- WWIII? A "Hybrid Geo-Financial War" Between NATO and Russia Is Dangerously Escalating
Submitted by Mac Slavo via SHTFPlan.com,
Russia is preparing for war against the West.
Putin is being urged to do so because the U.S. and NATO have been preparing for war themselves.
Syria and Ukraine have just been warm ups. The real thing could be around the corner, and other proxy flashpoints are ready to line up.
The rising tensions for military conflict are sharply complicated by the stealthier financial war that is nonetheless taking a serious toll across the globe, in particular as collapsing oil prices put incredible pressure on those regimes who have cast a big social benefits net financed primarily by $100/barrel oil.
As SHTF previously reported, that made Venezuela the most vulnerable, and it is plain today that the oil rich nation is collapsing. However, the manipulation of these prices was also meant to put pressure on Russia (as well as other countries)… while the attempt to undercut Russian natural gas by taking over Ukraine and have NATO supply gas to Europe instead of Russia has so far failed.
It is a sophisticated geopolitical gamble that perhaps no one is winning, apart from who manages not to topple over.
A detailed, but nonetheless alarming article by Alastair Crooke reports that there is significant pressure on Putin from other Russian leaders to take a hard line in the days ahead.
via the Huffington Post:
Putin carries, at one end of his balancing pole, the various elites more oriented toward the West and the “Washington Consensus“ and, at the pole’s other end, those concerned that Russia faces both a real military threat from the North Atlantic Treaty Organization and a hybrid geo-financial war as well. He is being pressed to come down on the side of the latter, and to pry the grip of the former from the levers of economic power that they still tightly hold.
In short, the issue coming to a head in the Kremlin is whether Russia is sufficiently prepared for further Western efforts to ensure it does not impede or rival American hegemony. Can Russia sustain a geo-financial assault, if one were to be launched? And is such a threat real or mere Western posturing for other ends?
What is so important is that if these events are misread in the West, which is already primed to see any Russian defensive act as offensive and aggressive, the ground will already have been laid for escalation. We already had the first war to push back against NATO in Georgia. The second pushback war is ongoing in Ukraine. What might be the consequences to a third?
In mid-April, General Alexander Bastrykin, the head of Russia’s Investigative Committee (a sort of super attorney general, as Cohen describes it), wrote that Russia — its role in Syria notwithstanding — is militarily ill prepared to face a new war either at home or abroad, and that the economy is in a bad way, too. Russia, furthermore, is equally ill prepared to withstand a geo-financial war. He goes on to say that the West is preparing for war against Russia and that Russia’s leadership does not appear to be aware of or alert to the danger the country faces.
[…] A retired Russian general entered the fray to confirm that the West is indeed preparing for war — he pointed to NATO deployments in the Baltics, the Black Sea and Poland, among other places — and underlines again the unpreparedness of the Russian military to face this threat. “This is a heavy indictment of Putin,” Cohen says of the revelations from this analysis. “It is now out in the open.”
[…]
The government’s economic policy is being criticized. The opposing faction wants to see an immediate mobilization of the military and the economy for war, conventional or hybrid. This is not about wanting Putin ousted; it is about pushing him to wield the knife — and to cut deeply.
There is every reason to think that the clashing interests of NATO and Russia can and will spark more flashpoints across the map and around the arc that generally surrounds the former Soviet empire, which the United States hopes to contain in order to maintain its own crumbling empire.
While President Obama, now officially the president to oversee the longest period of war (albeit somewhat contracted), may be reluctant to pursue in form of open conflict with Russia, a president like Hillary Clinton may be all-too willing to do so. She has already called in recent days for an escalated ‘war against ISIS,’ which handily also gives an open ended pretext to challenge NATO-Russian conflict points wherever they might appear.
Donald Trump’s positions here are as yet unclear, but he is beginning to surround himself with the same type of advisers – including Henry Kissinger – that have brought us to this point.
With economic decline and a definite fatigue for war, Americans face an end of the dollar as the world currency standard and an era where the BRICS nations, and in particular the militaries of Russia and China, pose an existential threat to the world that the U.S. and Britain carved out in the WWII era and which they essentially won away from the Soviets by the end of the Cold War.
These waxing and waning empires are dangerous as their vulnerabilities and short-comings become exposed, and their territories challenged.
That fact that Putin is being prodded from within Russia to be less diplomatic and more aggressive in posturing for war is downright unsettling. Many of our most dangerous American leaders are all-too willing to poke the bear and evoke a reaction.
Ukraine and Syria, as well as the Georgian conflict before it in 2008, prove that the U.S. will continue waging war and posturing for global domination in spite of the lack of a coherent narrative (but there’s ISIS), or any convincing pretext for sending troops and sponsoring proxy armies.
The American people are sick of war, but the misleaders in Washington are eager enough to reinvigorate their sense of power and entitlement to control the affairs here and abroad. After all, war – in a sick kind of way – is good for the economy, and a big one means a mandate of emergency powers and a period of unquestioning obedience from the domestic population.
The threat is all-too real, and a serious provocation, like the false flag attacks that have sparked most of the wars in the past, could be on the horizon.
That all basically points to WWIII… or at least a full second Cold War. It could be a long way off, but the sense is that the scent is in the air.
