration in Paris, which the president attended as a guest of French President Emmanuel Macron. Trump was awestruck by the tableau of uniformed French troops marching down Avenue des Champs-Elysees with military tanks, armored vehicles, gun trucks and carriers — complete with fighter jets flying over the Arc de Triomphe and painting the sky with streaks of blue, white and red smoke for the colors of the French flag.

    Aboard Air Force One en route home from Paris in July, aides said Trump told them that he was dazzled by the French display and that he wanted one at home.

    It was still on his mind two months later when he met with Macron on the sidelines of the United Nations General Assembly in New York.

    “It was one of the greatest parades I’ve ever seen,” Trump told reporters. “It was two hours on the button, and it was military might, and I think a tremendous thing for France and for the spirit of France.”

    Seated next to Macron, Trump added: “We’re going to have to try to top it.”

    If you think this sounds like the thought process of a two-year old, you’re right, but there’s more to it. For all his flaws, Trump is actually a very talented manipulator and salesman. This is why I was one of the first people to say we needed to take Trump seriously back in 2015 when most others were mocking him. He understands the ancient concept of “bread and circuses” as well as anyone, and he knows there’s no bigger slobbering circus than a big military parade.

    Superficial patriotism is the most attractive form of patriotism for any politician. It encourages spectacle without substance. Bluster without tangible success. Chest-thumping without sacrifice. Any big military parade in the U.S. will be a definitive sign of desperate insecurity and evidence that the American empire is expiring.

    Hate to break it to you, but the rest of the world will see a U.S. military parade and immediately think, oh, the U.S. is even weaker than we thought. Meanwhile, the same social media Trump celebrities we already knew had fascist tendencies will enthusiastically cheer such a spectacle and attempt to divide the public over it. Please don’t fall for such nonsense.

    *  *  *

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  • Marijuana Tops Liquor Sales For First Time In Aspen

    Marijuana shops in Aspen raked in the green in 2017, topping liquor sales with $11.3 million in revenue vs. $10.5 million of alcohol in the Colorado resort town home to just under 7,000 residents, and tens of thousands of tourists who are more mellow than ever.

    The figures, provided Wednesday in the city’s Finance Department year-end tax sales report for 2017, show Aspen retailers taking in a combined $730.4 million in revenue, up slightly over 2016. 

    Marijuana sales jumped 16% over 2016, which saw $9.7 million in sales – marking the largest increase among Aspen’s 12 retail sectors. Meanwhile, liquor store sales were flat year-over-year. 

    “I think it’s meaningful for a couple of reasons,” said Matt Kind, a Boulder entrepreneur and host of the CannaInsider podcast. “One in particular is when people are visiting Aspen and adjusting to a high altitude, some don’t drink for that first couple of days. And I think people are looking for something different from alcohol, which is essentially poison, and marijuana is botanical. I don’t say that with judgment, but you feel some lingering effects with alcohol.” –Aspen Times

    Aspen has six pot shops and five liquor stores, though one of the dispensaries closed last fall. 

    “I think it shows adults are open to change,” said Max Meredith, store manager at the Stash dispensary. “There are new substitutes, and they can be handled responsibly. And perhaps there are a few less late-night fights.”

    Despite fears that the cannabis industry would cannibalize alcohol sales, Aspen’s liquor stores are doing just fine – beating marijuana sales in December with nearly $1.6 million in sales vs. $1.2 million for pot. 

    When (legalized recreational marijuana) first came along, there were questions if it would hurt business,” Tom Ressel, day manager of the Local Spirits liquor store tells Summit Daily. “But obviously it hasn’t.”

    While that may be the case for Aspen – a study by Georgia State University Economics Professor, Alberto Chong, finds a 15 percent drop in alcohol sales which also allow medical marijuana sales over a 10 year period ending in 2015. 

    The study analyzed beer, wine and alcohol sales for over 2,000 U.S. counties using the Nielson Retail Scanner database, which they note provides a more accurate measure of alcohol consumption than self-reported surveys.

    “Our findings clearly show that these two substances act as strong substitutes in the marketplace,” Chong said, adding “This implies that rather than exacerbating the consequences of alcohol consumption—such as an increase in addiction, car accidents or disease risk—legalizing cannabis may temper them.”

    At the Green Dragon cannabis store, manager Kevin Doxtater said the latest sales tax figures show “people are waking up to this.” He and his co-workers added that cannabidiol — more widely referred to as CBD — has attracted a newer wave of retail consumers seeking medical benefits without getting high. Edible marijuana products also have been popular with the more discerning adults, while the younger set leans toward pre-rolled joints, he said. –Summit Daily

    See below for a breakdown of Aspen’s $730.4 million in retail sales last year

    • Accommodations $216.7 million
    • Restaurants & Bars $129.7 million
    • Clothing $57.3 million
    • Construction $57.2 million 
    • Food & Drug $56.1 million 
    • Miscellaneous $50 million 
    • Sports Equip/Clothing $47.9 million
    • Utilities $43.4 million
    • Luxury Goods $29.4 million
    • Automobile $20.8 million 
    • Marijuana $11.3 million 
    • Liquor $10.5 million
    • Total $730,414,351 

    Source: City of Aspen Finance Department

  • DOJ's #3 Official Quitting After Just Nine Months

    Update: U.S. JUSTICE DEPARTMENT NO. 3 OFFICIAL RACHEL BRAND TO BECOME EXECUTIVE AT WAL-MART: SOURCE

    where Hillary Clinton was on the board of directors.

    ***

    The number 3 official at the Department of Justice plans to leave the agency after just nine months on the job, the NYT reported citing two people briefed on her decision. 

    a

    Rachel L. Brand was appointed as Associate Attorney General on May 22, 2017, making her next in the line of succession after Deputy Attorney General Rod J. Rosenstein, who is currently overseeing Robert Mueller’s special counsel probe into Russian interference in the 2016 election. Attorney General Jeff Sessions has recused himself from the investigation due to his involvement with the Trump campaign. 

    Prior to her appointment to the DOJ last year, Brand held several politically appointed positions for the last few administrations. From 2012-2017, she served as one of five Senate-confirmed Members of the Privacy and Civil Liberties Oversight Board, appointed by President Obama.

    Before that, Brand worked at the DOJ between 2003-2007, first as the Principal Deputy Assistant Attorney General for the Office of Legal Policy, and then as the Senate-confirmed Assistant Attorney General for Legal Policy, appointed by President George W. Bush.

    Brand is also an Associate Professor of law at George Mason University’s Antonin Scalia Law School. She clerked for Associate Supreme Court Justice Anthony M. Kennedy from 2002-2003 after graduating from Harvard Law – where she was deputy editor-in-chief of the Harvard Jourrnal of Law and Public Policy.

    According to OpenSecrets.org, Brand has contributed heavily to Republicans – including George W. Bush, John McCain, Ted Cruz, Tom Cotton and Ed Gillespie. 

    What about Rosenstein?

    The release of the declassified GOP-authored “Nunes memo” earlier this month revealed that Rosenstein signed off on at least one questionable FISA surveillance warrant application in connection with spying on the Trump campaign.

    Rep. Ron DeSantis (R-FL), thinks Rosenstein will likely have to appear before Congress to explain his actions:

    I think Rosenstein is going to have to come to the Congress and explain his role in extending it, Mr. DeSantis said on Fox News. I mean, did he go back and review it and was satisfied, or he just extended? And is he going to be able to justify this as a proper use of FISA?

    When a reporter asked President Trump whether the Nunes memo makes it more likely that he will fire Rosenstein, Trump responded: “You figure it out.”

    https://platform.twitter.com/widgets.js

    Democrats responded to the Nunes memo with a threat to unleash holy hell if Trump fires the Deputy AG:

    “We are alarmed by reports that you may intend to use this misleading document as a pretext to fire Deputy Attorney General Rod Rosenstein, in an effort to corruptly influence or impede Special Counsel Bob Mueller’s investigation.

    “We write to inform you that we would consider such an unwarranted action as an attempt to obstruct justice in the Russia investigation. Firing Rod Rosenstein, DOJ Leadership, or Bob Mueller could result in a constitutional crisis of the kind not seen since the Saturday Night Massacre!’

    So with a “compromised” Rosenstein overseeing the Mueller / Russia probe, and his successor apparently heading for the hills, one has to wonder what’s actually going on behind the scenes at the DOJ.

  • Deep State Mantra: Use An Existing Crisis… Or Create One

    Authored by Jeremiah Johnson (nom) via SHTFplan.com,

    Rahm Emmanuel was/is (in)famous for his alleged attribution of the quote “Never allow a good crisis to go to waste.” Nevertheless, in the manner that Chaucer’s “Canterbury Tales” is an “English echo” of “The Decameron” by Giovanni Boccaccio, the quote assigned to Emmanuel is a paraphrase of words emitted by the equally-nefarious Milton Friedman:

    “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” – Capitalism and Freedom,” by Milton Friedman, Preface, Univ. Chicago Press, 1982.

    Although he was an Economist (so-called), Friedman’s Marxist economic endeavors (germinated by the Frankfurt School of Economics “alumni”) were cracked akin to a whip throughout the world and used by the U.S. to further imperialism and fostered dependence by third-world nations. Such “dependence,” it must be added, took the form of loans through the IMF and World Bank…backed by military force. The “dependence” is almost that of the Helsinki Syndrome, in which the kidnapped captive becomes psychologically dependent upon the captor…but the captivity remains. Protection and extortion in the same vein.

    These same “entangling alliances” were warned about for the fledgling United States by the Founding Fathers. Such forced alliances are easily seen for what they are: the creation of vassal states through force projection and intimidation. Even when we’re not directly involved, we “underwrite” the actions. The latest (and largest) prime example was the ousting of Ukraine’s president, Yanukovych, in 2014 and the attempt to force Ukraine to become a part of NATO, as well as another IMF-vassal in the NATO-Euro-hegemony.

