Today’s News 13th October 2017

  • 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? 

    MoviePass

    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?

    MoviePass

    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.

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    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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Today’s News 12th October 2017

  • 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).

    Infographic: The European Countries With The Most Psychiatrists  | Statista

    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 Weinsteinlongtime 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 Marchaccording 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.

    Hep A

    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:

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    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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Today’s News 11th October 2017

  • 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.

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    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.

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    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.

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    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)

    garbage food

    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?

    dumpster-diving-sandy

    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.

    looters_tweet

    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?

    SWAT TEAM

    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.

    //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%.

    Goldman

     

    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:

    Alvi

    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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Today’s News 10th October 2017

  • 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 insaneridiculous 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.

    Infographic: Would You Have Sex With A Robot?  | Statista

    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.

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    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.”

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    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.

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    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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Today’s News 9th October 2017

  • 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.

    //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.

    //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.

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Today’s News 8th October 2017

  • 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.

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    Several videos show numerous fire trucks at the scene around 9 p.m. 

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    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.

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    No injuries have been reported.

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    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.”

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    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!”

     

    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.

    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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Today’s News 7th October 2017

  • 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 21st-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 collapseI 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:

    //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.

    San Fran

    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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Today’s News 6th October 2017

  • Germany's East Is Shrinking

    According to forecasts from the 'Institut der deutschen Wirtschaft Köln', Germany's population is going to increase to 83.1 million by 2035.

    As Statista's Martin Armstrong notes, the main reason for this is the record number of immigrants and asylum seekers which arrived in the country in 2015.

    Infographic: Germany's East is Shrinking | Statista

    You will find more statistics at Statista

    While the overall trend is upward, seven of the country's sixteen federal states will see net decreases – primarily in the former German Democratic Republic (aka East Germany).

    The largest decrease is expected in the state of Saxony-Anhalt, where a 10.6 percent fall is forecast.

  • 'Decoders' Offer Dire Warnings About North Korea's Nuclear Program

    Authored by Mac Slavo via SHTFplan.com,

    Experts outside the United States government are using North Korea’s propaganda videos to dissect and decode the rogue regime’s nuclear program.

    Decoders say that there are clues about the weapons advancement program hidden in their propaganda, and they are sounding the alarm.

    A group of analysts at the Middlebury Institute’s Center for Nonproliferation Studies in Monterey, California are closely studying the propaganda photos and videos put out by the North Korean regime. They then apply new tools such as satellite imagery and 3-D mapping to the videos and photos so they can learn more about how the North continues to advance their weapons in the face of sanctions and growing opposition.

    The analysts are finding amazingly : information about North Korea’s military capabilities and in this , they walk us through the clues that reveal the capabilities of a North Korean missile. They will also show instances where they’ve found the North Koreans to be faking their weapons success.

    The intense voices in North Korea’s videos make them seem legitimate, but the decoders have looked into what they can actually accomplish and what they cannot by simple decoding images used by the regime themselves.

    Perhaps the most alarming revelation is that the decoders suggest that it’s likely that North Korea is using highly advanced machines to construct their missile components. This could make getting a powerful nuke more likely than originally thought. They also say that North Korea has a missile that can carry a warhead capable of hitting the mainland United States, “New York, LA.”

    But they also point out the failures in the North Korean weapons advancement program and can identify where Kim Jong-Un is in several photos.

  • These Are The World's Most Congested Cities

    No matter what city you live in, traffic is something you probably dread being stuck in.

    Whether it is the slow-moving I-95 in New York City or the molasses-like trip from East Hollywood to Santa Monica in L.A., it’s estimated that traffic congestion costs the United States alone a whopping sum of $300 billion per year in gas and time.

    THE WORLD’S WORST TRAFFIC

    Which city has the ultimate distinction of having the world’s most horrific traffic?

    Today’s infographic comes to us from INRIX via their Global Traffic Scorecard 2016, and it highlights the most congested cities around the globe. The report looks at average hours spent in congestion for 1,064 cities in 38 countries, as well as the percent of time spent in traffic.

    Courtesy of: Visual Capitalist

    Here’s a Top 10 list you don’t want to see your city on:

    Taking the top spot was Los Angeles, where drivers spent an average 104 hours stuck in the city’s legendary traffic jams.

    The cost of this congestion, measured in wasted time and fuel, was $9.7 billion – a number that works out to $2,408 per driver!

  • Paul Craig Roberts Asks "Was The Las Vegas Shooting A False Flag?"

    Authored by Paul Craig Roberts,

    Dear Readers, I appreciate the confidence that you show in me with your emails asking my opinion about the Las Vegas shooting. Many of you suspect that it is another false flag affair, and you ask me about its purpose.

    I don’t know if it was a false flag attack, and if so, by who or for what purpose. I don’t expect to ever know. A story is set in place by officials and media. The only way to ever know is to personally investigate. You would have to go to Las Vegas, examine the scene, ask questions of the hotel, investigate the answers if you get any, find and interview concert attendees who were shot, attend funerals and see bodies of those killed, speak to their families, learn about the weapon allegedly used, experience trying to shoot at targets far below and far away, compare the number of casualties with the recorded time of firing, and so forth. In other words, we would have to do the job that in former times would have been done by the press, but no more.

    It is almost like the story is being kept from us.

    For example, from media reports that the event was just across the street from the hotel, I did not know that “across the street” was a distance of 390 yards (1,170 feet).

    As I don’t expect to ever have a confident opinion about what happened, I am not paying much attention to the mass shooting, or should I say alleged shooting. We are lied to and deceived so much that we can never tell when we are told the truth. It is like Dmitry Orlov says:

    “Lies beget other lies, and pretty soon unbiased intelligence-gathering, rational analysis and proper mission planning become impossible.”

     

    ” … a reputation for telling the truth can only be lost exactly once, and from then on the use of the phrase “US intelligence sources” became synonymous with “a conspiracy of barefaced liars.””

     

    “Whatever message Washington and Western mass media are trying to push, a perfectly valid response is to point out all the times they have lied in the past, and to pose a simple question: When did they stop lying?”

    Official explanations of such events as Las Vegas, Sandy Hook, and so forth, always throw up red flags, because the official explanations always studiously ignore contrary eyewitness and other evidence. Also, often there are not even smart phone videos of dead and wounded people. As far as I can tell, the bodies of 573 dead and wounded are absent in the Las Vegas video evidence. Considering the suspicion that such events cause, one would think the authorities would make a special effort to show the dead and wounded. In other cases of mayhem, alleged bodies look like dummies or are covered and could be a pile of anything. The presence of crisis actors on the scene, as in the Boston Marathon Bombing, raise more questions. I remember when it was expected that police and media would investigate all evidence and clear away contradictions. Now all we get is an official story instantly ready and repeated endlessly by officials and media. This itself raises suspicions.

    You will have to make up your own minds about Las Vegas.

    Here are some of the reported facts to consider:

    The victims killed and wounded total 573. That number is the size of a military battalion. It is very difficult to turn an entire battalion into casualties with small arms fire even in a fierce combat situation. I don’t know if it has ever happened. Can one person with no military training shooting down from 32 stories, which requires special sighting knowledge, at a distance of 390 yards – the length of 4 football fields – hit 573 people in a few minutes of firing?

    Jon Rappoport doesn’t believe it

    Neither does the progressive Steve Lendman.

    There are reports of multiple shooters.

    There are reports of gun flashes from the 4th floor.

    The windows on the hotel do not open and would require the glass to be broken.

    Stephen Paddock doesn’t fit the profile of a psychopath. Reports are he was a multimillionaire with airplanes and his own pilot. He enjoyed life. His brother is dumbfounded, said it makes no sense Stephen did the shooting.

    The Mandalay Bay Hotel is reportedly a casino. If so, security cameras are everywhere. Why no videos of Stephen Paddock carrying in the many cases of 23 firearms and ammunition? How could maid service clean the room for three days and not see 23 firearms and their ammunition? Makes no sense.

    Why 23 guns? The number is beyond superfluous.

    The large number almost suggests that the entire event is concocted as a gun control incident. The huge number of guns, the huge number of casualties. Finally, at last, enough “gun violence” to get gun control.

    Skeptics are waiting to hear from the authorities how a person at such a distance managed to shoot so many people in such a short time and with what automatic rifle and caliber the deed was done. As this part of the story is especially difficult to believe, we will probably not get the explanation.

    And it is not only the authorities and the presstitutes that truth is up against. There is also the lack of integrity in people with axes to grind. For example, Paul Street writing in CounterPunch says: “The Las Vegas massacre is just the latest in the Gun Lobby’s long line of terrorist attacks on U.S. soil.” The article is titled:  “The NRA’s Latest Terrorist Attack on U.S. Soil.” 

    The gun control lobby has a massive vested interest in the official story. You can bet your life that the gun control lobby will ignore any and all problems associated with the official story. The story is exactly what they want in order to advance their cause. The campaign is underway.

    As Paddock is a rich white male, the story also fits with Identity Politics. Paddock is another example of the evil white male. Here is the Identity Politics connection served up by the Washington Post:

    “All across America white men, some young, some of middle-age, are turning into wolves. Always, after they commit acts of terror, it is revealed out that these perpetrators were not men after all. They were beasts, mindless monsters whose evil was abstract and cold and terrible.”

    CNN says mass shootings are “a white man’s problem.” See “How America has silently accepted the Rage of White Men:”

    People are more interested in confirming their beliefs and prejudices than they are in the truth. If Paddock were a Muslim, Islamophobic people would cling to the official account.

    Truth requires that people believe in truth more than they believe in their own biases and causes. In the United States, such people are increasingly rare.

    Remember always the Roman question: “Who benefits?” That is where you will find the answer.

    *  *  *

    UPDATE: Paddock’s girlfriend describes him as a “kind, caring, quiet” man who she envisioned a “quiet future” with. A woman knows a man. Her description is not one of a psychopath.

    I have spoken to more experienced persons and experts including US Marine snipers. They don’t believe a word of the official story. Will, once again, the experts be got rid of by branding them “conspiracy theorists” as was done to 3,000 architects and engineers who challenge the official story of 9/11?

  • Proof of Multiple Shooters at Vegas Attack?

    I haven’t explored this story — because I’e been uninterested in theories. However, this video is compelling, kindly narrated by A. Jones.

    Sounds like two distinctly different calibers and distance from attack.

    Thoughts?

  • "He's Full Of Crap": GM Exec Slams Musk As Car War Breaks Out

    Elon Musk says the upcoming Tesla Model 3 has the hardware to enable full-self driving capability. But GM’s self-driving car czar thinks he’s full of crap.

    GM's director of autonomous vehicle integration Scott Miller told a group of Australian journalists in Detroit on Thursday that Musk was “full of crap”, explaining that a “level 5” – that is, fully autonomous – vehicle would require hundreds of thousands of dollars’ worth of sensors. Even for a company like Tesla, which investors have practically encouraged to burn through large sums of cash, offering such an advanced vehicle for between $30,000 and $50,000 would be an impossibility.

    "I think he's full of crap," Mr Miller said. "To think you can see everything you need for a level five autonomous car [full self-driving] with cameras and radar, I don't know how you do that."

    Tesla and a handful of other car companies are testing autopilot in Australia, according to the Leader.

    The company is planning to price the Model 3, which just started rolling off the production line at Tesla’s California factory, at $50,000 in Australia. The car reportedly incorporates cameras, radar and ultrasonic sensors for self-driving.

    However, as the Leader points out, the Model 3 won’t be able to use Tesla’s controversial autopilot feature until the company’s engineers perfect the software. A Tesla driver in Florida became the first person to die in an accident involving Autopilot. Eventually, the NHTSA ruled that Tesla wasn’t at fault in the crash. But since then, other customers have complained that they found the way in which autopilot was marketed to be misleading.

    With this in mind, perhaps Musk should consider the consequences before exaggerating the functionality of a feature like autopilot.   

  • JPMorgan Updates By-laws In Case Of "Nuclear Disaster" Or World War III

    In the most bizarre news of the day, Bloomberg’s Hugh Son noticed that in a late Thursday filing, the board of JPMorgan approved a series of revisions to the bank’s by-laws, including a particularly notable one: a new section defining what constitutes a quorum in an emergency resulting from “an attack on the United States” or a “nuclear or atomic disaster.” That scenario is listed among emergencies that – understandably – might make it hard to hold a normal meeting for board members of America’s largest bank.

    The clause can be activated not just in case of a nuclear disaster or World War III, but also in a variety of situations including “without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God.”

    In short, JPMorgan’s Board has decided it is time to seriously consider a TEOTWAWKI scenario.

    As Son notes, in such an event, any member of the board or the firm’s operating committee can call a meeting using “any available means of communication.” And, just in case everyone else on the Board happens to die, one person will be sufficient to constitute a quorum. Vacancies can be filled by a majority vote of available directors. And if none are around, then designated officers can stand in. No officer, director or employee can be held liable in such a situation, except for “willful misconduct.”

    The revised Emergency By-Laws are reposted below (highlights ours):

    ARTICLE XI

     

    Emergency By-laws

     

    Section 11.01. Emergency By-laws. This Article XI shall be operative during any emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe or other similar emergency condition (including without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God), as a result of which a quorum of the Board or the Executive Committee thereof cannot readily be convened for action (an “Emergency”), notwithstanding any different or conflicting provisions in the preceding Articles of these By-laws, the Certificate of Incorporation or the General Corporation Law. To the extent not inconsistent with the provisions of this Article XI, the By-laws provided in the other Articles of these By-laws and the provisions of the Certificate of Incorporation shall remain in effect during such Emergency and upon termination of such Emergency, the provisions of this Article XI shall cease to be operative.

     

    Section 11.02. Meetings. During any Emergency, a meeting of the Board, or any committee thereof, may be called by the Chairman or any other member of the Board or the Chief Executive Officer, or any member of the Corporation’s Operating Committee (each, a “Designated Officer” and collectively, the “Designated Officers”), or the Secretary. Notice of the time and place of any meeting of the Board or any committee thereof during an Emergency shall be given by any available means of communication by the individual calling the meeting to such of the directors and/or Designated Officers who shall be deemed to be directors of the Corporation for purposes of obtaining a quorum during an Emergency if a quorum of directors cannot otherwise be obtained during such Emergency, in each case, as it may be feasible to reach. Such notice shall be given at such time in advance of the meeting as, in the judgment of the individual calling the meeting, circumstances permit.

     

    Section 11.03. Quorum. At any meeting of the Board, or any committee thereof, called in accordance with Section 11.02 above, the presence of one director shall constitute a quorum for the transaction of business. Vacancies on the Board, or any committee thereof, may be filled by a majority vote of the directors in attendance at the meeting. In the event that no directors are able to attend the meeting of the Board, then the Designated Officers in attendance shall serve as directors for the meeting, without any additional quorum requirement and will have full powers to act as directors of the Corporation for such meeting.

     

    Section 11.04. Amendments. At any meeting called in accordance with Section 11.02 above, the Board or a committee of the Board, as the case may be, may modify, amend or add to the provisions of this Article XI so as to make any provision that may be practical or necessary for the circumstances of the Emergency.

