• The Legacy Of Reagan's Civilian 'PsyOps'

  Authored by Robert Parry via ConsortiumNews.com,

  When the Reagan administration launched peacetime “psyops” in the mid-1980s, it pulled in civilian agencies to help spread these still-ongoing techniques of deception and manipulation…

  

  Declassified records from the Reagan presidential library show how the U.S. government enlisted civilian agencies in psychological operations designed to exploit information as a way to manipulate the behavior of targeted foreign audiences and, at least indirectly, American citizens.

  

  Walter Raymond Jr., a CIA propaganda and disinformation specialist who oversaw President Reagan’s “psyops” and “perception management” projects at the National Security Council. Raymond is partially obscured by President Reagan. Raymond is seated next to National Security Adviser John Poindexter. (Photo credit: Reagan presidential library)

  A just-declassified sign-in sheet for a meeting of an inter-agency “psyops” committee on Oct. 24, 1986, shows representatives from the Agency for International Development (USAID), the State Department, and the U.S. Information Agency (USIA) joining officials from the Central Intelligence Agency and the Defense Department.

  Some of the names of officials from the CIA and Pentagon remain classified more than three decades later. But the significance of the document is that it reveals how agencies that were traditionally assigned to global development (USAID) or international information (USIA) were incorporated into the U.S. government’s strategies for peacetime psyops, a military technique for breaking the will of a wartime enemy by spreading lies, confusion and terror.

  Essentially, psyops play on the cultural weaknesses of a target population so they could be more easily controlled or defeated, but the Reagan administration was taking the concept outside the traditional bounds of warfare and applying psyops to any time when the U.S. government could claim some threat to America.

  This disclosure – bolstered by other documents released earlier this year by archivists at the Reagan library in Simi Valley, California – is relevant to today’s frenzy over alleged “fake news” and accusations of “Russian disinformation” by reminding everyone that the U.S. government was active in those same areas.

  The U.S. government’s use of disinformation and propaganda is, of course, nothing new. For instance, during the 1950s and 1960s, the USIA regularly published articles in friendly newspapers and magazines that appeared under fake names such as Guy Sims Fitch.

  However, in the 1970s, the bloody Vietnam War and the Pentagon Papers’ revelations about U.S. government deceptions to justify that war created a crisis for American propagandists, their loss of credibility with the American people. Some of the traditional sources of U.S. disinformation, such as the CIA, also fell into profound disrepute.

  This so-called “Vietnam Syndrome” – a skeptical citizenry dubious toward U.S. government claims about foreign conflicts – undermined President Reagan’s efforts to sell his plans for intervention in the civil wars then underway in Central America, Africa and elsewhere.

  Reagan depicted Central America as a “Soviet beachhead,” but many Americans saw haughty Central American oligarchs and their brutal security forces slaughtering priests, nuns, labor activists, students, peasants and indigenous populations.

  Reagan and his advisers realized that they had to turn those perceptions around if they hoped to get sustained funding for the militaries of El Salvador, Guatemala and Honduras as well as for the Nicaraguan Contra rebels, the CIA-organized paramilitary force marauding around leftist-ruled Nicaragua.

  Perception Management

  So, it became a high priority to reshape public perceptions inside those targeted countries but even more importantly among the American people. That challenge led the Reagan administration to revitalize and reorganize methods for distributing propaganda and funding friendly foreign operatives, such as creation of the National Endowment for Democracy under neoconservative president Carl Gershman in 1983.

  

  President Ronald Reagan meeting with Guatemalan dictator Efrain Rios Montt, who later faced accusations of genocide against Indian populations in the central highlands.

  Another entity in this process was the Psychological Operations Committee formed in 1986 under Reagan’s National Security Council. In the years since, the U.S. administrations, both Republican and Democratic, have applied many of these same psyops principles, cherry-picking or manufacturing evidence to undermine adversaries and to solidify U.S. public support for Washington’s policies.

  This reality – about the U.S. government creating its own faux reality to manipulate the American people and international audiences – should compel journalists in the West to treat all claims from Washington with a large grain of salt.

  However, instead, we have seen a pattern of leading news outlets simply amplifying whatever U.S. agencies assert about foreign adversaries while denouncing skeptics as purveyors of “fake news” or enemy “propaganda.” In effect, the success of the U.S. psyops strategy can be measured by how Western mainstream media has stepped forward as the enforcement mechanism to ensure conformity to the U.S. government’s various information themes and narratives.

  For instance, any questioning of the U.S. government’s narratives on, say, the current Syrian conflict, or the Ukraine coup of 2014, or Russian “hacking” of the 2016 U.S. election, or Iran’s status as “the leading sponsor of terrorism” is treated by the major Western news outlets as evidence that you are a “useful fool” at best, if not a willful enemy “propagandist” with loyalty to a foreign power, i.e., a traitor.

  Leading mainstream media outlets and establishment-approved Web sites are now teaming up with Google, Facebook and other technology companies to develop algorithms to bury or remove content from the Internet that doesn’t march in lockstep with what is deemed to be true, which often simply follows what U.S. government agencies say is true.

  Yet, the documentary evidence is now clear that the U.S. government undertook a well-defined strategy of waging psyops around the world with regular blowback of this propaganda and disinformation onto the American people via Western news agencies covering events in the affected countries.

  During more recent administrations, euphemisms have been used to cloak the more pejorative phrase, “psychological operations” – such as “public diplomacy,” “strategic communications,” “perception management,” and “smart power.” But the serious push to expand this propaganda capability of the U.S. government can be traced back to the Reagan presidency.

  The Puppet Master

  Over the years, I’ve obtained scores of documents related to the psyops and related programs via “mandatory declassification reviews” of files belonging to Walter Raymond Jr., a senior CIA covert operations specialist who was transferred to Reagan’s National Security Council staff in 1982 to rebuild capacities for psyops, propaganda and disinformation.

  

  Then-Vice President George H.W. Bush with CIA Director William Casey at the White House on Feb. 11, 1981. (Photo credit: Reagan Library)

  Raymond, who has been compared to a character from a John LeCarré novel slipping easily into the woodwork, spent his years inside Reagan’s White House as a shadowy puppet master who tried his best to avoid public attention or – it seems – even having his picture taken.

  From the tens of thousands of photographs from meetings at Reagan’s White House, I found only a couple showing Raymond – and he is seated in groups, partially concealed by other officials.

  But Raymond appears to have grasped his true importance. In his NSC files, I found a doodle of an organizational chart that had Raymond at the top holding what looks like the crossed handles used by puppeteers to control the puppets below them. The drawing fits the reality of Raymond as the behind-the-curtains operative who was controlling the various inter-agency task forces that were responsible for implementing psyops and other propaganda strategies.

  In Raymond’s files, I found an influential November 1983 paper, written by Col. Alfred R. Paddock Jr. and entitled “Military Psychological Operations and US Strategy,” which stated: “the planned use of communications to influence attitudes or behavior should, if properly used, precede, accompany, and follow all applications of force. Put another way, psychological operations is the one weapons system which has an important role to play in peacetime, throughout the spectrum of conflict, and during the aftermath of conflict.”

  Paddock continued, “Military psychological operations are an important part of the ‘PSYOP Totality,’ both in peace and war. … We need a program of psychological operations as an integral part of our national security policies and programs. … The continuity of a standing interagency board or committee to provide the necessary coordinating mechanism for development of a coherent, worldwide psychological operations strategy is badly needed.”

  One declassified “top secret” document in Raymond’s file – dated Feb. 4, 1985, from Secretary of Defense Caspar Weinberger – urged the fuller implementation of President Reagan’s National Security Decision Directive 130, which was signed on March 6, 1984, and which authorized peacetime psyops by expanding psyops beyond its traditional boundaries of active military operations into peacetime situations in which the U.S. government could claim some threat to national interests.

  “This approval can provide the impetus to the rebuilding of a necessary strategic capability, focus attention on psychological operations as a national – not solely military – instrument, and ensure that psychological operations are fully coordinated with public diplomacy and other international information activities,” Weinberger’s document said.

  An Inter-Agency Committee

  This broader commitment to psyops led to the creation of a Psychological Operations Committee (POC) that was to be chaired by a representative of Reagan’s National Security Council with a vice chairman from the Pentagon and with representatives from CIA, the State Department and USIA.

  

  CIA seal in lobby of the spy agency’s headquarters. (U.S. government photo)

  “This group will be responsible for planning, coordinating and implementing psychological operations activities in support of United States policies and interests relative to national security,” according to a “secret” addendum to a memo, dated March 25, 1986, from Col. Paddock, the psyops advocate who had become the U.S. Army’s Director for Psychological Operations.

   

  “The committee will provide the focal point for interagency coordination of detailed contingency planning for the management of national information assets during war, and for the transition from peace to war,” the addendum added.

   

  “The POC shall seek to ensure that in wartime or during crises (which may be defined as periods of acute tension involving a threat to the lives of American citizens or the imminence of war between the U.S. and other nations), U.S. international information elements are ready to initiate special procedures to ensure policy consistency, timely response and rapid feedback from the intended audience.”

  In other words, the U.S. government could engage in psyops virtually anytime because there are always “periods of acute tension involving a threat to the lives of American citizens.”

  The Psychological Operations Committee took formal shape with a “secret” memo from Reagan’s National Security Advisor John Poindexter on July 31, 1986. Its first meeting was called on Sept. 2, 1986, with an agenda that focused on Central America and “How can other POC agencies support and complement DOD programs in El Salvador, Guatemala, Honduras, Costa Rica and Panama.” The POC was also tasked with “Developing National PSYOPS Guidelines” for “formulating and implementing a national PSYOPS program.” (Underlining in original)

  Raymond was named a co-chair of the POC along with CIA officer Vincent Cannistraro, who was then Deputy Director for Intelligence Programs on the NSC staff, according to a “secret” memo from Deputy Under Secretary of Defense Craig Alderman Jr.

  The memo also noted that future POC meetings would be briefed on psyops projects for the Philippines and Nicaragua, with the latter project codenamed “Niagara Falls.” The memo also references a “Project Touchstone,” but it is unclear where that psyops program was targeted.

  Another “secret” memo dated Oct. 1, 1986, co-authored by Raymond, reported on the POC’s first meeting on Sept. 10, 1986, and noted that “The POC will, at each meeting, focus on an area of operations (e.g., Central America, Afghanistan, Philippines).”

  The POC’s second meeting on Oct. 24, 1986 – for which the sign-in sheet was just released – concentrated on the Philippines, according to a Nov. 4, 1986 memo also co-authored by Raymond.

  But the Reagan administration’s primary attention continued to go back to Central America, including “Project Niagara Falls,” the psyops program aimed at Nicaragua. A “secret” Pentagon memo from Deputy Under Secretary Alderman on Nov. 20, 1986, outlined the work of the 4th Psychological Operations Group on this psyops plan “to help bring about democratization of Nicaragua,” by which the Reagan administration meant a “regime change.” The precise details of “Project Niagara Falls” were not disclosed in the declassified documents but the choice of codename suggested a cascade of psyops.

  Key Operatives

  Other documents from Raymond’s NSC file shed light on who other key operatives in the psyops and propaganda programs were. For instance, in undated notes on efforts to influence the Socialist International, including securing support for U.S. foreign policies from Socialist and Social Democratic parties in Europe, Raymond cited the efforts of “Ledeen, Gershman,” a reference to neoconservative operative Michael Ledeen and Carl Gershman, another neocon who has served as president of the U.S.-government-funded National Endowment for Democracy (NED), from 1983 to the present. (Underlining in original.)

  

  Carl Gershman, president of the National Endowment for Democracy.

  Although NED is technically independent of the U.S. government, it receives the bulk of its funding (now about $100 million a year) from Congress. Documents from the Reagan archives also make clear that NED was organized as a way to replace some of the CIA’s political and propaganda covert operations, which had fallen into disrepute in the 1970s. Earlier released documents from Raymond’s file show CIA Director William Casey pushing for NED’s creation and Raymond, Casey’s handpicked man on the NSC, giving frequent advice and direction to Gershman. [See Consortiumnews.com’s “CIA’s Hidden Hand in ‘Democracy’ Groups.”]

  While the initials USAID conjure up images of well-meaning Americans helping to drill wells, teach school and set up health clinics in impoverished nations, USAID also has kept its hand in financing friendly journalists around the globe.

  In 2015, USAID issued a fact sheet summarizing its work financing “journalism education, media business development, capacity building for supportive institutions, and strengthening legal-regulatory environments for free media.” USAID estimated its budget for “media strengthening programs in over 30 countries” at $40 million annually, including aiding “independent media organizations and bloggers in over a dozen countries,”

  In Ukraine before the 2014 coup, USAID offered training in “mobile phone and website security,” which sounds a bit like an operation to thwart the local government’s intelligence gathering, an ironic position for the U.S. with its surveillance obsession, including prosecuting whistleblowers based on evidence that they talked to journalists.

  USAID, working with billionaire George Soros’s Open Society, also funded the Organized Crime and Corruption Reporting Project (OCCRP), which engages in “investigative journalism” that usually goes after governments that have fallen into disfavor with the United States and then are singled out for accusations of corruption.

  The USAID-funded OCCRP also collaborates with Bellingcat, an online investigative website founded by blogger Eliot Higgins, who is now a senior non-resident fellow of the Atlantic Council, a pro-NATO think tank that receives funding from the U.S. and allied governments.

  Higgins has spread misinformation on the Internet, including discredited claims implicating the Syrian government in the sarin attack in 2013 and directing an Australian TV news crew to what looked to be the wrong location for a video of a BUK anti-aircraft battery as it supposedly made its getaway to Russia after the shoot-down of Malaysia Airlines Flight 17 in July 2014.

  Despite his dubious record of accuracy, Higgins has gained mainstream acclaim, in part, because his “findings” always match up with the propaganda theme that the U.S. government and its Western allies are peddling. Though most genuinely independent bloggers are ignored by the mainstream media, Higgins has found his work touted by both The New York Times and The Washington Post, and Google has included Bellingcat on its First Draft coalition, which will determine which news will be deemed real and which fake.

  In other words, the U.S. government has a robust strategy for deploying direct and indirect agents of influence who are now influencing how the titans of the Internet will structure their algorithms to play up favored information and disappear disfavored information.

  A Heritage of Lies

  During the first Cold War, the CIA and the U.S. Information Agency refined the art of “information warfare,” including pioneering some of its current features like having ostensibly “independent” entities and cut-outs present U.S. propaganda to a cynical public that would reject much of what it hears from government but may trust “citizen journalists” and “bloggers.”

  

  A screen shot of U.S. Assistant Secretary of State for European Affairs Victoria Nuland speaking to U.S. and Ukrainian business leaders on Dec. 13, 2013, at an event sponsored by Chevron, with its logo to Nuland’s left.

  USIA, which was founded in 1953 and gained new life in the 1980s under its Reagan-appointed director Charles Wick, was abolished in 1999, but its propaganda functions were largely folded into the new office of Under Secretary of State for Public Diplomacy and Public Affairs, which became a new fount of disinformation.

  For instance, in 2014, President Obama’s Under Secretary for Public Diplomacy Richard Stengel engaged in a series of falsehoods and misrepresentations regarding Russia’s RT network. In one instance, he claimed that the RT had made the “ludicrous assertion” that the U.S. had invested $5 billion in the regime change project in Ukraine. But that was an obvious reference to a public speech by U.S. Assistant Secretary of State for European Affairs Victoria Nuland on Dec. 13, 2013, in which she said “we have invested more than $5 billion” to help Ukraine to achieve its “European aspirations.”

  Nuland also was a leading proponent of the Ukraine coup, personally cheering on the anti-government rioters. In an intercepted phone call with U.S. Ambassador to Ukraine Geoffrey Pyatt, Nuland discussed how “to glue” or “midwife this thing” and who the new leaders would be. She picked Arseniy Yatsenyuk – “Yats is the guy” – who ended up as Prime Minister after elected President Viktor Yanukovych was overthrown.

  Despite all the evidence of a U.S.-backed coup, The New York Times simply ignored the evidence, including the Nuland-Pyatt phone call, to announce that there never was a coup. The Times’ obeisance to the State Department’s false narrative is a good example of how the legacy of Walter Raymond, who died in 2003, extends to the present.

  Over several decades, even as the White House changed hands from Republicans to Democrats, the momentum created by Raymond continued to push the peacetime psyops strategy forward.

  In more recent years, the wording of the program may have changed to more pleasing euphemisms. But the idea is the same: how you can use psyops, propaganda and disinformation to sell U.S. government policies abroad and at home.

  

  

• Chris Hedges: Elites "Have No Credibility Left"

  Chris Hedges and David North via TruthDig.com,

  On Monday, WSWS International Editorial Board Chairman David North interviewed Chris Hedges, the Pulitzer Prize-winning journalist, author, lecturer and former New York Times correspondent. Among Hedges’ best-known books are War is a Force That Gives Us Meaning, The Death of the Liberal Class, Empire of Illusion: the End of Literacy and the Triumph of Spectacle, Days of Destruction, Days of Revolt, which he co-wrote with the cartoonist Joe Sacco, and Wages of Rebellion: the Moral Imperative of Revolt.

  In an article published in Truthdig September 17, titled “The Silencing of Dissent,” Hedges referenced the WSWS coverage of Google’s censorship of left-wing sites and warned about the growth of “blacklisting, censorship and slandering dissidents as foreign agents for Russia and purveyors of ‘fake news.’”

  Hedges wrote that “the Department of Justice called on RT America and its ‘associates’ – which may mean people like me – to register under the Foreign Agent Registration Act. No doubt, the corporate state knows that most of us will not register as foreign agents, meaning we will be banished from the airwaves. This, I expect, is the intent.”

  North’s interview with Hedges began with a discussion of the significance of the anti-Russia campaign in the media.

  David North: How do you interpret the fixation on Russia and the entire interpretation of the election within the framework of Putin’s manipulation?

  Chris Hedges: It’s as ridiculous as Saddam Hussein’s weapons of mass destruction. It is an absolutely unproven allegation that is used to perpetuate a very frightening accusation—critics of corporate capitalism and imperialism are foreign agents for Russia.

  I have no doubt that the Russians invested time, energy and money into attempting to influence events in the United States in ways that would serve their interests, in the same way that we have done and do in Russia and all sorts of other countries throughout the world. So I’m not saying there was no influence, or an attempt to influence events.

  But the whole idea that the Russians swung the election to Trump is absurd. It’s really premised on the unproven claim that Russia gave the Podesta emails to WikiLeaks, and the release of these emails turned tens, or hundreds of thousands, of Clinton supporters towards Trump. This doesn’t make any sense. Either that, or, according to the director of national intelligence, RT America, where I have a show, got everyone to vote for the Green Party.

  This obsession with Russia is a tactic used by the ruling elite, and in particular the Democratic Party, to avoid facing a very unpleasant reality: that their unpopularity is the outcome of their policies of deindustrialization and the assault against working men and women and poor people of color. It is the result of disastrous trade agreements like NAFTA that abolished good-paying union jobs and shipped them to places like Mexico, where workers without benefits are paid $3.00 an hour. It is the result of the explosion of a system of mass incarceration, begun by Bill Clinton with the 1994 omnibus crime bill, and the tripling and quadrupling of prison sentences. It is the result of the slashing of basic government services, including, of course, welfare, that Clinton gutted; deregulation, a decaying infrastructure, including public schools, and the de facto tax boycott by corporations. It is the result of the transformation of the country into an oligarchy. The nativist revolt on the right, and the aborted insurgency within the Democratic Party, makes sense when you see what they have done to the country.

  Police forces have been turned into quasi-military entities that terrorize marginal communities, where people have been stripped of all of their rights and can be shot with impunity; in fact over three are killed a day. The state shoots and locks up poor people of color as a form of social control. They are quite willing to employ the same form of social control on any other segment of the population that becomes restive.

  The Democratic Party, in particular, is driving this whole Russia witch-hunt. It cannot face its complicity in the destruction of our civil liberties—and remember, Barack Obama’s assault on civil liberties was worse than those carried out by George W. Bush—and the destruction of our economy and our democratic institutions.

  Politicians like the Clintons, Pelosi and Schumer are creations of Wall Street. That is why they are so virulent about pushing back against the Sanders wing of the Democratic Party. Without Wall Street money, they would not hold political power. The Democratic Party doesn’t actually function as a political party. It’s about perpetual mass mobilization and a hyperventilating public relations arm, all paid for by corporate donors. The base of the party has no real say in the leadership or the policies of the party, as Bernie Sanders and his followers found out. They are props in the sterile political theater.

  These party elites, consumed by greed, myopia and a deep cynicism, have a death grip on the political process. They’re not going to let it go, even if it all implodes.

  DN: Chris, you worked for the New York Times. When was that, exactly?

  CH: From 1990 to 2005.

  DN: Since you have some experience with that institution, what changes do you see? We’ve stressed that it has cultivated a constituency among the affluent upper-middle class.

  CH: The New York Times consciously targets 30 million upper-middle class and affluent Americans. It is a national newspaper; only about 11 percent of its readership is in New York. It is very easy to see who the Times seeks to reach by looking at its special sections on Home, Style, Business or Travel. Here, articles explain the difficulty of maintaining, for example, a second house in the Hamptons. It can do good investigative work, although not often. It covers foreign affairs. But it reflects the thinking of the elites. I read the Times every day, maybe to balance it out with your web site.

  DN: Well, I hope more than balance it.

  CH: Yes, more than balance it. The Times was always an elitist publication, but it wholly embraced the ideology of neo-conservatism and neoliberalism at a time of financial distress, when Abe Rosenthal was editor. He was the one who instituted the special sections that catered to the elite. And he imposed a de facto censorship to shut out critics of unfettered capitalism and imperialism, such as Noam Chomsky or Howard Zinn. He hounded out reporters like Sydney Schanberg, who challenged the real estate developers in New York, or Raymond Bonner, who reported the El Mozote massacre in El Salvador.

  He had lunch every week, along with his publisher, with William F. Buckley. This pivot into the arms of the most retrograde forces of corporate capitalism and proponents of American imperialism, for a time, made the paper very profitable. Eventually, of course, the rise of the internet, the loss of classified ads, which accounted for about 40 percent of all newspaper revenue, crippled the Times as it has crippled all newspapers. Newsprint has lost the monopoly that once connected sellers with buyers. Newspapers are trapped in an old system of information they call “objectivity” and “balance,” formulae designed to cater to the powerful and the wealthy and obscure the truth. But like all Byzantine courts, the Times will go down clinging to its holy grail.

  The intellectual gravitas of the paper—in particular the Book Review and the Week in Review—was obliterated by Bill Keller, himself a neocon, who, as a columnist, had been a cheerleader for the war in Iraq. He brought in figures like Sam Tanenhaus. At that point the paper embraced, without any dissent, the utopian ideology of neoliberalism and the primacy of corporate power as an inevitable form of human progress. The Times, along with business schools, economics departments at universities, and the pundits promoted by the corporate state, propagated the absurd idea that we would all be better off if we prostrated every sector of society before the dictates of the marketplace. It takes a unique kind of stupidity to believe this. You had students at Harvard Business School doing case studies of Enron and its brilliant business model, that is, until Enron collapsed and was exposed as a gigantic scam. This was never, really, in the end, about ideas. It was about unadulterated greed. It was pushed by the supposedly best educated among us, like Larry Summers, which exposes the lie that somehow our decline is due to deficient levels of education. It was due to a bankrupt and amoral elite, and the criminal financial institutions that make them rich.

  Critical thinking on the op-ed page, the Week in Review or the Book Review, never very strong to begin with, evaporated under Keller. Globalization was beyond questioning. Since the Times, like all elite institutions, is a hermetically sealed echo chamber, they do not realize how irrelevant they are becoming, or how ridiculous they look. Thomas Friedman and David Brooks might as well write for the Onion.

  I worked overseas. I wasn’t in the newsroom very much, but the paper is a very anxiety-ridden place. The rules aren’t written on the walls, but everyone knows, even if they do not articulate it, the paper’s unofficial motto: Do not significantly alienate those upon whom we depend for money and access! You can push against them some of the time. But if you are a serious reporter, like Charlie Leduff, or Sydney Schanberg, who wants to give a voice to people who don’t have a voice, to address issues of race, class, capitalist exploitation or the crimes of empire, you very swiftly become a management problem and get pushed out. Those who rise in the organization and hold power are consummate careerists. Their loyalty is to their advancement and the stature and profitability of the institution, which is why the hierarchy of the paper is filled with such mediocrities. Careerism is the paper’s biggest Achilles heel. It does not lack for talent. But it does lack for intellectual independence and moral courage. It reminds me of Harvard.

  DN: Let’s come back to this question of the Russian hacking news story. You raised the ability to generate a story, which has absolutely no factual foundation, nothing but assertions by various intelligence agencies, presented as an assessment that is beyond question. What is your evaluation of this?

  CH: The commercial broadcast networks, and that includes CNN and MSNBC, are not in the business of journalism. They hardly do any. Their celebrity correspondents are courtiers to the elite. They speculate about and amplify court gossip, which is all the accusations about Russia, and they repeat what they are told to repeat. They sacrifice journalism and truth for ratings and profit. These cable news shows are one of many revenue streams in a corporate structure. They compete against other revenue streams. The head of CNN, Jeff Zucker, who helped create the fictional persona of Donald Trump on “Celebrity Apprentice,” has turned politics on CNN into a 24-hour reality show. All nuance, ambiguity, meaning and depth, along with verifiable fact, are sacrificed for salacious entertainment. Lying, racism, bigotry and conspiracy theories are given platforms and considered newsworthy, often espoused by people whose sole quality is that they are unhinged. It is news as burlesque.

  I was on the investigative team at the New York Times during the lead-up to the Iraq War. I was based in Paris and covered Al Qaeda in Europe and the Middle East. Lewis Scooter Libby, Dick Cheney, Richard Perle and maybe somebody in an intelligence agency, would confirm whatever story the administration was attempting to pitch. Journalistic rules at the Times say you can’t go with a one-source story. But if you have three or four supposedly independent sources confirming the same narrative, then you can go with it, which is how they did it. The paper did not break any rules taught at Columbia journalism school, but everything they wrote was a lie.

  The whole exercise was farcical. The White House would leak some bogus story to Judy Miller or Michael Gordon, and then go on the talk shows to say, ‘as the Times reported….’ It gave these lies the veneer of independence and reputable journalism. This was a massive institutional failing, and one the paper has never faced.

  DN: The CIA pitches the story, and then the Times gets the verification from those who pitch it to them.

  CH: It’s not always pitched. And not much of this came from the CIA. The CIA wasn’t buying the “weapons of mass destruction” hysteria.

  DN: It goes the other way too?

  CH: Sure. Because if you’re trying to have access to a senior official, you’ll constantly be putting in requests, and those officials will decide when they want to see you. And when they want to see you, it’s usually because they have something to sell you.

  DN: The media’s anti-Russia narrative has been embraced by large portions of what presents itself as the “left.”

  CH: Well, don’t get me started on the American left. First of all, there is no American left—not a left that has any kind of seriousness, that understands political or revolutionary theories, that’s steeped in economic study, that understands how systems of power work, especially corporate and imperial power. The left is caught up in the same kind of cults of personality that plague the rest of society. It focuses on Trump, as if Trump is the central problem. Trump is a product, a symptom of a failed system and dysfunctional democracy, not the disease.

  If you attempt to debate most of those on the supposedly left, they reduce discussion to this cartoonish vision of politics.

  The serious left in this country was decimated. It started with the suppression of radical movements under Woodrow Wilson, then the “Red Scares” in the 1920s, when they virtually destroyed our labor movement and our radical press, and then all of the purges in the 1950s. For good measure, they purged the liberal class—look at what they did to Henry Wallace—so that Cold War “liberals” equated capitalism with democracy, and imperialism with freedom and liberty. I lived in Switzerland and France. There are still residues of a militant left in Europe, which gives Europeans something to build upon. But here we almost have to begin from scratch.

  I’ve battled continuously with Antifa and the Black Bloc. I think they’re kind of poster children for what I would consider phenomenal political immaturity. Resistance is not a form of personal catharsis. We are not fighting the rise of fascism in the 1930s. The corporate elites we have to overthrow already hold power. And unless we build a broad, popular resistance movement, which takes a lot of patient organizing among working men and women, we are going to be steadily ground down.

  So Trump’s not the problem. But just that sentence alone is going to kill most discussions with people who consider themselves part of the left.

  The corporate state has made it very hard to make a living if you hold fast to this radical critique. You will never get tenure. You probably won’t get academic appointments. You won’t win prizes. You won’t get grants. The New York Times, if they review your book, will turn it over to a dutiful mandarin like George Packer to trash it—as he did with my last book. The elite schools, and I have taught as a visiting professor at a few of them, such as Princeton and Columbia, replicate the structure and goals of corporations. If you want to even get through a doctoral committee, much less a tenure committee, you must play it really, really safe. You must not challenge the corporate-friendly stance that permeates the institution and is imposed through corporate donations and the dictates of wealthy alumni. Half of the members of most of these trustee boards should be in prison!

  Speculation in the 17th century in Britain was a crime. Speculators were hanged. And today they run the economy and the country. They have used the capturing of wealth to destroy the intellectual, cultural and artistic life in the country and snuff out our democracy. There is a word for these people: traitors.

  DN: What about the impact that you’ve seen of identity politics in America?

  CH: Well, identity politics defines the immaturity of the left. The corporate state embraced identity politics. We saw where identity politics got us with Barack Obama, which is worse than nowhere. He was, as Cornel West said, a black mascot for Wall Street, and now he is going around to collect his fees for selling us out.

  My favorite kind of anecdotal story about identity politics: Cornel West and I, along with others, led a march of homeless people on the Democratic National Convention session in Philadelphia. There was an event that night. It was packed with hundreds of people, mostly angry Bernie Sanders supporters. I had been asked to come speak. And in the back room, there was a group of younger activists, one who said, “We’re not letting the white guy go first.” Then he got up and gave a speech about how everybody now had to vote for Hillary Clinton. That’s kind of where identity politics gets you. There is a big difference between shills for corporate capitalism and imperialism, like Corey Booker and Van Jones, and true radicals like Glen Ford and Ajamu Baraka. The corporate state carefully selects and promotes women, or people of color, to be masks for its cruelty and exploitation.

  It is extremely important, obviously, that those voices are heard, but not those voices that have sold out to the power elite. The feminist movement is a perfect example of this. The old feminism, which I admire, the Andrea Dworkin kind of feminism, was about empowering oppressed women. This form of feminism did not try to justify prostitution as sex work. It knew that it is just as wrong to abuse a woman in a sweatshop as it is in the sex trade. The new form of feminism is an example of the poison of neoliberalism. It is about having a woman CEO or woman president, who will, like Hillary Clinton, serve the systems of oppression. It posits that prostitution is about choice. What woman, given a stable income and security, would choose to be raped for a living? Identity politics is anti-politics.

  DN: I believe you spoke at a Socialist Convergence conference where you criticized Obama and Sanders, and you were shouted down.

  CH: Yes, I don’t even remember. I’ve been shouted down criticizing Obama in many places, including Berkeley. I have had to endure this for a long time as a supporter and speech writer for Ralph Nader. People don’t want the illusion of their manufactured personalities, their political saviors, shattered; personalities created by public relations industries. They don’t want to do the hard work of truly understanding how power works and organizing to bring it down.

  DN: You mentioned that you have been reading the World Socialist Web Sitefor some time. You know we are quite outside of that framework.

  CH: I’m not a Marxist. I’m not a Trotskyist. But I like the site. You report on important issues seriously and in a way a lot of other sites don’t. You care about things that are important to me—mass incarceration, the rights and struggles of the working class and the crimes of empire. I have read the site for a long time.

  DN: Much of what claims to be left—that is, the pseudo-left—reflects the interests of the affluent middle class.

  CH: Precisely. When everybody was, you know, pushing for multiculturalism in lead institutions, it really meant filtering a few people of color or women into university departments or newsrooms, while carrying out this savage economic assault against the working poor and, in particular, poor people of color in deindustrialized pockets of the United States. Very few of these multiculturalists even noticed. I am all for diversity, but not when it is devoid of economic justice. Cornel West has been one of the great champions, not only of the black prophetic tradition, the most important intellectual tradition in our history, but the clarion call for justice in all its forms. There is no racial justice without economic justice. And while these elite institutions sprinkled a few token faces into their hierarchy, they savaged the working class and the poor, especially poor people of color.

  Much of the left was fooled by the identity politics trick. It was a boutique activism. It kept the corporate system, the one we must destroy, intact. It gave it a friendly face.

  DN: The World Socialist Web Site has made the issue of inequality a central focus of its coverage.

  CH: That’s why I read it and like it.

  DN: Returning to the Russia issue, where do you see this going? How seriously do you see this assault on democratic rights? We call this the new McCarthyism. Is that, in your view, a legitimate analogy?

  CH: Yes, of course it’s the new McCarthyism. But let’s acknowledge how almost irrelevant our voices are.

  DN: I don’t agree with you on that.

  CH: Well, irrelevant in the sense that we’re not heard within the mainstream. When I go to Canada I am on the CBC on prime time. The same is true in France. That never happens here. PBS and NPR are never going to do that. Nor are they going to do that for any other serious critic of capitalism or imperialism.

  If there is a debate about attacking Syria, for example, it comes down to bombing Syria or bombing Syria and sending in troops, as if these are the only two options. Same with health care. Do we have Obamacare, a creation of the Heritage Foundation and the pharmaceutical and insurance industries, or no care? Universal health care for all is not discussed. So we are on the margins. But that does not mean we are not dangerous. Neoliberalism and globalization are zombie ideologies. They have no credibility left. The scam has been found out. The global oligarchs are hated and reviled. The elite has no counterargument to our critique. So they can’t afford to have us around. As the power elite becomes more frightened, they’re going to use harsher forms of control, including the blunt instrument of censorship and violence.

  DN: I think it can be a big mistake to be focused on the sense of isolation or marginalization. I’ll make a prediction. You will have, probably sooner than you think, more requests for interviews and television time. We are in a period of colossal political breakdown. We are going to see, more and more, the emergence of the working class as a powerful political force.

  CH: That’s why we are a target. With the bankruptcy of the ruling ideology, and the bankruptcy of the American liberal class and the American left, those who hold fast to intellectual depth and an examination of systems of power, including economics, culture and politics, have to be silenced.

   

  

  

• Meet The 31-Year-Old Austrian Anti-Immigrant Who Just Became The World's Youngest Leader

  As discussed earlier, Austria’s young conservative star, Sebastian Kurz, is now assured of becoming the country’s next leader, projections of Sunday’s parliamentary election result showed, but his party is far short of a majority and is likely to seek a coalition with the resurgent far right.

  

  Sebastian Kurz arrives to cast his ballot on Oct. 15.

  To his supporters, Kurz is Austria’s Macron: a one-man political phenomenon who is the only thing standing between the country’s resurgent nationalists and power. But to his detractors he is the Austrian Trump, who has hijacked one of the country’s two main parties and refashioned it in his own image. His critics say he is only holding the populists back by adopting their anti-immigrant rhetoric and policies.

  By taking a hard line on immigration that commingled his campaign with that of the Freedom Party (FPO), 31-year old Foreign Minister Kurz managed to propel his People’s Party to first place and draw some support away from an FPO buoyed by Europe’s migration crisis. Both parties increased their share of the vote from the last parliamentary election in 2013, marking a sharp shift to the right. Chancellor Christian Kern’s Social Democrats were in a close race with the FPO for second place.

  Kurz now has a mandate to form a coalition, replace Social Democrat Christian Kern as chancellor and become the world’s youngest government leader.

  

  With the Freedom Party poised to return to government for the first time since 2005, congratulations poured in from European nationalists including France’s Marine Le Pen and Geert Wilders in the Netherlands, while the World Jewish Congress expressed concern. For German Chancellor Angela Merkel, the result may chip away at a key ally’s pro-European stance in the years ahead.

  Frauke Petry, a former head of the anti-immigration Alternative for Germany party, which drew inspiration from its Austrian counterpart, posted congratulations on Twitter. Ronald Lauder, who heads the World Jewish Congress, said the Freedom Party is “full of xenophobes and racists. It is sad and distressing that such a platform should receive more than a quarter of the vote and become the country’s second party,” he said in an emailed statement. “My only hope is that they won’t end up in government.”

  While Sunday’s projected result doesn’t guarantee a coalition with the Freedom Party, Kurz has a mandate to form a government after an early election he triggered by breaking up a coalition with the Social Democrats this year. The final tally may still be influenced by postal ballots, which will only be counted on Monday.

  “This is a strong mandate for us to bring about change in this country,” Kurz told cheering supporters in Vienna as the results came in. “It’s about establishing a new political style, a new culture. It is our task to work with all others for our country,” Kurz told his supporters, without revealing which way he was leaning on coalition talks.

  Austria, one of Europe’s wealthiest nations of 8.7 million people, whose capital Vienna is ranked every year among the top 3 cities in which to live, was a gateway into Germany for more than 1 million people during the migration crisis that began in 2015. Many of them were fleeing war and poverty in the Middle East and elsewhere. Austria also took in roughly 1 percent of its population in asylum seekers in 2015, one of the highest proportions on the continent. Many voters say the country was overrun.

  Kurz’s strategy of focusing on that issue paid off.

  Meanwhile, the FPO was short of its record score of 26.9 percent, achieved in 1999, but still has a good chance of entering government for the first time in more than a decade. The OVP and the Social Democrats are at loggerheads, meaning the FPO is likely to be kingmaker. FPO leader Heinz-Christian Strache, who has accused Kurz of stealing his party’s ideas, declined to be drawn on his preferred partner.

  “Anything is possible,” he told ORF. “We are pleased with this great success and one thing is clear: nearly 60 percent of the Austrian population voted for the FPO program.”

  “There won’t be a debate to leave the EU, but the Freedom Party is strong enough to demand significant concessions” and may lead Austria to align more often with eastern European countries that have challenged Merkel on issues including migration, said Thomas Hofer, a political consultant in Vienna. “Austria has mostly been an ally of Germany for decades, but that picture could change more often now,” Hofer said.

  Austria’s two big parties, the People’s Party and the Social Democrats, have governed together for 44 of the 72 years since World War II. While Kurz and Freedom leader Heinz-Christian Strache might shake up Austria’s cozy political order, they broadly agree in pledging business-friendly policies, notably to scrap corporate taxes on retained profits. They’ll also stay in the German-led camp favoring fiscal austerity in the euro area.

  * * *

  So who is Kurz?

  Kurz, dubbed both the “Conservative Macron” and “Austrian Trump” due to his age and his party reform, said: ‘I would of course like to form a stable government. If that cannot be done then there are other options,’ adding that he planned to talk to all parties in parliament but would first wait for a count of postal ballots that begins on Monday.

  The young leader has pledged to cut benefits for all foreigners in Austria and has vowed to stop the European Union meddling in the country’s politics.  

  In his victory speech, he said: “I can only say, I am really overwhelmed. We campaigned for several months.”

  “We built a massive movement. We had a goal to be the first ones over the (finish) line on October 15. We have made the impossible possible. Thank you for all your work and for this historic success. Today is not about triumphing over others. But today is the day for real change in our country. Today has given us a strong mandate to change this country, and I thank you for that. We were handed a great responsibility from the voters, and we should all be aware of it. We should also be aware that a lot of people have put their hopes into our movement. I can promise you that I will fight with all my strength and all my commitment for change in this country, and I want to invite you all to come along this path together with me.”

  Kurz also wants to slash Austria’s red tape and keep the EU out of national affairs.

  At 31, Kurz is young even by the standards of Europe’s recent youth movement, which saw Macron enter the Elysee Palace at the age of 39 and Christian Lindner, 38, lead Germany’s liberal Free Democrats (FDP) back into the Bundestag.

  Kurz and Lindner showed that young new faces can inject dynamism into old establishment parties that have lost their way with voters.  Kurz rebranded the OVP as the New People’s Party and changed its colours from black to turquoise.  Lindner used trendy black-and-white campaign posters that showed him staring at his smartphone to revitalise the FDP’s image.

  Macron, who formed his own political movement, was able to paint himself as a rebel outsider despite having served for four years under failed French Socialist Francois Hollande.

  By taking a hard line on immigration that left little daylight between him and the far-right Freedom Party (FPO), 31-year-old Foreign Minister Kurz managed to propel his People’s Party to first place and draw some support away from an FPO buoyed by Europe’s migration crisis. Both parties increased their share of the vote from the last parliamentary election in 2013, marking a sharp shift to the right. Chancellor Christian Kern’s Social Democrats were in a close race with the FPO for second place.

  Today Kurz was pictured voting in the Austrian capital Vienna alongside his girlfriend Susanne Thier – a finance ministry worker who he met at the age of 18.

  
  Sebastian Kurz, 31, is set to take power and form an alliance with the far-right.
  He is pictured today with his girlfriend Susanne Thier, a finance ministry worker

  Without revealing which way he was leaning on coalition talks, the 31-year-old told his supporters: “It is our task to work with all others for our country.”

  * * *

  Earlier

  The front runner in Austria’s Sunday election ended his campaign with a familiar message : Sebastian Kurz pledged to make Austria great again. He is set to become the world’s youngest leader, ahead of France’s Emmanuel Macron, who is 39… oh and North Korea’s 34-year-old Kim Jong-un, of course.

  “I want to put Austria back on top,” he told an adoring crowd in Wiener Neustadt according to the Telegraph. “I want to provide security and order, because the Austrian people deserve it.”

  

  Sebastian Kurz

  Austrians are voting Sunday in the country’s National Council elections, where according to recent polls the country’s 6.4 million voters are likely to ditch the current coalition in favor of a new government backed by anti-immigration nationalists and headed by a 31-year-old Millennial.

  Ahead of today’s election results, the conservative candidate of the Austrian People’s Party (OVP), 31-year-old Sebastian Kurz, is leading the polls with Social Democratic Party (SPO) and the right-wing anti-immigrant Freedom Party (FPO) battling to secure second place. Polls suggest Kurz will lead his conservative People’s Party to victory in Sunday’s election: a victory by the millennial could lead to the unwind of a decade of Social Democratic-led administrations “that revived the economy but struggled with issues over immigration and welfare” and result in the anti-immigrant Freedom Party becoming a part of the coalition government for the first time in history.

  To his supporters, Kurz is Austria’s Macron: a one-man political phenomenon who is the only thing standing between the country’s resurgent nationalists and power. But to his detractors he is the Austrian Trump, who has hijacked one of the country’s two main parties and refashioned it in his own image. His critics say he is only holding the populists back by adopting their anti-immigrant rhetoric and policies.

  After a surge of support for populist candidates in elections this year in the Netherlands, France and Germany, Austria looks like it will go one further and elect an anti-immigration alliance. The biggest winner will be the aspiring 31-year-old Kurz, who has been Austria’s Minister for Foreign Affairs and Integration since 2013, and who is leading his political campaign along the center-right principles which seem to exploit the refugee issue.

  

  Sebastian Kurz, 31, Austria’s foreign minister and leader of the People’s Party,
  greets supporters during his final campaign event in Vienna on Oct. 13

  A recent survey by Meinungsraum conducted for GMX.at shows that FPO might secure around 28.5% of the vote, followed by OVP with 26.5%. SPO is expected to attract roughly 20% of the vote. Another poll by Research Affairs/Österreich predicts OVP to secure around 33% of the vote. FPO is predicted to come in second with around 27% , followed by SPO with 23% of the vote.

  

  “People are worried about the future and that is the currency that matters in this election,” said Christoph Hofinger, head of the SORA polling institute in Vienna. “The debate is revolving around the issue of fairness, and a lot is also linked to migration.”

  Back in May, Kurz called for a snap election amid tensions with coalition partner, the Social Democrats. The young politician previously backed plans to block refugee routes into Europe and supported a ban on full-face veils. He also supports cracking down on radical Islam, echoing FPO sentiments and luring in nationalist voters.

  For the past two years, the issue of how to deal with the influx of migrants has been among the most sensitive in Austrian society. The swell of anxiety over immigration to Austria began building 2015, when almost 70,000 mostly-Muslim refugees sought asylum from war-torn countries such as Syria, Afghanistan and Iraq. Schools and hospitals in the nation of 8.7 million struggled to accommodate the newcomers, and disagreements over whether it was fair to give immigrants generous welfare support dominate the media.

  As a result, voters have gravitated toward promises by both the People’s Party and Freedom to limit the number of immigrants Austria receives and force newcomers to adapt local customs more quickly.

  Leading FPO candidate Heinz-Christian Strache gained massive support ahead of the election by focusing on the country’s immigration policies and on issues such as unemployment, minimum wage and pensions. The party, founded by a former Nazi SS member after the end of the World War II, stuck the nerve of the electorate by proposing to stop immigration and by speaking out against Islam. The FPO support grew to unprecedented levels following EU-wide ‘Open Door’ migrant policy championed by Germany in wake of 2015 refugee crisis.

  While the biggest number of migrants was welcomed by Berlin, Austria received nearly 150,000 asylum requests since 2015. Comprising just over 1 percent of the population, their presence in the country became the number one debated issue in the election.

  Meanwhile, the incumbent chancellor of Austria and chairman of the Social Democratic Party, Christian Kern, is virtually assured to lose his place as the head of the government. Unlike his rivals, Kern advocates a much softer stand on migration, instead placing emphasis on employment and the economy. Kern, 51, a former business executive plucked from the national railroad by the Social Democrats in May 2016, has been dogged by sloppy campaign management. Despite overseeing faster growth in the export-oriented economy, Kern has struggled to connect with voters. His No. 1 goal is achieving full employment, since “modernizing the country with investment in education, security, health care and pensions” depends on it, Kern said late Thursday in the campaign’s final debate.

  “Austria deserves someone who is ready to take on real responsibility for the population,” Strache said in a parliamentary speech this week, in which he chided Kern for letting thousands of refugees enter Austria, transported on the national railroad he ran before becoming chancellor.

  Regardless of performance in Sunday’s election, the three main parties must work together to form a new coalition government. Neither the OVP nor the SPO has ruled out a coalition with the FPO, which may play the role of the kingmaker at the end of the day since as the revival of OVP/ SPO coalition seems unlikely. Other parties such as the liberal NEOS (The New Austria and Liberal Forum) and the Greens are expected to secure single digits.

  Compared with 10 years ago, more Austrians say they feel like they’re not being heard and are in search of law-and-order leadership, a SORA institute study showed. More than two-fifths of voters declared their desire for a “strongman” leader, according to the research, periodically commissioned by the federal government to gauge public attitudes and consciousness about the country’s Nazi history.

   

  Step forward Kurz, the foreign minister who’s distanced himself from the People’s Party’s leadership and forged similar views with Freedom’s Strache on immigration. Both men want to restrict immigrant access to Austria’s social-security system and impose tighter policing on the country’s borders. The Freedom Party came within 30,000 votes of winning the presidency, a mostly ceremonial post, in a run-off vote last year.

  In Austria, anyone over the age of 16 is eligible to vote in roughly 13,000 voting locations throughout the Alpine nation. There are about 6.4 million voters, and those who cast their ballots will decide 183 contested seats at the National Council.

  

  

• The U.S. Owes UNESCO Half A Billion Dollars

  This week, the U.S. and Israel announced that they would be withdrawing from UNESCO, citing 'continuing anti-Israel bias'.

  As Statista's Niall McCarthy notes, the move comes as a major blow to the organization which is known for designating cultural sites around the world such as the Grand Canyon or ancient Palmyra in Syria.

  The U.S. has been expected to pay the bulk of UNESCO's budget for years and it cancelled its financial contributions back in 2011 in protest of Palestine's admission as a full member.

  In the years since, it has amassed significant arrears of over $500 million…

  

  You will find more statistics at Statista

  This year, the UK, Japan and Brazil have all failed to pay their contributions so far, accrueing nearly $70 million of arrears between them.

  This isn't the first time the U.S. has turned its back on UNESCO.

  The country also left the organization under Ronald Reagan in the 1980s before rejoining under George W. Bush in 2003.

  The latest withdrawal will come into effect at the very end of 2018.

  

  

• Overheating China PPI Sends 10Y Yields To 30 Month Highs As Banks Inject Another Quarter Trillion Dollars In Loans

  Despite a disappointing US CPI report on Friday, which saw core inflation miss once again despite an expected spike due to the “hurricane effect”, moments ago China reported that in September, its CPI printed at 1.6% Y/Y, in line with expectations, and down from, 1.8% in August largely due to high year-over-year base effects, but it was PPI to come in smoking hot, jumping from 6.3% last month to 6.9% Y/Y, slamming expectations of a 6.4% print and just shy of the highest forecast, driven by the recent surge in commodity costs and strong PMI surveys.

  

  While there has been no reaction in the Yuan, either on shore or off, the stronger than expected PPI has pushed China’s 10Y yield to the highest in 30 months, or since April of 2015.

  

  Adding fuel to the flame was PBOC head Zhou Xiaochuan who said earlier that China’s GDP would pick up from the 6.9%  figure recorded in the first six months of the year “thanks to a boost from household spending”, according to a synopsis of his comments at the G30 International Banking Seminar posted to the People’s Bank of China website on Monday.” The reason why his comments have impacted the long-end is that the reported, and completely fabricated number, is higher than the previous consensus forecast of a goalseeked Q3 Chinese GDP of 6.8%.

  And while spiking Chinese yields wouldn’t be concerned if China was indeed deleveraging as the Communist Party and the PBOC claim it is doing, the reality is, of course, that China continues to add more and more debt as the latest weekend credit numbers out of the PBOC revealed. As Bloomberg reported earlier, China’s broadest credit aggregated, Total Social Financing, jumped to 1.82 trillion yuan, or over a quarter trillion dollars in September ($276BN to be precise), vs a Wall Street estimate of 1.57 trillion yuan and 1.48 trillion yuan the prior month. New yuan loans also beat expectations, at 1.27 trillion yuan, versus a projected 1.2 trillion yuan, while for the first time in months, the broader M2 money supply did not hit fresh fresh record lows, and instead beat expectations, rising to 9.2% from an all time low of 8.9%.

  

  Just as notable, after China’s shadow banking credit appeared to have finally been tamed after several months of contraction, shadow banking finance saw a pick-up in Sept (trust loans, entrusted loans and undiscounted bills), which accounted for 22% of Sept TSF vs. 18% in August. This was due mostly to milder deleveraging pace post the completion of self-checking of CBRC regs.

  

  Commenting on the latest burst of credit creation by China, Kenneth Courtis, chairman of Starfort Investment Holdings and a former Asia vice chairman for Goldman Sachs Group, said that “Momentum continues to be very strong. Loan demand of the private sector has finally turned up in recent months.”

  It also means that just two weeks after the PBOC cuts its RRR for most banks in an unexpected monetary easing on Sept 30, “there is little hope of further policy easing in the fourth quarter as the monetary policy is very accommodative,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “There could be even a tightening bias.”

  Of course, confirming what we have been saying for years, Christopher Balding who is an associated professor in Peking Univeristy in Shenzhen said that “deleveraging is not happening if we look at any measure of credit growth” and that “lending in 2017 has actually accelerated significantly from 2016.” This is shown in the chart below, which confirms that to keep its GDP at 6.9% or some other goalseeked number, China has to inject more than double that amount in credit every single month, in this case 15%. The biggest question is what happens to China’s credit impulse after the 19th Party Congress which begins on Wednesday.

  

  When looking at the boost in household spending noted above by Zhou Xiaochuan, all of this is the result of a surge in household lending: “Household short-term loans have increased too rapidly, with some funds being invested in stock and property markets,” said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing. “Regulators have started to pay attention to the sector and required banks to strengthen credit review. I think the momentum will show signs of slowing in the fourth quarter.”

  Commenting on the recent burst in Chinese household leverage, where short-term household loans soared to 1.53 trillion yuan, versus 524.7 billion yuan this time one year ago, Deutsche Bank’s Hans Fan writes that “noticeably China households are levering up quickly. We welcome the personal loans driven by genuine consumption growth, but there may be a notable portion of short-term consumer loans that were used to finance property purchases, which in our view contains higher risks.” 

  
  

  Some more details:

  A breakdown by borrower suggests household and corporate sectors continued to lever up, making up 31%/41% of new system credit in Sept (35%/38% in Aug). For households, while mortgage growth had slowed, s/t retail loan growth accelerated to 17.6% yoy in Sept (vs. 15.8% in Aug or 7.3% in 1Q17) to make up c.10% of credit creation. We attribute this to both decent consumption growth with rising credit penetration and property-related lending. We estimate 1/3 of new consumption loans may be used to finance purchases of second homes. However, PBOC and local CBRC offices have started to crack down on property-related consumer loans in September and we expect consumer loan growth momentum to moderate in the coming months.

  

  However, as so often happens in China, this surging leverage “sugar high” will not last, as “regulatory crackdown on property-related consumer loans together with monetary policy staying neutral lead us to expect slower credit growth in 4Q17.” The implications for China’s economy and the global credit impulse will be adverse, and will lead to a global economic slowdown just as all central banks enter tightening moment together.

  Finally, for those wondering what the biggest timebomb in the global financial system was, is and will be until such time as it finally blows up, here is a lovely up close schematic courtesy of Deutsche Bank.

  

  

  

• Is War Between Israel And Hezbollah Imminent?

  Submitted by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

  The US has raised the level of tension with Iran without taking any concrete steps to pull out of the Iranian nuclear deal. The reason why Trump is expected to limit himself to verbal abuse and continue threatening hostile measures against Tehran without executing them is fundamentally to avoid a breach between the US and the EU. The Nuclear deal is not bilateral, so the withdrawal of the US theoretically cannot scupper it. Nevertheless Iran is likely to consider the deal totally void if the US pulls out, with all that that implies. So the US continues its aggressive verbal campaigns against Iran, confusing the Europeans, who rightly fail to predict what decisions this US President is capable of adopting in the medium to long term.

  However, the target is not only Iran but also its main ally and military arm in the Middle East: the Lebanese Hezbollah. The US posted bounties on two Hezbollah members of the military council (the highest military authority within the organisation), Haj Fuad Shukr and Haj Talal Hamiyeh, allocating “$12 million to whomsoever is able to offer information” that brings these two to justice. The US bounty purposely showed old photos of the two men to avoid revealing the intelligence sources which have provided the most recent ones. The main question remains: which country is going to take advantage of such an offer, and how?

  
  Hezbollah troops at a rally and speech. Image source: Anadolu

  Iran is not longer interested in what Donald Trump will do in relation to the nuclear deal. The Iranian leadership has created hundreds of commercial companies during the embargo, mainly in Oman, Dubai, and Abu Dhabi, to counter over 30 years of US sanctions and embargo. Moreover, Iran used gold and oil in exchange of goods and technology and managed to hold on for many years, accepting to buy at a higher price in the open market.

  Today the nuclear deal has opened the thirsty Iranian market and connected it to the European markets. The EU is unwilling to lose that now – especially with the financial crisis the old continent has been going through since 2008 – all because Trump, the US President (alone among all the signatories) considers unilaterally that the “spirit of the nuclear deal has been violated”. The US would like to see the Iranian missile program halted and the supply of weapons to Hezbollah cease: this would also please Saudi Arabia and Israel. However these issues are considered by all the countries who signed (including Iran but excepting the US) as unrelated to, and excluded from, the nuclear deal.

  Saudi Arabian officials visited recently Washington, offering unlimited financial assistance as long as the US helps to destroy Hezbollah and limit Iran’s influence in the Middle East. In fact, Hezbollah is considered responsible for spoiling the game of the international and regional countries who were supporting a regime change in Syria. Therefore, many would like to see Hezbollah, the strong arm of Iran, cut off completely because this would transform Iran into a giant without arms.

  Moreover, during the Saudi Arabian King Salman’s visit to Moscow, the monarchy told the Russian President Vladimir Putin that all groups operating in Syria, such as the “Islamic State” (ISIS), al-Qaeda and Hezbollah are considered terrorist and should be eliminated. Putin, despite the King’s generous financial offer of contributions to invest in Russian products was very clear: any country or group fighting in Syria following the request of the legitimate government is not a terrorist group. The “head of Hezbollah” was not on the table in the Russian capital.

  As for as the US rewards are concerned, the Hezbollah leaders of the first, second and third ranks of the organization are moving freely between Beirut, Damascus, Tehran and Baghdad according to the requirements of the “war on terror” the organization is involved in against ISIS and al-Qaeda in Syria and Iraq.

  No authority – neither the Lebanese authorities nor the US authorities – would dare to arrest any of Hezbollah’s leaders without suffering direct consequences that would backfire against their solders or interests in the Middle East. Abduction (or capture) is expected to be treated similarly and rejected without hesitation.

  The most recent “incident” occurred in Iraq when Washington expressed its desire – when Baghdad asked all US forces to pull out from Iraq under President Barack Obama – to take the Lebanese Hezbollah commander, Ali Moussa Daqduq, to ??America. Hezbollah then sent a clear message to the US administration – through Iraqi leaders – that taking Daqdouq away from Iraq meant that every US soldier and officer in the Middle East, mainly in Iraq, would be held hostage.

  This prompted Washington to turn a blind eye and leave the Iraqis to decide the fate of the Hezbollah officer who had participated in the killing of five American soldiers and officers in an impressively planned operation in Karbala. In January 2007 Daqdouq – along with Moqtada al-Sadr’s resistance group AsaebAhl al-Haq – used bulletproof black cars belonging to an Iraqi minister that the same US had given him as a donation. The fact that Daqdouq was on board facilitated the entry of the convoy into the government building without raising the suspicions of the American forces stationed inside the building.

  

  Hezbollah is aware there are many American soldiers and officers who travel freely within Lebanon, mainly operating with the Lebanese Army. Therefore, the organization is reassured that the United States is conscious of Hezbollah’s capability for responding by reciprocity and will not leave their men prisoners without an action or reaction. Hezbollah thereby considers its own leaders safe from kidnapping, though not from assassination attempts.

  Thus, the US ”bounties” on the two Hezbollah commanders aim to please the US’s Middle Eastern allies (mainly Israel and Saudi Arabia) saying “we are all in one boat against Hezbollah’s presence and operational capabilities”. Indeed, it shows how Washington is serious about taking political – rather than operational – measures to limit Hezbollah and Iran in the Middle East. Both are considered enemies of the US and its close Israeli and Saudi Arabia associates.