    Such activities continue: in Syria, in Yemen, and throughout the world… a continued bolstering of U.S. military presence, backed by an ever-smiling line of “Rockettes” willing to “invest in a country’s future” with our almighty, fiat Petrodollar. Friedman’s actions as an economist can be seen enmeshed in virtually all U.S. foreign policy for the past five decades: they form the basis for the actions of “Economic Hit Men” as described by Perkins in his book.

    The coerced economic policies within the imperialism of American foreign policy are not the center of this piece.  Here is something relayed by Newsweek as reported by the New York Times on 2/2/18, an article entitled White House Pressures Pentagon for North Korea Attack Plan, Report Says, by John Haltiwanger that bears reading:

    “The White House is butting heads with the Pentagon on North Korea as senior military officials appear apprehensive about presenting President Donald Trump with military options against the rogue state, The New York Times reported Friday. White House National Security Adviser H.R. McMaster is reportedly concerned with drawing up a specific military plan in order to reinforce Trump’s various threats to the reclusive nation. Unnamed Pentagon officials are seemingly concerned the president is moving toward the use of force too quickly and worry that additional options will increase the probability Trump will move forward with an attack, according to the report.

    Dana W. White, press secretary for the Pentagon, told The New York Times the defense secretary “regularly provides the president with a deep arsenal of military options,” and claimed that the reports of reluctance in that regard were “false.”

    What can be gathered from this is the media is trying to paint a picture of confusion within the military command structure between the Pentagon and the administration. It is also more “predictive programming,” designed to “show” how the President wants a war: this to make him foot the blame when and if a war commences. Obviously, the United States and North Korea are still in a standoff with neither side backing away from their position. But just picture in your mind: the Emmanuel’s and the Friedman’s…smirking and smiling on the sidelines, knowing all this orchestration of the media is for the public to gulp down…knowing all of these crises have been acted upon by those of their ilk.

    We have a President who has ordered the release to the public of some very sensitive information on FISA (more appropriately labeled “DISA,” as the surveillance is directed toward the zeks formerly called “American citizens”).  An article came out on Lew Rockwell by former Justice Andrew Napolitano on 2/1/18 entitled Lying, Spying, and Hiding. Here is an excerpt of that article that I recommend reading in its entirety:

    “The abuse summarized in the Republican memo apparently spans the last year of the Obama administration and the first year of the Trump administration. If it comes through as advertised, it will show the deep state using the government’s powers for petty or political or ideological reasons.

    The use of raw intelligence data by the NSA or the FBI for political purposes or to manipulate those in government is as serious a threat to popular government — to personal liberty in a free society — as has ever occurred in America since Congress passed the Alien and Sedition Acts of 1798, which punished speech critical of the government.”

    So, to keep something from coming out of this magnitude, do you see the big picture?

    What is the best way to “deflect” attention from something such as this? War, naturally.

    I submit that the powers that be who are within the Deep State will either commence their lackeys to start a war or will create the conditions that will lead to one… not necessarily starting with North Korea, but possibly one of the other theatres where tensions with the U.S. are running high.

    I also submit that under such circumstances, it may not be the President who is responsible for the start of such a war: it may be a contrived crisis that the Deep State will not allow to go to waste that propels us into one. Nothing is beyond their capabilities, except to act with compassion and take into consideration the rights and welfare of the average citizen.

    The Deep State will allow millions to die in a war before being held accountable, especially to the American people.

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Today’s News 9th February 2018

  • Manhattan, London Housing Markets Are Suddenly Reeling

    When the latest reading on the Case-Shiller 20-City Composite printed within 1% of its record highs from 2006 a little more than a week ago, we asked a question that’s seemingly on every real-estate investors’ mind: Is this a “top” or a “breakout”?

    Case

    And with the effects of the Trump tax reform plan – which is expected to hammer real-estate markets, particularly in high-tax blue – having yet to take effect, already states – one early indicator that softness might be entering one of the country’s most iconic (and expensive) real estate markets was reported by Bloomberg today. To wit, the trend of landlords handing out rental concessions continued to intensify in January, as landlords are increasingly being pressured to hand out incentives like rent-free months or gift cards to entice potentially renters to sign on the dotted line. Concessions jumped to a record in January, with 49% of newly signed leases coming with some kind of incentive, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

    Manhattan

    That share surpasses the previous peak of 36% set just a month earlier.

    All of these concessions have caused the median rent to drop 3.6% from a year earlier to $3,141 – the biggest decline since October 2011 – interrupting six years of near-constant growth.

    “Landlords have finally realized, ‘OK, we have to adjust these prices because the concessions aren’t doing as much,'” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Customers are looking past the concessions being offered and just looking for the best deals they can find.”

    Rents fell last month in almost every Manhattan neighborhood, including some of the borough’s priciest, Citi Habitats said in its own report. On the Upper West Side, the median was $3,450, down 2.8 percent from a year earlier. Rents in the West Village dropped 4.5 percent to $3,700, while on the Upper East Side, they declined 5.3 percent to $3,185, the brokerage said.

    “The dynamic has shifted,” with Brooklyn, Queens and the New Jersey waterfront becoming viable options to many renters,” said Gary Malin, president of Citi Habitats. “Tenants are looking for value, and they’re open to suggestions.”

    While these data strictly apply to the rental market, we pointed out last year, the commercial real-estate market is having problems of its own: In September, we noted that sales of commercial real-estate plunged 50%, bringing commercial property purchases to their lowest level since 2012. And that problem isn’t isolated to NYC: Sales of commercial real estate are plunging across the US, and have been since peaking at $262 billion nationally in 2015.

    And of course this was before HNA announced this morning that it would be liquidating $4 billion in US commercial real estate across New York City, San Francisco and Chicago and Minneapolis.

    * * *

    But Manhattan isn’t the only high-end luxury market showing signs of softness. In London, according to the Financial Times, the gap between what sellers are asking and buyers offering for high-end homes is greater than it was in either 2008 or 2009.

    But according to one real-estate market analyst, reality is beginning to set in for sellers.

    Marcus Dixon, head of research at LonRes, said buyers were becoming more confident in demanding discounts and sellers were ore likely to accept lower offers. “People are going in with relatively cheeky offers, and sellers are accepting them,” said Mr Dixon. “There’s a bit of realism creeping in about what properties are worth.”

    LonRes’s data cover London’s most exclusive districts, including Kensington and Chelsea, as well as prime parts of the capital extending from Canary wharf in the east to Richmond in the west and Hampstead in north London.

    Outside the most expensive “prime central” areas, discounts to initial asking price stood at just over 9% – the highest level since 2009.

     

    In a phenomenon that’s also manifested in some of America’s toniest zip codes – namely, Greenwich, Connecticut – some sellers are opting to take their homes off the market to wait for another day.

     

    Many sellers have resisted dropping the prices of their properties, instead choosing to withdraw them from the market. Transaction volumes fell across central London in 2017, with the number of properties sold down 3.6% over the year as fewer homes were put to the market.

    LonRes said people were still taking their homes off the market if they could not achieve their desired price. More than half the homes leaving the market in the fourth quarter of 2017 were withdrawn rather than sold.

    To be sure, some sellers are still accepting lower offers – but the post-crisis boom times are over, one real estate analyst said. And, as of now, there are few signs to suggest an imminent return.

    “There have been some transactions – but it’s not boom time,” said Mr. Scarisbrick. “It’s becoming obvious that you don’t set foot in the London market unless you really need a London house.”

    Foreign buyers, who are attracted by favourable exchange rates between sterling and most currencies, were an exception, he said.“You can do well if you roll your sleeves up and get involved in a proper negotiation,” he added.

    “But I can’t see any catalyst for a resurrection in the market.”

    Some sellers are opting to cut their losses.

    “Sellers are saying, ‘if I get a buyer at a reasonable level, I’ll do a deal,'” said Charles McDowell, who runs a prime London estate agency.

    “There are deals being done- quite big ticket deals – but this is certainly a market where buyers perceive value.”

    If there’s value to be found now – just wait another 14 months until April 2019, when the UK’s departure is expected to be complete.

    And with cryptocurrency prices tanking after last year’s bubble, the great crypto-fueled property boom has seemingly fizzled before it even began.

  • HUD Secretary Ben Carson Mused That "The Purge" Could Really Happen… And He's Not Wrong

    Authored by Daisy Luther via The Organic Prepper blog,

    The Washington Post recently published an article about Dr. Ben Carson, the Secretary of Housing and Urban Development. It started off mockingly, describing Carson’s theory that the movie The Purge could easily become really given a specific set of circumstances.

    If you aren’t familiar with it, The Purge franchise is a series of movies that take place in a dystopian not-so-distant future. In that future world, things are pretty similar to how they are right now – there aren’t any flying cars or AI robots serving breakfast – except for one night a year.

    And on that night, people can commit any crime without worry of punishment. Anything they do that night is legal, there are no first responders to save the victims, and there won’t be any court cases later.

    It was Christmastime in Washington, and Ben Carson couldn’t stop talking about the apocalypse.

    “Did you know,” the secretary of housing and urban development asked his acting chief of staff, Deana Bass, at a Capitol Hill holiday party, “that if North Korea detonated a nuclear weapon into our exosphere, it could take out our entire electrical grid?”

    Bass shook her head.

    “What’s that movie where there’s complete lawlessness and anarchy for one night a year?” Carson said, calmly resting his right hand over his left. “ ‘The Purge’! It will be like ‘The Purge’ all the time…” (source)

    And honestly, he’s not wrong. There are a lot of people out there who seem like they’d salivate at the chance to off their neighbors without any repercussions. One of the movies, The Purge: Election Year, seems particularly timely after the vitriol of the last presidential race.