     

    Section 11.05. Management Contingency Plan. During an Emergency, the Corporation shall be managed by the Operating Committee under the direction of the Chief Executive Officer. In the absence of the Chief Executive Officer or his or her successor, the Operating Committee shall act under the direction of the Operating Committee member with the longest tenure with the Corporation.

     

    Section 11.06. Liability. No officer, director or employee of the Corporation acting in accordance with the provisions of this Article XI shall be liable except for willful misconduct.

     

    Section 11.07. Repeal or Change. The provisions of this Article XI shall be subject to repeal or change by further action of the Board or by action of the stockholders, but no such repeal or change shall modify the provisions of Section 11.06 of this Article XI with regard to action taken prior to the time of such repeal or change.

     

    Section 11.08. Termination of Emergency. The provisions of this Article XI shall cease to be operative upon the termination of the Emergency as determined by a quorum of the Board or the Executive Committee thereof in accordance with Sections 2.06 and 3.01, respectively, of these By-laws.

  • Sheriff: Vegas Shooter Led "Secret Life", May Have Planned Car Bombing; Tried To Ignite Jet Fuel Tanks

    With every passing day, the Las Vegas police department releases new details about Stephen Paddock, the gunman behind the deadliest mass shooting in modern U.S. history, who according to the latest update, spent decades stockpiling guns and living a “secret life” and may have planned other attacks, including a car bombing, Clark County Sheriff Joseph Lombardo said, after suggesting that it was only logical to “make the assumption” that Stephen Paddock had “some help at some point” in pulling off Sunday’s massacre.

    As evidence, Lombardo pointed to gunman Paddock’s huge arsenal, explosive materials found in his car and his meticulous planning. “What we know is Stephen Paddock is a man who spent decades acquiring weapons and ammo and living a secret life, much of which will never be fully understood,” the sheriff said. Lombardo also revealed that Paddock had an escape plan, even though he turned the gun on himself as police closed in on his suite at the Mandalay Bay Hotel.

    Meanwhile, authorities are still searching for a motive. “Anything that would indicate this individual’s trigger point, that would cause him to do such harm, we haven’t understood it yet,” Lombardo told reporters Wednesday. “Don’t you think the concealment of his history of his life was well thought out?”

    Analyzing Paddock’s computer, cellphone and other electronic devices, investigators have found no obvious ideological motive, no clear connection to extremists or activist groups or outward display of mental illness, the Associated Press reported.

    Earlier in the day, an Australian man who claimed he met Paddock several times in the Philippines told the Guardian that the shooter was “extremely intelligent, methodical, conservative — guarded — and strategic. A planning, thinking type of guy.” The man, who spoke to The Guardian on condition of anonymity from his Brisbane home, said the encounters came through their respective girlfriends, both Philippine-born sisters, who had family reunions.

    He said he and Paddock had “robust” discussions about American gun laws and said Paddock mentioned a “gun room” during one stay in his home in Mesquite, Nev. “His comments were that it’s a substantial hobby that needs to be protected: ‘a gun room’,” the man told The Guardian.

    Separately, NBC reported that Marilou Danley, Paddock’s girlfriend, said she remembers him exhibiting symptoms such as lying in bed and moaning, according to two former FBI officials who have been briefed on the matter. “She said he would lie in bed, just moaning and screaming, ‘Oh, my God,'” one of the former officials said. The other former official said Danley spoke about Paddock displaying “mental health symptoms.”

    Investigators believe Stephen Paddock, who claimed nearly 60 lives and injured hundreds more in Las Vegas on Sunday, may have been in physical or mental anguish, the sources said.

    Investigators are also examining approximately six media devices left behind by Paddock, one of the former officials said. Included in that search is an inquiry into Paddock’s web browsing history.

    * * *

    Meanwhile, as Fox News reports, the materials found in Paddock’s car – 1,600 rounds of ammunition, fertilizer that could be used to make explosives and 50 pounds of the explosive substance Tannerite — led authorities to believe the Paddock was possibly planning a car bombing.

    Authorities also revealed that the weekend before the shooting, Paddock had rented a high-rise condo in a building that overlooked the Life is Beautiful alternative music festival featuring Chance the Rapper, Muse, Lorde and Blink-182. Lombardo offered no other details on what led Paddock there. Paddock also rented a room in August at Chicago’s downtown Blackstone Hotel, but never checked in. The hotel overlooks Grant Park where the Lollapalooza festival is held each year with hundreds of thousands of people in attendance.

    Addition to the confusion is that as the AP notes, where other mass killers have left behind a trail of plain-sight clues that help investigators quickly understand what drove them to violence, Paddock had nearly no close friends, social media presence or other clear connections to the broader world. Even the No. 2 official in the FBI said Wednesday he was surprised investigators have not uncovered more about why a man with no obvious criminal record would cause so much bloodshed.

    “There’s all kinds of things that surprise us in each one of these events. That’s the one in this one, and we are not there yet,” FBI Deputy Director Andrew McCabe said. “We have a lot of work to do.”

    They wonder if he had some sort of mental break at the time that drove him to start making plans for mass murder. Authorities were looking for hints in the details of the kind of life he lived, and the kind of victims and venue he targeted, said David Gomez, a former FBI national security and criminal profiler.

    “We may never know to 100 percent certainty,” he said. “But they will find out.”

    * * *

    In a tangent, overnight the Las Vegas Review-Journal reported that Paddock reportedly also took aim at nearby aviation fuel tanks during the rampage. The bullets fired by the killer left two holes in one of two circular white tanks. One of the bullets penetrated the tank, but did not cause a fire or explosion near the Route 91 Harvest country music festival. The tanks are roughly 1,100 feet from the concert site, where Paddock killed 58 people. Several airplane hangars belonging to prominent corporations are also near the tanks.

    Within the past couple of days, a construction crew repaired the holes, and FBI agents inspected the tanks and took measurements of the line of fire from Mandalay Bay, the sources said. The bases of private aircraft companies are also close to the tanks, which sit on property owned by McCarran International Airport.

    The tanks are operated by Swissport, the company that runs the fueling operations for the airport, according to McCarran spokeswoman Christine Crews. They primarily are used to provide fuel to the private aircraft operators.

    According to the Journal, jet fuel is hard to ignite and tanks like those across from Mandalay Bay have mechanisms in place to prevent fires. Mike Boyd, a Colorado-based aviation consultant, echoed those words. “A machine gun is not going to blow up a tank of fuel,” Boyd said. “Jet fuel itself sitting there in a big wet pile is very hard to ignite. You have to be a very amateur terrorist to think anything like that.”

    Which would make sense: earlier in the day ISIS “tripled down” on allegations that Paddock was both a convert to Islam and operating on its behalf in its just published edition of its weekly Naba newsletter. The Islamic State propaganda newsletter featureed infographs and new specific claims concerning Paddock, who the terror group identifies according to the Muslim name, Abu Abdul Barr al-Amriki (or Abu Abdul Barr “The American”) and claimed “converted six months ago” to ISIS.

  • Previewing The September "Hurricane-Disrupted" Jobs Report

    Tomorrow’s hurricane-affected September jobs report will be… confusing. That is the (lack of) consensus from Wall Street analysts, who expect an average print of 80,000 (down from the 3-month average of 185K), however with huge variance on either side, with 4 economists predicting a loss of jobs, three expecting a print higher than 150K and one optimistic forecaster going as high as 260,000.

    The amusing breakdown by bank is as follows:

    • Hugh Johnson 153k
    • Stadnard Chartered 150k
    • UBS 125k
    • JPMorgan 100k
    • Bank of America 80k
    • Citi 70k
    • Wells Fargo 55k
    • Goldman Sachs 50k
    • Deutsche Bank 50k
    • SocGen -25k
    • Jefferies -45k

    Of course, the numbers are so scattered (as to make tomorrow’s report meaningless) due to the negative distortions from hurricanes Harvey, Irma, and Maria. The payroll survey is designed to ask employers about their number of employees for the pay period that includes the 12th of the month. Hurricane Irma made landfall just prior to the workweek containing the 12th of September. For workers who are paid on a weekly basis, if they were not able to work that week following Irma’s landfall, they may not be counted in the payroll report.

    Still, while jobs may be depressed due to the hurricanes, the impact on average hourly earnings would be the opposite. As Citi’s desk notes, the hurricanes themselves may put upward pressure on earnings given overtime paid as companies have a hard time finding workers. The street is fairly split on this fact, with 23 of the 57 economist submissions so far with an estimate of 0.2 or below (2 estimates at 0.1%) and the rest calling for 0.3% or above (4 estimates at 0.4%), although this may understate risk for a positive surprise.

    With that in mind, here is a summary of what to expects tomorrow at 8:30am, courtesy of RanSquawk

    US NONFARM PAYROLL PREVIEW – SEP 2017, ANALYST FORECASTS (forecast, range, previous):

    • Non-farm Payrolls: 80k (-45k to 209k, Prev. 156k)
    • Unemployment Rate: 4.4% (4.3% to 4.6%, Prev. 4.4%)
    • Average Earnings Y/Y: 2.5% (2.4% to 2.7%, Prev. 2.5%)
    • Average Earnings M/M: 0.3% (0.1% to 0.4%, Prev. 0.1%)
    • Average Work Week Hours: 34.4 hrs (34.2 to 34.6 hrs, Prev. 34.4 hrs)
    • Private Payrolls: 83k (-25k to 199k Prev. 165k)
    • Manufacturing Payrolls: 10k (-20k to 40k, Prev. 36k)
    • Government Payrolls: No forecasts (Prev. -9k)
    • U6 Unemployment Rate: No forecasts (Prev. 8.6%)
    • Labour Force Participation: No forecasts (Prev. 62.9%)

    TRENDS:

    Headline non-farm payrolls have averaged 176k in the first eight months of 2017, slightly lower than the 187k 2017 average. But the trend rate of payroll growth has picked up in recent months; on a  three-month rolling average basis, payroll growth averaged 185k in August, which is roughly in-line with the trend over the last three-months, and above the 175k twelve-month rolling average. Over the last five years, payrolls in September has averaged 204k, though it is worth noting that this month’s data will be distorted by the impact of Hurricanes Harvey, Irma, and Maria.

    “Expectations are heavily discounted due to the recent hurricanes,” write analysts at Lloyds. “The natural disaster is going to leave the data unclean for a while and the release would have to be significantly weaker than anticipated for the market to start discounting a December rate hike from the Fed.”

    HURRICANE IMPACT:

    Analysts at Capital Economics estimate that the hurricanes may have cut payrolls growth in half. “We already know that Hurricane Harvey caused jobless claims to spike in Texas. The rise in claims was smaller than that seen post-Katrina in 2005, but was larger than the impact from Ike in 2008. The rise in claims in Florida following Hurricane Irma so far has been negligible.”

    State-Level Jobless Claims Data Suggests a Larger-than-Normal Payrolls Impact from Hurricanes Harvey and Irma

    In 2005, Hurricane Katrina resulted in two months where payroll growth languished beneath 100k (versus the six-month trend of around 250k being added on a monthly basis).

    Hurricane Ike is a more troublesome example to look for clues about how payrolls react, given that Lehman Brothers collapsed two days after the hurricane hit, CapEco says.

    Looking further back, Capital Economics notes that payroll growth fell by around 100k in the aftermath of Hurricane Andrew in 1992, which was the largest storm on record to hit Florida at the time.

    WAGES:

    In its latest policy statement, the FOMC noted that “job gains have remained solid in recent months, and the unemployment rate has stayed low”, but “market-based measures of inflation compensation remain low”. Accordingly, despite the expected distortions to this month’s data, analysts will be looking to see if the wage inflation story remains intact, reinforcing the narrative behind a December rate hike.

    ING’s analysts believe “a decent wage number should help cement market pricing of a December hike,” and are more optimistic than consensus, forecasting annualised wage growth of 2.6%, arguing that calendar quirks may drive a strong print.

    Last month’s data was disappointing, ING says, but can be attributed to a change in the number of work days between the calendar months. The bank notes that where there were two additional workdays in the August, there were two fewer in the September month.

    “Of course, these statistical quirks tell us nothing about the economics. The tight labour market and increasing job-to-job flows should drive up the pace of pay rises over coming months. But it is a slow-moving picture and we may struggle to see growth above 3% this year.”

    MARKET INDICATORS:

    CLAIMS: The most recent data shows initial jobless claims at 268,250 on a four-week moving-average basis, higher than the 250,250 going into last month’s Employment Report. However, it seems that this jump was more mild than analysts had foreseen. “We feared a big spike in claims as a result of Hurricane Maria hitting Puerto Rico, but it didn’t happen,” writes Pantheon Macroeconomics. “Given the extent of the devastation and the subsequent drop in economic activity, this is odd.” Pantheon notes that the lingering impact of Harvey and Irma kept claims above the pre-storm trend around 240k, and  believes that a reversion to these levels will be seen in a matter of weeks. “We have no reason to think that the underlying labour market has changed much since August,” Pantheon says.

    ADP: The ADP’s measure of payroll growth was more-or-less in-line with expectations, showing the addition of 135k payrolls in September. But the tone of the commentary was generally positive; Moody’s chief economist Mark Zandi said “Hurricanes Harvey and Irma hurt the job market in September, but looking through the storms, the job market remains sturdy and strong.”

    CHALLENGER JOB CUTS: Challenger reported announced job cuts by US employers fell 4.4% MM, while they lodged a 27% YY fall. Looking at Q3 as a whole, job cuts were down by 6.2% QQ and were 22.5% lower than Q3 2016. The data continues to paint a picture of a healthy labour market. “Job cuts have remained low since the second half of last year. As companies grapple with potential deregulation and changes to health care costs in a tight labour market, employers are holding on to their existing workforces while many positions requiring skilled labour go unfilled,” Challenger noted.

    ISM SURVEYS: The employment sub-indices for both the manufacturing and non-manufacturing ISM surveys rose in September by 0.4pts and 0.6pts respectively. That marked the 12th straight month of employment growth in the manufacturing sector, and the 43rd consecutive month of growth in the non-manufacturing sector. And this is similar to the findings from the IHS Markit PMIs; for the manufacturing sector, employment growth was the fastest in nine months, though Markit noted that growth was running hotter than output, which signals that productivity may be slipping. The services PMI, however, saw employment growth slip to a three-month low, though Markit said it was still “solid” in September.

    * * *

    WHAT BANK DESKS ARE SAYING:

    Barclays: We look for nonfarm payrolls to expand by 75k, down from 156k in August. Informing our view are initial and continuing jobless claims, which have risen following the landfall of Hurricanes Harvey and Irma. Offsetting this to some degree are other factors like part-time employment for economic reasons and the employment diffusion index, which have shown improvement in recent months. Elsewhere in the report, we look for private payrolls to rise by 70k. We also expect average hourly earnings to rise by 0.3% m/m and 2.6% y/y, while average weekly hours remain unchanged at 34.4. With the slowdown in employment growth on the month, we expect an unchanged unemployment rate at 4.4%.