- Stock Share Buybacks Now Bought Out — American Enterprise in Decline
Published originally on The Great Recession Blog
I have pointed out in previous articles how most of the growth in stocks over the past few years has been due to stock share buybacks. Without this hideous (and at one time illegal) practice, there would have been no bull market over the last few years.
That’s right. Research from no other place than Wall Street, itself, indicates that almost all of the returns since 2009 have been due to stock share buybacks!
Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that “… there has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds….” Since every buyer has a seller (and vice versa), what group or groups had enough of a buying presence to push the S&P 500 14.2% off of the February closing lows? Corporations. (Seeking Alpha)
Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks…. The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. (Fortune)
Stock share buybacks may be winding down
But you cannot do share buybacks forever. Companies have been using profits and loading up on debt to make these share buybacks for so long that the law of diminishing returns is kicking in here, too.
First, it is kicking in because companies are nearing the end of their capacity to keep eating themselves. Earnings have been falling while debt has been stacking up, and so the capacity just isn’t there any more. (And I mean even the doctored earnings — as almost all major corporations have moved away from GAAP reporting policies — have been falling badly.)
Secondly, buybacks have gone insane to the point where the practice is even starting to reek of death to market bulls who are growing wary of them.
Over the past five weeks, the value of shares bought back has fallen 42% (yoy). The number of scheduled buybacks has fallen off substantially this year (35% below last year’s pace). So, we can anticipate the market will lose some of the hot air that once kept it aloft.
Here are two confusing headlines for you, released this week within 24 hours of each other: First comes Bloomberg’s “Bull Market Losing Biggest Ally as Buybacks Fall Most Since 2009.” Ah, but then came the Financial Times, with “US companies step up share buybacks in the first quarter of 2016….” At face value this would seem difficult. However, Bloomberg and the FT are in fact measuring two different things. Bloomberg has been looking at buyback announcements so far in 2016…. The FT meanwhile has been looking at preliminary numbers for the first quarter from S&P/Dow Jones indexes. These suggest that US buybacks were actually up 20% in this year’s first quarter, compared to the old year’s last…. So, what’s the upshot? …As David Lefkowitz, senior equity strategist at UBS, puts it: “earnings per share were down around 6% in the first quarter so it’s not terribly surprising that there should be a slowdown in buyback announcements.” He stressed however that buyback announcements are just that – announcements not activity. He also pointed out that the oil sector’s early-year wrestle with ever-lower crude prices, and profit worries at the major banks, have left corporate America with a lot less cash to flash…. Corporate buybacks may not continue at the pace we’ve seen since about 2011, but it seems unlikely that they’re going to fade away either. (News.Markets)
In other words, leftover buybacks from last year’s announcements are still unfolding, but announcements of additional buybacks are diminishing quickly as corporate cash drops.
Stock share buybacks have transformed America into the Alzheimer’s ward of enterprise
We are now a nation full of companies with much bigger piles of debt and much less capacity to keep propping up their share prices with buybacks because those companies are rotting from within. Buybacks syphoned money away from capital expansion and research and development in order to deliver candy to investors now at the cost of crippling the company down the road.
All of that was smiled upon (until now) by Wall Street and government for saving the day while losing the decade. Yes, a decade of potential recovery has been consumed by milking corporations dry, and there will be hell to pay as a result of this self-consuming greed.
Former Republican presidential candidate, Carly Fiorina, championed this kind of corporate management during her stint at Hewlett-Packard until the Crowned Executive Officer was forced off her throne. During her brief reign, HP bought back $14 billion of stocks, which was more than its entire profits during that same period ($12 billion).
That was total self-cannibalism, as during that time HP practically eliminated research and development, caving in to the idea that it was no longer capable of innovation and dominance in the consumer electronic field that it had long dominated. They gave up and walked away from their staple market of personal computers and home printers. Then they rejigged this plan into severing off separate companies. Contrasting this to Apple, can you even think of the last thing HP invented? Can you even remember the last thing that someone else invented that HP successfully produced and popularized?
Because of her great accomplishment at HP, Fiorina believed she was qualified to become president of the United States. Having successfully gotten rid of her, did HP learn anything? Of course not. Her successor tripled down on all of this, buying back $43 billion in shares on $36 billion in profits! Following him, Leo Apotheker did the same thing, buying back nearly a billion dollars in stock every month of his brief eleven-month reign. This is a company that knows how to eat itself one leg at a time.
“HP was the poster child of an innovative enterprise that retained profits and reinvested in the productive capabilities of employees. Since 1999, however, it has been destroying itself by downsizing its labor force and distributing its profits to shareholders….” HP declined to comment. (Reuters)
And this is the new corporate norm for America. Last year, corporations spent almost a trillion dollars on share buybacks and dividends, even though it was largely a year of declining profits. Maybe I should say because it was a year of declining profits. So, they weren’t doing it because they had the money to spend. Like HP, many spent money they didn’t earn.
That’s what you do when your business stinks so bad no one wants your stock because you have started to smell like the toe fungus and old urine that odorizes a bad nursing home. When the company is selling its own limbs on the meat market, it might not be in the healthiest of shape.