    Crimes are becoming more shocking and brutal

    We have reached an era of extreme brutality and virulent hatred that I certainly haven’t seen in my lifetime. Recently, I wrote an article based on the essay of Sir John Grubb about the end of empires and discussed unfathomable crimes.

    Crimes are becoming more horrific and mindboggling. A 17-year-old girl was trying to walk home through a “no-go zone” in the UK and was sexually assaulted 3 separate times in one hour. A man in Pennsylvania tried to strangle his girlfriend to death because she changed the passcode to the IPad. A Georgia woman murdered her two toddler sons by putting them in the oven and then video-chatted their father.

    A Hollywood fixture has been accused of assaulting and harassing dozens of women, which led thousands of other women to share their horror stories with a #MeToo hashtag on Twitter. I have seen report after report recently of teachers having sex with their high school students.

    And things have become even more horrifying since then.

    Just in today’s headlines, I saw:

    And those crimes are a drop in the bucket. There are awful tales of such severe animal cruelty that I can’t get the headlines out of my mind. Tales of child abuse so mindblowing that it seems like they can’t possibly be real pop up every single day.

    Complete disrespect for the political beliefs of others is now not only the norm, but it’s praised. People can lose their jobs because they voted for the “wrong” candidate. Cars with certain political stickers get targeted for vandalism. People are actually killing one another over politics. This is no longer about discourse – it’s about shouting over the people with different views.

    In light of this environment, if it was totally legal to do away with people who were vocal about their different political philosophies, how far of a stretch is it to think that Dr. Carson is right about the potential of a Purge? Good people love to say how they would not participate, but if someone came for you and your family, you’d have no choice but to commit acts every bit as brutal as your attackers in order to survive.

    When will it end?

    Certainly, no time soon if we keep lumping people together because of who they voted for and assuming that we know everything about them based on the sticker on their back bumpers. We’ve had deeply controversial elections before and we managed to get past it, but when we generalize, we take away the humanity of the people we criticize.

    When all we do is group people into “evil Republicans” and “crybaby Democrats” we miss the finer qualities of these people. And there ARE good qualities in just about every person, no matter what their political beliefs are. Even if you think someone is delusional, it’s important to try to understand the position from which they developed that perspective.

    One has to wonder what it will take to bring us together. Dr. Carson strikes again with a movie reference.

    …“There’s never been a time in the history of the world where a society became divided like this and did well,” Carson said as a crowd — including an off-duty New York Times reporter, D.C. Mayor Muriel E. Bowser, a slew of representatives from housing nonprofit organizations and old friends from his presidential campaign — circled him. “And we don’t really have a reason to be fighting each other. There was a movie some years ago, a Will Smith movie called ‘Independence Day’ . . .”

    With his soothing, story-time cadences and heavy-lidded gaze, Carson proceeded to hold forth on how Earth’s near-annihilation laid bare the superficiality of all the world’s strife. If only, he argued, people realized that the fate of humanity hung in the balance, then Palestinians and Jews, or even the United States and Russia, could be “like best friends.” (source)

    How can we help each other from a place of scorn and derision? How can we come together when we deliberately divide ourselves every single day?

    Let’s hope it doesn’t take an alien invasion or epic disaster to make us mend fences. The time is coming when we’re going to need our neighbors and they’re going to need us. Hatred breeds nothing but more hatred and it’s only a matter of time before Dr. Carson is right about that whole Purge business.

  • FBI Sued Over Docs Related To Comey's $2 Million Book Deal

    Watchdog group Judicial Watch has filed a Freedom of Information Act (FOIA) lawsuit against the DOJ in order to obtain records from the FBI connected to former Director James Comey’s $2 million book deal, after the agency failed to respond to an August 14, 2017 FOIA request.

    In particular, the FOIA request concerns communications between Comey and the FBI leading up to his controversial June 2017 testimony before the Senate Intelligence Committee. The group seeks:

    • All records of communications between the FBI and Comey prior to and regarding Comey’s testimony before the Senate Select Committee on Intelligence on June 8, 2017.
    • All records of communications between the FBI and Comey relating to an upcoming book to be authored by Comey and published.
    • All records, including but not limited to forms completed by Comey, relating to the requirement for prepublication review by the FBI of any book to be authored by Comey with the intent to be published or otherwise publicly available.

    Comey reportedly received an advance in excess of $2 million for his bookHigher Loyalty: Truth, Lies, and Leadership, reportedly set for publication on April 17th. Former FBI agents and officials intending to write books concerning their tenure are customarily required to submit the entire transcript for pre-publication review.” – Judicial Watch

    Following Comey’s firing on May 9, 2017, the former FBI director sat down with Senate Select Committee investigators for a highly controversial testimony which covered, among other things, the circumstances surrounding his dismissal. 

    Also covered in testimony was the ongoing investigation into alleged Russian interference in the 2016 election, as well as Comey’s handling of the Hillary Clinton email investigation. 

    Comey admitted to leaking his “memos” to the Senate Select Committee in order to kick off the Special Counsel headed by former FBI Director Robert Mueller III.

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    “Mr. Comey seems to have protected status for any misconduct and we want to know if he had a special deal for his book from his friends in the FBI,” said Judicial Watch President Tom Fitton.

    “The Deep State is in cover-up mode. The FBI, DOJ, and the Special Counsel are stonewalling our requests for Comey documents.”

    Comey moved up the date of his memoir “Higher Loyalty: Truth, Lies, and Leadership,” from May 1 to April 17, according to publisher Flatiron Books – due to the FBI coming under “intense scrutiny.”

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    Flatiron president Bob Miller and publisher Amy Einhorn said there was demand for Comey to be heard amid an “urgent conversation” about the FBI, just one week after Comey blasted “weasels and liars” for pushing for the release a memo which alleges that top officials in the FBI and Department of Justice (DOJ) misled a federal surveillance court in order to obtain a spy warrant against a former Trump campaign adviser.Daily Caller

    The book is said to feature “yet-unheard anecdotes from his long and distinguished career,” according to Flatiron Books, which describes the book as an exploration of, get this: “what good, ethical leadership looks like and how it drives sound decisions.”

    “Throughout his career, James Comey has had to face one difficult decision after another as he has served the leaders of our country,” Flatiron Books publisher Bob Miller said, who added that the book will be an “unprecedented entry into the corridors of power, and a remarkable lesson in leadership itself.”

    As the House and Senate home in on bad actors in the FBI and DOJ, and career officials peel out of the agencies left and right – we eagerly await the blind boyscout’s book…

  • Exposing America's Hypocrisy On "Political Intervention" In Elections

    Authored by Mac Slavo via SHTFplan.com,

    The United States government has interfered with more elections than any other government on the face of the earth. 

    But suddenly, the US is grandstanding and pretending it matters that other nations use the exact same tactics.

    “Ah, the peddler propaganda!” says Joe Joseph with The Daily Sheeple while reading a headline declaring that Russians penetrated U.S. voter systems. “Say it ain’t so! A clandestine operation by a foreign government here in the United States? No. Couldn’t be!” he said sarcastically.

    The overly biased and left-leaning media attempted to portray this “interference” as a big deal. But as always, propaganda is easy to break down.

    The U.S. official in charge of protecting American elections from hacking says the Russians successfully penetrated the voter registration rolls of several U.S. states prior to the 2016 presidential election.

    In an exclusive interview with NBC News, Jeanette Manfra, the head of cybersecurity at the Department of Homeland Security, said she couldn’t talk about classified information publicly, but in 2016, “We saw a targeting of 21 statesand an exceptionally small number of them were actually successfully penetrated.” –NBC News

    Reading between the lines, all this means is pretty much nothing, other than the US government blatantly displaying their hypocrisy while interfering in the elections of other countries. Of course, the media is going to make a big story out of this. “We’re going to turn back the clock a little bit,” says Joseph.

    “The US is no stranger to interfering in the elections of other countries. So, since we’re into this whole Russia thing and Russia’s so bad and ‘shame on you, Russia’...well, let’s take a look at all the ways that the United States has interfered.”

    According to data gathered by the LA Times, the U.S. has a long history of attempting to influence presidential elections in other countries. The United States government has tried to manipulate as many as 81 elections between 1946 and 2000. According to a database amassed by political scientist Dov Levin of Carnegie Mellon University, that number doesn’t include military coups and regime change efforts following the election of candidates the U.S. didn’t like, notably those in Iran, Guatemala, and Chile. Nor does it include general assistance with the electoral process, such as election monitoring.

    Levin defines intervention as “a costly act which is designed to determine the election results [in favor of] one of the two sides.” These acts, carried out in secret two-thirds of the time, include funding the election campaigns of specific parties, disseminating misinformation or propaganda, training locals of only one side in various campaigning, or get-out-the-vote techniques, helping one side design their campaign materials, making public pronouncements, or threats in favor of or against a candidate, and providing or withdrawing foreign aid.

    “There’s plenty of history here to show that we’ve been involved in intervening in foreign elections. We did it more than anybody else! So, why should we be surprised when other countries do it to us,” says Joseph.  Again, keep in mind, the election interference was incredibly menial in comparison to the US’s previous manipulations.

    You need to be able to “see and understand the propaganda coming from NBC and the mainstream television media.” In case you haven’t figured it out yet, most of the mainstream media is straight up propaganda with the minds of Americans and public opinion being manipulated every second. This has been admitted by the media, yet the public continues to be largely unaware that they are being controlled.  In fact, the US media tried very hard to manipulate public opinion in the 2016 election.  It’s become more than obvious unless you’re one who has been manipulated.