    Deutsche Bank: we expect only a 50k gain on headline nonfarm payrolls (+50k private). However, this may be enough to keep the unemployment rate steady at 4.4%. In fact, the “weather workers” series within the Household survey should provide a reasonable sense of the magnitude of the hurricane related disruptions to the payroll data.

    Goldman Sachs: We estimate that nonfarm payroll growth slowed to +50k in September, below consensus of +80k and the 3- month average pace of +185k. Our forecast reflects the widespread flooding and power outages caused by Hurricanes Harvey and Irma, which affected over 10% of the population and caused over $100bn in damages. The impact on tomorrow’s report is highly uncertain, but our base-case assumes a significant impact of -125k that partially offsets continued job growth in the rest of the country. We also expect the hurricanes to weigh on the household survey results, and given the high unrounded level of last month’s unemployment rate (4.442%), we believe the September jobless rate is more likely to round up than down (we estimate a rise to 4.5%). Finally, we estimate average hourly earnings increased 0.4% month over month and 2.7% year over year, reflecting positive calendar effects.

    Citi: Hurricane-related distortions to September payrolls imply market sensitivity to this month’s jobs tally will be lower than usual. Focus will be on wage growth for signs of inflation given last week’s soft PCE deflator print. We expect growth in average hourly earnings of 0.3% MoM (on-consensus) and 2.6% YoY (above-consensus), but see risks of a 0.4% print from a possible hurricane boost. Our forecast is for nonfarm payrolls growth of 70K (consensus: 80K) based on an analysis of initial claims data around past hurricanes. It would likely take a substantially below-consensus print (around flat or negative payrolls) to induce a large market reaction. Instead, the market may be more sensitive to upside surprises as a strong reading would imply either a smaller-than-expected impact from the hurricanes or stronger ex-hurricane job growth. Any hurricane-related softness in the September report will likely subsequently revert and boost the October payrolls report, as activity in the hurricane-affected areas returns to normal. Hurricane-related boosts to average hourly earnings will be temporary. Still, boosts to GDP growth from reconstruction will contribute to further labor market tightening, and with solid underlying growth, should lead to stronger wages over time.

    ING: With this month’s payrolls number likely to be “written off” given the effect of recent hurricanes, a decent wage number should help cement market pricing of a December hike. But in reality, if the Fed decides not to move at the end of the year, it’s unlikely to be because of economics. Instead, the new debt ceiling deadline falls almost right on top of the December meeting and given the divisive nature of US politics, it could go down to the wire. A substantial pick-up in market volatility on the possibility of a government shutdown could conceivably see the Fed delay until 2018 – although that’s not our base case.

    RBC: The survey period for the September employment report (the week that includes the 12th of the month) began as Hurricane Irma was making landfall in Florida and as Texas was still reeling from the effects of Hurricane Harvey. Thus, we will be shocked if we don’t see a significant slowing in nonfarm payroll growth on the month. Our best guess (given what Texas and Florida have added to payroll growth recently and trends in unemployment insurance claims in these states in the wake of the Hurricanes) is that headline and nonfarm payroll growth will slow to around 50K on the month, against a 6-month trend of around 160K. There is incredible uncertainty in this forecast and this is also reflected in the range of Street estimates (from -25K to +145K, if we throw out the highest and lowest guesstimates). Given the probability we get a very messy report is high, the market is likely to fade any weakness.

    SocGen: Hurricane Harvey may have led to a decline in nonfarm payrolls in September, which would mark the first negative reading in seven years. Quantifying the hurricane’s impact on job growth is fraught with uncertainty, but we suspect that Harvey’s impact was similar to the drag on payrolls seen in the wake of Hurricane Katrina in 2005.

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Today’s News 5th October 2017

  • Fukushima Operator Given Green Light To Restart Nuclear Reactors

    Via TheAntiMedia.org,

    The Japanese utility Tokyo Electric Power Company (TEPCO) has received approval to operate reactors for the first time since the 2011 Fukushima meltdown.

    On Wednesday, the Nuclear Regulation Authority said TEPCO’s two reactors in northern Japan met new and stricter safety standards.

    The authority unanimously approved the draft certificate for reactors number 6 and 7 at the Kashiwazaki-Kariwa plant, marking the first step in the process toward restarting them. Portions of the plant’s reactors were damaged in a 2007 earthquake.

    Much of the Japanese public is opposed to granting TEPCO permission to once again operate reactors, and rightfully so.

    TEPCO was blamed for safety lapses in the Fukushima nuclear plant disaster after a major earthquake in March of 2011, and the tsunami that followed damaged the power supply and cooling system of three reactors at the Fukushima Daiichi plant, resulting in an unprecedented nuclear accident.

    The area around the plant will be closed for the foreseeable future, with extremely high levels of radiation still being recorded in 2017. Radiation from the damaged plant has found its way into the ocean and surrounding areas, including groundwater. The long-term effects of the disaster are still unknown.

    TEPCO said in a statement that it will continue improving safety standards at its plants while focusing on Fukushima’s decommissioning in addition to compensation for the thousands of evacuees.

  • Catalan Independence: Why The Collective Hates It When People Walk Away

    Authored by Brandon Smith via Alt-Market.com,

    I have written many times in the past about the singular conflict at the core of most human crises and disasters, a conflict that sabotages human endeavor and retards critical thought. This conflict not only stems from social interaction, it also exists within the psyche of the average individual. It is an inherent contradiction of the human experience that at times can fuel great accomplishment, but usually leads to great tragedy. I am of course talking about the conflict between our inborn need for self determination versus our inborn desire for community and group effort — sovereignty versus collectivism.

    In my view, the source of the problem is that most people wrongly assume that "collectivism" is somehow the same as community. This is entirely false, and those who make this claim are poorly educated on what collectivism actually means. It is important to make a distinction here; the grouping of people is not necessarily or automatically collectivism unless that group seeks to subjugate the individuality of its participants. Collectivism cannot exist where individual freedom is valued. People can still group together voluntarily for mutual benefit and retain respect for the independence of members (i.e. community, rather than collectivism).

    This distinction matters because there is a contingent of political and financial elites that would like us to believe that there is no middle ground between the pursuits of society and the liberties of individuals. That is to say, we are supposed to assume that all our productive energies and our safety and security belong to society. Either that, or we are extremely selfish and self serving "individualists" that are incapable of "seeing the bigger picture." The mainstream discussion almost always revolves around these two extremes. We never hear the concept that society exists to serve individual freedom and innovation and that a community of individuals is the strongest possible environment for the security and future of humanity as a whole.

    Thus, the mainstream argument becomes a kabuki theater between the "ignorantly destructive" populists/nationalists/individualists versus the more "reasonable" and supposedly forward thinking socialists/globalists/multiculturalists. The truth is, sovereignty champions can be pro-individual liberty and also pro-community or pro-nation, as long as that community is voluntary.

    Collectivists will have none of this, however, and despite their intellectual and "rational" facade, they will often turn to brutality in order to disrupt any movement to decentralize power.

    The civil unrest in the Spanish region of Catalonia is an interesting example of the tyranny of the collectivist ideology. According to mainstream doctrine, Spain is supposed to be a "decentralized unitary state" made up of "autonomous communities," all with their own statutes and self governing bodies "loosely" regulated by the Spanish constitution of 1978. Catalonia, along with a couple other regions and cities in Spain, has long fought for true autonomy from the central government in Madrid. This separatist culture was crushed under the heel of Francisco Franco's dictatorial regime after the Spanish Civil War which started in 1936.

    After Franco's death in 1975, Spain began its "transition to democracy" (democracy being the tyranny of the majority rather than tyranny by military regime). Once again, Catalonia's push for independence returned.

    The reasons for a Catalan secession are multitude and are of course noble or nefarious depending on which side you talk to. From my research, it would seem the primary drive for Catalonia is economic. Spain is one of the more indebted member states in the European Union with a national debt near 100% of GDP. The "great recession" starting in 2008 struck Spain particularly hard, with around 21% of the general population officially in poverty and over 40% of all children officially in poverty. Unemployment according to government statistics hovers near 18%.

    Catalonia is the most prosperous region in Spain's economy, accounting for nearly 20% of total GDP. Catalans also assert that taxation in their region is a primary pillar for the Spanish government, which has not returned the favor with sufficient investment in infrastructure in the region. In essence, there is a "taxation without representation" feel to the conflict, and Americans in particular know very well how that kind of situation can end.

    On the other side of the debate, it is clear that if Catalonia leaves the Spanish system on negative terms, then Spain's already crumbling economy will be destroyed. The motivation for Spain to keep control of Catalonia is high just on the grounds of economic disaster.

    Beyond the economic issue, another interesting side note on Spain is its intense social justice (cultural Marxism) programs. While Europeans often suggest Spain as being a "conservative" government, in policy and action this is simply not true.  Spain is notorious for being one of the most militantly feminist governments in the EU aside from Sweden, and this is saying something given the socialist nature of the EU. Gender laws and divorce laws in the country offer some of the most draconian double standards against men I have ever witnessed. Perhaps this will give you a kind of litmus test for the sort of culture we are dealing with here, and maybe it accounts for some discontent in certain portions of the Spanish population.

    Catalonia itself is often cited as being "more liberal" in its political orientation in comparison to the rest of Spain. Of course, the term "liberal" can mean many different things in Europe depending on the nation, and American definitions do not necessarily apply. Just as Europeans tend to have no understanding whatsoever of what "conservatism" means in the U.S., Americans have a hard time understanding all the intricacies of the various levels of "liberalism" in Europe.

    That said, what side of the political spectrum Catalonia sits on is irrelevant to greater discussion.

    What I actually enjoy pointing out here is the fact that whether you look at the Franco era of nationalist totalitarianism, or the "semi" socialist and hyper-cultural Marxist era of today, the Spanish government STILL acts the same in its despotism against Catalan separation or independence.  It is not as if the socialists set out to right the wrongs of the Franco regime once it fell. Not at all. Instead, they merely perpetuated the same attitude of centralization while wearing a smiling face. Once again, we see that there is very little difference between fascism and communism/socialism when we get down to core behaviors and policies.

    Collectivists, regardless of what other labels they use to identify themselves, have certain rules that they consistently follow in order to maintain power. One of those rules is that the collective is indivisible. They might pontificate endlessly about their superior democratic ideals, but when some people vote to leave en masse, either in polling booths or with their feet, the mask of benevolence always comes off and the true monster behind collectivism is revealed.

    As we have seen in Catalonia, this monstrous behavior is undeniable. The Spanish government has set out to prevent not just separation, it has sought to prevent the very act of voting on separation using police and military force. In essence, martial law was been declared in Catalonia in order to stop the people from enacting the very democratic ideals the Spanish government claims it enshrines.

     

    Despite the vicious measures of interference, reports suggest that the vote was still successful, with 90% of the citizenry in support of independence. What happens now is unclear, but I can tell you two things are relatively certain.

    First, a 90% vote in favor will result in a militarized response from the Spanish government. If the vote was less overwhelming, the government might attempt to pit one side of the population against the other, causing internal strife and disrupting secession. This strategy is unrealistic given the mass movement for independence. So, the only other option for the government is full blown martial law.

    Second, such a crackdown will result in a violent counter-response. This happened in the 1970s in Catalonia and I see no reason why it would not happen again. When you have almost an entire population in agreement on separation and you use force to stop them from attaining it, they will become violent. Civil war is inevitable if martial law is declared.

    It is vital that we examine the root ideological catalyst in this scenario.

    The most rational solution would be for the Spanish government to accept the Catalan vote (if they believe in "democracy" as they claim, then they have to accept it, otherwise they appear extraordinarily hypocritical). This could result in a more harmonious economic relationship and less drastic damage to Spain's fiscal structure. However, this is not going to happen. Instead, Spain is going to use the age old collectivist tactics of intimidation and carnage to oppress the Catalan's and subsume their economic production (as socialist governments always do).  When civil war erupts, and it will, production in Catalonia will grind to a standstill and Spain STILL loses 20% of its GDP.

    You see, this is a lose/lose scenario for Spain, all because the collectivist doctrine demands a jackbooted reaction to any movement for decentralization. Collectivist systems are parasitic in nature; they see the citizenry as food, as units of production for the state that cannot be allowed to leave, for the "greater good of the greater number." Collectivists rationalize their behavior as essential to the well being of the society at large, but this is dishonest, for their behavior more often harms society by crushing individual innovation and instigating wars that might not have ever happened in the first place.

    There is at the same time the matter of sovereignty movements across Europe. The only people who benefit from stopping these movements are globalists/collectivists. They may also benefit by sabotaging these movements after the fact, making an example of them and holding them up to the rest of the world as symbols of the "failures of populism."

    It is important to point out here that Catalonia is not necessarily seeking independence from the EU, only Spain.  Some might argue that this makes the Catalan vote irrelevant.  I disagree.  If Catalonia wants to be separate from Spain but still retain ties to the EU, then I suppose that is their choice, which is really the issue here – choice. Everyone should be allowed to make good and bad decisions and hopefully learn from them both. If Catalan's choice is meaningless because they will still be part of the EU, then the Spanish government should pull its national guard out and leave them to their own devices.

    Some people might also argue that if secession happened in the U.S., the response would be the same. I would argue that just because it might happen the same way, this does not mean it is right. If leftist Californians, for example, followed through with their latest threats to secede from the U.S. and a massive shift of leftists and cultural Marxists move to the state, frankly I would be ecstatic. Let these people separate and congregate. Let them fail or succeed on the merits of their own ideas and ethics. If they are allowed to organize without interference and they fail, then this is simply more proof that their ideology was unsound and impractical. California's large percentage of U.S. GDP would simply transfer to other states if in fact the productive people there are not leftists and they migrate away, leaving the separatists to wallow in their naive ideology.

    If Catalonia separates without interference and succeeds economically and socially, then perhaps it is not for Spain to try to subvert or destroy the region, but to emulate their model and learn from them. If people wish to walk away from a community, they should be allowed to do so. This is very simple. Self determination is not dependent on political expediency or mutual benefit. It is an inherent human right.  Communities and borders should be based on principles that the population stands by and every system should remain voluntary. If they do not stand by said principles and they work to thwart voluntarism, then those communities are worthless and should not exist at all.

    When a collective acts to stop people from leaving, all they are doing is exposing the fact that their reasons for existing are inadequate and unconvincing. This goes for Spain, it goes for the EU and it goes for the rest of the world. Globalists and collectivists should take note  decentralization is the true model for the future.

    In the long run, forcing people into participation in the system is a losing battle.

  • A Failing Empire, Part 2: De-Dollarisation – China and Russia's Plan From Petroyuan To Gold

    Authored by Federico Pieraccini via The Strategic Culture Foundation,

    As seen in my previous article, US military power is on the decline, and the effects are palpable. In a world full of conflicts brought on by Washington, the economic and financial shifts that are occurring are for many countries a long-awaited and welcome development.

    If we were to identify what uniquely fuels American imperialism and its aspirations for global hegemony, the role of the US dollar would figure prominently.