  Tel Aviv – like Washington – is limiting itself to adopting a threatening rhetoric, talking about “a nearby war” against Hezbollah but without taking the narrative further or adopting any belligerent steps besides the rumbling of its drums.

  In the unlikely event of war between Israel and Hezbollah, there is no doubt that Israel has the destructive military capability to bring back Lebanon to the “Stone Age,” as it claims. However, this is a situation that the Lebanese have already experience of since the civil war in1975 and the two (1982 and 2006) Israeli wars. In these wars, Israel launched attacks and destroyed the Lebanese infrastructure, killing thousands of civilians and hundreds of Hezbollah militants.

  However, there is also no doubt that Hezbollah would give Israel a taste of a similar “Stone Age” scenario, with its tens of thousands of rockets and missiles, among them some of the very highest accuracy. The Israeli population however is not accustomed to such a harsh possible scenario: Hezbollah missiles will hit the infrastructure (bridges, concentration locations, markets, water, electricity, chemical plants and more), harbours, airports, military barracks and institutions, and civilian homes.

  It is true that Israeli political and military leaders are not naïve and will never exchange their own security against economic and financial support (which was offered by Saudi Arabia to destroy Hezbollah), no matter how substantial the offer. Israel won’t exchange a public diplomatic relationship with Saudi Arabia and most of the Gulf countries to give up its own safety and the well-being of its people. Israeli commanders are fully aware of the unique military experience which Hezbollah developed in Syria and Iraq, and how Hezbollah is using new underground caches for its long-range accurate missiles on the Lebanese-Israeli borders.

  Nevertheless, Israel and the US are capable of carrying out security and intelligence attacks to strike Hezbollah leaders, as both countries have done in the past with the late Hezbollah Secretary General Sayed Abbas al-Moussawi, with Sayed Hasan Nasrallah’s vice Imad Mughnniyeh and against other minor positions within the leadership such as Hussein al-Lakis, Samir Qantar, Jihad Mughnniyeh, and others.

  The “account” is still open between Hezbollah and Israel. The Lebanese organization has certainly tried similar intelligence strikes against Israel. However, several attempts have failed due to poor planning and a US-Israeli intelligence breach of Hezbollah security by an officer involved in the external operations unit.

  But the balance of terror between Hezbollah and Israel remains: Hezbollah feels more at ease in Syria today and is able to dedicate more resources to the fight against Israel and its allies in the region.

  Thus, American pressure remains within the limits of the inability of anyone to take it further: there is no country or entity that wants to confront a rival like Hezbollah, trained in the art of war and politics and an essential player in the Middle Eastern and international arenas.

  

  

• There Are 2.7 Trillion Reasons Why Tesla Won't Rule The World

  News of mass “performance-based departures” at Tesla, reported yesterday by the San Jose Mercury News has underscored the fact that Elon Musk and company have burned through a ridiculous amount of cash in the past two quarters alone, raising questions about why the company would choose to cut nearly 10% of its workforce when the assembly line for the company’s new Model 3 sedan has reportedly not yet been completed, and production remains woefully behind schedule as employees at the company’s Freemont factory have been forced to piece together the cars by hand.

  

  And with Elon Musk reeling from a series of embarrassing revelations, Bloomberg is here to remind us of one of the many reasons why Tesla will never become a global automotive behemoth.

  So far, the US government’s generous tax incentives for buyers of electric vehicles have helped bolster Tesla’s sales – a strategy that has been employed across Europe – and have sustained the market’s misguided conviction that Tesla will one day become a profitable enterprise.

  But unfortunately, those incentives aren’t nearly enough to create the infrastructure to support Morgan Stanley’s forecast of 526 million electric vehicles operating globally by 2040. Building the charging stations and other infrastructure necessary would cost an astonishing $2.7 trillion, much of which would probably need to be allocated by governments.

  

  Morgan Stanley says the problem requires a mix of private and public funding across regions and sectors. The investment bank’s strategists added that any auto company or government with aggressive targets would be unfeasible unless the infrastructure is in place.

  As we’ve noted time and time again, the electric-vehicle industry is essentially being support by generous – and borderline anti-competitive – government subsidies. In China, which has aggressively pushed EVs as a potential remedy for its pollution problem, communist party officials have hit on an effective strategy for forcing consumers to favor electric vehicles. In Shanghai, where tens of thousands of people enter monthly lotteries for just a handful of license plates, consumers who buy electric cars are given license plates with little resistance.

  

  Morgan Stanley expects China to become the largest EV market in the world by 2040, accounting for about a third of global infrastructure spending, Bloomberg reports.

  But with Trump in office, it’s unlikely the US will prove so amendable to subsidizing Elon Musk’s ambitions for much longer.

  

  

• China's Mortgage Debt Bubble Raises Spectre Of 2007 US Crisis

  Authored by He Huifeng via The South China Morning Post,

  In an inglorious echo of 2007 America, many young homeowners in booming cities owe more than they earn, and some even falsify salary details to get bigger mortgages…

  

  Young Chinese like Eli Mai, a sales manager in Guangzhou, and Wendy Wang, an executive in Shenzhen, are borrowing as much money as possible to buy boomtown flats even though they cannot afford the repayments.

  Behind the dream of property ownership they share with many like-minded friends lies an uninterrupted housing price rally in major Chinese cities that dates back to former premier Zhu Rongji’s privatisation of urban housing in the late 1990s.

  Rapid urbanisation, combined with unprecedented monetary easing in the past decade, has resulted in runaway property inflation in cities like Shenzhen, where home prices in many projects have doubled or even tripled in the past two years.

  City residents in their 20s and 30s view property as a one-way bet because they’ve never known prices to drop. At the same time, property inflation has seen the real purchasing power of their money rapidly diminish.

  “Almost all my friends born since the 1980s and 1990s are racing to buy homes, while those who already have one are planning to buy a second,” Mai, 33, said.

   

  “Very few can be at ease when seeing rents and home prices rise so strongly, and they will continue to rise in a scary way.”

  

  The rush of millions young middle-class Chinese like Mai into the property market has created a hysteria that eerily resembles the housing crisis that struck the United States a decade ago. Thanks to the easy credit that has spurred the housing boom, many young Chinese have abandoned the frugal traditions of earlier generations and now lead a lifestyle beyond their financial means.

  

  The build-up of household and other debt in China has also sparked widespread concern about the health of the world’s second largest economy.

  

   

  The Chinese leadership headed by President Xi Jinping has taken a note of the problem and launched an unprecedented campaign in the second half of last year to curb home price rises in major cities by raising down payment requirements, disqualifying some buyers and squeezing the bank credit available for home buyers. The campaign is still deepening, with five more cities introducing rules last weekend that will freeze some property deals.

  Meanwhile, China’s financial regulators have launched an investigation of “consumer loans” in big cities because a torrent of consumer credit flowed into the property market after the government imposed restrictions on mortgage loans.

  Government policies are also protecting the interests of homeowners. City governments have squeezed land supply to keep land prices high and made secondary market trading less attractive, with new home buyers left to compete for a few new developments. Meanwhile, there is no property tax, which encourages homeowners to hold on to appreciating property assets.

  The result has been skyrocketing housing prices in Shenzhen, Beijing and Shanghai, where property prices can match those in Hong Kong or London.

  The lesson was that “if you don’t buy a flat today, you will never be able to afford it”, Wang, 29, said.

  Property ownership was now increasingly what separated the rich and the poor, the haves and have-nots, and the privileged and the underdogs, she said.

  And that means young people like Mai and Wang are scrambling for credit to buy property.

  In May last year, after the value of his first flat, a 70 square metre unit in Guangzhou’s Panyu subdistrict, soared from 900,000 yuan (US$136,500) to 1.2 million yuan in just a few months, Mai, who has a monthly salary of 15,000 yuan, decided to raise the down payment for a new property to cash in on the booming housing market.

  

  In June, he emptied his and his parents’ 300,000 yuan in savings and incurred debts to friends to muster the 50 per cent down payment for a 2.4 million yuan flat.

  To meet the mortgage repayments of about 12,000 yuan a month on the two flats, and other debts to friends, he used the first flat as collateral for a loan about 800,000 yuan and got 200,000 yuan in cash from a short-term consumer loans supposedly for a car.

  Mai got the money easily from local banks and financial institutions. Now, he needs to pay about 25,000 yuan a month for loans totalling around 3 million yuan, including around 4,000 yuan in mortgage payments for his first flat, about 7,300 yuan in mortgage payments for his second flat, nearly 9,000 yuan on the secondary mortgage for his first flat, 3,800 yuan for car loans, and the rest to service debts to family members and friends.

  In Wang’s case, she borrowed 500,000 yuan from her parents, relatives and friends and sourced another 300,000 yuan from credit cards and consumer loans to pull together 800,000 yuan late last year for the minimum down payment on a small flat.

  She also borrowed 1.8 million yuan from a bank, with monthly mortgage payments of about 9,600 yuan – 80 per cent of her monthly income – for 30 years. To help cover the mortgage, her mother, a retiree who lives 4,000km away in a city in northeastern China, remits the bulk of her pension to Wang.

  “The debts are huge to me,” Wang said. “But a person without a flat has no future in Shenzhen.”

  In China’s world of debt, household debt is supposed to be much safer than corporate or local government debt. Outstanding household loans were the equivalent of 44.4 per cent of China’s gross domestic output last year, more than double the ratio in 2008 but much lower than in most advanced economies. The ratio is 87 per cent in Britain, 79 per cent in the United States and 62 per cent in Japan.

   

  But the figure could be misleading because it failed to reflect regional differences and it under-reported many hidden family debts in China, a recent report by the Institute for Advanced Research at Shanghai University of Finance and Economics said.

  Because Chinese household incomes were growing more slowly than property prices, families were facing serious liquidity problems, with increasing amounts of income and savings sucked into the property market, Chen Yuanyuan, a co-author of the report, told the South China Morning Post.

  Real household debt would have been the equivalent of at least 60 per cent of China’s GDP at the end of last year, Chen said, warning that the rapid rise in household debt was undermining China’s economic growth prospects.

  China’s crackdown on grey rhinos won’t reduce its debt burden, it will only redistribute it

  “If it goes on, as early as in 2020, the ratio of mortgage debt and disposable income in China will reach the same peak level [127 per cent] as the US [in 2007] on the eve of the subprime crisis,” Chen said.

  The boom in China’s housing market since 2015 was the result of soaring household debt leverage, Jiang Chao, an analyst at Haitong Securities in Shanghai, said in a research note last month.

  China’s household debt to household disposable income ratio had soared to 90 per cent from less than 35 per cent in 2007, he said. Meanwhile, its household savings to household disposable income ratio had dropped from more than 30 per cent in the early 2000s to about 15 per cent last year.

  The latest data from the People’s Bank of China, the country’s central bank, shows that at the end of May, domestic household savings deposits totalled around 63 trillion yuan while the amount of outstanding personal loans had soared to 36.4 trillion yuan, up from 8.8 trillion yuan in 2010.

  

  The Chinese tradition of saving money for a rainy day has been uprooted, and it’s not just that the younger generation, like Wang and Mai, are trying to spend before they earn. Their property buying frenzy has also been endorsed by their parents.

  “My mum is happy about my decision,” Wang said.

  Shenzhen is one of the most indebted cities in China. Data from Lianjia, the country’s biggest property agent, shows that Shenzhen property buyers took on a record amount of debt last year, with mortgage loans a feature of more than 93 per cent of purchases.

  Property buyers in the city spent an average of about 3.7 million yuan on their flat in the first half of last year, with mortgage loans averaging 2.38 million yuan, Lianjia said, resulting in an average loan-to-value ratio of just over 64 per cent. In Hong Kong, banks’ average loan-to-value ratio for new mortgages was 51 per cent in December, according to Standard & Poor’s, while in the US last year it was 55.5 per cent, according to Statista, a leading Web-based data and statistics provider.

  China’s first home buyers are, on average, younger than those elsewhere in the world, with most of those in Shenzhen in their 20s and 30s. On average, they need to pay about 10,600 yuan a month for 30 years for their first flat – or 13,000 yuan for 20 years – based on the current mortgage interest rate of 4.9 per cent. Meanwhile, the average white-collar salary in Shenzhen was 8,315 yuan last year and 8,892 yuan in the first quarter of this year, according to Zhaopin.com, a leading Chinese jobs website.

  

  “Chinese banks typically allow homebuyers to use up to half of their monthly incomes to repay mortgages,” said Julia Fan, a former state bank manager.

   

  “But the market in cities like Shenzhen and Shanghai is full of buyers whose out-of-pocket property spending is much more than their actual monthly salaries.”

  Bill Duan, a manager at a Chinese investment bank, said it was not unknown for Chinese buyers to exaggerate their salaries or use fake payslips when taking out mortgages and loans, “and this may be when the problem starts”.

  “It’s known among industry insiders that local branches of the banks in many cities do not always double-check salary details with employers, even though the applicants offered salary certificates for several times the city’s average wages,” he said.

  Mai and Wang have been playing it fast and loose to deal with their debts.

  Mai has lent 600,000 of the 800,000 yuan he got from a bank after using his first flat as collateral to a money shark promising an annualised return of 20 per cent. Wang gave the bank fake documents showing her monthly income was 18,000 yuan – about 1.6 times her actual salary. It did not ask any questions.

  Neither see any problem, because the value of their underlying assets, the flats, have risen.

  

  The value of Mai’s two flats rose from 3.8 million yuan last year to 6.4 million yuan last month, while the value of Wang’s unit is now 2.93 million yuan, up from 2.6 million yuan.

  “I think I made a smart and successful decision to leverage debt,” Mai said.

  

  

• Fiancee Of 'Suspended' Amazon Studios Head Calls Off Wedding

  Former Amazon Studios head Roy Price’s terrible, awful no-good week just got even worse…

  Earlier in the week, Price was unceremoniously suspended by Amazon this past week for reportedly sexually harassing female colleagues.

  Price allegedly lewdly propositioned Isa Hackett, a producer on 'The Man in the High Castle,' back in 2015, promising during a late-night cab ride that she’d “love his dick.” On the evening of July 10, 2015, after a long day of promoting Man in the High Castle at Comic-Con in San Diego, Hackett attended a dinner with the show's cast and Amazon staff at the US Grant Hotel. At the dinner, Price asked Hackett to attend an Amazon staff party later that night at the former W Hotel. She ended up in a taxi with Price and Michael Paull, then another top Amazon executive and now CEO of the digital media company BAMTech.

  During the ride, Price repeatedly propositioned her, Hackett said. Though she immediately reported the incident to Amazon, little was done until this week when Price, the executive in charge of Amazon studios, was suspended “indefinitely”.

  Hackett is the daughter of the late Philip K. Dick, who wrote the acclaimed novel on which “The Man in the High Castle” is based.

  Amazon said in a statement this past week,

  “Roy Price is on leave of absence effective immediately. We are reviewing our options for the projects we have with The Weinstein Company.”

  And now, Price’s fiancée, writer Lila Feinberg, has called off their wedding, which was set to take place in four weeks.

  

  A source close to the couple confirmed the news of the cancellation to Page Six:

  “Lila is currently in New York and she has called off the wedding.”

  Feinberg was due to wear a Marchesa dress at the nuptials that had been custom-designed by Harvey Weinstein’s wife, Georgina Chapman, who this week announced she was leaving the movie mogul after more than 30 women came forward to accuse Weinstein of harassment, groping and – in more than a handful of instances – rape.

  Price was said to be close friends with Weinstein.

  Feinberg was awarded Araca Group’s National Graduate Playwriting Award for her play “Vertebrae,” and is also the creator and executive producer of “12 Parties,” an original series that was acquired by The Weinstein Company.

  She has also sold projects to Legendary Television and MTV.

  

  

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• Forget Catalonia, Flanders Is The Real Test Case Of EU Separatism!

  Authored by Andrew Korybko via Oriental Review,

  Catalonia’s separatist campaign has dominated European headlines for the past couple of weeks, but it’s really the northern Belgian region of Flanders which will serve as a barometer over whether large chunks of the EU will fall apart into a collection of identity-centric statelets prior to the bloc’s reconstitution into a “federation of regions”.

  What’s going on in Catalonia is of paramount importance to the geopolitical future of Europe, since it could very well serve as the catalyst for fracturing the EU if copycat movements elsewhere are emboldened by the Spanish region’s possible separatist success. This was explained in detail in the author’s recent analysis about “The Catalan Chain Reaction”, which readers should familiarize themselves with if they’re not already acquainted with the thesis put forth in that work. To concisely summarize, there’s a very distinct possibility that the EU’s liberal-globalist elite have been planning to divide and rule the continent along identity-based lines in order to further their ultimate goal of creating a “federation of regions”.

  Catalonia is the spark that could set off this entire process, but it could also just be a flash in the pan that might end up being contained no matter what its final result may be. Flanders, however, is much different because of the heightened symbolism that Belgium holds in terms of EU identity, and the dissolution of this somewhat artificially created state would be the clearest sign yet that the EU’s ruling elite intend to take the bloc down the direction of manufactured fragmentation. Bearing this in mind, the spread of the “Catalan Chain Reaction” to Belgium and the inspiration that this could give to Flanders to break off from the rest of the country should be seen as the true barometer over whether or not the EU’s “nation-states” will disintegrate into a constellation of “Balkanized” ones.

  

  “The First Bosnia”

  In order to properly understand the state of affairs at play, it’s necessary to briefly review the history of what could in some sense be described as “The First Bosnia”, or in other words, Europe’s “first artificially created state”. Most of the territory of what is nowadays referred to as Belgium was unified with the modern-day Netherlands from 1482-1581 when the political entity was referred to as the Habsburg Netherlands. The southern part (Belgium) came under Spanish control from 1581-1714 when it was called the Spanish Netherlands. Afterwards, it passed under Austrian administration from 1714-1797 when it became the Austrian Netherlands prior to its brief incorporation into the First French Republic and later Empire from 1797-1815. It was during the Spanish and Austrian eras that Belgium began to consider Catholicism as an inseparable part of its national identity in opposition to the Netherland’s Protestantism. Finally, Belgium was part of the United Kingdom of the Netherlands from 1815-1839 until the Belgian Revolution made it an independent state for the first time in its history.

  In essence, what ended up happening is that a majority-Catholic but ethno-linguistically divided population got caught up in the 19^th century’s wave of nationalism and created a hybrid Franco-Dutch state that would eventually federalize in the late-20^th century, in a structural sense serving as a precursor to the dysfunctional Balkan creation of Bosnia almost a century and a half later.

  It’s important to mention that the territory of what would eventually become Belgium had regularly been a battleground between the competing European powers of the Netherlands, the pre-unification German states, France, the UK, and even Spain and Austria during their control of this region, and this new country’s creation was widely considered by some to be nothing more than a buffer state. The 1830 London Conference between the UK, France, Prussia, Austria, and Russia saw the Great Power of the time recognize the fledgling entity as an independent actor, with Paris even militarily intervening to protecting it during Amsterdam’s failed “Ten Day’s Campaign” to reclaim its lost southern province in summer 1831. For as artificial of a political construction as Belgium was, it fared comparatively well during the 19^th century as it leveraged its copious coal supplies and geostrategic position to rapidly industrialize and eventually become a genocidal African colonizer in the Congo. Although it was devastated in both World Wars, Belgium was able to bounce back in a relatively short period of time, partly because it could rely on its Congolese prison state.

  In The Belly Of The Beast

  Flash forward to the present, and the only thing that modern-day Belgium has in common with its past self is its internal divisions. The post-colonial aftermath of “losing the Congo” and shortly beforehand agreeing to host the capital of the European Union opened up previously nationalistic Belgium to liberal-globalist influence, which contributed to what would eventually become its utter domestic dysfunction in recent years. It wasn’t by chance that Brussels was chosen as the EU’s headquarters either, since its inherent weakness was thought to make it an ideal “compromise country” for establishing the bloc’s headquarters, as it would never become as powerful as France, for example, in potentially monopolizing the international organization’s agenda. Again, Belgium’s history as a buffer state/region came into relevant play in positioning it “in the belly of the beast” that’s nowadays reviled by all sorts of individuals across the continent.

  The administrative disconnect between its northern region of Flanders and the southern one of Wallonia, as well as what would eventually become its multi-tiered federal, regional, and community structure, was exploited by the EU’s ideologically extreme elite to make the country the centerpiece of their “multicultural experiment”. After decades of facilitating mass migration from civilizationally dissimilar societies of the “Global South”, 5.9% of the country is Muslim while at least an astonishing 20% of Brussels follows Islam. Almost all of the capital’s Muslims are immigrants, mostly from Morocco and Turkey, which isn’t surprising considering that 70% of Brussels’ inhabitants are foreign-born. Unfortunately for the native locals, the “multicultural experiment” has failed miserably, and Belgium is now Europe’s jihadist leader in terms of the per capita number of fighters who have travelled abroad to join Daesh.  All things considered, the “utopia” that the Belgians were promised by joining the EU and hosting its headquarters has turned into a dystopia, and the country now finds itself in the belly of the liberal-globalist beast.

  It’s little wonder than that some of Belgium’s population wants to escape from the organization which is responsible for their socio-cultural and security challenges, ergo the Flemish independence movement which aims to see the country’s northern region become an independent state because of the lopsided demographic-economic advantage that it has over Wallonia. Flanders contributes four times as much to Belgium’s national economy as Catalonia does to Spain’s, being responsible for a whopping 80% of the country’s GDP as estimated by the European Commission, and it also accounts for roughly two-thirds of Belgium’s total population unlike Catalonia’s one-sixth or so. This means that Flemish independence would be absolutely disastrous for the people living in the remaining 55% of the “Belgian” rump state, which would for all intents and purposes constitute a de-facto, though unwillingly, independent Wallonia. Therefore, it’s important to forecast what could happen if Belgium ultimately implodes with Flanders’ possible secession.

  

  Breaking The Buffer State

  This section should appropriately be prefaced by emphasizing that there’s no guarantee that Flanders will actually secede from Belgium, or that it would be successful in holding an unconstitutional referendum such as the one that Catalonia did in attempting to “legitimize” its anti-state ambitions. Furthermore, the Belgian state or its EU superstate overseer might resort to force just as Madrid did in trying to prevent this region’s secession, so the reader shouldn’t take it for granted that Flanders will inevitably become an independent state. Having gotten the “disclaimer” out of the way, however, there’s a very real chance that the “Catalan Chain Reaction” will spread to the “belly of the beast” in catalyzing a similar separatist process in Flanders, hence why the author argued in the introduction that the outcome of such a reenergized post-Catalan movement in this region will be the best barometer in gauging whether the EU’s liberal-globalist elite do indeed plan to “Balkanize” the bloc into an array of regionally “federalized” identity-centric statelets.

  Given the domestic and historical particularities of the Belgian case study, it appears likely that Flanders’ successful secession (however it ends up coming about) would lead to a narrow range of geopolitical outcomes for the Western European country.

  The first one is that Wallonia would be unable to function as a stand-alone “rump”/”independent” state given its measly 20% of unified Belgium’s GDP, its one-third of the previous population, and presumed dependency on Flanders’ port of Antwerp for most economic contact with the “outside world’ aside from France and Germany. For these reasons, it’s conceivable that the French-speaking region could be taken over by France just like how the famous French diplomat Charles Maurice de Talleyrand-Périgord originally envisioned in his unfulfilled eponymous “Talleyrand partition plan” that was first unveiled during the 1830 London Conference. As for Flanders itself, it could either attempt to remain an “independent” state or possibly confederate with the Netherlands, if there was any desire from both parties for this latter option.

  Where things get tricky, however, is when it comes to the German-speaking community in eastern Wallonia, which might not want to become part of France. Also, for reasons of sensitive political-historical optics, they probably wouldn’t be able to join Germany because it would carry uncomfortably strong shadows of Hitler’s annexation of the Sudetenland during the pre-World World II dissolution of Czechoslovakia. Therefore, it’s likely that this sub-region would remain within Wallonia, which itself would probably become part of France, albeit with possible autonomy guaranteed to the German speakers that Paris would be “inheriting”. That said, this isn’t the trickiest part of any Belgian breakup, as the status of Brussels would definitely occupy center stage in this scenario. The EU would be inclined to see to it that its capital becomes an “independent” city-state on par with similarly sized Liechtenstein, though with a much higher and more dangerous Salafist demographic to contend with, one which could make it the “rightful” capital of “Eurabia” if civilizational-geopolitical trends continue in that direction.

  Concluding Thoughts

  The future of Flanders will be more of a harbinger of the EU’s administrative-political future than Catalonia’s will be, though the latter is indeed the trigger for sparking what might become the former’s emboldened separatist push. If the host country of the EU’s headquarters falls victim to the secessionist trend that might be poised to sweep across the bloc due to the “Catalan Chain Reaction”, then it would confidently indicate that the EU’s ruling liberal-globalist elite are determined to initiate the “controlled Balkanization” of the continent into a constellation of identity-centric statelets so as to ultimately satisfy their long-held goal of implementing a “federation of regions.

  

  There is no place in Europe more symbolically significant than Belgium, and especially its jihadist dystopian capital of Brussels, so if the European power structures “allow” Flanders to separate from “the First Bosnia”, then it’s all but certain that the rest of the bloc will feel the geopolitical reverberations within their own borders sooner than later.

  

  

• Hillary Goes To College: Clinton In Talks To Accept Columbia Professorship

  Like the old joke goes: Those who can’t, teach.

  And after losing an election to the most controversial and unpopular candidate in American history, Hillary Clinton is going back to school.

  

  The New York Post is reporting, citing sources close to the Clinton camp, that the former Secretary of State is in talks to accept a professorship at Columbia University in Morningside Heights.

  “She’s been in discussions about a professorship, but nothing has been locked down,” a friend of the ex-secretary of state said Thursday.

  As the Post reports, the Ivy League university in upper Manhattan has been a friendly landing pad for other Democrats who have lost elections. Al Gore became a professor at Columbia’s Graduate School of Journalism a year after losing the 2000 presidential election to George W. Bush. And the school hired former mayor David Dinkins after he lost his re-election bid to Rudy Giuliani in 1993.

  The former mayor told the Post that he’d be happy to see Clinton in Morningside Heights.

  Columbia is familiar territory for the Clintons. The Clinton Foundation once had an office in Harlem. Her professorship would reportedly involve leading seminars about issues she is passionate about. No word yet on whether these will include a thorough deconstruction of the forces that cost her the 2016 election.

  

  

• Amid Management Exodus, Tesla Fires Hundreds Of Workers

  One month after Tesla lost its head of business development who wished to “spend more time with his family”, and just weeks after the EV company’s veteran battery technology director also unexpectedly quit amid a growing senior management exodus (full list at the bottom of this article), Tesla decided to even out the ranks on the bottom as well, and fired “hundreds of workers” this week, including engineers, managers and factory workers even as the company struggles to expand its manufacturing and product line, according to the Mercury News which first reported of the mass layoffs.

  Workers estimated between 400 and 700 employees have been fired, although Tesla refused to say how many employees were let go, and added that it expects employee turnover to be similar to last year’s attrition. Tesla employs about 10,000 workers at its Fremont factory; it lost $336 million in the second quarter, and burned through a record $1.16 billion in cash in Q2, or $13 million per day.

  

  In September, Tesla announced it was cutting 63 positions at SolarCity Corp.’s Roseville, California office; the staff was dismissed after Tesla bought the company, which manufacturers and installs rooftop solar panels, for about $2 billion in 2016.  SolarCity had over 12,200 employees as of the end of 2016.

  The dismissals come at a critical point for the company, which is scrambling to increase vehicle production five-fold and reach a broader market with its new Model 3 sedan. The electric vehicle maker missed targets for producing the lower-cost sedan, manufacturing only 260 last quarter despite a wait list of more than 450,000 customers. It was later revealed by the WSJ that Tesla’s “dirty secret” for the unexpected production problem is that it was banging out parts of the Model 3 by hand.

  According to the Mercury News, this week’s dismissals have not been reported to the state Employment Development Department, a spokeswoman said. The state generally requires companies to report layoffs of more than 50 employees in a 30-day period. Tesla countered that the performance-based departures were not considered layoffs and not subject to state notifications.

  In an absurd demonstration of Musk’s bizarre management style, the company said the mass terminations have “generally boosted worker morale”, as high-performing employees have been rewarded. it was unclear what the 700 layoffs, pardon, exit events did to worker morale.

  While the company said this week’s dismissals were the result of a company-wide annual review, claiming some workers received promotions and bonuses, and expects to hire for the “vast majority” of new vacancies, insisting the mass terminations were not layoffs, some critics have noted that these are layoffs “plain and simple” as a company does not fire 700 people at the same time in the middle of the year due to “performance” issues.

  “As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures,” a spokesman said. “Tesla is continuing to grow and hire new employees around the world.”

  Still, validating the argument that these were indeed layoffs, in interviews former and current employees told the Mercury News little or no warning preceded the dismissals. The workers interviewed include trained engineers working on vehicle design and production, a supervisor and factory employees.

  “Workers spoke on the condition of anonymity because they feared reprisals from the company. Employees said the firings have lowered morale through many departments. Several said Model X, Model S and former SolarCity operations seemed to be targeted.”

  Among those fired was Juan Maldonado, a production worker, who felt the tap on his shoulder on Thursday. He worked at Tesla for nearly four years, and said he heard about 60 other workers in his section of the factory were dismissed. Maldonado, 48, said he ran late for work twice in recent months, but thought he had straightened things out with his supervisor. Now, he said, “I’m going to try to find a job.”

  The dismissals come after Tesla said it built just 260 Model 3 sedans during the third quarter, less than a fifth of its 1,500-unit forecast. The company has offered scant detail about the problems it’s having producing the car, although the previously noted WSJ report suggests that Tesla is having severe manufacturing bottlenecks forcing workers to build parts of the Model 3 by hand. The vehicle’s entry price starts at $35,000, roughly half the cost of Tesla’s least-expensive Model S sedan. When unveiling the Model 3, Musk joked to employees they would be going through “production hell” to meet demand for the new car.  Little did many the employees know that hell would come in the form of a pink slip.

  As Bloomberg notes, a delayed ramp-up risks the ire of some of the almost half million reservation holders who started paying $1,000 deposits early last year. On Oct. 12, Tesla Chief Executive Officer Elon Musk posted a video on Instagram of what he said was a stamping press producing body panels for the Model 3.

  Musk has told investors the company is focused on Model 3 production and expects to eventually build 10,000 cars a week. The manufacturing will become highly automated, but Musk told investors during the early ramp up he expected high overtime costs.

  * * *

  Meanwhile, Tesla has faced ongoing discontent from some factory workers, who have complained about work conditions and wages below the auto industry average. Tesla has a hearing before the National Labor Relations Board in November for charges that company supervisors and security guards harassed workers distributing union literature. Tesla denied the accusations.

  Openly pro-union workers were among those fired this week. Some believe they were targeted, even as the company denied union activities played a role in the dismissals.

  Quoted by the Mercury News, Michael Harley, managing editor at Kelley Blue Book and Autotrader, thought the dismissals could be an effort to improve vehicle production. “It’s no secret that Tesla’s Model 3 development and ramp-up for production has been derailed,” Harley said. “A major change in staff – whether dismissal or layoff – is an indication that there is an upper level movement to put the train back on the tracks.”

  Whatever the reason behind the “non-layoffs”, one thing is clear: Tesla has a management exodus problem as demonstrated by this extensive list of recent senior level departures from the company, including two of the most important, non CEO positions in just the past three months.

   

  

  

  

• US Reaper Drone Shot Down Over Afghanistan

  In a rare, successful attack on one of the most advanced US offensive weapons, a US drone has reportedly been shot down over Afghanistan. The Islamic Emirate of Afghanistan (Voice of Jihad) reports that Mujahideen of the Islamic Emirate shot down an unmanned aerial vehicle (UAV) said to be operated by the United States. The rea

  

  The UAV above is believed to be a MQ-9 Reaper with a price tag of $10.5 million. The aircraft can stay airborne up to 36 hours with 1.7 tons of missiles and bombs. The wreckage of the plane is said to have been seized by the Mujahideen. So far, there has been no comment from from the US military.

  

  The location of the downed drone is in Kunduz, a city in northern Afghanistan.

  

  The attack may have been in retaliation for a US drone strike which yesterday killed 14 ISIS militants in the Kunar province, a northern boarder region in Afghanistan. According to The Guardian, “Abdul Ghani Musamim, a spokesman for the provincial governor, told the Associated Press that the drone had targeted a meeting of Isis commanders who were planning a terrorist attack.”

  

  Apropos, on Thursday, we reported U.S. bombs dropped in Afghanistan surged to a 7-year high in the month of September, as it became clear that Trump’s Afghanistan war policy was simply to add to the local death toll by dropping more bombs.

  

  As discussed before, we suspect that President Trump, gradually settling in into his role as the next “Warmonger-in-Chief” has reignited a trend that the military industrial complex is simply delighted about.

  

  

• The Death Of Petrodollars & The Coming Renaissance Of Macro Investing

  Authored by John Curran via Barrons,

  The petrodollar system is being undermined by exponential growth in technology and shifting geopolitics. What comes next is a paradigm shift…

  

  In the summer of 1974, Treasury Secretary William Simon traveled to Saudi Arabia and secretly struck a momentous deal with the kingdom. The U.S. agreed to purchase oil from Saudi Arabia, provide weapons, and in essence guarantee the preservation of Saudi oil wells, the monarchy, and the sovereignty of the kingdom. In return, the kingdom agreed to invest the dollar proceeds of its oil sales in U.S. Treasuries, basically financing America’s future federal expenditures.

  Soon, other members of the Organization of Petroleum Exporting Countries followed suit, and the U.S. dollar became the standard by which oil was to be traded internationally. For Saudi Arabia, the deal made perfect sense, not only by protecting the regime but also by providing a safe, liquid market in which to invest its enormous oil-sale proceeds, known as petrodollars. The U.S. benefited, as well, by neutralizing oil as an economic weapon. The agreement enabled the U.S. to print dollars with little adverse effect on interest rates, thereby facilitating consistent U.S. economic growth over the subsequent decades.

  An important consequence was that oil-importing nations would be required to hold large amounts of U.S. dollars in reserve in order to purchase oil, underpinning dollar demand. This essentially guaranteed a strong dollar and low U.S. interest rates for a generation.

  [ZH: Still, the underlying concept of how Petrodollar recycling, or as some call it, petrocurrency mercantilism works, leaves some confusion. So in order to alleviate that, here courtesy of Cult State, is a quick and simple primer that should hopefully answer all questions. From CultState:

   

  So what is petrocurrency mercantilism?

   

  It’s when a national bank and an energy producer collude to generate artificial demand for a currency at the expense of the purchasing power of other currencies.

   

  The flowchart below shows how it all works.

   

  

  Given this backdrop, one can better understand many subsequent U.S. foreign-policy moves involving the Middle East and other oil-producing regions.

  Recent developments in technology and geopolitics, however, have already ignited a process to bring an end to the financial system predicated on petrodollars, which will have a profound impact on global financial markets. The 40-year equilibrium of this system is being dismantled by the exponential growth of technology, which will have a bearish impact on both supply and demand of petroleum. Moreover, the system no longer is in the best interest of key participants in the global oil trade. These developments have begun to exert influence on financial markets and will only grow over time. The upheaval of the petrodollar recycling system will trigger a resurgence of volatility and new price trends, which will lead to a renaissance in macro investing.

  Let’s examine these developments in more detail.

  First, TECHNOLOGY is affecting the energy markets dramatically, and this impact is growing exponentially. The pattern-seeking human mind is built for an observable linear universe, but has cognitive difficulty recognizing and understanding the impact of exponential growth.

  Paralleling Moore’s Law, the current growth rate of new technologies roughly doubles every two years. In the transportation sector, the global penetration rate of electric vehicles, or EVs, was 1% at the end of 2016 and is now probably about 1.5%. However, a doubling every two years of this level of usage should lead to an automobile market that primarily consists of EVs in approximately 12 years, reducing gasoline demand and international oil revenue to a degree that today would seem unfathomable to the linear-thinking mind. Yes, the world is changing—rapidly.

  Alternative energy sources (solar power, wind, and such) also are well into their exponential growth curves, and are even ahead of EVs in this regard. Based on growth curves of other recent technologies, and due to similar growth rates in battery technology and pricing, it is likely that solar power will supplant petroleum in a vast portion of nontransportation sectors in about a decade. Albert Einstein is rumored to have described compound interest (another form of exponential growth) as the most powerful force in the universe. This is real change.

  The growth of U.S. oil production due to new technologies such as hydraulic fracturing and horizontal drilling has both reduced the U.S. need for foreign sources of oil and led to lower global oil prices. With the U.S. economy more self-reliant for its oil consumption, reduced purchases of foreign oil have led to a drop in the revenues of oil-producing nations and by extension, lower international demand for Treasuries and U.S. dollars.

  ANOTHER MAJOR SECULAR CHANGE that is under way in the oil market comes from the geopolitical arena. China, now the world’s largest importer of oil, is no longer comfortable purchasing oil in a currency over which it has no control, and has taken the following steps that allow it to circumvent the use of the U.S. dollar:

  • China has agreed with Russia to purchase Russian oil and natural gas in yuan.
  • As an example of China’s newfound power to influence oil exporters, China has persuaded Angola (the world’s second-largest oil exporter to China) to accept the yuan as legal tender, evidence of efforts made by Beijing to speed up internationalization of the yuan. The incredible growth rates of the Chinese economy and its thirst for oil have endowed it with tremendous negotiating strength that has led, and will lead, other countries to cater to China’s needs at the expense of their historical client, the U.S.
  • China is set to launch an oil exchange by the end of the year that is to be settled in yuan. Note that in conjunction with the existing Shanghai Gold Exchange, also denominated in yuan, any country will now be able to trade and hedge oil, circumventing U.S. dollar transactions, with the flexibility to take payment in yuan or gold, or exchange gold into any global currency.
  • As China further forges relationships through its One Belt, One Road initiative, it will surely pull other exporters into its orbit to secure a reliable flow of supplies from multiple sources, while pressuring the terms of the trade to exclude the U.S. dollar.

  The world’s second-largest oil exporter, Russia, is currently under sanctions imposed by the U.S. and European Union, and has made clear moves toward circumventing the dollar in oil and international trade. In addition to agreeing to sell oil and natural gas to China in exchange for yuan, Russia recently announced that all financial transactions conducted in Russian seaports will now be made in rubles, replacing dollars, according to Russian state news outlet RT. Clearly, there is a concerted effort from the East to reset the economic world order.

  ALL OF THESE DEVELOPMENTS leave global financial markets vulnerable to a paradigm shift that has recently begun. In meetings with fund managers, asset allocators, and analysts, I have found a virtually universal view that macro investing—investing based on global macroeconomic and political, not security-specific trends—is dead, fueled by investor money exiting the space due to poor returns and historically high fees in relation to performance. This is what traders refer to as capitulation. It occurs when most market participants can’t take advantage of a promising opportunity due to losses, lack of dry powder, or a psychological inability to proceed because of recency bias.

  A current generational low in volatility across a wide spectrum of asset classes is another indicator that the market doesn’t see a paradigm shift coming. This suggests that current volatility is expressing a full discounting of stale fundamental inputs and not adequately pricing in the potential of likely disruptive events.

  THE FEDERAL RESERVE is now in the beginning stages of a shift toward “normalization,” which will lead to diminished support for the U.S. Treasury market. The Fed’s total assets stand at approximately $4.5 trillion, or five times what they were prior to the financial crisis of 2008-09. The goal of the Fed is to “unwind” this enormous balance sheet with minimal market disruption. This is a high-wire act a thousand feet in the air without a safety net or prior practice. Additionally, at some not-so-distant future date, the U.S. will need to finance enormous and growing entitlement programs, and our historical international sources for that financing will no longer be willing to support us in that endeavor.

  The market participants with whom I met theoretically could have the ability to accept cognitively the points made in this article. But the accumulation of many small losses in a low-volatility and generally trendless market has robbed them of confidence and the psychological balance to embrace any new paradigm proactively. They are frozen with fear that the lower- return profile of recent years is permanent—ironic in an industry that is paid to capture price changes in a cyclical world.

  One market legend with whom I spoke suggested he wouldn’t have had the success he enjoyed in his career had he begun in the past decade. Whether or not this might be true, it doesn’t mean that recent lower returns are to be extrapolated into the future, especially when these subpar returns occurred during the quantitative-easing era, a period that is an anomaly.

  I have been fortunate to ride substantial bets on big trends, earning high risk-adjusted returns using time-tested techniques for exploiting these trends. Additionally, I have had the luxury of not participating actively full-time in macro investing during this difficult period. Both factors might give me perspective. I regard this as an extraordinarily opportune moment for those able to shed timeworn, archaic assumptions of market behavior and boldly return to the roots of macro investing.

  The opportunity is reminiscent of the story told by Stanley Druckenmiller, who was promoted early in his investment career to head equity research at a time when his co-workers had vastly more experience than he did. His director of investments informed him that his promotion owed to the same reason they send 18-year-olds to war; they are too dumb to know not to charge. The “winners” under the paradigm now unfolding will be market participants able to disregard stale, anomalous concepts, and charge.

  RELATEDLY, THERE IS a running debate as to whether trend-following is a dying strategy. There is plenty of anecdotal evidence that short-term and mean-reversion trading is more in vogue in today’s markets (think quant funds and “prop” shops). Additionally, the popularity of passive investing signals an unwillingness to invest in “idea generation,” or alpha. These developments represent a full capitulation of trend following and macro trading.

  Ironically, many market players who wrongly anticipated a turn in recent years to a more positive environment for macro and trend-following are throwing in the towel. The key difference is that now there is a clear catalyst to trigger the start of the pendulum swinging back to a fertile macro/trend-following trading environment.

  As my mentor, Bruce Kovner [the founder of Caxton Associates] used to say, “Nobody rings a bell at key turning points.” The ability to properly anticipate change is predicated upon detached analysis of fundamental information, applying that information to imagine a plausible world different from today’s, understanding how new data points fit (or don’t fit) into that world, and adjusting accordingly. Ideally, this process leads to an “aha!” moment, and the idea crystallizes into a clear vision. The thesis proposed here is one such vision.

  

  

• Fukushima Court Rules TEPCO, Government Liable Over 2011 Disaster

  Six years after a tsunami crashed into the Fukushima-Daiichi nuclear power plant, causing three of the plant’s seven reactors to melt down in the worst nuclear accident since Chernobyl, a Japanese district court in Fukushima prefecture ruled this week that Tokyo Electric Power and the Japanese government were liable for damages totaling about 500 million yen ($4.44 million) in the largest class action lawsuit brought over the 2011 nuclear disaster, Reuters reported citing local media sources. It was the third civil court ruling to find Tepco financially liable, and the second to produce an admission of wrongdoing from the inept utility.  

  However, considering the billions of dollars in damage caused by the Fukushima Daiichi meltdown – not to mention the tens of thousands of lives that were disrupted – the judgment is hardly a victory. Especially considering Tepco has been roundly condemned for negligently failing to take the necessary precautions to prevent just such a disaster.

  A group of about 3,800 people, mostly in Fukushima prefecture, filed the class action suit, marking the biggest number of plaintiffs out of about 30 similar class action lawsuits filed across Japan. This is the second ruling to hold the government responsible, following a Maebashi district court decision in March, Reuters reported.

  

  The fact that Tepco has managed to largely avoid consequences for its botched handling of the disaster at Fukushima, from failing to anticipate the possibility that a natural disaster might severely damage the plants to allowing radioactive material to spill into the soil and the Pacific Ocean. And while the cleanup effort has become a top government priority ahead of the 2020 Tokyo Olympics, the company’s engineers have had trouble locating the lost reactor cores inside the ruined reactors.  

  Tepco notoriously waited months to disclose the true extent of the damage at Fukushima. Furthermore, the company admitted in 2013 that it had allowed more than 300 tons of contaminated wastewater to leak into the Pacific.

  This year, as the Japanese government has cut off subsidies to Fukushima disaster victims, forcing the first of tens of thousands of displaced residents to return to their abandoned homes, Tepco has courted controversy by proposing to dump more radioactive wastewater into the Pacific, provoking outrage among local fishermen.  

  The plaintiffs in Fukushima case have called on defendants for reinstating the levels of radioactivity at their homes before the disaster, but the court rejected the request, Kyodo said.

  In an amusing twist, Tepco on Friday disclosed that Kobe Steel’s Shinko Metal Products unit supplied Tepco with piping for the Fukushima Dai-Ni nuclear power plant that didn’t meet specifications. Luckily, the piping was never used, and is currently sitting in a warehouse, Tepco said.
   

  

  

• The Endgame Of Financialization: Stealth Nationalization

  Authored by Charles Hugh Smith via OfTwoMinds blog,

  This is the new model of nationalization: central banks control the valuation of private-sector assets without actually having to own them lock, stock and barrel.

  

  As you no doubt know, central banks don't actually print money and toss it out of helicopters; they create a digital liability and use this new currency to buy assets such as bonds and stocks. Central banks have found that they can take control of the stock and bond markets by buying up as much as these markets as is necessary to force price and yield to do the central banks' bidding.

  Central Banks Have Purchased $2 Trillion In Assets In 2017. This increases their combined asset purchases above $15 trillion. A trillion here, a trillion there, and pretty soon you're talking real money–especially if you add in assets purchased by sovereign wealth funds, dark pools acting on behalf of monetary authorities, etc.

  

  Gordon Long and I discuss this stealth nationalization in our latest video program, The Results of Financialization: "Nationalization" (35 min):

  In the old model of nationalization, governments expropriated/seized privately owned assets lock, stock and barrel. When a central state nationalized an enterprise, it took total ownership of the asset.

  In today's globalized financial world, such crude expropriation is avoided for two reasons:

  1. The entire point of the dominant neoliberal / neofeudal /neocolonial model is to maintain private ownership as a means of transferring the wealth to the New Aristocracy, i.e. the financier class. Government ownership certainly conveys benefits to the some are more equal than others functionaries atop the state's wealth-power pyramid, but it doesn't transfer the assets' income streams to private hands.

   

  2. It sends the wrong message: central banks want private investors to do their bidding, i.e. to go along with the transfer of wealth and income from the many to the few (the New Aristocracy). Maintaining the system of private ownership enables the central banks to control the markets for these assets at the modest cost of a few handfuls of the loot being distributed to the small-fry owners of IRAs, 401K retirement accounts, etc.

  In other words, what central banks want is not outright ownership, which is costly and troublesome; what central banks want is to control the markets on the cheap, with leveraged buying. In effect, central banks have been able to manage assets worth $150 trillion with a mere $15 trillion in well-timed (and loudly announced) asset purchases.

  This is the new model of nationalization: central banks control the valuation of private-sector assets without actually having to own them lock, stock and barrel. Being the buyer of last resort–the Plunge Protection Team that buys every dip in whatever size is needed to stabilize valuations and then reverse the downturn into yet another rally to new highs–has worked for nine long years.

  This success has bred a complacent faith in the central bank cargo-cult that there is no limit to central bank control of yields, valuations and market sentiment.

  But as I've described here many times, financialization is a box canyon. Once you start down the path to the Dark Side of phantom wealth created by commoditized debt and leverage (i.e. financialization), there's no turning back to the real world.

  The central bank aircraft is flying into a canyon with walls 2,000 feet high at an altitude of 300 feet. Everything seems to be going splendidly until the central bank aircraft rounds a bend in the canyon and discovers the canyon ends in a rock face 2,000 high.

  In a desperate attempt to escape the box canyon, central banks will ramp up their assets purchases of bonds to keep yields near zero, and of stocks to keep the bubble valuations high enough to support all the debt and leverage that's been piled on the underlying collateral of the stock market: non-phantom net earnings.

  Needless to say, attempting to control global markets via the issuance of trillions in new currency and using that currency to buy huge chunks of the stock and bond markets is an unprecedented experiment.

  To continue the box canyon analogy: central bankers and their cargo-cult faithful are confident central banks are flying an F-18 with afterburners on max; climbing 1,700 feet in a near-vertical ascent should be no problem.

  Those of us outside the cargo cult see the central bankers flying a Wright Flyer: innovative in its time, but inadequate to the task of controlling private-sector markets via stealth nationalization.

  *  *  *

  If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

  

  

• Syria Demands "Immediate, Unconditional Withdrawal" Of "Terror Supporting" Turkey From Its Territory

  The Syrian government has issued a strong condemnation of Turkey's recent military incursion into northern Syria, demanding "immediate and unconditional withdrawal" according to Syrian state media citing the foreign ministry. Though Turkey claims to be acting in accordance with the Astana agreement reached by Russia, Turkey, and Iran, Damascus is now calling the move a departure from the deal and an intentional violation of Syrian sovereignty, while further accusing Turkey of collaborating with al-Qaeda terrorists on the ground in pursuance of an expansionist policy. 

  On Thursday a large Turkish army convoy consisting of more than 100 Turkish soldiers, including special forces and commandos, along with at least 30 armored trucks entered Syria’s Idlib region for a joint mission ostensibly to monitor a local de-escalation zone and "to pacify al-Qaeda linked militants" there, according to official Turkish statements.

  Many analysts, however, predict that Turkey will not directly confront al-Qaeda, but instead will either allow the terror group to secure an exit or will recognize it under a new form or identify while pretending it to be a local organization.

  

  The Syrian foreign ministry said on Saturday, “The Syrian Arab Republic condemns in the strongest terms the incursion of Turkish military units in the Idlib Province, which constitutes to blatant aggression against the sovereignty and territorial integrity of Syria and flagrant violation of international law.” According to SANA Syrian state news, the foreign ministry further noted that Turkey's military entered Idlib province "accompanied by Jabhat a-Nusra terrorists which shows clearly the close relationship between Turkish regime and terrorist groups, a matter that the international community should pay more attention to and take firm stance in order to oblige Turkey to end its support to terrorism which managed to shed the blood of Syrian people and destabilize the region and the entire world."

  Meanwhile, Russia has not formally responded to Damascus' condemnation, and it is unclear how the Syrian government's declaration will be interpreted. Turkish government officials have consistently claimed complete cooperation and coordination between Turkey and Russia – though President Erdogan this week stressed that Turkey would implement its "own game plan, step by step" in Syria and that "we are not bounded by just resistance or defense."

  

  Map source: Middle East Eye

  Erdogan has also vowed to prevent the YPG (Syrian Kurdish "People's Protection Units") from establishing what he called a "terror corridor" to the Mediterranean. Turkey has long sought a green light from Russia to attack YPG-held Afrin – a city close to the Turkish border which is part of the Kurdish declared Rojava autonomous zone – as part of a broader Turkish attempt to prevent such a Kurdish zone from gaining any permanence. And it appears we are now witnessing the beginning this strategy which Turkey clearly holds as its top priority far and above pacifying Idlib (after all, Turkey assisted al-Qaeda's takeover of Idlib in the first place).

  Both the Syrian Kurds and the Damascus government see Turkey's real motives in Idlib as merely a land grab using both local proxies (including al-Qaeda) and direct troop occupation. Turkey hopes the deal reached in Astana, Kazakhstan to implement "safe zones" in the area will give Russian backing to its war on the Kurds, and Turkey's first step which it began implementing this week is to ensure the YPG is contained. As a spokesman for the Turkish sponsored Free Syrian Army (FSA) told the Reuters this week, the Turkish deployment would "ensure the area is protected from Russian and regime bombing and to foil any attempt by the separatist YPG militias to illegally seize any territory."

  In doing a deal with Turkey, it now appears Russia will walk a fine line between keeping a leash on Erdogan's machinations and conducting legitimate anti-terror operations with its Syrian ally.

  

  

• China Is Threatening America's Unicorn Dominance

  The United States is the undisputed capital of the unicorn – private companies worth more than $1 billion. This title though, is becoming more and more under threat, primarily from China.

  

  You will find more statistics at Statista

  As Statista's Martin Armstrong notes, according to CB Insights, there are currently 215 unicorns in the world, of which 108 are from the U.S.

  When it comes to the 'birth' of new unicorns however, America's strength is clearly being diluted.

  In 2013, 75 percent of new unicorns were born in the United States, fast forward to 2017 though, and this share has fallen to just 41 percent.

  The number of new unicorns from around the world has remained reasonably stable over this time, but it is the rapid increase in activity in China – from 0 percent in 2013 to 36 percent this year – that is putting the most pressure on U.S. dominance.

  

  

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• Retired Green Beret Fears North Korea Is On "Death Ground" – No Recourse But To Fight Or Die

  Authored by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

  

  Fox News reported this on October 11, 2017, in the article North Korea says Trump ‘Lit the Wick of War,’ vows a hail of fire:

  “On Wednesday, the U.S. and South Korea flew two strategic bombers over the Korean peninsula in a joint military exercise — another show of force against Pyongyang amid the mounting tensions. The bombers also conducted firing exercises over the East Sea and Yellow Sea, according to the BBC. Japan’s air force also joined the drill.  This is the second time since Trump’s fiery U.N. General Assembly speech that North Korea vocally accused the U.S. of declaring war on its country. Trump lambasted “little rocket man” Kim Jong Un for going on a “suicide mission for himself and his regime” in the speech last month. He vowed to “totally destroy” the country if it did not halt its nuclear program.”

  Additionally, this information was released in the article North Korea Hackers Reportedly Stole US, South Korea War Plans, by Fox News on October 10, 2017:

  “A plan to assassinate Kim Jong Un and preparations for a potential nuclear showdown with North Korea were among the trove of South Korean military documents reportedly stolen by Hermit Kingdom hackers.  South Korea’s Defense Ministry did not comment on the alleged hack, which reportedly occurred in September 2016 but was only revealed Tuesday. Rhee Cheol-hee, a lawmaker in South Korea, confirmed the data breach to the BBC. The hack consisted of 235 gigabytes of military documents and about 80 percent of what was stolen hasn’t been identified.

   

  Pentagon spokesman Army Col. Rob Manning told reporters on Tuesday: “I can assure you that we are confident in the security of our operations plans and our ability to deal with any threat from North Korea.”  Manning would not confirm the hack.  Pyongyang is suspected of having expert hackers attack South Korean government websites and facilities for years. North Korea has accused its neighbor of “fabricating” the claims, the BBC reported.”

  There was also an incident pursuant to the UN sanctions (initiated by the US) on North Korea, as reported by Reuters on October 11:

  “The United Nations Security Council has banned four ships from ports globally for carrying coal from North Korea, including one vessel that also had ammunition, but the United States postponed a bid to blacklist four others pending further investigation.  The vessels are the first to be designated under stepped-up sanctions imposed on North Korea by the 15-member council in August and September over Pyongyang’s sixth and largest nuclear test and two long-range ballistic missile launches.  The Security Council North Korea sanctions committee, which operates by consensus, agreed at the request of the United States, to blacklist the ships on Oct. 3 for “transporting prohibited items from the DPRK” (North Korea), according to documents seen by Reuters on Tuesday.”

  As mentioned in the articles, the U.S. just flew (and has been flying) bomber missions…ostensibly for “combat readiness,” but realistically to torment North Korea.  Along with the hacked into battle plans, it has been reported that an assassination plan against Kim Jong Un was also among the plans.  Now the UN (at the request of the U.S.) is interfering with North Korea’s ability to ship materials abroad.

  The U.S. is rapidly approaching the point of placing North Korea on the “Death Ground,” characterized in Sun Tzu’s “Art of War.”  This “Death Ground” is an untenable position where an enemy has no recourse but to fight or die, as honorable withdrawal is not permitted.

  We have a president who is not acting in the manner of a statesman with the name-calling and insults…actions that are unbecoming for a man who is the Commander-in-Chief and leader of the United States of America.  Diplomatic channels are not being properly pursued.  China and Russia have each stated that North Korea will not back down, and that diplomacy needs to be placed in clearer focus and sought after.

  The United States is deliberately trying to goad North Korea into taking an action (not necessarily an attack) that will justify a response in force.  Un knows what happened to Iraq’s Saddam Hussein and Libya’s Muhammar Khaddaffi…two nations that did not have nuclear weapons.  The North Koreans know that to disarm is to capitulate.  They also know that the U.S. will not strike first without irradiating South Korea, China, or Russia, and such will elicit repercussions from China and Russia.

  North Korea does have the capability to strike the United States, and the United States is backing it into a corner with provocative actions militarily and unstatesmanlike banter that does not befit or dignify representatives of the country.  North Korea has been backing up into a corner for some time.  There will come a point when it can back up no longer, and will be forced to come out swinging.  It is undoubtedly all part of a larger plan.  The cost, however, will not be borne by the politicians, but by the civilian populations.  The price remains to be seen.

  

  The next world war will be initiated by an EMP device detonated over the continental United States, followed by a nuclear exchange and fighting with conventional forces.

  

  

• Wave Of Eruptions Along Pacific 'Ring Of Fire' Leave 10,000s Displaced

  The Pacific “Ring of Fire” is living up to its name.

  The 450 or so volcanoes that make up the ring outline have been unusually active this year, sparking evacuations on the Indonesian island of Bali and on the tiny island nation of Vanuatu. Parts of southwestern Japan, meanwhile, have been shaken by a series of earthquakes, unsettling the local population, in an area where the massive Pacific Plate grinds against other plates that form the Earth’s crust, creating a 25,000-mile zone where earthquakes and volcanic eruptions are unusually common.

  Three volcanos have either erupted, or are showing signs of an imminent eruption, across the region, according to a roundup published by the Associated Press.

  Japan:

  

  The Shinmoedake volcano in southwestern Japan started erupting Wednesday for the first time in about six years. An ash plume rose 1,700 meters (5,580 feet) from the crater Thursday and ash fell on cities and towns in Miyazaki prefecture. Japanese broadcaster TBS showed students wearing helmets and masks on their way to school at the foot of Shinmoedake. The Japan Meteorological Agency is warning that hot ash and gas clouds known as pyroclastic flows could reach 2 kilometers (1 mile) from the crater, and ash and volcanic rocks are a risk over a wider area depending on wind and elevation. It raised the volcanic alert level from 2 to 3 on a scale of 5. Level 3 warns people to not approach the volcano.