    “It’s easier to fool people than convince them that they’ve been fooled.” -Unknown, but often attributed to Mark Twain

  • Here Is Goldman's Annotated Chart Showing The History Of Bitcoin

    Goldman has long had a love, hate relationship with bitcoin: while JPM’s Jamie Dimon was slamming it and threatening anyone caught trading it with termination, Lloyd Blankfein was planning the rollout of a cryptotrading desk. While other brokerages were shunning futures trading, Goldman told clients “your money is welcome here.” On the other hand, from a purely fundamental standpoint, Goldman was more ambivalent, unwilling or unable to embrace the currency, yet laying out under what conditions it may succeed as money, which nonetheless was a far cry from JPM’s blanket determination that bitcoin is a pyramid scheme.

    Then, this morning, the market awoke to a Goldman report that was released on Monday evening, in which as we reported earlier, Steve Strongin – Head of Goldman’s Global Investment Research – said that the current generation of cryptocurrencies is unlikely to survive even if blockchain technology endures:

    Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive…. To my eye, they still seem too primitive to be the long-term answer.

    Asked if the market is accurately pricing the likelihood that several—if not most—of the current cryptocurrencies will ultimately fail?, his answer was surprisingly pessimistic:

    I don’t believe it is. People seem to be trading cryptocurrencies as though they’re all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they all seem to move as a single asset class. But if you believe this is a “few-winnerstake-most” situation, then the potential for retirement depreciation should be taken into account. And because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.

    To be sure, Goldman did highilight some of the notable highlights of bitcoin, chief among which is the unprecedented value storage density, which is why Goldman’s commodity chief proposes calling them not cryptocurrencies but rather cryptocommodities.

    Despite being called cryptocurrencies, bitcoin and other digital assets are better described as “cryptocommodites.” A financial security—currencies included—has a claim or liability attached to it, as it is “secured” to an underlying real asset. Just as equity is secured to the future earnings of a real company, a dollar bill is secured to the US government and its tax revenue. In contrast, commodities have no obligation or liability to any government, company, or other entity. Given that bitcoin has no liability to any entity, it is a good like any other commodity. Bitcoin just happens to be the first digital commodity—in contrast to financial assets and money, which have long been digitized.

    In most economies, a standard digital bank account provides ease of storage, secure transactions, and a positive carry. However, it is still a claim on a bank, and the funds cannot be concealed and transported without alerting regional authorities. To the extent that this is a problem, bitcoin solves it better than any other commodity (although other cryptocurrencies are starting to offer superior privacy and anonymity). This suggests that black markets and less developed regions without a reliable banking system would be the obvious sources of demand for cryptocurrencies.

    But the most remarkable feature of cryptos: how much value they can concentrate in virtually no physical space.

    Unlike other storage commodities like oil, gold, platinum, diamonds, and even cash, there is no need to hold much physical material to own bitcoin; even a technology as obsolete as the 3½ inch floppy disk can hold almost 30,000 private keys. There is no theoretical upper limit to the value of bitcoins in a wallet, but if we assume each wallet secured by this disk contains as much as the largest wallet today (180,000 BTC), this single disk could “hold” all bitcoins in existence and remain less than 0.5% full. Assuming a bitcoin market cap of roughly $190bn (as of late January), this disk would be the equivalent to either: 95% of the 4,583 tons of gold in Fort Knox, or 1,344 Very Large Crude Carrier supertankers of oil.

    Goldman’s conclusion:

    On net, cryptocurrencies have superior physical attributes relative to other commodities for concealing and transporting large amounts of wealth, which could be valuable in dark markets and some areas that lack reliable banking systems. But a long list of hurdles remains for cryptocurrencies to reach the equivalence of precious metals in financial markets, and these will be difficult to overcome anytime soon. In the meantime, we believe gold still offers the best store of wealth given how institutionalized it has become over 3,000 years of active trading versus five years for bitcoin.

    So bitcoin… or gold? To Goldman that is the question. Meanwhile, for your viewing pleasure, here is Goldman’s chart showing the annotated history of bitcoin’s Rise… and recent fall. The question is what happens next.

  • US Contagion Accelerates – China Big Caps Crash Over 7%, Worst Week Since Lehman

    Update 0950ET: Things went from bad to worst very fast…

    • *CHINA H-SHARE INDEX SLIDES 5%
    • *SHANGHAI COMPOSITE INDEX DROPS 5.3%
    • *CHINA SSE 50 INDEX OF BIG CAPS DROPS 7.5%
    • *TENCENT DROPS 5.1% TO TRADE BELOW HK$400

     

    This is the big caps worst day since the Aug 2015 devaluation crash, and the worst week (unless The National Team steps in) since Lehman…

     

    *  *  *

    After an insane winning streak in December and January, the Hang Seng has plummeted in the last few days and along with the rest of the major mainland China equity markets – has entered correction.

     

    2018 started off so well in China…

     

    But after an almost incessant ramp, China and Hong Kong stocks have crashed back to reality in the last few days…

    Shanghai Composite is now at 7-month lows…

     

    And Hang Seng is down 12% from its highs, back below 30,000…

    The Yuan remains on edge as it tumbles most since the Aug 2015 devaluation…

     

    And across the water, Japanese stocks are down 13% from their highs…

  • "Worst Case" Confirmed: Biggest Weekly Fund Outflow In History

    If it seems like it was just a few days ago  that we reported of the biggest ever inflow into equities, it’s because that’s precisely when it happened. It was then that according to BofA CIO Michael Hartnett, we observed a “non-stop euphoria cabaret” in which markets saw a record $33.2bn inflow to equity funds, record $12.2bn inflow to active funds, $1.5bn into gold (50-week high), as well as record inflows to tech & TIPS.

    Incidentally, that was the day the S&P hit its all time high, and more importantly, the day BofA also said that its euphoria and panic-buying driven “sell signal” was just triggered for the first time in 5 years, and predicted a 12% selloff in the next three months.

    In retrospect, it took just two weeks because that post marked the peak of the market, and it has been non-stop selling since.

    But much more troubling than the selling, is the composition: after all, as we showed earlier, the “worst case scenario” according to both JPMorgan and Morgan Stanley is if the liquidation panic was not just systematic funds and various quants puking as a result of the surge in the VIX, but if ordinary retail investors had also joined in: that would be a nightmare outcome for the bulls, as it would mean that the sharp but concentrated relentless selloff, had spread to the broader investing world, and institutions would have no choice but to join.

    Specifically, this is what JPM said over the weekend when observing the recent record fund inflows:

    If these equity ETF flows start reversing, not only would the equity market retrench, but the resultant rise in bond-equity correlation would likely induce de-risking by risk parity funds and balanced mutual funds, magnifying the eventual equity market sell-off.

    And then there was Morgan Stanley:

    Today’s moves lower are likely not being driven by systematic supply – this appears to be more discretionary selling. Systematic supply from vol target strategies is largely out of the way now, while consensus trades are getting hit:  NDX is underperforming SPX, momentum is down 1%, and the Passive Factor is up, indicating actively held names are underperforming names better held by passive funds.

    Well, we now have confirmation.

    According to the just released EPFR weekly fund flow data, what was just two weeks ago a record equity inflow has become a record equity outflow, as the 10% drop in the US stock market has officially launched a selling panic.

    As Citi writes tonight, “in the week of 2/7/2018, bond funds had an inflow of US$4.0bn and equity funds lost US$30.6bn to outflows. This was the largest outflow on record from equity funds, which just had their record high inflow of US$33.2bn only two weeks ago. The largest outflow had come from US funds which saw US$32.9bn of outflow. “

    Stated simply, this means that one no longer needs the VIX ETN, CTAs or risk pars to launch a liquidation panic: one has already begun, and retail is panicking, desperate to get out of stocks.

    Which means that a full on bear market is now in the hands of just two players: institutions, and corporations. In other words, if hedge and mutual funds dont step up, and if companies don’t unleash a buyback tsunami, it’s about to turn very ugly.

  • Infrastructure Emergency: 50,000 American Bridges Are "Structurally Deficient"

    Last week, President Trump announced his proposal for a $1.5 trillion infrastructure program in his State of The Union address to the American people. He failed to mention that over the next decade, the federal government would provide very little money whatsoever for America’s crumbling bridges, rails, roads, and waterways.

     

    In fact, Trump’s plan counts on state and local governments working in tandem with private investors to fork up the cash for projects.

    In overhauling the nation’s crumbling infrastructure, the federal government is only willing to pledge $200 billion in federal money over the next decade, leaving the remainder of $1.3 trillion for cities, states, and private companies.

    Precisely how Trump’s infrastructure program would work remains somewhat of a mystery after his Tuesday night speech, as state transportation officials warned that significant hikes to taxes, fees, and tolls would be required by local governments to fund such projects.

    To get an understanding of the severity of America’s crumbling infrastructure. The American Road & Transportation Builders Association (ARTBA) has recently published a shocking report specifying more than 50,000 bridges across the country are rated “structurally deficient.

     

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    If the “structurally deficient” bridges were placed end-to-end, they would stretch 1,216 miles or nearly the distance between Miami and New York City, said ARTBA. Cars, trucks, and school buses cross these 54,259 compromised structures more than 175 million times per day, which it is only a matter of time before another Mississippi River Bridge collapse occurs.

    Here are the highlights from the report: 

    • 54,259 of the nation’s 612,677 bridges are rated “structurally deficient.”
    • Americans cross these deficient bridges 174 million times daily.
    • Average age of a structurally deficient bridge is 67 years, compared to 40 years for non-deficient bridges.
    • One in three (226,837) U.S. bridges have identified repair needs.
    • One in three (17,726) Interstate highway bridges have identified repair needs.
    • Website features listing of deficient bridges by state and congressional district.

    Dr. Alison Premo Black, chief economist for the American Road & Transportation Builders Association (ARTBA), who conducted the analysis, said, “the pace of improving the nation’s inventory of structurally deficient bridges slowed this past year. It’s down only two-tenths of a percent from the number reported in the government’s 2016 data. At current pace of repair or replacement, it would take 37 years to remedy all of them. ” 

    Black says, “An infrastructure package aimed at modernizing the Interstate System would have both short- and long-term positive effects on the U.S. economy.”