    An exploration of the depth of the dollar’s effects on the world economy is therefore necessary in order to understand the consequential geopolitical developments that have occurred over the last few decades.

    The reason the dollar plays such an important role in the world economy is due to the following three major factors: the petrodollar; the dollar as world reserve currency; and Nixon's decision in 1971 to no longer make the dollar convertible into gold. As is easy to guess, the petrodollar strongly influenced the composition of the SDR basket, making the dollar the world reserve currency, spelling grave implications for the global economy due to Nixon's decision to eliminate the dollar’s convertibility into gold. Most of the problems for the rest of the world began from a combination of these three factors.

    Dollar-Petrodollar-Gold

    The largest geo-economic change in the last fifty years was arguably implemented in 1973 with the agreement between OPEC, Saudi Arabia and the United States to sell oil exclusively in dollars.

    Specifically, Nixon arranged with Saudi King Faisal for Saudis to only accept dollars as a payment for oil and related investments, recycling billions of excess dollars into US treasury bills and other dollar-based financial resources. In exchange, Saudi Arabia and other OPEC countries came under American military protection. It reminds one of a mafia-style arrangement: the Saudis are obliged to conduct business in US dollars according to terms and conditions set by the US with little argument, and in exchange they receive generous protection.

    The second factor, perhaps even more consequential for the global economy, is the dollar becoming the world reserve currency and maintaining a predominant role in the basket of international foreign-exchange reserves of the IMF ever since 1981. The role of the dollar, linked obviously to the petrodollar trade, has almost always maintained a share of more than 40% of the Special Drawing Right (SDR) basket, while the euro has maintained a stable share of 29-37% since 2001. In order to understand the economic change in progress, it is sufficient to observe that the yuan is now finally included in the SDR, with an initial 10% share that is immediately higher than the yen (8.3%) and sterling (8.09%) but significantly less than the dollar (41%) and euro (31%). Slowly but significantly Yuan currency is becoming more and more used in global trade.

    The reason why the United States has been able to fuel this global demand for dollars is linked to the need for other countries to own dollars in order to be able to buy oil and other goods. For example, if a Bolivian company exports bananas to Norway, the payment method requires the use of dollars. Norway must therefore own US currency to pay and receive the goods purchased. Similarly, the dollars Bolivia receives will be used to buy other necessities like oil from Venezuela. It may seem unbelievable, but practically all countries until a few years ago used US dollars to trade amongst each other, even countries that were anti-American and against US imperialist policies.

    This continued use of the dollar has had some devastating effects on the globe. First of all, the intense use of the American currency, coupled with Nixon’s decisions, created an economic standard based on the dollar that soon replaced precious metals like gold, which had been the standard for the global economy for years. This has led to major instability and to economic systems that have in the proceeding years created disastrous financial policies, as seen in 2000 and 2008, for example. The main source of economic reliability transferred from gold to dollars, specifically to US treasury bills. This major shift allowed the Federal Reserve to print dollars practically without limit (as seen in recent years with interests rates for borrowing money from the FED at around 0%), well aware that the demand for dollars would never cease, this also keeping alive huge sectors of private and public enterprises (such as the fracking industry). This set a course for a global economic system based on financial instruments like derivatives and other securities instead of real, tangible goods like gold. In doing this for its own benefit, the US has created the conditions for a new financial bubble that could even bring down the entire world economy when it bursts.

    The United States found itself in the enviable position of being able to print pieces of paper (simply IOU’s) without any gold backing and then exchange them for real goods. This economic arrangement has allowed Washington to achieve an unparalleled strategic advantage over its geopolitical opponents (initially the USSR, now Russia and China), namely, a practically unlimited dollar-spending capacity even as it accumulates an astronomical public debt (about 21 trillion dollars). The destabilizing factor for the global economy has been Washington's ability to accumulate enormous amounts of public debt without having to worry about the consequences or even of any possible mistrust international markets may have for the dollar. Countries simply needed dollars for trade and bought US treasures to diversify their financial assets.

    The continued use of the dollar as a means of payment for almost everything, coupled with the nearly infinite capacity of the of FED to print money and the Treasury to issue bonds, has led the dollar to become the primary safe refuge for organizations, countries and individuals, legitimizing this perverse financial system that has affected global peace for decades.

    Dollars and War: The End?

    The problems for the United States began in the late 1990s, at a time of expansion for the US empire following the demise of the Soviet Union. The stated geopolitical goal was the achievement of global hegemony. With unlimited spending capacity and an ideology based on American exceptionalism, this attempt seemed to be within reach for the policymakers at the Pentagon and Wall Street. A key element for achieving global hegemony consisted of stopping China, Russia and Iran from creating a Eurasian area of integration. For many years, and for various reasons, these three countries continued to conduct large-scale trade in US dollars, bowing to the economic dictates of a fraudulent financial system created for the benefit of the United States. China needed to continue in its role of becoming the world's factory, always having accepted dollar payments and buying hundreds of billions of US treasury bills. With Putin, Russia began almost immediately to de-dollarize, repaying foreign debts in dollars, trying to offload this economic pressure. Russia is today one of the countries in the world with the least amount of public and private debt denominated in dollars, and the recent prohibition on the use of US dollars in Russian seaports is the latest example. For Iran, the problem has always been represented by sanctions, creating great incentives to bypass the dollar and find alternative means of payment.

    The decisive factor that changed the perception of countries like China and Russia was the 2008 financial crisis, as well as growing US aggression ever since the events in Yugoslavia in 1999. The Iraq war, along with other factors, prevented Saddam from starting an oil trade in euro, which threatened the dollar's financial hegemony in the Middle East. War and the America’s continued presence in Afghanistan stressed Washington’s intentions to continue encircling China, Russia and Iran in order to prevent any Eurasian integration. Naturally, the more the dollar was used in the world, the more Washington had the power to spend on the military. For the US, paying a bill of 6 trillion dollars (this is the cost of the wars in Iraq and Afghanistan) has been effortless, and this constitutes an unparalleled advantage over countries like China and Russia whose military spending in comparison is a fifth and a tenth respectively.

    The repeated failed attempts to conquer, subvert and control countries like Afghanistan, Georgia, Iraq, Libya, Syria, Donbass, North Korea, Egypt, Tunisia, Yemen and Venezuela, have had significant effects on the perception of US military power. In military terms, Washington faced numerous tactical and strategic defeats, with the Crimean peninsula returning to Russia without a shot fired and with the West unable to react. In Donbass, the resistance inflicted huge losses on the NATO-supported Ukrainian army. In North Africa, Egypt is now under the control of the army, following an attempt to turn the country into a state under the control of the Muslim Brotherhood. Libya, after being destroyed, is now divided into three entities, and like Egypt seems to be looking with favorable regard towards Moscow and Beijing. In the Middle East, Syria, Turkey, Iran and Iraq are increasingly cooperating in stabilizing regional conflicts, where needed they are backed by Russian military power and Chinese economic strength. And of course the DPRK continues to ignore US military threats and has fully developed its conventional and nuclear deterrent, effectively making those US threats null and void.

    Color revolutions, hybrid warfare, economic terrorism, and proxy attempts to destabilize these countries have had devastating effects on Washington's military credibility and effectiveness. The United States finds itself being considered by many countries to be a massive war apparatus that struggles to get what it wants, struggles to achieve coherent common goals, and even lacks the capability to control countries like Iraq and Afghanistan in spite of its overwhelming military superiority.

    No One Fears You!

    Until a few decades ago, any idea of straying away from the petrodollar was seen as a direct threat to American global hegemony, requiring of a military response. In 2017, given the decline in US credibility as a result of triggering wars against smaller countries (leaving aside countries like Russia, China, and Iran that have military capabilities the likes of which the US has not faced for more than seventy years), a general recession from the dollar-based system is taking place in many countries.

    In recent years, it has become clear to many nations opposing Washington that the only way to adequately contain the fallout from the collapsing US empire is to progressively abandon the dollar. This serves to limit Washington’s capacity for military spending by creating the necessary alternative tools in the financial and economic realms that will eliminate Washington's dominance. This is essential in the Russo-Sino-Iranian strategy to unite Eurasia and thereby render the US irrelevant.

    De-dollarization for Beijing, Moscow and Tehran has become a strategic priority. Eliminating the unlimited spending capacity of the Fed and the American economy means limiting US imperialist expansion and diminishing global destabilization. Without the usual US military power to strengthen and impose the use of US dollars, China, Russia and Iran have paved the way for important shifts in the global order.

    The US shot itself in the foot by accelerating this process through their removal of Iran from the SWIFT system (paving the way for the Chinese alternative, known as CIPS) and imposing sanctions on countries like Russia, Iran and Venezuela. This also accelerated China and Russia’s mining and acquisition of physical gold, which is in direct contrast to the situation in the US, with rumors of the FED no longer possessing any more gold. It is no secret that Beijing and Moscow are aiming for a gold-backed currency if and when the dollar should collapse. This has pushed unyielding countries to start operating in a non-dollar environment and through alternative financial systems.

    A perfect example of how this is being achieved can be seen with Saudi Arabia, which has represented the crux of the petrodollar.

    De-dollarize

    Beijing has started putting strong pressure on Riyadh to start accepting yuan payments for oil instead of dollars, as are other countries such as the Russian Federation. For Riyadh, this is an almost existential issue. Riyadh is in a delicate situation, dedicated as it is to keeping the US dollar tied to oil, even though its main ally, the US, has pursued in the Middle East a contradictory strategy, as seen with the JCPOA agreement. Iran, the main regional enemy of Saudi Arabia, was able to have sanctions lifted (especially from Europeans countries) thanks to the JCPOA. In addition, Iran was able to pursue a historic victory with its allies in Syria, gaining a preeminent role in the region and aspiring to become a regional powerhouse. Riyadh is obliged to obey the US, an ally that does not care about its fate in the region (Iran is increasingly influential in Iraq, Syria and Lebanon) and is even competing in the oil market. To make matters worse for Washington, China is Riyadh’s largest customer; and considering the agreements with Nigeria and Russia, Beijing can safely stop buying oil from Saudi Arabia should Riyadh continue to insist on receiving payment only in dollars. This would badly hurt the petrodollar, a perverse system that damages China and Russia most of all.

    For China, Iran and Russia, as well as other countries, de-dollarization has become a pressing issue.

    The number of countries that are beginning to see the benefits of a decentralized system, as opposed to the US dollar system, is increasing.

     Iran and India, but also Iran and Russia, have often traded hydrocarbons in exchange for primary goods, thereby bypassing American sanctions.

     

    Likewise, China's economic power has allowed it to open a 10-billion-euro line of credit to Iran to circumvent recent sanctions.

     

    Even the DPRK seems to use cryptocurrencies like bitcoin to buy oil from China and bypass US sanctions. 

     

    Venezuela (with the largest oil reserves in the world) has just started a historic move to completely renounce selling oil in dollars, and has announced that it will start receiving money in a basket of currencies without US dollars. (This is not to mention the biggest change to have occurred in the last 40 years).

     

    Beijing will buy gas and oil from Russia by paying in yuan, with Moscow being able to convert yuan into gold immediately thanks to the Shanghai International Energy Exchange.

    This gas-yuan-gold mechanism signals a revolutionary economic change through the progressive abandonment of the dollar in trade.

    In the next and last article, we will concentrate on how successful Russia, Iran and China have been in forging a multipolar world order with the goal of peacefully containing the fallout from the collapsing American empire, and how this alternative world order is opening up a new geopolitical landscape for America’s allies and other countries.

  • Stanford Says Soaring Public Pension Costs Devastating Budgets For Education And Social Services

    A new study from Joe Nation of Stanford’s Institute for Economic Policy Research entitled “Pension Math: Public Pension Spending and Service Crowd Out in California, 2003-2030,” says that the devastating consequences of the ill-advised, Cadillac pensions doled out to America’s public employees over the past several decades are only getting started. 

    Looking back at taxpayer contributions to public pensions in California, Nation found that they’ve increased by 5 times since 2002-2003 and are very likely to double again by 2029-2030.  Not surprisingly, that kind of hyper-inflationary growth has massively outstripped increases in tax revenue, even in the great progressive state of California (shocking, we know), meaning that pension contributions now account for 11.4% of California’s operating budget, up 3x from the 3.9% it consumed in 2002-2003.

    For more than a decade, public pension costs have been rising sharply in California. There is contentious debate about what is driving these cost increases—significant retroactive benefit increases, unrealistic assumptions about investment earnings, operational practices that mask or delay recognition of true system costs, poor governance, 1 to name the most commonly cited. But there is agreement on one fact: public pension costs are making it harder to provide services that have traditionally been considered part of government’s core mission.

     

    • Employer pension contributions (i.e., pension contributions plus debt service on any Pension Obligation Bonds) from 2002-03 to 2017-18 expanded on average 400%, i.e., contributions in nominal dollars are now five times greater.
    • Employer contributions are projected to rise an additional 76% on average from 2017-18 to 2029-30 in the baseline projection and 117%, i.e., more than double, in the alternative projection.
    • Employer pension contributions from 2002-03 to 2017-18 have increased at a much faster rate than operating expenditures. As noted, pension contributions increased an average of 400%; operating expenditures grew 46%. As a result, pension contributions now consume on average 11.4% of all operating expenditures, more than three times their 3.9% share in 2002-03.
    • The pension share of operating expenditures is projected to increase further by 2029-30: to 14.0% under the baseline projection—that is, even if all system assumptions, including assumed investment rates of return, are met—or to 17.5% under the alternative projection.
    • The average employer funding amount expressed as a percent of active member payroll, i.e., the employer contribution rate,5 has increased from 17.7% in 2008-09 to 30.8% in 2017-18. By 2029-30, it reaches 35.2% under the baseline projection and 44.2% under the alternative projection.
    • On a market basis, the average funded ratio fell from 58.5% in 2008 to 43.0% in 2015. By 2029 it improves to 48.2% in the baseline projection, but falls to 39.0% in the alternative projection. The unfunded liability per jurisdiction household on an actuarial basis also rose from an average $1,682 in 2008 to $5,071 in 2015; the unfunded liability per household on a market basis is $21,491, up from $9,127 in 2008.

    Here’s a graphical depiction of California taxpayers getting steamrolled…

    …or as a percent of total operating expenditure, if you prefer…

    What’s getting cut from California’s budget to make room for these exorbitant pension payouts?  Well, basically everything else…

    As discussed above, the pension expenditure share of the state’s operating budget increased from 2.1% in 2002-03 to 4.9% in 2008-09; it is estimated at 7.1% in 2017-18. This increasing share, despite an expanding budget, has shifted $6.0 billion in 2017-18 from other state expenditures to pensions.

     

    Changes in state expenditures by agency and department suggest that this reduction has come primarily from social services and higher education. For example, the expenditure share for the Department of Social Services (DSS) fell from 10.7% in 2002-03 to 6.0% in 2014-15 before climbing to 7.0% in 2017-18. The higher education share of operating expenditures fell from 11.3% in 2002-03 to 9.8% in 2014-15, although it increased to 10.5% in 2017-18.