  Bali:

  

  More than 140,000 people fled Mount Agung on the Indonesian resort island of Bali after its alert status was raised to the highest level on Sept. 22. Hundreds of tremors daily from the mountain indicate magma is rising inside it, prompting authorities to warn a powerful eruption is possible. The volcano spewed lava and deadly fast-moving clouds of boiling hot ash, gas and rocks when it last erupted in 1963, killing more than 1,100 people. A new eruption is likely to kill fewer people because officials have imposed a large no-go zone around the crater but it could paralyze tourism, which many Balinese rely on for their livelihoods. Indonesia has more than one tenth of the world’s active volcanoes and another two are currently erupting. Sinabung in northern Sumatra is shooting plumes of ash high into the atmosphere nearly daily, and Dukono in the Maluku island chain is also periodically erupting.

  Vanuatu:

  

  The entire population of a Pacific island was evacuated in the space of a few days in late September and early October to escape the belching Manaro volcano. The 11,000 residents of Ambae island were moved by every boat available to other islands in Vanuatu, a Pacific archipelago nation, where they’re living in schools, churches and tents. Officials have since downgraded the volcano’s danger level but say the population must wait at least two more weeks to return. The island’s water supply and crops have been affected by volcanic ash and acid rain but most villages were spared major damage. Previous eruptions of the volcano have lasted a month to six weeks.

  As if the Ring of Fire wasn’t doing enough to inspire febrile visions of an apocalyptic calamity, scientists are warning that supervolcanos in Italy and the US could be headed for eruptions that would register as by far the most destructive in modern human history.

  Earlier this week, scientists from Arizona State University presented research showing that when the Yellowstone caldera super volcano last erupted more than 600,000 years ago, it took barely a decade for magma flowing into the volcano’s chamber to reach a critical mass.

  Volcanos, hurricanes, wildfires, earthquakes – natural disasters are seemingly happening everywhere at once.  

  Perhaps the ultimate irony is that while the Trump administration is focusing its energy on foreign enemies like Iran and North Korea, the greatest threat to the American population lies within a cherished domestic landmark and symbol of national pride.

  

  

• The Less We Believe Them About Las Vegas, The More They Want Our Guns

  Authored by James George Jatras via The Strategic Culture Foundation,

  Once again, there has been a mass shooting in the United States and the usual script is in play.

  

  America’s ‘gun culture’ is to blame!

    Before the blood was dry gun control advocates had trotted out their standard list of remedial measures, none of which would have prevented what had just taken place.

  Since the Las Vegas massacre we have been regaled about evil guns by factually ignorant buffoons like Bill Maher, Colin Jost, Michael Che, Jimmy Kimmel, Stephen Colbert, Trevor Noah, and John Oliver – the last two not even Americans. Anyone who disagrees is just wrong and callous about the loss of innocent life. We now import foreigners to insult us and our institutions and pay them outrageous salaries to do it.

  Las Vegas was a bit different from previous mass shooting in at least two glaring respects.

  First, the inability of law enforcement to discover a motive remains the biggest mystery. Admittedly, these same authorities in the US – and even worse in Europe – typically find themselves scratching their collective head in puzzlement after a murderer shouting “Allahu Akbar” kills a bunch of people. (What did he mean by that? Maybe that’s Arabic for “Merry Christmas”! We’re still trying to figure out why he did it, but we’re sure it had nothing to do with Islam. And anyone who says it did is a racist.) At this point, the actions of the person identified as the Las Vegas killer (whose name will not be mentioned here to deny whatever immortality he may have sought) are attributed to mental instability. That’s not good enough. Subjectively, even maniacs think they are doing something. Even a total lunatic who believes he is, say, fighting Martians or chopping potatoes, intends that outcome. But here, supposedly, someone stockpiles weapons for months, meticulously plans a murderous onslaught – and maybe had contingencies for attacks elsewhere – and there’s not a hint of what he thought he was up to. That’s simply not plausible. (Repeated claims by Daesh that the Las Vegas killer was one of their “soldiers” have not yet been substantiated but authorities were lightning-quick to dismiss the possibility. Meanwhile, despite a total lack of evidence, multiple “RussiaGate” investigations of the Trump Administration roll on and on. Let’s not be hasty, some connection to the Kremlin might eventually turn up . . . )

   

  Second, there’s the money. The individual in question, as confirmed by his girlfriend as well as by his brother and other family members, was quite rich. Supposedly his initial wealth was made via savvy real estate deals (possible) but later was sustained by being really, really good at video poker at Las Vegas casinos, where he was a welcome regular “comped” by the House with food, drinks, hotel rooms, and other goodies. That’s not just implausible, it’s virtually impossible. As Ann Coulter points out, the fact that he was “was treated like royalty by the casinos . . . means he was losing… Anyone who plays video poker over an extended period of time will absolutely, 100 percent, by basic logic, end up a net loser.” If anyone would know this, it’s police in Los Vegas, where casino operators are pillars of the community and gambling is the major industry. It’s clear to anyone with half a brain that the killer was laundering money – from somewhere yet to be disclosed. In our age of digital financial surveillance, casinos are among the last places someone can anonymously churn large amounts of unsourced cash, no questions asked. Maybe the police and FBI haven’t figured out where the money was coming from, or maybe they have and are protecting someone.

  In any case, the inability to get a straight answer to the questions, or even to ascertain simple facts like whether a hotel security guard was shot before or after the mass killing began, or when the first call was made to police, feeds public distrust and speculation as to what the hell is really is going on. That is turn prompts establishment gatekeepers like Snopes to denounce as “conspiracy theorists” (mainly of the “far right” variety, because the existence of a far left is itself a conspiracy theory) folks trying to make sense of the nonsense we’re being force-fed.

  At least Las Vegas has shined a light on one deception that has long been standard in the American media: the notion – no doubt believed by many outside the US – that Americans routinely run around with machine guns shooting each other. This impression is fed by false claims of gun-control advocates that “assault rifles” – semiautomatic guns (where one trigger-pull equals one round fired) – are “weapons of war.” What makes them not like contemporary weapons of war is that they are not fully automatic (hold the trigger down for multiple, rapid rounds), which is why gun control advocates abuse the trick designation “military style” – they look scarier than semiautomatic hunting rifles because of cosmetic features like pistol grips and folding stocks. Fully automatic weapons (i.e., machine guns) have been virtually impossible acquire legally in the US for decades. The evident use in Las Vegas of a so-called “bump stock” to allow a semiautomatic to fire in a manner similar to a machine gun has forced even our fake news outlets to note the distinction. It’s a rare breakout of actual facts.

  Ironically, when the Second Amendment to the US Constitution, which protects Americans’ fundamental right to keep and bear arms, was adopted, ordinary civilian guns really were equal to weapons of war. In fact, they were sometimes better. Think of how the standard British “Brown Bess” smoothbore was outclassed by the far more accurate Pennsylvania Rifle – perfect for picking off Redcoat officers at long range.

  Advocates in gun control in America are always saying they just want “common-sense gun control” laws, like “closing the gun show loophole,” having stricter background checks, limiting the size of magazines, restricting the number of weapons or amount of ammunition someone can buy, and other seemingly innocuous measures. Each is a fraud.

  For example, closing the so-called gun show loophole would be basically a ban on private transfers from one citizen to another – such as a man selling, or giving, a pistol or rifle to his cousin – without all the reporting and red tape federally licensed arms dealers must deal with. This is despite the fact that none the notable killings that supposedly justify more controls was carried out with a weapon from such a sale or would have been prevented if the demanded reform had been in place.

  

  Meanwhile, the real American slaughter continues in cities where gun laws are as strict as those in any country in Europe, and it is virtually impossible for an honest citizen to acquire and carry a legal weapon.

  For example, last month Chicago reached its 500^th homicide so far this year, and by New Year’s Day 2018 is on track to rack up a total exceeding ten times that of the Las Vegas massacre.

  What’s the solution? Evidently to infringe on the constitutional rights of honest, peaceful, law-abiding citizens who are armed and increasingly distrustful of what they are being told by their supposed betters.

   

  

  

• Pay-TV Companies Tank As Subscriber Losses Surge To Record Highs In 2017

  As the broader markets casually melt-up to new record highs with each passing day, one small corner of the equity market is in full on meltdown mode: cable and satellite pay-tv providers.  Down anywhere from 3-10% on the week, investors in this space seem to be finally admitting that record subscriber losses, quarter after quarter, just may end up being a bad thing.

  As Bloomberg points out this morning, pay-tv subscriber losses are expected to set a new record in 2017, surpassing the 1.7mm homes that “cut the cord” in 2016, as industry analyst Craig Moffet warns “it is becoming increasingly clear that the wheels are falling off…”

  Barring a major fourth-quarter comeback, 2017 is on course to be the worst year for conventional pay-TV subscriber losses in history, surpassing last year’s 1.7 million, according to Bloomberg Intelligence. That figure doesn’t include online services like DirecTV Now. Even including those digital plans, the five biggest TV providers are projected to have lost 469,000 customers in the third quarter.

   

  AT&T sank 6.1 percent, the biggest one-day loss since November 2008. Dish, which also provides satellite service, declined 5.1 percent. Viacom dropped 2.5 percent while AMC Networks Inc. fell 6.8 percent after Guggenheim Securities LLC downgraded the two stocks to neutral from buy.

   

  Dallas-based AT&T is pushing headlong into TV programming by acquiring HBO and CNN owner Time Warner Inc. in an $85.4 billion deal. Chief Executive Officer Randall Stephenson has argued that the acquisition will let AT&T create compelling video packages for mobile subscribers and provide valuable targeting information for advertisers.

   

  “It is becoming increasingly clear that the wheels are falling off of satellite TV,” said Craig Moffett, an analyst at MoffettNathanson LLC, in a research note.

  

  AT&T set off the selling panic earlier this week when they announced they would lose 390,000 pay-tv customers in 3Q 2017 alone.  As a reminder, AT&T purchased DirectTV for $48.5 billion just 3 years ago…something tells us shareholders might like a ‘do-over’ on that colossal misallocation of capital.

  AT&T, whose ownership of the DirecTV satellite service makes it the biggest U.S. pay-television provider, said late Wednesday it will report a third-quarter loss of 390,000 satellite and cable customers, echoing a similar warning weeks earlier from Comcast Corp. The same night, Viacom cautioned that its distribution deal with Charter Communications Inc., the second-biggest cable U.S. company, may lead to a blackout, potentially testing whether millions of viewers are willing to go without MTV and Nickelodeon.

   

  Shares of both companies retreated Thursday, contributing to a broader selloff in the sector. The S&P 500 Media Index, which includes Comcast and ESPN owner Walt Disney Co., slid 2.3 percent to the lowest level since December.

  

  Meanwhile, the bigger question that remains to be answered is whether cable providers will finally use this customer backlash to push back on content providers who have managed to force ridiculous annual price increases down the throats of American consumers for decades…Citi analyst Jason Bazinet seems to think so…

  After decades of steadily increasing bills and ever-bigger packages of channels, the pay-TV ecosystem is in full-blown crisis mode. AT&T, Dish Network Inc. and others are offering cheaper, online-only versions of cable to lure customers back, but that means having to accept thinner profit margins.

   

  “Those salad days of fat bundles, automatic carriage renewals and customary affiliate steps ups are long gone,” Citigroup Inc. analyst Jason Bazinet wrote in a note this week. “Today, every media and cable firm is jockeying for self-preservation. And we suspect the next chapter in this new era means Charter will drop — or significantly curtail — distribution of Viacom’s content.”

  Of course, some of these content owners are making the decision to drop the cable bundle much easier all on their own…

  

  

  

• Tech Vs. Trump: The Great Battle Of Our Time Has Begun

  Authored by Niall Ferguson via The Spectator,

  Social media helped Donald Trump take the White House. Silicon Valley won’t let it happen again…

  

  In the 1962 Japanese sci-fi classic King Kong vs Godzilla, the two giant monsters fight to a stalemate atop Mount Fuji. I have been wondering for some time when the two giants of American social media would square up for what promises to be a comparably brutal battle. Finally, it began last month – and where else but on Twitter?

  ‘Facebook was always anti-Trump,’ tweeted the President of the United States on 27 September.

  Mark Zuckerberg shot back hours later (on Facebook, of course): ‘Trump says Facebook is against him. Liberals say we helped Trump. Both sides are upset about ideas and content they don’t like. That’s what running a platform for all ideas looks like.’

  A platform for all ideas? Well, maybe. Others see Facebook differently. As Zuckerberg’s response to Trump acknowledged, the President is not alone in criticising him. The various inquiries into Russian meddling in the 2016 presidential election are turning up much that is awkward, notably that Russia bought around 3,000 Facebook ads designed to spread politically divisive posts to Americans before and after the election, as well as to promote inflammatory political protests on issues such as Muslim immigration.

  It may be too big a stretch to claim that Russian Facebook ads swung the election in Trump’s favour. But it seems plausible that his campaign’s use of social media, particularly Facebook, gave it a vital edge that compensated for its financial disadvantage relative to Hillary Clinton’s campaign. On that, if on nothing else, I suspect Steve Bannon and Clinton would agree. ‘Facebook is now the largest news platform in the world,’ Clinton writes in her election postmortem. ‘With that awesome power comes great responsibility.’

  Awesome power, yes. At the end of June, the number of active Facebook users (people who visit the site at least once a month) passed the two billion mark. WhatsApp, Messenger and Instagram — all owned by Facebook — have three billion users altogether, though no doubt there is much overlap. Two- thirds of American adults are on Facebook and 45 per cent get their news from it. More than half the UK population access Facebook at least once a month. The average user is on the site for 1/16 of every day.

  But great responsibility? In the wake of the Las Vegas massacre, Facebook briefly featured a bogus story that the shooter had ‘Trump-hating’ views. A fake page claimed responsibility for the attack on behalf of the far-left Antifa movement, saying the goal had been to kill ‘Trump-supporting fascist dogs’.

  Last month, the non-profit investigative news site ProPublica revealed that Facebook’s online ad tools had helped advertisers to target self-described ‘Jew haters’ or people who had used phrases such as ‘how to burn Jews’. In the words of Facebook’s chief operating officer Sheryl Sandberg: ‘The fact that hateful terms were even offered as options was totally inappropriate and a fail on our part.’ Facebook ‘never intended or anticipated this functionality being used this way’.

  What Facebook intended and how Facebook is used turn out to be very different. The company’s motto used to be: ‘Make the world more open and connected.’ It’s no longer quite so simple.

  ‘For most of the existence of the company, this idea of connecting the world has not been a controversial thing,’ Zuckerberg recently said. ‘Something changed.’

  What has changed is that the world has belatedly woken up to realities about social networks that were already obvious to anyone familiar with history and network science.

  For most of history, it is true, hierarchies have tended to dominate distributed networks. However, there are historical precedents for technological change leading to enhanced connectedness that empowers social networks and weakens hierarchies.

  The first began exactly 500 years ago, when Martin Luther launched his campaign for reform of the Roman Catholic church. Had it not been for the printing press, Luther would have been just another obscure heretic and might well have ended his life in the flames of the stake. But Gutenberg’s innovation enabled Luther’s message to ‘go viral’ — as we would now say — and it spread with remarkable speed throughout Germany and then across north-western Europe.

  Luther was as much of a utopian as the pioneers of Silicon Valley in our own time. In his mind, the Reformation would create a powerful new network of pious Christians, all enabled to read the Bible in the vernacular and to establish more direct relationships with God than the indirect ones mediated by a corrupt ecclesiastical hierarchy. The vision of St Peter of a ‘priesthood of all believers’ would finally be realised.

  But the true upshot of the Reformation was not harmony but polarisation and conflict. Not everyone was inspired by Luther’s message. Some sought to go further than him. Others reacted violently against the proposed reforms. The Counter-Reformation adopted the Protestants’ novel techniques of propagation and deployed them against the heretics.

  Yet it proved impossible to destroy Protestant networks, even with mass executions and hideously cruel torture. If anything, persecution promoted radicalisation. Meanwhile, the constantly growing network of printed words proved itself as ready to spread madness as holiness. The witch craze of the 17th century was a classic example of a monster meme, claiming innocent lives from Scotland to Salem, Massachusetts.

  There are three big differences between now and then.

  First, today’s social networks are vastly bigger, faster and more widespread than those of the early modern era.

   

  Secondly, whereas the printing press was a truly decentralised technology — Johannes Gutenberg was no Bill Gates — the ownership of today’s IT infrastructure is concentrated in remarkably few hands.

   

  Finally, our networked age began by disrupting markets and later politics; only one religion, Islam, has been significantly affected.

  But the similarities are nevertheless striking. Now, as then, newly empowered networks have led to polarisation, not harmony. Now, as then, the networks have acted as a transmission mechanism for all kinds of manias and panics as well as truth and beauty. And now, as then, the networks have eroded territorial sovereignty, weakening the established structures of political authority.

  The US government sought to harness the power of social networks when the National Security Agency co-opted the big technology companies into its PRISM programme of mass domestic and foreign surveillance. But the new networks did not easily integrate into old power structures. Globally disseminated leaks, courtesy of Edward Snowden and Julian Assange, exposed PRISM, while a new kind of populist politics flourished on social media.

  A defining feature of social networks (as in the Reformation) is their tendency to divide rather than unite. Recent research on American blogs and Twitter reveals a similar pattern: the emergence of two self-segregated ideological communities, one liberal, the other conservative. Just as birds of a feather flock together (network geeks call it ‘homophily’) so Twitter users retweet within their political clusters. One study found that with tweets on hot-button political topics (such as gun control, same-sex marriage and climate change), the use of emotional words increases their diffusion by a factor of 20 per cent for each additional word. Ever wondered why tweets are full of expletives? Now you know.

  The presidential election of 2016 was a tale of many networks. By going viral through a largely self-organised network, Trump beat Clinton’s old-school, hierarchically structured campaign, which poured money into antiquated channels like local television. Isis contributed to the febrile atmosphere with its worst attack in North America (in Orlando in June last year), prompting Trump’s populist (and popular) promise of a ‘Muslim ban’. But the Trump network had itself been penetrated by the Russian intelligence network. Trump’s campaign and, to a much smaller extent, the Russians both used Facebook and Twitter as tools to discredit his opponent and discourage potential Democratic voters.

  Make no mistake: 2016 will never happen again. Silicon Valley hates Trump for too many reasons to count. The most important are his stance on immigration (on which the Valley depends for its supply of skilled software engineers) and Big Tech’s need to ‘virtue-signal’ to its most valued user demographic: the young and affluent. They lean left. So does the otherwise capitalist Valley.

  The political consequences were not immediately obvious, unless you were paying close attention, but after the Charlottesville clashes between white supremacists, neo-Nazis and their various left-wing opponents, they were there for all to see. Matthew Prince, CEO of the internet service provider Cloudflare, described what happened: ‘Literally, I woke up in a bad mood and decided someone shouldn’t be allowed on the internet.’ On the basis that ‘the people behind the Daily Stormer are assholes’, he denied their fascistic website access to the worldwide web. As Prince himself rightly observed: ‘No one should have that power. We need to have a discussion around this with clear rules and clear frameworks. My whims and those of Jeff [Bezos] and Larry [Page] and Satya [Nadella] and Mark [Zuckerberg] shouldn’t be what determines what should be online.’ Yet that discussion has barely begun. And until it happens, it will indeed be they who decide who is allowed on the internet.

  This goes to the heart of the matter. According to Zuckerberg, Facebook is ‘a tech company, not a media company… We build the tools; we do not produce any content’. Yet in practice, according to a recent Reuters investigation, ‘an elite group of at least five senior executives regularly directs content policy and makes editorial judgment calls.’ In the words of Espen Egil Hansen, the editor-in-chief of the Norwegian newspaper Aftenposten, Zuckerberg is now ‘the world’s most powerful editor’.

  It is not only neo-Nazi sites that find themselves on the online equivalent of the newsroom spike. Twitter has recently rejected paid-for tweets from the Center for Immigration Studies (CIS) on the grounds of ‘Hate’. These tweets were hardly excerpts from Mein Kampf: for example: ‘The fiscal cost created by illegal immigrants of $746.3bn compares to a total cost of deportation of $124.1bn.’ In the words of CIS director Mark Krikorian, ‘The internet is now a utility more important than phones or cable TV. If people can be denied access to it based on the content of their ideas and speech (rather than specific illegal acts), why not make phone service contingent on your political views? Or mail delivery?’

  Google recently revealed that it is using machine learning to document ‘hate crimes and events’ in America. Among their partners in this effort is the notorious Southern Poverty Law Center (SPLC), which maintains a list of ‘anti-Muslim extremists’ — including my wife, Ayaan Hirsi Ali, and the British liberal Muslim Maajid Nawaz — but no list whatsoever of Muslim extremists.

  ‘YouTube doesn’t allow hate speech or content that promotes or incites violence,’ declared a recent message to YouTube content creators. But who decides what is ‘hate speech’? The phrase has become the 21st-century equivalent of ‘heresy’. It’s what you call something before you proscribe it.

  Silicon Valley insists it is home to neutral network platforms. This is no longer credible. Facebook alone has, without quite meaning to, evolved into the most powerful publisher in the history of the world. Zuckerberg is William Randolph Hearst to the power of ten.

  So what to do? Left-leaning Democrats have an answer: revive the progressive interpretation of anti-trust policy and break up the internet monopolies. Superficially, they have a case. Amazon controls 65 per cent of all online new book sales. Google’s market share of online search is 87 per cent in the US. In mobile social networking, Facebook and its subsidiaries control 75 per cent of the American market.

  Yet who seriously cares what the hipster anti-trust types say? Silicon Valley is a huge donor to the Democrats. Why would they make life difficult for Big Tech when it so openly leans left? The real question is when Republicans (and not just the President) are going to wake up to the threat they now face.

  Two big battles are looming: one on the question of net neutrality (the principle that all bits of data should be treated alike, regardless of their content or value), the other on the 1996 Communications and Decency Act, which allows tech firms exemption from liability for content that appears on their platforms. A group of senators led by Rob Portman has started the ball rolling by seeking to impose liability on companies that knowingly facilitate sex trafficking on their platforms. The initial response of the Internet Association, a trade group that is essentially a mouthpiece for the Valley, was revealing: ‘The entire internet industry wants to end human trafficking,’ it said. ‘But there are ways to do this without amending a law foundational to legitimate internet services.’ Last month, however, the IA conceded the need for ‘targeted amendments’.

  This battle is only just beginning, but its outcome could be decisive in both the 2018 midterm elections to Congress and the 2020 presidential race. The regulatory status quo is not only highly favourable to Silicon Valley. It could also prove highly unfavourable to Republican candidates — though (so far as I could tell on a recent visit to Washington) the penny has not yet dropped with lawmakers who are accustomed to talking only about deregulation, not regulation.

  In many ways, what we are about to witness will be a classic struggle between new networks and established hierarchies. Like King Kong’s epic slugfest with Godzilla, however, it’s far from easy to predict which side will prevail – or how much collateral damage they will both inflict on American democracy. In the old Godzilla movies, after all, the one predictable thing is that Tokyo always gets destroyed.

  

  

• "Enough To Kill 5 Million People": Authorities Make One Of Biggest Fentanyl Busts In History

  The Acting United States Attorney for the District of Nebraska announced earlier this morning that a joint force involving both the Drug Enforcement Administration and Nebraska State Patrol made one of the largest fentanyl busts in the history of the country.  According to authorities, 27 year old Edgar Navarro-Aguirre of California was arrested at an Amtrak station in Omaha carrying 15 kilos (33 pounds) of the deadly opioid.  Here is more from a local NBC affiliate:

  Navarro-Aguirre was traveling on the Amtrak train and waiting at the station when a Drug Enforcement Administration agent was doing a routine surveillance there and noticed a suspicious person with a bag.

   

  “We have officers that are trained to pick out people that are different than the normal traveling public,” Nebraska State Patrol Lt. Jason Scott said.

   

  According to an affidavit, Navarro-Aguirre said it was his friend’s bag, and he denied that anything illegal was inside.

   

  Inside Navarro-Aguirre’s luggage was 15 vacuum-sealed bundles of what forensic chemists determined was pure or nearly pure fentanyl.

   

  “This fentanyl seizure is the largest ever in Nebraska and one of the largest in the nation,” a news released from the U.S. Attorney’s Office said.

  

  For those who may not be familiar with this deadly epidemic, fentanyl is a synthetic opioid that is 40-50 times more potent than herion and has resulted in a wave of overdoses across the country, and particularly in the midwest.  Experts say it only takes a small amount, about 3 milligrams, for the drug to be fatal.

  “This is playing Russian Roulette knowing every cylinder has a bullet in it,” DEA Associate Special Agent in Charge Matt Barden said.

   

  With that in mind, the amount seized by authorities in its pure form would be enough to kill approximately 4.9 million people, or nearly the entire populations of Iowa and Nebraska.

   

  “I think it was literally one mishap away from something extremely tragic for Nebraska,” Lt. Scott said, “dropping a suitcase or it being cut open, this is in a public venue, this was not in a private room.”

  As the New York Times pointed out last month, fentanyl is estimated to have killed over 20,000 people in the U.S. in 2016, a 5x increase over just a couple of years.

  Drug overdoses killed roughly 64,000 people in the United States last year, according to the first governmental account of nationwide drug deaths to cover all of 2016. It’s a staggering rise of more than 22 percent over the 52,404 drug deaths recorded the previous year — and even higher than The New York Times’s estimate in June, which was based on earlier preliminary data.

   

  Drug overdoses are expected to remain the leading cause of death for Americans under 50, as synthetic opioids — primarily fentanyl and its analogues — continue to push the death count higher. Drug deaths involving fentanyl more than doubled from 2015 to 2016, accompanied by an upturn in deaths involving cocaine and methamphetamine. Together they add up to an epidemic of drug overdoses that is killing people at a faster rate than the H.I.V. epidemic at its peak.

   

  The explosion in fentanyl deaths and the persistence of widespread opioid addiction have swamped local and state resources. Communities say their budgets are being strained by the additional needs — for increased police and medical care, for widespread naloxone distribution and for a stronger foster care system that can handle the swelling number of neglected or orphaned children.

  

  Navarro-Aguirre is facing a charge of possession with intent to distribute 400 grams or more of a mixture or substance containing fentanyl. The penalty carries a minimum of 10 years with a maximum of life in prison.  The 27-year-old will appear in federal court Friday afternoon.

  

  

• Rickards Warns "Prepare For A Chinese Maxi-Devaluation"

  Authored by James Rickards via The Daily Reckoning,

  China is a relatively open economy; therefore it is subject to the impossible trinity.

  

  China has also been attempting to do the impossible in recent years with predictable results.

  Beginning in 2008 China pegged its exchange rate to the U.S. dollar. China also had an open capital account to allow the free exchange of yuan for dollars, and China preferred an independent monetary policy.

  The problem is that the Impossible Trinity says you can’t have all three. This model has been validated several times since 2008 as China has stumbled through a series of currency and monetary reversals.

  For example, China’s attempted the impossible beginning in 2008 with a peg to the dollar around 6.80. This ended abruptly in June 2010 when China broke the currency peg and allowed it to rise from 6.82 to 6.05 by January 2014 — a 10% appreciation.

  This exchange rate revaluation was partly in response to bitter complaints by U.S. Treasury Secretary Geithner about China’s “currency manipulation” through an artificially low peg to the dollar in the 2008 – 2010 period.

  After 2013, China reversed course and pursued a steady devaluation of the yuan from 6.05 in January 2014 to 6.95 by December 2016. At the end of 2016, the Chinese yuan was back where it was when the U.S. was screaming “currency manipulation.”

  Only now there was a new figure to point the finger at China. The new American critic was no longer the quiet Tim Geithner, but the bombastic Donald Trump.

  Trump had threatened to label China a currency manipulator throughout his campaign from June 2015 to Election Day on November 8, 2016. Once Trump was elected, China engaged in a policy of currency war appeasement.

  China actually propped up its currency with a soft peg. The trading range was especially tight in the first half of 2017, right around 6.85.

  In contrast to the 2008 – 2010 peg, China avoided the impossible trinity this time by partially closing the capital account and by raising rates alongside the Fed, thereby abandoning its independent monetary policy.

  This was also in contrast to China’s behavior when it first faced the failure of its efforts to beat impossible trinity. In 2015, China dodged the impossible trinity not by closing the capital account, but by breaking the currency peg.

  In August 2015, China engineered a sudden shock devaluation of the yuan. The dollar gained 3% against the yuan in two days as China devalued.

  The results were disastrous.

  U.S. stocks fell 11% in a few weeks. There was a real threat of global financial contagion and a full-blown liquidity crisis. A crisis was averted by Fed jawboning, and a decision to put off the “liftoff” in U.S. interest rates from September 2015 to the following December.

  China conducted another devaluation from November to December 2015. This time China did not execute a sneak attack, but did the devaluation in baby steps. This was stealth devaluation.

  The results were just as disastrous as the prior August. U.S. stocks fell 11% from January 1, 2016 to February 10. 2016. Again, a greater crisis was averted only by a Fed decision to delay planned U.S. interest rate hikes in March and June 2016.

  The impact these two prior devaluations had on the exchange rate is shown in the chart below.

  

  Major moves in the dollar/yuan cross exchange rate (USD/CNY) have had powerful impacts on global markets. The August 2015 surprise yuan devaluation sent U.S. stocks reeling. Another slower devaluation did the same in early 2016. A stronger yuan in 2017 coincided with the Trump stock rally. A new devaluation is now underway and U.S. stocks may suffer again.

  By mid-2017, the Trump administration was once again complaining about Chinese currency manipulation.

  This was partly in response to China’s failure to assist the United States in dealing with North Korea’s nuclear weapons development and missile testing programs.

  For its part, China did not want a trade or currency war with the U.S. in advance of the National Congress of the Communist Party of China, which begins on October 18.

  President Xi Jinping was playing a delicate internal political game and did not want to rock the boat in international relations. China appeased the U.S. again by allowing the exchange rate to climb from 6.90 to 6.45 in the summer of 2017.

  China escaped the impossible trinity in 2015 by devaluing their currency.

  China escaped the impossible trinity again in 2017 using a hat trick of partially closing the capital account, raising interest rates, and allowing the yuan to appreciate against the dollar thereby breaking the exchange rate peg.

  The problem for China is that these solutions are all non-sustainable.

  China cannot keep the capital account closed without damaging badly needed capital inflows. Who will invest in China if you can’t get your money out?

   

  China also cannot maintain high interest rates because the interest costs will bankrupt insolvent state owned enterprises and lead to an increase in unemployment, which is socially destabilizing.

   

  China cannot maintain a strong yuan because that damages exports, hurts export-related jobs, and causes deflation to be imported through lower import prices. An artificially inflated currency also drains the foreign exchange reserves needed to maintain the peg.

  Since the impossible trinity really is impossible in the long-run, and since China’s current solutions are non-sustainable, what can China do to solve its policy trilemma?

  The most obvious course, and the one likely to be implemented, is a maxi-devaluation of the yuan to around the 7.95 level or lower.

  This would stop capital outflows because those outflows are driven by devaluation fears. Once the devaluation happens, there is no longer any urgency about getting money out of China. In fact, new money should start to flow in to take advantage of much lower local currency prices.

  There are early signs that this policy of devaluation is already being put into place. The yuan has dropped sharply in the past month from 6.45 to 6.62. This resembles the stealth devaluation of late 2015, but is somewhat more aggressive.

  The geopolitical situation is also ripe for a Chinese devaluation policy. Once the National Party Congress is over in late October, President Xi will have secured his political ambitions and will no longer find it necessary to avoid rocking the boat.

  

  China’s President Xi Jinping awaits appointment to a second term at the 19th National Congress of the Communist Party of China, starting October 18. His reappointment is a foregone conclusion.

  China has clearly failed to have much impact on North Korea’s nuclear weapons ambitions. As war between North Korea and the U.S. draws closer, neither China nor the U.S. will have as much incentive to cooperate with each other on bilateral trade and currency issues.

  Both Trump and Xi are readying a “gloves off” approach to a trade war and renewed currency war. A maxi-devaluation of the yuan is Xi’s most potent weapon.

  Finally, China’s internal contradictions are catching up with it. China has to confront an insolvent banking system, a real estate bubble, and a $1 trillion wealth management product Ponzi scheme that is starting to fall apart.

  A much weaker yuan would give China some policy space in terms of using its reserves to paper over some of these problems.

  Less dramatic devaluations of the yuan led to U.S. stock market crashes. What does a new maxi-devaluation portend for U.S. stocks?

  We might have an answer soon enough.

  

  

• California's Path To Independence Smoother Than Catalonia's, Secessionists Say

  California’s burgeoning secessionist movement has been watching Catalonia’s struggle for independence with an eye toward the future. Proponents of transforming California into an independent republic have pointed out that there are many similarities between Catalonia and America’s largest state. For example, both are relatively wealthy.  

  However, the circumstances of the two states diverge in one notable respect: The US constitution and California’s state constitution would make it easier for California to secede than Catalonia.

  

  At least, that’s what one leader of California’s largest pro-secessionist group said during an interview with McClatchy.

  Catalonia has approached secession in the best way it could, Marin said. If secession is what Californians want, he says their path to independence will be easier thanks to the 10th Amendment to the U.S. Constitution, which says any powers not explicitly given to the federal government are retained by the states. The states cannot unilaterally declare independence, but Marin argues that the Constitution provides the federal government and the states a sanctioned path toward that negotiation.

   

  “There are definitely similarities in the fiscal situation – we both give more than we get back,” said Dave Marin, director of research and policy for the California Freedom Coalition. “But there’s more flexibility in the U.S. Constitution for secession than there is in the Spanish one. California has more tools available to it.”

  In a shocking display of police brutality, the government of Spanish Prime Minister Mariano Rajoy forcefully tried to shut down a Catalan independence referendum that took place on Oct. 1 despite being declared illegal by a court in Madrid. Most recently, Catalan Leader Carles Puidgdemont symbolically declared independence before suspending it pending talks with the central government. Meanwhile, Rajoy said Wednesday that Catalonia has eight days to comply with the state’s order to drop its independence bid or Madrid will revoke the state’s autonomy and reassert centralized rule, likely accompanied by a violent crackdown as the rest of Europe backs away.

  However, Dave Marin says California can probably find a way to disentangle itself from the US peaceably by employing unconventional tactics.

  The first step for Marin’s group is getting an initiative on the 2018 ballot that would repeal a section of the state’s constitution that says California is an “inseparable” part of the US.

  “Our state government is very experienced at doing things that undermine the federal government without being unconstitutional,” Marin said, citing California’s sanctuary cities as an example.

   

  The California Freedom Coalition is collecting signatures to get its ballot initiative in front of voters in 2018. It does not definitively say California will declare independence from the United States; it would repeal a provision in the state constitution that says California is “an inseparable part of the United States.” It also directs the governor to negotiate for greater autonomy from the federal government and establishes an advisory commission on California autonomy and independence.

  Calls for California’s independence pre-date Donald Trump’s presidency, but his election magnified the movement considerably. Still, most Californians see secession as ridiculous, with only 20% seeing it favorably. Meanwhile, 32% saw it favorably.

  “We’re not strictly saying secession right now,” Marin said. “But if that number gets into the high 40s or 50s, it makes sense to consider. And then we have a few more tools to pursue it than Catalonia.”

  Given the intense polarization in America’s values and priorities – not to mention California’s open defiance of the federal government, most recently manifested in the “sanctuary state” declaration as well as the state’s legalization of marijuana, which remains illegally at the federal level, the notion that we one day might see an independent California is looking less preposterous.

  At the very least, as first the UK – and now Catalonia – have demonstrated, it’d be foolish to write off the possibility.
   

  

  

• FBI 'Hand-In-Hand' With Vegas PD, Begin Damage Control: "There Is No Conspiracy… Nobody Is Attempt to Hide Anything"

  Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department appeared to be visibly shaken when told reporters Friday that he wasn’t attempting to be “subversive” in previous statements he made surrounding details of the October 1 massacre at the Route 91 Music Festival where 58 people lost their lives.

  As Intellihub details, in the ‘no questions’ conference, which members of the independent media were not allowed to attend, the sheriff said that he’s “well aware” of the timeline dispute released by MGM Management on Thursday which claims that Stephen Paddock fired his weapon into the crowd just seconds after Mandalay Bay security guard Jesus Campos was struck by a bullet in the 32nd-floor hallway outside the shooter’s end suite.

  The sheriff stuck to his guns on Friday when he told reporters that he still ‘stands by’ his latest timeline which lists Campos’s encounter with Paddock at 9:59 p.m., 6 minutes prior Paddock’s first known volley of fully-automatic gunfire.

  The visibly nervous sheriff also made clear that “there is no conspiracy between the FBI, LVMPD, or the MGM” and that “nobody is attempting to hide anything” in reference to the investigation and noted his solidarity with the FBI.

   

  “We are standing hand-in-hand with the FBI in the continuance of this investigation,” the sheriff explained.

   

  “I feel confident that there are no other individuals that are intending to cause harm to our community associated with the 1 October event.”

  Sheriff Lombardo also provided an explanation for changes he recently made to the publicly released timeline surrounding Paddock’s arrival to Vegas and his check-in date at the Mandalay Bay.

  “We have come to learn that the suspect did occupy the room on the 25th and the situation on how the room was compensated or paid for had changed on the 28th to include Marilou Danley,” he explained.

  Additionally, the sheriff told reporters that so far there has only been a “visual inspection” done of Paddock’s brain and said that Paddock’s brain was shipped to a facility that will conduct a “microscopic analysis of the brain” to see if there were any signs of mental illness.

  As of yet, authorities admit that they still have no motive for Paddock’s crimes and maintain that he has no affiliation with any groups.

  At one point a reporter tried to sneak a question in but was quickly swatted down by Lombardo over the podium mic.

  

  This fiasco comes after earlier chaos surrounding the sudden disappearance of Mandalay Bay security guard Jesus Campos, who was shot in the leg by Stephen Paddock…

  Authored by Mac Slavo via SHTFplan.com,

  Over the last few days Las Vegas law enforcement officials have significantly altered the timeline of the mass shooting that left 59 dead and hundreds injured. Adding further intrigue is the fact that the Mandalay Bay Hotel & Casino now says that they have their own timeline of events, which diverge from the official story.

  Media scrum tonight as we learn security officer shot in Vegas attack, Jesus Campos’ whereabouts are unknown. pic.twitter.com/Jk09tRlPsX

  — Stephanie Wash (@WashNews) October 13, 2017

  //platform.twitter.com/widgets.js

  On top of that, mystery still surrounds Mandalay Bay security guard Jesus Campos, who was shot in the leg when Stephen Paddock opened fire and unleashed some 200 rounds through the door of his hotel room.

  

  As Fox News reports, the Mandalay Bay security guard shot by Stephen Paddock in the moments leading up to the worst mass shooting in modern U.S. history was set to break his silence Thursday night with five television interviews, including one on Fox News, Campos' union president said.

  Except when the cameras were about to roll, and media gathered in the building to talk to him, Campos reportedly bolted, and, as of early Friday morning, it wasn't immediately clear where he was.

   

  “We were in a room and we came out and he was gone,” Campos' union president told reporters, according to ABC News’ Stephanie Wash.

  ampos, who is reportedly not registered to work in the State of Nevada, was also scheduled to do an interview with Sean Hannity Thursday night. But just minutes before the interview was to take place, Campos was said to have abruptly cancelled his appearance:

  How come @seanhannity didn’t run the #JesusCampos interview tonight? #LasVegasShooting

  — Laura Loomer (@LauraLoomer) October 13, 2017

  //platform.twitter.com/widgets.js

  He cancelled. https://t.co/fWCb4X8cNQ

  — Sean Hannity (@seanhannity) October 13, 2017

  //platform.twitter.com/widgets.js

  In response to the cancellation, alternative media reporter Laura Loomer attempted to reach out to Campos, who has thus far remained shielded behind his union representatives and refused to provide his account of the shooting to the public. According to Loomer, it appears that Campos and his family have been forced to remain silent because of a gag order surrounding the incident.

  She “doorstopped” the Campos family in person when she visited their home in Las Vegas Thursday night.

  I just doorstopped #JesusCampos after it was reported he canceled his interview with @seanhannity. I can confirm his family has a gag order. https://t.co/lNMaaaZzWC

  — Laura Loomer (@LauraLoomer) October 13, 2017

  //platform.twitter.com/widgets.js

  According to a video Loomer posted on Periscope, Campos has armed security and it appears that an unmarked law enforcement vehicle is parked outside his home.

  #JesusCampos is missing? Laura Loomer pays him a SECOND home visit #LasVegasShooting https://t.co/Hue57jqveu

  — Laura Loomer (@LauraLoomer) October 13, 2017

  //platform.twitter.com/widgets.js

  Additional videos show Loomer asking members of the Campos family for more information about why he chose to cancel his interviews:

  .@LauraLoomer visits home of #LasVegasShooting “hero” #JesusCampos after media told he is MIA. Family says “can’t talk”/ Gag order? pic.twitter.com/j6gq6lIISy

  — TruNews™ (@TruNews) October 13, 2017

  //platform.twitter.com/widgets.js

  According to Loomer, Jesus Campos and his family members have been told not to discuss the incident. Further, when Loomer was confronted by an armed security guard outside of Campos’ home she noted that the firm the security guard supposedly works for is not registered to operate in Nevada, to which she asks the guard:

  You said that you worked for OnScene, a security company. We did a background check…. and the business license expired in January 2017 and has a virtual address… so the company that you work for…. is it a real company? Or is it just some type of a shill company that the FBI or DHS is using?

  .@LauraLoomer visits home of #LasVegasShooting “hero” #JesusCampos after media told he is MIA. Family says “can’t talk”/ Under gag order? pic.twitter.com/snlJswamGl

  — TruNews™ (@TruNews) October 13, 2017

  //platform.twitter.com/widgets.js

  Little is known about Campos, with few pictures to emerge of the security guard and no apparent online footprint surfacing to provide details about one of the central figures in the mass shooting.

  

  

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• China Launches Yuan-Ruble Payment System

  The monetary regimes of China and Russia, two of the world’s most resource-rich nations, are drawing closer with every passing day.

  In the latest push for convergence, China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions. The PVP system for yuan and ruble transactions, designed to streamline commerce and curency transactions between the two nations, was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.

  It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS). PVP systems allow simultaneous settlement of transactions in two different currencies.

  According to CFETS, the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency. Of course, if the two countries had a blockchain-based settlement system, they would already have all this and much more.

  CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization. Russia, however, is a top priority: the world’s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.

  To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.

  At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.

  Furthermore, also around the same time, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday

  “The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation,” Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said. “The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries,” he added according to.

  Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.

  * * *

  The creation of the clearing center, and the launch of PVP systems enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly. In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People’s Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.

  But one of the most significant measures under consideration is the previously reported push for joint organization of trade in gold.

  In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.

  “We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency.

  In other words, China and Russia are continuing to shift away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.

  Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China – which has been the biggest accumulator of gold in recent years – likes it.

  

  

• "It Is Time To Return To Sanity" Gorbachev Urges Trump And Putin To Save Crucial Cold-War Arms Pact

  Former Soviet Leader Mikhail Gorbachev the last Soviet leader, is urging Russian President Vladimir Putin and US President Donald Trump to meet face to face to resolve their differences as each side accuses the other of violating a Cold War-era arms-control treaty that Gorbachev believes is essential to maintaining peace between the two world powers.

  The Intermediate-Range Nuclear Forces Treaty, a landmark arms control treaty signed in 1987 by Gorbachev and former US President Ronald Reagan, helped end the Cold War by requiring both countries to eliminate all nuclear ground-launched ballistic and cruise missiles with a range of 500 to 5,500 kilometers.

  

  But recently, both sides have called for the treaty to be scrapped as perceived encroachment by NATO “missile-defense” systems in South Korea and Europe has unnerved Putin, while Russia’s efforts to influence the US presidential election with a “sophisticated” propaganda campaign

  In an essay that was published in a local newspaper, and re-published by the Washington Post, Gorbachev explains why preserving the treaty – which he sees as the most vulnerable link in the system of limiting and reducing weapons of mass destruction – is imperative to maintaining the Russia-US relationship.

  In the essay, Gorbachev argues that the US-Russia relationship is “in a severe crisis” and only a dialogue based on “mutual respect” can help repair it – if only the two leaders could scrounge up the political will to make it happen.

  So what is happening, what is the problem, and what needs to be done?

   

  Both sides have raised issues of compliance, accusing the other of violating or circumventing the treaty’s key provisions. From the sidelines, lacking fuller information, it is difficult to evaluate those accusations. But one thing is clear:

   

  The problem has a political as well as a technical aspect. It is up to the political leaders to take action.

   

  Therefore I am making an appeal to the presidents of Russia and the United States.

   

  Relations between the two nations are in a severe crisis. A way out must be sought, and there is one well-tested means available for accomplishing this: a dialogue based on mutual respect.

   

  It will not be easy to cut through the logjam of issues on both sides. But neither was our dialogue easy three decades ago. It had its critics and detractors, who tried to derail it.

   

  In the final analysis, it was the political will of the two nations’ leaders that proved decisive. And that is what’s needed now. This is what our two countries’ citizens and people everywhere expect from the presidents of Russia and the United States.

  If Trump and Putin could agree to preserve the agreement, it would encourage the generals and diplomats responsible for implementing and monitoring the terms to fall in line, Gorbachev said.

  I am confident that preparing a joint presidential statement on the two nations’ commitment to the INF Treaty is a realistic goal. Simultaneously, the technical issues could be resolved; for this purpose, the joint control commission under the INF Treaty could resume its work. I am convinced that, with an impetus from the two presidents, the generals and diplomats would be able to reach agreement.

   

  We are living in a troubled world. It is particularly disturbing that relations between the major nuclear powers, Russia and the United States, have become a serious source of tensions and a hostage to domestic politics. It is time to return to sanity. I am sure that even inveterate opponents of normalizing U.S.-Russian relations will not dare object to the two presidents. These critics have no arguments on their side, for the very fact that the INF Treaty has been in effect for 30 years proves that it serves the security interests of our two countries and of the world.

  Unfortunately, the INF isn’t the only important treaty in danger of collapse. As we reported last month, US officials are preparing restrictions for Russian military flights over American territory permitted by the 2002 Treaty on Open Skies after accusing the country of concealing movements of personnel and military equipment near its western enclave of Kaliningrad as Russia prepared to stage its “Zapad-2017” drills, its biggest display of military power since the end of the Cold War.

  In another sign of mounting tensions, the US suspended joint military exercises with its Gulf allies after a historic Russia-Saudi Arabia summit.

  Gorbachev led the Soviet Union from 1985 until its dissolution in 1991.

  

  

• 'Shocker' Of The Day: 'Tech' Company That Buys Movie Tickets For $10 And Sells Them For $0.33 May Not Survive

  Over the past 4 weeks, the stock of a tiny New York based “IT service management” company, Helios & Matheson Analytics, Inc., has surged just over 1,300% after announcing plans to purchase a majority stake of an “innovative and disruptive technology company” called MoviePass at a $210 million valuation.

  So how exactly does MoviePass, the “innovative” and “disruptive” tech powerhouse that it is, plan to change the entertainment world forever, you ask?  Well, apparently by paying movie theaters $10 a pop for movie tickets and then re-selling them to their own monthly subscribers for a small 97% discount, or roughly $0.33 each (in the worst case scenario). Per Bloomberg:

  The company sells a monthly subscription that gives moviegoers a daily pass to movie theaters for $10 a month – though MoviePass is paying theaters full price for tickets, which can cost $10 apiece or more.

  Genius plan, right? 

  

  And while the company planned to supplement its top line with advertising revenue and deals with theater chains to share in concession sales, at least according to Bloomberg, a problem developed when its subscriber base ballooned from nearly nothing to 400,000 in a matter of weeks.  Unfortunately, at least when you’re business model is dependent upon selling your primary product at a 97% loss, the more ‘successful’ you are the more money you lose.

  And while the ending of this particular movie seemed obvious from the start, it apparently eluded Helios investors until today when the company announced that the business they just purchased 4 weeks ago may not survive…all of which sent their stock plunging by 40%. 

  Helios & Matheson Analytics Inc., the backer of the controversial $10 MoviePass subscription, fell as much as 21 percent after warning the money-losing cinema service may not make it.

   

  Helios boosted its support for MoviePass to $11.5 million from $5 million as part of an August deal to acquire a majority stake, according to a regulatory filing. At the same time, Helios said MoviePass’s auditors are expected to warn of substantial doubt about its ability to continue as a going concern.

  Who knew that massive cash losses could be considered detrimental for a tech company?

  

  Just to put this problem in perspective, lets apply some math to this case study on how not to run a business.  Lets assume that each of MoviePass’s 400,000 subscribers decide to see 2 movies each week (they’re entitled to one movie pass a day…but lets just assume they only use 2 per week) at a cost of $10…that’s a total cost of $32 million each month.  Now, each of those subscribers are paying $10 per month for their service which means MoviePass is collecting $4 million in revenue and burning $28 million every single month or $336mm per year…and that doesn’t even count their staff and other overhead expenses which we’re sure are considerable.  Does that sound like a business plan that might be of interest to you?

  Meanwhile, even AMC, undoubtedly one of the biggest beneficiaries of the bizarre MoviePass business model, said that the company was “unsustainable.”

  MoviePass sparked an outcry in the movie business after cutting the price of its movie subscription plan to just under $10 from $30. That led to a flood of sign-ups that the company struggled to keep up with. The biggest movie-theater chain in the world, AMC Entertainment Holdings Inc., has said the plan is unsustainable — because MoviePass is paying exhibitors full price for tickets — and was looking to block the deal.

  Sorry guys, only Bezos and Musk are able to sell products at a massive loss, in perpetuity, without investor backlash…

  

  

• Andy Xie Warns "The Bubble Economy Is Set To Burst" As Political Tension Soars

  Authored by Andy Xie via The South China Morning Post,

  Central banks continue to focus on consumption inflation, not asset inflation, in their decisions. Their attitude has supported one bubble after another. These bubbles have led to rising ­inequality and made mass consumer inflation less likely.

  

  Since the 2008 financial crisis, asset inflation has fully recovered, and then some. The US household net worth is 34 per cent above the peak in 2007, versus 30 per cent for nominal GDP. China’s property ­value may have surpassed the total in the rest of the world combined. The world is stuck in a vicious cycle of asset bubbles, low consumer ­inflation, stagnant productivity and low wage growth.

  The US Federal Reserve has indicated that it will begin to ­unwind its QE (quantitative easing) assets this month and raise the ­interest rate by another 25 basis points to 1.5 per cent. China has been clipping the debt wings of grey rhinos and pouring cold water on property speculation. They are ­worried about asset bubbles.

  But, if recent history is any guide, when asset markets begin to tumble, they will reverse their actions and ­encourage debt binges again.

  Recently, some central bankers have been puzzled by the breakdown of the Philipps Curve: that falling unemployment rates would lead to wage inflation first and consumer price inflation next. This shows how some of the most powerful people in the world operate on flimsy ­assumptions.

  Despite low unemployment and widespread labour shortages, wage increases and inflation in Japan have been around zero for a quarter of a century. Western central bankers assumed that the same wouldn’t happen to them without understanding the underlying reasons.

  The loss of competitiveness changes how macro policy works. Japan has been losing competitiveness against its Asian neighbours. As its population is small, relative to the regional total, lower wages in the region have exerted gravity on its ­labour market. This is the fundamental reason for the decoupling between the unemployment rate and wage trend.

  The mistaken stimulus has the unintended consequences of dissipating real wealth and increasing inequality. American household net worth is at an all-time high of five times GDP, significantly higher than the bubble peaks of 4.1 times in 2000 and 4.7 in 2007, and far higher than the historical norm of three times GDP. On the ­other hand, US capital formation has stagnated for decades. The outlandish paper wealth is just the same asset at ever higher prices.

  The inflation of paper wealth has a serious impact on inequality. The top 1 per cent in the US owns one-third of the wealth and the top 10 per cent owns three-quarters . Half of the people don’t even own stocks. Asset inflation will increase inequality by definition. Moreover, 90 per cent of the income growth since 2008 has gone to the top 1 per cent, partly due to their ability to cash out in the ­inflated asset market. An economy that depends on asset inflation always disproportionately benefits the asset-rich top 1 per cent.

  There have been so many theories on why inequality has risen. The misguided monetary policy may be the culprit. Germany and Japan do not have significant asset bubbles. Their inequality is far less than in the Anglo-Saxon economies that have succumbed to the allure of financial speculation.

  While Western central bankers can stop making things worse, only China can restore stability in the global economy. Consider that 800 million Chinese workers have ­become as productive as their Western counterparts, but are not even close in terms of consumption. This is the fundamental reason for the global imbalance.

  China’s model is to subsidise ­investment. The resulting overcapacity inevitably devalues whatever its workers produce. That slows down wage rises and prolongs the ­deflationary pull. This is the reason that the Chinese currency has had a tendency to depreciate during its four decades of rapid growth, while other East Asian economies experienced currency appreciation during a similar period.

  Overinvestment means destroying capital. The model can only be sustained through taxing the household sector to fill the gap. In addition to taking nearly half of the business labour outlay, China has invented the unique model of taxing the household sector through asset bubbles. The stock market was started with the explicit intention to subsidise state-owned enterprises. The most important asset bubble is the property market. It redistributes about 10 per cent of GDP to the government sector from the household sector.

  The levies for subsidising investment keep consumption down and make the economy more dependent on investment and export. The government finds an ever-increasing need to raise levies and, hence, make the property bubble bigger. In tier-one cities, property costs are likely to be between 50 and 100 years of household income. At the peak of Japan’s property bubble, it was about 20 in Tokyo. China’s residential property value may have surpassed the total in the rest of the world combined.

  How is this all going to end? Rising interest rates are usually the trigger. But we know the current bubble economy tends to keep inflation low through suppressing mass consumption and increasing overcapacity. It gives central bankers the excuse to keep the printing press on.

  In 1929, Joseph Kennedy thought that, when a shoeshine boy was giving stock tips, the market had run out of fools. Today, that shoeshine boy would be a genius. In today’s bubble, central bankers and governments are fools. They can mobilise more resources to become bigger fools.

  In 2000, the dotcom bubble burst because some firms were caught making up numbers. Today, you don’t need to make up numbers. What one needs is stories.

  Hot stocks or property are sold like Hollywood stars. Rumour and ­innuendo will do the job. Nothing real is necessary.

  In 2007, structured mortgage products exposed cash-short borrowers. The defaults snowballed. But, in China, leverage is always rolled over. Default is usually considered a political act. And it never snowballs: the government makes sure of it. In the US, the leverage is mostly in the government. It won’t default, because it can print money.

  The most likely cause for the bubble to burst would be the rising political tension in the West. The bubble economy keeps squeezing the middle class, with more debt and less wages. The festering political tension could boil over. Radical politicians aiming for class struggle may rise to the top. The US midterm elections in 2018 and presidential election in 2020 are the events that could upend the applecart.

  

  

• Bitcoin Tops $5800 – Up Over 20% Today Amid China Rumors

  Update: Bitcoin has now topped $5800 amid unconfirmed rumors that China will restore cryptocurrency trading (perhaps in a more regulated environment) following the forthcoming National Congress.

  

  As it seems the rest of the crypto space is being sold to fun BTC buying…

  

   

  *  *  *

  Having smashed through the old record high this morning, Bitcoin has blasted above $5600 as the Asian session begins. The cryptocurrency is now up 30% since the Chinese returned from their Golden Week holiday…

  

   

  Bitcoin is now 16% above its previous record high…

  

   

  As a reminder, Mike Novogratz recently suggested Bitcoin could reach $10,000 within the next year.

  In an interview with CNBC's Fast Money, Novogratz called the emerging landscape a "revolution," stating:

  "I never thought I'd come out of retirement but the space is so exciting right now I decided to build a business, hire a whole bunch of smart guys, and we're gonna to raise a fund … and hopefully take advantage of what I see as a revolution, actually. A decentralised revolution."

  As a store of value, Novogratz likened bitcoin to digital gold, and said the technology is beginning to make "more and more sense" as we move increasingly into the digital.

  Novogratz continued to say that, while bitcoin is a bubble, the mania is justified, because it is a technological advancement that promises to fundamentally alter our lives.

  "I can hear the herd coming" Novogratz said.

  And bubble or not, Novogratz concluded eloquently on the extreme nature of cryptocurrencies' potential…

  “Remember, bubbles happen around things that fundamentally change the way we live,” he said.

   

  “The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”

  Bitcoin is set to become "the biggest bubble of our time," he added, and could reach $10,000 very soon due to fast-building interest.

   

   

  

  

• Trump To Scrap Crucial Obamacare Insurer Subsidy

  Just hours after signing an executive order that implicitly begins unwinding ObamaCare, Politco reports, citing two people familiar with the matter, that President Trump plans to cut off critical subsidy payments to insurers selling Obamacare coverage.

  

  Earlier today, Trump signed an executive order expanding access to more loosely regulated insurance options with low premiums, a move that could undermine the ACA insurance markets.

  “We’ve been hearing about the disaster of Obamacare for so long,” Trump said in signing the order at a White House ceremony. “For a long time, I’ve been hearing repeal, replace, repeal, replace.”

   

  He then said that the order is "starting that process" to repeal ObamaCare.

   

  It will be the "first steps to providing millions of Americans with ObamaCare relief."

  And now, as Politico reports, the process appears to accelerating as Trump's decision to end the payments, estimated at $7 billion this year, marks the president's most aggressive move yet to dismantle Obamacare after months of failed GOP repeal efforts on Capitol Hill.

  As Reuters notes, Trump has repeatedly threatened to stop the payments, which are made directly to insurance companies to help cover out-of-pocket medical expenses for low-income Americans enrolled in individual healthcare plans under Obamacare.

  The move is likely to draw lawsuits and may put pressure on Congress to appropriate funding for the subsidies.