    She adds that traffic jams cost the trucking industry $60 billion in 2017 in lost productivity and fuel, which “increases the cost of everything we make, buy or export.”

    Other key findings in the ARTBA report:

    • Iowa (5,067), Pennsylvania (4,173), Oklahoma (3,234), Missouri (3,086), Illinois (2,303), Nebraska (2,258), Kansas (2,115), Mississippi (2,008), North Carolina (1,854) and New York (1,834) have the most structurally deficient bridges. 

    • The District of Columbia (8), Nevada (31), Delaware (39), Hawaii (66) and Utah (87) have the least.

    • At least 15 percent of the bridges in six states – Rhode Island (23 percent), Iowa (21 percent), West Virginia (19 percent), South Dakota (19 percent), Pennsylvania (18 percent) and Nebraska (15 percent)—fall in the structurally deficient category.

    As Staista’s Niall McCarthy notes, U.S. drivers cross those bridges 174 million times a day and on average, a structurally deficient bridge is 67 years old. Dr. Alison Premo Black carried out the analysis for the ARTBA and she has said that if things continue at their current pace, it would take 37 years to repair all of the bridges that need attention. With a total of 5,067 of them, Iowa has the most structurally deficient bridges, followed by Pennsylvania (4,174) and Oklahoma (3,234).

    Infographic: Thousands Of American Bridges Are Falling Apart  | Statista

    You will find more statistics at Statista

    Here are the most traveled “structurally deficient” U.S. bridges in 2017:

    In 2007, the I-35W Mississippi River Bridge in Minneapolis collapsed during an evening rush hour commute, sending cars and trucks diving into the river. Thirteen people were killed and 145 were injured. The incident served as an eye opener to America’s deteriorating infrastructure. Ten years later, not much progress has been made in America’s bridges.

    President Trump has undoubtedly over-hyped his proposal for a $1.5 trillion infrastructure program, but for the 50,000 “structurally deficient” bridges across America, it is a race against time for the Trump administration, before the next bridge collapses triggers a mass causality event. We are almost positive this administration does not want this on their plate.

    “Every federal dollar should be leveraged by partnering with state and local governments and — where appropriate — tapping into private sector investment to permanently fix the infrastructure deficit,” Mr. Trump said in his State of the Union address.

  • Government Shutdown Now Certain: Next House Vote After Deadline

    For the second time in one month, the US government will be shut down… if only for 3-6 hours, and potentially much longer.

    As we explained earlier, a last minute Senate vote to approve the bipartisan “budget-busting, cap-lifting, debt-ceiling extending” two year budget deal is on hold at the moment as Kentucky Sen. Rand Paul prevents its advancement. Furthermore, as discussed earlier, the White House has instructed critical agencies to begin shutdown preparations for a government shutdown should a deal not be reached before midnight when the funding lapse expires.

    This now appears certain because as Bloomberg reports, according to House majority whip Steve Scalies, “At this point, we expect next votes in the House to occur at very roughly 3:00-6:00 a.m.”

    And since midnight is the deadline for a deal, that would guarantee at least a short U.S. government funding lapse, and potentially a protracted one if for some reason the scheduled vote is once again delayed.

    As a reminder, uber-deficit hawk, Rand Paul has been pushing for an amendment to maintain budget caps, but Senate sources say leaders have no plan to give Paul such a concession, meaning that he can continue to prevent a vote until after midnight, when government funding runs out.

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    When the Senate eventually gets to a vote – some time on Friday morning, the measure will likely have enough support to pass. However, and this is where things get tricky, even if the Senate approves the legislation Thursday night, a suddenly divided House, where Nancy Pelosi’s Dreamer stunt has stumped her Democratic colleagues, still needs to pass it and get it to President Donald Trump’s desk.

    In other words, today was bad for the market. Tomorrow could be much worse.

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Today’s News 8th February 2018

  • Three Top Russian Officials (Quietly) Visit United States

    Authored by Alex Gorka via The Strategic Culture Foundation,

    Nothing like this ever happened even at the best of times.

    The heads of three Russian intelligence agencies all visited the US simultaneously. This is an extraordinary and unprecedented event, especially at a time when that relationship has so greatly deteriorated. Sergei Naryshkin, the foreign intelligence chief, Alexander Bortnikov, who heads the Federal Security Service, and Lieutenant General (two stars) Igor Korobov, the head of Russia’s military intelligence, visited Washington in late January. Not much has been leaked to the media but it was reported that they met with CIA Director Mike Pompeo. There was no secrecy about the visit or attempts to hush it up. The Russian ambassador to the US, Anatoly Antonov, mentioned the event on television. He claimed that the visit had been a success and that despite the extreme tension between the two countries, their intelligence agencies were continuing to cooperate. As he put it, “Politics is politics, work is work. There are political proclamations, and there is real work.”

    At least one of the Russian visitors is affected by the sanctions constraints. Obviously, President Donald Trump permitted the visit, as he is the only one who is authorized to temporarily waive those restrictions. No doubt there was a discussion of the terrorist threat posed by the Federal Security Service, but that team was headed by Mr. Naryshkin. The negotiations over the joint efforts to counter international terrorism could have been held anywhere. Such contacts between intelligence agencies do not require the top officials to head the delegations. Thus one must conclude that the talks addressed a much broader agenda – there must have been something really significant to discuss, with an agenda not limited to just one or two issues.

    There was a particular context for this event.

    It’s important to note that Kurt Volker, the US Special Representative for Ukraine, and Vladislav Surkov, the Russian president’s top aide, also met in late January in Dubai. The American official is known for his stints at the CIA. Many observers found it rather surprising that President Trump did not say anything critical about Russia in his remarks at the Davos World Economic Forum on Jan. 26. During his stay in Switzerland, the US president was too busy to meet Ukrainian President Poroshenko but managed to find time for talks with his “friend” Rwandan President Paul Kagame! The long- awaited “Kremlin List” was nothing but a meaningless administrative step.

    There have been reports that Washington has been seeking ways to improve ties. The two countries’ top military leaders met last September to discuss Syria. More such events are planned for the future. The two foreign-office chiefs regularly hold private meetings. And Feb. 5 was an important date – both parties reported they had met their obligations under the New START Treaty.

    This is the moment when the tide is starting to turn, as President Trump is seeing some success from his efforts to undermine public confidence in the Russiagate investigation. The president is going on the offensive. Donald Trump has given permission to release a memo, which alleges that there was an abuse of power by the FBI and the Justice Department in the investigation into Russia’s alleged meddling in the US presidential election. The document shines a light on the role of the “deep state” in America and its influence on the media. It provides a clue about who raised the hullabaloo over “Russiagate” and why, and shows that they are ready to go to any length to spoil the US relationship with Moscow and jam a spoke into Donald Trump’s wheel.

    With the economy surging, the US president felt strong enough to approve the visit. This shows, better than any other example, that Russia is too important not to talk to. The two powers need to be engaged in dialog and the issues are too vital to ignore or sweep under the rug. President Trump has never shied away from claiming that he wants to repair that relationship. In his own words, “Putin is very important.” It’s an open secret that personal chemistry between leaders can play a very significant role in kick-starting the reconciliation process. With the memo released and “Russiagate” going nowhere, the president may have more supporters in Congress after the 2018 midterm elections. The US policy on Russia may be one of the things to change.

    The odds are slim of Russia and the United States becoming close partners. This makes engagement, “deconfliction,” and interaction in certain areas even more important. The contacts between the intelligence chiefs indicate that the parties are serious about bringing about positive changes. We may never know what the officials talked about, but the very fact of the meeting speaks for itself. It really is impossible to underestimate its importance. Looks like there might well be a light at the end of the tunnel.

  • Tesla Building 250MW "Virtual Solar Power Plant" Using 50,000 Homes In Australia

    After building the world’s largest lithium battery in Australia nearly 40 days ahead of schedule, Tesla has announced plans to build the world’s largest “virtual power plant” by outfitting 50,000 homes in South Australia with solar panels and Tesla battery storage units over the next four years, slashing participants’ energy bill by 30%.

    Beginning with a trial of 1100 Housing Trust properties, a 5kW solar panel system and 13.5kWh Tesla Powerwall 2 battery will be installed at no charge to the household and financed through the sale of electricity.

    Following the trial, which has now commenced, systems are set to be installed at a further 24,000 Housing Trust properties, and then a similar deal offered to all South Australian households, with a plan for at least 50,000 households to participate over the next four years. –ourenergyplan.sa.gov.au

    Over 6,500 households have already applied for the 250MW program (which will provide the panels for free), tweeted South Australian Premier Jay Weatherill on Monday.

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    The AUD$32 million ($25 million USD) project bankrolled by taxpayers and a state-funded techonlogy grant will be recovered by selling the electricity to customers on the grid. “We will use people’s homes as a way to generate energy for the South Australian grid, with participating households benefiting with significant savings in their energy bills,” says South Australia’s premier Jay Weatherill. “More renewable energy means cheaper power for all South Australians.”

    Price predicts utility bills for participating households will be slashed by 30%. The installations will begin with 100 households in a low-income housing community. Those systems should be completed by the end of June. Then another 1,000 systems will be installed in similar properties by the end of the year.

    After that, another 24,000 Housing Trust residents will be offered the opportunity to join the program, followed by 25,000 more households over the next 4 years. Minister for Social Housing Zoe Bettison said the decision to install the systems in Housing Trust homes would assist the most vulnerable. “We know that people in social housing can often struggle meeting their everyday needs and this initiative will take some pressure off their household budget,” she said. –cleantechnica.com

    South Australia’s 1.7 million residents regularly suffer power outages and energy reductions, with several major incidents leaving people without power following storms and a massive heat wave. 