     

    In addition, expenditure shares fell in several smaller departments from 2002-03 through 2014-15: the Department of Justice (0.4% to 0.2%), Department of Parks and Recreation (0.2% to 0.1%), and Department of Water Resources (0.2% to 0.1%).

    So good luck with that whole education thing kiddos because you’re grandparents are about to crush your future.

    Here is the full study:

  • Paul Craig Roberts Asks "Whose Bright Idea Was RussiaGate?"

    Authored by Paul Craig Roberts,

    The answer to the question in the title of this article is that Russiagate was created by CIA director John Brennan.

    The CIA started what is called Russiagate in order to prevent Trump from being able to normalize relations with Russia.

    The CIA and the military/security complex need an enemy in order to justify their huge budgets and unaccountable power. Russia has been assigned that role.

    The Democrats joined in as a way of attacking Trump. They hoped to have him tarnished as cooperating with Russia to steal the presidential election from Hillary and to have him impeached. I don’t think the Democrats have considered the consequence of further worsening the relations between the US and Russia.

    Public Russia-bashing pre-dates Trump. It has been going on privately in neoconservative circles for years, but appeared publicly during the Obama regime when Russia blocked Washington’s plans to invade Syria and to bomb Iran.

    Russia bashing became more intense when Washington’s coup in Ukraine failed to deliver Crimea. Washington had intended for the new Ukrainian regime to evict the Russians from their naval base on the Black Sea. This goal was frustrated when Crimea voted to rejoin Russia.

    The neoconservative ideology of US world hegemony requires the principal goal of US foreign policy to be to prevent the rise of other countries that can serve as a restraint on US unilateralism. This is the main basis for the hostility of US foreign policy toward Russia, and of course there also is the material interests of the military/security complex.

    Russia bashing is much larger than merely Russiagate.

    The danger lies in Washington convincing Russia that Washington is planning a surprise attack on Russia. With US and NATO bases on Russia’s borders, efforts to arm Ukraine and to include Ukraine and Georgia in NATO provide more evidence that Washington is surrounding Russia for attack. There is nothing more reckless and irresponsible than convincing a nuclear power that you are going to attack.

    Washington is fully aware that there was no Russian interference in the presidential election or in the state elections.

    The military/security complex, the neoconservatives, and the Democratic Party are merely using the accusations to serve their own agendas.

    These selfish agendas are a dire threat to life on earth.

  • Maduro Visits Putin, Proposes Global Oil Trade In Rubles, Yuan

    Three weeks after the US imposed financial sanctions on Venezuela in an effort to cripple its economy and choke the Maduro regime, which in turn prompted Caracas to announce it would no longer receive or send payments in dollars, and that those who wished to trade Venezuelan crude would have to do so in Chinese Yuan, today during an energy summit held in Moscow, Venezuela’s president Nicolas Maduro proposed to expand his own personal blockade of the US, by proposing that all oil producing countries discuss creating a currency basket for trading crude and refined products. One which is no longer reliant on the (petro)dollar. 

    “Developing a new mechanism of controlling the oil market is necessary,” Maduro said on Wednesday at the Russian Energy Forum, being held in Moscow this week.

    Quoted by RT, Maduro also blamed trade in crude oil paper futures as having an adverse impact on the oil market, which has undermined attempts by OPEC to stabilize prices. To counteract such “speculation”, Maduro proposed an alternative currency basket, one which is based not on the world’s reserve currency but includes the yuan, ruble, and other currencies, and which will mitigate the alleged adverse impact of futures trading.

     

     

    Maduro’s proposal is merely the latest not so veiled hint at dedolarizing the global financial system by bypassing the petrodollar entirely, and rearranging a new currency basket determined by the world’s biggest oil producer, and largest oil importer.

    Of course, Maduro is merely piggybacking on what China may already have in the works: recall that a month ago, the Nikkei Asian Review reported that China is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan.

    Maduro also insisted that Venezuela is dealing with its debt to Russia, currently in the billions, and that Rosneft’s deal with Venezuelan state oil producer PDVSA is “subject to negotiation.” “We fulfill all the obligations to Russia. If we get more favorable terms for restructuring the debt, this will be the result of a deal between the two governments,” said Maduro. It was unclear how Putin felt toward said proposal. 

    Maduro also complained that US sanctions make it difficult to negotiate the debt issue with American debt holders (something the US is well aware of). In addition to switching to a Yuan-based basket

    … Caracas has been framing a plan to deliver its crude to alternative markets should the White House impose sanctions on trading the country’s oil, Maduro said in response to a question on the possibility of PDVSA’s default. “Venezuela has plans A, B, C, and others. There are other international companies interested in buying oil and refined products. We will create the best terms for them,” he said.

    It remains to be seen if a last minute agreement by Russia and China to bailout Venezuela by revoking some or all of the petrodollar’s reserve currency privileges, is in store. Needless to say, such a development would be the biggest shock to the global monetary system since Nixon killed the gold standard.

  • China's Shadow-Lending Ecosystem Could Be As Large As $40 Trillion, PBOC Guesses

    Authored by Deep Throat at Deep Throat Blog

    Today, I'd like to take some time to revisit a couple of related topics that we first started discussing a few years ago. I am, of course, referring to the burgeoning increases in China's Debt levels, Shadow Bank Assets (loans) and M2, along with a high-level analysis of the most recent PBOC Financial Stability Report and FSB Global Shadow Bank Monitoring Report. (No!….please don't click this page closed….I promise this will eventually get interesting…)

    As a starting point, let's begin by reviewing the February, 2015 McKinsey report  Debt and (not much) Deleveraging .  I first referenced the report in this blog in March of 2015. The report focused on the world's, and particularly China's, rapidly building debt/leverage phenomenon (2014 Year End Data).  I encourage you to re-read the entire report, but for those of you who are pressed for time, I'll give you the executive summary bullet-points right here:

    • Debt continues to grow  
    • Reducing government debt will require a wider range of solutions
    • Shadow banking has retreated, but non?bank credit remains important
    • Households borrow more
    • China’s debt is rising rapidly

    I'm hoping that the McKinsey authors will consider updating the report, bringing the figures current, as I believe these observations, figures and analysis are even more pertinent today than they were back in 2015.

    China's Debt

    So now, using McKinsey as a reference point, let's take a look at where we are today, via the FRED (St. Louis FED)data below.

    The FRED (Federal Reserve Economic Data – Citations below) Chart below represents US Core Debt (as defined and provided by the BIS – Bureau of International Settlements) compared to China Core Debt, as a percentage of GDP.  The third (bold Red) line represents China's debt levels adjusted for a "what-if" constant I'll explain shortly.

    Lets dig into the numbers.  We see from 2006 thru 2016 US Core Debt increased modestly from roughly 220% of GDP to 250% of GDP.  However, China's Core Debt, relative to GDP nearly doubled during the same period, to roughly 260% of GDP.


    Before we discus the above, let's talk about what GDP is (and isn't).  GDP is:

    C+I+G+(NX) or:

    (Consumption + Investment + Government Spending + (Exports-Imports)).  

    First, it's important to understand that increased GDP does not necessarily increase wealth or improve quality of life.  A GDP calculation is measuring-stick for economic activity….nothing more.  A GDP figure makes no representations as to the quality, efficiency or economic utility of the activity producing the GDP.  i.e.) When my Dad was in the Army (WWII….the "big one") he talked about "practicing" digging fox holes.  He and thousands of other soldiers would be told/ordered to dig holes and fill them in…..for no apparent reason other than to keep them busy.  This activity, since he was being paid to do it, would increase GDP, even though it accomplished nothing more than wear them out and keep them out of the English pubs.

    That said, here are a few examples of things that would significantly increase GDP.

    • Building a Superhighway, Bridge or Bullet Train connecting two uninhabited deserts or islands. (I+G)
    • Building a Ghost City. (I+G)
    • A military build up. (I+G)
    • Producing millions of tons of steel and cement held in a developer's CIP inventory. (I+G+C)
    • Creating even more manufacturing capacity (factories and mines) for steel, cement, etc.(I)
    • Building infrastructure.  i.e.) Public works, water, power plants, tunnels, wells, utilities etc. (I+G)
    • Manufacturing phones, computers, clothing and consumer goods for export. (C+NX)
    • Buying tons of eCommerce stuff. (C)
    • Tearing down an abandoned building/high rise. (C+G)

    Here are a few more you might not think about…..again, these are events/activities that increase GDP but don't necessarily increase wealth or quality of life.

    • A hurricane….all of the destruction has to be financed and rebuilt. (C+I+G)
    • Public Welfare and Housing Assistance Checks (C+G)
    • Single Payer Health Care (C+G)
    • Paying 10x as much for a medical procedure as you might pay in other countries (C)

    So you get the point…..although it looks good on paper, incurring debt to build/finance things that aren't economically viable, produce little (or no) economic utility or fail to generate earnings and cash flow doesn't work too well over the long haul.  At some point, the lenders won't be paid back…..or, as should happen in a free-floating world, if they are eventually paid back, they'll be paid back with a currency having a fraction of the purchasing power of the currency they initially loaned out to finance the activity.

    China's "Productive GDP"

    Now, let's get back to the bold Red line on the chart above and take some time to coin a phrase. We'll call it "Productive GDP" or PGDP.  As any economist will tell you, desperate times call for desperate measures…..and new terminology!  Let's say that China's "Productive" GDP, for lack of a better term, is defined as GDP excluding all of the over-building, non-productive excess capacity and accounting games created simply to hit the arbitrary 7%, etched in stone, silly, CCP mandated GDP growth target.

    So let's further say that rather than the published, rock solid, 7%, annual NBS GDP growth rate, the "Productive", un-fudged, non-incentivized, PGDP growth rate is only 4.6%, (2/3rds of the published/reported rate), but still a remarkable number for an economy the size of China's.  Extrapolating the bold Red Line above, if GDP is "overstated" by a third, we illustrate/conclude that the ratio of Core Debt to "Productive" PGDP explodes to nearly 400%, much higher than the current G20 average of 240%.

    Author's Note:  You math aficionados out there might be observing that the bold red line doesn't consider the compounding impact (i.e. reducing the GDP growth rate in a prior year impacts the current year starting point).  So the method illustrated (multiplying GDP by a constant) actually overstates GDP.  That's absolutely correct.  However, since I have no actual data to base my adjustment on, it's a guess, an arbitrary adjustment, so the compounding doesn't matter.  Besides using a constant was just simply easier than trying to program the FRED model to compound the change.  In any case, I'm just illustrating a point.

    So far so good?

    Shadow Banking

    Now lets revisit the 2015 McKinsey Report (2014 data) bullet points above.  Specifically:

    • Shadow banking has retreated, but non?bank credit remains important

    Unfortunately, per the People's Bank of China (PBOC), Shadow Bank lending has reversed course abruptly and skyrocketed since the 2015 McKinsey report.  Nobody really knows how big China's Shadow Bank ecosystem is, but the PBOC recently offered a rather shocking guess in their 2017 Financial Stability Report (pg.48).  China's Off-Balance-Sheet, un-regulated, "Shadow" loans have grown to nearly US $37 Trillion (RMB 252.3 Trillion) and have surpassed China's US$34 Trillion, "On-Balance Sheet" bank assets as of the close of 2016.  They also restated the 2015 numbers, increasing the 2015 figures to US$ 28 Trillion (RMB 189 Trillion), roughly doubling the 2015 figure.

    Keep in mind, the PBOC estimating Non-Bank Shadow loans is a bit like the local Sheriff estimating "unreported financial crime".  He doesn't have authority over the mechanics of the activity, lacks enforcement resources and therefore can't do much about preventing the crime(s).  Even if he had authority and resource, he'd have a hard time zeroing in on the metric….criminals generally don't respond to surveys or self-report their schemes.  Moreover, the Sheriff would have an incentive to under-estimate the problem and hope everything works out, since, at some point, someone is going to be held accountable.  As history shows, and Chinese Bankers are well aware of this, financial scoundrels are normally exiled to horrific disgrace on a private tropical island with access to boatloads of Cayman Islands money…..so it goes.

    Again, based solely on the usual, limited transparency inherent in PBOC reporting (good things are trumpeted and bad things are swept under the rug), a disclosure like this would indicate that the problem is potentially much larger than they are letting on.  In the 2017 Financial Stability Report (an oxymoron if I've ever heard one) the PBOC restates the Shadow Bank Assets for 2014 and 2015 (as shown by the dotted line in the chart below). To my knowledge, no other major economy has ever experienced an acceleration anywhere near these levels of Non-Bank, Shadow debt relative to GDP, much less restated it in a gigantic "ooppps….our bad" buried in a couple of paragraphs in the bowels of a report.  In China….they do things big.  The bigger the better.  The two Charts below, prepared by Capital Economics illustrate that we've apparently entered uncharted waters.

    Although the fiercely independent citizens, politicians and bankers of Hong Kong and Singapore might disagree, we can generalize that the leverage in those economies (tall bars on the left of the chart) is inextricably linked to the Chinese financial system. If there were ever a potential "ground-zero" for a default-induced financial contagion Shang-Hong-apore would be it.

    Moreover, when we examine the PBOC/CE Charts above, it wouldn't be much of a reach to conclude that Shadow/Non-Bank Credit has become an absolutely essential tool for keeping all of the financial balls in the air. As reported by Ambrose Evans-Pritchard in a piece for the Telegraph:

    Jahangir Aziz and Haibin Zhu from JP Morgan said the debts of the state-owned entities (SOEs) have alone reached 90pc of GDP or $13.3 trillion.  

    Nearly 60pc of new credit this year is being used to repay old loans. It takes four times as much new credit to generate a given amount of extra of GDP as it did a decade ago. “China’s rising indebtedness has come to represent all that is disconcerting about their economy,” they said in a report entitled “The Sum of All Fears”.

    Hmmmm….."The Sum of All Fears"….catchy little title for a financial/policy report!  Tom Clancy would be proud….

    Viewed another way, when we add the current, 2016 BIS figure, roughly US$28 Trillion of China's Core Debt plus the estimated US$37 Trillion +/- of Shadow debt (RMB 253.5 Trillion), we have a Debt/PGDP ratio approaching 900% of "Productive" PGDP.  The Comparable, relatively constant, US ratio (250% +/-) is shown in blue below.

    "Total Social Financing" (TSF)

    Total Social Financing (TSF), a term of art the Chinese government introduced a few years ago to track the leverage in their economy, grew to RMB 155.99 trillion RMB (US$ 23 Trillion),  up 12.8 percent from 2015, per the PBOC Report. (Pg. 28)  The intent of this statistic is to track the "total financing" required by households and businesses.  The process goes awry when we try to decipher exactly what's included in this metric and how the data is collected.  There are numerous articles written on this topic and I've listed a few of them in the citations below.  Suffice it to say that the consensus is, that a significant amount of Non-Bank Shadow financing is excluded from TSF.  Interestingly, this metric, intended to show changes in the composition of how economic growth is financed, is actually misleading, since significant Shadow risk is omitted from the calculations.