  This latest move is likely to throw healthcare markets into chaos, and will infuriate Democrats – effectively closing the 'Chuck and Nancy' channel of communications – leaving a deal to avert government shutdown on or after Dec 8th (when the currenct extension deal runs out) increasingly doubtful.

  

  

• Robert Gore's "Hard Core Doom Porn"

  Authored by Robert Gore via Straight Line Logic blog,

  It will be a crash like we’ve never seen before.

  

  SLL has been accused of trafficking in “doom porn.” Guilty as charged. If you don’t like doom porn, don’t read this article, it’s hard core. If you prefer feel good and heartwarming, there are plenty of Wall Street research reports and mainstream media stories about the economy available. Enjoy!

  In 1971, President Nixon closed the “gold window,” which allowed foreign governments to exchange their dollars for gold. This severed the last link between any government and central bank-created debt and the real economy. Debt could be conjured at whim, and governments and central banks have done so for the last 46 years.

  Not surprisingly, credit creation without restraint has papered the globe with the greatest pile of debt mankind has ever amassed, measured in nominal terms or relative to the underlying economy. A measure of how extraordinary this situation is: most people regard it as normal, if they think of it all. Debt is a first mover, a financial constant. Any exigency small or large can be met from an unlimited credit pool that will always be with us. How to rebuild Houston, Florida, and Puerto Rico? No problem, borrow.

  Although fiat credit creation by governments and central banks is unconnected to the real economy, its effects are not. Their debt becomes an asset within the financial system. Through fractional reserve banking, securitization, and derivatives it become the basis for a multiplication of the original debt. That multiplication is many times the multiplier (the reciprocal of the reserve requirement) taught in introductory macroeconomics classes whereby the debt is contained within the banking system.

  Nominal global debt is reckoned at between $225 and $250 trillion, or about three times global GDP. Financial, debt-supported derivatives (financial instruments whose prices are derived from the prices of other financial instruments) are estimated at anywhere from $500 trillion to $1 quadrillion notational, or six to twelve times global GDP.

  Overpriced houses did not cause the last financial crisis and almost bring down the world’s financial system, securitized packages of mortgages and their associated derivatives did. The Panglossian view of derivatives is that most of them can be netted out against offsetting derivatives, thus actual exposures are far less that notational amounts. The real world view is they can only be netted out as long as all counterparties remain solvent. As we learned in 2009, that is not always a correct assumption.

  Globally, unfunded old age pension and medical liabilities, not counted as debt but still promises made that often have the force of law, sum to another $400 trillion. In the US, they are about $210 trillion, or about 11 times US GDP. Demographics amplify the liability: across the developed world, declining birth rates and extensions in life expectancies mean a shrinking pool of workers supports an expanding pool of beneficiaries. In the last month, SLL has posted four excellent articles by John Mauldin for those who want all the gruesome details. (Just enter John Mauldin in SLL’s search box and they’ll pop right up.)

  This doom porn, the skeptics will say, is almost as old as Deep Throat (released in 1972). Markets crash from time to time, but they always bounce back. Central banks and governments come to the rescue with fiscal stimulus (increased government debt) and unlimited fiat debt.

  Why should we worry now?

  There are a number of reasons.

  When the world was less indebted, a fiat currency unit’s worth of debt produced more than a fiat currency unit’s worth of expanded output of goods and services. Sometime within the last year or two, the marginal economic effectiveness of all that government and central bank debt reached zero, and is negative after debt service.

  With the world saturated in debt, another fiat currency unit of debt produces no increase in output. Kick in the costs of servicing and repaying that debt, and increasing debt is actually retarding economic growth. It accounts for the long-term slowing growth trend, flat incomes, and “secular stagnation” that puzzle so many economists.

  It also accounts for the lack of inflation that puzzles so many central bankers, at least in the price indexes they look at. They are looking at the wrong indexes. The relevant indices are stock, high-grade bond, real estate, and cryptocurrency prices, still at or close to record highs, and corporate and securitized-debt credit spreads to treasury benchmarks at record lows (indicating massive complacency about corporate credit risk). Here inflation—the speculative kind that blows bubbles—is alive and thriving.

  With the Federal Reserve now taking steps to shrink its balance sheet and other central banks making noises about doing the same, global fiat debt creation may go into reverse for the first time in many years. Brandon Smith at Alt-Market.com argues that this is part of plan leading to a crash and global, centralized monetary control.

  He may or may not be on to something, however, valuation extremes and sentiment indicators point to the same conclusion concerning a crash. SLL maintains financial markets are exercises in crowd psychology, impervious to government and central bank efforts to control them, designed to separate the maximum number of speculators from a maximum amount of their money.

  Robert Prechter, of Elliott Wave International, has written the chapter and the verse on markets and psychology. (SLL reviewed his groundbreaking tome, The Socionomic Theory of Finance.) Consider the following from Elliot Wave International’s October “Financial Forecast.”

  Every month another sentiment indicator seems to pop to a frothy new extreme. Last month it was the percentage of cash that members of the American Association of Individual Investors harbored in their investment portfolios. At 14.5%, it was the smallest allocation to this safe alternative since January 2000, the same month that the Dow Industrials began a 38% decline that lasted through October 2002. Last month, we also showed a new bullish extreme for the five-day average of Market Vane’s Bullish Consensus survey of advisors. On September 15, the average pushed to 71%, a new ten-year extreme.

   

  …

   

  The most recent Commitment of Traders Report shows that Large Speculators in futures on the CBOE Volatility Index (VIX) have amassed a record net- short position of 172,395 contracts.

   

  …

   

  This record bet on subdued volatility sets the stage perfectly for the period of “high volatility” that EWFF called for in August.

   

  …Large Speculators in the E-mini DJIA futures have pushed their net-long position to 95,976 contracts, more than four times the number of contracts they held in January 2008, shortly after the Dow started its largest percentage decline since 1929. So, investors are betting to a record degree that the stock market will continue to rise and volatility will continue to remain subdued. Paradoxically, these measures indicate that exact opposite.

   

  …Various media accounts confirm that a rare complacency now dominates the stock market.

  One doesn’t have to buy in to socionomics to realize that virtually everyone is now on the same side of the boat, a condition generally followed by the boat capsizing. Using conventional valuation measures, the only time stocks have been more highly valued is just before the tech wreck in 2000.

  If one does buy into socionomics, the last few upward squiggles in the stock market will put the finishing touches on intermediate, primary, cycle, supercycle, and grand supercycle Elliot Waves dating back to 2016, 2009, 1974, 1932, and the 1780s, respectively. In other words, this is going to be a crash for the ages.

  Given the unprecedented level of global debt, that appears to be the most likely scenario. Every financial asset in the world is either a debt claim or an even less secure equity claim—a claim on what’s left after debt is paid. Much of the world’s real, tangible assets are mortgaged.

  When the debt bubble implodes, a global margin call will prompt forced selling, driving down all asset prices precipitously. Most of what is currently regarded as wealth will vanish. Opening up the world’s fiat debt spigots full force won’t stop this one. The notions that governments and central banks have speculators’ backs, that problems caused by excessive debt can be solved with more debt, will be revealed as monumental follies. And markets will not come back, at least in our lifetimes.

  Long-time readers will point out that SLL has been issuing warnings for years. Again, guilty as charged. However, we’ll join Mr. Prechter and company in their prediction that US equity markets top out before the end of this year. (They called last year’s top in the government bond market, adding to an impressive list of correct calls.) If we’re wrong, it won’t be the first or last time. If we’re right, given the magnitude of what’s coming, being a few years early won’t matter at all.

  Our concluding clichés: fear is stronger than greed and markets go down much quicker than they go up.

  

  

• DHS Releases Images Of Border Wall Prototypes

  The White House wasn’t going to let minor details like the fact that Congress hasn’t appropriated any money to fund construction of President Trump’s promised border wall stop it from building eight prototypes in Otay Mesa, near San Diego.

  And with few expecting the Democrats to accept the White House’s demands relating to a tentative deal that Trump struck with “Chuck and Nancy” last month to avert a shutdown and secure some border wall funding in exchange for enshrining DACA, it’s possible that the Trump administration will never secure the funds, given rumors that a handful of Republican lawmakers privately oppose it.  

  Nevertheless, construction on the prototypes, which were selected by the Department of Homeland Security back in August, began two weeks ago. And now, DHS has released the first images of the partly finished designs.

  Beginning preps are underway at #OtayMesa for the Wall prototypes. pic.twitter.com/77YVMUFAk9

  — CBP San Diego (@CBPSanDiego) September 27, 2017

  Several Border Wall Prototypes are taking form or are near completion. pic.twitter.com/aFg9uq1f5c

  — CBP San Diego (@CBPSanDiego) October 11, 2017

  //platform.twitter.com/widgets.js

  With just over 2 weeks in the construction phase the companies building the Border Wall Prototypes are taking form. https://t.co/2dv2WbVCSz pic.twitter.com/BXV0NTBRUm

  — CBP San Diego (@CBPSanDiego) October 11, 2017

  //platform.twitter.com/widgets.js

  Construction workers building the Border Wall Prototypes, look like they are making great progress in only 11 days. #CBP pic.twitter.com/NctporJ6mi

  — CBP San Diego (@CBPSanDiego) October 6, 2017

  //platform.twitter.com/widgets.js

  Wall Prototype construction continues in#OtayMesa along the border. pic.twitter.com/wAkDStCPK6

  — CBP San Diego (@CBPSanDiego) October 2, 2017

  //platform.twitter.com/widgets.js

  Plans for the prototypes that were selected by DHS after a bidding process that began in the spring were published in late August.

  The prototypes are meant to be a “menu of designs” that might be used for the wall, should it be built. Four of the prototypes are made of concrete, while the other four are made of other materials, the Blaze reports. They range from 18 to 30 feet high and are “designed to deter illegal crossings,” says the Border Protection office. They are expected to cost $3.6 million.

  The money for building the prototypes came from $20 million that Congress has allowed the Department of Homeland Security to pull from other areas of its budget. That followed an executive order President Donald Trump signed in January directing the federal government to begin construction on the border wall as soon as possible.

  While the final cost of a border wall would depend on which design is chosen, estimates range from the upper end of $70 billion from a report by Senate Democrats, to $21.6 billion estimated by the US Department of Homeland Security.

  

  

• Did Bannon Just Take Down Harvey Weinstein?

  Authored by Tom Luongo via TomLuongo.me,

  The biggest open-secret in Hollywood was that Harvey Weinstein was a Grade-A pervert.  And his ‘coming out party’ this week is incredibly intriguing.  Hollywood is a dirty place.

  

  It’s Chinatown, squared.

  And, at this point it’s what we don’t know that is more interesting than what we’ve heard so far.  But, staying focused on Harvey Gropeman, Producer at Large, his position has been to act as one of the main enforcers of the status quo in all of the power centers of the United States.

  From the casting couches of Hollywood to the banks on Wall St. to the grubby think tanks in D.C., this story won’t have all the twists and turns of L.A. Confidential, but it will have the same implications.

  Weinstein, in effect, was perfectly suited for his role.  He is a man of infinite appetites with poor impulse control.  A pathetic loser with power over hot, young women desperate for fame.

  And these women made the trade willingly.  “Small price to pay, right?”  Wrong.

  Look at the women most opposed to Trump, the Ashley Judds, the Gwynneth Paltrows.  They were all used by Weinstein or someone like him.  More will come out every day.

  Ben Affleck is next because he couldn’t handle fame and power any better than the rest of them did. He’s also Batman and Disney will not pass up the opportunity to bloody Warner Bros. nose.

  The story is perverted by the desperate need of the powerful to maintain their power at all costs.  Weinstein’s film companies acted like money laundering operations for the DNC.  How many millions did he raise for people like Obama, Hillary, Pelosi, Feinstein?

  How many millions were added to the budgets of performer’s salaries to be funneled from Wall St. financiers to those same people?

  The whole thing is an internecine nightmare of quid pro quo and the shadiest of finances.

  And Steve Bannon just attacked all of it.  In real time.

  The Bannonator

  Yes, you heard me. Steve Bannon is the Dr. Evil in this movie.  He’s the mastermind behind this.  Except that Bannon isn’t the villain (well, to Harvey Weinstein he is) but the protagonist.  Think about it for two seconds.

  Who else has motive, means, opportunity and, most importantly, the will to take on the biggest, most powerful (and pathetic) people in the world.

  And he doesn’t want money.  Bannon’s already rich.  Remember, as Bannon left the White House he said that there he had influence, but at Breitbart he has power.

  We’re seeing the first effects of his deploying that power.

  Go through it like Jake Gittes or Sam Spade

  Motive?  Bannon, for whatever faults he has, is a patriot.  He’s a disciple of Andrew Breitbart who routinely castigated Hollywood to ‘stop raping the children.’  Bannon joined Trump’s campaign and turned the messaging into a pale reflection of his film, “Generation Zero.”

  Bannon understands the cultural and generational imperatives of this moment in time.  If you haven’t watched that film then you don’t know who Steve Bannon is.

  Means?  The man runs Breitbart.

  Opportunity?  Bannon made millions as a producer on Seinfeld.  He worked in Hollywood for years.  Bannon also saw all sorts of stuff while working for Trump.

  Remember, I told you on the outside he would be Trump’s Secret Agent, using his newly-found knowledge (cue the Hero Cycle!) from the Underworld of Washington to deploy sump pumps in the swamp.

  Will?  That’s my guess.  Spending time in Washington changes everyone.  It corrupts the venal and galvanizes the principled.  Bannon didn’t want to cut deals to govern.  He wasn’t interested in governing the U.S. with Trump, he was interested in blowing up the vile status quo.  He runs Breitbart.

  How do I know Bannon was behind this?  The headlines today are all about how Bannon did some business with Weinstein over a decade ago.  A minor company that Bannon ran into the ground.  It went bankrupt.  Simple guilt by ironic association.

  Here’s a better question?  Who hasn’t worked with Weinstein in Hollywood?  This story is simply chum to feed to the loony left’s Facebook feeds.  It will alienate even more people from that pillar of thought control.

  The left crowed when they thought they’d chased Bannon from the White House.  They thought they had Trump cornered and without friends.  But, Bannon’s leaving the White House wasn’t the end of the movie, it was, simply the end of a smaller arc.

  The Weinstein Turn

  In writing, there is something called the “Mid-Point Turn.”  It is the moment when someone does something so singular, usually bad, that it ensures things can never go back to the way they were at the beginning.

  The fall of Harvey Weinstein is the ‘Mid-Point Turn’ for this part of the story.  The lid has been blown off the abuse cycle in Hollywood. Someone finally is going down for their crimes.  The guy behind the outing is still in power and the dominoes will continue to fall.

  Trump was right to lean on the NFL like he did.  It galvanized his base.  It exposed the hypocrisy of a hyper-violent sport played by criminals and financed by taxpayers.  They think they can just stop taking a knee for a few weeks and all will be forgiven.

  No.  It won’t.  The same thing with the image handlers in Hollywood.  They think that isolating Weinstein, putting out rumors of rehab, etc. will make this thing go away.  Harvey Weinstein is going to jail.  He’s a sex offender.

  But, the real story is how much this disrupts the money laundering cycle of the entertainment industry to maintain control over the narrative.  Trump’s base already didn’t like Hollywood.  Now they hate it.

  George Clooney recently ranted about Steve Bannon saying,

   “Steve Bannon is a failed f**king screenwriter, and if you’ve ever read [his] screenplay, it’s unbelievable. Now, if he’d somehow managed miraculously to get that thing produced, he’d still be in Hollywood, still making movies and licking my a$$ to get me to do one of his stupid-a$$ screenplays.”

  Well, George, Bannon is right now producing one of the best screenplays I’ve read in a long time.  He has power and your boy Harvey has lawyers.  How’s that for an act reversal?

  

  

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• The European Countries With The Most Psychiatrists

  If Europe is driving you nuts, we have some simple advice… head to Finland!

  As Statista's Niall McCarthy notes, according to new Eurostat data released to mark World Mental Health Day, the European Union has about 90,000 psychiatrists in total and Finland has the most per 100,000 inhabitants (23.60) followed by Sweden (23.19) and the Netherlands (22.95).

  

  You will find more statistics at Statista

  The fewest per 100,000 people can be found in Malta (9.49), Poland (9.01) and Bulgaria (7.59).

  In 2014, 183,500 people across the EU died due to mental and behavioural disorders with women accounting for around two-thirds of all deaths.

  

  

• NATO "Concerned By Russia's Military Buildup Close To Our Borders"

  Authored by Eric Zuesse via The Strategic Culture Foundation,

  The Secretary-General of NATO said this on October 9th, speaking in NATO member Romania, right across the Black Sea from Russia’s region of Crimea (which had always been part of Russia except for the brief period 1954-2014, when the Soviet dictator arbitrarily transferred Crimea to Ukraine in 1954 — i.e., the Soviet dictator had made Crimea ‘Ukrainian’, and only in 2014 was a plebiscite actually held there in order to determine what the people there wanted, and more than 90% chose to be restored to the Russian Government). He said, on October 9th, that NATO is “concerned by Russia’s military buildup close to our borders”, but NATO actually had expanded up to Russia’s borders; in no way had Russia expanded up to NATO’s borders. NATO’s leader was importantly misrepresenting history, there.

  

  In fact, Romania, itself, used to be a member of the former Soviet Union’s Warsaw Pact military alliance of nations, which had been set up by the Soviet Union in response to America’s having established in 1949 its NATO military alliance with Western European nations. After the Cold War ended, on Russia’s side, in 1991, and has been secretly continued by the U.S. Government and its allies right up to the present time, Romania became a member of the NATO anti-Russian alliance in 2004, under George W. Bush’s Administration. But Bush’s father, President George Herbert Walker Bush, had, as the U.S. President, established, in 1990, the foundation for what NATO now is doing in Romania, against Russia — even though Russia had, in fact, ended the Cold War on its side, in 1991.

  When the Cold War ended in 1991, it was on the basis of the promise by the Soviet Union that the U.S.S.R. would end, and would become its component separate independent states (one of which was Russia), and end its communism, and end its Warsaw Pact military alliance with nations adjoining the Soviet Union – that all of this would happen if the United States and its NATO allies would not expand NATO, and that especially NATO would not move “one inch to the east” (i.e., toward Russia) by adding, to the NATO military alliance, any of the nations (such as Romania) which had been in the Soviet Union’s Warsaw Pact, nor especially any nations that had been a part of the former Soviet Union itself (such as Ukraine). The U.S. Government wants to bring Ukraine into NATO, to become its 29th member-nation. But Ukraine is not yet a member, and NATO therefore doesn’t yet have any legitimate business there, at all. NATO isn’t, and can’t yet be, ‘defending’ Ukraine — no matter how much NATO might possibly want to go to war against Russia.

  For NATO to be alleging to be “concerned by Russia’s military buildup close to our borders” is amazing, since NATO is militarily building up not only “close to” Russia’s borders, but right on Russia’s borders (such as in Estonia, Latvia, and Lithuania) and is now seeking to add Ukraine as a member, but already has other formerly Russia-allied nations: Poland, East Germany, Czech Republic, Slovakia, Hungary, Bulgaria, Albania, Bosnia and Herzegovina, Croatia, Slovenia, and, this year, Montenegro – and is attempting to draw in the few remaining ones, but especially Ukraine, which it claims to be ‘defending’.

  The Warsaw Pact was formed six years after the NATO alliance was, and only after repeated failures by the Soviet Union to be allowed into NATO. The Soviet leader, Mikhail Gorbachev, was, additionally, but only vaguely, promised, in 1990, that if the Cold War would ‘end’, then Russia, now to become an independent nation, would be considered ‘again’ for possible admission into NATO, but this vaguely presented bait turned out not to be honored in reality, once the deal was done. During the years after 1991, NATO boldly and blatantly violated the “move not one inch to the east” agreement with Gorbachev, and took on 13 new members — all of which lands had previously been either inside the Soviet Union, or else inside the Warsaw Pact — so that NATO increased from its then-existing 16 nations, to become today’s 29 nations, all of which 13 additional nations had previously been allied with Russia; and, so, NATO is now not only near Russia’s borders, such as in Romania, but right on Russia’s very borders in other nations, and the U.S. is, even now installing an anti-missile system to annihilate Russia’s retaliatory missiles in the event that the U.S. regime decides to launch a blitz first-strike nuclear attack against Russia to eliminate Russia’s retaliatory nuclear arsenals either on the ground or in the air and thus finally conquer NATO’s eternal target: Russia.

  NATO repeatedly accuses Russia of aggression for defending itself against American, and other NATO, aggressions, such as U.S. President Barack Obama’s carefully engineered coup that started being planned in 2011 and was finally perpetrated in 2014 to take over Ukraine’s Government to turn anti-Russian this country, Ukraine, which has the longest of all European borders with Russia. The U.S. regime wants Ukraine in NATO, but other NATO members don’t yet allow it (and maybe never will).

  However, American and other NATO ‘news’media, lie about this entire matter, and present NATO as being purely a ‘defensive’ organization, instead of what it actually is: a major component in the U.S. dictatorship’s effort ultimately to checkmate Russia or else to kill Russians entirely and take over their natural resources to be controlled by U.S. and other international corporations. NATO is an international mega-criminal gang, which enormously increases the likelihood of World War III, but which also is enormously profitable for its ultimate backers, Lockheed Martin and other NATO weapons-makers, whose controlling ownership also happens to own and control, and to advertise their other corporations’ products and services in, the ’news’ media in those nations. Media-profits are thus connected — both directly and indirectly — to that military-industrial complex, which needs invasions, even if it doesn’t actually need to conquer Russia or any other country. But perpetual war for perpetual ‘peace’ is the most essential thing of all for NATO (and, since nuclear weaponry is the most expensive type of all, the anti-Russian agenda is especiallyimportant to NATO, even without Russia’s natural resources). That’s what actually is behind NATO Secretary-General Jens Stoltenberg’s speech on October 9th near Russia’s border, in which he alleged, “Our deployments are a direct response to Russia’s aggressive actions in Ukraine,” and, “We are concerned by Russia’s military build-up close to our borders.” He said there, “We do not want to isolate Russia. NATO does not want a new Cold War. Our actions are designed to prevent, not provoke conflict.” (Even Hitler had said, prior to the start of WW II, that he was merely ‘defending’ Germany, against other countries.) He knows, as well as anyone possibly can, that, on the U.S. regime’s side, the Cold War never stopped, and that it has escalated sharply and re-invigorated NATO itself, with the Obama-regime’s takeover of Ukraine, and he knows that the ‘aggression’ which NATO and the U.S. regime blame against Russia, constitute actually Russia’s defensive actions which necessarily result from Obama’s Ukrainian coup on Russia’s very doorstep — a coup which was even documented on recordings, such as here and here (and many other key moments) (and the key background for which coup has, by now, also been documented, going all the way back to 2011, when the planning for organizing Obama’s coup was already begun in 2011 inside the U.S. State Department), and which therefore cannot even be denied (except in the persistently lying U.S.-NATO team’s ‘news’media).

  It’s all a big ‘jobs program’ for the U.S. and other extremely corrupt-at-the-top nations – the U.S. aristocracy and its vassal-aristocracies in Europe and elsewhere, and their lying ‘news’media, who can’t deny the evidence, and so they simply ignore the evidence, and they instead stenographically ‘report’ the U.S. Government’s lies as ‘truths’, much the same as had happened prior to the U.S. Government’s invasion of Iraq in 2003, only on a much larger scale now.

  

  So, these ugly facts are not reported in the NATO press, because they’re true – their truth is why they’re not allowed to be broadcast and publicly debated. Their being true is blocking those ‘democracies’ from allowing their respective publics to know anything about any of this.

  We are, thus, all living in the type of situation that the allegorical novel 1984 described; but the means by which it operates, in reality, turn out to be far more sophisticated than in the fictional version.

  Welcome, then, to 2017’s version of 1984 — it’s the updated version, in which, NATO is “concerned by Russia’s military buildup close to our borders.”

  

  

• Power Corrupts: A Culture Of Compliance Breeds Despots And Predators

  Authored by John Whitehead via The Rutherford Institute,

  Power corrupts.

  Worse, as 19th-century historian Lord Acton concluded, absolute power corrupts absolutely.

  It doesn’t matter whether you’re talking about a politician, an entertainment mogul, a corporate CEO or a police officer: give any one person (or government agency) too much power and allow him or her or it to believe that they are entitled, untouchable and will not be held accountable for their actions, and those powers will eventually be abused.

  

  We’re seeing this dynamic play out every day in communities across America.

  A cop shoots an unarmed citizen for no credible reason and gets away with it. A president employs executive orders to sidestep the Constitution and gets away with it. A government agency spies on its citizens’ communications and gets away with it. An entertainment mogul sexually harasses aspiring actresses and gets away with it.

  Abuse of power – and the ambition-fueled hypocrisy and deliberate disregard for misconduct that make those abuses possible – works the same whether you’re talking about sexual harassment, government corruption, or the rule of law.

  For instance, 20 years ago, I took up a sexual harassment lawsuit on behalf of a young woman – a state employee – who claimed that her boss, a politically powerful man, had arranged for her to meet him in a hotel room, where he then allegedly dropped his pants, propositioned her and invited her to perform oral sex on him.

  Despite the fact that this man had a well-known reputation for womanizing and this woman was merely one in a long line of women who had accused the man of groping, propositioning, and pressuring them for sexual favors in the workplace, she was denounced as white trash and subjected to a massive smear campaign by the man’s wife, friends and colleagues (including the leading women’s rights organizations of the day), while he was given lucrative book deals and paid lavish sums for speaking engagements.

  William Jefferson Clinton eventually agreed to settle the case and pay Paula Jones $850,000.

  Here we are 20 years later and not much has changed.

  We’re still shocked by sexual harassment in the workplace, the victims of these sexual predators are still being harassed and smeared, and those who stand to gain the most by overlooking wrongdoing (all across the political spectrum) are still turning a blind eye to misconduct when it’s politically expedient to do so.

  This time, it’s Hollywood producer Harvey Weinstein – longtime Clinton associate and a powerhouse when it comes to raising money for Democrats – who is being accused of decades of sexual assaults, aggressively sexual overtures and harassment.

  I won’t go into the nauseating details here. You can read them for yourself at the New York Times and the New Yorker.

  Suffice it to say that it’s the same old story all over again: man rises to power, man abuses power abominably, man intimidates and threatens anyone who challenges him with retaliation or worse, and man gets away with it because of a culture of compliance in which no one speaks up because they don’t want to lose their job or their money or their place among the elite.

  This isn’t just happening in Hollywood, however.

  And it’s not just sexual predators that we have to worry about.

  For every high-profile power broker who eventually gets called out for his sexual misbehavior, there are hundreds – thousands – of others in the American police state who are getting away with murder – in many cases, literally – simply because they can.

  The cop who shoots the unarmed citizen first and asks questions later might get put on paid leave for a while or take a job with another police department, but that’s just a slap on the wrist. The shootings and SWAT team raids and excessive use of force will continue, because the police unions and the politicians and the courts won’t do a thing to stop it. Case in point: The Justice Department will no longer attempt to police the police when it comes to official misconduct. Instead, it plans to give police agencies more money and authority to “fight” crime.

  The war hawks who are making a profit by waging endless wars abroad, killing innocent civilians in hospitals and schools, and turning the American homeland into a domestic battlefield will continue to do so because neither the president nor the politicians will dare to challenge the military industrial complex. Case in point: Rather than scaling back on America’s endless wars, President Trump—like his predecessors—has continued to expand America’s military empire and its attempts to police the globe.

  The National Security Agency that carries out warrantless surveillance on Americans’ internet and phone communications will continue to do so, because the government doesn’t want to relinquish any of its ill-gotten powers. Case in point: The USA Liberty Act, proposed as a way to “fix” all that’s wrong with domestic surveillance, will instead legitimize the government’s snooping powers.

  Unless something changes in the way we deal with these ongoing, egregious abuses of power, the predators of the police state will continue to wreak havoc on our freedoms, our communities, and our lives.

  For starters, let’s recommit to abiding by the rule of law.

  Here’s what the rule of law means in a nutshell: it means that everyone is treated the same under the law, everyone is held equally accountable to abiding by the law, and no one is given a free pass based on their politics, their connections, their wealth, their status or any other bright line test used to confer special treatment on the elite.

  We need to stop being victimized by these predators.

  As I point out in my book Battlefield America: The War on the American People, I’m not just talking about the political predators in office, but the ones who are running the show behind the scenes—the shadow government—comprised of unelected government bureaucrats whose powers are unaffected by elections, unaltered by populist movements, and beyond the reach of the law.

  There is no way to erase the scars left by the government’s greed for money and power, its disregard for human life, its corruption and graft, its pollution of the environment, its reliance on excessive force in order to ensure compliance, its covert activities, its illegal surveillance, and its blatant disdain for the rule of law.

  “We the people” – men and women alike –  have been victims of the police state for so long that not many Americans even remember what it is to be truly free anymore. Worse, few want to shoulder the responsibility that goes along with maintaining freedom.

  Still, we must try.

  

  

• Vegas Hotel Worker Warned Police Of Shooter Before Massacre Began

  In one of the most shocking developments to emerge in the week-and-a-half since Stephen Paddock killed 59 people and wounded more than 500 others during the worst mass shooting in US history, NBC is reporting that a maintenance worker said Wednesday he told hotel dispatchers to call police and report a gunman had opened fire with a rifle inside Mandalay Bay before Paddock began firing on the Harvest country music festival below.

  Worker Stephen Schuck told NBC News that he was checking out a report of a jammed fire door on the 32nd floor of Mandalay Bay when he heard Paddock shoot security guard Jesus Campos in the leg. After the shooting, Campos peeked out from an alcove and told Schuck to take cover.

  “As soon as I started to go to a door to my left the rounds started coming down the hallway,” Schuck said. “I could feel them pass right behind my head. “It was kind of relentless so I called over the radio what was going on,” he said.

   

  “As soon as the shooting stopped we made our way down the hallway and took cover again and then the shooting started again.”

   

  Paddock fired more than 200 bullets into the hall and nearby rooms at the beginning of his deadly rampage on Oct. 1.

  Somehow, Schuck avoided the bullets.

  "I am incredibly blessed that somehow I came out of there alive," Schuck added.

  Before Las Vegas Police unveiled the latest "narrative change" during a Monday press conference, it was believed that Campos had been shot after the rampage, not before. The changeup has raised questions about why Paddock chose to end his rampage and take his own life with a gunshot blast to the head when evidence in his room and truck suggested he intended to escape.

  According to the official timeline, Campos was injured at about 9:59 p.m. Six minutes later, at 10:05 p.m., Paddock fired the first shots on concertgoers.

  A police SWAT team got to the 32nd floor at 10:17 p.m., and a minute later learned that the security guard was hit and where the shots were fired from.

  Mandalay Bay owner MGM Resorts said in a statement that it cannot comment about the ongoing investigation, but raised questions about the timeline since "many facts are still unverified."

  The report has raised questions about whether there was a lapse in communication among first responders that delayed their arrival on the scene.

  The police's latest timeline means it took 19 minutes for Las Vegas police to learn where the fire was coming from, information that Schuck had already relayed to hotel dispatchers.

  In an audio recording of Schuck's dispatch call released by NBC earlier today, Paddock's first shots into the hallway are clearly audible.

   

  

  

• San Diego's Deadly Hepatitis A Outbreak Turns "Statewide Epidemic" As "Outbreak Could Last Years"

  A few weeks ago we highlighted the staggering outbreak of Hepatitis A in San Diego that had infected 400 people and killed more than a dozen.  The outbreak was first identified in early March, according to the county, and declared a public health emergency in September.

  But, as the LA Times points out, the hepatitis A outbreak that started in San Diego is now on the verge of reaching statewide epidemic status, as cases have spread through homeless tent cities all the way north to Sacramento.

  California’s outbreak of hepatitis A, already the nation’s second largest in the last 20 years, could continue for many months, even years, health officials said Thursday.

   

  At least 569 people have been infected and 17 have died of the virus since November in San Diego, Santa Cruz and Los Angeles counties, where local outbreaks have been declared.

   

  Dr. Monique Foster, a medical epidemiologist with the Division of Viral Hepatitis at the U.S. Centers for Disease Control and Prevention, told reporters Thursday that California’s outbreak could linger even with the right prevention efforts.

   

  “It’s not unusual for them to last quite some time — usually over a year, one to two years,” Foster said.

  Hepatitis A is commonly transmitted through contaminated food. The only outbreak in the last 20 years bigger than California’s occurred in Pennsylvania in 2003, when more than 900 people were infected after eating contaminated green onions at a restaurant.

  California’s outbreak, however, is spreading from person to person, mostly among the homeless community.

  The virus is transmitted from feces to mouth, so unsanitary conditions make it more likely to spread. The city of San Diego has installed dozens of handwashing stations and begun cleaning streets with bleach-spiked water in recent weeks.

  Meanwhile, the outbreak has made its way to Santa Cruz and L.A. counties, where 70 and 12 people have already been diagnosed, respectively, as public health officials warn that the worst is likely far from over.

  San Diego County declared a public health emergency in September because of its hepatitis A outbreak.

   

  Since November, 481 people there have fallen ill, including 17 who died, according to Dr. Eric McDonald with the county’s health department. An additional 57 cases are under investigation, he said.

   

  Officials from both counties say they’ve vaccinated thousands of homeless people and will continue to do so.

   

  New cases linked to the outbreak might not appear for weeks, because it can take up to 50 days for an infected person to show symptoms, said Santa Cruz public health manager Jessica Randolph.

   

  “I don’t think the worst is over,” Randolph said.

  

  Of course, as we pointed out earlier this year (see: Shocking Video Footage Of Sprawling California Tent City), sprawling tent cities have been popping up all over California for years and are called home by 1,000s of residents in even the most posh cities from Newport to Santa Cruz.  All of which has prompted a wave of vaccinations and a “review of sanitation protocols for homeless encampments”…which we’re sure will be followed very rigorously by residents.

  In Orange County, which has had two hepatitis A cases linked to the outbreak, public health workers have given out 492 vaccines, mostly to homeless people, officials said. County nurses have also been visiting shelters and parks to vaccinate people.

   

  Some officials, including in Riverside and Sacramento counties, also said they were reviewing their sanitation protocols for homeless encampments. An L.A. councilman recently called for more toilets in neighborhoods such as skid row and Venice in light of the local hepatitis cases.

   

  In Oakland, city workers, represented by SEIU Local 1021, sent a letter to City Hall last month saying they feared a hepatitis A outbreak in the region’s homeless community. So far, there haven’t been any cases in Oakland or the rest of Alameda County, but city safety steward Brian Clay said he believed the city has allowed unsanitary conditions in homeless encampments.

   

  “There’s syringes, there’s human feces, there are dead animals, rats alive, and dead rats … pee bottles, five-gallon buckets used as toilets,” Clay said. “We’re definitely concerned about this added threat of hepatitis A.”

  As Breitbart points out, California’s tent cities are the direct result of “proactive” legislation that forbids police from dispersing homeless people living in tent cities between the hours of 9pm and 5:30am.

  California homeless advocates have been successful across the state in forcing cities to accept the homeless living in large tent communities on public property. The advocates refer to anti-homeless ordinances as the modern-day equivalent to post-slavery Jim Crow and Depression era anti-Okie laws that allowed police to disperse people deemed “undesirable” after dark.

   

  The City of San Diego was forced to sign the Spencer Settlement in 2006, which forbids its Police Department from enforcing the city’s “Illegal Lodging Enforcement Guidelines” between the hours of 9 pm to 5:30 am.

   

  California, with 115,738 homeless, now accounts for about 21 percent of America’s total homeless population. Due to legal settlements against vagrancy laws, about 72.3 percent of California’s homeless are unsheltered, usually living in tent cities.

  If you like your socialist utopia, you can keep your socialist utopia.

  

  

• Brandon Smith: A Tactical Analysis Of The Las Vegas Mass Shooting Incident

  Authored by Brandon Smith via Alt-Market.com,

  I set aside some time for more details of the Vegas shooting to emerge before writing this article. A few important data points have been released, but I have to say that this remains one of the most confusing terror incidents in decades.

  

  The tactical and strategic thought applied in this attack denotes a sophisticated and experienced shooter, yet, we are told by Stephen Paddock's family and girlfriend that there was no indication that he had such knowledge or experience. There were some advanced tactical decisions involved in every aspect of the staging of the event, yet, there were also a few glaring mistakes that do not fit. Beyond this, there is evidence that Paddock (the alleged shooter) did not act alone, yet, the official mainstream narrative continues to tell us that he was a lone wolf.

  Now, every terror event these days produces an endless supply of alternative theories, some practical and some ridiculous. I will be keeping my theories to a minimum here, because I don't think they serve much purpose in this instance beyond comfort for those that desperately want explanations. What I will be doing is presenting some questions and pointing out inconsistencies. My goal is merely to show that there is evidence which indicates far more complexity to the Vegas shooting than the mainstream media and federal officials are willing to discuss.

  First, lets look at how the attack was staged versus what we are told about the background of Stephen Paddock.

  Mass Shooter Psychological Profile

  Psychological disposition is the root of tactical behavior.  It is important to note that mass shootings are an extremely rare occurrence despite the propaganda often poured onto the pages of the mainstream media. Psychological profiling of the people behind these crimes is difficult because the number of candidates is very small. There are, however, some common themes.

  For example — many mass shooters are motivated by revenge or envy. Shooters often exhibit signs of sociopathy, a self-centered nature and a lack of compassion along with past instances of abuse and violence towards other people and animals. There is also usually a previous history of mental illness. In most cases there is a "triggering event" which leads to a psychological break and a reaction to violence.

  According to the personal accounts from the people that knew Paddock, including his girlfriend, none of these attributes seems to fit. Marilou Danley described him as a "kind and caring man," stating that he had never taken any action which would have led her to believe he was capable of such violence. The only factor that stands as evidence of a potential psychological break is the fact that Paddock was prescribed the anti-anxiety drug diazepam months prior, which has been known to cause aggression when taken in larger doses.

  Did Paddock take this drug because of unrelated anxiety and did it trigger his shooting spree? Or, was his anxiety caused by the fact that he was already planning a shooting spree and the drug was meant to "take the edge off" so he could more easily follow through with the attack?

  Paddock was prescribed the drug once in 2016 and on June 21st of this year.  I have seen no evidence that he was using the medication in the days before the attack.  The meticulous planning that went into this attack, as well as possible evidence that Paddock was renting rooms adjacent to major musical events for some time, shows that this was not initiated by a psychological break. Rather, there was a considerable level of conscious critical thought and foresight.

  There is also no available evidence of domestic instability or financial troubles. Paddock was a multi-millionaire with a successful real estate investment portfolio. He was a former postal worker and tax auditor, as well as an employee for defense contractor Lockheed Martin (I have not seen any statements by Lockheed on what exactly he did for them). It should be noted that Paddock, at age 64, was one of the oldest mass shooters in recent history.

  Paddock's father, a bank robber on the FBI's Most Wanted list, was not present for the most of the early lives of the children according to his brother, Eric Paddock, which undermines the notion of poor environmental influences.

  Eric Paddock claims Stephen also had no strong ideological or religious leanings and simply "didn't care" about such matters. Meaning, no apparent ties to extremist views. He had no social media profiles and police claim they have found nothing in his home computers or phones to suggest a philosophical or political motive. So far I have not seen a single concrete and verified piece of evidence proving Paddock believed in anything other than making money, gambling and traveling the world for fun.

  I personally find this extremely hard to believe. Stephen Paddock, for all intents and purposes, was positively the perfect "Gray Man," a ghost that blended completely into the background, so much so that his own family and girlfriend had no idea that he was amassing the weapons and training needed to pull off the Vegas attack.

  The Tactical Know-How Of A Nobody

  This is the area which brings up the most questions for me in terms of the Vegas incident. As an avid tactical shooter and long distance shooter, I immediately recognized some strange factors. For instance, the choice of his perch, two adjacent rooms on the 32nd floor of the Mandalay Bay Hotel, was rather effective for a number of reasons.

  If you have the chance to study counter-sniping methodologies or talk with veterans involved in counter-sniping in urban areas, you will learn that the most successful snipers tend to choose mid-ground perches to take shots from. Meaning, they never choose the highest points nor the lowest points, and never shoot from the closest points or the furthest points. Well trained snipers can and do sometimes shoot from 1,000 yards or more, but they prefer to shoot from the "sweet spot" around 300-400 yards away at an elevated point from an expedient hide in the middle of a building or structure.

  They do this because when people (including trained combat soldiers) are shot at, their eyes naturally tend to scan for the highest points in the background and the closest points in the foreground first. Choosing mid-ground positions makes snipers more difficult to pick out quickly and also harder for the average person to shoot back at.

  I would note that average, untrained mass shooters are more likely to enter a crowd and start shooting at point blank range in order to ensure hits on targets. Paddock chose the position of a trained shooter, which you can see a photo of in this article by The New Yorker. It was NOT the best possible position, but a very good one.

  Paddock's choice to fire from the position of a large occupied hotel gave a layer of cover to his attack; anyone attempting to suppress him with their own fire would risk hitting innocent people within the building.  Only a person with an understanding of counter-sniping and a scoped rifle would have the ability to stop the attack from outside.  Nevada is a very concealed carry friendly state and attacking a crowd at close range on the ground would be a high risk scenario.  Firing from the Mandalay was the shooter's most likely chance of a high body count without meeting opposition, as long as he had the proper training.

  The first room Paddock used in the Mandalay is in the corner of the 32nd floor with a view of the concert area and the north. It has a diagonal range of around 400 yards and a linear range of around 240 yards. When firing from an elevated position snipers range targets and bullet drop according to the shorter linear range or "true ballistic distance" (base of the ground to the target) rather than the direct range from their perch to the target. This is because gravity only affects the bullet over the true ballistic distance and elevation in a scope must be adjusted to that distance. It is not as easy as it seems to hit targets from an elevated position, even with an "automatic" weapon.

  It has been recently stated by Las Vegas police that the "note" found near Paddock's body was scribbled with calculations for bullet drop from his position. These calculations can be done with newer laser rangefinders, but Stephen apparently chose to do them on paper. Las Vegas Detective Casey Clarkson was on the grounds of the concert during the attack, and recounted "I'm like, how is he so accurate" (in reference to Paddock) in an interview with 60 Minutes. Yet another piece of evidence showing that Paddock (or someone else) had extensive shooter training.

  The two adjacent rooms at the Mandalay offered extensive coverage of possible approaches for first responders. The first room gave the shooter good coverage of the concert and the north approach of Las Vegas Blvd. The second room gave the shooter a very wide angle of coverage to the south approach to the Mandalay as well as the main entrance of the hotel. More tactical know-how on display.

  Finally, Paddock allegedly placed small surveillance cameras in the hall approaching his room. A valuable tool which a shooter could use to surprise law enforcement, maintaining a longer period of shooter effectiveness as well as possibly allowing for an escape. Las Vegas police are quoted as stating that it appeared as though Paddock had planned to evade capture. This fits in line with the rest of his tactical staging. His suicide does not.

  Things That Don't Add Up

  Again, I am not going to enter into much discussion on theory, here. I am only going to cite some instances of evidence and narrative that, for me, do not make sense.  Let's begin…

  The motive: No apparent motive. Paddock led a life of near luxury, had a happy relationship with his girlfriend and gave no indication to anyone of any instability or ideological affiliation. He had no criminal record. He was also well beyond the average age range of people commonly involved in such crimes. He does not fit any of the characteristics of mass shooters.  Period.

  The arsenal: Paddock put a substantial amount of thought and planning into the position of his perch as well as a potential escape. He had the knowledge and experience to calculate accurate shots from an elevated position at distance. But, for some reason the 64-year-old-man decided it was warranted to drag at least 23 guns and hundreds of pounds of ammunition in ten separate suitcases to his room at the Mandalay Bay. A person with the intelligence displayed in the planning of this event would know that most of these rifles were not needed in the slightest to achieve the effect desired. They are dead weight, and moving them into the Mandalay only presented unnecessary risk of discovery. Unless, of course, the original plan involved multiple shooters.

  A strange year?: Family and acquaintances have mentioned Paddock's propensity for "disappearing" in the year previous to the Vegas attack. And, there is the fact that 33 of the 47 firearms Paddock owned were purchased in the last 12 months.

  Security calls: Paddock called hotel security at least twice to complain about "loud music" on the floor below him the day of the shooting.  Why would a mass shooter care, or take the risk of drawing too much attention to himself?

  The windows: Why, after so much careful planning, did Paddock expose his position by smashing two separate windows in his adjacent hotel rooms? There are other ways of providing a shooter's loophole with less exposure? Very odd.  Almost as if the decision to actually shoot was made suddenly, which does not fit the rest of the narrative or evidence.

  "Unrelated" room alarm leads security right to Paddock: The Las Vegas Sheriffs Department indicates that security was originally led directly to the floor that Paddock was shooting from by a "door alarm" that was set off by someone three rooms down from him. Now, authorities have been forced to admit that this alarm and the confrontation between security and Paddock took place BEFORE he began his shooting spree.  This means that police should have been alerted to Paddock's presence and exact location in advance of the attack.  Who set off this alarm which conveniently helped to give away Paddock's position early, and why?

  The surveillance cameras: Paddock had a head start on security, SWAT and anyone else that approached his rooms. He fired at hotel security through his door injuring employee Jesus Campos. He also had thousands of rounds of ammunition including .308 rounds which could easily be fired through several walls on the floor of his hotel room. Why did Paddock prepare for an escape, use his cameras to allow him to fire at hotel security through his door, equip rounds capable of annihilating any SWAT team that stacked up to breach his room, but decided to shoot himself instead before SWAT ever entered? Some people might argue that there is no logic to the mind of a "madman," but again, I've seen no evidence that Paddock was insane beyond the criminal act itself.  Also, the hotel had its own surveillance in the hall near Paddock's rooms.  No one noticed the man placing cameras about the area?

  Multiple shooters?: Las Vegas County Sheriff Joseph Lombardo is quoted as saying that it was only logical to assume given the evidence that Paddock "had some help at some point" in the staging of the Vegas attack. To me, this is absolutely clear in the tactical planning.  Paddock does not appear to have the background or training to have chosen and staged the perch.

  The report suggesting that a phone charger was found that did not belong to Paddock has since been refuted by police, as well as the report that his card key was used to access his room while Paddock was gone. Of course, hotel surveillance would prove this one way or the other and should be made available to the public.

  Still, there are multiple accounts by witnesses that there may have been a second shooter, including the initial reports given by first responders on the scene, who were told a shooter was on the 29th floor as well as the 32nd floor.  All of these accounts have been dismissed as a result of "panic" and the fog of war.

  The mystery woman: A witness on site at the concert stated that a woman (and her apparent boyfriend) approached people near the stage 45 minutes before the attack, telling them that "they were all going to die." She was later escorted out of the venue by security. Who was this woman? Was she trying to menace the concertgoers or warn them? Or, was it all coincidence?

  Conclusion

  In my view, there is simply no way that a man with Stephen Paddock's history and background committed the Vegas shooting alone.

  There is no motive, no clear evidence of mental illness, no ideological markers and nothing to be gained. The tactical expertise displayed in most cases shows considerable training. Theories will abound.

  It is possible that he was used. It is also possible that he was secretly radicalized and trained, as ISIS has continuously asserted since the attack. Or, perhaps he never pulled a single trigger and somehow ended up shot through the head in a room full of guns overlooking Las Vegas Blvd. and dozens of dead concertgoers.

  The most disturbing aspect of this event and the mainstream narrative, though, is what it insinuates.

  It insinuates that anyone no matter how seemingly normal could one day simply "snap" and murder crowds of people with impunity.

  It is the anti-Second Amendment narrative personified, because if "anyone" is capable of such horror, and motive is nonexistent, then the mere existence of firearm access means that we are surrounded by millions of latent mass shooters.

  That is to say, we are supposed to fear everyone around us at all times.

  I will write about the solution to this problem in my next article. In the meantime, I suggest everyone ponder on the oddities of this event and continue to ask questions.

  

  

• FBI Reportedly Investigating Harvey Weinstein

  The FBI has opened an investigation into Harvey Weinstein for alleged sex crimes, the DailyMail reported on Wednesday evening, a move that reportedly came at the behest of the DOJ which instructed the bureau to investigate the mounting allegations leveled at the movie mogul. The move comes amid rumors that Weinstein plans to head to Europe for sex rehab – leading to fears that Weinstein could attempt to pull a “Roman Polanski” where he lands in some non-extradition country in Europe to dodge U.S. prosecution.

  The FBI can both look at whether he has committed any federal crimes in the U.S. and prepare extradition proceedings if he remains in Europe.

  The Mail writes that while it is unknown whether the DOJ order came directly from Attorney General Jeff Sessions, the probe will likely be seen in a political light given Weinstein’s friendship with Trump foe Hillary Clinton. Additionally, it is not yet known if Sessions gave the direct order or if Trump requested the investigation, however the president has previously said he wasn’t surprised by the sexual harassment and assault claims made against Weinstein.

  Trump said shortly after news of the shock report on Thursday: ‘I’ve known him for years. I’m not surprised.’

  Among the allegations against Weinstein, which the FBI is expected to examine, is that he forced Lucia Evans, a student who wanted to be an actress, to perform oral sex on him in New York in 2004. And since New York State has no statute of limitations on rape and criminal sexual acts – its legal term for forced oral or anal intercourse – Weinstein may be out of luck if Evans, or any other number of women who have stepped up in recent days, decides to press charges.

  Ironically, even escaping to Europe may not help the scandalous former movie exec: So far five accusers have given accounts of attacks in France, while allegations of attacks in London have also surfaced – any of which could lead to charges there. Additionally, the FBI has field offices in both countries and could assist prosecutors there with their cases.

  

  Weinstein was a big donor for Hillary Clinton, who kept silent for five days after the accusations emerged, before finally denouncing her longtime friend in a statement on Tuesday;

  “I was shocked and appalled by the revelations about Harvey Weinstein. The behavior described by women coming forward cannot be tolerated. Their courage and the support of others is critical in helping to stop this kind of behavior.”

  She has, however, remained silent on the crucial issue of the vast amount of cash Weinstein donated directly to her and her family.  The move by the DOJ comes as it emerged the movie mogul has taken on top criminal defense lawyers Blair Berk and David Chesnoff. Berk has represented A-listers like, Mel Gibson, Johnny Depp, Britney Spears, Kiefer Sutherland, and Lindsay Lohan, while Chesnoff’s clients have included Vince Neil, Bruno Mars, Paris Hilton, Leonardo DiCaprio and the family of Michael Jackson.   The pair will join his expanding legal team following an article in the New Yorker, which alleged three women were sexually assaulted by him.

  Up to 30 women have now come forward to make allegations of sexual misconduct

  

  

• Trump To Sign Executive Order On Obamacare Tomorrow Morning

  As first previewed over the weekend, tomorrow at 11:15am, President Trump will sign an executive order aimed at taking action on health care, or as the White House put it, “to promote health care choice and competition”, after Congress’s failure to repeal ObamaCare.  The order – which is expected to further weaken Obamacare – should, in theory, ease rules on small businesses banding together to buy health insurance, through what are known as association health plans, and lift Obama administration limits on short-term health insurance plans, according to a source on a call with administration officials Wednesday night.

  According to The Hill’s sources, the order will direct the Department of Labor to “modernize” rules to allow small employers to create association health plans. Small businesses will be able to band together if they are within the same state, in the same “line of business,” or are in the same trade association. 

  Needless to say, this latest attempt to dismantle Obamacare did not make the likes of Andy Slavitt, who ran Medicare, Madicaid and Obamacare under Obama, happy, and he took to twitter to make it clear:

  BREAKING: Tomorrow 11:15 Eastern, Trump will sign his Executive Order on ACA. 1/

  — Andy Slavitt (@ASlavitt) October 12, 2017

  //platform.twitter.com/widgets.js

  It isn’t clear what made it into the final version of the EO: a rhetorical step or a severe dismantling of the ACA. 2/

  — Andy Slavitt (@ASlavitt) October 12, 2017

  //platform.twitter.com/widgets.js

  The EO could move us quickly back to a world where if you’re sick (or a woman) you pay more or offerings aren’t available. 6/

  — Andy Slavitt (@ASlavitt) October 12, 2017

  //platform.twitter.com/widgets.js

  Slavitt’s slamming aside, it does not appear that the order will go as far as some Democrats feared, though: liberals are worried that the order will undermine the stability of ObamaCare markets because healthy people will be attracted to the cheaper, new association health plans, which do not have the same protections, leaving only sicker people remaining in ObamaCare plans. However, according to The Hill, it does not seem that individuals will be eligible to join the association health plans, which would be a more sweeping move.

  The source said administration officials did not mention individuals joining the association health plans, only referring to small businesses being able to join.

  That would steer the changes clear of disrupting the individual market, which is the core of ObamaCare.

  Still, the order will lift Obama administration limits on short-term health insurance plans, allowing the plans to last as long as 12 months and be renewed. The change to short-term health insurance could damage the stability of ObamaCare.  The fear from Democrats is that healthier people will migrate to cheaper, short-term plans, leaving only sicker people in ObamaCare plans and driving up premiums.

  The source said the new rules for short-term plans are where administration officials think the order will have the “most immediate impact.”

   

  The order will also allow people to use tax-advantaged accounts known as Health Reimbursement Accounts to pay for their premiums.

  Meanwhile, as democrats scream bloody murder around 11am tomorrow when Trump is signing the EO, one person will be delighted: Sen. Rand Paul has been pushing for this order for months, arguing that allowing small businesses to band together to buy insurance gives them leverage to lower premiums. Paul is expected to be in attendance at the unveiling at the White House on Thursday.

  

  

• Goldman Is Allowing Its Clients To Bet On The Next Financial Crisis

  Just over a decade ago, as the S&P was hitting all time highs and there was a line around the block of 30-some year old hedge fund managers, desperate to put other people’s money in various ultra risky investments just so they could pick a few excess bps of yield over Treasurys – a situation painfully familiar to what is going on now – Goldman had an epiphany: create new synthetic products that have huge convexity, i.e., provide little upside (such as a few basis points pick up in yield) versus unlimited downside, link them to the shittiest assets possible and sell them to gullible, yield-chasing idiots (collecting a transaction fee) while taking the other side of the trade (collecting a huge profit once everything crashes). The instruments, of course, were CDOs, and not long after Goldman sold a whole of them, the financial system crashed and needed a multi-trillion bailout from which the world has not recovered since.

  Ten years later, Goldman is doing it again, only instead of targeting subprime mortgages, this time the bank has focused on quasi-insolvent European banks.

  And just like right before the last financial crash, Goldman is once again allowing its clients to profit from the upcoming collapse, or as Bloomberg puts it, “less than a decade after the last major banking crisis, Goldman Sachs and JPMorgan  are offering investors a new way to bet on the next one.”

  The trade in question is a total return swap, a highly levered product which is similar or a credit default swap but has some nuanced differences, which targets what are known as Tier 1 , or AT1 or “buffer” notes issued by European banks, and which usually are the first to get wiped out when there is even a modest insolvency event (just ask Banco Popular), let alone a full blown financial crisis.

  Goldman and JPM are offering the derivative trades that enable investors to bet on or against high-risk bank bonds that financial regulators can wipe out if a lender runs into trouble. Other banks are also hoping to get in on the fun, and start making markets in the contracts, known as total-return swaps, or TRS, in the coming weeks, according to Max Ruscher, the London-based director of credit indexes at IHS Markit Ltd., which administers the benchmarks that the swaps are linked to.

  Why now? Bloomberg explains:

  At a time when financial markets are racing from one high to another, and even the new Nobel laureate in economics is wondering aloud about investor behavior, the development is at once a sign of the headlong global race for investment returns and nagging worries that the investors may be getting ahead of themselves.

  Just like with CDS, the security underlying these trades is debt, in this case what is known as additional Tier 1 notes, or AT1s, which banks started issuing after the European debt crisis. Since they were created to protect taxpayers from bearing the cost of government bailouts – and are therefore the first instrument to get bailed in (usually alongside the equity) – they pay generously high yields. And just like CDOs ten years ago, in today’s era of near-zero interest rates, they’ve become sought after by debt investors around the world, ballooning into a $150 billion market: according to BofA index data, the average yield on AT1 debt is about 4.8%, around 10 times that for senior bank bonds.

  To be sure, it’s not just yield-chasing fanatics: as shown in the chart below…

  

  … at least some of the demand for the new derivatives is coming from investors looking to hedge their exposure and protect themselves should prices of the debt drop… or in the case of another banking crisis erupt. Those risks became apparent in June, when AT1s issued by Banco Popular Espanol were wiped out as part of a bank rescue, after trading at part just months earlier.

   

  

  The good news for Goldman is that whether for hedging or prop trading, the TRS is in great demand:

  “Some participants are looking to get exposure to an asset class while others are hedging their positions,” according to a report on IHS Markit’s website. “On one side of the TRS trade, the index buyer anticipates that the total return of the index will rise. The index seller on the other side takes the opposite view.”

  But if all the TRS does is payoff in the event of a technical default, why not just buy CDS to hedge AT1 exposure (or simpy to naked short)? The answer is that unlike with conventional trigger events, banks can skip coupon payments on the bonds without triggering a CDS default.

  So they needed something new, and that’s where Goldman’s TRS emerged. As for the similarities to CDS, total-return swaps allow investors to hedge a single name or a basket of AT1s, and traders can make amplified gains – or potentially outsized losses – without having to own the underlying notes or tie up large amounts of collateral.

  The good news – for Goldman clients – is that they can now start putting on a very, very cheap hedge with almost no negative carry ahead of the next financial crisis. And just like before the last financial crisis, Goldman is delighted to make the markets, in this case in swaps tied to an iBoxx index of dollar-denominated bank-capital notes and a gauge of similar euro bonds. The two indexes include AT1s issued by lenders such as Banco Santander SA, Deutsche Bank AG and HSBC Holdings Plc. In other words, anyone who shorts the product will make out like a bandit should some of Europe’s biggest banks suffere an “unexpected” financial crisis.

  Just like Lehman.