When profits are in perpetual decline, you cover the stink of your own slow death with the sweet smell of candy. You throw grain (dividends) to the market bulls to get them to gather.
What have stock buybacks gotten us?
No wonder corporate stock buybacks were illegal until Reagan changed that during his tenure of deregulation. Yes, that deregulation did wonders for the stock market for a long time. It’s amazing how rich shareholders can become (especially the board members and CEOs) when they dine for years on their own company. It’s also amazing how rich you can become when no one is paying for the largess because it is bought on credit.
However, greed and self-delusion among America’s corporate leaders has finally reached the zenith that comes just before self-annihilation. That is what happens when you get carried away with taking the regulations off of avaricious activity. Greed gets bolder and bolder as it explores the outer limits of its success. Evil contains the seeds of its own destruction. It always reaches too far.
Responsible use of credit buys innovation (research and development) or production expansion for the future. Greedy and irresponsible use buys profit sharing for the present when profits are down. That lack of rigorous self-discipline is the new American leadership norm.
For all of this, corporate bosses get bigger and bigger pay and eventually rise to become presidential candidates. That’s because they are best suited to run a country that advocates this kind of business by stripping away the laws that once governed such greed. Those laws were created because past experience taught us that humans couldn’t be trusted to act in the company’s (and the nation’s) long-term best interest, instead of their own immediate self-interest. Left on their own, many would reap and run. We always forget the lessons of the past, so we ditch those laws when they seem to restraining our progress.
However, the buybacks aren’t yielding the returns they once were, and the corporations have already taken on a load of debt for past buybacks that is even threatening the credit rating of some. Earnings have declined steadily as money spent on building for the future has dropped dramatically. It looks like the golden years when companies buy themselves are winding down, and we shall all convalesce together.
International Business Machines Corp. (IBM) is a poster child for questionable buybacks…. Over five years, IBM bought back $59.1 billion in common shares, while its stock returned only 5%. Meanwhile, the S&P 500 returned 81%…. There have been plenty of solid arguments that IBM could have made much better use of that money by investing in its business. After all, the company’s annual sales have declined 24% over the past five years, while its earnings have dropped 16%. (MarketWatch)
With so many American corporations on their sickbeds, it’s a good thing we have Obamacare.
- Visualizing 200 Years Of US Immigration
While the common narrative is now that Donald Trump is dividing the United States along racial lines, it would appear that 200 years of widespread immigration (some more integrative and some less) – as the following stunning animated graphic shows – the proverbial melting pot, after 8 years of an African-American president, during which black inequality has worsened dramatically, is boiling over by its own volition.
Here is everyone who has emigrated to the United States since 1820 (1 dot = 10,000 people)
Full interactive version here at MetroCosm.com
And after 200 years, this is what America has become…
- "Government Ain't Fixable But It Will Correct!"
As the next Presidential election nears, optimism regarding candidates and political parties ebbs and flows. Voters like to believe their candidate sees the problems and will fix them. This fundamental belief drives voting. But what if it isn’t true? What if government ain’t fixable? Or can’t be changed? What then?
Government Ain’t Fixable and People Are Sensing It
The public increasingly recognizes that the opportunity to choose between two candidates is not working very well. The election process allows for a peaceful transfer of power but if the only change is in the the names and placeholders that media refer to as “leaders” But government continues to grow, become more expensive, more intrusive, less responsive and more burdensome. That is the way of government in this country for the half century I have been paying attention.
The quadrennial event that is the Presidential election cycle is akin to Charlie Brown, Lucy and the football. Voters play the role of the hapless Charlie Brown. Lucy represents the political class and the football plays the role of campaign promises. The football is never kicked, altered or used. Yet hapless Charlie falls for the promise again and again.
This election seems different. The public is beginning to understand the game. Some are rebelling. How else does one explain the popularity of Donald Trump and Bernie Sanders? H. L. Mencken’s wisdom regarding democracy, politics and politicians is gaining followers. Mencken’s litany of disgust is too prolific to deal with other than to suggest that the public may be realizing that:
Every election is a sort of advance auction sale of stolen goods.
Increasing numbers understand this observation and that they are the victims in the game.
Government is too large and entrenched to be changed by elections. The political establishment considers themselves to be privileged and pretends to like and tolerate citizens. The truth is that the citizenry are nothing more than a commodity to the rulers. Their votes and pocketbooks are mined so that political lifestyles can be continued.
This reality is becoming apparent to more and more citizens who recognize the government as Lucy and themselves as Charlie Brown. The football is always promised but never delivered. The story of this election is the number of people dissatisfied with Lucy and her behavior. In a sense this election is beginning to look like a protest similar to the Boston Harbor tea party. It is likely a precedent that will not directly change anything, although the retrospective of history may recognize it as the first shot fired in the coming rebellion against oppressive government.
Government Will Correct
No one can fix government. Even if Donald Trump or Hillary/Bern were the best managers in the world, they could only have a marginal impact even if they were inclined.