    Some Verifiable Numbers…..Bonds

    As difficult as it is to measure China's fragmented Shadow Financial System, there are a few reported metrics which are presumably more reliable than others.  China's bond markets are one such example.  In the last two years (2015 & 2016) the value of new "Major" Chinese Bond issues (below) has actually exceeded the total amount outstanding of America's Corporate Bond market (about US$ 8.6 Trillion).  Why is all of this new debt necessary?  Again, most (60%?) of the new issues are used to roll over other bonds/debts/financing coming due.

    Continuing the theme, Non-Performing Loans (NPL's) have somehow remained relatively constant, hovering just under 2% since 2011 as shown below.  (pg. 44 of the PBOC Report)

    How can this be?  Perhaps it's just little old skeptical me, but usually, when borrowing skyrockets like this, underwriting is lax and bad loans go bad much quicker.  The universally accepted game bankers play to keep a bad loan from being reported as non-performing is to refinance it and change the terms….and (drum roll please….) ….like magic, it's a performing loan again!  In all likelihood, that's what's happening with this fake NPL statistic.  It's hard to believe that China's financial system hasn't already broken its economic foot as a consequence of kicking all of these NPL cans down the road, but somehow it just keeps chugging merrily along.  As my favorite Irish pub drinking song goes…."Roll me over in the clover…..roll me over lay me down and do it again…this is number one….we've only just begun….."

  • Las Vegas Sheriff: "You Got To Assume He Had Help" As "Mystery Woman" Emerges

    During a lengthy press conference update on the investigation into the Las Vegas massacre, Clark County Sheriff Lombardo expressed his belief that gunman Stephen Paddock had to have help at some point but sarcastically says "maybe he’s a super guy."

    Clearly showing the strains of being awake under serious stress for the last 72 hours, the sheriff explained…

     “Look at this. You look at the weapon obtaining the different amounts of tannerite available, do you think this was all accomplished on his own, face value?”

     

    You got to make the assumption he had to have help at some point, and we want to insure that’s the answer. Maybe he’s a super guy, super hero–not a hero, super–I won’t use the word. Maybe he’s super — that was working out this out on his own, but it will be hard for me to believe that.”

     

    “Here’s the reason why, put one and one–two and two together, another residence in Reno with firearms, okay, electronics and everything else associated with larger amounts of ammo, a place in Mesquite, we know he had a girlfriend. Do you think this is all self-facing individual without talking to somebody, it was sequestered amongst himself. Come on focus folks these type of investigations have been occurring in the last few years and we have to investigate that.”

    Sheriff Lombardo began by giving more detailed timeline of the Las Vegas Police effort to breach the hotel door

    Additionally, Sheriff Lombardo stated that the piece of paper in the gunman's hotel room was not a suicide note and that authorities have seen evidence that the shooter planned to survive and possible escape, adding that he could not disclose details

    Police also told a news conference that 317 of the 489 people injured in the Las Vegas shooting have been discharged from hospitals.

    Lombardo also said none of the cameras Paddock put up in the hotel room where he unleashed gunfire onto a concert crowd were recording, and noted that the shooter had 1,600 rounds of ammunition and several containers of an explosive commonly used in target shooting (Ammonium nitrate and Tannerite) that totaled 50 pounds in his car.

    Earlier this afternoon, several law enforcement officials told NBC News that investigatorsare trying to identify a mystery woman seen with Stephen Paddock in the days before the Las Vegas massacre. They don't know if she has any connection to the attack, but they would like to speak with her as they build a timeline of Paddock's last days, the officials said.

    So to summarize – He had help, planned to escape (so was not a suicide mission), there is a female potential accomplice at large, and the FBI further confirmed that "no evidence at this point to say it was an act of [domestic] terrorism."

  • Will Brazil Be The Next Hotspot For Independence Movements?

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

     

    If you’ve read my work over the past several weeks, you’ve probably noticed an increased fascination with secession/independence movements around the world.

    I think we’re at the very early stages of this developing trend, which will see nation-states across the world fracture for a variety of reasons.

    The historical significance of the political changes we’re about to live through cannot be overstated. As I wrote in last month’s piece, The Future Will Be Decentralized:

    To conclude, I recognize that I’m making a huge call here. I think the way human beings organize their affairs will experience the most significant paradigm level shift we’ve seen in the Western world since the end of the European feudal system hundreds of years ago. That’s how significant I think this shift will be. There are two key things that need to happen for this to occur. The first is technological innovation, and that’s already happening. The second is increased human consciousness. As Thoreau noted, in order for us to have greater self-determination we need to be ready for it. Are we ready? I think we’re getting there.

    While extremely significant, the Catalan independence movement is just the tip of the iceberg when it comes to a global drive toward political decentralization. For example, just today I came across another potential secessionist hotspot in an unexpected place, Brazil.

    Bloomberg reports:

    Inspired by the separatist vote in Catalonia, secessionists in three wealthy southern Brazilian states are redoubling their efforts to break away from the crisis-battered nation.

     

    Residents of Rio Grande do Sul, Santa Catarina and Parana states are being called to vote in an informal plebiscite on Oct. 7 on whether they want independence. Organizers are also urging residents of the three states to sign a legislative proposal for each of their regional assemblies that would call for a formal, binding referendum. The non-profit group “The South is My Country” aims to mobilize a million voters in 900 out of the region’s 1,191 cities.

     

    Cooler, whiter and richer than the rest of Brazil, these southern states have long nursed separatist ambitions. Rio Grande do Sul even briefly claimed independence 180 years ago. Few Brazilians expect the current movement to succeed any time soon, not least because it is prohibited by the Constitution. But the country’s deepest recession on record and a massive corruption scandal have exacerbated the region’s longstanding resentment towards the federal government in Brasilia. With just one year to go until general elections, the rekindling of separatist sentiment in the south is another indicator of the unsettled state of Brazilian politics.

     

    Celso Deucher, the leader of The South is My Country, says the region contributes four times as much tax as it receives and suffers from a below-average level of political representation. He argues that such an unjust situation outweighs any legal concerns.

     

    “Whenever the subject of separatism comes up, they ban it because the federal Constitution does not allow it,” he said. “But the law is not immutable.”

     

    Rio Grande do Sul is currently immersed in a financial crisis and has lost much of its economic clout, according to Fernando Schuler, a professor of political science at Insper University in Sao Paulo.

     

    “There’s a huge cultural detachment between the Tropicalia Brazil and the South,” he said. “The reasons for separation are solid, justifiable, but I don’t think they are viable.” 

    There are two aspects of the above story I’d like to address.

    First, is that, like Catalonia, the regions thinking about secession from Brazil are relatively wealthy. This is not insignificant and certainly worth thinking about when it comes to wondering what sorts of responsibility these regions should have to the former union should a peaceful breakup go forward. It’s also worth remembering that the leaders of the American revolution were also extremely wealthy. An Independence movement driven by wealthy factions doesn’t necessarily preclude the creation of a superior governing structure.

     

    The second point relates to the fact that Brazil, like Spain, apparently provide no “exit option” for any province or region which decides it no longer wishes to be part of the nation-state. As such, this is by definition an oppressive and involuntary political relationship completely inappropriate to conscious human beings. As I explained in Monday’s post, all political associations should be voluntary and it’s absurd that people are simply born into nation-states that are assumed to be forever entities with no escape latch.

    Nation-states aren’t eternal, nor should they be. The problem with nation-states is they refuse to accept this fundamental reality. As such, political dealings with the state get transformed into oppressive centralized relationships, as opposed to voluntary decentralized arrangements. It’s no surprise then that oppressive relationships work out less positively for the average person than voluntary ones where the citizen and local communities are sovereign and empowered.

    In response to the Spanish King’s extraordinarily thuggish comments regarding Catalonia yesterday, I composed several tweets relevant to today’s discussion.

    //platform.twitter.com/widgets.js

    //platform.twitter.com/widgets.js

    //platform.twitter.com/widgets.js

    Any nation-state constitution that claims there’s no way to separate from the centralized government is an unethical and anti-human constitution. You can’t hide behind unjust laws to defend political bondage. The sooner we recognize this truth and increasingly move toward voluntary political relationships, the better.

    *  *  *

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Today’s News 4th October 2017

  • Caracas Or Catalan – Nightstick Democracy At Its Finest…

    Authored by Simon Black via SovereignMan.com,

    The last several days in Venezuela have been absolutely mind-blowing.

    Pretty much all the stories you’ve heard are true– countless people eating out of garbage cans, the appalling shortages of basic staples like food, medicine, and even soap… and the lines.

    Oh boy, the lines.

    The longest lines I saw, in fact, were not at grocery stores, but at banks.

    Hundreds of people were queuing up, many of them to pull money out of their accounts to exchange cash on the black market.

    Lines snaked through a bank’s cavernously large lobby, continued outside, wrapped around the entire building, and terminated at some point down the street.

    Making a simple withdrawal can be an all-day affair.

    Perhaps most surprising was how much Venezuela deteriorated since the last time I came here. And I’m concerned that it will continue to get worse… perhaps even much worse… until it gets better.

    As I mentioned last week, long-term this place is a veritable gold mine. The natural resources, cheap hydropower production, port facilities, low-cost workforce, abundant factories, etc.

    Venezuela is a manufacturer’s dream.

    But none of those opportunities can come to pass until this government collapses and there’s a complete reset.

    Undoubtedly the Venezuelan government will eventually run out of money, probably within the next two years. It’s nearly a mathematical certainty.

    And when they’ll no longer be able to pay the scumbag police and military who shoot peaceful protesters in the face, it’ll be game over.

    But until then they’re doing everything they can to strengthen their grip.

    A few months ago the government held a sham election here, where citizens exercised their ‘democratic’ right to choose among a bunch of puppet candidates hand-selected by the government.

    You can still see the billboards up across Caracas telling people to go vote between the choices given to them by the government. Freedom!

    You’d think that such oppressive tactics to keep a population under control would only exist in brutal dictatorships like Venezuela or North Korea.

    But then we witnessed the events in Spain over the weekend where millions of people in the Catalan region went out to vote on independence for their region.

    Caracas? … or Catalonia…

    The Spanish government loves democracy so much that they sent tens of thousands of police around the region to confiscate ballots, shut down polling stations, and beat-up peaceful citizens.

    This is ‘Nightstick Democracy’ at its finest.

    And in a most Orwellian statement, Spanish Prime Minister Mariano Rajoy told reporters later on Sunday that “there was no referendum in Catalonia today. . .”

    It was like some Jedi mind trick trying to hide the fact that more than 2 million Catalans voted for independence.

    I’m reminded of that old quote, often attributed to Soviet dictator Josef Stalin, that basically says “It’s not the people who vote that counts, it’s the people who count the votes.”

    (According to the memoirs of Stalin’s personal secretary, the actual quote was “I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this– who will count the votes, and how.”)

    This is pretty pathetic: we are ‘free’, as long as we only vote when they give us permission and choose among the options that they provide us.

    A few months ago when writing about Venezuela, I concluded that blockchain technology could fix this.

    Think about it– in 2017, it’s pretty ridiculous that people have to go down to a polling station to stuff a paper ballot into a box, all of which will be counted by hand.

    Blockchain technology would ensure that everyone registered has exactly one vote, and that every vote is counted once.

    No more lost ballots. No more tampering. No more miscounts and recounts. No more voter fraud.

    Plus, blockchain voting can be cryptologically hashed to ensure secrecy, as well as provide an easy way for ANY candidate to be nominated.

    And compared to the cost of legions of human beings required to supervise and count votes, in addition to the logistical cost of printing and moving all that paper, a Blockchain vote is MUCH cheaper.

    A blockchain vote would be a clear, independent, indisputable expression to the world that millions of Venezuelans reject their government… and that millions of Catalans desire independence from Spain.

    This isn’t some far-fetched idea. These tools already exist, as do the means to implement them, including identity validation to ensure that every registrant is eligible to vote.

    When the game is rigged, there are really only two choices available: stop playing. Or change the game.

    And this is absolutely game-changing technology.

    Do you have a Plan B?

  • Texas Lawyer Says Neighbors Need To Stop Complaining About His New Tank

    Wealthy homeowners in one tiny Fort Worth suburb say their neighbor’s decision to park a World War II-era tank in front of his multimillion-dollar home is making them nervous.

    At least that’s what attorney Tony Buzbee, a history buff who purchased the WWII tank for $600,000 earlier this year, learned when his neighborhood homeowners’ association sent him a letter saying the tank “impedes traffic” and causes a “safety issue” and “serious concerns for neighbors."

    Buzbee says he’s temporarily storing the tank at his River Oaks, Texas home before moving it out to his ranch in East Texas later this year. But even though he’s made it clear that the tank’s presence is temporary, his neighbors are pressing him to remove the tank as soon as possible, according to Houston’s KHOU television station.

    Unfazed by his whiny neighbors, Buzbee is pushing back against what he described as NIMBYism run amok, telling local media outlets that his neighbors need to “lighten up” and that the tank isn’t going anywhere unless he decides to move it. Buzbee said the tank “took a year to get here, but now it’s on River Oaks Boulevard,” according to Fox. “This particular tank landed at Normandy. It liberated Paris, and ultimately went all the way to Berlin. There’s a lot of history here.”

    "It's not violating any ordinance, but for some people it makes the homeowners association uncomfortable," said Buzbee.

     

    They sent Buzbee a letter saying the tank "impedes traffic", causes a "safety issue" and is causing "serious concerns for neighbors".

     

    "If you're offended just lighten up, my goodness it isn't hurting anyone," said Buzbee.

     

    Buzbee says he's not losing too much sleep over that HOA letter. For now though, he's keeping his new tank right where it is.

     

    "The problem is there is no action they can take," said Buzbee. "They can ticket it or they can try to tow it, but the truth is unless I decide to move it, it's not going anywhere."

     

    Buzbee says the tank will eventually end up on his ranch in east Texas.

    The irony is, with the tank easily visible to any would-be criminals, Buzbee's block is probably the safest in the town.
     

  • Mass Shootings: The Military-Entertainment Complex's Culture Of Violence Turns Deadly

    Authored by John Whitehead via The Rutherford Institute,

    This latest mass shooting in Las Vegas that left more than 50 people dead and more than 500 injured is as obscure as they come: a 64-year-old retiree with no apparent criminal history, no military training, and no obvious axe to grind opens fire on a country music concert crowd from a hotel room 32 floors up using a semi-automatic gun that may have been rigged to fire up to 700 rounds a minute, then kills himself.

    We’re left with more questions than answers, none of them a flattering reflection of the nation’s values, political priorities, or the manner in which the military-industrial complex continues to dominate, dictate and shape almost every aspect of our lives.

    For starters, why do these mass shootings keep happening? Mass shootings have taken place at churches, in nightclubs, on college campuses, on military bases, in elementary schools, in government offices, and at concerts. This shooting is the deadliest to date.

     

    What is it about America that makes violence our nation’s calling card?

     

    Is it because America is a gun culture?