    Off to a good start

    Tesla’s lithium battery storage project has already proven its worth; after the 129 MWh installation was activated on December 2, the Loy Yang coal power plant – one of the largest in Australia, went offline – depriving the grid of 560 MW of electricity, enough for 170,000 homes. Within 140 milliseconds, the Tesla “Hornsdale Power Reserve Battery System” kicked in, providing the grid with 100 MW of power – buying grid operators enough time to reroute other power sources and make up for the shortfall. Utility customers were largely unaffected. 

    That’s a record and the national operators were shocked at how quickly and efficiently the battery was able to deliver this type of energy into the market,” said State energy minister, Tom Koutsantonis, who added “Until now, if we got a call to turn on our emergency generators it would take us 10 to 15 minutes to get them fired up and operating which is a record time compared to other generators.”

  • Trump Administration To Test Biometric Program To Scan Faces Of Drivers

    Authored by Derrick Broze via ActivistPost.com,

    The U.S. Customs and Border Protection is preparing to launch a pilot program to scan the faces of drivers and passengers at Anzalduas Port near McAllen, Texas.

    On Thursday the U.S. Customs and Border Protection announced plans for a new pilot program that will test out biometric facial recognition technology as part of an effort to identify fugitives or terror suspects. The Austin-American Statesman reported on the announcement:

    Thanks to quantum leaps in facial recognition technology, especially over the past year, the future is arriving sooner than most Americans realize. As early as this summer, CBP will set up a pilot program to digitally scan the faces of drivers and passengers — while they are in moving vehicles — at the busy Anzalduas Port of Entry outside of McAllen, the agency announced Thursday.

    The Texas-Mexico border is being used as the testing grounds for the technology. The results of the pilot program will be used to help roll out a national program along the entire southern and northern borders. The Statesman notes that the Department of Energy hired researchers at Tennessee’s Oak Ridge National Laboratory to help overcome the difficulties of using facial recognition technology on moving vehicles. The researchers developed a method for combating window tinting and sun glare which can make a vehicle’s windows impenetrable to cameras. The facial recognition technology being developed for the pilot program will be capable of identifying the driver, front passengers, and the passengers riding in the back.

    The CBP currently operates facial recognition exit programs at almost a dozen international airports in the United States. Colleen Manaher, the CBP’s executive director of planning, program analysis and evaluation, told the Statesman that travelers have been accepting of the technology and noted that “we can thank the Apples and the Googles for that.”

    Although the CBP claims implementing facial recognition technology could eventually eliminate the need for passports, boarding passes and other travel documents, the technology is without a doubt an invasion of privacy. Both the Electronic Frontier Foundation and Georgetown University’s Center on Privacy and Technology have called for further investigation into the potential dangers of a massive facial recognition apparatus. In the U.S., only Texas and Illinois have laws preventing the use of biometric data for commercial purposes.

    The new Texas pilot program is only the latest effort by the federal government to implement a wide range of biometric and surveillance programs around the United States.

    In August 2017 Activist Post first reported on the plans to launch a national program scan the faces of all airline passengers in the U.S. Customs and Border Protection launched a “Traveler Verification Service” (TVS) that intends to use facial recognition on all airline passengers, including U.S. citizens, boarding flights exiting the United States. That same month it was reported that thirty-one sheriffs along the U.S.-Mexico border voted unanimously to adopt tools that will allow the collection and storing of iris scans.

    Additionally, Activist Post just last week reported that the U.S. Immigration and Customs Enforcement (ICE) agency now has access to a nationwide license plate recognition database after finalizing a contract with the industry’s top license plate data collection company. This database allows ICE to search a vehicles whereabouts over the last five years, as well as developing “hot lists” that can track particular vehicles indefinitely.

    The U.S. Immigration and Customs Enforcement is currently facing a lawsuit for failing to release records related to the agency’s use of devices to gather biometric data from immigrants. Mijente and the National Immigration Project of National Lawyers Guild are asking a federal court to force ICE and the Department of Homeland Security to release information related to the use of handheld devices used to gather biometric data from immigrants during raids.

    These programs are reminiscent of mass surveillance systems established in Russia and China.

    The truth of the matter is that all three nations are taking different paths towards the same goal: control and monitoring of their population and suppression of critical thought or opposition. The only way to stand against this is to refuse to fund the programs at every turn and sharing the information. It might be too late to stop the establishment of these programs, but the people could potentially form enough of a resistance to establish free communities and neighborhoods where these invasive technologies are rejected.

  • Yuan Is Crashing After Huge China Trade Surprise

    China’s overseas shipments held up (exports +11.1% YoY in USD terms) despite the stronger yuan and rising trade tensions with the U.S., but it was the imports that stunned many, rising 36.9% YoY in USD terms, slamming the trade surplus well below expectations.

    In Yuan terms the spike in imports was just as impressive…

    In USD terms, the China trade balance printed $20.34bn, well below the $54.65bn expectation and collapsing from last month.

    Perhaps in an effort to show there is no trade war, January exports to U.S. rose 7.5%, but ‘friendly’ imports surged 20.5% on the year.

    While coal (colder than normal) and oil imports (record) surged in January more than expected, it is crucial to understand that the Lunar New Year, which began earlier in 2017, may have distorted the data notably.

    Nevertheless, stocks extended their losses on the data…

     

    But the big impact is extending the losses from the US session in the Yuan as it crashes 5 handles after the data…

    Offshore Yuan is now down over 11 handles on the day and down 1.5% in the last two days.

    It would appear all bets are on again for another devaluation.

    Today is actually the biggest drop in the Yuan since the Aug 2015 devaluation (and remember what ripples that sent through global markets)

  • Paul Craig Roberts Exposes The Plunge Protection Team's Fraud

    Authored by Paul Craig Roberts,

    After the extraordinary sudden loss in equity values, the last two days brought gains back to the stock indices (albeit with a late day tumble today).

    What happened? Did the market sneeze, cough, or was something misread and today perceived in a different light?

    In my opinion this is what happened:

    The Plunge Protection Team, as they have done on previous equity market drops, or the Federal Reserve operating for the Working Group on Financial Markets, sent a purchase order for S&P futures to the trading floor. The hedge funds, seeing the incoming bid, front-ran the bid by stepping in and buying S&P futures. This pushed the market back up, ended the correction, and prevented financial panic.

    The Plunge Protection Team was created in 1987, approaching the end of the Reagan administration, in order to prevent a market correction from costing George H. W. Bush the presidential election as Reagan’s successor. The Republican Establishment was desperate to reestablish its control over the party. The Republican Establishment, convinced by Wall Street that the Reagan tax cut would result in high inflation, found themselves instead confronted with a long economic expansion. In those days that meant that the expansion could be nearing its end, and a stock market correction could deny the presidency to George H.W. Bush.

    To prevent any such correction, the US Treasury and Federal Reserve created a “working group” to intervene in the stock market in order to support values. Whenever the market starts to drop, the team purchases S&P futures which halts the market decline.

    We have witnessed this on several occasions. And, most likely, again this week.

    Pundits who speak about “market forces” are speaking about something that doesn’t exist. “Market forces” are the interventions that support existing values with money infusions.

    How long can the fraudulent valuation of equities continue?

    My sometimes coauthor Dave Kranzler and I think it can continue until the dollar as reserve currency comes under attack. Neither of us believed that the fraud could be perpetrated this long. The two other world powers, Russia and China, are moving away from use of the US dollar, but the consequence for the dollar could still be in the future. In the meantime, liquidity supplied by central banks and the interventions of the Plunge Protection Team could send equity prices higher.

  • Uber CIO : We Were Wrong To Pay Hacker $100,000 And Cover Up Breach Of 57 Million Accounts

    Testifying in front of Congress on Tuesday, Uber CIO John Flynn said that there was “no justification” for the company covering up a massive 2016 breach by hackers from Canada and Florida which affected 57 million accounts.

    John Flynn, Uber CIO

    I think we made a misstep in not reporting to consumers, and I think we made a misstep in not reporting to law enforcement,” said Flynn.

    The CIO also said that it was inappropriate to have paid one of the hackers $100,000 through a “bug bounty” program to destroy the stolen data. The bounty program offers financial rewards to anyone who identifies vulnerabilities.

    Flynn confirmed the man who obtained data from Uber was in Florida and that his partner, who first contacted the company on Nov. 14, 2016, to demand a six-figure payment, was located in Canada. The company’s security team made contact with both people and received assurances the pilfered data had been destroyed before paying the intruders $100,000, Flynn said. –Reuters

    We recognize that the bug bounty program is not an appropriate vehicle for dealing with intruders who seek to extort funds from the company,” Flynn said in his written testimony. “The approach that these intruders took was separate and distinct from those of the researchers in the security community for whom bug bounty programs are designed.”

    Of the 57 million user accounts were compromised last November, 25 million were located in the United States. Of those, 4.1 million were Uber drivers, according to Flynn’s testimony. The hackers were able to obtain names, addresses and drivers license numbers. 

    Lawmakers on the Senate Commerce consumer protection subcommittee railed against the company over how it handled the breach.

    The fact that the company took approximately a year to notify impacted users raises red flags within this Committee as to what systemic issues prevented such time-sensitive information from being made available to those left vulnerable,” said subcommittee chairman Sen. Jerry Moran (R-KS).

    There ought to be no question here that Uber’s payment of this blackmail without notifying consumers who were greatly at risk was morally wrong and legally reprehensible and violated not only the law but the norm of what should be expected,” added Sen. Richard Blumenthal (D-CT).

    Blumenthal also noted that Uber was in the process of negotiating a settlement with the Federal Trade Commission over an earlier, smaller breach and charges of deceptive privacy claims – while covering up the giant breach from November 2016. 