Government is too far gone and too deeply entrenched. It is a gigantic blob immune to common sense, cost control or the will of the citizens it pretends to serve. People are expected to serve it, a complete contradiction of the stated goal of the Founders. It grows and enriches itself (and its members) simply because it can. It is no different from an unaccountable criminal enterprise, exempting itself from laws it imposes on others. In point of fact, it is less efficient than organized crime which must generate a profit under less than ideal circumstances. Most Mafia-run businesses provide a service or value to their customers in excess of what it costs. Government has no need to do so and is especially ineffective and inefficient.
Government is Leviathan. It looks out for itself and no one person or small group can alter that condition. Government will correct, but not willingly. Today it is at the point where the plant from Little Shop of Horrors was in this clip:
The conflicted Seymour represents the citizens of this country, subject to increasing demands and monetary contributions. Both the plant and the government demand contributions while provide little service or benefits in return. Government is as addicted to more every bit as much as the demanding plant. It knows no other way other than to spend to continue its scam.
Government ain’t fixable but it will correct because there are limits to what people and economies will bear. Government is out of money and hopelessly indebted. Yet it continues to spend as if it had the money. It has seriously wounded the host on which it parasitically survives. The golden goose no longer can shake off the effects of the government burden. The economy is stagnant. Confiscatory taxation and regulatory burdens prevent private capital formation. Without capital, standard of living and employment stagnate. The economy will continue to deteriorate and people will continue to become poorer until the system collapses of its own weight or the people revolt. Either represents a cataclysmic event!
For a time monetary printing can disguise the deterioration. States and municipalities are unable to print money. Their unnecessary and wasteful schemes are surfacing. Puerto Rico demands a bailout. So will Illinois and dozens of other governmental entities. California is driving its productive class away. That is also happening at the Federal level where both people and companies are voting with their feet. The renouncement of US citizenship is exploding as is the relocation of corporate headquarters out of this country.
Government as we know it is doomed. It will not recognize this reality until markets and/or citizens force it. This time is likely close and the process will not be painless. The more government ignores what is inevitable the greater the pain will be. One hopes that civilization does not enter an economic and anarchical Dark Ages. To the extent that government refuses to respond to the fantasy world they have created, the more likely that is to be the outcome.
While many still think their vote matters, others are beginning to recognize the futility of voting.
Government is Bad at Almost Everything
Everyone has heard more than their share of stories about government inefficiency and stupidity. It is difficult to point to any government agency run effectively or achieving the ends for which it was created. The War on Poverty has increased poverty. The Department of Education was formed at the peak of educational effectiveness and everything has gone downhill since. What does the Department of Energy do besides make it more difficult to achieve more energy? The Internal Revenue Service has become a political tool to hammer opponents who do not hold the presidency. Hasn’t the Veteran’s Administration done a wonderful job for the medical care of our veterans? ObamaCare has driven health-care costs through the roof and put a damper on the creation of jobs like nothing else.
And now this inefficiency seems to be reaching new heights in the TSA, the agency that fails miserably on routine tests to find contraband and other items prohibited. Now we are told that this agency is going to impose the loss of millions of hours of wait time because it cannot do its job properly. The following video shows what is coming:
All the money being spent on preventing terrorism has not stopped one terrorist act at an airport. If you are a traveler, you are more likely to become a terrorist as a result of treatment by your own government than to be protected from terrorism.
- The Secret (US-Instigated) History Of ISIS
It appears, once again, Donald Trump is correct…
Crooked Hillary Clintons foreign interventions unleashed ISIS in Syria, Iraq and Libya. She is reckless and dangerous!
— Donald J. Trump (@realDonaldTrump) May 21, 2016
As the following controversial Frontline documentary exposes – for the first time to the mainstream and average joes of America – the inside story of the the radicals who became the leaders of ISIS, the many missed warning signs and the U.S. failures to stop the terror group’s brutal rise.
“We created chaos. We abandoned that chaos… We created ISIS!”
Trailer…
“I said: ‘Mr. President, it isn’t just a simple matter of going to Baghdad. I know how to do that. What happens after? You need to understand, if you take out a government, take out a regime, guess who becomes the government and regime and is responsible for the country? You are. So if you break it, you own it.’”
-Colin Powell
Full documentary here (no embed, click image for link)
- Taliban Leader Mansour Killed In US Drone Strike Inside Pakistan
Earlier today, a veteran White House correspondent laid out his version of how Obama “gets away with it” in a news cycle when everyone’s attention should be glued to the economic failures of the lame duck president. One thing he forgot to mention, however, was the use of such conventional “rally around the flag” tactics as taking out a key symbolic nemesis of the US to drum up patriotic fervor.
Just over five years ago this function was served by Osama bin Laden, who then died anywhere between the 3rd and 5th time (depending on who was counting). Then, earlier today, it was Mullah Akhtar Mansour, the leader of the Taliban in Afghanistan, who was killed by a US drone strike around 6 a.m. EDT Saturday
while Mansour was riding in a vehicle in a remote area near the town
of Ahmad Wal, Pakistan, along the border with Afghanistan, according to
Defense Department officials.Mansour has been seen as the leader of the Taliban since it was revealed last year that famed leader Mullah Mohammad Omar had died in 2013. Since the disclosure of Omar’s death and under Mansour’s leadership, Taliban fighters have conducted numerous attacks that have resulted in the death of tens of thousands of Afghan civilians and Afghan security forces as well as a number of U.S. and coalition personnel, Pentagon spokesman Peter Cook said in the statement.