  Explaining the need for the TRS, Manav Gupta, Goldman’s co-head of European credit flow trading, who confirmed to Bloomberg the bank is making markets for the trades said that the swaps on bank-capital note indexes “will be a very useful addition to the toolkit that our clients use in managing risk and taking broad-based exposure to the AT1 market.”  Similarly, a spokesman for JPM also confirmed the bank is offering swaps on iBoxx indexes. Other have also jumped on board: Deutsche Bank started trading total-return swaps referencing Bloomberg Barclays indexes last month and plans to trade on iBoxx gauges, a spokesman said. Which is ironic: the biggest payoff to the TRS would come if Deutsche Bank suffers another liquidity, or solvency, event and its AT1s get wiped out.

  Which begs the question: will vindictive Deutsche Bank traders bet the bank, so to speak, that their bank will be the next to tank? Of course, if they are right, there will be no middle or back office to collect the funds.

  As for everyone else, now that both Goldman and JPM have once again announced it is “open season” for hunting banks, you may want to keep a close eye on unexpected risk-flaring episodes, first out of European banks and then everywhere else.

  

  

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• What Saudis Hope To Get Out Of Russia Ties

  Authored by M.K. Bhadrakumr viaThe Strategic Culture Foundation,

  The mishap at the Moscow airport on Wednesday when the Saudi King Salman bin Abdulaziz arrived on a historic visit, was a wake-up call that even the most carefully choregraphed enterprises may hold unpleasant surprises.

  When Salman exited his plane and stepped out onto the special escalator he travels with, something went wrong. It malfunctioned halfway down, leaving the king standing awkwardly for about 20 seconds before he decided to walk the rest of the way. For ordinary mortals, this wouldn’t have been an uncommon occurrence but divinity ordains when a king is involved.

  Saudi Arabia king uses golden escalator as a airplane stairs. When he arrived to Moscow yesterday, his golden stairs got stuck. pic.twitter.com/h3o1UD8s8p

  — English Russia (@EnglishRussia1) October 5, 2017

  //platform.twitter.com/widgets.js

  The Russian-Saudi entente is not going to be smooth. The climactic event last week drawing Saudi Arabia into President Vladimir Putin’s Middle East sphere of influence, must be assessed with a sense of proportions.

  Salman had hardly departed from Russian soil when the Pentagon issued a statement announcing that the State Department had on Friday approved a possible US$15-billion sale of Terminal High Altitude Area Defense (THAAD) systems to Saudi Arabia.

  The statement recalled that Saudi Arabia had requested to purchase from America 44 THAAD launchers, 360 missiles, 16 fire control stations and seven radars.

  The US officials confirmed that the sale was part of the $110-billion package of defense equipment and services initially announced during US President Donald Trump’s trip to Saudi Arabia in May. The Pentagon statement said, “This potential sale will substantially increase Saudi Arabia’s capability to defend itself against the growing ballistic missile threat in the region.”

  The timing of the US announcement is highly significant. It comes in the wake of claims by Russian officials that Saudi Arabia had shown interest in buying the S-400 missile defense system from Russia. The Saudis have successfully pressured the Trump administration to approve the sale of the THAAD system. And Washington has signaled that the US will not let Russia make an entry into the Saudi arms bazaar.

  Hard-nosed realpolitik

  The hard-nosed realpolitik in the Saudi-Russian entente had a dramatic start when the then Saudi intelligence chief Prince Bandar bin Sultan visited Russia and held a four-hour meeting with Putin at the latter’s dacha outside Moscow in early August 2013. According to media leaks from Russian sources, the Prince allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break Russia’s support for the Syrian regime, which Riyadh was trying to overthrow.

  Bandar’s package was riveted on the alluring proposal of a unified Russian-Saudi strategy to keep oil production quantities at a level that keeps the price stable in global markets via an alliance between the OPEC cartel and Russia. And, in return for throwing the Syrian regime under the bus – thereby leaving Iran to face the brunt of the ISIS threat – Bandar promised that Russia could retain the naval base in Taurus under a successor regime in Damascus and be assured of security from a ‘jihadi’ backlash.

  The Kremlin apparently spurned the overture in a huff. At any rate, by the beginning of 2014, symptoms of a new Cold War began appearing in Russia’s relations with the West following the regime change in Ukraine. The year 2015 also saw a ‘transition’ in Saudi Arabia with the death of King Abdullah. Of course, the year ended with Russia’s military intervention in Syria.

  However, the seeds left behind by Bandar began sprouting and with the Russian economy feeling the crunch from Western sanctions, the fall in oil prices on the world market assumed an existential overtone for the Kremlin. The challenge of the US oil shale industry also meant that Saudi-Russian cooperation became a practical necessity. The rest is history.

  Agreement to cut oil production

  Indeed, the hallmark of Salman’s visit to Moscow has been the pledge by the two countries to carry forward their agreement to cut oil production. Putin disclosed that the deal to cut oil output to boost prices could be extended till the end of 2018, instead of expiring in March 2018.

  

  Putin described his talks with the Saudi king as “very substantive, informative and very trusting”. And Russian commentators have hyped up that Saudi Arabia is “leaning toward Moscow in solving the Syrian crisis”. The Russian reports mentioned that Moscow and Riyadh are eyeing cooperation on nuclear energy, space exploration, plus infrastructure and arms deals.

  However, Bandar’s proposal on oil production still remains the leitmotif of Saudi-Russian cooperation, as apparent from the rise in oil prices this week – as word came that Saudi Arabia and Russia would limit oil production through next year. (Brent crude was up 70 cents at $56.50 per barrel on Thursday.)

  The point is, how do the Saudis view their ties with Russia? Are they aiming at a geopolitical shift in the Middle East? Evidently, Salman’s visit underscores that the Saudi and Russian leaders have decided to shift their focus toward common interests rather than let disagreements crowd the centre stage of relations. But then, the THAAD deal signals that Saudi Arabia also has a ‘big picture’ of itself being a major regional and international player.

  Suffice to say, the Saudis are shifting away from their special relations with the West to a balanced foreign policy by opening up with Russia and creating multiple options for pursuing national interests. To be sure, the Saudis hope to diversify their partnerships based on common interests. While disagreements remain with Moscow over Syria – and notwithstanding the close ties between Moscow and Tehran – the Saudis have adopted a realistic policy toward the Kremlin.

  Most certainly, the Saudi expectation is that at some point, the prospect of lucrative business opportunities would encourage the Kremlin to balance Russia’s relations with Iran. Basically, Bandar’s overture to Putin remains the bottom line.

  

  

• US Destroyer Carrys Out Trump's 4th "Freedom Of Navigation" Operation In South China Sea

  In a provocation that’s sure to raise eyebrows in Beijing, a US Navy destroyer on Tuesday sailed within 12 miles of Parcel islands in the South China Sea in what appears to be the first US “Freedom of Navigation” operation in two months.

  Reuters reports that the USS Chafee, a guided-missile destroyer, challenged “excessive maritime claims” near the Paracel Islands, among a string of islets, reefs and shoals over which China has territorial disputes with its neighbors. The operation is believed to be the fourth of its kind to take place since Trump took office.

  Unlike a previous mission conducted in August, officials said the destroyer didn’t sail within range of the islands, though it did come close.

  

  As Reuters points out, the ship didn’t penetrate a 12 nautical mile boundary surrounding the islands that marks the islands’ internationally recognized territorial limits. Sailing within that range is meant to show the US doesn’t recognize territorial claims.

  The operation was carried out even as China and the Trump administration have been working closely together to pass restrictive economic sanctions against North Korea. Recently, China instructed its banks to stop doing business with North Korean clients, and informed North Korean laborers and businesses that they must stop operating in China and return to North Korea.

  

  When approached by Reuters, the Pentagon did not comment directly on the operation, but said the US has carried out regular freedom-of-navigation operations and would continue to do so.

  The operation was portrayed by Reuters as an attempt to counter what Washington sees as Beijing’s efforts to limit freedom of navigation in the strategic waters.

  China has kept up the pressure on North Korea, though some have speculated that it will loosen up following November’s Communist Party Congress. An op-ed published by the Global Post on Tuesday urged North Korea to take the first step toward peace with the US by giving up its nuclear program. The GP is considered a mouthpiece for the Chinese government.

  

  

• The Disaster Myth Narrative: No One Panics, No One Loots, No One Goes Hungry

  Authored by Daisy Luther via The Organic Prepper blog,

  “The most effective way to destroy people is to deny and obliterate their own understanding of their history.”  ~ George Orwell

  A few years back, I was doing some research about the aftermath of some natural disasters that took place here in America. I was shocked to find that the articles I was looking for – ones that I had read in the past – were pretty hard to find, but articles refuting the sought-for pieces were rampant.  Not just one event, but every single crisis aftermath that I looked up, had articles that were written after the fact stating in no uncertain terms that the hunger, chaos, and unrest never happened.

  

  Apparently we, the preparedness community, are all wrong when it comes to the belief that after a disaster, chaos erupts and civic disorder is the rule of the day. That is only a disaster myth, and the public narrative belies it all.

  Listen to the “experts” and they will confirm, it never happens.

  

  Panic?  What panic?

  According to newspaper articles written after Superstorm Sandy devastated the East Coast and after Hurricane Katrina caused countless billions in damage in New Orleans, people were calm, benevolent and peaceful.  Heck, they were all standing around singing Kumbayah around a campfire, sharing their canned goods, calming frightened puppies, and helping the elderly.

  Apparently, studies prove that the fear of anarchy, lawlessness, and chaos is nothing but the “disaster myth”.  Reams of examples exist of the goodness and warmth of society as a whole after disaster strikes. All the stories you read at the time were just that – stories, according to the mainstream media:

  Yet there are a few examples stubbornly fixed in the popular imagination of people reacting to a natural disaster by becoming primal and vicious. Remember the gangs “marauding” through New Orleans, raping and even cannibalizing people in the Super-Dome after Hurricane Katrina? It turns out they didn’t exist. Years of journalistic investigations showed them to be racist fantasies. They didn’t happen. Yes, there was some “looting” — which consisted of starving people breaking into closed and abandoned shops for food. Of course human beings can behave atrociously – but the aftermath of a disaster seems to be the time when it is least likely. (source)

  Looting?  Only hungry people getting food from unmanned stores. Who wouldn’t do that?

  Beatings and assaults?  Didn’t happen. Disturbed people made these stories up for attention.

  Gang rapes?  No way. You watch too much Law and Order: SVU.

  Murder, mayhem, and gangs of youth on the streets?  Silly readers – we just made that up.

  

  The Disaster Myth is a narrative created by the establishment and delivered by their stoolies in the mainstream media.  The Disaster Myth points fingers at many of the things that are commonly believed to be true by the preparedness community.  Included in this narrative:

  1. People do not panic after a disaster – instead, they pull together.
  2. The official government response is always speedy and appropriate – unless you are a person of color, in which case you will be denied assistance based on your race, because racism is the current agenda
  3. You will be taken care of if you simply comply peacefully with authorities.
  4. There is little increase in post-disaster crime.

  These statements all stand in direct opposition to the stories we hear from news sources during the crisis.  We heard terrible stories from eyewitnesses who suffered from hunger, thirst, and unsanitary condition in the Superdome after Katrina.  We heard about citizens being robbed of their 2nd Amendment rights by police after the crisis, and we heard about gang rapes, looting, and mayhem.  Fast forward to Sandy where people were defecating in the hallways of their high rise apartments and digging through garbage to find food just a few days after the storm.  As for the official response, who can forget the FEMA shelter that closed because of inclement weather?  Of course, the weather was inclement – it was a freaking weather-related disaster!

  Mac Slavo of SHTFplan wrote of the unrest, discomfort, and mayhem after Superstorm Sandy ransacked the East Coast:

  For tens of thousands of east coast residents that worst case scenario is now playing out in real-time. No longer are images of starving people waiting for government handouts restricted to just the third-world.

   

  In the midst of crisis, once civilized societies will very rapidly descend into chaos when essential infrastructure systems collapse.

   

  Though the National Guard was deployed before the storm even hit, there is simply no way for the government to coordinate a response requiring millions of servings of food, water and medical supplies

   

  Many east coast residents who failed to evacuate or prepare reserve supplies ahead of the storm are being forced to fend for themselves.

   

  Frustration and anger have taken hold, as residents have no means of acquiring food or gas and thousands of trucks across the region remain stuck in limbo.

   

  Limited electricity has made it possible for some to share their experiences:

   

  Via Twitter:

  • I was in chaos tonite tryin to get groceries…lines for shuttle buses, only to get to the no food left & closing early (link)
  • I’m not sure what has shocked me more, all the communities around me destroyed, or the 5 hour lines for gas and food. (link)
  • Haven’t slept or ate well in a few days. Hope things start getting better around here soon (link)
  • These days a lot of people are impatient because they’re used to fast things. Fast food, fast internet, fast lines and fast shipping etc. (link)
  • Glad Obama is off to Vegas after his 90 minute visit. Gas lines are miles long.. Running out of food and water. Great Job (link)
  • Went to the Grocery store and lines were crazy but nail salon was empty so I’ve got a new gel manicure and some Korean junk food (link)
  • So f*cking devastated right now. Smell burning houses. People fighting for food. Pitch darkness. I may spend the night in rockaway to help (link)

  

  At the time of the event, even the mainstream reported on the affluent East Side residents dumpster diving in search of food. Was this NBC report, complete with video, a work of salacious fiction?

  

  As far as civil unrest is concerned, the Twittersphere was jammed with people planning looting sprees in the aftermath of Superstorm Sandy.  Those who were already of criminal leanings saw the disaster as a great opportunity. In the great North American Edit, however, these tweets are said to be part of the myth – apparently, they were just kids playing around.  Some reports pooh-poohed the very idea that looters had run amok.

  

  This article from Prison Planet refutes all of the refuting and says that the civil unrest DID occur and that it generally does, given evidence from past events.

  Legends from the past? Every single extreme weather event in recent years in the United States has been followed by looting.

   

  As MSNBC reported at the time, looting during Hurricane Katrina was so prevalent that it “took place in full view of police and National Guard troops.”

   

  Residents described the scenes as being like “downtown Baghdad” as looters filled garbage cans full of stolen goods and floated them down flooded streets.

   

  As Forbes’ Erik Kain points out, “looting and rioting…occur after most natural disasters,” including after Hurricane Irene as well as Hurricane Isaac.

   

  Looters also targeted victims of the Colorado wildfires earlier this year.

  Does this sound familiar?

  This revision of inconvenient history will sound quite familiar to anyone who has read George Orwell’s masterpiece 1984 (which was not meant to be an instruction manual, by the way.)  In the novel, the main character, Winston Smith, worked for the Ministry of Truth, which was actually a department of propaganda whose job it was to rewrite any faction of history that did not make the government look omniscient.

  In George Orwell’s novel Nineteen Eighty-Four, the Ministry of Truth is Oceania’s propaganda ministry. It is responsible for any necessary falsification of historical events. The word truth in the title Ministry of Truth should warn, by definition, that the “minister” will self-serve its own “truth”; the title implies the willful fooling of posterity using “historical” archives to show “in fact” what “really” happened. As well as administering truth, the ministry spreads a new language amongst the populace called Newspeak, in which, for example, truth is understood to mean statements like 2 + 2 = 5 when the situation warrants.

   

  The Ministry of Truth is involved with news media, entertainment, the fine arts and educational books. Its purpose is to rewrite history to change the facts to fit Party doctrine for propaganda effect. For example, if Big Brother makes a prediction that turns out to be wrong, the employees of the Ministry of Truth go back and rewrite the prediction so that any prediction Big Brother previously made is accurate. This is the “how” of the Ministry of Truth’s existence. Within the novel, Orwell elaborates that the deeper reason for its existence is to maintain the illusion that the Party is absolute. It cannot ever seem to change its mind (if, for instance, they perform one of their constant changes regarding enemies during war) or make a mistake (firing an official or making a grossly misjudged supply prediction), for that would imply weakness and to maintain power the Party must seem eternally right and strong. (source)

  We are watching narratives being created in front of our very eyes with the Vegas massacre. Every time something terrible happens, there’s a spin and that spin a) keeps us in the dark. b) encourages us to be dependent, and c) benefits someone.

  But….WHY????

  So why the vast effort to expunge tales of mayhem and to make it seem like our own national disasters really weren’t that bad? There are a few reasons, like pandering to an audience that wants to be blissfully unaware, but primarily, it’s about control.

  Those who live a self-sufficient lifestyle are a threat to the status quo that those in power would like to see.  If you don’t NEED them, then there is no leverage to force you into compliance.  You don’t NEED to go to Camp FEMA in order to have 3 squares a day.  You don’t NEED to give up your guns in order to have a roof over your head and government supplied security.  You don’t NEED to get some kind of chip implanted in your arm to be scanned in order to receive “benefits” like medical care, food, and even money.

  Self-sufficiency means freedom.  When you can feed yourself, clothe yourself, shelter yourself, and protect yourself, you are far less likely to need to cede your freedoms in order to stay alive. And in a police state that is frantically trying to withdraw our constitutional rights, this just won’t do.  They need leverage.

  So the establishment has created a narrative that tells us what we are doing is silly and unnecessary.  They are rewriting history even though we only lived that history in the past decade.  Even though we know the truth of the matter because we watched it live, they are changing the facts to make us doubt our own perceptions. They are catering to the people who have no interest whatsoever in taking care of themselves.

  This narrative was created to make a society of anti-preppers – of people who believe that all will be right with the world, the government is kind and benevolent, potential disasters aren’t really that big of a deal, and those crazy preppers are stark raving lunatics.  They want us to be perceived as extremists so that others are less likely to follow our examples. If they need a crazy bad guy at whom to point the finger, all they have to do is call someone a “Doomsday Prepper”. (Remember how poor Nancy Lanza was vilified after the Sandy Hook shooting?)

  But…

  If this civil unrest is not occurring, why is the National Guard called to keep the peace?  Why are state police riding around on tanks wearing body armor? Why were the guns of law-abiding citizens taken away in the aftermath of Katrina?

  

  Which version of reality are you going to believe?  The one that you actually witnessed or the perverted rewrite that the mainstream media is trying to push upon you?

  Remember the things happening right now.

  We have recently been hit with disaster after disaster in the United States. The aftermath of Hurricanes Harvey and Irma hit the mainland amidst stories of looters and people standing armed to protect homes and businesses. In the Carribean, lawlessness was rampant, and after Hurricane Maria devastated Puerto Rico, the danger from armed people robbing those who still had some supplies was constant. As I write this, there are uncontrolled wildfires tearing through California wine country, and looters are striking the homes of evacuees.

  Of course, we are seeing reports of this now, but later will these stories be “debunked” by “experts” like the stories from Katrina and Sandy?

  It’s entirely likely because most people would prefer to live smug in the belief that the police are only seconds away, their neighborhoods are immune to looters and vandals, and that America is a place of exceptional order and civilization. It comforts them to believe these things.  They use it as ammunition so they can scoff at “doomsday” preppers and call them “conspiracy theorists.”

  But we know differently, and today, bloggers and alternative media are also documenting these stories before history is erased. I have watched for years as supplemental links in stories I have written have disappeared. I have witnessed the changing narratives, and if you’re reading this, you probably have too.

  So, don’t be discouraged in your efforts when you read all the “good news” stories that inevitably show up after a disaster. To be sure, there are some wonderful people out there helping their neighbors, but there is also a dark side that the media prefers to ignore.

  You saw it when it was happening. You know the truth, even if the disaster myth narrative would have you believe otherwise.

  

  

• California's "Wine Country" Could Take Years To Recover From Deadly Wildfires

  Wildfires that have been raging across Northern California’s “wine country” since Sunday have destroyed at least four wineries and seriously damaged at least nine more just as the season’s harvest came to an end. The damage could leave one of the state’s signature industry’s hobbled for years, according to NBC.

  Of course, assessing the scope of the damage will be impossible until the fires subside. The Napa Valley Vintners trade association has not heard from all members, especially those in the most vulnerable parts of the valley.  By the time the fires started on Sunday – accelerated by dry conditions and strong winds -about 90% grapes had been picked. And most of the remaining crop of thick-skinned cabernet sauvignon grapes not expected to be affected by the smoke.

  Most wineries remain closed from power outages and mandatory evacuation orders.

  

  What remains of the Signorello Estate winery…

  At the Gundlach Bundschu – the oldest family-run winery in California, started in 1858 – in Sonoma County, workers were not sure whether the grapes above the winery survived the fires, Fox reported.  

  Katie Bundschu, a sixth-generation vintner, recounted a scary Monday night in which the flames licked at the perimeter of the winery but were beaten back by firefighters. A century-old redwood barn and her grandmother's 1919 home were spared.

  "The winery was in the path of the fire but escaped being engulfed by the flames. We have some damage to fix. The wine is secure in our cellars. We are cleaning up and hoping to have the power back on this week," Bundschu said.

  However, Bundschu said that her winery, while damaged, will soldier on, and was seeking to dispel rumors that the business had been utterly destroyed. With information from the affected areas trickling out, a few other wineries have sought to inform customers that their facilities can be quickly repaired and expect to be back in business soon.

  

  Burned out wine bottles at Signorello Estates

  Millions of locals and out-of-staters flock to Napa and Sonoma counties every year to sample wine, sit in mud baths and soak in the region's natural beauty.

  Even one of the four wineries that was reportedly destroyed by the fires, the Signorello Estate winery in Napa, may recover. According to Fox, its vineyard appeared to be untouched by the flames.

  Signorello Spokeswoman Charlotte Milan could only confirm damage to the winery and a residence. Fortunately, the estate's 2015 reds and 2016 whites were stored off-site.

  

  Burned out wine bottles at Signorello Estates

  Not every winery was so lucky. The Paradise Ridge Winery in Sonoma County posted that it was "heartbroken" to announce that the facility had burned.

  About 12% of grapes grown in California are in Sonoma, Napa and surrounding counties, said Anita Oberholster, a cooperative extension specialist in enology at the University of California, Davis. However, the grapes grown in those counties are of the highest quality and are used in the most state’s most expensive wines.

  Since the year’s harvest had already been mostly completed by the time the fires broke out, the fire did little damage to crops, though it would’ve presumably destroyed stocks of harvested grapes and wines that have already been bottles.

  

  What's left of the Signorello Estate winery is seen through a window

  Also, since the soil was unaffected by the fires, next year’s crop should be unharmed, Oberholster said.

  Sara Brooks, chairwoman of the Visit Napa Valley Board of Directors and general manager of the historic Napa River Inn, said she has had some cancellations, but expects tourism to bounce back as it did after the 2014 Napa earthquake.

  "It's heartbreaking," she said, "It's tough to see these places you've seen your whole life on fire."

  However, for some vineyards, the process of rebuilding could be painfully slow. At least 15 people have died from the fires, while 150 more remain missing. More than 1,500 buildings have been destroyed.

  

  

• Empire-Destroying Wars Are Coming To America Under Trump – Part 1

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

  There are a variety of reasons Trump supporters voted the way they did in November, but one clear message many found attractive was the idea his administration would be driven by an “America First” doctrine.

  

  America first meant a lot of things to a lot of different people, running the gamut from economic populism and immigration, to an avoidance of barbaric and costly overseas wars. The economic populism part was the biggest ruse from day one, a betrayal which (as we had seen under Obama) became undeniable as soon as he started appointing lifelong swamp-dwelling billionaires and Goldman Sachs partners to run his administration. 

  Irrespective of who you elect, Wall Street runs the empire, as Trump proved once again.

  The coming massive pivot when it comes to destructive wars abroad will take a little longer, but the writing’s been on the wall for months. I’ve published several posts on the topic, with the most popular one titled, Prepare for Impact – This is the Beginning of the End for U.S. Empire.  Here’s an excerpt:

  This is not the sort of thing you see in a confident, brave, and civilized nation, it’s the sort of stuff you’d expect to see toward the end. It’s the stuff of craven war-mongers, of dishonest cowards, of a totally deranged and very dangerous media. The signs are everywhere; imperial decline is set to accelerate rapidly in the coming years…

   

  Expect more of all the above as the U.S. empire enters its most devastating phase of collapse. Think about what it might mean for you and your family and prepare accordingly.

  When I compare who Trump currently has advising him and who he’s getting closer to, the future looks increasingly ominous. This is especially true when it comes to the Iran nuclear deal. Irrespective of what you think of Secretary of State Rex Tillerson and Defense Secretary James Mattis, these two look like a couple of the most sane humans on earth compared to some of the others Trump’s cozying up to. I alluded to this earlier today on Twitter.

  You think Tillerson and Mattis are bad?
  Wait until Cotton and Haley are in charge.
  Empire destroying wars are coming.

  — Michael Krieger (@LibertyBlitz) October 10, 2017

  //platform.twitter.com/widgets.js

  The key event I believe will set the groundwork for a coming disastrous confrontation with Iran, is Trump’s highly anticipated announcement that the Iran nuclear agreement is against U.S. interests. This wouldn’t immediately end the deal or lead to new U.S. sanctions, but it would represent the first step in heading in that direction. A direction I believe will ultimately lead to US aggression against Iran in a similar fashion as Iraq, except this miscalculation will have even more disastrous consequences for the American empire.

  Before we go any further, it’s important to understand what’s going on with regard to Iran and who now has Trump’s ear on foreign policy. Let’s start with some color from a recent New York Times article:

  President Trump is expected to overrule his top national security advisers and decline to certify the Iran nuclear agreement, according to people who have been briefed on the matter, a decision that would reopen a volatile political debate on Iran but is likely to leave in place the landmark deal negotiated by the Obama administration.

   

  By declining to certify Iran’s compliance, Mr. Trump would essentially kick it to Congress to decide whether to reimpose punitive economic sanctions. Even among Republicans, there appears to be little appetite to do that, at least for now.

  If Trump isn’t listening to Tillerson or Mattis, who is he listening to?

  Congress will have to decide whether to reimpose sanctions, which could sink the deal, or use the prospect of that to force Iran — and the other parties to the deal — back to the negotiating table to make changes in the agreement.

   

  That is the approach favored by Senator Tom Cotton, Republican of Arkansas, who has emerged as a leading hard-liner on Iran and is working closely with the White House to devise its strategy. On Thursday, Mr. Cotton met with Mr. Trump to discuss Iran and other issues.

   

  “Congress and the president, working together, should lay out how the deal must change and, if it doesn’t, the consequences Iran will face,” Mr. Cotton said in a speech on Tuesday at the Council on Foreign Relations. Reimposing sanctions, he said, would be a “backward-looking step.”

   

  The deal is also contentious inside the administration. Secretary of State Rex W. Tillerson and Defense Secretary Jim Mattis have both urged Mr. Trump not to back out of it, in part because that would free Iran to begin producing uranium and reprocessing plutonium immediately, not after 13 years, as is stipulated in the agreement.

   

  But Mr. Trump, after twice certifying the deal, has warned his aides that he would not do so again. As a result, the administration is looking for ways to claim Iran is in violation of the “spirit” of the accord, even if it has complied with inspection criteria. The International Atomic Energy Agency has said that Iran was in compliance; when it has found minor violations, they have been quickly fixed.

  Tom Cotton is as dangerous a war hawk as exists in America today. In fact, the guy’s such a total lunatic, I’ve been warning followers on Twitter about him for years. Since most of you probably aren’t caught up on him, definitely take a moment to read the following article published by Alternet  in 2015, 10 Horrifying Facts About GOP Senator Tom Cotton.

  We should probably go ahead and update this list as it didn’t even mention how Cotton claims the U.S. has an “under-incarceration” problem even though it has only 5% of the world’s population, yet 25% of its prisoners. Seems like a swell guy.

  Jokes aside, Tom Cotton might actually be the most dangerous person in the entire U.S. Senate (which is saying a lot), so the fact he’s become so cozy with Trump on foreign policy is extremely dangerous. Indeed, he’s become so influential, Politico recently conducted an in-depth interview with him where he made his positions quite clear. Here are a few highlights:

  This is a moment of truth for President Trump’s national security team. He is set to overrule both his secretaries of State and Defense on the Iran nuclear deal this week, declaring it no longer in the U.S. “national interest” in explicit contradiction to their public position. And if they don’t like it, Senator Tom Cotton says, then they should get out.

   

  Cotton, who has personally advised Trump in recent days about the new Iran strategy he is set to release this week, stopped short of saying either embattled Secretary of State Rex Tillerson or Defense Secretary Jim Mattis should in fact resign. But his comments were nonetheless a striking acknowledgement of the giant rift that has opened up in the midst of the Trump team over foreign policy.

   

  The interview with Cotton took place before this latest explosive twist, but even then it was clear a new rift of significance was opening up inside the Republican foreign policy world. I spoke with Cotton Thursday, the day after Tillerson’s unusual press conference to deny press reports he was considering quitting, and just a couple hours after Cotton was summoned to the White House for a private Oval Office meeting with Trump to discuss the Iran strategy. In the interview, Cotton did not really try to paper over the rift or offer the usual assurances that it would all be papered over. Instead, when I asked him directly whether there would be resignations, Cotton did not say there wouldn’t be, only that he did not believe they were “imminent.”

   

  Because Cotton today is one of the few Senate Republicans who pay close attention to foreign policy who is still out there making Corker’s initial case for engagement with Trump, and he insists it’s paying off with substantive shifts in Trump’s thinking on subjects as varied as how to deal with Russia and the continuation of the war in Afghanistan.

   

  Until now, Trump has shied away from outright confrontation with the experienced hands he’s hired to oversee his national security policy. But the Iran deal now seems to have finally forced a public rupture.

   

  Cotton, who has repeatedly consulted with Trump and other top White House officials in recent days, appears to be on the winning side, pushing Trump to adopt the formula his administration has now settled on of refusing to re-certify the Iran deal to Congress but holding off – for now – asking Congress to blow it up by imposing new sanctions. Iran “is on the president’s mind right now, probably more than anything,” Cotton says, and he says he believes Trump will take the step of not certifying as a way to send “a very important signal to Congress and to our E.U. plus three partners and to Iran that this president is not going to abide by a disastrous nuclear deal.”

   

  Cotton gave a lengthy address at the Council on Foreign Relations the same day as Mattis’ testimony taking the opposite view – and a link to it was soon tweeted out approvingly by an Iran deal hardliner inside the administration, U.N. Ambassador Nikki Haley.

  I’m glad Nikki Haley came up, as she’s a certified grade-A maniac and bloodthirsty neocon. While she’s dangerous enough at the U.N., there’s talk that she could ultimately replace Tillerson as Secretary of State. Any combination of Cotton and Haley moving into increased prominence within the Trump circle of influence effectively guarantees more disastrous war in the Middle East.

  

  The writing’s on the wall and you can feel free to ignore it at your own risk. Beyond what I outlined in this piece, a key question is how will Trump sell the coming conflicts to his base, and what will the ultimate implications of the coming wars be? I plan to address both those things in tomorrow’s post.

  *  *  *

  In the meantime, if you liked this article and enjoy my work, consider becoming a monthly Patron, or visit our Support Page to show your appreciation for independent content creators.

  

  

• National Rents Stall For 4th Month In A Row As Multi-Family Supply Glut Takes Its Toll

  After a steady march higher in the wake of the ‘great recession’ nearly a decade ago, a note today from Rent Cafe reveals that average rents in the United States have now stalled for 4 months in row with September’s national average coming in at $1,354 per month, which is virtually flat from the $1,350 average reached in the summer.

  National rents have barely moved through the entire peak rental season and into September, marking the longest period of stagnation in recent history — 4 consecutive months. Coming in at $1,354 for the month of September, the average rent is only 2.2 percent higher than this time last year. This is the slowest annual growth rate we’ve seen in more than six years — having reached a high point of 5.5%-5.6% peak growth around two years ago — a pretty good indicator that the rental market has entered calmer waters.

   

  Still, that doesn’t mean rents have flat-lined everywhere. Though nationally and in the most expensive cities for renters prices have finally come to a full stop, there are still some holdouts—and it seems renters in smaller and mid-sized cities are not yet getting a break, on the contrary.

  

   

  As we pointed out over the summer, just like almost any bubble, stagnating rents are undoubtedly the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders.  Per the chart below from Goldman Sachs, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

  

   

  But, while rents are certainly slowing – and construction is indeed playing its part – the impact isn’t spread evenly across all markets as Rent Cafe notes that the construction boom in Texas has earned the state 6 out of 10 of the worst performing rental markets in the country. 

  The anticipated rent drops from Hurricane Harvey have not been realized in the city of Houston, but are seen in other Texas communities, with the biggest changes being outside of Harvey’s reach, as a result of the major apartment construction taking place throughout the state. Lubbock, located on the west side of the state, came in at No. 1 for biggest year-over-year rent decreases in the nation, with rents dropping 3.4 percent since 2016.

   

  Rents for apartments in Round Rock, a suburb outside Austin—another city barely touched by Harvey, dipped to $1,092—3.4 percent below last year’s numbers. Round Rock took the No. 2 spot for biggest rent decreases of the year.

   

  Texas claimed the third spot, too, with McAllen’s 2.6 percent drop in rents since last year, and three other Texas towns—College Station, Waco and Plano—also made the top 10, with decreases of 2.4 percent, 2 percent, and 1.1 percent, respectively. The rest of the list was spread throughout the nation, with California’s Simi Valley taking No. 4 (down 2.6 percent), New Orleans at No. 5 (down 2.4 percent), Manhattan, NYC at No. 8 (down 1.9 percent), and Tulsa, Oklahoma at No. 9 (down 1.5 percent.)

  

  Meanwhile, areas with stronger job markets and/or better overall affordability are still seeing demand growth which, combined with a lack of capital investment, is driving rents considerably higher.

  Though smaller and mid-sized towns used to be a haven for renters looking to avoid the sky-high prices of large urban areas, it seems those days are in the past. September’s list of fastest-growing rents is dominated by small and medium-sized towns—many boasting double-digit growth since this time last year.

   

  The Lone Star State’s Odessa and Midland—both hubs of oil and gas activity—came in at the top two spots, with jumps of 24.7 percent and 20.7 percent, respectively. Odessa rents now clock in at $1,060 per month, while Midland’s reach even higher, coming in at $1,225.

   

  The rest of the nation’s fastest-growing rents can be found largely on the West Coast, with California, Washington, Nevada and Colorado taking up the remaining bulk of the list. The only Northeastern cities to see big year-over-year rent growth were Buffalo, New York, with an 11.2 percent jump over 2016, and Elizabeth, New Jersey, which saw rents climb 8.5 percent to $1,187.

  

   

  Finally, here are the top 10 most and least expensive rental markets in the U.S. at the end of September 2017.  To our complete lack of surprise, New York and California continue to dominate the expensive list while Southern and Midwestern markets continue to provide the best value…perhaps this is why all those domestic migration studies show a mass exodus from the cities on the left to the cities on the right?  Just a hunch…

  

  

  

• Home Depot Panics Over Millennials; Forced To Host Tutorials On Using Tape Measures, Hammering Nails

  As wall street analysts celebrate the coming of age of the millennial generation, a group of young people who were supposed to lead another revolutionary wave of consumerism if only they could work long enough to escape their parents’ basement, retailers like Home Depot are panicked about selling into what will soon be America’s largest demographic…but not for the reasons you might think. 

  While avocado resellers like Whole Foods only have to worry about creating a catchy advertising campaign to attract millennials, Home Depot is in full-on panic mode after realizing that an entire generation of Americans have absolutely no clue how to use their products.  As the Wall Street Journal points out, the company has been forced to spend millions to create video tutorials and host in-store classes on how to do everything from using a tape measure to mopping a floor and hammering a nail.

  Home Depot’s VP of marketing admits she was originally hesitant because she thought some of their videos might be a bit too “condescending” but she quickly learned they were very necessary for our pampered millennials.

  In June the company introduced a series of online workshops, including videos on how to use a tape measure and how to hide cords, that were so basic some executives worried they were condescending. “You have to start somewhere,” Mr. Decker says.

   

  Lisa DeStefano, Home Depot vice president of marketing, initially hesitated looking over the list of proposed video lessons, chosen based on high-frequency online search queries. “Were we selling people short? Were these just too obvious?” she says she asked her team. On the tape-measure tutorial, “I said ‘come on, how many things can you say about it?’ ” Ms. DeStefano says.

  And just in case you think we’re joking and/or exaggerating, here is Home Depot’s tape measure tutorial in all its glory:

   

  Meanwhile, Scotts Miracle-Gro has been forced to start training classes to remind frustrated millennials, who can’t seem to keep their flowers alive, that plants need sunlight to grow (apparently not a single millennial ever took biology in grade school).  Commenting on the tutorials, a defeated VP of Corporate Affairs, Jim King, admitted “these are simple things we wouldn’t have really thought to do or needed to do 15 to 20 years ago”…sorry, Mr. King this is your life now.

  The Scotts Miracle-Gro Co. has started offering gardening lessons for young homeowners that cover basic tips—really, really basic—like making sure sunlight can reach plants.

   

  “These are simple things we wouldn’t have really thought to do or needed to do 15 to 20 years ago,” says Jim King, senior vice president of corporate affairs for Scotts. “But this is a group who may not have grown up putting their hands in the dirt growing their vegetable garden in mom and dad’s backyard.”

   

  “They grew up playing soccer, having dance recitals and playing an Xbox,” says Scott’s Mr. King. “They probably didn’t spend as much time helping mom and dad out in the yard as their predecessors or their predecessors’ predecessors.”

   

  Companies such as Scotts, Home Depot Inc., Procter & Gamble Co. , Williams-Sonoma Inc.’s West Elm and the Sherwin-Williams Co. are hosting classes and online tutorials to teach such basic skills as how to mow the lawn, use a tape measure, mop a floor, hammer a nail and pick a paint color.

  Unfortunately, at least for the Home Depots of the world, millennials now represent the largest demographic in America with 4.75 million 26 year olds roaming the streets of New York, San Francisco and Los Angeles without a clue as to how to use a tape measure.

  The biggest single age cohort today in the U.S. is 26-year-olds, who number 4.8 million, according to Torsten Slok, chief international economist for Deutsche Bank . People 25, 27 and 24 follow close behind, in that order. Many are on the verge of life-defining moments such as choosing a career, buying a house and having children.

   

  Millennials as a whole are America’s latest demographic bubble, overtaking the baby boom generation and, like them, transforming popular culture, retailing, media and lifestyles. They make up about 42% of all home buyers today, and 71% of all first-time home buyers, according to Zillow Group . Some 86% of millennial home buyers reported making at least one improvement to their home in the past year, more than any other generation, Zillow says.

  

   

  While we have our doubts that it will save their business, retailers like J.C. Penney and West Elm are trying to adapt to the millennial generation by offering basic in-home services like installing televisions or hanging wall art.

  J.C. Penney Co. says the group is willing to hire others for projects. The retailer has pushed into home services, including furnace and air-conditioning repair, water-treatment systems and bathroom renovations, and expanded its window-covering installation.

   

  “They’re much more of a ‘Do-It-for-Me’ type of customer than a ‘Do-It-Yourself’ customer,” says Joe McFarland, executive vice president of J.C. Penney stores. “You don’t need a ladder or a power drill, you don’t even have to wonder if you measured your window right.”

   

  Home-furnishings retailer West Elm offers service packages, which start at $129, to provide plumbing and electrical work, painting, installing a television and hanging wall art and mirrors.

  

   

  All that said, at least some millennials are trying to be more self-sufficient…as an example, the WSJ notes the case of 26-year-old Breanne Loes who recently borrowed her dad’s power tools to craft a wooden headboard…which went really well AFTER she realized the saw blade was on backwards.

  Ms. Loes enjoys do-it-yourself projects, and two summers ago built with her now-husband a wooden headboard in her parents’ garage, with help from an online tutorial, her dad, two older brothers and their tools.

   

  The saw wasn’t working at first because the blade was backward. “That was embarrassing,” says Ms. Loes.

  Congrats, Breanne, really great job…really.

  

  

• How Vulnerable Is The Electrical Grid?

  Authored by Kurt Cobb via OilPrice.com,

  When the electricity stops in modern civilization, pretty much everything else stops.

  

  Not even gasoline-powered vehicles can get far before they are obliged to seek a fill-up – which they cannot get because gas pumps rely on electricity to operate.

  When I wrote "The storms are only going to get worse" three weeks ago, I thought the world would have to wait quite a while for a storm more devastating than hurricanes Harvey and Irma. But instead, Hurricane Maria followed right after them and shut down electricity on the entire island of Puerto Rico except for those buildings with on-site generators.

  

  Another casualty was drinking water because, of course, in almost every location, it must be moved using pumps powered by electricity. In addition, the reason we remain uncertain of the full scope of the damage and danger on the island is that the communications system (powered by electricity, of course) failed almost completely.

  The Associated Press reported that as of September 30, 10 days after Maria's landfall, about 30 percent of telecommunications had been restored, 60 percent of the gas stations were able to dispense fuel and half of the supermarkets were open.

  Presumably, these figures represent mostly urban areas where any single act of repair can restore services to many more people than in the countryside where conditions by all accounts remain desperate.

  Unless power is restored soon to those areas still without it, many of life's daily necessities—food, water, medicine—will remain beyond reach for substantial portions of Puerto Rico's residents. The consequences of this are both predictable and dire. But the expectations are that weeks and months may pass before electricity again reaches the entire island.

  If that turns out to be the case, then those who are able will simply leave their homes and migrate elsewhere, most probably to the U.S. mainland—something they are entitled to do as American citizens. The United States is unprepared for such a massive wave of migration if it develops.

  Electricity is the essential pillar upon which the operations of all modern industrial societies depend. And yet, it is something that remains impossible to stockpile in large amounts; nearly all electricity is consumed as it is produced. Its transmission remains all too vulnerable to bad weather which we now know is only going to get worse—not only hurricanes but also ice and snow storms which will increase in frequency and severity as the atmosphere becomes more saturated with water vapor (because warmer air can hold more moisture).

  Part of the question the United States and the world will be answering when deciding on how and what to rebuild in Puerto Rico is how much are we willing to spend on making infrastructure climate-change proof when climate change is a moving target. We do not now know how "hard" we will have to make any rebuilt infrastructure in Puerto Rico because we do not know for certain the ultimate severity of climate change through the lifetime of the infrastructure being built. It would be foolish to rebuild infrastructure that will simply blow down or flood out in the next major hurricane or one just 10 years from now.

  While contemplating such dangers, the world remains largely oblivious to an unparalleled danger to the electric grid, one that dwarfs what climate change is ever likely to threaten: electromagnetic pulse or EMP.

  

  Two sources of EMP, a coronal mass ejection from the Sun and the detonation of a nuclear bomb at high altitude are real threats. What makes North Korea such a menace is not the few nuclear weapons which the country apparently has, but the possibility that it could detonate one at high altitude and thereby cripple much of the electrical infrastructure of the country targeted. (Whether it has a weapon of sufficient power and the ability to deliver it high into the atmosphere above the United States or another country is unknown. Not surprisingly, the nuclear facilities of the U.S. military have been hardened against such an attack so as to assure a retaliatory capability in the event of a first strike.)

  The possibility of a coronal mass ejection of sufficient power to cripple the world's electrical system, however, is not theoretical. Just such an event, known as the Carrington Event, took place in 1859. Back then it dazzled viewers of the sky worldwide while burning up telegraph lines. Today, it would shut down much if not most of the globe's electrical infrastructure.

  What Hurricane Maria has done to Puerto Rico reminds us of how vulnerable systems critical to the daily operation of industrial society remain.

  

  We have options: one is a more decentralized, renewable energy system hardened against EMP.

  But we do not yet have the foresight and the will to realize such a system anytime soon.

  

  

• Wife Of Indicted IT Staffer Imran Awan Turns: "My Husband Committed Fraud Along With Polygamy"

  Much of what you thought you knew about the events leading up to the arrest of Debbie Wasserman Schultz’s former, and now indicted, IT staffer Imran Awan just got upended by a new revelation from the Daily Caller which reported that his wife, Hina Alvi, filed a lawsuit against her husband in Pakistan accusing him of fraud.  If true, of course, this would raise questions of whether Alvi might seek, or already has, an immunity deal with the FBI in return for additional evidence and/or testimony related to her husband’s misdeeds.

  As you may recall, Alvi reportedly fled the U.S. to Pakistan back in March and was temporarily detained by U.S. Customs officials when they discovered $12,000 in unreported cash in her luggage.  While moving that amount of cash is technically a felony, Alvi to was ultimately allowed to leave the country, presumably to never return.

  That said, Alvi stirred rumors that she may have ‘flipped’ last month when she struck a deal with the FBI to return to the U.S. to appear at an arraignment…rumors that have seemingly now been confirmed by the Daily Caller.

  The indicted husband-and-wife team of former IT aides to Democratic Rep. Debbie Wasserman Schultz sat directly across from each other at the defendants’ table in federal court Friday in Washington, D.C., but refused to look at each other.

   

  Even as they are co-defendants in a U.S. case, Imran Awan’s own wife, Hina Alvi, has become the latest person to accuse him of fraud, filing papers against him in Pakistani court on Sept. 13, records obtained by The Daily Caller News Foundation show. Alvi said Awan “threatened the complainant of dire consequences, he also threatened to harm the lives of family of the complainant if she intervenes.”

   

  Yet the couple entered and left the court separately, have different lawyers, and Awan’s lawyer told the judge that the husband and wife are staying “in a one-bedroom apartment and then also a house.” The Pakistani legal papers say they live in separate towns there, too.

   

  “My husband Imran Awan son of Muhammad Ashraf Awan, committed fraud along with offence of polygamy,” she charges in the papers.

   

  After TheDCNF sent Gowen a copy of a Pakistani news article mentioning the complaint and asked him for comment, Gowen said “your story is totally false” and “clearly part of your Trump agenda.” At TheDCNF’s request, Wajid Ali Syed, a correspondent for Pakistan’s Geo TV, then obtained Alvi’s filing in full from the Pakistani court, and it is posted below.

  And here is Alvi’s statement as filed along with her lawsuit in Pakistan:

  

  Meanwhile, within the lawsuit, we also learn that Alvi apparently only learned of Awan’s second marriage over the summer, a full two years after he was married in August 2015.

  Respondent has contract a second marriage on 17-08-2015 with one Mst. Sumaira Shehzadi alias Sumaira Siddique… without obtaining prior permission. Rather he mentioned himself as bachelor in… marriage certificate, he falsely declared that he has no wife or biological children at the time of contracting second marriage. This act of the respondent was shocking for the complainant and she asked the respondent about his second marriage on which he became furious while admitting the same and said he has no need to obtain permission from the complainant.

   

  He further said furiously that the complainant has no right or power to restrain him from second and even third marriage. Furthermore, the respondent threatened the complainant of dire consequences, he also threatened to harm the lives of family of the complainant if she intervenes into the affairs of the respondent.

   

  The Pakistani legal motion filed by Alvi states: “A few months ago I got apprised of the fact that my husband has contracted second marriage secretly, fraudulently and without my consent with Mst. Sumaira Shehzadi Alias Sumaira Siddique Daughter of Muhammad Akram r/o Township, Lahore. The second marriage of my husband is illegal, unlawful and without justification.”

  “The court has recorded the testimonies of the applicant and other witnesses,” the Pakistani news outlet ARY reported.

  Of course, if the name Sumaira Siddique sounds familiar at all it’s because she is the woman that the Daily Caller previously reported had filed charges against Awan for domestic abuse and keeping her locked up in the house “like a slave.”

  Last month, TheDCNF published police reports showing that two women who appeared to be in romantic relationships with Awan, but who were not Alvi, called the police on him in Virginia. One, Salam Chaudry, said she “just wanted to leave,” while the second was named Sumaira Siddique.

   

  Criminal investigations involving Siddique and Awan in Virginia took place on Oct. 16, 2015 into assault, and Nov. 16, 2015 into telephone threats. Siddique called them again on July 18, 2016 and said he kept her there “like a slave.” Alvi’s lawsuit says he only married Siddique in August 2015.

  So, what say you?  Just another meaningless twist in a truly bizarre case or is Imran about to learn the meaning to the saying “hell hath no fury like a woman scorned?”

  

  

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• Are Russia And China Right On North Korea?

  Authored by Matthew Jamison via The Strategic Culture Foundation,

  With the nuclear standoff between North Korea and the United States having heated up significantly over the summer, it has been the Governments of Russia and China who have sought to be the responsible, mature and wise international parties at the United Nations and throughout the international community.

  

  It has been the brilliant diplomacy of Moscow and Beijing who have been the voices urging restraint, calm and dialogue unlike the insane, ridiculous and totally counter-productive rhetoric of the American President Donald Trump and the US Ambassador to the UN Nikki Haley.

  The leaders of Russia and China must be given a strong round of applause for trying to avert a nuclear holocaust on the Korean peninsula whilst upholding international law, attempting to avoid a nuclear war and advocating for multi-party dialogue with the resumption of the 6 Party Talks {which have been in abeyance since 2009} and a cooling off period on the Korean peninsula with the suspension of the US-South Korea military exercises. This is the right policy going forward for the welfare, safety and security of the Korean peninsula as well as regional and international peace and stability. The wrong course of action and the wrong policies of handling North Korea and the Kim Jong Un regime have been consistently followed by the Trump administration and its allies on the UN Security Council. 

  The American policy of constantly aggravating North Korea with US-South Korea joint military exercises designed to unsettle, disturb and provoke the North is counter-productive and has only increased tensions and the possibility of all out war in Korea which would be a complete disaster and must not be allowed to happen. The American policy of deploying THAAD has also been like a red rag to a bull in North Korea and again only adds to increasing tensions ans the likelihood of armed conflict. While Russia and China have been working with great effort to calm the situation down with the restoration of dialogue, cooperation and stability it has been unfortunately the Governments of the United States and to a certain degree President Trump's ally in British "prime" minister Theresa May who have actually in reality been increasing tensions, escalating the situation, antagonising the North Koreans and not helping to decrease tensions and deescalate the situation. 

  To be clear North Korea is also completely in the wrong and it is the prime actor that must stop its nuclear tests and enter into talks. Yet it is very difficult for the North to enter into the 6 Party Talks when the United States will not countenance such talks. One could also mount an argument that the only reason the North Korean regime is behaving this way and seeking nuclear weapons is to preserve its own security as it in all likelihood feels extremely threatened especially in light of what happened with regards to Iraq during 2002-2003 and beyond and Libya after 2003.

  The rhetoric of the Trump administration whether it be from the President himself or his Defence Secretary Mattis or UN Ambassador Haley has not been helpful and has been full of hyperbole, no doubt sabre rattling, but still it simply inflames and escalates an already difficult, tense and fragile international and regional security and humanitarian headache.

  Imagine if the situation where reversed and it was Mexico on the United States' southern border acting in this way. Do you really think the American Government would want to deal with the fall out on its own door step of a nuclear obliterated Mexico and the tremendous ecological, environmental and human damage that would create. I doubt it very much that the United States would take the same approach to such a situation if the rogue party playing up was right on its own southern border. 

  With regards to the role that the United Kingdom Government is playing, hopefully, it is a constructive role with the aim to help reduce tensions and deescalate the nuclear crisis on the Korean Peninsula not increase and exacerbate what is already a very delicate situation. Time alone will tell if the current British "prime" minister Theresa May is fully committed to such a course and is actually exerting (what little influence and leverage) she may have over her new found best friend from January President Trump. Mrs. May made great hay out of her early visit to hold hands with Donald Trump a week after he was sworn in. Let the international community see now the Anglo-American "special relationship" in action with the UK prime minister persuading the American President to change tack.

  

  

• 24% Of American Men Would Have Sex With A Robot

  Sex machine is going to take on a whole new meaning in years to come.

  As Statista's Niall McCarthy notes, once the realm of science fiction fantasies, the technology behind anthropomorphic sex robots is advancing at a rapid pace.

  

  Some observers believe the technology will become widespread in the near future and that sex with robots could even eclipse human love-making by 2050. It is highly controversial, however, with many feeling that the development of sex robots cannot be morally justified.

  That begs the question: would you have sex with a robot? YouGov conducted a survey in an attempt to find out how Americans feel about the possibility of having a wild night with an actual sex machine. They found that while the vast majority of U.S. adults would turn down the chance of having sex with a robot, men are more likely to accept the offer than women.

  

  You will find more statistics at Statista

  1 in 4 men say they would consider having sex with a robot compared to just 1 in 10 women.

  The research also shed some light on the moral consequences of having a mechanical fling. 32 percent of people would consider it cheating if their partner had sex with a robot while 33 percent would not. Interestingly, men are less likely to consider it cheating than women.

  

  

• US Boosts Defense Spending – To What End?

  Authored by J.Hawk, Daniel Deiss, & Edwin Watson via SouthFront.org,

  One of Donald Trump’s campaign promises was the pledge to “rebuild the US military”, and it is one of the few of his initiatives that appears to enjoy broad bipartisan support.

  

  The US Senate’s version of the defense appropriations bill provides for what amounts to a dramatic 10% increase in defense spending, or more than even the Trump Administration requested. The bill passed with a strong bipartisan majority and with hardly any debate. There is no reason to expect the House of Representatives will not follow suit.

  This naturally raises the question: what is behind the sudden interest in boosting US defense spending, after a decade and a half of continuous war?

  The official reason for the boost, and one that has some merit, is the sorry state of the US military. The wars in Afghanistan and Iraq, plus the various and sundry other operations against Libya, Syria, Yemen, Somalia, not to mention the confrontations with Russia, China, and North Korea, have left the US military stretched thin and demoralized.

  

  Much of the Army and Marine equipment pool has incurred significant wear and tear from operating in the hot and dusty Middle East conditions. The air force has been reduced to a collection of on-call bomb trucks supporting land operations. Even the navy, easily the least-engaged of the three services, has had to station carrier battle groups to contribute their airwings to the ground support mission, and thus justify the existence of the costly carrier fleet. The result is a force with significant morale and training problems which manifest themselves in crashing planes and colliding warships.

  It is doubtful, however, that Congress is so eagerly “supporting the troops” for the reasons outlined above. As the recent US elections have demonstrated, the US economy’s softness is leading to unpredictable and uncontrollable election outcomes. Moreover, ideological opposition makes public spending extremely difficult to provide, with defense spending being the one solitary exception. The members of Congress are therefore supporting the defense appropriations bill with the expectation it will create jobs in their districts and states. Defense contractors themselves go out of their way to “educate” the legislators of the benefits associated with supporting this bill.

  Donald Trump’s own motives likely aren’t all that different. While he campaigned on, for example, a “trillion-dollar investment in infrastructure,” the chances of such a program being passed by Congress are between slim and none. So offering a de-facto trillion-dollar increase in defense spending is the next best thing, as it may well translate into enough jobs in key states to ensure a margin of victory in the 2020 election.

  But there is also a deeper sense to this effort, as the US establishment seems to try to re-enact the 1980s. And for a good reason. It was quite literally the last decade of America’s greatness, the last decade in which the country elected a president by a landslide–Ronald Reagan in 1984–and the last decade in which it scored a genuine, unalloyed geopolitical triumph in the form of the collapse of USSR and the emergence of the US as the sole hegemonic power. Therefore it is no surprise that US decisionmakers want to use it as a blueprint for repeating the earlier success.

  Indeed, if one looks at the origins of America’s 1980s triumph, it is easy to see similarities between the current policies and US policies of 1970s and 1980s. The prescription for success looks something like this: first, end unpopular costly quagmire wars, retrench, carry out domestic reforms liberalizing the economy, run up national debt through massive deficit spending, pump hundreds of billions of dollars of new spending into a revitalized all-volunteer force benefiting from a technological leap forward, and watch the geopolitical benefits practically reap themselves!

  But it’s unlikely this feat can be repeated.

  There is no next generation of US weapons comparable to the Abrams and Bradley armored vehicles, F-15 and F-16 fighters, or AEGIS destroyers that would provide the US with the sort of qualitative advantage it enjoyed in the 1980s and 1990s. It seems highly unlikely the US will be able to extricate itself from the debilitating wars in the Middle East. Trump is no Nixon, he lacks the foreign policy credibility sufficient to persuade the US establishment to accept at least a temporary loss of influence in the Middle East. Most importantly, while Reagan benefited from a stagflationary economy that benefited from liberalization and deregulation, and a low level of national debt, Trump has neither. US economy is suffering from neoliberalism and globalization taken to their logical extremes, not over-regulation or over-taxation. The US national debt is reaching its historic maximums. And, last but not least, China today is an economic powerhouse while Russia’s economy is on a far more sound footing than the Soviet economy was in the 1970s and 1980s.

  The danger here is that, aware that the time is not on their side, the US elites may engage in more international adventurism to a far greater extent than Reagan did in Grenada and Lebanon.

  Unfortunately, there are few indications the US elites have accommodated themselves to the new, post-hegemonic, international balance of power, and the boost in military spending is a reflection of their efforts to recapture past glories. But it is unlikely they can reverse the process of US hegemonic decline. Indeed, this effort actually represents a still-heavier burden on the already weak US economy.

  

  

• Unsealed CIA Memos Provide Shocking 'Salt Pit' Black Site Details

  A new batch of 274 CIA documents connected with Bush era torture have just been made public as a result of a lawsuit brought by families of victims. Contained in the documents are newly unearthed details on the CIA’s “black site” program which reached its peak under Bush’s ‘war on terror’ as well as shocking details revealing how the agency integrated its contract psychologists into its ‘enhanced interrogation’ program in order to give torture a veneer of legality. While much of this story of CIA torture has already slowly come to light over the past few years, especially with the 2014 Senate Intelligence Committee report, the just released documents capture internal high level agency discussions revealing a cover-up in action.

  Many of the memos focus on the CIA’s infamous ‘Cobalt’ site in Afghanistan (also code named The Salt Pit), routinely described in headlines as the “sadistic dungeon” and “dark prison” for its full sensory deprivation darkness which detainees experienced round the clock, sometimes for years, as well as the two psychologists credited with designing the program of brutal interrogation techniques: John “Bruce” Jessen and James Mitchell. 

  Two surviving prisoners and the family of a detainee who died at the Colbalt site reached an out-of-court settlement with the CIA psychologists in August after a lawsuit was brought for their role in the torture. As was hoped, the CIA and Pentagon were forced to declassify the documents related to the case in pretrial discovery. 

  
  Satellite image of Cobalt site, also called the Salt Pitt, from now public documents.