     

    Is it because guns are so readily available? After all, the U.S. is home to more firearms than adults. Curiously enough, the majority of gun-related deaths in the U.S. are suicides, not homicides.

     

    Is it because entertainment violence is the hottest selling ticket at the box office?

     

    Is it because the government continues to whet the nation’s appetite for violence and war through paid propaganda programs (seeded throughout sports entertainment, Hollywood blockbusters and video games) – what professor Roger Stahl refers to as “militainment” – that glorify the military and serve as recruiting tools for America’s expanding military empire?

     

    Is it because the United States is the number one consumer, exporter and perpetrator of violence and violent weapons in the world? America spends more money on war than other countries. America polices the globe, with 800 military bases and troops stationed in 160 countries. And the war hawks have turned the American homeland into a quasi-battlefield with military gear, weapons and tactics. In turn, domestic police forces have become roving extensions of the military – a standing army.

     

    Or is the Second Amendment to blame, as many continue to suggest? Would there be fewer mass shootings if tighter gun control laws were enacted?

    Then again, could it be, as some have speculated, that these shootings are all part of an elaborate plan to incite fear and chaos, heighten national tensions and shift us that much closer to a complete lockdown? After all, the military and our militarized police forces have been predicting and preparing for exactly this kind of scenario for years now.

    Perhaps there’s no single one factor to blame for this gun violence. However, there is a common denominator, and that is a war-drenched, violence-imbued, profit-driven military industrial complex that has invaded almost every aspect of our lives.

    Ask yourself: Who are these shooters modelling themselves after? Where are they finding the inspiration for their weaponry and tactics? Whose stance and techniques are they mirroring?

    In almost every instance, you can connect the dots back to the military.

    We are a military culture.

    We have been a nation at war for most of our existence.

    We are a nation that makes a living from killing through defense contracts, weapons manufacturing and endless wars.

    In order to sustain the nation’s appetite for war over the long haul in spite of the costs of war in lives lost and dollars spent—and little else to show for it—the military has had to work overtime to churn out pro-war, pro-military propaganda. It’s exactly what President Eisenhower warned against (“the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex”) in his 1961 farewell address.

    We didn’t listen then and we’re still not listening now.

    All the while, the government’s war propaganda machine has grown more sophisticated and entrenched in American culture.

    All of the military equipment featured in blockbuster movies such as X-Men and Transformers is provided—at taxpayer expense—in exchange for carefully placed promotional spots aimed at indoctrinating the American populace into believing that patriotism means throwing their support behind the military wholeheartedly and unquestioningly.

    Even reality TV shows have gotten in on the gig.

    It’s estimated that U.S. military intelligence agencies (including the NSA) have influenced over 1,800 movies and TV shows.

    And then there are the growing number of video games, a number of which are engineered by or created for the military, which have accustomed players to interactive war play through military simulations and first-person shooter scenarios.

    This is how you acclimate a population to war.

    This is how you cultivate loyalty to a war machine.

    Not satisfied with peddling its war propaganda through Hollywood, reality TV shows and embedded journalists whose reports came across as glorified promotional ads for the military, the Pentagon turned to sports to further advance its agenda, “tying the symbols of sports with the symbols of war.”

    The military has been firmly entrenched in the nation’s sports spectacles ever since.

    Remember, just before this Vegas shooting gave the media, the politicians and the easily distracted public something new to obsess over, the headlines were dominated by President Trump’s feud with the NFL over players kneeling during the national anthem.

    That, too, was yet another example of how much the military entertainment complex – which paid $53 million of taxpayer money between 2012 and 2015 to pro sports teams for military tributes—has infiltrated American culture.

    Are you starting to get the picture now?

    When you talk about the Las Vegas mass shooting, you’re not dealing with a single shooter scenario. Rather, you’re dealing with a sophisticated, far-reaching war machine that has woven itself into the very fabric of this nation.

    You want to stop the gun violence?

    Stop the worship of violence that permeates our culture.

    Stop glorifying the military industrial complex with flyovers and salutes during sports spectacles.

    Stop acting as if there is anything patriotic about military exercises and occupations that bomb hospitals and schools.

    Stop treating guns and war as entertainment fodder in movies, music, video games, toys, amusement parks, reality TV and more.

    Stop distributing weapons of war to the local police and turning them into extensions of the military—weapons that have no business being anywhere but on a battlefield.

    Most of all, as I point out in my book Battlefield America: The War on the American People, stop falling for the military industrial complex’s psychological war games.

  • The Largest Hack Ever? Yahoo Admits 2013 Data Breach Impacted All 3 Billion Accounts

    Is it too late for Verizon to get some more of its money back?

    After the entity responsible for selling Yahoo agreed to cut $350 million off the company’s sales price earlier this year following revelations that hackers had stolen sensitive  account information of as many as 1.5 billion user accounts during two separate data breaches, the Wall Street Journal is now reporting that the scale of one of those intrusions was much larger than initially believed.

    A 2013 data breach that was initially believed to have impacted 1 billion, actually impacted all of Yahoo's 3 billion user accounts, Verizon announced on Tuesday. Verizon’s acquisition of Yahoo formally closed in June after contentious negotiations that were complicated by the discovery of the hacks. The smaller of the two incidents, which took place in 2014, was first disclosed to the public last September. It reportedly involved 500 million user accounts. Three months later, in December, the company publicized the 2013 hack.

    The stolen data included names, email addresses, dates of birth, telephone numbers and encrypted passwords, Yahoo has said. In October, before the second breach was even disclosed, Verizon signaled that it would likely consider the data breach to be a “material event”, allowing it to change the terms of its deal to buy Yahoo, which it did in February.

    As WSJ pointed out, the disclosure shows that executives are still coming to grips with Yahoo's myriad security problems.

    Even before the number of affected user accounts was revised higher to 3 billion, the breach was still the largest on record by number affected. However, most experts consider the Equifax breach, which involved sensitive financial and personal information like credit card, social security and drivers’ license numbers, more damaging than the Yahoo breach.

    A spokesman for Oath, the new name of Verizon’s Yahoo unit, said the company determined last week that the break-in was much worse than thought, after it received new information from outside the company. He declined to elaborate on the source of that information. Compromised customer information included usernames, passwords, and in some cases telephone numbers and dates of birth, the spokesman said.

    Fortunately for Yahoo executives, as part of the revised deal, Verizon agreed to forfeit the right to sue Yahoo for allegedly covering up the hacks. Meanwhile, the entity selling Yahoo has retained liability for an SEC investigation that was launched in January, as well as any shareholder lawsuits related to the deal itself.
     

  • Chris Hedges On The End Of Empire: "The Death Spiral Appears Unstoppable"

    Authored by Chris Hedges via TruthDig.com,

    The American empire is coming to an end. The U.S. economy is being drained by wars in the Middle East and vast military expansion around the globe. It is burdened by growing deficits, along with the devastating effects of deindustrialization and global trade agreements. Our democracy has been captured and destroyed by corporations that steadily demand more tax cuts, more deregulation and impunity from prosecution for massive acts of financial fraud, all the while looting trillions from the U.S. treasury in the form of bailouts. The nation has lost the power and respect needed to induce allies in Europe, Latin America, Asia and Africa to do its bidding. Add to this the mounting destruction caused by climate change and you have a recipe for an emerging dystopia. Overseeing this descent at the highest levels of the federal and state governments is a motley collection of imbeciles, con artists, thieves, opportunists and warmongering generals. And to be clear, I am speaking about Democrats, too.

    Source: Mr.Fish

    The empire will limp along, steadily losing influence until the dollar is dropped as the world’s reserve currency, plunging the United States into a crippling depression and instantly forcing a massive contraction of its military machine.

    Short of a sudden and widespread popular revolt, which does not seem likely, the death spiral appears unstoppable, meaning the United States as we know it will no longer exist within a decade or, at most, two. The global vacuum we leave behind will be filled by China, already establishing itself as an economic and military juggernaut, or perhaps there will be a multipolar world carved up among Russia, China, India, Brazil, Turkey, South Africa and a few other states. Or maybe the void will be filled, as the historian Alfred W. McCoy writes in his book “In the Shadows of the American Century: The Rise and Decline of US Global Power,” by “a coalition of transnational corporations, multilateral military forces like NATO, and an international financial leadership self-selected at Davos and Bilderberg” that will “forge a supranational nexus to supersede any nation or empire.”

    Under every measurement, from financial growth and infrastructure investment to advanced technology, including supercomputers, space weaponry and cyberwarfare, we are being rapidly overtaken by the Chinese. “In April 2015 the U.S. Department of Agriculture suggested that the American economy would grow by nearly 50 percent over the next 15 years, while China’s would triple and come close to surpassing America’s in 2030,” McCoy noted. China became the world’s second largest economy in 2010, the same year it became the world’s leading manufacturing nation, pushing aside a United States that had dominated the world’s manufacturing for a century. The Department of Defense issued a sober report titled “At Our Own Peril: DoD Risk Assessment in a Post-Primacy World.” It found that the U.S. military “no longer enjoys an unassailable position versus state competitors,” and “it no longer can … automatically generate consistent and sustained local military superiority at range.” McCoy predicts the collapse will come by 2030.

    Empires in decay embrace an almost willful suicide. Blinded by their hubris and unable to face the reality of their diminishing power, they retreat into a fantasy world where hard and unpleasant facts no longer intrude. They replace diplomacy, multilateralism and politics with unilateral threats and the blunt instrument of war.

    This collective self-delusion saw the United States make the greatest strategic blunder in its history, one that sounded the death knell of the empire – the invasion of Afghanistan and Iraq. The architects of the war in the George W. Bush White House, and the array of useful idiots in the press and academia who were cheerleaders for it, knew very little about the countries being invaded, were stunningly naive about the effects of industrial warfare and were blindsided by the ferocious blowback. They stated, and probably believed, that Saddam Hussein had weapons of mass destruction, although they had no valid evidence to support this claim. They insisted that democracy would be implanted in Baghdad and spread across the Middle East. They assured the public that U.S. troops would be greeted by grateful Iraqis and Afghans as liberators. They promised that oil revenues would cover the cost of reconstruction. They insisted that the bold and quick military strike—“shock and awe”—would restore American hegemony in the region and dominance in the world. It did the opposite. As Zbigniew Brzezinski noted, this “unilateral war of choice against Iraq precipitated a widespread delegitimation of U.S. foreign policy.”

    Historians of empire call these military fiascos, a feature of all late empires, examples of “micro-militarism.” The Athenians engaged in micro-militarism when during the Peloponnesian War (431-404 B.C.) they invaded Sicily, suffering the loss of 200 ships and thousands of soldiers and triggering revolts throughout the empire. Britain did so in 1956 when it attacked Egypt in a dispute over the nationalization of the Suez Canal and then quickly had to withdraw in humiliation, empowering a string of Arab nationalist leaders such as Egypt’s Gamal Abdel Nasser and dooming British rule over the nation’s few remaining colonies. Neither of these empires recovered.

    “While rising empires are often judicious, even rational in their application of armed force for conquest and control of overseas dominions, fading empires are inclined to ill-considered displays of power, dreaming of bold military masterstrokes that would somehow recoup lost prestige and power,” McCoy writes.

     

    “Often irrational even from an imperial point of view, these micromilitary operations can yield hemorrhaging expenditures or humiliating defeats that only accelerate the process already under way.”

    Empires need more than force to dominate other nations. They need a mystique. This mystique—a mask for imperial plunder, repression and exploitation—seduces some native elites, who become willing to do the bidding of the imperial power or at least remain passive. And it provides a patina of civility and even nobility to justify to those at home the costs in blood and money needed to maintain empire. The parliamentary system of government that Britain replicated in appearance in the colonies, and the introduction of British sports such as polo, cricket and horse racing, along with elaborately uniformed viceroys and the pageantry of royalty, were buttressed by what the colonialists said was the invincibility of their navy and army. England was able to hold its empire together from 1815 to 1914 before being forced into a steady retreat. America’s high-blown rhetoric about democracy, liberty and equality, along with basketball, baseball and Hollywood, as well as our own deification of the military, entranced and cowed much of the globe in the wake of World War II. Behind the scenes, of course, the CIA used its bag of dirty tricks to orchestrate coups, fix elections and carry out assassinations, black propaganda campaigns, bribery, blackmail, intimidation and torture. But none of this works anymore.

    The loss of the mystique is crippling. It makes it hard to find pliant surrogates to administer the empire, as we have seen in Iraq and Afghanistan. The photographs of physical abuse and sexual humiliation imposed on Arab prisoners at Abu Ghraib inflamed the Muslim world and fed al-Qaida and later Islamic State with new recruits. The assassination of Osama bin Laden and a host of other jihadist leaders, including the U.S. citizen Anwar al-Awlaki, openly mocked the concept of the rule of law. The hundreds of thousands of dead and millions of refugees fleeing our debacles in the Middle East, along with the near-constant threat from militarized aerial drones, exposed us as state terrorists. We have exercised in the Middle East the U.S. military’s penchant for widespread atrocities, indiscriminate violence, lies and blundering miscalculations, actions that led to our defeat in Vietnam.

    The brutality abroad is matched by a growing brutality at home. Militarized police gun down mostly unarmed, poor people of color and fill a system of penitentiaries and jails that hold a staggering 25 percent of the world’s prisoners although Americans represent only 5 percent of global population. Many of our cities are in ruins. Our public transportation system is a shambles. Our educational system is in steep decline and being privatized. Opioid addiction, suicide, mass shootings, depression and morbid obesity plague a population that has fallen into profound despair. The deep disillusionment and anger that led to Donald Trump’s election – a reaction to the corporate coup d’état and the poverty afflicting at least half of the country – have destroyed the myth of a functioning democracy. Presidential tweets and rhetoric celebrate hate, racism and bigotry and taunt the weak and the vulnerable. The president in an address before the United Nations threatened to obliterate another nation in an act of genocide. We are worldwide objects of ridicule and hatred. The foreboding for the future is expressed in the rash of dystopian films, motion pictures that no longer perpetuate American virtue and exceptionalism or the myth of human progress.

    “The demise of the United States as the preeminent global power could come far more quickly than anyone imagines,” McCoy writes. “Despite the aura of omnipotence empires often project, most are surprisingly fragile, lacking the inherent strength of even a modest nation-state. Indeed, a glance at their history should remind us that the greatest of them are susceptible to collapse from diverse causes, with fiscal pressures usually a prime factor. For the better part of two centuries, the security and prosperity of the homeland has been the main objective for most stable states, making foreign or imperial adventures an expendable option, usually allocated no more than 5 percent of the domestic budget. Without the financing that arises almost organically inside a sovereign nation, empires are famously predatory in their relentless hunt for plunder or profit—witness the Atlantic slave trade, Belgium’s rubber lust in the Congo, British India’s opium commerce, the Third Reich’s rape of Europe, or the Soviet exploitation of Eastern Europe.”

    When revenues shrink or collapse, McCoy points out, “empires become brittle.”