As a reminder, the last time the US conducted a strategic mission deep inside Pakistan (to executed Osama bin Laden), it led to a furious reaction by the local government which had not preapproved the operation. We expect this time will be no different as the US once again shows that “sovereignty” means absolutely nothing to the printer of the world’s reserve currency.
Mullah Akhtar Mohammad Mansour, Taliban militants’ leader
While still unconfirmed, the death of Mullah Akhtar Mansour could further fracture the Taliban – an outcome that experts cautioned might make the insurgents even less likely to participate in long-stalled peace efforts. In other words, it would push Afghanistan that much further from some semblance of peace. It will , however, likely lead to an escalation of Taliban retaliation which will likely focus on US assets in both Afghanistan, Pakistan and all other neighboring countries where US presence is not exactly “welcome.”
According to Reuters, the assassination mission, which included multiple drones, demonstrated a clear willingness by Obama to go after the Afghan Taliban leadership in Pakistan now that the insurgents control or contest more territory in Afghanistan than at any time since being ousted by a U.S.-led intervention in 2001.
The WSJ adds that a second man who was with Mr. Mansour and was considered a combatant is also believed to have been killed in the strike. The strike was authorized by President Obama, Pentagon officials said. Pentagon spokesman Peter Cook confirmed an air strike targeting Mansour in the Afghanistan-Pakistan border region but declined to speculate on his fate, although multiple U.S. officials, speaking on condition of anonymity, told Reuters he likely was killed.
Another Pentagon official said that there were no unintended casualties or other damage because of the remoteness of the area in which the strike occurred. He probably felt obliged to add that in light of the thousands of innocent civilians that the US has “droned to death” in its pursuit of radical militants whose every step and location it knew well in advance.
“We are still assessing the results of the strike and will provide more information as it becomes available,” Cook said.
Not surprisingly the locals have denied the story: a Taliban commander close to Mansour, speaking to Reuters on condition of anonymity, denied Mansour was dead. It’s unclear why the Taliban was anonymous: it’s not like he is exactly leaking insider trading information.
“We heard about these baseless reports but this not first time,” the commander said. “Just wanted to share with you my own information that Mullah Mansour has not been killed.”
This is not the first time Mansour has been “killed” – in December, Mansour was reportedly wounded and possibly killed in a shootout at the house of another Taliban leader near Quetta in Pakistan. Well, not reportedly killed if he has been reportedly killed again, although as a reminder this is precisely what happened to none other than Osama bin Laden who also was “reportedly” killed numerous times before Obama finally took credit for his “final” killing.
Bruce Riedel, an Afghanistan expert at the Brookings Institution think-tank, described the U.S. operation in Pakistan as an unprecedented move but cautioned about possible fallout with Pakistan, where Taliban leadership has long been accused of having safe haven.
In other words, with ISIS cells in Europe carrying out suicide bombing missions every few months, the US decided it was a good idea to poke yet another hornets’ nest and create more chaos and retaliation. A State Department official said both Pakistan and Afghanistan were notified of the strike but did not disclose whether that notification was prior to it being carried out.
“The opportunity to conduct this operation to eliminate the threat that Mansour posed was a distinctive one and we acted on it,” the official said.
Reuters adds that the U.S. drones targeted Mansour and another combatant as the men rode in a vehicle in a remote area southwest of the town of Ahmad Wal, another U.S. official said, speaking on condition of anonymity.
U.S. special operations forces operated the drones in a mission authorized by Obama that took place at about 6 a.m. EDT (1000 GMT), the official said. That would have placed it at Saturday at 3 p.m. in Pakistan.
Cook branded Mansour “an obstacle to peace and reconciliation between the government of Afghanistan and the Taliban” and said he was involved in planning attacks that threatened U.S., Afghan and allied forces.
Ironically, those who actually grasp what is about to happen, completely disagree. Take for example, Michael Kugelman, a senior associate for South and Southeast Asia at the Woodrow Wilson Center, said the strike was unlikely to bring the Taliban to the negotiating table any time soon. In fact, it will likely make the Taliban far less likely to want to sit down and discuss peace, assuming of course that Mansour is dead.
“The Taliban won’t simply meekly agree to talks and especially as this strike could worsen the fragmentation within the organization,” he said.
Kugelman said the most important target for the United States remained the top leadership of the Haqqani network, which is allied with the Taliban. Mansour had failed to win over rival factions within the Taliban after formally assuming the helm last year after the Taliban admitted the group’s founding leader, Mullah Omar, had been dead for more than two years. It was unclear who Mansour’s successor might be. “If Mansour is dead it will provoke a crisis inside the Taliban,” Riedel said.U.S.
It will also likely provoke another major diplomatic incident between Pakistani leadership and the Obama administration.
Meanwhile, the neocons in the US were giidy with delight: John McCain, the Republican head of the Senate Armed Services Committee, said he hoped the strike would herald a change in the Obama administration’s policy against more broadly targeting the Taliban.