  The documents show the psychologists had been directly involved in designing and implementing torture, and that the blurring of lines between CIA interrogators and the psychologists originally brought in for “research” and development of techniques had agency leadership worried over future legal ramifications. Jessen himself had spent 10 days at the Cobalt facility in November 2002 where he was involved in interrogating Gul Rahman – a suspected militant who died of hypothermia while chained naked from the waist down to a concrete floor. He died 5 days after Jessen left. 

  Ironically, a key fact rarely highlighted is that Gul Rahman was captured among Gulbuddin Hekmatyar’s Hezb-i-Islami faction, which itself had previously been funded and vastly expanded by the CIA  as part of Operation Cyclone. By 2010 terror leader Hekmatyar himself would enter negotiations with then President Karzai, and by 2017 would be fully reconciled with the US-backed government in Kabul.

  
  Dr. Bruce Jessen, left, and Dr. James Mitchell, psychologists who contracted with the C.I.A.

  The Guardian summarizes the newly released “Chronology of Significant Events” court findings covering the specific time period of Rahman’s slow death at the Salt Pit as follows:

  • November 2002: Rahman wearing only socks and diaper; supervisor has concern regarding hypothermia
  • Rahman subjected to 48 hours of sleep deprivation, rough treatment, cold shower and other measures but remained noncompliant.
  • Subjected to cold conditions and minimum food and sleep… confused due to dehydration and fatigue.
  • Cable recommends future use of continued environmental deprivations with interrogations 18 out of 24 hours daily
  • Linguist asks questions about the temperature at which hypothermia occurs
  • November 19 2200 hrs guard check – Rahman is alive.
  • 2300 hrs guard check – Rahman is alive.
  • November 20 0400 hrs guard check – Rahman is alive.
  • 0800 hrs guard check – Rahman is alive.
  • 1000 hrs guard check – Rahman is dead.

  The Guardian further describes the now declassified documents as providing “the fullest picture yet of what the three men suffered [associated with the lawsuit] in that secret CIA dungeon – and of how fatefully their lives intersected with the rise and fall of James Mitchell and Bruce Jessen, the men who designed the torture regime.”

  Highlighted below are some revealing sections from the newly released batch of CIA torture memos – some of the below were already available before the latest release:

  CIA contracted psychologists created an “Exploitation Draft Plan” which involved holding captives in soundproof cells in hidden facilities that were beyond the reach of the Red Cross, the press, and even internal US government oversight. The plan notes: No International Red Cross [IRC] nor even US observers. Detainees were essentially “disappeared” individuals and not even family members knowing their fates. Rahman’s family didn’t know of his whereabouts or death for seven years until an AP report unearthed his name. As noted in the below memo, Pentagon involvement ended with capture and transfer as a DoD psychologist accompanied the captive “unbeknown to the subject” after which the CIA psychologists would be involved in interrogation. 

  

  Particularly intense “interrogation” sessions involved medical personnel attending to detainee wounds, and even applying antibiotics, so that torture could continue: “The straps were removed: subjects breathing continued to be rapid. Subject was then instructed to off the [water] board under his own power, which he did. The interrogators pointed to the small box and said, ‘you know what to do.’… At 1130 hours, taken out of small box, hooded, and made to stand against a cell wall: at 1230 hrs, back into the large box (unhooded)–note that medical officers dressed as security team member at this time gave subject Betadine to clean wound. Subject was also given a topical antibiotic to apply to the leg wound… At 1450 hrs, back to large box. At 1601 hrs into small box: 1612 hrs, subject was heard crying/wimpering/chanting, 1635 went from small box to floor, sitting down hooded; and 1655 hrs, returned to large box, unhooded…”

  

  CIA leadership envisioned that psychologists Jessen and Mitchel would provide a legally “defensible” veneer to torture sessions (after being paid $81 million). So long as their personal assessments vouched for detainees being of mentally sound mind, “enhanced interrogations” could be initiated. “In my read of the DOJ memo, providing we abide by our water board process on [redacted] (qualified medical staff present, the defensible exam is done and we follow our procedures) I believe the water board can be approved by CTC/LGL [CIA’s internal legal review team] without the need for further input from DOJ.” Jessen and Mitchel were paid $81 million by the CIA in the process.

  

  CIA leadership suggested psych evals be done from afar based on mere review of a file in order to set up a minimally invasive rubber stamp process. “to get waterboard approvals, we need a psychological evaluation… [Name redacted] indicated that we need to make a ‘defensible’ psychological analysis indicating that, given the individual’s particular mental disposition, he would not suffer prolonged and sever psychological problems resulting from the enhanced interrogation techniques… can OTS make a defensible analysis based on a file review on the targets? Or do they need to have a psych eval done on the ground, face-to-face?  [Name redacted] indicates that all it must [be] is ‘defensible.'”

  

  Doctors and nurses were requested to be present during sessions. One email with the subject line “Medical coverage planning” asked “There would be nurses on site correct?” This was presumably to allow torture to continue after detainees were injured, wounded, or sick – while also preventing those running the program from being legally exposed to prosecution. 

  

  Internal admissions of “blatant disregard for ethics”: CIA contracted psychologists’ ethics were questioned even by colleagues. They “have both shown blatant disregard for the ethics shared by almost all of their colleagues.” Other emails admitted: “No professional in the field would credit their later judgments as psychologists assessing the subjects of their enhanced measures.” And also, “if some untoward outcome is later to be explained, their sole use in this role will be indefensible.”

  

  

  

• Minsky, Myopia, & Why The S&P 500 Is A Bloated Corpse

  Authored by Raul Ilargi Meijer via The Automatic Earth blog,

  According to Hyman Minsky, economic stability is not only inevitably followed by instability, it inevitably creates it. Complacent humans being what they are. If he’s right, and would anyone dare doubt it, we’re in for that mushroom cloud on the financial horizon. We know that because market volatility, as measured for instance by the VIX, the Chicago Board Options Exchange (CBOE)’s volatility index, is scraping the depths of the Mariana trench.

  Two separate articles at Zero Hedge this weekend, one by NorthmanTrader.com and one by LPLResearch.com, address the issue: it is time to be afraid and wake up. And that is not just true for investors or traders, it’s true for ‘everyone out there’ perhaps even more. Central bank policies, QE and ultra low rates, have distorted the financial system to such an extent -ostensibly in an attempt to save it- that the depressed, compressed volatility these policies have created can only come back to life with a vengeance.

  Feel free to picture zombies and/or loss of heartbeat as much as you want; it’s all true. Financial markets haven’t been functioning for years, and there have been no investors either, only gamblers and profiteers, as savers and pensioners have been drawn and quartered. Central bankers have eradicated price discovery, nobody knows what anything is really worth anymore, be it stocks, bonds, housing, gold, bitcoin, you name it.

  If you make interest rates ‘magically’ disappear anyone can spend any amount of money on anything they fancy buying. And it’s not just traders and investors either. Scores of people think: look, I can buy a house, others think they can buy a bigger house, many will get into stocks and/or bonds, because prices just keep going up. Even savers and pensioners are drawn into the central bank Ponzi, often in an effort to make up for what they lose when their accumulated wealth no longer pays them any returns. Shoeshine boys are dishing out market tips.

  Crypto may or may not be a new tulip, but many Silicon Valley start-ups -increasingly funded by crypto ICO’s- certainly are. There’s so much money sloshing around nobody can tell, or even cares, whether they are actually worth a penny. It’s all based on gossip multiplied by the idea that they will be smart enough to get out in time in case things go awry.

  People mistakenly think that a market’s heartbeat can be found in for instance rising stock prices, the Dow, the S&P. But that’s simply not true. The S&P is a bloated corpse increasingly filling up with gases that will eventually cause it to explode, with guts and blood and body parts and fluids flying all around.

  The US stock market’s heartbeat manifests itself in volatility, and the overall economy’s heartbeat in interest rates. Rising and falling volatility and interest rates is how we know whether a market is in good health, or even alive at all. They are its vital signs.

  That follows straight from Minsky. Ultra-low rates and ultra-low volatility, especially if they last for a longer period of time, are signs of trouble. The markets the central banks’ $20+ trillion QE and ZIRP have created are bloated corpses that no longer have a heartbeat. They are zombies. But markets, unlike natural bodies, won’t die, they can’t. They will instead rise from their graves and take over Wall Street, the City, and then everyone else’s street.

  Bernanke, Yellen, Draghi and Kuroda are sorcerer’s apprentices and Dr. Frankensteins, who have created walking dead monsters they have no control over. But the monsters won’t turn on them personally; that’s the tragedy here as much as it is the reason why they have worked their sorcery. They themselves won’t go bankrupt, other will. No skin in the game.

  Enough with the metaphors. First, here’s NorthmanTrader:

  Flatliners

  In the movie Flatliners aspiring medical doctors tried to unlock the mysteries of death by, well, killing themselves. It was meant to be a controlled death of course, to flat line on the heart rate monitor for a few minutes to find out what wonders where to be found “on the other side” only to then return safe & sound thanks to medical intervention. Well, they soon found out the other side wasn’t everything it was cracked up to be and the main character soon got regular beatings as the sins of his past came back to haunt him.

   

  In my view markets find themselves in a very similar script. The promise of investor nirvana where the pains of real life no longer matter. If you only pay attention to the record highs headlines it all looks rather fantastical these days. [..] any trader staring at the tape knows that we find ourselves in the most compressed price environment in history. This is not normal, there’s no heartbeat:

  

  As I’m writing this I’m fully aware I may be viewed as the bear who cried wolf. After all I’ve been outlining structural risk factors for a while and markets have moved past my technical risk zones of 2450-2500 and most recently 2530. That’s what bubbles do. They blow past anyone’s expectations, they make believers of the unbelievers, make bears look like idiots and the most reckless look like geniuses. But an extreme market that only becomes more extreme is not any less extreme, it is just more extreme. As no risk is apparent these extremes are then dismissed as the new normal. Yet momentum driven price appreciation has absolutely zero predictive value of future price appreciation, it only appears as such at the time.

   

  We find ourselves in a very unique point in history and in a world dominated by false narratives. It is a challenge to keep an analytical grip on reality, but I’ll try to tie a few threads together here to put everything in a macro context. Firstly the underlying base reality: Free money, easy money, whatever you want to call it, permeates everything we see in financial markets. Indeed I would argue price appreciation has been paid for with unprecedented and, in my view, unsustainable volatility compression. A couple of charts really highlight this. Most clearly perhaps is the precise trend line tagging we can observe in the correlated picture of price appreciation and volatility compression since the February 2016 lows:

  

  The $VIX’s corollary, the inverse $XIV, embarked on an explosive near one way journey since the US election coinciding with over $2 trillion central bank intervention in just the first 9 months of 2017:

  

  And it has continued to this day and just made another all time high this past week on a massive negative divergence. It is the magnitude of this volatility compression that explains the current trading environment we find ourselves in.

   

  [..] Debt expansion at low rates continues to sustain the illusion of real prosperity for the 90%:

  

  And then LPLResearch with another indicator that goes to show we’re dealing with a zombie here: stock prices are not moving, either up or down. Or rather, they’re moving up all the time, but in too small increments. Yeah, like that bloated corpse.

  Where Did All the Big Moves Go?

  There have only been eight moves of at least 1% for the S&P 500 Index so far this year—the least since 13 in 1995. The all-time record was an incredible three in 1963. What about a big move? The last time the S&P 500 moved at least 4% was nearly six years ago. In fact, the S&P 500 had four consecutive days with 4% (or greater) changes in August 2011. Other than 2008 and the crash of ’87, that is the only other time since the Great Depression to see four consecutive 4% changes. That isn’t anything like today’s action.

   

  

  As the chart below shows, so far in 2017, big moves have been nonexistent; and even 1% changes have been rare. Per Ryan Detrick, Senior Market Strategist, “If you had forecast that the 11 months after the 2016 U.S. presidential election would be one of the least volatile periods ever, you would be in the minority. Then again, the last time we saw a streak of calm like this was the year after John F. Kennedy was assassinated in November 1963. Once again proving that the market rarely does what the masses expect and usually surprises us.”

  You want a heartbeat. That tells you if a body or a market is alive, healthy, functioning. We don’t have one. We haven’t for years. But we will again.

  Natural bodies can tend towards equilibrium, i.e. death. Markets cannot. They’re doomed to flatline, and then to always come back from near death experiences. They tend to do so in violent ways though. When volatility at last returns, so will price discovery. It won’t be pretty.

  

  

• "The Prices Are Insane": You Know It's Bad When Used Private Jet Prices Are Crashing

  America’s wealthiest have never been richer, thanks to 9 years of Federal Reserve “wealth creation” which has favored the top 1%, leading to an imbalance in wealth accumulation that has resulted in a record split between the haves and have nots. In fact, as the Fed admitted two weeks ago, the top 1% of Americans are 70% wealthier than the bottom 90%. But even though the number of millionaires and billionaires living in the US is at an all time high, and is on track to increase by nearly 700,000 a year between now and 2021 – assuming the market does not for the next 4 years – an influx of new potential buyers has done little to alleviate a supply glut that has been weighing on used jet prices for years.

  As Bloomberg reports, sales prices for used private jets have fallen as much as 16% over the past year – and more than 35% over the past 3 years – with the average price falling from $13.7 million in April 2014 to $8.9 million as of this summer, according to research by Colibri Aircraft, which specializes in the marketing, resale and purchase of pre-owned private aircraft. And, as a glut of planes came on to the market in the wake of the economic downturn, owners have lost millions on the value of their existing business jets. The resale price of a Bombardier Global XRS, which sold for $50m, has dropped from $31.3m to $20.4m — down just under 35%.

  While most major manufacturers, including Gulfstream and Bombardier have modestly pared production in the last couple of years as demand for private jets slumped, it has been nowhere near enough to shrink supply in line with the collapse in demand, and as a result it has not been enough to halt declines in aircraft values, say consultants for the $18 billion industry quoted by Bloomberg.

  And with bargains aplenty on machines with few flight hours, including various new timeshare startups which have made it even more economical to rent than to own, manufacturers are slashing prices and cutting deals to entice buyers to purchase new planes. Meanwhile, they keep churning out aircraft and introducing new models.

  It is this excess production glut that has sent prices tumbling by double-digits. “It’s a question of who wants to blink first,” Rolland Vincent, a consultant who puts together the JetNet iQ industry forecast, told Bloomberg. “Nobody – because whoever blinks, loses share.”

  In the latest, just released long-term outlook on the state of the Business Jet Aviation, Honeywell forecast up to 8,300 new business jet deliveries worth $249 billion from 2017 to 2027, down 2-3%  points from the most recent 10-year forecast released one year ago.

  And unfortunately for makers of private jets, a rebound in demand for new company planes, which would help stabilize the market, isn’t in the cards. Corporate plane-buying plans have hit a 17-year low, according to an annual survey by Honeywell International Inc. of more than 1,500 flight departments. Companies expect to replace or add planes equivalent to 19 percent of their fleets on average over the next five years, down from 27 percent in last year’s survey.

  “Declining used aircraft prices, continued low commodities prices, and economic and political uncertainties in many business jet markets remain as near-term concerns for new jet purchases, leading to a modest growth in 2018,” said Ben Driggs, president, Americas Aftermarket, Honeywell Aerospace. Driggs noted that the declined was most significant in Chinese and Russian purchase plans; Brazil remains a bright spot by recording strongest new aircraft purchase plans in survey from a major aircraft market though overall buying plans also declined year over year.

  Meanwhile, all those “aspirational” buyers who hoped to impress someone with their full-priced toy purchase, are seething said Barry Justice, founder and chief executive officer of Corporate Aviation Analysis & Planning Inc.

  And so, to stimulate some demand, Gulfstream slashed as much as 35% off the price of its G450, which is being phased out as the new G500 aircraft nears arrival, Vincent said. The G450 had a list price of about $43 million, according to the Business & Commercial Aviation guide.

  Others are similarly liquidating: Bombardier has offered discounts of as much as $7 million on the Challenger 350’s list price of about $26 million as it fends off competitors entering the super midsize space, he said. The weakness across the industry in private-jet sales is adding to the pressure on Bombardier, which is also struggling to sell its C Series commercial planes. The U.S. government slapped import duties of about 300% on the single-aisle jetliner in the last two weeks after a complaint by Boeing.

  But what is most surprising is that the corporate aircraft segment – the one catering exclusively to the world’s richest, i.e. those who have explicitly benefited from central bank policies in the past decade, the global market hasn’t fully recovered from the last U.S. recession, when plunging demand popped a bubble that had flooded the industry with more than 1,000 new jet deliveries in both 2007 and 2008. A nascent recovery in 2013 and 2014 fell apart after the price of oil and other commodities collapsed, drying up sales in emerging markets such as Russia and Brazil.

  Deliveries of new private jets are forecast to drop to 630 this year, from 657 last year and 689 in 2015, according to JPMorgan Chase & Co. The number is forecast to rebound slightly to 640 next year.

  

  According to Bloomberg, the more conservative pace has done little to relieve the glut, creating a buyer’s market for used aircraft. A five-year-old jet sold in 2016 was worth only 56% of its original list price, on average. That’s down from 64% in 2012, according to a report by plane broker Jetcraft. The value retention was as high as 91 percent in 2008.

  Prices for used aircraft right now are “insane,” said Justice. And yet, prices are only going to get even more insane.

  “There’s a vast overproduction of large-cabin airplanes and there are only so many people in the world who are going to step up and pay $60 million-plus,” he said. “What happens is, people are going to that pre-owned market.”

  Of couse, none of this should be a surprise, as the collapse of the private-jet bubble isn’t a new phenomenon, though the markdowns that some owners face are probably even larger than what Bloomberg is reporting: Back in 2015, we reported that Delta purchased a used Boeing 777 for just $7.7 million, equivalent to a 97.2% discount off its list price of $277.3 million.

  

  Delta CEO Richard Anderson raised eyebrows, and caused smirks among industry “experts”, that October when he said there was a “huge bubble” in used widebody aircraft, pricing a 10-year-old 777-200 at $10 million. Anderson said that the market would be “ripe” for Delta to buy used 777s. To be sure, Boeing CEO Dennis Muilenburg was among those who pushed back against Anderson, saying the Delta CEO was valuing used 777’s much too low. Turns out, Anderson’s estimate was $2.3 million too high.

  To be sure, the supply of new jets has fallen sharply in the past decade. In 2008, 1,313 business jets were delivered, compared with 661 in 2016, and less expected this year. But the drop hasn’t been fast enough to balance out oversupply in the used-jet market.

  The silver lining is that the chartered private plane industry stands to benefit as more owners give their planes up for charter. The rise in available planes hasn’t had much of an impact on the price of a charter hour, which has changed little in the last decade. “It has been exactly the same price to charter a private jet for the past 10 years,” said Adam Twidell, chief executive of PrivateFly, a global booking service for private aircraft hire.

  However, it is just a matter of time before the primary cost deflation spreads to the services segment and who knows: at this rate of plunging prices, it may soon be (much) cheaper to charter a seat in a private jet than to fly commercial first (or even business) class.

  

  

• Donald Trump: Warmonger-In-Chief?

  Authored by Antonius Aquinas via Acting-Man.com,

  Cryptic Pronouncements

  If a world conflagration, God forbid, should break out during the Trump Administration, its genesis will not be too hard to discover: the thin-skinned, immature, shallow, doofus who currently resides in the Oval Office!

  

  The commander-in-chief – a potential source of radiation?

   

  This past week, the Donald has continued his bellicose talk with both veiled and explicit threats against purported American adversaries throughout the world.  In a cryptic exchange with reporters during a dinner with military leaders, he quipped:

  You guys know what this represents? Maybe it’s the calm before the storm.  It could be the calm… before… the storm.*

  A reporter asked if he meant Iran or Isis which the POTUS responded, “you’ll find out.”  Instead of threatening supposed overseas foes with nuclear annihilation, none of whom have taken any concrete military action against the US, why not go after someone who has actually compromised the country’s security, namely Hillary Rodham Clinton!

  While some dismissed the comments as typical Trumpian bluster, White House press secretary Sarah Sanders added further ominous overtones when questioned saying they were “extremely serious.” Later in the week, Trump continued to threaten tiny North Korea, this time in not so veiled terms:

  “Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid hasn’t worked, agreements violated before the ink was dry, making fools of U.S. negotiators.  Sorry, but only one thing will work”.**

  If war erupts either on the Korean Peninsula or in any other part of the globe that the U.S has wantonly poked its nose into, it can be safely assured that neither Trump nor any of the other “military leaders,” with whom he recently had dinner with will be in the midst of hostilities as the bombs and bullets are being cast about.

  No, these laptop bombers will be in safe quarters far away from enemy lines, giving orders, making speeches, and praising the troops, while Congress will be hurriedly passing more “defense” funding legislation further lining the pockets of the military industrial complex.

  

  Too far removed from the battlefield…

   

  Curtailing the Warmongers

  The Warmonger-in-Chief, who has repeatedly bragged about America’s military prowess, had a chance to become a part of the organization he constantly gushes over during his youth at the time of the Vietnam War.  Yet, he escaped military service, due to the machinations of his father, because of a mysterious foot/toe malady.

  All those who avoided being conscripted into America’s disastrous imperial exercise in Southeast Asia during those years, whether it was from phony medical conditions, escaping to Canada or beyond, or going to jail, they did so for justifiable reasons.

  The war was immoral, since Vietnam had taken no hostile action against the US and what made it worse, the government drafted thousands of America’s youth to fight it.  It is reprehensible that those who got out of military service then are now at the forefront in advocating mass murder (war).

  One resolution that would certainly curtail warmongering in the future would be that any legislator, president, cabinet officer, or ambassador who promotes military intervention abroad should be required to directly participate in field operations.  This would quickly put the brakes on threatening talk from the likes of Trump and his crazed UN Ambassador, Nikki Haley.

  A country’s leadership personally conducting military operations has a long tradition in Western history.  During the era of the crusades, princes and kings led their retinues and forces into battle risking their own life and limb – such as the great Norman prince, Bohemond, whose courage, tenacity, and military acumen won the day for Christian forces at the battle of Antioch.

  

  From left to right: Bohemond I of Antioch, Bohemond’s troops scaling the ramparts of Antioch in AD 1098, Bohemond’s mausoleum in Canosa di Puglia. Bohemond was the son of Rober Guiscard, the count of Apulia and Calabria. His real name was Mark Guiscard. He was a nicknamed Bohemond after a legendary giant – the name was given to him because he was an unusually tall and strong man, dwarfing those around him. Even for a crusader, Bohemond’s life was unusually colorful. [PT]

   

  This venerable ideal can still be seen in Russia when recently one of its generals and two colonels lost their lives in the Syrian quagmire.***   When was the last time a US general has perished in active combat?

  It is apparent that the current POTUS does not understand the catastrophic consequences of what his threats, if carried out, would lead to – death to millions, unimaginable destruction, and the end of civilization.

  

  A brief history of US-North Korean relations in the 2000ds

   

  Maybe, had he actually suffered through the horrors of combat or had been the victim of US aggression as the peoples of North Korea, Vietnam and Iraq have witnessed, he might refrain from such bellicose language.

  Hopefully, cooler heads in the Administration will prevail, however, a more peaceful world is unlikely with the likes of Donald J. Trump at the command of the greatest destructive force in human history.

  References:

  *Tyler Durden, “President Trump Warns Ominously: ‘It’s the Calm Before the Storm.’”  Zero Hedge.  6 October 2017.

  **Tyler Durden, “Trump Hints at War With North Korea: ‘Sorry, But Only One Thing Will Work.’”  Zerohedge, 7 October 2017.

  ***Alexander, “General Asapov Died Because as a Russian Officer He Led From the Front.”  Russia Feed.  30 September 2017.

  

  

• Vegas Massacre Story Changes: Gunman Shot Security Guard Before Opening Fire On Crowd

  In a dramatic shift to the original Las Vegas shooting narrative, over a week after Stephen Paddock rained down bullets on a crowd and killed 58 people, late on Monday Clark County Sheriff Joe Lombardo drastically changed the timeline of the deadliest mass shooting in modern U.S. history, and now the gunman allegedly opened fire on a security guard six minutes before he unleashed the massacre. Officials had previously claimed that Paddock, 64, shot Mandalay Bay security guard Jesus Campos only after Paddock had started shooting at the Route 91 Harvest country-music festival from his 32nd-floor hotel suite on Oct. 1.

  The revision to the story also undermines the story surrounding the end of the shooting: officials had previously credited Campos, who was shot in the leg, with stopping the 10-minute assault by turning the gunman’s attention to the hotel hallway, where Campos was checking an alert for an open door in another guest’s room. However, with the revelation that Campos was shot before his mass shooting, officials now admit they don’t know why he stopped his attack.

  Las Vegas Metro PD: Suspect shot security guard before shooting at crowd https://t.co/befniwHBH8 https://t.co/GHSxEOfAtZ

  — NBC News (@NBCNews) October 9, 2017

  //platform.twitter.com/widgets.js

  As part of the new “story”, officials said that police officers who rushed to the hotel room when the shooting began didn’t know a hotel security guard had been shot “until they met him in the hallway after exiting the elevator,” Lombardo said.

  The security guard, Jesus Campos, was struck in the leg as the gunman, from behind his door, shot into the hallway on the 32nd floor. Paddock apparently detected Campos via surveillance cameras he set up outside his hotel suite, police have said.

  Paddock shot the guard at 9:59 p.m. local time, Lombardo said, shortly before raining down bullets on the Route 91 Harvest festival in an attack that began at 10:05 p.m. and lasted 10 minutes. Police officers found Campos when they arrived on the floor.

  And since it is not Campos who summoned the police, it is once again unclear what event catalyze the end of the mass shooting.

  Lombardo also disclosed that Paddock was seen on numerous occasions in Las Vegas without any person accompanying him and he gambled the night before the shooting. “This individual purposely hid his actions leading up to this event, and it is difficult for us to find the answers,” said Lombardo, who said he was frustrated with the speed of the investigation.

  “In coordination with the FBI’s behavioral analysis unit, a comprehensive picture is being drawn as to the suspect’s mental state and currently we do not believe there is one particular event in the suspect’s life for us to key on,” Lombardo said.

  Meanwhile, Sheriff Lombardo refuted something he himself insinuated last week, when he said that there is no indication anyone other than Paddock fired on the crowd: “We have uncovered no evidence to show there was a second shooter.”

  “We have uncovered no evidence to show there was a second shooter,” Sheriff Joe Lombardo says of Las Vegas massacre https://t.co/Okz2bwUl4f pic.twitter.com/bNLOdsgyn3

  — CBS News (@CBSNews) October 9, 2017

  //platform.twitter.com/widgets.js

  Now, as part of the new narrative, Lombardo said it was unclear why Paddock stopped firing at the crowd, suggesting he may have initially planned to escape. As we reported last week, Paddock also shot at jet fuel tanks at McCarran International Airport and had protective gear in the hotel suite and explosives in his parked car.

  

  

• South Korea's New "Blackout Bomb" Can Paralyze The North's Power Grid

  US and South Korean officials are nervously watching to see if North Korea follows through with its threats to carry out another nuclear test – or to fire a rumored long-range missile capable of accurately striking the west coast of the US into the Pacific – in celebration of the Oct. 10 anniversary of the Communist Party’s creation. Meanwhile, the Telegraph reports that South Korea has developed a new weapon to hobble the North’s infrastructure should an armed conflict erupt on the peninsula. Given that it's almost daybreak in North Korea, such a test could happen as soon as Monday night, Eastern Time.

  The weapon is a graphite bomb – otherwise known as a “blackout bomb” – which South Korean officials say will be capable of shutting down North Korea’s entire power grid. Blackout bombs were first used by the US in Iraq in the 1990 Gulf War and work by releasing a cloud of extremely fine, chemically treated carbon filaments over electrical components. The filaments are so fine that they act like a cloud, but cause short circuits in electrical equipment.

  As News.com.au points out, North Korea tends to celebrate the Oct. 10 holiday with military parades and aggressive rhetoric. But this year's festivities could include new provocative weapons tests.

  “The Kim regime usually uses these sorts of occasions to demonstrate some show of strength — in this current climate a missile test is a likely result,” says Dr Genevieve Hohnen, lecturer in politics and international relations at Edith Cowan University.

  

  The Telegraph reports that the South developed the bomb to minimize civilian casualties in the North should a conflict erupt. In a statement to Yonhap, a military official said the South Korean army could assemble a blackout bomb at any time. The weapon was reportedly developed by South Korea's Agency for Defense Development.

  “All technologies for the development of a graphite bomb led by the ADD have been secured. It is in the stage where we can build the bombs anytime,” a military official told Yonhap.

  The bomb is often referred to as a “soft bomb” because it only affects targeted electrical power systems.

  As the Telegraph explains, the blackout bomb was developed as part of South Korea’s “three pillars” plan for retaliating against the North if it believes a nuclear strike is imminent. Escalating tensions with the North have inspired the South to move its target date for completion forward by three years. The plan was initially slated to be complete by the mid-2020s.

  The first two parts of the plan involve detecting – and then intercepting – North Korea missiles. The second part – aptly named the “massive punishment and retaliation plan” involves launching attacks against the country’s leadership, including a plan to assassinate Kim Jong Un.

  South Korea is bringing forward the deployment of its "three pillars" of national defence by as much as three years as a result of the growing threat posed by Pyongyang's nuclear and missile development programmes.

   

  The three-pronged strategy was originally scheduled to be in place by the mid-2020s, but North Korea's increasingly aggressive and unpredictable behaviour has forced Seoul to revise that timeline.

   

  The Kill Chain programme is designed to detect, identify and intercept incoming missiles in the shortest possible time and operates in conjunction with the Korea Air and Missile Defence system for lower-tier defence against inbound missiles.

   

  The final component of the strategy is the Korea Massive Punishment & Retaliation plan, under which Seoul will launch attacks against leadership targets in North Korea if it detects signs that the regime is planning to use nuclear weapons.

  South Korea believes North Korea’s energy grid is outdated and vulnerable, and thus would be incredibly susceptible to a “blackout bomb” attack. Blackout bombs were first used by the US against Iraq in the Gulf War of 1990, when they knocked out about 85 percent of Iraq’s electricity. They were also used by NATO against Serbia in 1999, when it damaged around 70 percent of the country’s electrical supply.

  * * *

  President Donald Trump fired off his latest threatening tweet about North Korea earlier today, reiterating his view that 25 years of US appeasement and billions of dollars in humanitarian aid for the North clearly have not worked. He ended the tweet with yet another vague hint that the US could soon resort to a military strike.

  Our country has been unsuccessfully dealing with North Korea for 25 years, giving billions of dollars & getting nothing. Policy didn't work!

  — Donald J. Trump (@realDonaldTrump) October 9, 2017

  //platform.twitter.com/widgets.js

  Though the US has rejected North Korea's claims that Trump's rhetoric has amounted to a declaration of war, how much longer can the US credibly claim that "all options are on the table" if North Korea continues to provoke the international community with its missile and nuclear tests?

  

  

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• A Mysterious Virus Has Infiltrated America's Drone Program

  There’s something deeply wrong at Creech Air Force Base, the notorious home of America’s drone program, where pilots remotely order US Reaper and Predator drones to unleash destructive missile strikes on unsuspecting villagers in Yemen, Libya, Iraq, Syria, Afghanistan and other war zones.

  Less than a week after the Department of Homeland Security advised all federal agencies using anti-virus software created by Kaspersky Labs to remove the programs from their systems immediately, Ars Technica reports that two weeks ago the Defense Information Systems Agency detected mysterious spyware embedded in the drone “cockpits” – the control stations that pilots use to control the deadly machines.

  

  Investigators have been unable to determine the virus’s provenance, or even if it was intentionally introduced to the drone systems, or the result of an accidental infection. But perhaps the virus’s most perplexing feature is its passivity. Instead of hastening away reams of classified information, it has simply logged keystrokes.

  More curious still, the virus has resisted all attempts to remove it from the Air Force’s systems.

  The virus, first detected nearly two weeks ago by the military’s Host-Based Security System, has not prevented pilots at Creech Air Force Base in Nevada from flying their missions overseas. Nor have there been any confirmed incidents of classified information being lost or sent to an outside source. But the virus has resisted multiple efforts to remove it from Creech’s computers, network security specialists say. And the infection underscores the ongoing security risks in what has become the US military’s most important weapons system.

   

  “We keep wiping it off, and it keeps coming back,” says a source familiar with the network infection, one of three that told Danger Room about the virus. “We think it’s benign. But we just don’t know.”

   

  Military network security specialists aren’t sure whether the virus and its so-called “keylogger” payload were introduced intentionally or by accident; it may be a common piece of malware that just happened to make its way into these sensitive networks. The specialists don’t know exactly how far the virus has spread. But they’re sure that the infection has hit both classified and unclassified machines at Creech. That raises the possibility, at least, that secret data may have been captured by the keylogger, and then transmitted over the public internet to someone outside the military chain of command.

  As Ars notes, drones have become America’s weapon of choice for waging stealth warfare across the Middle East and Africa, a fact that was underlined by the killing of four US green berets in Niger earlier this week. The military advisers were serving at a waystation for American drones that were used to carry out attacks on nearby Al Qaeda affiliates.

  Drones have become America’s tool of choice in both its conventional and shadow wars, allowing US forces to attack targets and spy on its foes without risking American lives. Since President Obama assumed office, a fleet of approximately 30 CIA-directed drones have hit targets in Pakistan more than 230 times; all told, these drones have killed more than 2,000 suspected militants and civilians, according to the Washington Post. More than 150 additional Predator and Reaper drones, under US Air Force control, watch over the fighting in Afghanistan and Iraq. American military drones struck 92 times in Libya between mid-April and late August. And late last month, an American drone killed top terrorist Anwar al-Awlaki — part of an escalating unmanned air assault in the Horn of Africa and southern Arabian peninsula.

  And while they represent America’s most sophisticated weaponry in the never-ending war on terror, the drone program has well-known security flaws. Last fall, the US Air Force investigated a secure network outage in early September at Creech. Around the time of the outage, there were three incidences of drones striking three unintended targets. The Air Force said it was just a coincidence. 

  But despite their widespread use, the drone systems are known to have security flaws. Many Reapers and Predators don’t encrypt the video they transmit to American troops on the ground. In the summer of 2009, US forces discovered “days and days and hours and hours” of the drone footage on the laptops of Iraqi insurgents. A $26 piece of software allowed the militants to capture the video.

  Authorities believe the virus was spread by the use of remote drives used by technicians to upload maps and other data to the drone piloting systems, which are “air gapped” from the rest of the Air Force’s systems.

  Use of the drives is now severely restricted throughout the military. But the base at Creech was one of the exceptions, until the virus hit. Predator and Reaper crews use removable hard drives to load map updates and transport mission videos from one computer to another. The virus is believed to have spread through these removable drives. Drone units at other Air Force bases worldwide have now been ordered to stop their use.

  But given the hysteria surrounding Kaspersky’s software allegedly being used as a tool for espionage by the Russian government, how long until this breach is connected with a broader narrative about Russian hackers trying to destabilize American society?

  Or, worse – how much longer until a malicious actor manages to seize control of America’s drone program and harness its destructive capabilities for its own ends?

  

  

• Meet Adrej Babis – The Czech 'Donald Trump'

  Authored by Soeren Kern via The Gatestone Institute,

  • Andrej Babis, one of the Czech Republic's wealthiest people, presents himself as a non-ideological results-oriented reformer. He has pledged to run the country like a business after years of what he calls corrupt and inept management. He is demanding a return of sovereignty from the European Union and rejects the euro.
  • Babis's anti-establishment party ANO (which stands for "Action of Dissatisfied Citizens" and is also the Czech word for "yes") is centrist, technocratic and pro-business. ANO, which rejects political labels, has attracted voters from both left and right, pulling support away from the established parties.
  • "The West European politicians keep repeating that it is our duty to comply with what the immigrants want because of their human rights. But what about the human rights of the Germans or the Hungarians? Why should the British accept that the wealth which has been created by many generations of their ancestors, should be consumed by people… who are a security risk and whose desire it is not to integrate but to destroy European culture?" – Andrej Babis, candidate for prime minister of the Czech Republic.

  A "politically incorrect" billionaire businessman opposed to further EU integration is on track to become the next prime minister of the Czech Republic.

  Andrej Babis, a Slovak-born former finance minister who has been sharply critical of German Chancellor Angela Merkel's open-door migration policy, is leading the polls ahead of general elections, set for October 20.

  Babis, one of the country's wealthiest people, presents himself as a non-ideological results-oriented reformer. He has pledged to run the Czech Republic like a business after years of what he calls corrupt and inept management. He is demanding a return of sovereignty from the European Union and rejects the euro; he argues that it would "be another issue that Brussels would be meddling with." He has also said he plans to cut government spending, stop people from "being parasites" in the social welfare system, and fight for Czech interests abroad. Babis is often referred to as "the Czech Donald Trump."

  Babis's anti-establishment party ANO (which stands for "Action of Dissatisfied Citizens" and is also the Czech word for "yes") is centrist, technocratic and pro-business. ANO, which rejects political labels, has attracted voters from both left and right, pulling support away from the established parties. Babis has said that ANO aims to replace left and right with "common sense."

  A recent poll shows that support for ANO has grown to 30.9%, while the support for the Czech Social Democrats has dropped to 13.1%. The pro-Russian Communist Party of Bohemia and Moravia has 11.1%; the nationalist Civic Democratic Party 9.1%. TOP 09, the only openly pro-EU party, will not pass the 5% barrier of entry into Parliament; it is supported by only 4.4% of Czech voters.

  Babis's approach to the EU is pragmatic: "They give us money, so our membership is advantageous for us." He does not want the Czech Republic to leave the EU, but he is opposed to the country joining the eurozone:

  "No euro. I don't want the euro. We don't want the euro here. Everybody knows it's bankrupt. It's about our sovereignty. I want the Czech koruna, and an independent central bank. I don't want another issue that Brussels would be meddling with."

  Andrej Babis (left), then Finance Minister of the Czech Republic, meets with Austria's Foreign Minister Sebastian Kurz (right) on February 13, 2015. (Image source: Austrian Foreign Ministry)

  Babis has expressed opposition to mass migration: "I have stopped believing in successful integration and multiculturalism."

  He has called on Merkel "to give up her political correctness and to begin to act" on securing European borders:

  "In return for billions of euros, she should make sure that Greece and Turkey completely stop the arrival of refugees in Europe. Otherwise, it will be her fault what happens to the European population. Unfortunately, Mrs. Merkel refuses to see how serious the situation is in Germany and in other EU nations. Her attitude is really tragic."

  Babis blamed Merkel for the December 2016 jihadist attack on a Berlin Christmas market:

  "Unfortunately, the migration policy is responsible for this dreadful act. It was she who let migrants enter Germany and the whole of Europe in uncontrolled waves, without papers, therefore without knowing who they really are. Germany is paying a high price for this policy. The solution is peace in Syria and the return of migrants to their homes. There is no place for them in Europe."

  Babis has rejected pressure from the European Commission, which has launched infringement procedures against the Czechs, Hungarians and Poles for refusing to comply with an EU plan to redistribute migrants. In August 2016, he tweeted:

  "I will not accept refugee quotas for the Czech Republic. The situation has changed. We see how migrants react in Europe. There is a dictator in Turkey. We must react to the needs and fears of the citizens of our country. We must guarantee the security of Czech citizens. Even if we are punished by sanctions."

  In June 2017, Babis reiterated that the Czech Republic would not be taking orders from unelected bureaucrats in Brussels:

  "We have to fight for what our ancestors built here. If there will be more Muslims than Belgians in Brussels, that's their problem. I don't want that here. They won't be telling us who should live here."

  Babis has called on the EU to establish a system to sort economic migrants from legitimate asylum seekers: "The EU must say: You cannot come to us to be unemployed and immediately take social benefits."

  In an interview with the Czech daily Pravo, Babis said:

  "We are not dutybound to accept anyone and we are not even now able to do so. Our primary responsibility is to make sure that our own citizens are safe. The Czech Republic has enough of its own problems, people living on the breadline, single mothers. The West European politicians keep repeating that it is our duty to comply with what the immigrants want because of their human rights. But what about the human rights of the Germans or the Hungarians? Why should the British accept that the wealth which has been created by many generations of their ancestors, should be consumed by people without any relationship to that country and its culture? People who are a security risk and whose desire it is not to integrate but to destroy European culture?

   

  "The public service media in some countries have been brainwashing people. They have been avoiding problems with the immigrants. Politicians have also been lying to their citizens. This has only increased tension between the indigenous population and the immigrants. It is not acceptable that Europeans should have fewer rights than immigrants.

   

  "It is unthinkable that the indigenous European population should adapt themselves to the refugees. We must do away with such nonsensical political correctness. The refugees should behave like guests, that is they should be polite, and they certainly do not have the right to choose what they want to eat. Europe and Germany in particular are undergoing an identity crisis. There is a deep chasm between what people think and what the media tell them….

   

  "Many of the Middle Eastern refugees are unusable in industry. Many of them are also basically illiterate and they only know two German politicians: Merkel and Hitler."

  

  

• Terraforming 101: How To Make Mars A Habitable Planet

  Before we can journey to the stars, we must first go to Mars.

  That’s Elon Musk’s philosophy, anyways – and as Visual Capitalist's Jeff Desjardins reports, just days ago he revealed new details on his ambitions to colonize the Red Planet, including sending two cargo rockets by 2022 and four rockets (two manned, two cargo) by 2024.

  In 40 to 100 years, Musk suggested that up to a million people could live there.

  CHANGE OF SEASONS

  As Elton John wisely noted, “Mars ain’t the kind of place to raise your kids”.

  Indeed, the average temperature on Mars is −55 °C (−67 °F), dust storms are frequent and potentially deadly, and the planet has extremely low atmospheric pressure (about 1% of Earth). Because of the atmosphere and temperature swings, meaningful occurrences of liquid water on the planet’s surface are almost impossible. And while Mars is thought to have plenty of frozen water at its poles and in underground deposits, the logistics of tapping into these resources could be quite difficult.

  In other words, for any meaningful and long-lasting human presence on Mars, we would likely want to alter the planet and its atmosphere to make it more habitable for human life. And while the exact mechanisms we would use to accomplish this are still up for debate, the basics behind what’s needed to achieve Earth-like conditions are actually pretty straightforward.

  TERRAFORMING 101

  Today’s infographic comes to us from Futurism, and it details what might need to happen on Mars to make it more accommodating to human life.

  

  Courtesy of: Visual Capitalist

  Here are two steps we could take to get Mars into the “Goldilocks Zone”, where water is liquid – and harmful ionizing radiation like x-rays, UV rays, and gamma rays are not problematic.

  Greenhouse Gases
  One way to ward off harmful ionizing radiation is to add a thicker layer of greenhouse gases to the atmosphere of Mars. Such an atmosphere would also allows less heat to escape, meaning warmer temperatures on the planet.

   

  Magnetic Field
  A strong magnetic field on Earth is something else that makes life easier. Earth’s solid inner core, composed primarily of iron, creates this field when the planet spins – and it deflects cosmic rays and other harmful types of radiation.

  One interesting solution to solve this problem on Mars would to have a magnetic field generator in front of the planet at all times, deflecting any such rays coming from the sun.

  THE REALM OF POSSIBILITY

  While terraforming is still a mixture of theory and science fiction at this point, we do know some of the major problems that have to be solved for attaining a habitable environment – and it will be interesting to see how plans around Mars develop as the prospect of colonization becomes more real.

  You need to live in a dome initially but over time you could terraform Mars to look like Earth and eventually walk around outside without anything on.

   

  … So it’s a fixer-upper of a planet.

   

  – Elon Musk

  

  

• Is This The Geopolitical Shift Of The Century?

  Authored by Cyril Widdershoven via OilPrice.com,

  The geopolitical reality in the Middle East is changing dramatically.

  The impact of the Arab Spring, the retraction of the U.S. military, and diminishing economic influence on the Arab world – as displayed during the Obama Administration – are facts.

  The emergence of a Russian-Iranian-Turkish triangle is the new reality. The Western hegemony in the MENA region has ended, and not in a shy way, but with a long list of military conflicts and destabilization.

  

  The first visit of a Saudi king to Russia shows the growing power of Russia in the Middle East. It also shows that not only Arab countries such as Saudi Arabia and the UAE, but also Egypt and Libya, are more likely to consider Moscow as a strategic ally.

  King Salman’s visit to Moscow could herald not only several multibillion business deals, but could be the first real step towards a new regional geopolitical and military alliance between OPEC leader Saudi Arabia and Russia.

  This cooperation will not only have severe consequences for Western interests but also could partly undermine or reshape the position of OPEC at the same time.

  Russian president Vladimir Putin is currently hosting a large Saudi delegation, led by King Salman and supported by Saudi minister of energy Khalid Al Falih.

  Moscow’s open attitude to Saudi Arabia—a lifetime Washington ally and strong opponent of the growing Iran power projections in the Arab world—show that Putin understands the current pivotal changes in the Middle East.

  

  U.S. allies Saudi Arabia, Egypt, Turkey and even the UAE, have shown an increased eagerness to develop military and economic relations with Moscow, even if this means dealing with a global power currently supporting their archenemy Iran. Analysts wonder where the current visit of King Salman will really lead to, but all signs are on green for a straightforward Arab-Saudi support for a bigger Russian role in the region, and more in-depth cooperation in oil and gas markets.

  In stark contrast to the difficult relationship of the West with the Arab world, Moscow seems to be playing the regional power game at a higher level. It can become an ally or friend to regional adversaries, such as Iran, Turkey, Egypt and now Saudi Arabia. Arab regimes are also willing to discuss cooperation with Russia, even though the country is supporting adversaries in the Syrian and Yemen conflicts and continues to supply arms to the Shi’a regime in Iran.

  Investors can expect Russia and Saudi Arabia to sign a multitude of business deals, some of which have already been presented. Moscow and Riyadh will also discuss the still fledgling oil and gas markets, as both nations still heavily depend on hydrocarbon revenues. Arab analysts expect both sides to choose a bilateral strategy to keep oil prices from falling lower. Riyadh and Moscow have the same end goal: a stable oil and gas market, in which demand and supply keep each other in check to push price levels up, but without leaving enough breathing space for new market entrants such as U.S. shale.

  Putin and Salman will also discuss the security situation in the Middle East, especially the ongoing Syrian civil war, Iran’s emerging power, and the Libya situation. Until now, the two have supported opposite sides, but Riyadh has realized that its ultimate goal, the removal of Syrian president Assad, is out of reach. To prevent a full-scale Shi’a triangle (Iran-Iraq-Syria-Lebanon), other options are now being sought to quell Tehran’s power surge. Moscow is key in this.

  Putin’s unconditional support of the Iranian military onslaught in Iraq and Syria, combined with its support for Hezbollah in Lebanon or Houthis in Yemen, will be discussed and maybe tweaked to give Riyadh room to maneuver into the Russian influence sphere. The verdict on this isn’t yet out, but Riyadh’s move must be seen in light of ongoing Moscow discussions with Egypt, Libya, Jordan and the UAE.

  A growing positive Putin vibe in the Arab world is now clear. The strong leadership of Russia’s new Tsar has become a main point of interest for the (former pro-Western) Arab regimes. The U.S. and its European allies have only shown a diffuse political-military approach to the threats in the MENA region, while even destabilizing historically pro-Western Arab royalties and presidents. Putin’s friendship, however, is being presented as unconditional and long lasting.

  Even though geopolitics and military operations in the Middle East now are making up most headlines, the Saudi-Russian rapprochement will also have economic consequences. Riyadh’s leadership of OPEC is still undisputed, as it has shown over the last several years. Saudi Arabia’s eagerness to counter the free-fall of oil prices has been successful, but a much bigger effort is required to bring prices back to a level of between $60-75 per barrel. Russia’s role—as the largest of non-OPEC producers—has been substantial, bringing in not only several emerging producers, but also by putting pressure on its allies Iran, Venezuela and Algeria.

  The historically important Moscow-Riyadh cooperation in oil and gas is unprecedented. Without Russia’s support, overall compliance to the OPEC production cut agreement would have been very low, leading to even lower oil prices.

  The Saudi-Russian rapprochement could, however, be seen as a threat by the West and OPEC itself. Western influence in the region has waned since the end of the 1990s, not only due to the peace dividend of NATO, but especially because OECD countries are moving away from oil. Saudi Arabia had to find new markets, which happened with China and India. The Saudi future is no longer based on Western customers or support, but lies in Asia and other emerging regions. The FSU region has also popped up on Saudi screens. Investment opportunities, combined with geopolitical support and military interests, are readily available in Russia and its satellite states.

  For OPEC, the Moscow-Riyadh love affair could also mean a threat. Throughout OPEC’s history, Riyadh has been the main power broker in the oil cartel, pushing forward price and production strategies; most of the time this was done in close cooperation with all the other members, most of them Arab allies. This changed dramatically after Saudi Arabia and Russia agreed to cooperate in global oil markets. Through the emergence of this OPEC/ non-OPEC cooperation, Moscow and Riyadh have grown closer than expected. The two countries now decide the future of global oil markets before they discuss it with some of the other main players like UAE, Iran, Algeria and Nigeria. King Salman’s visit is seen as another step toward a more in-depth cooperation in oil and gas related issues.

  Besides global oil market cooperation, Saudi Arabia is and will become more interested to invest in natural gas development, not only to have an interest in Russia’s gas future but also to bring in Russian technology, investment and LNG to the Kingdom. 

  At the same time, media sources are stating that Saudi Arabia is NOT asking Russia to take part in the long-awaited Aramco IPO in 2018. Russian individual investors and financial institutions, however, are expected to take an interest.

  Putin understands not only Russian chess tactics but also the Arab “Tawila” approach. Saudi Crown Prince Mohammad bin Salman already will prepare his Tawila strategy, putting enough stones on the table to ensure his successful end game. MBS, currently de-facto ruler of the Kingdom, is targeting a full house—Russian cooperation in energy, defense and investments—while softening Moscow’s 100% percent support of the Shi’a archenemy Iran.

  For both sides, Moscow and Riyadh, the current constellation presents a win-win situation. Moscow can reach its ultimate goal in the Middle East: to become the main power broker and knock the US from the pedestal. For Riyadh, the option to counter the Iranian threat, while also bolstering its own economy and hydrocarbon future, is now within reach.

  King Salman’s trip could go down in history as the point of no return for the West. Pictures of Russian President Vladimir Putin and King Salman of Saudi Arabia could replace historic pictures of King Saud and U.S. President Roosevelt (Bitter Lake, 1945). In a few years, King-to-be Crown Prince Mohammad bin Salman might tell his children that this was one of the pillars that changed not only the Middle East but also supported his Vision 2030 plan of becoming a bridge between the old (West) and the new (Russia-Asia).

  

  

• Google Is Using Hot Air Balloons To Restore Cell Service In Puerto Rico

  While Elon Musk is pretending that he can rebuild Puerto Rico’s power grid with solar-powered batteries, Google wants to deliver cell phone service using balloons.

  Alphabet Inc., Google’s corporate parent, received permission on Friday from the FCC to begin providing emergency cellular service to hurricane-ravaged Puerto Rico using balloons. The effort appears to be a dry run for Google X’s “Project Loon” moonshot program, which ultimately aims to beam internet across the world using high-altitude balloons.

  2) We've granted an experimental license to Project Loon; it could help Puerto Ricans access cellular service. https://t.co/VJPbZ0ipYo pic.twitter.com/31IrPhDW00

  — Ajit Pai (@AjitPaiFCC) October 7, 2017

  //platform.twitter.com/widgets.js

  Pai is also waiving regulations on telecom providers operating in Puerto Rico for six months to allow them to focus on the recovery effort.

  4) We've also extended deadlines for telecom providers, allowing them to focus on restoring networks over paperwork. https://t.co/mo2fj4FELM pic.twitter.com/VvMtg1g9oO

  — Ajit Pai (@AjitPaiFCC) October 7, 2017

  //platform.twitter.com/widgets.js

  Pai said on Friday he was launching a Hurricane Recovery Task Force focused on providing aid to Puerto Rico and the U.S. Virgin Islands. The agency has also reportedly been working with private companies since the storm to devise ways to more quickly restore the island’s downed communications infrastructure, the Hill reported.

  Eight-three percent of the island's cellular sites remain out of commission, making communication on and off the island difficult, according to the agency.

  

  One of Google X's "Project Loon" balloons

  After exchanging tweets about the possibility of Tesla rebuilding the island’s power grid (presumably after helping itself to a generous portion of federal government aid dollars) PR Gov Ricardo Rosselló and Tesla chief Elon Musk had a 25-minute phone conversation Friday night where the two discussed relief efforts as well as Tesla playing a leading role, Rosselló told USA TODAY. Teams from Tesla and Puerto Rico’s energy sector will continue the talks early next week, Rosselló said at the time.

  As proof of a precedent, Musk cited Tesla's work building a solar energy grid for the Hawaiian island of Kauai. However, Kauai's population is only around 70,000 people, whereas Puerto Rico’s is 3.4 million. As Newsweek points out, the island's aging power grid relies on fossil fuels that must be imported by the island, a costly expense. Solar batteries could help alleviate the financial strain on Puerto Rico as it struggles with $74 billion in debt, a large chunk of which is owed by Prepa, the island's power authority.

  However, it looks like Musk might find himself preoccupied trying to rescue his company from yet another embarrassing production fiasco. As WSJ revealed late Friday, the company has been assembling new Model 3s by hand because its production line remains inoperable. Earlier in the week, Tesla revealed that it had completed only a tiny fraction of the 1,500 Model 3s it had promised to deliver by the end of the third quarter, blaming unspecified “production bottlenecks”. To be sure, Musk has sent a team of engineers to oversee installations of Tesla's "powerwall" home solar battery systems in the homes of Puerto Rican customers.

  Here's a video introducing Project Loon that was published by Google back in June 2013:

  

  

• China On Pace To Dethrone The US

  Authored by James Holbrooks via TheAntiMedia.org,

  “Not sure whether China will be nice to self-ruled Taiwan? Wait until after the 19th National Congress of the Communist Party.

   

  What’s in store for the hotly disputed, resource-rich South China Sea, where Beijing has taken a military and technological lead since 2010? Wait until after the Congress.

   

  Coffee maker wouldn’t start today? Wait until after the Congress.

   

  Wait. But you get the idea: This event, due to start Oct. 18, is monumental enough to put a lot of Asia on hold — and make it worry.”

  That’s how Ralph Jennings opened his piece for Forbes on Wednesday. Humor aside, the point he’s making is the same one I made at the end of September — that China’s upcoming National Congress is a really big deal.

  

  China sets the regional tone on nearly all matters, as Jennings points out in his article:

  "Chinese foreign and economic policies shape much of Asia. China’s ever-growing efforts to build and fund infrastructure around the subcontinent through initiatives such as One Belt, One Road have obvious impact on smaller countries that might otherwise struggle to finance their own projects. Neighbors from Japan to India are watching China for foreign policy cues that affect their iffy diplomatic relations with the region’s major power.”

  But China’s geopolitical influence extends far beyond Asia. The country has long been viewed as the rising global superpower on pace to dethrone the United States. Much has been written and said about China’s willingness to embrace this role as more and more countries turn to it for guidance.

  China is highly conscious of this trend. It feels the world’s eyes aimed squarely in its direction and very much wants everything at the upcoming Congress, during which President Xi Jinping is expected to be reaffirmed as leader and appoint his own trusted allies to key positions of power, to go smoothly.

  This is why, as I pointed out last month, the Chinese government has implemented a system-wide crackdown – both in the streets and in cyberspace – on political dissent ahead of the Congress. It all goes back to perception and the desire to present to the world the “One China” the country’s government says exists.

  But perhaps there’s even more to it than that. It may be that once power is further solidified under Xi at the Congress, China will be ready to fully embrace the role of world leader. On Wednesday, its state-run Xinhua News Agency ran an article titled “China offers wisdom in global governance,” which opened with the following:

  “With its own development and becoming increasingly closer to the center of the world stage, China has been injecting positive energy into the international community in pursuit of better global governance over recent years.”

  Xinhua writes that China’s leadership ability is already well-established and that even though it’s currently undergoing a restructuring of its own, its vision for the world is one rooted in peace and innovation:

  “As the world’s second largest economy and the biggest contributor of global economic growth, China’s innovative concepts on improving global governance and promoting global peace and common prosperity have gained wide recognition and support from other countries.

   

  “Undergoing structural reforms, China is implementing its new concept of innovative, coordinated, green, open and shared development, eyeing a quality growth model driven by innovation.

   

  “Meanwhile, the country is assuming its international responsibility to promote common development with other countries in the interconnected world.”

  Continuing, Xinhua points to international acceptance of One Belt, One Road as evidence of China’s ability to take the lead in adapting to the modern era:

  “The Belt and Road Initiative, building a community of shared future for mankind and the principle of extensive consultation, joint contribution and shared benefits, all proposed by China, have been incorporated in U.N. resolutions, showing wide international consensus on the concepts.

   

  “Equality, mutual respect and win-win cooperation feature in the Chinese plans, which also safeguard the irreversible trend of globalization.”

  This “win-win cooperation” is China’s guiding principle, Hu Angang of Tsinghua University in Beijing, told Xinhua. He even dubbed the philosophy “win-winism,” as the state news organ explains:

  “’Win-winism’ highlights an open world economy for common development of all countries and joint efforts to address global challenges such as climate change and terrorism, and exchanges of different cultures, said the researcher.”

  Xinhua goes on to write that Liu Wei, president of Renmin University of China, says the country has taken the lead by “putting forward new concepts, thoughts and plans to reshape the global governance system.”

  With China in the spotlight ahead of the National Congress, it shouldn’t be taken lightly that the superpower would allow such bold language by one of its state mouthpieces. Indeed, it could be that a post-Congress China will be a far more assertive player on the world stage.

  

  

• The Dark Web's Largest Pedophile Site Was Secretly Run By The Police For A Year

  A major international police operation to bust child predators involved police sharing child pornography with over a million unsuspecting online subscribers for a year after investigators took control of the dark web's largest child abuse forum. Though hundreds of pedophiles were arrested after the site was shut down, the police sting involved undercover officers sharing extremely disturbing content and encouraging followers to engage in sexual acts with children. But police say it was worth it.