    “So delicate is their ecology of power that, when things start to go truly wrong, empires regularly unravel with unholy speed: just a year for Portugal, two years for the Soviet Union, eight years for France, eleven years for the Ottomans, seventeen for Great Britain, and, in all likelihood, just twenty-seven years for the United States, counting from the crucial year 2003 [when the U.S. invaded Iraq],” he writes.

    Many of the estimated 69 empires that have existed throughout history lacked competent leadership in their decline, having ceded power to monstrosities such as the Roman emperors Caligula and Nero. In the United States, the reins of authority may be in the grasp of the first in a line of depraved demagogues.

    “For the majority of Americans, the 2020s will likely be remembered as a demoralizing decade of rising prices, stagnant wages, and fading international competitiveness,” McCoy writes. The loss of the dollar as the global reserve currency will see the U.S. unable to pay for its huge deficits by selling Treasury bonds, which will be drastically devalued at that point. There will be a massive rise in the cost of imports. Unemployment will explode. Domestic clashes over what McCoy calls “insubstantial issues” will fuel a dangerous hypernationalism that could morph into an American fascism.

    A discredited elite, suspicious and even paranoid in an age of decline, will see enemies everywhere. The array of instruments created for global dominance—wholesale surveillance, the evisceration of civil liberties, sophisticated torture techniques, militarized police, the massive prison system, the thousands of militarized drones and satellites—will be employed in the homeland. The empire will collapse and the nation will consume itself within our lifetimes if we do not wrest power from those who rule the corporate state.

  • "Credit Negative For U.S. Government": Moody's Threatens Downgrade If Trump Tax Plan Is Passed

    As various institutions continue to publish very detailed estimates of how Trump’s tax plan will impact the federal budget, which is somewhat amazing since income brackets haven’t even been assigned yet, Moody’s published a note today threatening to finally strip the U.S. of its AAA credit rating if the tax plan is ultimately passed as currently contemplated.

    President Donald Trump’s tax proposal would probably weigh on the U.S. government’s credit outlook, on concerns that it would cause the federal deficit to swell, according to Moody’s Investors Service.

     

    “The Trump tax framework is likely credit negative for the U.S. government,” Moody’s said in a statement. “Tax cuts would not be offset by equivalent cuts to spending, which would put upward pressure on the federal budget deficit and debt,” while “the tax reform’s effect on economic growth and, in turn, federal government revenue would also affect U.S. credit strength.”

     

    By contrast, banks, insurers and asset managers would benefit from a lower tax rate, Moody’s said.

    Moodys

    As we pointed out last Friday, the Tax Policy Center found that Trump’s plan would cost $2.4 trillion over the first decade, assuming no spending cuts, and result in federal deficits soaring by several hundred billion dollars each year. 

    • The proposal would reduce federal revenues by $2.4 trillion over the first ten years and $3.2 in the second decade. This means that absent a matched deduction in spending, US deficit and debt will increase by a similar amount. This is a problem as a Senate GOP budget resolution unveiled on Friday only allows for adding $1.5 trillion to the debt, implying a revenue shortfall of just under $1 trillion.
      • The business income tax provisions—including those affecting corporations and pass-through businesses—would reduce revenues by $2.6 trillion over the first ten years. Elimination of estate and gift taxes would lose another $240 billion. The individual income tax provisions (excluding those related to business income) would increase revenues by about $470 billion over the same period.

    So, just to summarize Moody’s position on this issue, a ~$1.5 trillion budget deficit in 2009 was no problem at all but a ~$1 trillion budget deficit today would suddenly merit a downgrade.

    Of course, the Trump administration has argued that increased GDP growth will offset lower tax receipts and actually result in lower deficits rather than higher. 

    To that end, Deutsche Bank’s economists took a shot a estimating what kind of GDP boost could be expected from the Trump tax plan and found that a 0.4% – 0.5% boost might be reasonable…

    Given the size and scope of the tax plan presented, it is worthwhile to investigate the potential macroeconomic implications of the bill. We use the Fed’s model of the US economy (FRB/US) to do just that.

     

    The full tax plan provides a meaningful lift to growth in the coming years (Figure 7). Year-over-year growth in Q4 2018 and Q4 2019 is about 0.4pp and 0.5pp higher than the no ?scal stimulus baseline.  Higher growth leads to a tighter labor market. The unemployment rate falls to 4% by end-2018 and 3.85% by end-2019 under the full plan, 0.2pp and 0.35pp below the baseline with no tax cuts (Figure 8). The more modest, and in our view more realistic, tax plan intuitively produces more modest results for growth and the unemployment rate. Growth is higher by about 0.2pp and 0.3pp, and the unemployment rate is 0.1pp and 0.2pp lower, by end-2018 and end-2019, respectively.

    …that said, they also found that any increase in growth expectations would just be offset by quicker interest rate hikes from the Fed.

    Despite assuming a gradual response by the Fed, the implied fed funds rate is significantly higher in response to the tax cuts, as the Fed at least partially o?sets the further decline in the unemployment rate below NAIRU (Figure 9). By end-2018, the fed funds rate would be 13bp higher in response to the full tax plan and 5bp higher under the more modest tax plan scenario. The gap between the no-stimulus scenario and tax cut scenarios is considerably wider further out. By end-2019, the fed funds rate would be 40bp higher in response to the full tax plan and 20bp higher under the more modest tax plan scenario. These differences rise to 60bp and 30bp by end-2020 – more than two hikes more under the full tax cut scenario and more than one additional hike under the modest stimulus compared with the baseline.

    Of course, the most comical part of all of this is that, after years of exponential debt growth, Moody’s has finally decided that Trump’s tax cuts will be the final straw that forces them to strip the U.S. of its pristine debt rating…

  • Las Vegas Police Release Body Cam Footage From Night Of Shooting

    The Las Vegas Police have released the first body camera footage from Sunday night’s mass shooting that left 59 dead and over 500 wounded. While not much can be seen, the video depicts the chaos and the gunfire in the background, as officers outside of the Mandalay Bay Resort and Casino try to figure out where the gunfire is coming from as bullets rain down.

    According to police officials, the video is a compilation of footage from several body cameras.

    Separately, the latest press briefing by the LVPD delivered on Tuesday evening, can be seen here.

  • Is It Time To Question The Modern Nation-State Model Of Governance?

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    I typically try to avoid news on Sundays, but I spent much of this weekend in complete awe of the extraordinary strength and fortitude of the Catalan people in the face of totalitarian violence from the Spanish state against citizens attempting to vote in a peaceful referendum.

    Before you start telling me about how the vote is illegal and goes against the Spanish constitution, let me be perfectly clear. That line of thinking is entirely irrelevant to the point of this post.

    Specifically, I believe humanity is reaching a point in its evolution, both from a consciousness perspective as well as a technological one, where we’ll begin to increasingly question many of our silly contemporary assumptions about how governance should work.  The primary one is this absurd notion that a nation-state should be seen as a permanent structure of political governance which only becomes dissolvable in the event of violent revolution or war.

    When it comes to great leaps in human progress, a crucial component to lasting change is convincing enough people that a particular way of organizing human affairs is outdated and harmful. I think if we take a step back and look at how people are governed across the world, there are very few places where “the people” feel they live in societies in which they exert any sort of genuine political self-determination. When we look at the last few decades of political governance in the Western world, a march toward more and more centralized political power has been a facet of life in both the U.S and Europe. I believe this trend is being pushed to its breaking point, and groups of humans with common culture, language and interests will increasingly question whether massive nation-states (or wannabe super states like the EU) make sense. In the past five years alone, Scotland held a referendum on UK membership, Great Britain voted to leave the EU, and most recently, Catalonia took a major step toward independence with yesterday’s banned referendum.

    Those who favor centralized power see these events and movements toward decentralized political power as inconvenient, intransigent outbursts from the ungrateful, unwashed masses. Movements which would best put down one way or the other in order to carry on with the business of further centralizing power. They view such burgeoning drives for political self-determination as temporary storms which the wise elders of centralization must merely ride out. Unfortunately for them, this is not the case.

    If anything, we can expect many more movements for decentralized power in the decades ahead for two main reasons.

    First, the current system is simply not working for most people.

     

    Second, as we become more connected and conscious, we will invariably conclude that all human beings deserve to have a real choice in the type of governments they live under.

    The prevailing assumption that we’re simply born into a particular nation-state and must accept this situation for the rest of our days irrespective of how brutal, oppressive and dysfunctional it may be, is an irrational, inhumane and outdated perspective.

    As things stand today, humans essentially have two choices when it comes to political life. We either accept the nation-state we’re born into and play the game to the best of our advantage, or we try to become citizens of another country with values that more align with our own. The only way to really shatter existing political power structures and form new ones is through violent revolution or war, which is an insane way of reorganizing matters of human governance. One of Spanish Prime Minister Mariano Rajoy’s key arguments in casting the Catalan referendum as illegal is that Spain is an indivisible nation under the 1978 constitution. Let’s think about what this means in practice.

    Anyone who’s spent any time in Spain understands how culturally and linguistically distinct many of the regions are when compared to Madrid. These are differences that go back centuries and can’t be brushed off by a constitution created a few decades ago. The idea that these various regions must be part of a centralized Spain even if the people within the regions want political autonomy is ethically preposterous, as well as authoritarian and evil in every sense of the word. If done properly, human governance should always be a voluntary arrangement. If an overwhelming majority of culturally distinct people within any nation-state decide the super state is no longer working for them, they should have every right to leave. Anything else is bondage.

    As the U.S. Declaration of Independence so eloquently states:

    We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

     

    That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. 

    The key aspect of the above declaration is that governments instituted among humans derive their powers from the consent of the governed. If we take the U.S. as an example, how do we know that the people of Texas and California believe centralized power in Washington D.C. as it stands today is an appropriate form of governance unless there’s a periodic vote confirming it? Did any of the 50 states ever actually consent to an out of control centralized deep state-run oligarchy running things as they please? Likewise, how do we know that the people of Catalonia consent to being part of Spain unless you ask them? The truth is you don’t, and this presents a major dilemma we must confront going forward.

    If we look at the world’s nation-states, they generally consist of large, centralized political entities comprised of a union of culturally distinct provinces, states or regions. In some cases these regions voluntarily came together over time, while in other cases they were forced together during a war or revolution. It’s crucial that we not view such nation-states as Rajoy views them, as eternal structures that can never be altered, but rather as voluntary political associations. Again, the only way to know such associations are truly voluntary is to periodically subject them to referendums. It seems to me that this should be an integral part of any nation-state. In contrast, we have a name for power relationships that aren’t voluntary. Slavery.

    Indeed, the fact that we put up with this at all is downright perplexing. For example, although we accept children should be under the care of parents from birth up to a certain point, at a certain age we pretty much all agree that an adult should be free to make autonomous decisions. While a human becomes free at this micro level upon reaching a certain age, at the macro level most human beings never get to choose what sort of government they live under. Most of us are not at all governed by consent, and this feels very wrong to me.

    Beyond the ethical implications of imposed political governance, we should also discuss the way our current system ends up functioning in practice. If power hungry authoritarians understand that the bond which unites the various regions of a nation-state can never be questioned, power dynamics become very lopsided and increasingly centralized over time. In contrast, lets imagine that every 25 years, every defined region of every nation-state gets to vote on whether they want to stay part of the current governing structure or create a new one. Power might be much more distributed in the interim period under such a system, since there’s always a threat that one or many of the various states or provinces might choose to sever ties in a few short years. Such a system would be much more akin to a free market for political governance versus what we have today, which appears more in-line with a “divine right of kings,” feudal type system. I think we can do much better than this.

    That being said, I don’t want anyone to assume that the hypothetical system I described above is what I think should happen. I’m just providing an extremely simplistic example to get people thinking. The key point is human beings should not be forced to live their entire lives under systems of involuntary political governance which they never agreed to in the first place.

    We must figure out a way for human beings to peacefully and periodically alter the forms of government they live under in a major way should they choose to. Right now, the main options for achieving this sort of change tends to involve violence, which often leads to situations that are worse than they were before.

    We need to agree that political associations should always be voluntary, and that most such associations worldwide right now are not. Rather, they are most often maintained via state violence, as we just witnessed in Spain. Our goal should be to live in a world defined by peaceful voluntary political associations, but getting from here to there won’t be easy or quick.

    I hope I live long enough to see such a world.

    *  *  *

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  • Trump Gets Final List Of Fed Candidates, Yellen Gets The Cold Shoulder

    Picking up on a story reported previously by both the WSJ and Politico – oh and Bloomberg itself – Bloomberg writes that Trump’s advisers have delivered the final list of candidates they recommending as candidates to lead the Fed and have ended the search. While only a “small handful” of the president’s closest advisers have seen the final list of names, it did not prevent them from leaking it, and the result is what we already know from previous leaks namely that in addition to Yellen, Trump is considering Gary Cohn, Kevin Warsh and current Fed governor Jerome Powell, who as Politico reported overnight, is said to have the blessing of Steven Mnuchin.

    Also confirming what the WSJ reported previously, Trump’s chief economic advisor Gary Cohn – himself under consideration – has recused himself from the selection process.

    In fact, the only incremental news in the latest report seems to be that while Janet Yellen remains under consideration, “few, if any, of Trump’s inner circle are advocating for her re-appointment.”

    Furthermore, we can cross out economist Glenn Hubbard and U.S. Bancorp Chairman Richard Davis, both of whom have been floated as possible candidates, although Trump has no intention of interviewing them.  A potential wildcard is Stanford economist John Taylor, a favorite of fiscal conservatives, who is also said to be under consideration.

    It has also been previously reported that Trump has spoken to Yellen, Cohn, Warsh and Powell about the Fed post, although there is no frontrunner at the moment.

    According to Bloomberg, “the latest developments show that Trump is closer to making a final selection than previously known.” Last Friday, Trump said that he is “two or three weeks away from announcing his nominee” for the post overseeing the nation’s central bank.

    Meanwhile, speaking at the Vanity Fair New Establishment Summit on Tuesday in Los Angeles, Jeffrey Gundlach – who accurately predicted Trump’s presidency – predicted that Neel Kashkari would be picked as next Fed chair. “I actually have a very non-consensus point of view. I think it’s going to be Neel Kashkari… He happens to be the most easy money guy that’s in the Federal Reserve system today and that’s why he may win.”

    The Bond King said that Trump needs someone who will keep rates low in order to keep his populist reputation and help his base voters and that’s why he’ll pick Kashkari. “A stronger dollar is not good for achieving that agenda,” he said.

    Gundlach also is confident that Yellen would not get reappointed: “I
    think there is no chance that she wants to be chairwoman, nor do I think
    the president wants her to be,” said the manager of $109 billion.

    Judging by the latest PredictIt odds, if Gundlach is right, and if he is willing to bet some money on it, he could make a killing, as Kashkari does not even have a contract. As to the current ranking, Warsh remains in top spot with 38% odds, although following today’s Politico news, Powell surged to second place with 31% odds, and now following the Bloomberg report, John Taylor finds himself in third spot with 20% odds, above both Gary Cohn in 4th and Janet Yellen who has tumbled to 5th with just 13% odds of being reappointed.

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