The new U.S. commander in Afghanistan is currently reviewing U.S. strategy, including whether broader powers are needed to target insurgents and whether to proceed with plans to reduce the number of U.S. forces. “Our troops are in Afghanistan today for the same reason they deployed there in 2001 – to prevent Afghanistan from becoming a safe haven for global terrorists,” McCain said. “The Taliban remains allied with these terrorists, including al-Qaeda and the Haqqani network, and it is the one force most able and willing to turn Afghanistan into a terrorist safe haven once again.”
As the WSJ concludes, under the current authorities, U.S. military operations against the Taliban can only be taken under three broad circumstances: when U.S. or coalition forces are under threat, when U.S. officials deem that the Taliban is providing direct support to al Qaeda or when the Taliban pose a “strategic threat” to Afghan forces.
U.S. officials said the strike Saturday was considered a “defensive” operation because the U.S. believed that the Taliban leader was actively plotting attacks against U.S. forces in neighboring Afghanistan. Even though there is clearly nothing defensive about an offensive drone assasination.
The White House has called for shifting control of U.S. drone operations from the CIA to the Pentagon, but officials said the shift wouldn’t apply anytime soon to Pakistan because of political opposition there to the U.S. conducting overt strikes on Pakistani soil.
- Suddenly Trump And Hillary Is All Goldman's Clients Want To Talk About
A little over a month ago, conventional wisdom (and overrated pundits) said that Trump has no chance of being the republican nominee. They were all wrong, but so was the market which continued to ignore the possibility of a Trump presidency until well after the fact. And, as always happens, now is when if not the market, then certainly Goldman’s clients are finally trying to catch up. As Goldman strategist David Kostin (who just one week ago warned that there is now a substantial risk of a market drop ahead of the year end), writes “Politics is now a topic in every client discussion.”
Kostin remains short-term bearish, and still sees the S&P sliding as low as 1850 in the next several months, but he appears more focused on the the impact of the next president on the market and the economy, now that suddenly the market is starting to price it in.
So for all those curious, this is how Kostin is responding to all of Goldman’s clients questions about the upcoming presidential election and how to trade it.
* * *
United we stand, divided we fall: Equity strategies ahead of a rise in political uncertainty
The US Presidential election will take place in 170 days on November 8, 2016. Politics is now a topic in every client discussion. Last week we argued the S&P 500 was vulnerable to a 5%-10% drawdown and the index could fall to 1850-1950 during the next several months although it would end the year at 2100, roughly 3% above the current level. Rising political uncertainty was one of the risks we identified as a potential catalyst for a market drawdown.
Prediction markets assign a 60% probability that Hillary Clinton will win the general election. Polls tell a different story: the Real Clear Politics (RCP) average of the most recent national polls shows a 3.1 point spread in favor of presumptive Democratic nominee former Secretary of State Clinton (45.8) versus presumptive Republican nominee businessman Donald Trump (42.7). The RCP spread has narrowed from 9.3 points just one month ago (48.8 vs. 39.5 on April 20, 2016). Some polls such as the May 18th Rasmussen Reports show a spread of 5 points in favor of Trump (42) vs. Clinton (37).
Polls in prior presidential elections tightened as voting day approached. But thus far 2016 has hardly followed a regular election playbook. Our view is the closeness of the current race is underpriced by the market. We believe that the contest will become more competitive – or at least will be perceived as more competitive – than it is currently. The upcoming party conventions (Republicans on July 18-21 and Democrats on July 25-28) will raise political uncertainty as the competition enters the home-stretch.
Equity market uncertainty will almost assuredly climb during the next several months in concert with rising political uncertainty. The US Equity Market Uncertainty Index tracks articles in more than 1,000 domestic newspapers that use the terms “uncertainty,” “economics,” and “equity market” or “stock market”. Exhibit 1 shows the path of stock market uncertainty during the past seven US presidential election years. The 2016 path is tracking below any previous election year since 1988. But the trend will soon reverse and equity uncertainty will rise as Election Day approaches.
When equity market uncertainty rises, Consumer Staples typically outperforms while Information Technology lags (see Exhibit 2). From a factor perspective, the past decade shows that when equity market uncertainty increases, stocks with high dividend yield and low volatility outperform. In contrast, both high growth stocks and low valuation companies underperform their respective counterparts (see Exhibit 3)
Equity portfolio managers should focus on the investment implications of the economic, trade, and tax policies of the presumptive nominees. A rise in protectionism would represent a broad risk to the stock market because 33% of aggregate S&P 500 revenues is generated outside the US.
Donald Trump has stated that if elected President he would threaten to impose tariffs on various imports to offset what he deems unfair competition in the form of state subsidies and currency manipulation. A protectionist US trade policy raises the risk of retaliation by other countries.
The Trans-Pacific Partnership (TPP) is a multilateral trade agreement with 11 other nations on the Pacific Basin that awaits Senate approval. The Office of the US Trade Representative believes the agreement will facilitate the sale of Made-in-America products abroad by eliminating more than 18,000 taxes and trade barriers on US products across TPP nations. The US Chamber of Commerce supports the deal. Hillary Clinton supported the trade agreement while it was being negotiated but now she opposes it.