  A new report reveals that Australian police were running the largest pedophile and child pornography forum on the internet for a year as part of a joint initiative between Australian, European, and Canadian police as well as the US Department of Homeland Security to track down the site's administrators and child porn producers. Over the weekend the Norwegian newspaper VG published its bombshell investigation which confirmed that between October 2016 and September 2017 a special police task force based in Queensland, Australia was able to quietly hack the site "Childs Play" which had reached over a million registered accounts and had thousands of active users.

  

  Queensland police at Taskforce Argos, including investigator Paul Griffiths (pictured). Image source: Kinsa.net

  The task force was able to identify the site's top tier administrators, leading to hundreds of international arrests and criminal investigations, but not before crossing what critics see as a significant ethical line: to expose those behind the site, police themselves posted child pornography and facilitated what was essentially a pedophile online meet-up.

  The site has existed since April 2016 on the dark web, which made it next to impossible to identify users and administrators as the dark web operates based on layers of encryption which ensures complete anonymity. Not only did the forum include over one hundred active producers of child pornography who would daily post videos and images, but even more disturbingly involved a smaller inner circle who shared child torture videos.

  Among this inner circle were Childs Play administrators 'Warhead' and 'Crazymonk' – later revealed to be 26-year old Canadian Benjamin Faulkner and 27-year old Tennessee native Patrick Falte, according the VG report. Both had previously worked as internet security professionals and were active technical support providers for pedophilia related internet sites – the two had initially met, for example, through a website called the the “Pedo Support Community." The Australian child abuse task force had begun tracking the two by assembling profiles of their previous digital footprints in relation to child abuse related chat on the open web.

  

  Source: Norway's VG

  Faulkner (Warhead) for example, had in 2012 posted the following to a chat forum under his previous online identity, CuriousVendetta:

  A little about myself to establish credibility here: My name is CuriousVendetta, and I work as a JR forensics consultant and penetration tester for an IT security firm. On the side, I do what I can to cause general mischief on the internet with a few friends of mine…

   

  At the pool is where I am free, and where I can generate my fantasies. I have more girls in my 'fan club' than I can even count.

  Faulkner was working as a youth swimming instructor in the small Canadian city of North Bay in Ontario and though it appears some parents had become suspicious of his proclivities, no police reports were ever filed. Patrick Falte had lived all his life with his parents a half an hour outside of Nashville and was the more advanced technical expert of the two. Both Warhead and Crazymonk as administrators of the Childs Play dark web forum had promised subscribers increased security measures. For example users knew that should Warhead, the site's leader, ever miss one of his routine postings to the community which involved a message stamped with a pornographic image, it would be a signal that the community had been infiltrated by police.

  But police did infiltrate the community and took it over, partly due to mistakes made by the administrators. The forum transacted in Bitcoin – common for the dark web – but Crazymonk had his bitcoin wallet linked to his personal email address, making it easy for the US Department of Homeland Security to locate him. Other mistakes which helped police included both site leaders posting identifying information in various on the open web which helped investigators build profiles for the two. From there police not only began monitoring the pair – even installing tracking devices on their vehicles – but were also able to observe all communications and postings on the site through a backdoor. It was soon understood that the two would occasionally drive for over 10 hours to meet multiple times a year. After months of monitoring, the two met in person at a usual spot in Manassas, Virginia, where one of Childs Play's users had regularly offered the men his 4-year old daughter to rape while being video taped.

  It was in Manassas that US federal agents finally made the arrest, but only after the 4-year old had already been raped in a Virginia home. Authorities told VG that they had no way of knowing of the rape beforehand, citing online messaging as not indicative of that information. The video tape would later be used to convict Faulkner and Falte, who were given life sentences for both the rape and running the site. After the arrests, the Australian task force, known as Argos, then moved in to assume the identities of the arrested site administrators. Investigators studied the pair's online language styles and characteristics, eventually posting an admin message so that users wouldn't get suspicious, which of course required the child pornography image stamp.

  The site's server was located in Australia, which was important to the international investigation as Australian law gives police broad leeway to commit crimes in pursuit of investigations, especially in relation to catching child pornographers. Task force Argo's officers not only uploaded the image, thereby convincing subscribers that nothing was wrong, but according to VG issued the following message to the community:

  "I hope that some of you were able to give a special present to the little ones in your lives, and spend some time with them. It's a great time of year to snuggle up near a fire, and make some memories."

  Police, while running the site, also continued to share images and videos while undergoing their year-long investigation which identified numerous video producers as well as consumers of the content. For example the task force posted a video of an eight-year-old girl being raped only two weeks after taking over the forum, which was viewed 770,617 times, according to the report. Such extreme police tactics, which authorities argue was necessary to rescue victims and put predators behind bars, have outraged some of the victims' families.

  VG reporters were able to speak to a mother of one the victims whose video was used by police as part of the operation: "My daughter should not be used as a bait… It is not right for the police to promote these images," she said. But police investigators told VG in response to criticism that, "There is definitely a balance between what we want to achieve and how we go about it." And added, "Eventually we get to the point where it isn’t worth running the forum any more. But as long as we’re identifying victims, producers and abusers, we will keep running it."

  A similar investigation by the FBI in 2015 of a site significantly smaller than Child's Play's size made 870 arrests and rescued 259 children after agents kept it online for just two weeks. The FBI came under fire for actively sharing, promoting and facilitating the transfer of thousands of images and videos. But the Australian task force ran a site which was over five times the size and content volume for close to a year.

  

  

• "He Concerns Me" – Corker Tells NYT That Trump's Actions Threaten World War 3

  With what The New York Times called "almost cathartic satisfaction," Senator Bob Corker took his feud with the president from Twitter to mainstream media, proclaiming during a 25-minute confessional that Trump was treating his office like “a reality show,” with reckless threats toward other countries that could set the nation “on the path to World War III.”

  

  After a brief reposte following the day's Twitter-fight in which President Trump accused him of lacking "guts" and he compared the White House to an "adult day care center," Corker went running to the New York Times to spill his guts, saying that he believes Trump is out of control, and dangerous:

  Trump is treating the presidency like “a reality show” and acts “like he’s doing ‘The Apprentice’ or something.”

   

  “He concerns me.  He would have to concern anyone who cares about our nation.”

  Then, desperate to refute Trump's claims that he had begged for an endorsement for 2018 and backed out when he didn't receive one, he claimed Trump actually pushed him to run, saying:

  "I don't know why the president tweets out things that are not true. You know he does it, everyone knows he does it, but he does."

  Corker had plenty more to spill (as Axios notes)…

  On how fellow GOP senators feel: "Look, except for a few people, the vast majority of our caucus understands what we're dealing with here… of course they understand the volatility that we're dealing with and the tremendous amount of work that it takes by people around him to keep him in the middle of the road."

   

  On Trump undermining Tillerson: "A lot of people think that there is some kind of 'good cop, bad cop' act underway, but that's just not true."

   

  On Trump's tweets harming U.S. foreign policy: "I know he has hurt, in several instances, he's hurt us as it relates to negotiations that were underway by tweeting things out."

  Interetingly The New York Times itself seemed unimpressed by Corker's rant, noting:

  "In a 25-minute conversation, Mr. Corker, speaking carefully and purposefully, seemed to almost find cathartic satisfaction by portraying Mr. Trump in terms that most senior Republicans use only in private."

  We suspect this is far from over – with or without Trump's kindergarten cop Kelly to manage him.

  Perhaps most concerning (for markets as much as anything else) is that Corker has many friends in the Senate and we suspect this feud will do nothing to help Trump pass any reform.

  

  

• White House Reveals What It Wants In Exchange For Keeping "Dreamers"

  On Sunday night, the White House revealed that it is seeking more funds from Congress to fund Trump’s wall along the U.S.-Mexico border, more resources to hire thousands more immigration officers, cutting the number of new legal immigrants and generally demanding a steep price for legislation under consideration to help so-called Dreamers. According to the WSJ, “the White House documents, sent to congressional leaders in both parties on Sunday, amount to a lengthy wish list of longstanding conservative immigration goals.” While White House officials told reporters that they want these to be included in any immigration deal, they stopped short of saying the White House will insist on them.

  As The Hill adds, Trump’s new “immigration principles and policies” call for a crackdown on border security, more resources to catch individuals residing in the country illegally, as well as a merit-based system that limits chain migration to spouses and children.

  
  Border patrol agents stand next to a border fence used for training
  at the U.S. Border Patrol Academy in Artesia, New Mexico

  Claiming that in order to properly protect the nation’s borders, the White House said Congress must also approve of the construction of a border wall to deter human trafficking, drug trafficking and other cartels. “Success of border walls are undeniable from the perspective of their operators,” U.S. Customs and Border Protection Acting Deputy Commissioner Ronald Vitiello said Sunday. The plan also takes a hardline stance against unaccompanied minors who enter the country.

  Trump also went after sanctuary cities, calling on Congress to cut funding from certain grants and agreements to punish the “states and localities that refuse to cooperate with Federal authorities.”   Additionally, the administration is advocating for a “refugee ceiling” that caps how many are let into the country to an unspecified “appropriate level.”

  “[T]he refugee ceiling needs to be realigned with American priorities,” according to a press release that points to the nation’s historically high average of resettling refugees compared to “the rest of the world combined.”

  The plan also suggests measures that allow for a swift deportation process once ICE or other authorities detect and catch those residing in the country illegally.

  But the most notable feature was the return of demands for a border wall. The Trump White House had previously called for border security measures as part of a Dreamer deal but had agreed to take the wall off the table. Now the administration is again insisting on it.

  “These findings outline reforms that must be included as part of any legislation addressing the status of Deferred Action for Childhood Arrivals (DACA) recipients,” President Trump said in a statement following the announcement of the proposal on Sunday. “Without these reforms, illegal immigration and chain migration, which severely and unfairly burden American workers and taxpayers, will continue without end.”

  The just released proposed plan is meant to guide the administration’s discussions with Congress to replace Deferred Action for Childhood Arrivals (DACA), an Obama-era program that shielded nearly 800,000 so-called “Dreamers” from deportation and also allowed them to secure work permits. The administration said many agencies weighed in to give policy recommendations in order to improve the immigration system including the Department of Justice, Department of Homeland Security, ICE, and U.S. Customs and Border Control.

  The principles also lay out changes to the legal immigration system that Mr. Trump has already endorsed, including large cuts to green cards issued for family members and shifting existing employment-based green cards to a skills-based system.

  It is no surprise that Democrats are opposed to most of these ideas outright and don’t support others unless they are part of a comprehensive package that includes a path to citizenship for almost all of the estimated 11 million people living in the U.S. illegally. They will certainly throw up Trump’s renewed attempt to push through “the wall.”

  “The administration can’t be serious about compromise or helping the Dreamers if they begin with a list that is anathema to the Dreamers, to the immigrant community and to the vast majority of Americans,” Senate Minority Leader Chuck Schumer (D., N.Y.) and House Minority Leader Nancy Pelosi (D., Calif.) said in a joint statement Sunday.

  This may be a problem because suddenly it appears that all the goodwill that Trump had built up with the Democrats last month, when in exchange for avoiding a government shutdown he caved on his DACA executive order, may have vaporized:

  Last month, Mr. Trump met with the pair for dinner and, afterward, it seemed that a deal to legalize Dreamers might be at hand. All three of them suggested that they had agreed to pair protections for the young migrants with border security provisions that didn’t include the controversial proposal for a wall along the U.S. border with Mexico.

   

  But immediately after that, many congressional Republicans said they would seek to extract more significant enforcement provisions as part of any deal. And on Sunday, a White House official said that the only agreement was that dealing with Dreamers was a priority and that they would try to come to a resolution as quickly as possible.

  As the WSJ adds, many of the proposals outlined are included in legislation that has passed the GOP-controlled House but wasn’t considered in the Senate, in part because they likely don’t have support from the 60 senators that would be needed to pass them.

  As for the Dreamers, there was some additional confusion, because a White House official said that the administration wasn’t interested in providing these people with a path to citizenship, as the Dream Act provides. But last week, two administration officials told a Senate committee young people should have the opportunity for citizenship.

  Finally, should this proposal indeed sour the tentative ceasefire that had emerged between Trump and the Democrats last month, suddenly not only is tax reform before year end looking impossible shaky, but if Trump has just made the DACA legislation impossible, then not only is the threat of a government shutdown again back on the table, but it may be time to start worrying about the next debt ceiling hike which is due exactly two months from today.

  

  

Digest powered by RSS Digest

• Fire Breaks Out On The Roof Of The New York Fed

  Dozens of firefighters are fighting a blaze which broke out on the top of the Federal Reserve Bank of New York, NBC New York reports. The fire broke out sometime before 8:40 p.m. on the roof of the 14-story building at 33 Liberty St. in Lower Manhattan, the location of the world’s biggest gold vault as Simon Gruber knows too well.

  Manhattan: *2 Alarm Fire* Box 061 at 33 Liberty St, heavy fire of a federal reserve bank. Fire on the roof.

  — NYC Scanner (@NYScanner) October 8, 2017

  //platform.twitter.com/widgets.js

  Several videos show numerous fire trucks at the scene around 9 p.m. 

  Uh the Federal Reserve is kinda on fire. pic.twitter.com/fK5ndqnzPd

  — the ghost of jay (@jaydestro) October 8, 2017

  //platform.twitter.com/widgets.js

  

  Contrary to recurring rumors that the fire was created from excess money creation, the FDNY said that a generator on the roof of the building caused the fire in a chimney, although the severity of the damage to the building is not known.

  Just a fire atop the Federal Reserve @nytimes @wsj @nypost anyone know what’s going on pic.twitter.com/mgODXKtlAB

  — Daniel Feldstein (@feldstein) October 8, 2017

  //platform.twitter.com/widgets.js

  No injuries have been reported.

  Must be a fire going on at the Federal Reserve… Never seen so many fire trucks in my life at least 15 pic.twitter.com/CByRumxRWN

  — Michael Rothman (@TheRealRothman) October 8, 2017

  //platform.twitter.com/widgets.js

  NYC News Fire Erupts on Roof of Federal Reserve Bank https://t.co/1E1GB65iVc pic.twitter.com/QVwfDEDZ9i

  — NYC NewsChannel (@NYC_NC) October 8, 2017

  //platform.twitter.com/widgets.js

  The Federal Reserve Bank of New York is the most important of the 12 regional Reserve Banks that are part of the Federal Reserve system, the central banking system of the United States. As previously reported, the world’s most important trading desk, also known as the “Plunge Protection Team”, is located on the 9th floor of the New York Fed.

  Here are some snapshots.

  Blake Gwinn, left, and James White in the operations room at the Federal Reserve Bank of New York (source)

   

   

   

   

   

   

  A Trader Monitors Four Computer Screens on the Open Market Trading Desk at the Federal Reserve Bank of New York (source)

   

   

   

   

   

  Open Market Trading Floor at the Federal Reserve Bank of New York (source)

   

   

   

   

   

   

  And just because…

  

  

• Russiagate Is More Fiction Than Fact

  Authored by Aaron Mate via TheNation.com,

  From accusations of Trump campaign collusion to Russian Facebook ad buys, the media has substituted hype for evidence...

  

  In her new campaign memoir, What Happened, Hillary Clinton reveals that she has followed “every twist and turn of the story,” and “read everything I could get my hands on,” concerning Russia’s role in the 2016 presidential election. “I do wonder sometimes about what would have happened if President Obama had made a televised address to the nation in the fall of 2016 warning that our democracy was under attack,” she writes.

  Clinton has had a lot to take in. Since Election Day, the controversy over alleged Russian meddling and Trump campaign collusion has consumed Washington and the national media. Yet nearly one year later there is still no concrete evidence of its central allegations. There are claims by US intelligence officials that the Russian government hacked e-mails and used social media to help elect Donald Trump, but there has yet to be any corroboration. Although the oft-cited January intelligence report “uses the strongest language and offers the most detailed assessment yet,” The Atlantic observed that “it does not or cannot provide evidence for its assertions.” Noting the “absence of any proof” and “hard evidence to back up the agencies’ claims that the Russian government engineered the election attack,” The New York Times concluded that the intelligence community’s message “essentially amounts to ‘trust us.’” That remains the case today.

  The same holds for the question of collusion. Officials acknowledged to Reuters in May that “they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far.” Well-placed critics of Trump – including former DNI chief James Clapper, former CIA director Michael Morrell, Representative Maxine Waters, and Senator Dianne Feinstein – concur to date.

  Recognizing this absence of evidence helps examine what has been substituted in its place.

  Shattered, the insider account of the Clinton campaign, reports that “in the days after the election, Hillary declined to take responsibility for her own loss.” Instead, one source recounted, aides were ordered “to make sure all these narratives get spun the right way.” Within 24 hours of Clinton’s concession speech, top officials gathered “to engineer the case that the election wasn’t entirely on the up-and-up.… Already, Russian hacking was the centerpiece of the argument.”

  But the focus on Russia has utility far beyond the Clinton camp. It dovetails with elements of state power that oppose Trump’s call for improved relations with Moscow and who are willing to deploy a familiar playbook of Cold War fearmongering to block any developments on that front.

  The multiple investigations and anonymous leaks are also a tool to pacify an erratic president whose anti-interventionist rhetoric—by all indications, a ruse—alarmed foreign-policy elites during the campaign. Corporate media outlets driven by clicks and ratings are inexorably drawn to the scandal. The public is presented with a real-life spy thriller, which for some carries the added appeal of possibly undoing a reviled president and his improbable victory.

  

  These imperatives have incentivized a compromised set of journalistic and evidentiary standards. In Russiagate, unverified claims are reported with little to no skepticism. Comporting developments are cherry-picked and overhyped, while countervailing ones are minimized or ignored. Front-page headlines advertise explosive and incriminating developments, only to often be undermined by the article’s content, or retracted entirely. Qualified language—likely, suspected, apparent—appears next to “Russians” to account for the absence of concrete links. As a result, Russiagate has enlarged into a storm of innuendo that engulfs issues far beyond its original scope.

  The latest two stories about alleged Trump campaign collusion were initially received as smoking guns. But upon further examination, they may actually undermine that narrative.

  One was news that Trump had signed a non-binding letter of intent to license his name for a proposed building in Moscow as he ran for the White House. Russian-born developer Felix Sater predicted to Trump lawyer Michael Cohen that the deal would help Trump win the presidency. “I will get Putin on this program and we will get Donald elected,” Sater wrote, believing that voters would be impressed that Trump could make a real-estate deal with the United States’ “most difficult adversary.” The New York Times describes the outcome:

  There is no evidence in the emails that Mr. Sater delivered on his promises, and one email suggests that Mr. Sater overstated his Russian ties. In January 2016, Mr. Cohen wrote to Mr. Putin’s spokesman, Dmitri S. Peskov, asking for help restarting the Trump Tower project, which had stalled. But Mr. Cohen did not appear to have Mr. Peskov’s direct email, and instead wrote to a general inbox for press inquiries.

   

  The project never got government permits or financing, and died weeks later.

  Peskov has confirmed he ended up seeing the e-mail from Cohen, but did not bother to respond. The story does raise a potential conflict of interest: Trump pursued a Moscow deal as he praised Putin on the campaign trial. But it is hard to see how a deal that never got off the ground is of more importance than actual deals Trump made in places like Turkey, the Philippines, and the Persian Gulf. If anything, the story should introduce skepticism into whether any collusion took place: The deal failed, and Trump’s lawyer did not even have an e-mail address for his Russian counterparts.

  The revelation of Sater’s e-mails to Cohen followed the earlier controversy of Rob Goldstone offering Donald Trump Jr. incriminating information on Hillary Clinton as “part of Russia and its government’s support for Mr. Trump.” Goldstone’s e-mail was more fruitful than Sater’s in that it yielded a meeting, albeit one that Trump Jr. claims he abandoned after 20 minutes. Those who deem the Sater-Goldstone e-mail chains incriminating or even treasonous should be reminded of their provenance: Sater is known as “a canny operator and a colorful bullshitter” who has “launched a host of crudely named websites—including IAmAFaggot.com and VaginaBoy.com… to attack a former business partner.” Meanwhile, Goldstone is a British tabloid journalist turned music publicist. One does not have to be an intelligence expert to doubt that they are Kremlin cut-outs.

  Then there is Facebook’s disclosure that fake accounts “likely operated out of Russia” paid $100,000 for 3,000 ads starting in June 2015. The New York Times editorial board described it as “further evidence of what amounted to unprecedented foreign invasion of American democracy.” A $100,000 Facebook ad buy seems unlikely to have had much impact in a $6.8 billion election. According to Facebook, “the vast majority of ads…didn’t specifically reference the US presidential election, voting or a particular candidate” but rather focused “on amplifying divisive social and political messages across the ideological spectrum—touching on topics from LGBT matters to race issues to immigration to gun rights.” Facebook also says the majority of ads, 56 percent, were seen “after the election.” The ads have not been released publicly. But by all indications, if they were used to try to elect Trump, their sponsors took a very curious route.

  The ads are commonly described as “Russian disinformation,” but in the most extensive reporting on the story to date, The Washington Post adds multiple qualifiers in noting that the ads “appear to have come from accounts associated with the Internet Research Agency,” itself a Kremlin-linked firm (emphasis added).

  The Post also reveals that an initial Facebook review of the suspected Russian accounts found that they “had clear financial motives, which suggested that they weren’t working for a foreign government.” Furthermore, “the security team did not find clear evidence of Russian disinformation or ad purchases by Russian-linked accounts.” But Russiagate logic requires a unique response to absent evidence: “The sophistication of the Russian tactics caught Facebook off-guard.”

  The Post adds how Russian “sophistication” was overcome:

  As Facebook struggled to find clear evidence of Russian manipulation, the idea was gaining credence in other influential quarters.

   

  In the electrified aftermath of the election, aides to Hillary Clinton and Obama pored over polling numbers and turnout data, looking for clues to explain what they saw as an unnatural turn of events.

   

  One of the theories to emerge from their post-mortem was that Russian operatives who were directed by the Kremlin to support Trump may have taken advantage of Facebook and other social media platforms to direct their messages to American voters in key demographic areas in order to increase enthusiasm for Trump and suppress support for Clinton.

   

  These former advisers didn’t have hard evidence that Russian trolls were using Facebook to micro-target voters in swing districts—at least not yet—but they shared their theories with the House and Senate intelligence committees, which launched parallel investigations into Russia’s role in the presidential campaign in January.

  The theories paid off. A personal visit in May by Democratic Senator Mark Warner, vice-chair of the Senate Intelligence Committee, “spurred the company to make some changes in how it conducted its internal investigation.” Facebook’s announcement in August of finding 3,000 “likely” Russian ads is now an ongoing “scandal” that has dragged the company before Congressional committees.

  Other election threats loom. A recent front-page New York Times article linking Russian cyber operations to voting irregularities across the United States is headlined, “Russian Election Hacking Efforts, Wider Than Previously Known, Draw Little Scrutiny.” But read on and you’ll discover that there is no evidence of “Russian election hacking,” only evidence-free accusations of it. Voting problems in Durham, North Carolina, “felt like tampering, or some kind of cyberattack,” election monitor Susan Greenhalgh says, and “months later…questions still linger about what happened that day in Durham as well as other counties in North Carolina, Virginia, Georgia and Arizona.” There is one caveat: “There are plenty of other reasons for such breakdowns—local officials blamed human error and software malfunctions—and no clear-cut evidence of digital sabotage has emerged, much less a Russian role in it.”

  The evidence-free concern over Russian hacking expanded in late September when the Department of Homeland Security informed 21 states that they had been targeted by Russian cyber-operations during the 2016 election. But three states have already dismissed the DHS claims, including California, which announced that after seeking “further information, it became clear that DHS’s conclusions were wrong.”

  Recent elections in France and Germany saw similar fears of Russian hacking and disinformation—and similar results. In France, a hack targeting the campaign of election winner Emmanuel Macron ended up having “no trace,” of Russian involvement, and “was so generic and simple that it could have been practically anyone,” the head of French cyber-security quietly explained after the vote. Germany faced an even more puzzling outcome: Nothing happened. “The apparent absence of a robust Russian campaign to sabotage the German vote has become a mystery among officials and experts who had warned of a likely onslaught,” the Post reported in an article headlined “As Germans prepare to vote, a mystery grows: Where are the Russians?” The mystery was so profound that The New York Times also explored it days later: “German Election Mystery: Why No Russian Meddling?”

  Following this evidentiary praxis, Russia can be blamed for matters far beyond Western elections. After the recent white-supremacist violence in Charlottesville, foreign-policy consultant Molly McKew issued a widely circulated appeal on Twitter: “We need to have a conversation about what is happening today in Charlottesville & Russian influence, and operations, in the United States.” (McKew recently testified at a US government hearing on “The Scourge of Russian Disinformation.”)

  Writing for CNN, Yale Law School’s Asha Rangappa asserted that Charlottesville “highlighted again the problem of Russia.” Sure, Rangappa concedes, “there is no evidence to date that Russia is directly supporting extreme right groups in the United States.” But Russian government ties to the European far-right “when viewed through the lens of Trump’s response to Charlottesville, suggests an opening for Russian intelligence to use domestic hate groups as a vehicle for escalating their active measures inside the United States.”

  Linking Russia to right-wing American racists contrasts with just a few months prior, when it was fashionable to tie Russia to the polar opposites. In March, intelligence-community witnesses soberly testified to Congress that Russia’s “21st-century cyber invasion” has “tried to sow unrest in the U.S. by inflaming protests such as Occupy Wall Street and the Black Lives Matter movement.” The evidence presented for this claim was that both movements were covered by the Russian state-owned television network RT.

  Russian-linked tweets about NFL players kneeling during the national anthem to protest racial injustice show the Russians “trying to push divisiveness in this country,” says Republican Senator James Lankford. A Russian-linked ad about Black Lives Matter aimed at audiences in Ferguson and Baltimore “tells us…that the Russians who bought these ads were sophisticated enough to understand that targeting a Black Lives Matter ad to the communities…would help sow political discord.… the goal here was really about creating chaos,” says CNN reporter Dylan Byers.

  But this story might actually tell us a lot more about the attitudes of pundits and lawmakers towards their audiences. On top of the 3,000 ads identified by Facebook, Twitter has now informed Congress of around 200 accounts “linked to Russian interference in the 2016 election.” Twitter has 328 million users. To suggest 200 accounts out of 328 million could have had an impact is as much an insult to common sense as it is to basic math. It also suggests Black Lives Matter protesters in places like Ferguson and Baltimore were unwitting foreign agents who needed Russian social-media prodding to march in the streets. To protest racism is not to sow “chaos” and “political discord,” but to protest racism.

  Because the ads may have originated in Russia, it is widely taken for granted that they were part of an alleged Russian government plot. Few have considered a different scenario, pointed out by the journalist Max Blumenthal, that the ads could have been like those from any other troll farm: clickbait to attract page views.

  Some who focus on Russiagate may be acting from the real fear and disorientation that follows from the victory of the most unqualified and unpredictable president in history. But those who partake, particularly those in positions of privilege, should consider that Russiagate offers them a safe and anodyne way to “Resist.” For privileged Americans to challenge Trump mainly over Russia is to do so in a way that avoids confronting their own relationship to the economic and political system that many of his voters rebelled against. “If the presidency is effectively a Russian op, if the American presidency right now is the product of collusion between the Russian intelligence services and an American campaign,” to borrow a scenario posed by Rachel Maddow, then there is nothing else to confront.

  But economic discontent, along with voter suppression, the Democratic Party’s failures to reach voters, and corporate media that gave endless attention to Trump’s empty promises and racial animus, are among the issues cast aside by the incessant focus on Russigate, as are the very real US-Russia tensions that do not fit the narrative.

  Amid widespread talk of Putin pulling the strings, Trump has quietly appointed anti-Russia hawks to key posts and admitted a new NATO member over Russian objections. Trump’s top military commander, Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, is backing an effort by the Pentagon and Congress to arm Ukraine with new weapons. President Obama had rejected a similar proposal out of fear it would inflame the country’s deadly conflict. Just before Russia’s recent war games with allied Belarus, the United States and NATO allies carried out their “biggest military exercise in eastern Europe since the Cold War” right next door.

  These tensions only stand to worsen in a political climate in which diplomacy with Russia is seen as a weakness, and in which challenging it through sanctions and militarism is one of the few areas of bipartisan agreement. Conflict with a nuclear power may threaten the future annihilation of many, but it offers immediate benefits for some. “NATO concerns about Russia are seen as a positive for the defense industry,” the business press notes in reporting that military stocks have reached “all-time highs.” As have the ratings of MSNBC, the cable network that has pushed Russiagate more than any other.

  Those unbound by Russiagate’s offerings need not succumb to them. Trump didn’t get to the White House via Russia, but by falsely portraying himself as a populist champion. The only con he will be undone by is his own.

  

  

• Harvey Weinstein's Lawyer Quits After Two Days As Democrats Scramble To Distance Themselves

  Harvey Weinstein’s attorney Lisa Bloom cut ties suddenly with her “radioactive” movie mogul client in a terse Saturday tweet.

  “I have resigned as an advisor to Harvey Weinstein,” wrote Bloom – ironically a women’s rights advocate – who was brought in after the Miramax Films co-founder was accused by the NYT of spending decades sexually harassing the women he worked with. “My understanding is that Mr. Weinstein and his board are moving toward an agreement.”

  I have resigned as an advisor to Harvey Weinstein.
  My understanding is that Mr. Weinstein and his board are moving toward an agreement.

  — Lisa Bloom (@LisaBloom) October 7, 2017

  //platform.twitter.com/widgets.js

  In a statement issued Thursday, Bloom said she was brought in to assist Harvey in using this “painful learning experience to grow into a better man.” The attorney also promised that “I will continue to work with him personally for as long as it takes.”

  Apparently, it took 2 days.

  Bloom did not elaborate what the agreement involving Weinstein might entail. Weinstein, 65, was suspended indefinitely Friday by company officials, including his brother Bob, amid devastating allegations  of three decades of inappropriate behavior. Among those accusing Weinstein are actresses Ashley Judd and Rose McGowan.

  According to Variety and the NY Post, brother Bob Weinstein was among those executives calling for his brother’s firing. Miramax also brought in attorney John Kiernan to conduct an internal company probe of Harvey Weinstein’s conduct amid reports that fellow executives wanted him out.

  * * *

  Meanwhile, Democrats – until this week proud recipients of Weinstein’s financial generosity – are rushing to distance themselves from the suddenly “radioactive” film producer.  According to The Hill, nearly a dozen Democratic senators, including Senate Minority Leader Charles Schumer (D-N.Y.) and several potential 2020 presidential contenders, are pledging to donate the contributions they’ve received from Weinstein over the years to nonprofit groups advocating for women who have been the victims of sexual abuse.

  The Democratic National Committee (DNC) will give the money it received from Weinstein in the most recent campaign cycle to a trio of women’s groups (although in retrospect, they should probably also spend some on server protection and antivirus software). However, the DNC quickly came under fire for only donating a fraction of what it had received from Weinstein over the years, and for giving the money to political organizations rather than those that support victimized women.

  “The allegations in the New York Times report are deeply troubling,” DNC communications director Xochitl Hinojosa told The Hill. “The Democratic Party condemns all forms of sexual harassment and assault. We hope that Republicans will do the same as we mark one year since the release of a tape showing President Trump bragging about sexually assaulting women followed by more than a dozen women who came forward to detail similar experiences of assault and harassment.”

  Meanwhile, the Democratic campaign committees in Washington are working with lawmakers and their campaigns to assess how much Weinstein — whose donations date back to the early 1990s — might have given to their candidates and organizations.

  * * *

  Weinstein’s association with the Democratic Party runs deep. He has long been one of the most prominent figures on the donor circuit that runs through Hollywood. Many Democrats expressed disgust that Weinstein would open the party up to the same attacks they’ve levied against President Trump, whose “Access Hollywood” tape broke almost a year ago.

  “The difference between Trump, Bill Cosby and Weinstein — none,” said Bob Mulholland, a Democratic National Committee member from California.

  The Democratic disavowal of Weinstein began quickly after the publication of the Times story.

  • Schumer said he would give $14,200 received over the course of several campaign cycles to women’s groups, his office told The Hill.
  • Elizabeth Warren will donate the $5,000 she got from Weinstein to a Boston nonprofit group called Casa Myrna, which aids victims of domestic violence. Sen. Cory Booker (D-N.J.) will give $7,800 to the New Jersey Coalition Against Sexual Assault.
  • Al Franken is returning the most money — $19,600 given to both his campaign and a supporting super PAC — to the Minnesota Indian Women’s Resource Center. And Sen. Kirsten Gillibrand (D-N.Y.) is giving $11,800 — none of which was received in the most recent cycle — to RAINN, the nation’s largest group assisting victims of sexual violence.
  • Richard Blumenthal, Martin Heinrich, Bob Casey, and Patrick Leahy are among other lawmakers donating Weinstein’s contributions to women’s groups.

  The amount of money the lawmakers received from Weinstein pales in comparison to what he has given to the DNC and the Democratic Senate and House campaign arms.

  In total, Weinstein has given at least a quarter of a million dollars to the DNC over the years, with about $30,000 of that coming in the latest cycle. The DNC is giving the $30,000 to EMILY’s List, which supports women candidates that support abortion rights, Emerge America, which recruits and trains Democratic women for office, and Higher Heights, which supports black women running for office.

  Weinstein’s influence went beyond his wallet. He was a top draw at Democratic fundraisers for former President Obama and Democratic presidential nominee Hillary Clinton, where tickets could run upwards of $35,000.

  In 2015, Weinstein and his wife, Georgina Chapman, a fashion designer, hosted a fundraiser for Clinton in New York City, along with Vogue editor-in-chief Anna Wintour.  Weinstein had also teamed up with Wintour for at least two fundraisers for Obama in 2012, where a top-flight roster of liberal donors paid $35,800 to co-host and individuals paid $10,000 each to get in.

  Spokespeople for Obama and Clinton did not respond to requests for comment.

  Republicans hammered Democrats for the Weinstein connection, eagerly highlighting those who have yet to return funds he’s given dating back to 1993. “During three-decades worth of sexual harassment allegations, Harvey Weinstein lined the pockets of Democrats to the tune of three quarters of a million dollars,” said Republican National Committee chairwoman Ronna McDaniel. “If Democrats and the DNC truly stand up for women like they say they do, then returning this dirty money should be a no brainer.”

  Democrats were in no mood to hear that from Republicans, pointing to Trump’s own controversies and those at Fox News, where former chairman Roger Ailes and former anchor Bill O’Reilly were forced out amid sexual harassment accusations.

   

  “The entire Republican Party, from the grass roots to the establishment, stayed with Donald Trump after they’d been made aware about what he said on the “Access Hollywood” tape,” said Jon Reinish, a Democratic consultant. “They all went on Bill O’Reilly and kissed Roger Ailes’ ring. I don’t want to hear from Republicans because they don’t have a leg to stand on here.”

  Still, Democrats were doing their own soul searching about whether they had turned a blind eye toward Weinstein’s behavior, which was long the subject of rumors in Hollywood.

  “There’s no question that for a long time Harvey was a mover and shaker and presence around fundraising structure of the party at a high level, he brought star wattage,” said one Democratic strategist.

  “When the rumors are out there, whether about Harvey or someone else, all too many times they’ve turned out to be true. We need to do a better job of being true to our values and looking at the full picture, not just what someone can do for our movement.”

  

  

• Billionaire Investor Claims 'Never Married' In One Of Britain's Biggest Divorce Cases Ever

  Lawyers for one billionaire financier who’s suing to stop his ex-wife from taking half of his assets have hit on a novel strategy for winning their case: Proving that the couple were never married in the first place.

  Asif Aziz, founder and chief executive officer of the real estate investment company Criterion Capital Ltd., says he was never married to Tagilde Aziz under English law, in a case that could be one of the largest divorce cases in UK history.

  The lawsuit was filed in Asif’s hometown of London, according to Bloomberg.

  In their rebuttal, lawyers for Tagilde – who shares four children with Aziz – argue that, while they were never legally married, Tagilde was “presented to the world” as Asif’s wife and is seeking a “fair share” of his wealth, which she values at 1.1 billion pounds ($1.3 billion).

  

  Funds overseen by Criterion investments, Asif’s firm, have invested in the Trocadero entertainment complex in London’s Piccadilly Circus, according to its website, and its most recent accounts show its revenue in the year to March 31, 2016, was 4.3 million pounds.

  Ultimately, the dispute will likely turn on whether Asif’s lawyers can prove that two ceremonies held in Malawai in 2002 and in Wimbledon in 1997 constituted legally binding weddings.

  Tagilde Aziz says she was already pregnant when they held a “nikah,” a type of religious ceremony, in South London at the insistence of family. She says she hadn’t divorced her first husband at the time.

  Five years later, she says they had another ceremony at the home of his uncle in the African country with a “lavish feast.” Tagilde is also alleging that Asif has tried to intimidate her, in part by being the “puppet master” behind “ferocious litigation” that she faces in the UK and Gibraltar.

  The ultimate ruling on whether the couple was married will be a big factor in Tagilde Aziz’s final recovery.

  “If he were able to satisfy a court that they were not married, the wife would still get something but it would probably be substantially reduced,” said Graham Coy, a London divorce lawyer who isn’t involved in the case.

  Asif, for what it’s worth, is claiming he is worth far less, with his lawyers arguing that he earns a meager 400,000 pounds a year. Court documents prepared for Wednesday’s hearing on behalf of Tagilde Aziz said Asif Aziz had argued that “he has no capital, is a man of straw and has accumulated debts as a result of these proceedings in excess of 600,000 pounds.”

  

  

• "This May Be The End Of Europe As We Know It": The Pension Storm Is Coming

  Authored by John Mauldin via MauldinEconomics.com,

  I’ve written a lot about US public pension funds lately. Many of them are underfunded and will never be able to pay workers the promised benefits – at least without dumping a huge and unwelcome bill on taxpayers.

  And since taxpayers are generally voters, it’s not at all clear they will pay that bill.

  Readers outside the US might have felt safe reading those stories. There go those Americans again… However, if you live outside the US, your country may be more like ours than you think.

  This week the spotlight will be on Europe.

  The UK Is Headed to a Retirement Implosion

  The UK now has a $4 trillion retirement savings shortfall, which is projected to rise 4% a year and reach $33 trillion by 2050.

  This in a country whose total GDP is $3 trillion. That means the shortfall is already bigger than the entire economy, and even if inflation is modest, the situation is going to get worse.

  Plus, these figures are based mostly on calculations made before the UK left the European Union. Brexit is a major economic shift that could certainly change the retirement outlook. Whether it would change it for better or worse, we don’t yet know.

  A 2015 OECD study found workers in the developed world could expect governmental programs to replace on average 63% of their working-age incomes. Not so bad. But in the UK that figure is only 38%, the lowest in all OECD countries.

  This means UK workers must either build larger personal savings or severely tighten their belts when they retire. Working past retirement age is another choice, but it could put younger workers out of the job market.

  UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. Depending how Brexit negotiations go, that option could disappear.

  Turning next to the Green Isle, 80% of the Irish who have pensions don’t think they will have sufficient income in retirement, and 47% don’t even have pensions. I think you would find similar statistics throughout much of Europe.

  A report this summer from the International Longevity Centre suggested that younger workers in the UK need to save 18% of their annual earnings in order to have an “adequate” retirement income.

  But no such thing will happen, so the UK is heading toward a retirement implosion that could be at least as damaging as the US’s.

  The Swiss Are No Different Despite the Prudence

  Americans often have romanticized views of Switzerland. They think it’s the land of fiscal discipline, among other things. To some extent that’s true, but Switzerland has its share of problems too. The national pension plan there has been running deficits as the population grows older.

  Earlier this month, Swiss voters rejected a pension reform plan that would have strengthened the system by raising women’s retirement age from 64 to 65 and raising taxes and required worker contributions.

  From what I can see, these were fairly minor changes, but the plan still went down in flames as 52.7% of voters said no.

  Voters around the globe generally want to have their cake and eat it, too. We demand generous benefits but don’t like the price tags that come with them. The Swiss, despite their fiscally prudent reputation, appear to be not so different from the rest of us.

  This outcome in Switzerland captures the attitude of the entire developed world. Compromise is always difficult. Both politicians and voters ignore the long-term problems they know are coming and think no further ahead than the next election

  Switzerland and the UK have mandatory retirement pre-funding with private management and modest public safety nets, as do Denmark, the Netherlands, Sweden, Poland, and Hungary.

  Not that all of these countries don’t have problems, but even with their problems, these European nations are far better off than some others.

  France, Belgium, Germany, Austria, Spain Are in Deep Trouble

  The European nations noted above have nowhere near the crisis potential that the next group does: France, Belgium, Germany, Austria, and Spain.

  They are all pay-as-you-go countries (PAYG). That means they have nothing saved in the public coffers for future pension obligations, and the money has to come out of the general budget each year.

  The crisis for these countries is quite predictable, because the number of retirees is growing even as the number of workers paying into the national coffers is falling.

  Let’s look at some details.

  Spain was hit hard in the financial crisis but has bounced back more vigorously than some of its Mediterranean peers did, such as Greece. That’s also true of its national pension plan, which actually had a surplus until recently.

  Unfortunately, the government chose to “borrow” some of that surplus for other purposes, and it will soon turn into a sizable deficit.

  Just as in the US, Spain’s program is called Social Security, but in fact it is neither social nor secure. Both the US and Spanish governments have raided supposedly sacrosanct retirement schemes, and both allow their governments to use those savings for whatever the political winds favor.

  The Spanish reserve fund at one time had €66 billion and is now estimated to be completely depleted by the end of this year or early in 2018. The cause? There are 1.1 million more pensioners than there were just 10 years ago. And as the Baby Boom generation retires, there will be even more pensioners and fewer workers to support them.

  A 25% unemployment rate among younger workers doesn’t help contributions to the system, either.

  Overall, public pension plans in the pay-as-you-go countries would now replace about 60% of retirees’ salaries. Plus, several of these countries let people retire at less than 60 years old. In most countries, fewer than 25% of workers contribute to pension plans. That rate would have to double in the next 30 years to make programs sustainable.

  Sell that to younger workers.

  The Wall Street Journal recently did a rather bleak report on public pension funds in Europe. Quoting:

  Europe’s population of pensioners, already the largest in the world, continues to grow. Looking at Europeans 65 or older who aren’t working, there are 42 for every 100 workers, and this will rise to 65 per 100 by 2060, the European Union’s data agency says. By comparison, the U.S. has 24 nonworking people 65 or over per 100 workers, says the Bureau of Labor Statistics, which doesn’t have a projection for 2060. (WSJ)

  While the WSJ story focuses on Poland and the difficulties facing retirees there, the graphs and data in the story make clear the increasingly tenuous situation across much of Europe.

  And unlike most European financial problems, this isn’t a north-south issue. Austria and Slovenia face the most difficult demographic challenges, right along with Greece. Greece, like Poland, has seen a lot of its young people leave for other parts of the world.

  This next chart compares the share of Europe’s population that 65 years and older to the rest of the regions of the world and then to the share of population of workers between 20 and 64. These are ugly numbers.

  

  Source: WSJ

  The WSJ continues:

  Across Europe, the birthrate has fallen 40% since the 1960s to around 1.5 children per woman, according to the United Nations. In that time, life expectancies have risen to roughly 80 from 69.

  In Poland birthrates are even lower, and here the demographic disconnect is compounded by emigration. Taking advantage of the EU’s freedom of movement, many Polish youth of working age flock to the West, especially London, in search of higher pay. A paper published by the country’s central bank forecasts that by 2030, a quarter of Polish women and a fifth of Polish men will be 70 or older.

  

  Source: WSJ

  This Coming Crisis Is Beyond the Power of Politicians

  I could go on on reviewing the retirement problems in other countries, but I hope you begin to see the big picture. This crisis isn’t purely a result of faulty politics – though that’s a big contributor.

  It’s a problem that is far bigger than even the most disciplined, future-focused governments and businesses can easily handle.

  Worse, generations of politicians have convinced the public that their entitlements are guaranteed. Many politicians actually believe it themselves. They’ve made promises they aren’t able to keep and are letting others arrange their lives based on the assumption that the impossible will happen. It won’t.

  How do we get out of this jam?

  We’re all going to make big adjustments. If the longevity breakthroughs that I expect to happen do so soon (as in the next 10–15 years), we may be able to adjust with minimal pain. We’ll work longer years, and retirement will be shorter, but it will be better because we’ll be healthier.

  That’s the best-case outcome, and I think we have a fair chance of seeing it, but not without a lot of social and political travail. How we get through that process may be the most important question we face.

  Sharp macroeconomic analysis, big market calls, and shrewd predictions are all in a week’s work for visionary thinker and acclaimed financial expert John Mauldin. Since 2001, investors have turned to his Thoughts from the Frontline to be informed about what’s really going on in the economy. Join hundreds of thousands of readers, and get it free in your inbox every week.

  

  

• Julian Assange Outlines The 3 Simple Steps To "Being A Journalist In 2017"

  Haven’t you heard? The Russians did it.

  

  Julian Assange has outlined the key element to being a “Western journalist in 2017” and it’s quite simple: blame Russia.

  Seemingly behind every major news event in the last number of years, Russia has been busy influencing world events simply by reporting on them, just like everyone else. And as RT notes, this, according to Assange, is key, as outlined in his three-point strategy on Friday.

  First, “Pick a globally newsworthy event” which the Russian press “will also be reporting it by definition.”

  Second, “Write story: Russian state secretly behind globally newsworthy event as proved by their press reporting it.”

  And finally “Profit!”

   

  Want to be a Western journalist in 2017? You can do it!

  1) Pick random globally newsworthy event.

  Russian press will also be reporting it by definition.

  2) Write story: Russian state secretly behind globally newsworthy event as proved by their press reporting it.

  3) Profit!

  — Julian Assange ???? (@JulianAssange) October 6, 2017

  Assange’s comments echo that of The Intercept’s Glenn Greenwald who, on September 28, reported on the demise of “yet another major Russia story” that most major US media outlets ran with as fact, despite the lack of any evidence whatsoever.

  Yet another major Russia story falls apart. Is skepticism permissible yet? https://t.co/fKgEV9S9te by @ggreenwald

  — The Intercept (@theintercept) September 28, 2017

  Despite the fact that ‘Russia did it’ stories have been consistently debunked, the Catalonian independence referendum seems to have been the latest target, according to the MSM.

  In the face of a brutal state crackdown by Spanish forces, Catalans voted overwhelmingly to leave Spain.

  But, of course, this was not an action taken by the Catalan people (who have been seeking independence for 650 years) but a result of Russian meddling…

  “Russian propagandists scored a victory in Spain this weekend after ‘boldly injecting fake news and disinformation’ into the debate over Catalonian independence and seemingly influencing the election results,” the Washington Post’s Dan Boylan wrote, citing “U.S. information warfare experts.”

  So, that's 'fact' now, and yet another example of the mainstream media adopting Assange's strategy.

  

  

• Caught On Tape: UNLV Professor Blames Trump For Las Vegas Massacre

  Authored by Mitchell Gunter via CampusReform.org,

  Just days after the horrific massacre in Las Vegas, and just 5 miles away from the scene, a University of Nevada-Las Vegas professor told her class that President Trump is to blame.

  In a video obtained by Campus Reform, UNLV Assistant Professor Tess Winkelmann is seen addressing her History 407 class.

  Referring to Trump, Winkelmann noted that “when he got elected, I told my classes three semesters ago, some of us won’t be affected by this presidency, but others are going to die. Other people will die because of this.”

  

  "I don’t know whether these events would have inevitably happened whether or not he got elected, but he has the same rhetorical powers every president has, to encourage or discourage,” she continued.

   

  “So far, all he has done is to encourage violence.”

  Winkelmann also charged President Trump with equating “right nationalism” with “anti-racism,” referring to the president’s comments on the violence in Charlottesville, VA.

  She then asserted that Trump has “threatened nuclear violence against North Korea, and other places,” proclaiming that “words, especially coming from someone who is the President, have consequences.”

  Some students weren’t happy with Winkelmann’s comments.

  One UNLV student, who spoke with Campus Reform on condition of anonymity, called the speech a “politically-driven rant” to make the point that “President Trump somehow incited this violence.”

   

  “We just experienced one of the worst mass shootings in U.S. History. It’s a mile [sic] away, and we don’t know what happened, we don’t know why it happened, and we’re pushing political agendas, and that’s what this is about, taking advantage of the situation for political belief, when we should be uniting, healing as a community,” the student remarked.

   

  “At every chance the President got, he condemned this violence. The professor is taking away from the dialogue that should be happening to attack the President,” the student added.

   

  “Professors are in a position of trust, and they’re abusing it to promote their political ideology or agenda. I think it’s dangerous when you blame the President for a massacre, and basically shut down students who disagree.”

   

  “I think it is despicable that a professor at an institute of higher learning, one that is located in the same city in which this attack occurred, would use her platform to spew such hatred and divisive rhetoric,” agreed another student, who also wishes to remain anonymous.

   

  The second student did, however, say the incident was not entirely surprising because “this professor had previously made comments in opposition to Trump.”

  Campus Reform reached out to Assistant Professor Tess Winkelmann, but did not receive a response in time for publication.

  

  

• Kyle Bass Sounds Off On "Worthless" Puerto Rican Debt, The Crypto "Gold Rush", And Guns

  With the dollar’s recent post-Fed bout of appreciation providing some much-needed relief for Haymarket Capital’s P&L, its founder Kyle Bass sat for an interview on Friday with Bloomberg’s Erik Schatzker. During the 20 minute discussion, Bass expounded on the importance of holding gold, his cautiously optimistic view on digital currencies, the misguided notion that holders of Puerto Rican debt will someday be made whole – oh, and Bass’s next big call: Long Greece – particularly the stocks and debt of Greek banks.

  A few weeks ago, Bloomberg view published a Bass-penned editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece –  publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%.

  And if Bass is right, they could have another 20% to 30% over the next 18 months if the IMF abandons its insistence on austerity and acknowledges that debt relief will need to be part of the long-term alleviation of debt. Bass added that, in the near future, voters will elect a more business-friendly government that will help reestablish the country’s creditworthiness, much like the government of Mauricio Macri did for Argentina. 

  I think you also have an interesting political situation in Greece where I think there's going to be a handoff from the current Syriza government to kind of a more slightly-center-right but very economically independent new leadership in the next, call it, 18 months.

   

  And so, I think you asked why now? And I think you're starting to see green shoots. You're starting to see the banks do the right things finally in Greece and you are about to have new leadership.

   

  So, I think that you're going to see – and if you remember Argentina as Kirschner was going to hand-off – hand the reins over to someone that was much more let's say focused on business and economics than being a kleptocrat, I think you're going to see something again slightly similar in Greece where you have leadership today that might not be the right leadership and the government-in-waiting, I believe, and I think you know Mr. (Mitsutakous) – I think you're going to see something great happen to Greece in the and next, kind of, two years.

  Asked if he still considers himself a China bear after the yuan’s surprising run of strength against the dollar, Bass answered in the affirmative. But the language he uses to talk about China has softened notably, with the investor now expecting a correction instead of an all-out collapse.

  Chinese President Xi Jinping has been laser-focused on consolidating power during this year’s quinquennial Communist Party National Congress, set for Oct. 18. Once it passes, Bass believes that the PBOC’s grip on the yuan exchange rate will loosen and market forces will reassert themselves. Meanwhile, the country will also relax its focus on appeasing President Trump.

  What I'm telling you is my guess is their laser-like focus on exchange rates and dealing with the Trump Administration is going to be relaxed a bit once Xi consolidates his power.

   

  You know, their electoral cycle is a little different than ours if you want to call it that. Their NPCs happen every five years. Xi – this is the end of his first term. He's going to solidify a second term. He's going to reconstitute the Standing Committee of the Politburo and we think that he has consolidated power.

   

  He's quickly becoming the most powerful Chinese ruler since Mao and the question is will he have a third term. And so, once this consolidation of power is over and the NPC is finished I think you're going to see more natural economic forces acting on their banking system.

  He acknowledged that the appreciation of the yuan "has been terrible this year" for his hedge fund, which has predicted that the yuan would fall more than 30%. But he’s standing by the position for now with the expectation that over the next nine months “you’ll see the rubber hit the road.”

  It's been terrible this year. And again, you think about the time continuums of these big global macro events.

   

  Unfortunately, it doesn't fit into a nice envelope that works every month, every quarter, every year. And so, you have to stick with it as long as you can and in this environment, I think in the next call it nine months from October you'll see the rubber hit the road.

  Bass scoffed at the notion of investing in Puerto Rican debt, saying that investors would be lucky to walk away with between 10 and 20 cents on the dollar. The idea that the island, with a workforce of just 1.4 million people, will ever be able to pay back $70 billion in debt is ridiculous, he said.

  These are two different questions – one is, should we help with hurricane? Absolutely. We should do everything possible.

   

  Puerto Rico is just a simple math 101 question.

   

  But on the debt question I just think you have to be a little crazy to think that $100 billion worth of debt or even $70 billion of on-balance sheet debt is worth anything with 1.4 million workers in an economy like Puerto Rico's.

   

  …

   

  When you look at sovereigns and you look at history of sovereign defaults, recoveries and wipeouts are $0.10-$0.20 on the dollar – that's what I think people are going to end up with.

  Asked for his view on bitcoin, Bass said he’s accepted that he was wrong to dismiss it early on, saying he failed to grasp the technology. He acknowledges now that digital currencies are a “real asset class”. While he hasn’t yet figured out how to value digital assets, bitcoin’s deflationary features would presumably make it a strong performer as inflation rebounds over the coming years, Bass said. Bass said he doesn’t own digital currencies.  

  Early on I summarily dismissed bitcoin and I shouldn't have. And didn't understand – truthfully, I don't understand the depth of the algorithms, the technology and the fundamental foundation of bitcoin I didn't understand. I spent a lot of time trying to understand it in the last call it six months and I believe that the digital-asset class of cryptocurrency is a real asset-class but in terms of kind of how the world views digital currencies we talked – when you look at global cash positions today given global Q/E, they're now north of 110 percent of global GDP. So, we're talking about almost $100 trillion of cash in the world.

   

  That has never happened before in world history and so when I think about inflation – you're starting to see wages move. You're starting to see the price of all goods and services move. The thing that's been really deflationary in the globe has been technology. It's been a very positive deflationary force and I think that's played out.

   

  The technological deflation has played out so, now I think you're going to start to see inflation and wages move. And this gets into crypto-currency.

   

  The collective value of crypto currency is a little over $100 billion today. Global M2, global cash is like $80 trillion, $100 trillion; so, what's $100 billion? The question is, what's it worth? And as a store of value, a media of exchange and other currency I don't think there's any true institutional investor has any money in bitcoin – I know some have a little bit. They have nominal amounts invested but I think it will be an asset class that will work over time. I'm not sure how to value it yet – I really have no idea.

  To be sure, Bass expressed skepticism about the red-hot market for ICOs, referring to it as a “digital gold rush” that will end with “a lot of people losing a lot of money.”

  I think there's a digital gold rush that's gone on.

   

  I think a whole bunch of people are going to lose a lot of money. These ICOs – you're going to see a bunch of them go completely broke – a bunch of them are frauds. And that's going to be problematic for all the people that just rushed in and so I feel like it's a bit of a mania at the moment but

  With the end of the interview approaching, the conversation veered toward gun control. Bass said that he and his son own dozens of guns and are close to many members of the armed service. However, he still believes that the state and federal government should maintain comprehensive gun registries, even though such precautions probably wouldn’t have stopped Las Vegas shooter Stephen Paddock from carrying out his horrifyingly deadly crime.

  My son and I have this – we have this place here that we enjoy and when I think about this debate – should guns be registered? Absolutely. Should people be able to sell a gun from one to another without recording the buyer and the seller? Should every gun have a serial number and be registered with the federal government and local authorities?

   

  I think this is a no-brainer. That's just a pragmatist. The NRA fights that tooth-and-nail.

  After all, people need to register their cars with the state, Bass said. Why not guns, too?

  So, to sum up: Buy Greek bonds, buy Greek debt; hold gold, hold bitcoin; sell Puerto Rican debt, sell ICOs, sell yuan warning that "within nine months, the rubber will hit the road" on China's currency collapse, and register all your guns…
   

  

  

• Jim Rickards: This Is The Only Russia Story That Matters

  Authord by James Rickards via The Daily Reckoning,

  The World Gold Council has reported that the Central Bank of Russia has more than doubled the pace of its gold purchases, bringing its reserves to the highest level since Putin took power 17 years ago.

  

  Russia’s desire to break away from the hegemony of the U.S. dollar and the dollar payment system is well-known. Over 60% of global reserves and 80% of global payments are in dollars. The U.S. is the only country with veto power at the International Monetary Fund, the global lender of last resort.

  Perhaps Russia’s most aggressive weapon in its war on dollars is gold. The first line of defense is to acquire physical gold, which cannot be frozen out of the international payments system or hacked.

  With gold, you can always pay another country just by putting the gold on an airplane and shipping it to the counterparty. This is the 21st-century equivalent of how J.P. Morgan settled payments in gold by ship or railroad in the early 20th century.

  Russia has now tripled its gold reserves from around 600 tonnes to 1,800 tonnes over the past 10 years and shows no signs of slowing down. Even when oil prices and Russian reserves were collapsing in 2015, Russia continued to acquire gold.

  But Russia is pursuing other dollar alternatives besides gold.

  For one, it’s been building nondollar payments systems with regional trading partners and China.

  The U.S. uses its influence at SWIFT, the central nervous system of global money transfer message traffic, to cut off nations it considers to be threats.

  From a financial perspective, this is like cutting off oxygen to a patient in the intensive care unit. Russia understands its vulnerability to U.S. domination and wants to reduce that vulnerability.

  Now Russia has created an alternative to SWIFT.

  The head of Russia’s central bank, Elvira Nabiullina, has reported to Vladimir Putin that “There was the threat of being shut out of SWIFT. We updated our transaction system, and if anything happens, all SWIFT-format operations will continue to work. We created an analogous system.”