  • Brandon Smith: Is A Massive Stock Market Reversal Upon Us?

    Authored by Brandon Smith via Alt-Market.com,

    I have been saying it for years and I will say it again here – stocks are the worst possible “predictive” signal for the health of the general economy because they are an extreme trailing indicator. That is to say, when stock markets do finally crash, it is usually after years of negative signs in other more important fundamentals.

    Of course, whether we alternative analysts like it or not, the fact of the matter is that the rest of the world is psychologically dependent on the behavior of stock markets. The masses determine their economic optimism  (if they are employed) according to the Dow and the S&P and, to some extent, by official and fraudulent unemployment statistics. When equities start to dive, society takes notice and suddenly becomes concerned about fiscal dangers they should have been worried about all along.

    Well, it may have taken a couple months longer than I originally predicted, but it would seem so far that a moment of revelation (that slap in the face I discussed a couple weeks ago) is upon us. In less than a few days, most of the gains in global stocks for 2018 have been erased. The question is, will this end up as a “hiccup” in an otherwise spectacular bull market bubble? Or is this the inevitable death knell and the beginning of the implosion of that bubble?

    After I predicted the election of Donald Trump, I also predicted that central banks would begin pulling the plug on life support for equities markets. This did in fact take place with the Fed’s continued program of interest rate increases and the reduction of their balance sheet, which effectively strangles the flow of cheap credit to banking and corporate institutions that fueled stock buybacks for years. Without this constant and ever expansionary easy fiat, there is nothing left to act as a crutch for stocks except perhaps blind faith. And blind faith in the economy always ends up being smacked down by the ugly realities of mathematics.

    I believe the latest extraordinary dive in stocks is NOT a “hiccup,” but a sign that “contagion” is still a thing, and also a trailing sign of instability inherent in our fiscal system. Here are some reasons why this trend is likely to continue.

    Historic Corporate Debt Levels

    As mentioned above, artificially low interest rates have allowed corporations incredible leeway to manipulate stock markets at will using stock buybacks and other methods.  However, there are still consequences for this strategy.  For example, corporate debt levels are now at historic annual highs; far higher even than debt levels just before the crash of 2008.

    If this doesn’t illustrate the falseness of the so called “economic recovery”, I don’t know what does.  Beyond that, what happens as the Fed continues to raise interest rates and all that debt held by the “too big to fails” becomes vastly more expensive?  Well, I think we are seeing what happens.  Over time, faith in the corporate ability to prop up equities will erode, and a considerable decline is built directly into the farce.

    Price To Earnings Ratio

    In some of her final statements upon stepping down as the head of the Federal Reserve, Janet Yellen had some choice comments about the state of equities markets. These included statements that stock market valuations were high and that the price-to-earnings ratio of the S&P 500 (the ratio of stock values versus actual corporate earnings per share) were at a historical peak. This fits exactly with the policy shift I warned about in 2017, and my assertion that Jerome Powell will be the Fed chairman to oversee the final crash of the post-bailout market bubble.

    The spike in P/E ratios is not only taking place in U.S. markets. For example, the same trend can be observed in countries like India.  Meaning, there are equities valuation problems around the world.

    The issue here is that corporate earnings do not justify such high stock prices. Therefore, something else must be inflating those prices. That something was, of course, central bank stimulus, and now that party is almost over, whether the “buy the f’ing dippers” want to admit it yet or not.

    10-Year Treasury Yield Spike

    Have spiking Treasury bond yields actually been a signal for an “accelerating economy” as mainstream economists often suggest? Not really. In the era of central bank monetary manipulation, it is more likely that yields were spiking because markets are anticipating the arrival of Jerome Powell as Fed chair and accelerating interest rate hikes rather than an accelerating economy.

    The notion that the economy itself might be “overheating” in 2018 is a rather new and nefarious propaganda meme being used by central bankers to set a particular narrative. I believe that narrative will be the claim that “inflation” is a key concern rather than deflation and that central banks must act to temper inflation with more aggressive rate increases. In reality, what we are seeing is not “inflation” in a traditional sense, but stagflation. That is to say, we are seeing elements of price inflation in necessary goods and services and well as property markets, but continued deflation in the rest of the economy.

    The Fed in particular will continue to ignore negative fundamentals because they are seeking to deliberately pop the market bubble they have created.

    The spike in 10-year bond yields seems to be correlating closely to the recent volatility in stocks. This volatility increased exponentially as yields neared the 3% mark, which appears to be the magical trigger point for equities failure.  Though yields suffered a modest decline as stocks tumbled this week, I still recommend keeping an eye on this indicator.

    Dollar Weakness

    As I have mentioned in recent articles, there has been a strange disconnect between interest rates and the U.S. dollar. As the Fed continues its policy of hiking interest rates, generally the dollar index should rise in response. Instead, the dollar has been swiftly falling, only stalling in the past couple of trading sessions. If the dollar index continues to fall even as stocks decline and rates increase, this may suggest a systemic risk to the dollar itself.

    Such risk could include a dollar dump by foreign central banks in favor of a wider basket of currencies, or the SDR trading basket created by the IMF.

    Balance Sheet Reductions Accelerating

    The Fed’s most recent release of data on its balance sheet reduction program shows a drop in holdings of $18 billion; this is far higher that the originally planned $12 billion slated by the Fed.  Meaning, the Fed is dumping its balance sheet holdings much faster than it told the public initially.

    Why is this important?  Well, if you have been tracking the behavior of stocks over the past few years as well as the increases in the Fed’s balance sheet, you know that stock markets have risen in direct correlation with that balance sheet.  In other words, the more purchases the Fed made, the higher stocks climbed.

    Image result for Fed balance sheet and Stocks 2017

    If this correlation is directly linked, then as the Fed reduces its balance sheet, stocks should fall.

    So, the fed announces its latest round of balance sheet reductions on January 31st, the reduction is much higher than anticipated, and within a week we witness the largest two day market drop in years.  You would think this observation might just be important, but if you look at the mainstream economic media, almost NO ONE is mentioning it.  Instead, they are searching for all sorts of random explanations for what just happened, none of which are very logically satisfying.

    I believe that the Fed will not only continue its program of interest rate increases even if stocks begin to flounder, but that they will also unload their balance sheet as quickly as possible.

    Corporate Investor Comments

    Major corporate investment firms are beginning to raise their voices about the potential not only for stock devaluations, but also the amount that they might fall. Sydney-based AMP capital suggested a rather moderate 10% pullback in equities, which I think will become the talking point for most of the mainstream media over the next couple weeks. At least, until the whole thing comes crashing down much further than that.

    The head of Blackstone COO expects stocks to fall at least 20% this year, a much more aggressive number but not high enough in my view.

    I still believe these kinds of estimates are only applicable in the very short term. By the end of 2018, it is possible that markets will double the worst estimated declines predicted by the mainstream investment world given the fundamentals.

    Central Banker Comments

    Comments by agents of the Federal Reserve reinforce the notion that the central bank is about to crush the bull market bubble. San Francisco branch head Robert Kaplan has been quoted as saying the Fed may be required to hike interest rates MORE than the three times expected by mainstream economists in 2018.

    As noted above, Janet Yellen’s exit statements were decidedly “hawkish,” suggesting that property markets and stocks are overpriced. On top of this, Jerome Powell, the new Fed chair, has been quoted in Fed documents from 2012 (finally released this past month) discussing the market bubble the Fed had created and the need to temper than bubble. In other words, Powell is the perfect man for the job of imploding stocks. Powell even predicted in 2012 that when the Fed raises rates the reaction by stock markets might be severe.  Interesting that markets would plunge the very first day Powell assumes the Fed chair position.

    I suppose finally a Fed agent and I have something in common. We’ve both been predicting the same exact market outcome caused by the same trigger event for around the same number of years.

    I outlined in great detail the plan for the “global economic reset” and Powell’s role in overseeing the next stock crash in my article Party While You Can – Central Bank Ready To Pop The Everything Bubble. In that article, I predicted exactly the results which seem to be developing today in equities.

    In essence, Powell is being portrayed by the mainstream media as “Trump’s guy,” and the change in Fed leadership is now being referred to as “Trump’s Fed.” This is not random rhetoric.  I can’t think of ANY other president in the past that was given credit by the mainstream media for the activities of the Federal Reserve. Trump’s control over the Federal Reserve is zero. But, the actions of the Fed over the course of this year will undoubtedly crash the very equities markets that Trump has been foolishly taking credit for since his election.

    The real issue here now is, how fast will this ugly festering sore explode? That’s hard to say. I would not be surprised if markets fall about 20% below recent highs in the course of the next couple of months and then stall. We may even see a couple spectacular bounces in the near term, all set to trumpets and fanfare by the mainstream economic media who will proclaim that the latest shock-drop was nothing more than an “anomaly.” Then, the crash will continue into the end of 2018 and panic will ensue.

    That said, if there is some kind of major geopolitical crisis (such as a war with North Korea), then all bets are off. Stocks could crash exponentially over the course of a few weeks rather than a year. As the past few days have proven, stocks are not invincible, not in the slightest. And all the gains accumulated in the span of years can be wiped away in an instant.

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  • "Do I Have To Worry About Another Volatility Spike"- A Q&A With Goldman's Head Quant

    After a day of conference calls with investors, Goldman’s newly-hired quant Rocky Fishman has assembled the most frequently asked questions that are relevant for trading dynamics in the VIX and equities in the coming days.