Protectionist rhetoric will become louder as election season progresses and stocks with high US sales will outperform firms with foreign sales. Our sector-neutral basket of 50 stocks with 100% US sales (GSTHAINT) will outperform our corresponding basket of stocks with 72% non-US revenues (GSTHINTL). The long US sales/short foreign sales trade benefits from a strengthening US Dollar, which explains why the strategy has returned -350 bp YTD as our basket of high US sales (-1.3%) has trailed our foreign sales basket (+2.2%). Domestic stocks have faster growth and a lower P/E. Looking forward, a hawkish Fed relative to expectations will boost the USD.
Taxes are a perennial election year debate topic. However, any tax reform plans would require Congressional approval. According to the independent Tax Foundation, Donald Trump proposes to reduce the federal corporate tax rate to 15% from the current rate of 35% and repeal most preferences. Hillary Clinton seeks to impose an “exit tax” on tax inversions and limit earnings stripping via interest deductions. In general, firms with high effective tax rates would benefit most from any changes in the tax code while companies with low tax rates would be more at risk. Constituents in our high tax rate basket (GSTHHTAX) have a median effective federal and state tax rate during the past 10 years of 38% compared with 18% for firms in our low tax rate basket (GSTHLTAX) and 31% for the median S&P 500 stock. See Exhibit 5 for a list of 16 stocks that are constituents of both our high US sales and high tax rate baskets that should outperform the 11 stocks with both high foreign sales and low tax rates as Election Day draws near.
- Meet AnBot: China's Tireless, Unquestioning, Taser-Wielding "Robocop"
China is developing a robotic security officer that can sniff out bombs, grab suspects with a mechanical clamp and deliver a jolt of electricity to neutralise threats.
Xiao Xiangjiang, who leads the development team at the defence university, told the People’s Liberation Army mouthpiece PLA Daily that AnBot had undergone test runs at a military camp, airport and museum in Changsha with “very positive” user feedback.
Xiao said the robot, which moves on wheels, could carry out a non-stop patrol for eight hours, hitting speeds as high as 18km/h. Its cameras can recognise and track faces, and it is equipped with sensors that can detect explosives, drugs and weapons.
It can also be ordered via a remote human controller to deliver an electric jolt with its mechanical clamp to disable a target.
When the system is automated, as SHTFPlan's Mac Slavo notes, the robotic enforcers will quite literally do what they are told.
If the governing powers-that-be enforce a tyranny, and ask the robots to do something against the people that human law enforcement officers would know to be illegal and/or immoral, they will simply obey. It is in their programming.
As such, robot enforcers stand to be a formidable obstacle to freedom and justice. They can choose targets and make decisions automatically, without the need for human oversight. So just what will happen when civil unrest, riots or other emergencies take place? These machines can and will restore order at all costs.
Mainland China has seen a spate of large-scale violent attacks erupt in key cities in recent years, including bombings, knife attacks and arson, according The South China Morning Post.
The government does not make public the number of such “mass incidents”, but sales of security hardware hit about 500 billion yuan last year and the market has been growing by 17 to 20 per cent annually, the fastest in the world, according to the association.
“Many soldiers and security personnel are working in torturous environments beyond the imagination of ordinary people. Security robots will end the pain,” he said.
But some human rights researchers have expressed concern over an authoritarian state using robots to help maintain public security. Flesh and blood officers might refuse to carry out orders if they felt conflicted.
And that's why, as The Daily Sheeple's Joshua Kearse explains, the governments of the world are very interested in developing robots for military and law enforcement applications…
Over the past few years, the police in America and around the world have been facing more scrutiny than they ever have before. Their abuses and arrogant demeanor are now easily recorded, and displayed on the internet for all to see. As a result, it’s never been so easy to criticize the police.
But it’s important to remember that not all cops are bad. It may seem that way, because people are much more likely to turn on their smartphone cameras when a cop is being an intolerable tyrant. There are still plenty of police officers out there who have a conscience, and no doubt, the government is afraid of these officers more than anyone else. They’ll never be able to crackdown on the population, unless they have near 100% obedience from their enforcers.
That’s why the governments of the world are very interested in developing robots for military and law enforcement applications. They need yes men more than ever, and if they can’t get enough yes men to enforce their onerous rules, then they’ll turn to yes robots to fill the gap, and replace all the cops and soldiers who don’t toe the line.
They’ll do it for a lot of the same reasons that private companies are trying to automate their respective industries. In any given workforce, there are humans that complain. There are people who need time off and benefits. There are people in positions both high and low, who can blow the whistle on crimes and labor violations. Ultimately, running a business means appeasing a bunch of ornery humans, each with individual needs, wants, and agendas. And let’s not forget, they all need to be paid.
But more importantly, the government needs people who are willing to control the population. Robots simplify everything for people who are control freaks, and as it just so happens, control freaks tend to gravitate into positions of higher authority in both the public and private spheres. In the case of our government and other governments around the world, the control freaks are eager to clean out all the do-gooders and conscientious individuals who are less than willing to carry out their orders to brutalize the population. If they can replace these people with robots and promote the remaining yes men to higher positions, then they no longer have to answer to anyone.
And don’t think for a second that this is going to happen many years down the road. It’s happening right now in countries like China. While the US has been leading the charge for military robots, China’s autocratic regime may be ahead of the rest of the world when it comes to law enforcement robots. In fact, they’re about to introduce one of the world’s first policing robots, complete with a tazer for shocking non compliant citizens.