  Russia is also part of a reported Chinese plan to install a new international monetary order that excludes U.S. dollars.

  Under that plan, China could buy Russian oil with yuan and Russia could then exchange that yuan for gold on the Shanghai exchange.

  Now it appears Russia has another weapon in its anti-dollar arsenal.

  Russia’s development bank, VEB, and several Russian state ministries are reportedly teaming up to develop blockchain technology. They want to create a fully encrypted, distributed, inexpensive payments system that does not rely on Western banks, SWIFT or the U.S. to move money around.

  This has nothing to do with bitcoin, which is just another digital token. The blockchain technology (now often referred to as distributed ledger technology, or DLT) is a platform that can facilitate a wide variety of transfers — possibly including a new Russian-state cryptocurrency backed by gold.

  “Putin coins,” anyone?

  

  The ultimate loser here will be the dollar. That’s one more reason for investors to allocate part of their portfolios to assets such as gold.

  

  

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• Is Saudi Arabia's Grand Strategy Shifting?

  Authored by Andrew Korybko via Oriental Review,

  Even in this era of global paradigmatic changes, Saudi Arabia’s shifting grand strategy is perhaps one of the most surprising developments to occur thus far, but the fast-moving Russian-Saudi rapprochement is likely to provoke an Iranian “zero-sum” reaction which could complicate Moscow’s multipolar efforts in managing the “New Middle East”.

  

  Vladimir Putin with King Salman bin Abdulaziz Al Saud at the official greeting ceremony, Moscow, October 5, 2017 (Photo: kremlin.ru)

  Most observers were taken aback by what to many seemed to be the inexplicable visit of Saudi King Salman to Moscow this week, wondering how and why the two long-standing Great Power rivals were able to get so close to one another in such a short period of time – and apparently without much public fanfare, too – in making this historic event possible. The usual Alt-Media demagogues decried this as a sellout of Russia’s fundamental national interests, with the most extreme pundit-provocateurs even ranting that it amounts to President Putin siding with “terrorists” such as Daesh and Al Qaeda, especially in light of Moscow’s decision to sell the much-vaunted S-400 anti-air missile systems to Riyadh and even set up a Kalashnikov production plant in the Kingdom.

  Had the Saudi Arabia of 2017 been the same country as it was half a decade ago, or even last year for that matter as some could argue, then there might be some rhetorical substance to this outlandish claim no matter how false it would still be, but what most people don’t realize is that Saudi Arabia is in the process of comprehensive changes to its foreign and domestic policies, and that there’s a very high likelihood that it will moderate its traditional behavior in becoming a more responsible actor in international (and especially regional) affairs. A lot of this has happened away from the public eye, at least in the sense that the developments weren’t “sexy” enough to draw widespread attention from most media outlets and commentators, but these piecemeal changes have altogether contributed to the formation of what looks to be a totally new grand strategy.

  Russia’s Rationale

  Before getting into the details of the drastic policy changes that Saudi Arabia has been up to lately, it’s important to comment a bit on why Russia is embracing its erstwhile nemesis. For starters, Russia’s foreign policy is driven nowadays by the “progressive” faction of the Ministry of Foreign Affairs, which believes that their country’s 21^st-century grand strategic ambition should be to become the supreme balancing force in the Eurasian supercontinent. To this end, they’re diligently employing “military diplomacy” and “nuclear diplomacy”; the first in selling arms to rival states in order to preserve the status quo between them and prevent a hot war from transpiring (which is the opposite of the US selling weapons in order to tip the balance in favor of its preferred partner and spark the said conflict that Russia wants to avoid), and the second in utilizing its global leadership in nuclear energy technology to make important strategic inroads with non-traditional partners.

  Multipolarity In Action

  Concerning Saudi Arabia, this has seen Russia sign deals with it for the S-400 anti-air missile system and Kalashnikov production plant (“military diplomacy”), and Rosatom’s proposal to build Riyadh’s first-ever nuclear power plant (“nuclear diplomacy”). Of course, there’s also traditional and energy diplomacy at play here as well, the former as it relates to cooperation in uniting the Syrian “opposition” as a prerequisite to resolving the War on Syria, and the latter when it comes to both sides’ participation in the historic OPEC+ output deal from last year and subsequent renewal earlier in 2017. Moreover, none of this is occurring in a multipolar vacuum either, as Russia’s premier Chinese partner has been making great strides with Saudi Arabia in the same timeframe, including by inking two sets of deals totaling than $130 billion in the past six months alone.

  

  King Salman bin Abdulaziz in Moscow (photo: kremlin.ru)

  Riyadh’s Reforms

  Most of the Chinese-Saudi agreements were signed in the framework of Crown Prince Mohammed Bin Salman’s ambitious Vision 2030 project for diversifying away from his Kingdom’s present oil-exporting dependency and towards a more “real-sector” economy. This can’t happen unless crucial socio-cultural reforms are made in Saudi Arabia, and the young prince – who’s far from a fundamentalist Wahhabi in real life and therefore something like a “rock star” among his country’s majority “moderate-prone” youth population (over half of which is under 25 years old)  – recently undertook the pivotal decision to allow women to drive in the future, understanding that this a necessary step to increasing their future participation in the economy. It can be expected that more such reforms might follow in the future, such as the possible reopening of movie theaters and maybe even one day lessening the patriarchal legal restrictions placed on women’s freedom of movement.

  Unipolar Pushback

  Mohammed Bin Salman’s reforms aren’t without controversy, however, as they’ve produced a lot of resistance among the country’s ultra-fundamental clerical class, as was explained in the author’s recent analysis about “Why Allowing Saudi Women To Drive Is Very Dangerous”. The fact of the matter is that Saudi Arabia isn’t a pure “monarchical dictatorship” in the structural-political sense, but a “dual dictatorship” between the monarchy and the clergy, but the Crown Prince’s socio-culturally modernizing reforms are being perceived of as an unprecedented “power grab” which de-facto constitutes a “soft coup” by the monarchy against the clergy. In turn, the most extreme clerics could become a pressing national security risk if they rally their followers against the monarchy in fomenting unrest, whether manifested through street protests, a royal coup, or terrorism. It’s the fear of this happening which explains the Kingdom’s recent crackdown and the author’s subsequent investigation into “Who’s Really Trying To Overthrow Mohammed Bin Salman?”

   As the aforementioned article concludes, the only serious player with the clandestine competencies to pull this off is the US, which is considering the “Balkanization” of the Kingdom into a collection of emirates aided by the duplicitous connivance of its regional UAE ally. This was elaborated on more in depth by the author in his work a couple of months ago explaining “The Machiavellian Plot to Provoke Saudi Arabia and Qatar into a ‘Blood Border’ War”, but the overriding idea is that the US has had an interest in betraying its decades-long ally ever since the 2015 Iranian nuclear deal was agreed to, which the author predicted in his summer 2015 piece about a “Polar Reorientation In The Mideast” that also described the strategic contours that would eventually lead to the present-day Russian-Saudi rapprochement. It’s this Great Power convergence between Moscow and Riyadh, as well as the latter and Beijing, which is driving the US to wage an incipient but increasingly multifaceted Hybrid War on Saudi Arabia.

  

  Rosatom SEO Alexey Likhachev with his Saudi counterpart after signing program documents in nuclear sphere (photo: kremlin.ru)

  Stopping The Saudi “Deep State” Conspiracy

  Mohammed Bin Salman must masterfully manage to tame both the radical clerics and domestic terrorists if he’s to have a chance at avoiding a US-backed royalist coup against him. He already has the support of the majority-youthful masses who could come out to the streets to support him in the event of a sudden coup, just like they did for Turkish President Erdogan during last year’s failed pro-US coup attempt, so this infers that he needs to win the backing of the military-security services in order to preemptively suppress clerical-terrorist destabilizations before countering the royalist conspiracy that’s  taking form. However, Saudi forces are embroiled in the bloody War on Yemen, which was one of the first decisions that he made as Defense Minister and is therefore attributed entirely to him, but would have probably happened regardless of whoever was in power at the time due to the geopolitical dynamics involved.

  In fact, the author forecast that a forceful Saudi response could be expected to developments in Yemen as early as September 2014 in his article about “Syria’s Yemeni Opportunity and the Rise of the Shia Circle”, which deliberately analyzed events from Riyadh’s sectarian perspective in an attempt to better understand the Kingdom’s future response. Likewise, the follow-up piece in January 2015 about “Yemen: The Saudi Coup That Totally Backfired” presciently concluded that “the Saudis are expected to hit back as hard as they can against the phantom ‘Iranian menace’ that they’re attributing their Yemeni failings to”, and that “no matter which form it takes, it’s not going to be pretty.” In any case, the only way for Mohammed Bin Salman to be confident in the support of his military-security services is to downscale the disastrous War on Yemen and eventually follow the Syrian peace format in resolving the conflict there in as much of a “face-saving” way as possible.

  That, however, won’t necessarily endear him to any of the conspiratorial royals who are plotting his ouster, many of whom are reportedly irreconcilably opposed to him for his high-profile foreign policy failings in the aforementioned War on Yemen and Qatar Crisis, which is why the young prince so urgently needed to make up for them with a dramatic success elsewhere, ergo the reason why he decided to commence his country’s now-successful rapprochement with Russia. Conversely, it’s precisely because of his pivotal role in carrying out this game-changing foreign policy rebalancing that the US wants him out, and Washington sent a very clear message to Riyadh of its displeasure just the other day when it announced that it will be halting some of its military exercises with “Gulf countries” until the Qatar Crisis is resolved. Reading between the lines, this is the Pentagon voicing its strong opposition to King Salman’s visit to Moscow and Saudi Arabia’s S-400 deal with Russia, thereby signaling to its in-country proxies that it’s time to commence their planned regime change operation.

  

  Russia-Saudi Arabian talks in extended format in Moscow, Oct 2017 (photo: kremlin.ru)

  Moderating The Monarchy

  All in all, Mohammed Bin Salman is trying to compensate for his earlier errors of judgement in “moderating” his country’s foreign policy to the most realistic extent possible under the present circumstances, which in an historical comparison amounts to an unprecedented pivot of sorts towards the Multipolar World Order.  This doesn’t just have geopolitical implications, however, as there’s the very real possibility that Saudi Arabia might de-dollarize new Vision 2030 and energy contracts with its new non-Western partners, which would in effect equate to the death of the “petrodollar”. The author predicted this in a late-September forecast after it became abundantly clear that the country was no longer as solidly in the American camp as most observers had considered it, especially following its fast-moving rapprochement with Russia and the $130 billion’s worth of deals that the Kingdom signed with China.

  The combined effect of these two multipolar realignments, as well as the likely downscaling of the War on Yemen and the “Damocles’ Sword” potential that Saudi Arabia has for dealing a deathblow to the dollar, are increasingly turning Mohammed Bin Salman into the “Saudi Saddam”, in that he’s now being targeted for elimination by the US because this one-time American subordinate was brave enough to chart his country’s own sovereign path in the world. If he can successfully withstand the US-encouraged “deep state” coup against him being waged through the Hybrid War mechanisms of a rebelling clergy, a possible domestic terrorist insurgency (as partial blowback from Saudi Arabia’s support for such groups abroad), and a royalist plot, among whatever other means might soon make themselves available, then it’s expected that the end result will be a considerable moderation of the Kingdom’s destabilizing activities in the region.

  Irate Iranians

  Background Concepts:

  While the welcoming of Saudi Arabia into the multipolar fold as a responsible member of the international community would be celebrated by many because of the far-reaching consequences that it could have in altering the entire course of the New Cold War, there’s one multipolar party which would actually be incredibly irate at this happening, and that’s Iran. The Islamic Republic is caught in an intense security dilemma with the Kingdom, inspired partly by the centuries-old but previously long-dormant Sunni-Shiite split, and also the US’ efforts since the 1979 Revolution and especially after 9/11 to exacerbate this into taking on geopolitical dimensions all across the international Muslim community (“Ummah”). Iran and Saudi Arabia both conceive of international affairs as being a “zero-sum” game between them, and it’s very likely that Riyadh and its media surrogates will intentionally misportray King Salman’s visit to Russia as being against Tehran instead of epitomizing Moscow’s skillful geopolitical balancing act.

  It’s understandable if Iran feels uncomfortable with these optics, though it should recognize that Russia’s overall intent is truly apolitical and driven by neutral Great Power considerations, not anything directed against it personally no matter what the forthcoming Saudi psy-ops might infer.

  That being said, it’s very tempting to perceive of events through the aforementioned “zero-sum” prism in seeing any betterment of Russian-Saudi relations as being to the overall detriment of Russian-Iranian ones, which in turn might prompt an asymmetrical response or set thereof from Tehran in countering what some of its leadership might truly believe is Russia’s “unfriendly” and “humiliating” gesture by hosting the Saudi King, selling him S-400 anti-air missiles and state-of-the-art Kalashnikovs, and bidding to produce the Kingdom’s first-ever nuclear power plant. This isn’t speculation either, as Iran already isn’t happy with the de-facto alliance that Russia has struck with “Israel” in Syria, which is explained in detail in the author’s earlier work rhetorically questioning whether “Anyone Still Seriously Thinks That Russia And Israel Aren’t Allies?”

  Phase 1: Syria

  Moreover, Iran doesn’t like how Saudi Arabia is the main reason why it hasn’t been invited to join BRICS, and while the other four members are in a technical sense equally responsible for this too, it’s only Russia which is courting Saudi Arabia in a way which could make Iran uneasy given how impactful the latest rapprochement will be for Syria. Therefore, even though Iran’s official media has been largely silent on the implications of the Russian-Saudi rapprochement, it can’t be ruled out that the millennia-experienced Iranian diplomats are preparing one of their stereotypically asymmetrical responses to what’s happening, and that it could most immediately have consequences for Syria. For example, Iran could make the Astana talks more difficult by siding more closely with Damascus in attempting to rebuff the joint Russian-Turkish efforts to get the Syrian government to enter into certain political-administrative concessions (e.g. a “phased leadership transition” and “federalization”) as part of a comprehensive peace plan that would meet the interests of most external parties to the conflict and therefore maximize Moscow’s geopolitical “balancing” capabilities.

  Phase 2: Caucasus

  Apart from that and stepping its response up a notch, there’s also the possibility that Iran could work with India to redirect the North-South Transport Corridor (NSTC) from Azerbaijan and Russia to Armenia and Georgia instead, the latter route of which was predicted in the Mideast chapter of the author’s book-length analytical series about “The Chinese-Indian New Cold War” and would allow both on-the-fence Great Powers to pioneer a trade route to the EU. This would be a geopolitically troubling development for Russia and contribute to its perception that Armenia has become an “obstructionist” actor vis-à-vis Moscow-led Eurasian integration processes and has probably been totally taken over by the powerful American-based diaspora lobby, though China’s latest inroads in building its second-largest embassy in the post-Soviet space in Yerevan might help to “balance” everything out in preventing this potential move from being completely disastrous for multipolarity. Nevertheless, if Iran takes this step in rerouting some or all of the NSTC to Armenia, Georgia, and the EU, then it would probably mean that it’s also seriously considering expanding its asymmetrical response to the third phase of operations in the Balkans.

  Phase 3: Balkans

  The third and final escalatory phase of Iran’s most realistic responses to any perceived “security dilemma” with Russia after Moscow’s rapprochement with Riyadh would be if Tehran seeks to broaden its asymmetrical measures to include energy and geopolitical dimensions in the Balkans. The author wrote about the future role that post-sanctions Iranian energy exports to Europe could have in challenging Russia’s present market dominance in certain regions, and while this might not happen if the EU reimposes sanctions against the Islamic Republic in compliance with American pressure, it still can’t be entirely discounted that Iranian LNG exports to Croatia, Ukraine, Lithuania, and even Poland could be in the cards, as well as its exit from the OPEC+ output agreement. However, the most destabilizing consequence of Iran’s irritability with Russia could be if it decides to return to its post-Yugoslav role in breaking up Bosnia, using the Serbs as stand-ins for the Russians in a new proxy war. That’s the most extreme step that Iran could take and there’s nothing right now which indicates that it will happen, but it should nevertheless be included as the worst-case “dark scenario” forecast.

  Concluding Thoughts

  Royal Pivot:

  Saudi Arabia’s grand strategy is shifting away from its former Western-/unipolar-centric focus to a more diversified one of “multi-alignment’ with multipolar leaders such as Russia and China, motivated in part by the US’ hostile energy and geopolitical actions against it. On the domestic front, Crown Prince Mohammed Bin Salman is modernizing his country’s socio-cultural situation by enacting belated reforms that will complement his ambitious Vision 2030 project of multisectoral economic diversification away from its present dependency on oil exports. Taken together, the international and domestic dimensions of Saudi Arabia’s grand strategic shifts are expected to have game-changing implications in altering the global dynamics of the New Cold War, to say nothing of what would happen if the Kingdom de-dollarizes its future Vision 2030 and energy deals with its new non-Western partners, hence why the initiator of all of this, Mohammed Bin Salman, is now the “Saudi Saddam” in the sense of being targeted for elimination.

  Iranian Reaction:

  That’s not all that there is to it, however, since even in the event that the young prince is successful in thwarting his myriad Hybrid War adversaries and the wide variety of weaponized threats that they’re poised to utilize against him, it’s unlikely that this will result in multipolar stability in the Mideast, owing mostly to the fact that Iran is expected to be incredibly irate at its hated rival being feted as a privileged partner by Russia and China. The difference between the two Eurasian Great Powers, however, is that Moscow’s outreaches to Riyadh are having direct consequences for Syria, particularly as it relates to possibly “counterbalancing” or even “rolling back” Iran’s intended post-Daesh influence in the Arab Republic, or so it may seem, which is why Tehran looks much more suspiciously at Moscow than it does at Beijing. The problem, though, is that Russia isn’t doing any of this “against Iran”, but in the “larger multipolar interests” of becoming the supreme “balancing” force in the Eurasian supercontinent, which in and of itself necessitate having excellent relations with Saudi Arabia.

  Scenario Forecasts:

  If the Iranian leadership is misled into viewing Russia’s ties with Saudi Arabia as part of a “zero-sum” game and not the “win-win” strategy that it’s actually intended (key word) to be, then it’s very likely that the Islamic Republic will resort to one of its stereotypically asymmetrical responses honed by millennia of diplomatic experience in making its silent disagreements well known. This would be an unfortunate development because it would mean that Russia’s sincere efforts to balance and then mediate the Saudi-Iranian/Sunni-Shiite rivalry would be for naught, and that the US’ unstated goal of redirecting Iranian attention away from Saudi Arabia and towards Russia would have been partially successful. Nevertheless, should this happen, then it’s expected that the three-phase tier of escalatory responses could see Iran create “complications” in the Astana peace process; redirect the North-South Transport Corridor away from Azerbaijan and Russia and towards Armenia, Georgia, and the EU; and begin actively competing with Russia for part of the European energy market. At the worst, it might even try to restore its destabilizing influence in Bosnia and spark a proxy war against Russia’s Serbian partners there.

  American Backup Plan:

  None of Iran’s forecasted responses are certain, or even that it will negatively appraise the fast-moving Russian-Saudi rapprochement in the first place, but in the possible event that it does, then it would inadvertently be playing into the US’ intended strategy of indirectly using Iran as a backup plan for replacing Saudi Arabia in countering Russian interests in the Mideast, Caucasus, and the Balkans. In addition, Riyadh’s reversal from the unipolar camp to the multipolar one would leave the US without a regular source of jihadi recruits, thereby necessitating that it scout elsewhere in such countries as Sudan, India, Bangladesh, and Indonesia. The most likely scenario to happen in the near future is that Iran’s suspicions of the Russian-Saudi rapprochement manifest themselves subtly in Syria, at least at first, while the US begins looking to non-Mideast “Global South” countries for mercenaries while concurrently commencing its regime change operation in Saudi Arabia.

  The best outcome would be if Russia’s multidimensional diplomatic efforts could bring Saudi Arabia and Iran together in a “New Détente” like how Iraq’s Muqtada al-Sadr unsuccessfully tried to do, all the while assisting both of them in warding off the US’ Hybrid War threats, but the most likely result is that this wishful thinking eventuality is still a far way’s off, if it ever happens at all, since the US is well known for flexibly adapting its unipolar grand strategy to accommodate for any multipolar contingency such as this one.

  

  

  

• Mapping The Most (And Least) Valuable States In America

  Everyone knows location is the most important part of real estate. You can’t change where your house is (all things being equal). You have to consider school districts, crime rates, commute times—the list goes on and on. It can be much simpler when you’re considering buying a home to compare apples to apples so you can see how the real estate market differs according to location.

  So HowMuch.net created a new visualization showing land and housing prices at a glance.

  

  Source: HowMuch.net

  The blue dots represent the value of an acre of land, and the red circles indicate the median value of a home. The bigger the blue dot and the larger the red circle, the more expensive it is to become a property owner. Small circles and dots likewise indicate a very low cost of purchasing property. The home values are from the U.S. Census Bureau’s 2015 American Consumer Survey, and the numbers behind the land values come from the Bureau of Economic Analysis.

  As HowMuch.net notes, several things stand out in our illustration.

  An acre of land is much more valuable in the Northeast compared to any other part of the country. This is partly because the Eastern seaboard is a very densely populated area with several large cities, most notably New York. It is also a historical artifact that Europeans settled New England first and then moved west, meaning that New York and Massachusetts have some of the oldest modern structures anywhere in the U.S. In other words, Eastern cities are a lot older than Midwestern cities, so there isn’t a lot of farmland for suburban expansion anymore. We should also mention that in terms of geographic size, these are some of the smallest states in the country. Matter of fact, the three states where the cost of an acre of land is greater than the median price of a house are all located on the East Coast, and they happen to be some of the smallest states in the Union (Rhode Island, Connecticut, and New Jersey).

  Median home values (the red circles) are a different and more complicated story. California has the most expensive houses by far ($449,100). Oregon and Washington boast similarly high housing valuations as well ($264,100 and $284,000, respectively). It is also expensive to buy a home on the East Coast with six out of the top ten states with the most expensive median home values.

  But there’s a noticeable dip in both housing and land prices in southern and midwestern states. Prices slowly rise the further you move from east to west. This highlights unique economic developments over the last several years, including the boom in oil exploration in North Dakota and the growth of Western cities thanks to young people,like Denver. Snowbirds also tend to move to Florida and Arizona after they retire, which also pushes up housing prices in those places.

  Top 5 Most Expensive States to Buy a Home 

  1. California – Value per acre: $39,092; Median Home Value: $449,100
  2. Massachusetts – Value per acre: $102,214;  Median Home Value: $352,100
  3. New Jersey – Value per acre: $196,410; Median Home Value: $322,600
  4. Maryland – Value per acre: $75,429; Median Home Value: $299,800
  5. New York – Value per acre: 41,314; Median Home Value: $293,500

  Top 5 Cheapest States to Buy a Home

  1. West Virginia – Value per acre: $10,537; Median Home Value: $112,100
  2. Mississippi – Value per acre: $5,565; Median Home Value: 112,700
  3. Arkansas – Value per acre: $6,739; Median Home Value: $120,700
  4. Oklahoma – Value per acre: $7,364; Median Home Value: $126,800
  5. Kentucky – Value per acre: $7,209; Median Home Value: $130,000

  All this shows that the laws of supply and demand are alive and well in the real estate market. You can easily find cheap acres of land where they are plentiful and un-useful (sorry, Nevada), but owning property is a lot more expensive in smaller places crowded with lots of people. As always, location, location, location.

  

  

• Is Population Decline Catastrophic?

  Authored by Peter St.Onge via The Mises Institute,

  In the 1970’s we heard the earth was going to get so crowded we’d be falling off. Now the panickers have flipped to population decline. They were wrong in the 70’s, so are they wrong again? Is a declining population catastrophic?

  

  Countries from Germany to Japan are investing in mass immigration or pro-birth policies on the assumption that they must import enough warm bodies to stave off economic collapse. I think this is mistaken.

  Falling population on a country level is certainly no catastrophe and, indeed, may be positive. I’ll outline some reasons here…

  Historically, the first question is why population declined. If it’s the Mongols invading again then, yes, the economy will suffer. Not because of the death alone, but because wholesale slaughter tends to destroy productive capital as well.

  On the other hand, if the population is declining from non-war, we have a well-studied natural experiment in the Black Plague. Which is generally credited with the “take-off” of the West. Because if the population declines by a third while capital including arable land stays the same, you get a surplus. Same resources divided by fewer people.

  Think of zombie movies where dude’s running around with unlimited resources at his disposal — free cars, riverfront penthouses. That, in diluted form, is what a declining population gives us — more land, more highways or buildings, more resources per person.

  Now, if the population’s declining not because of a terrible disaster like the Plague, rather because people simply want fewer children, then you don’t even get the massive hit from losing productive people. A worker dying at 40 takes a lot of productivity with him, while a child unborn isn’t actually destroying anything but hopes and dreams.

  So if the Plague was a per capita economic bonanza to Europe, having fewer children should be an even larger per capita bonanza.

  Take Germany; before recent rises in immigration, Germans averaged 1.25 children per woman. This translates into a 1/3 decline in population per cycle (i.e every 75 years if people are living 75 years). So without immigration, Germany might expect a 1/3 decline by 2100. Is this good or bad?

  The question breaks into 2 parts: absolute number of people, and changes in age composition. On numbers alone, it’s great for Germans; same physical capital, same amount of land and air and water. True there are fewer taxpayers to amortize shared costs like defense, but these costs are small and, empirically, often scale to the population anyway. For example Holland’s military budget and population are both about 1/5 of Germany’s.

  So on numbers it’s great — more stuff for fewer people.

  Now the second question is age profile. The key here is that a declining population means fewer working-adults to pay out pensions, but it also means even fewer kids. Who are very expensive. The number that captures both is “dependency ratio,” which is the ratio of workers to children-plus-elderly.

  To take a real-world example, the UN expects Germany in 2100 to have 68 million people, compared to today’s 82 million — about a 20% decline. The age profile shifts so they expect a third more over-65’s — from 17 to 23 million. Meanwhile, children 14 and under fall from 11m to 9m. So total dependents goes from 28 million today to 32 million in 2100. Meanwhile, population age 15 to 64 goes from 54 million today to 36 million in 2100. Upshot is today a single working-age person supports half a dependent — 54 million carrying 28 million. But in 2100 that worker will support a single dependent — 36 million carrying 32 million. So far so bad, right?

  Well, there are 2 big caveats here, both based on long-lasting trends.

  First, for over a century now people are not only living longer, but living healthy longer. This is called “health expectancy” and, sticking with Germany, is rising by about 1.4 years per decade.

   

  This implies that 65 year-olds in 2100 will be as healthy as 53 year-olds today. While today’s 65-year-olds are as healthy as 2100’s 78-year-olds. This alone would bring the elderly numbers back down to today’s, but the lower number of children means worker burdens actually decline.

   

  Of course, this would require raising retirement ages in line with health expectancy – 1.4 years per decade – which politicians are obviously deeply reluctant to do.

   

  Second caveat is another long-term trend, economic growth. The irony here is that, from a population growth viewpoint, economic growth is actually the worst-case scenario. Because if the economy crashes instead, then historically the population actually soars — kids become your safety net if the welfare state goes bankrupt. So if we fail to grow, the demographic problem actually solves itself anyway. Either we grow, or population decline was a false alarm anyway.

   

  Quantifying this growth, over the past 50 years Germany has grown 1.65% per year, real per capita. That trends puts a 2100 German worker making 4 times what they do today. Keep in mind this is likely underestimating the benefit, because any outperformance makes Germans richer yet, while any catastrophe probably makes them have more kids.

  So, summing up, rising health expectancy implies there will actually be fewer dependents in 2100 Germany, while economic growth implies German workers will be 4 times richer, just on growth alone. The demographic burden plunges by 80% or more.

  By the way, if you’re freaked out at the prospect of working an extra 1.4 years per decade, that economic growth alone suggests a 50% decline in worker burdens – twice the dependents on four times the income. So even if politicians are spineless, the welfare burden declines even with more dependents.

  Bottom line, whether we look at total numbers or demographically, population decline coming from simply choosing to have fewer kids is nothing remotely catastrophic.

  Now, a final point: in a worldwide context, more people does tend to increase investment, therefore innovation and economic growth. This is obvious in the aggregate – there wouldn’t be any factories if there weren’t any humans – but people forget. So, on a world-wide level, we should have a bias towards more humans, while recognizing that, on a country level, a shrinking population is certainly no catastrophe.

   

  

  

• What Would A North Korean Nuclear Attack Look Like?

  Reports that North Korea is planning to test an ICBM capable of reaching the US west coast opened a trapdoor under stocks this morning, suggesting that investors are taking president’s ominous warnings about “the calm before the storm” seriously.

  But in the unlikely event that you’re not sufficiently terrified already, researchers at Johns Hopkins have sought to quantify the horrifying consequences of a North Korean nuclear strike in a new research report published by the university’s 38th Parallel project.

  The US carrying out any military option raises a significant risk of military escalation by the North, including the use of nuclear weapons against South Korea and Japan. According to the calculations presented below, if the “unthinkable” happened, nuclear detonations over Seoul and Tokyo with North Korea’s current estimated weapon yields could result in as many as 2.1 million fatalities and 7.7 million injuries.

  In the report, author Michael Zagurek calculates that an all-out nuclear strike launched by North Korea against Tokyo or Seoul could kill as many as 2.1 million people and injure another 8 million. Combined, the number of dead and injured would equal 10% of the South Korean population – affirming that a nuclear strike by the North would be – by a considerable margin – the single deadliest attack in human history. By comparison, the US killed a combined 120,000 Japanese civilians when dropped nuclear bombs over Hiroshima and Nagasaki.

  

  To hear Zagurek tell it, investors and ordinary citizens alike are underestimating the likelihood of a nuclear conflict. As Zagurek explains, tipping the world into a potentially civilization conflict could result from an accidental miscalculation by either side. In the most likely scenario, an accidental miscalculation during a missile or nuclear test in the Pacific impacts US military assets in Guam, triggering an overwhelming military response by the US.

  With the North Korean regime fearing the imminent destruction of its nuclear arsenal, as the logic goes, the Kim regime would fire off all 25 of its nukes – at least, that was the number upon which Zagurek based his calculations – at either Japan or Seoul.

  But ruling out the possibility of an accident like that described above, how much longer can North Korea and the US trade threats before a military conflict becomes inevitable?

  If the status quo is unacceptable and diplomacy has been ineffective, then at what point do military responses become probable?  The tension between North Korea, its neighbors and the United States are now extremely high, antagonized further by bombastic exchanges between the US and DPRK during the United Nations General Assembly meetings and continued tweets from Trump. History is replete with “rational actors” grossly miscalculating, especially in crisis situations. It is possible that another North Korean nuclear test—especially if detonated in air or under water—an ICBM test, or a missile test that has the payload impact area too close to US bases in Guam for example, might see Washington react with force. This could include such options as attempting to shoot down the test missiles or possibly attacking North Korea’s missile testing, nuclear related sites, missile deployment areas or the Kim Regime itself. The North Korean leadership might perceive such an attack as an effort to remove the Kim family from power and, as a result, could retaliate with nuclear weapons as a last gasp reaction before annihilation. Therefore, it is worth reviewing the consequences if the “unthinkable” happened.

  The following graphs show the results of Zagurek's calculations for different-sized nuclear payloads:

  

   

  

  

   

  Here’s a map of Seoul showing four possible blast areas from a 250 kt airbust detonation – 12+ psi, 5-12 psi, 2-5 psi, 1-2 psi…

  

  And the four possible blast areas for Tokyo…

  

  With Sarah Huckabee Sanders telling reporters that President Donald Trump’s ominous hints about a coming “storm” should be taken seriously, it’s possible that a breaking point could be approaching…

  …then again, Trump is fond of bluffing. Meanwhile, Steve Bannon’s surprising admission that there is “no attractive military solutions” for dealing with North Korea that wouldn't result in the deaths of hundreds of thousands of people in Seoul within 30 minutes due to conventional weapons fire continue to haunt the administration…

  

  

• The U.S. Justice System Must Focus On Elite Criminality

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

  Two very important articles published in recent days serve to once again highlight America’s metastasizing elite criminality problem. A problem which our justice system simply refuses to address.

  

  This corrupt two-tier justice system is something I’ve been focused on from the very beginning of my writings, and I continue to see it as a civilization-level threat for this country if not aggressively addressed and confronted in the very near future.

  The two articles in question focus on different aspects of untouchable elite culture in America.

  The first relates to the continued fraud pervasive in America’s largest financial institution, while the second covers a thirty year history of predatory sexual behavior by one of Hollywood’s biggest moguls, Harvey Weinstein. In both cases, countless people have known and reported on repeated abuses perpetrated by both the institution and the man, yet the U.S. justice system and the vast majority of “elite” culture happily help shield them from justice. Predators are predators, and elite predators are far more dangerous to society that your average street crook, so why does our justice situation deal with it in the exact opposite way?

  Let’s start with the blockbuster article published in The Nation by the always informative David Dayen. The article is titled, How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis—With Phony Mortgages!

  Here’s just brief excerpt:

  JPMorgan’s share of the settlement was $5.3 billion, but only $1.1 billion had to be paid in cash; the other $4.2 billion was to come in the form of financial relief for homeowners in danger of losing their homes to foreclosure. The settlement called for JPMorgan to reduce the amounts owed, modify the loan terms, and take other steps to help distressed Americans keep their homes. A separate 2013 settlement against the bank for deceiving mortgage investors included another $4 billion in consumer relief.

   

  A Nation investigation can now reveal how JPMorgan met part of its $8.2 billion settlement burden: by using other people’s money.

   

  Here’s how the alleged scam worked. JPMorgan moved to forgive the mortgages of tens of thousands of homeowners; the feds, in turn, credited these canceled loans against the penalties due under the 2012 and 2013 settlements. But here’s the rub: In many instances, JPMorgan was forgiving loans on properties it no longer owned.

   

  The alleged fraud is described in internal JPMorgan documents, public records, testimony from homeowners and investors burned in the scam, and other evidence presented in a blockbuster lawsuit against JPMorgan, now being heard in US District Court in New York City.

  Sounds hard to believe, but it’s true. Not only that, but as we’ve come to expect from the “rule of law” in America, it somehow never applies to that group of people with the greatest ability to financially destroy people and their lives. Bankers. For example, here’s some more from the same piece:

  Federal appointees have been complicit in this as well. E-mails show that the Office of Mortgage Settlement Oversight, charged by the government with ensuring the banks’ compliance with the two federal settlements, gave JPMorgan the green light to mass-forgive its loans. This served two purposes for the bank: It could take settlement credit for forgiving the loans, and it could also hide these loans—which JPMorgan had allegedly been handling improperly—from the settlements’ testing regimes.

   

  “No one in Washington seems to understand why Americans think that different rules apply to Wall Street, and why they’re so mad about that,” said former congressman Miller. “This is why.”

   

  Most of the loans that JPMorgan released—and received settlement credit for—were all but worthless. Homeowners had abandoned the homes years earlier, expecting JPMorgan to foreclose, only to have the bank forgive the loan after the fact. That forgiveness transferred responsibility for paying back taxes and making repairs back to the homeowner. It was like a recurring horror story in which “zombie foreclosures” were resurrected from the dead to wreak havoc on people’s financial lives.

   

  Federal officials knew about the problems and did nothing. In July 2014, the City of Milwaukee wrote to Joseph Smith, the federal oversight monitor, alerting him that “thousands of homeowners” were engulfed in legal nightmares because of the confusion that banks had sown about who really owned their mortgages. In a deposition for the lawsuit against JPMorgan Chase, Smith admitted that he did not recall responding to the City of Milwaukee’s letter.

   

  Few would expect Jeff Sessions’s Justice Department to pursue such a case, but what this sorry episode most highlights is the pathetic disciplining of Wall Street during the Obama administration.

   

  JPMorgan’s litany of acknowledged criminal abuses over the past decade reads like a rap sheet, extending well beyond mortgage fraud to encompass practically every part of the bank’s business. But instead of holding JPMorgan’s executives responsible for what looks like a criminal racket, Obama’s Justice Department negotiated weak settlement after weak settlement. Adding insult to injury, JPMorgan then wriggled out of paying its full penalties by using other people’s money.

   

  The larger lessons here command special attention in the Trump era. Negotiating weak settlements that don’t force mega-banks to even pay their fines, much less put executives in prison, turns the concept of accountability into a mirthless farce. Telegraphing to executives that they will emerge unscathed after committing crimes not only invites further crimes; it makes another financial crisis more likely. The widespread belief that the United States has a two-tiered system of justice—that the game is rigged for the rich and the powerful—also enabled the rise of Trump. We cannot expect Americans to trust a system that lets Wall Street fraudsters roam free while millions of hard-working taxpayers get the shaft.

  Of course, this is just the latest when it comes to JP Morgan. I highlighted the firm’s rap sheet in last month’s post, Which is Fraudulent – Bitcoin or JP Morgan?

  

  

  How many JP Morgan executives have gone to jail?

  Now onto Harvey Weinstein, a guy whose cretinous behavior has been the biggest non-secret in Hollywood for decades. Just like with banker crooks, he mere settles cases and continues to walk around, freely hunting the next defenseless victim.

  The New York Times article published yesterday exposing some of this grotesque man’s history was extraordinary and I suggest everyone read it. Here’s just a little from the piece, Harvey Weinstein Paid Off Sexual Harassment Cases for Years:

  Two decades ago, the Hollywood producer Harvey Weinstein invited Ashley Judd to the Peninsula Beverly Hills hotel for what the young actress expected to be a business breakfast meeting. Instead, he had her sent up to his room, where he appeared in a bathrobe and asked if he could give her a massage or she could watch him shower, she recalled in an interview.

   

  “How do I get out of the room as fast as possible without alienating Harvey Weinstein?” Ms. Judd said she remembers thinking.

   

  In 2014, Mr. Weinstein invited Emily Nestor, who had worked just one day as a temporary employee, to the same hotel and made another offer: If she accepted his sexual advances, he would boost her career, according to accounts she provided to colleagues who sent them to Weinstein Company executives. The following year, once again at the Peninsula, a female assistant said Mr. Weinstein badgered her into giving him a massage while he was naked, leaving her “crying and very distraught,” wrote a colleague, Lauren O’Connor, in a searing memo asserting sexual harassment and other misconduct by their boss.

   

  “There is a toxic environment for women at this company,” Ms. O’Connor said in the letter, addressed to several executives at the company run by Mr. Weinstein.

   

  Dozens of Mr. Weinstein’s former and current employees, from assistants to top executives, said they knew of inappropriate conduct while they worked for him. Only a handful said they ever confronted him.

   

  Mr. Weinstein enforced a code of silence; employees of the Weinstein Company have contracts saying they will not criticize it or its leaders in a way that could harm its “business reputation” or “any employee’s personal reputation,” a recent document shows. And most of the women accepting payouts agreed to confidentiality clauses prohibiting them from speaking about the deals or the events that led to them.

   

  In interviews, some of the former employees who said they had troubling experiences with Mr. Weinstein asked a common question: How could allegations repeating the same pattern — young women, a powerful male producer, even some of the same hotels — have accumulated for almost three decades?

   

  “It wasn’t a secret to the inner circle,” said Kathy DeClesis, Bob Weinstein’s assistant in the early 1990s. She supervised a young woman who left the company abruptly after an encounter with Harvey Weinstein and who later received a settlement, according to several former employees.

   

  In March 2015, Mr. Weinstein had invited Ambra Battilana, an Italian model and aspiring actress, to his TriBeCa office on a Friday evening to discuss her career. Within hours, she called the police. Ms. Battilana told them that Mr. Weinstein had grabbed her breasts after asking if they were real and put his hands up her skirt, the police report says.

   

  The claims were taken up by the New York Police Department’s Special Victims Squad and splashed across the pages of tabloids, along with reports that the woman had worked with investigators to secretly record a confession from Mr. Weinstein. The Manhattan district attorney’s office later declined to bring charges.

  As disturbing as all that is, it might be the tip of the iceberg. Here’s some additional info from an article published today by The Daily Beast, Hollywood’s Loud Silence on Harvey Weinstein:

  The Times piece later identified the 1997 actress as Rose McGowan, who starred in the 1996 film Scream, which was distributed by Weinstein-owned Dimension Films. In October 2016, McGowan tweeted, “Because my ex sold our movie to my rapist for distribution #WhyWomenDontReport.” It’s not known whom McGowan was referring to, though she dated filmmaker Robert Rodriguez from 2006 to 2009, and their film Planet Terror was distributed by Weinstein in 2007.

   

  In the wake of the blockbuster Times exposé, The Daily Beast reached out to dozens of prominent actors, actresses, and filmmakers—who both have andhave not worked with Weinstein—only to receive many replies of “no comment” and plenty of radio silence.

  Elite criminals are the most dangerous criminals on earth, but our justice system treats them like well-meaning philosopher kings who deserve endless breaks in the face of rampant unethical and often evil behavior. It should be completely obvious to everyone that the only reason elite crooks get treated with kid gloves is because they’re rich and powerful. The end result of this dereliction of justice is those entrusted with protecting the public have willingly created an entrenched, untouchable, distributed, criminal class which spans across and leads all major industries in America.

  As I tweeted earlier today:

  The entire force of the U.S. justice system should be focused on elitist crimes, but instead the exact opposite happens.

  — Michael Krieger (@LibertyBlitz) October 6, 2017

  //platform.twitter.com/widgets.js

  If we don’t get a grip on this now and begin to marshal our resources against the most dangerous criminals in America — those from the highest echelons of U.S. society — the country will continue to unravel and in an increasingly dangerous and chaotic fashion.

   

  If you liked this article and enjoy my work, consider becoming a monthly Patron, or visit our Support Page to show your appreciation for independent content creators.

  

  

• San Franciscans Pissed To Learn Their Liberal Policies Caused A Wave Of Restaurant Failures

  In a note that we’ll file away under the definition of ‘irony’, Bloomberg wrote today that the fun-loving, free-spirited socialists of San Francisco are suddenly really pissed off that their liberal economic policies have resulted in a wave of restaurant failures, making it nearly impossible to find good food at an ‘affordable’ price. 

  We would be pissed too...who could have guessed that artificially raising wages well above market supported rates would result in business failures?

  On Thursday, the Michelin Guide announced its 2018 Bib Gourmand winners for San Francisco with only 67 restaurants on the list this year, a decrease from the 74 restaurants in 2017. Twelve restaurants in total dropped off, once you factor in some new additions. In 2016, there were 73 restaurants, and in 2015, 76 were on the list.

   

  Restaurants that rate a spot on the Bib Gourmand list are defined as places that offer notable food at a reasonable price. Michelin specifically defines that as two courses plus dessert or wine for $40, not including tax or tip. A group of anonymous inspectors choose the restaurants. Bib Gourmand restaurants are not eligible to receive Michelin stars.

   

  Some of the attrition on the 2018 list is due to places that simply fell off (or maybe even got promoted to the star list, proper), like Bistro Jeanty in Yountville, Bistro 29 in Santa Rosa, and Le Garage in Sausalito. But the alarming rate of restaurant closures in the Bay Area also accounts for the dip on the list, with spots like Bar Tartine and Mason Pacific in San Francisco and Scopa in Healdsburg wine country shutting their doors.

  

  So what was the catalyst that sparked the ongoing massive wave of San Francisco restaurant failures?  Well, Bloomberg figures it’s the result of soaring minimum wages and health care costs…you know, all the things that San Fran liberals argue and protest for.

  Factors like skyrocketing rents, minimum wage and health care have certainly taken a toll on Bib Gourmand-style restaurants around the Bay Area. More than 60 restaurants closed between Sept. 2016 and Jan. 2017, according to the East Bay Times. “We’re at this precipice where the model of the full-service restaurant is being pushed to the brink,” said Gwyneth Borden, executive director of the Golden Gate Restaurant Association.

   

  Although ecstatic by the news of her Bib Gourmand, Brown Sugar Kitchen’s chef/owner Tanya Holland echoed the sentiment during a phone interview: “It’s so challenging to operate this kind of restaurant in the Bay Area right now” especially when it comes to staffing, she said.

  Of course, as we pointed out back in January, a Thrillist article written by Kevin Alexander highlighted the demise of one independently owned restaurant in San Francisco, AQ, that shut down earlier this year for all the same reasons listed above.  When it came to minimum wage hikes, Alexander found that just a $1 per hour minimum wage increase reduced an independent restaurant’s already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for restaurant owners.

  I should say before I go any further that all of the restaurant owners and chefs I’ve talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here — they’re just genuinely worried about how to afford to pay extra without radically changing the way they do business.

   

  Let’s start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration’s attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

   

  Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn’t change the fact that it’s an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ’s best year — a phenomenal year by restaurant standards — that would have been nearly 10% of profits.

  Meanwhile, when it comes to Obamacare, Alexander noted that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn’t exist in 2012, which eroded another ~30% of the company’s peak net income.

  Then there’s health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics’ description of the back-of-house work environment: “Kitchens are usually crowded and filled with potential dangers.” With the introduction of Obamacare, most restaurant workers finally got the coverage they’ve needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines “full time” as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).

   

  Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee’s income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That’s an increase of $72K MORE per year than 2012, or 29% of their best year’s profit.

  Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for “yieldy” commercial real estate.
  

  In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you’re either moving into a sketchy or “emerging” neighborhood where the rent is cheap but few want to go there, or you’re overpaying for an established ‘hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the ‘hood you helped revitalize.

   

  In Miami, Michelle Bernstein’s Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America’s culinary landmarks, when he couldn’t rationalize paying the huge rent hike the landlord proposed.

  What’s next?  Is San Francisco going to tell us how mad they are that Obamacare is driving up healthcare premiums?

  

  

• One Chart Explains What Bernie Madoff And Kentucky Public Pensions Have In Common

  If Bernie Madoff taught us anything it’s that every successful ponzi scheme requires precisely one critical component to keep it afloat: a steady stream of fresh capital to fund redemptions.  Absent that key component, even the most carefully crafted ponzi, with the best, most creative accounting fabrications in the world, will inevitably fail from a lack of real, cold, hard cash to keep the illusion going.

  Unfortunately, it seems that Kentucky’s public pensions are now running into the very same problem that ultimately brought down Madoff’s multi-billion dollar ’empire’.  As the Lexington Herald Leader points out today, it’s no coincidence that the Kentucky public pension system is suddenly collapsing just as the number of retirees (redemptions) has surged beyond the number of active employees (fresh capital) required to keep the ponzi going.

  It’s impossible to know exactly who, where or when, but one day in 2016, a Kentucky state employee packed up her desk, said goodbye to her colleagues and retired.

   

  Once she hit the exit, the number of retirees drawing a pension from the Kentucky Employees Retirement System (Non-Hazardous), the struggling $2.6 billion fund that serves most of state government, officially topped the number of active workers paying into it.

   

  The 60-year-old fund has been mathematically upside down from that day forward.

   

  Social Security, by comparison, has a roughly 3-to-1 ratio of workers supporting retirees, but KERS’ ratio is less than 1 to 1. Its numbers are expected to worsen as state government continues to cut its work force and aging baby boomers keep heading into retirement. The average age of a worker in KERS is 45, up from 43 just a few years ago. And they retire at age 57 on average to draw a lifetime pension.

   

  “You just can’t depend on this model anymore,” said state Sen. Joe Bowen, R-Owensboro.

  

  As Senator Joe Bowen notes, “it creates a cash flow problem”…

  Bowen is working with Gov. Matt Bevin and other GOP lawmakers on proposed changes to Kentucky’s public pension systems, which face tens of billions of dollars in unfunded liabilities due to inadequate contributions and unrealistic financial assumptions by state government over much of the past two decades.

   

  Bowen said Wednesday that an outline of their pension proposals could be unveiled within the next week, with a special legislative session to enact those changes possible later this year.

   

  “The model of a defined-benefits plan doesn’t work for us anymore because we can’t raise enough money from this work force to pay for everyone who is going into retirement,” Bowen said. “This is why moving to 401(k) accounts, moving to defined-contribution plans, and then committing to paying down the existing liabilities … that’s really the only option we have.”

   

  “It creates a cash-flow problem,” said David Eager, interim executive director of Kentucky Retirement Systems, which manages KERS (non-hazardous) and other state and local government pension funds. “The benefit payments are going to continue to go up. The contributions are going to continue to go down. That’s just the math of it.”

  Of course, the demographics of the Kentucky pension system are hardly unique.  A surge in Baby Boomer retirements over the next couple of decades, combined with technological advancements that ensure that only a fraction of those retirees will have to be replaced with actual human workers, will inevitably result in a wave public pension ponzi failures as they meet with the same “cash flow problem” as Bernie Madoff.

  

   

  That said, unlike the Madoff ponzi, no one will go to jail when the public pension ponzi schemes of the U.S. are exposed because, for some reason, defrauding taxpayers, as opposed to investors, is perfectly legal.

  

  

• Why Are Washington's Clients Getting Cozy With Moscow?

  Submitted by Nauman Sadiq,

  Turkey, which has the second largest army in NATO, has been cooperating with Russia in Syria against Washington’s interests since last year and has recently placed an order for the Russian-made S-400 missile system.

   

  Similarly, the Saudi King Salman, who is on a landmark state visit to Moscow, has signed several cooperation agreements with Kremlin and has also expressed his willingness to buy S-400 missile system.

   

  Another traditional ally of Washington in the region, Pakistan, has agreed to build a 600 mega-watt power project with Moscow’s assistance, has bought Russian helicopters and defense equipment and has held joint military exercises with Kremlin.

  All three countries have been steadfast US allies since the times of the Cold War, or rather, to put it bluntly, the political establishments of these countries have acted as virtual proxies of Washington in the region and had played an important role in the collapse of the former Soviet Union in 1991.

  In order to understand the significance of relationship between Washington and Ankara, which is a NATO member, bear in mind that the United States has been conducting air strikes against targets in Syria from the Incirlik airbase and around fifty American B-61 hydrogen bombs have also been deployed there, whose safety became a matter of real concern during the failed July 2016 coup plot against the Erdogan administration; when the commander of the Incirlik airbase, General Bekir Ercan Van, along with nine other officers were arrested for supporting the coup; movement in and out of the base was denied, power supply was cut off and the security threat level was raised to the highest state of alert, according to a report by Eric Schlosser for the New Yorker.

  Similarly, in order to grasp the nature of principal-agent relationship between the United States on the one hand and Saudi Arabia and Pakistan on the other, keep in mind that Washington used Gulf’s petro-dollars and Islamabad’s intelligence agencies to nurture jihadists against the former Soviet Union during the Cold War.

  It is an irrefutable fact that the United States sponsors militants, but only for a limited period of time in order to achieve certain policy objectives. For instance: the United States nurtured the Afghan jihadists during the Cold War against the former Soviet Union from 1979 to 1988, but after the signing of the Geneva Accords and consequent withdrawal of Soviet troops from Afghanistan, the United States withdrew its support to the Afghan jihadists.

  Similarly, the United States lent its support to the militants during the Libyan and Syrian civil wars, but after achieving the policy objectives of toppling the Arab nationalist Gaddafi regime in Libya and weakening the anti-Israel Assad regime in Syria, the United States relinquished its blanket support to the militants and eventually declared a war against a faction of Sunni militants battling the Syrian government, the Islamic State, when the latter transgressed its mandate in Syria and dared to occupy Mosul and Anbar in Iraq in early 2014.

  The United States regional allies in the Middle East, however, are not as subtle and experienced in Machiavellian geopolitics. Under the misconception that alliances and enmities in international politics are permanent, the Middle Eastern autocrats keep on pursuing the same belligerent policy indefinitely as laid down by the hawks in Washington for a brief period of time in order to achieve certain strategic objectives.

  For example: the security establishment of Pakistan kept pursuing the policy of training and arming the Afghan and Kashmiri jihadists throughout the eighties and nineties and right up to September 2001, even after the United States withdrew its support to the jihadists’ cause in Afghanistan during the nineties after the collapse of its erstwhile archrival, the Soviet Union.

  Similarly, the Muslim Brotherhood-led government of Turkey has made the same mistake of lending indiscriminate support to the Syrian militants even after the United States partial reversal of policy in Syria and the declaration of war against the Islamic State in August 2014 in order to placate the international public opinion when the graphic images and videos of Islamic State’s brutality surfaced on the social media.

  Keeping up appearances in order to maintain the façade of justice and morality is indispensable in international politics and the Western powers strictly abide by this code of conduct. Their medieval client states in the Middle East, however, are not as experienced and they often keep on pursuing the same militarist policies of training and arming the militants against their regional rivals, which are untenable in the long run in a world where pacifism has generally been accepted as one of the fundamental axioms of the modern worldview.

  Regarding the recent cooperation between Moscow and Ankara in the Syrian civil war, although the proximate cause of this détente seems to be the attempted coup plot against the Erdogan administration in July last year by the supporters of the US-based preacher, Fethullah Gulen, but this surprising development also sheds light on the deeper divisions between the United States and Turkey over their respective Syria policy.

  After the United States reversal of “regime change” policy in Syria in August 2014 when the Islamic State overran Mosul and Anbar in Iraq in early 2014 and threatened the capital of another steadfast American ally, Masoud Barzani’s Erbil in the oil-rich Iraqi Kurdistan, Washington has made the Kurds the centerpiece of its policy in Syria and Iraq.

  Bear in mind that the conflict in Syria and Iraq is actually a three-way conflict between the Sunni Arabs, the Shi’a Arabs and the Sunni Kurds. Although after the declaration of war against a faction of Sunni Arab militants, the Islamic State, Washington has also lent its support to the Shi’a-led government in Iraq, but the Shi’a Arabs of Iraq are not the trustworthy allies of the United States because they are under the influence of Iran.

  Therefore, Washington was left with no other choice than to make the Kurds the centerpiece of its policy in Syria and Iraq after a group of Sunni Arab jihadists transgressed its mandate in Syria and overran Mosul and Anbar in Iraq in early 2014 from where the United States had withdrawn its troops only a couple of years ago in December 2011.

  The US-backed Syrian Democratic Forces, which are on the verge of liberating the Islamic State’s de facto capital, Raqqa, and are currently battling the jihadist group in a small pocket of the city between the stadium and a hospital, are nothing more than the Kurdish militias with a symbolic presence of mercenary Arab tribesmen in order to make them appear more representative and inclusive in outlook.

  As far as the regional parties to the Syrian civil war are concerned, Saudi Arabia, Jordan and the rest of the Gulf Arab States may not have serious reservations against this close cooperation between the United States and the Kurds in Syria and Iraq, because the Gulf Arab States tend to look at the regional conflicts from the lens of the Iranian Shi’a threat.

  Turkey, on the other hand, has been more wary of the separatist Kurdish tendencies in its southeast than the Iranian Shi’a threat, and particularly now after the Kurds have held a referendum for independence in Iraq despite the international pressure against such an ill-advised move.

  Finally, any radical departure from the longstanding policy of providing unequivocal support to Washington’s policy in the region by the political establishment of Turkey since the times of Mustafa Kemal Ataturk is highly unlikely. But after this perfidy by Washington of lending its support to the Kurds against the Turkish proxies in Syria, it is quite plausible that the Muslim Brotherhood-led government in Turkey might try to strike a balance in its relations with the Cold War-era rivals.

  *  *  *

  Nauman Sadiq is an Islamabad-based attorney, columnist and geopolitical analyst focused on the politics of Af-Pak and Middle East regions, neocolonialism and petro-imperialism.

  

  

• BLS Caught Fabricating Wage Data

  While it’s not the first time we have observed the BLS manipulate data (the last time was in “This Is What Happens When The Bureau Of Labor Statistics Is Caught In A Lie“), never before had we actually caught the Bureau Of Labor Statistics openly fabricating data. Until now.

  As reported earlier today, in one of the most closely watched statistics in today’s payrolls report, the BLS reported that the annual increase in Average Weekly Earnings was a whopping 2.9%, above the 2.5% expected, and above the 2.5% reported last month. On the surface this was a great number, as the 2.9% annual increase – whether distorted by hurricanes or not – was the highest since the financial crisis.

  

  However, a problem emerges when one looks just one month prior, at the revised August data.

  What one sees here, as Andrew Zatlin of South Bay Research first noted, is that while the Total Private Average Weekly Earnings line posted another solid increase of 0.2% month over month, an upward revision from the previous month’s 0.1%, when one looks at the components, it become clear that the BLS fabricated the numbers, and may simply hard-coded its spreadsheet with the intention of goalseeking a specific number.

  Presenting Exhibit 1: Table B-3 in today’s jobs report. What it shows is that whereas there was a sequential decline in the Average Weekly Earnings for Goods Producing and Private Service-producing industries which are the only two sub-components of the Total Private Line (and are circled in red on the table below) of -0.8% and -0.1% respectively, the BLS also reported that somehow, the total of these two declines was a 0.2% increase!

  

  Another way of showing the July to August data:

  • Goods-Producing Weekly Earnings declined -0.8% from $1,118.68 to $1,109.92
  • Private Service-Providing Weekly Earnings declined -0.1% from $868.80 to $868.18
  • And yet, Total Private Hourly Earnings rose 0.2% from $907.82 to %909.19

  What the above shows is, in a word, impossible: one can not have the two subcomponents of a sum-total decline, while the total increases. The math does not work.

  This, as Zatlin notes, undermines not only the labor inflation narrative, but it puts into question the rest of the overall labor data, and whether there are other politically-motivated, goalseeked  “spreadsheet” errors.

  We have sent an email to the BLS seeking an explanation for the above data fabrication, meanwhile here is what likely happened: a big, juicy fat-finger error, whether on purpose or otherwise because if one looks at the finalized July weekly earnings of $907.82, it’s precisely the same as what the August preliminary wage number was as released last month, also $907.82.  For the excel fans out there, it means that the August totals were simply hard coded when the BLS shifted cells in the spreadsheet, becoming July.

  

  Of course, if the BLS confirms that this was a transposition fat finger error, it would also imply that the August number is in fact, the September data, a rather massive mistake which today has had a impact on trillions dollars worth of assets.

  Source: BLS

  

  

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