    Here is the result: Goldman’s Q&A on the Trading Dynamics of ETPs

    * * *

    1. Do I have to worry about VIX ETPs driving another similar volatility spike?

    Not for now, and not likely anytime soon. The large short VIX products were the primary driver of Monday afternoon’s late-day acceleration in the VIX, and with them diminished ($300mm AUM now vs $3.9bln peak AUM), the quantity of VIX futures ETP issuers would have to buy on a further volatility spike is diminished as well. Levered long ETPs remain sizable ($1.1bln AUM), but per unit of VIX futures exposure, they trade less on a volatility spike than inverse products would (filling the gap between long futures that have risen and a fund NAV that has risen faster requires fewer units of futures than between a NAV and futures position that are moving in opposite directions). The higher level of VIX futures also makes an N-point move a lower percentage move than it would be with lower VIX futures prices.

    2. What’s the impact of the XIV (and Japan-listed 2049) redemption? What’s the impact of the SVXY continuing to trade?

    The previously sizable short VIX ETPs no longer have a significant impact on the VIX futures market because Monday’s sell-off pushed their AUM down so much that their VIX futures holdings would be immaterial to the broad market (the SVXY is short less than 1% of VIX futures open interest), regardless of whether or not they continued trading.

     

    3. Why were VIX futures and S&P futures both down throughout much of Tuesday’s trading day?

    Typically, VIX futures rise when S&P 500 futures are falling; however, VIX futures had such outsized, technicals-driven buying pressure on Monday afternoon that the absence of this was enough to allow VIX futures to fall on Tuesday, even in the context of an initially weaker equity market.

    4. Were short ETPs a material percentage of the VIX futures market? What implications do this week’s events have on VIX future trading volumes?

     

    VIX future volumes closely track VIX ETP trading volumes, so we would expect a material drop in ETP volumes due to the lack of sizable short ETP trading activity to result in a similar drop in VIX future volumes. We estimate short VIX ETPs constituted over 40% of ETP trading volume in January, when measured in VIX future-equivalent terms. While VIX derivatives naturally are active when volatility is moving around, we expect VIX future volumes to fall below – perhaps substantially below – their typical 2017 range (1st & 2nd futures volume was 30% higher than the typical 2015-6 volume) as conditions normalize.

     

    5. Is there a transmission mechanism by which VIX futures activity can lead to S&P 500 trading?

    Investors may use S&P 500 futures to hedge some of the risk of short VIX future positions. If some of the investors selling VIX futures to ETP issuers on Monday simultaneously sold SPX futures as a hedge against the market risk inherent in their short VIX future positions, their positioning could potentially have impacted equity prices. High volatility can also pressure equity prices via flows from systematic volatility-linked funds, investor confidence, and VAR-driven risk reduction.

     

    6. Was this technical selloff expected? Should vol-of-vol (i.e., VIX option prices) be structurally higher given what has taken place?
    VIX option prices had been abnormally high for the current low level of volatility throughout much of January as investors had priced in some risk of outsized short VIX ETPs causing turmoil like Monday’s. In effect, option pricing implied that should volatility rise, it would rise quickly. With the short VIX ETP market now small, we think that implied volatility of VIX options should reset to levels lower than the last few months once conditions normalize, which could create opportunities to sell VIX options.

    7. If the AUM of short VIX ETPs was only $3.9bn at their peak, why are they important?

    Short VIX ETPs were important because a hypothetical spike in VIX futures would economically drive their issuers to buy an outsized amount of VIX futures, and that buying could push VIX futures up more, creating escalating volatility like we saw on Monday. VIX ETPs are small relative to the US equity market, but large relative to the VIX futures market (often accounting for 40% of open interest). These ETPs were also highly correlated with the equity markets and had multiples of the SPX’s volatility, giving them a larger impact on portfolios than their AUM would suggest.
     

    8. Why do short and levered long VIX ETPs both buy more VIX futures when volatility spikes?

    When volatility rises, both inverse and levered long VIX ETP issuers are economically driven to buy VIX futures: the inverse product issuers do so to reduce a short position that has become too large relative to their AUM, and the levered issuers do so to supplement a long position that has not risen as quickly as the AUM of the ETP itself.
     

    9. Can VIX ETPs cause vol to fall abnormally quickly just like they caused this rise?

    Yes and no, in our view. VIX futures tend to spike up more than they spike down, but should volatility drop dramatically, ETP rebalancing could help VIX futures overreact to the downside as well. We estimate that Tuesday’s normalization of volatility left ETP issuers with around 40k VIX futures to sell – a large amount but far below Monday’s estimated “vega to buy” that exceeded 200k VIX futures.
     

    10. Why do issuers have to trade near the 4:15 futures market close?

    The indices behind the VIX ETPs are based on one-day changes in VIX futures levels, measured by their 4:15 PM NY time prices. Every day, an ETP’s NAV change is a weighted average of the one-day returns of two VIX futures, but those weights change every day. It is only at the close of each trading day that the next day’s weights are fully known, because the total dollar amount of futures involved needs to be exactly the right leverage times the price of the product. This process becomes a feedback loop because each ETP’s closing NAV is an input to the size of its position the next trading day. As we approach the close every day, an ETP issuer shifts its portfolio to the next day’s position so it can correctly replicate the next day’s return.
     

    11. Did the XIV and SVXY cause 2017’s surprisingly low VIX range? Now that they are diminished will volatility return?

    In our view, 2017’s low VIX range was driven primarily by low S&P 500 realized volatility (the lowest S&P 500 realized volatility since 1964), which was a byproduct of low volatility across asset classes, low intra-SPX correlation, and benign economic conditions. We do not see evidence that VIX ETPs furthered this in any material way.

    12. What is vega?

    Vega is a measurement of volatility risk that represents dollars per volatility point. Because the contract has a 1,000 multiplier, each VIX futures contract carries 1,000 vega – i.e. its value changes by $1,000 for each point that the VIX futures price moves. The amount of vega in any one VIX ETP share changes over time, as the amount of VIX futures exposure that can “fit” inside a share is a function of the share’s NAV and the price of VIX futures. Short VIX ETPs had seen their vega per share grow quickly in late 2017, but now the SVXY has very little vega per share.

  • US-Led Coalition Bombs Syrian Forces Following Israeli Strike Near Damascus

    A US-led coalition has conducted several “defensive” airstrikes against Syrian forces allied with President Bashar al-Assad on Wednesday in Syria’s Deir al-Zor province, in retaliation for what the coalition said was an “unprovoked” attack on the US-backed left-wing Syrian Democratic Forces (SDF) headquarters.

    Furthermore, CNN reported late Thursday that US forces are now investigating whether Russian contractors were involved in the initial attack against the SDF, after a US official told the news outlet that the possibility could not be ruled out.

    The retaliatory airstrikes are said to have occurred 8km (5 miles) east of the Euphrates River, while no U.S. troops embedded with the local fighters at their headquarters are believed to have been wounded or killed in the attack on the headquarters, reports Reuters.

    The US-led coalition did not say whether any pro-Syrian forces were killed in the retaliatory strike.

    a

    Syrian pro-regime forces initiated an unprovoked attack against well-established Syrian Democratic Forces headquarters,” reads a Feb 7 press release from Central Command. “In defense of Coalition and partner forces, the Coalition conducted strikes against attacking forces to repel the act of aggression against partners engaged in the Global Coalition’s defeat-Daesh mission.” 

    Although no U.S. servicemembers were reportedly involved in the attack on the SDF, the US-led coalition has previously asserted a “non-negotiable right to act in self-defense,” pointing to the fact that coalition service members are embedded with the SDF “partners” on the ground in Syria. 

    Syrian President Bashara al-Assad has repeatedly stated that the presence of the US-led coalition on Syrian soil is an act of aggression and a violation of Syrian sovereignty. Officially, Russian and Syrian air forces are the only military allowed to operate in Syria – however Syria and Iran are close strategic allies, with the latter providing logistical, technical and financial support to the Syrian government during the ongoing Syrian Civil War. Syria has repeatedly asked the United Nations to convince the United States to leave following the defeat of most ISIS forces in the country, however US Secretary of State Rex Tillerson says US troops will remain in Syria as a counter to Syrian President Bashar al-Assad and Iranian forces.

    a
    Secretary of State Rex Tillerson

    News of the retaliatory coalition airstrike comes on the heels of what we reported was an overnight attack against Syrian government locations near Damascus, in yet another attempt to provoke war with Syria. 

    Bombs Away

    As we discussed earlier, for at least the third time since the start of the 7-year long war in Syria, Israeli jets attacked a site just outside of Syria’s capital city called Jamraya – believed to be a military research facility related to chemical weapons.

    a

    Jamraya’s government facilities are well known – and include a branch of Syria’s Scientific Studies and Research Center – the site of two previous Israeli attacks in 2013 and December of 2017. 

    Like with other recent attacks, Israeli jets are reported to have fired from over Lebanon, with a Syrian military media statement saying that its air defenses intercepted most of the inbound missiles, though no further details were given. Unconfirmed international media reports, however, indicate one or more of the Israeli missiles may have impacted parts of the Syrian government facility during the strikes which occurred at 03:42 am local time Wednesday morning.

    In response to Israel’s most recent attack – apparently timed to coincide with recent allegations against repeated chemical attacks conducted by the Syrian government against al-Qaeda held pockets of the country, the Syrian military said “The general command of the armed forces holds Israel fully responsible for the dangerous consequences of its repeated, aggressive and uncalculated adventures.”

    Though admitting “no evidence” US Defense Secretary Jim Mattis suggested last week that the Syrian Army may be using sarin gas while also alleging multiple smaller scale chlorine attacks. 

    Israel, however, has lately been quick to justify what Damascus has condemned as unprovoked “acts of aggression” in humanitarian terms as retribution for supposed gas attacks. Israel has long been on record as condemning Iran’s presence in the region, however, Israeli leaders lately appear increasingly reliant on chemical attack claims as rationale for bombing Syrian government sites. 

    Looks like more regime change is on the menu. The only question is when, and whether or not chocolate cake will be served for dessert. 

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