Take note. This is the future. There’s no reason why robots like this won’t show up in your neighborhood someday. Pretty much all governments have the same desire to control their population, and technology knows no borders.
- A Retired White House Correspondent Explains "How Obama Gets Away With It"
Authored by Richard Benedetto, a retired USA Today White House correspondent and columnist, who teaches politics and journalism at American University and in the Fund for American Studies program at George Mason University. Originally posted in the WSJ.
How Obama Gets Away With It
At a time when large numbers of Americans say they are fed up with politics and politicians, why is it that the nation’s chief politician, President Obama, seems to skate above it unscathed?
Usually when an incumbent president is leaving office and a slew of candidates are battling for his job, that departing chief executive’s record is a major campaign issue.
But not this year, even though two of three Americans say the country is on the wrong track, job creation is sluggish, income inequality continues to rise and Mr. Obama’s job approval barely tops 50%. Moreover, approval of his handling of the war on terror and Islamic State is underwater, and a majority of Americans—white and black—say race relations are getting worse, not better.
When Mr. Obama ran for office in 2008, a central part of his campaign strategy was to heap blame on George W. Bush. How has Mr. Obama dodged similar treatment? One reason: Donald Trump’s bombastic candidacy is a huge distraction and often blocks out or obliterates more-substantive issues. That was the case even when his now-vanquished rivals tried to address serious topics. When Mr. Trump does criticize the president, it gets far less news play than his attacks on his opponents and critics, Republican or Democrat. As for Bernie Sanders and Hillary Clinton, they both are angling for a third consecutive Democratic administration, so are not eager to criticize Mr. Obama.
But another reason—a big one—why Mr. Obama is able to avoid being a target is that he is a deft manipulator of the media, probably more skillful at it than any president ever. He heads a savvy public-relations machine that markets him like a Hollywood celebrity, a role he obligingly and successfully plays. One of the machine’s key tactics is to place Mr. Obama in as many positive news and photo situations as possible. Ronald Reagan’s advisers were considered masters of putting their man in the best possible light, but they look like amateurs compared with the Obama operation—which has the added advantage of a particularly obliging news media.
A sampling over the past few weeks: A Washington Post photo captures President Obama blowing giant bubbles “At the final White House Science Fair of his presidency.” A New York Times photo shows the president mobbed by women admirers at a ceremony designating the Sewall-Belmont House on Capitol Hill as a national museum for women’s equality.
An ABC News video gives us Mr. Obama’s helicopter landing on the rainy grounds of Britain’s Windsor Castle, and then we visit the president and first lady lunching with Queen Elizabeth II on her 90th birthday.
In other news clips, we see a doctoral-robed Obama speaking to graduates of Howard University, a tuxedoed Obama yukking it up at the White House Correspondents Association dinner, a brave Obama drinking a glass of water in Flint, Mich., a cool Obama grooving with Aretha Franklin at a White House jazz concert, a serious Obama intently listening to Saudi King Salman, a jubilant Obama on his showy trip to Cuba.
A picture may be worth a thousand words, but with Mr. Obama you also get the thousand words.
Yet at the same time we were seeing those nice photos, videos and articles, a lot of other important stuff was going on where Mr. Obama was hardly mentioned, seen or questioned. For example, the U.S. economy grew at a meager 0.5% in the first quarter of 2016; Russian military planes lately have been buzzing U.S. Navy ships; and China is building its military forces and expanding their reach in the South China Sea. Early in May, a Navy SEAL was killed in Iraq (the president has assured the American public that U.S. troops there, increasing in numbers, are not in combat roles). Islamic State terrorist attacks in Baghdad in recent weeks have killed scores of civilians. The Taliban are on the march in Afghanistan. The vicious war in Syria continues. The Middle East refugee crisis shows no sign of diminishing. Military provocations by Iran and North Korea keep coming.
President Obama’s media handlers try to keep the president as far away from these crises as possible, leaving others in his administration such as Press Secretary Josh Earnest, Vice President Joe Biden, Secretary of State John Kerry, Defense Secretary Ash Carter and Joint Chiefs Chairman Joseph Dunford to be their public face. That way the problems don’t appear to be Mr. Obama’s problem, and he is free to bask in the good news.
One of the news media’s main jobs is to hold public officials accountable, from the president on down. But Mr. Obama is the beneficiary of news-media managers and reporters who mostly like his style and agree with his policies, from his reluctance to make strong military commitments to his advocacy for LGBT rights, fighting climate change and supporting tougher gun-control laws. Case in point: The administration’s easy orchestration of the media story line about the Iranian nuclear deal, recently revealed by Deputy National Security Adviser Ben Rhodes, only scratches the surface of the White House’s skill at managing a media happy to be managed.
Given such a congruence of opinion, Mr. Obama’s policies don’t receive the scrutiny and analysis they should. Reporters who criticize or dig too deep are cast by the administration as spoilsports or, worse, cut off from sources.
With Donald Trump now the media obsession—and most in the media don’t like him—it is easy to see why Mr. Obama’s performance over the past seven-plus years is still not a major issue in the 2016 campaign. And that’s the way he likes it.
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