- China: Beijing's Arctic Power Grab
China: Beijing’s Arctic Power Grab
Authored by Lawrence Franklin via The Gatestone Institute,
One important element of the $738 billion National Defense Authorization Act for the Fiscal Year 2020, which US President Donald Trump signed into law in mid-December, is the directive to examine and monitor “Chinese military activities in the Arctic, as well as Chinese foreign direct investment in the Arctic.”
The administration in Washington is right to be concerned about China’s increasing interest in the northern polar region. Two years ago, Beijing published a White Paper outlining its Arctic policy, which includes creating a “Polar Silk Road.” If fully implemented, this policy will challenge the United States and Russia for primacy in the region, where beneath the glaciers lie vast quantities of coal and natural gas.
Two Chinese polar icebreaking research vessels, Xuelong and Xuelong II, are presently carrying out the regime’s 36th scientific expedition in the waters off Antarctica. The crews of these vessels will help complete China’s fifth Antarctic scientific station for the gathering of data and establishment of under-the-ice submarine deployments similar to those operated by Washington and Moscow.
China’s Dailan Naval Academy supports an aggressive strategy for both the northern and southern polar seas. China’s Ministry of Defense and State Council continue to publish papers expressing a desire to pursue a robust maritime program, including a “Freedom of Navigation” mission in the Bering Sea, slated for some time in 2020.
Beijing’s polar strategy is linked to the prospect of finding deposits of “rare earth materials,” such as praseodymium, yttrium, and lanthanum, which are used in lasers, magnets, semiconductors, specialty glass, ceramics and nuclear batteries.
China already controls the mining and extraction of most of the world’s rare earth materials — all crucial for the global economy — and may be in talks with the Taliban in Afghanistan to obtain more: Afghanistan’s mountains are among a handful of places in the world where large deposits of these materials exist.
Unfortunately, the US is largely dependent upon China for these materials, which also lie beneath the huge ice masses of Greenland. This circumstance might well explain China’s vigorous effort to conclude major infrastructure contracts with Greenland’s government. Beijing is proposing to build several airports, harbors, roads and railways in Greenland, which would facilitate the transport of rare earth materials — once they are excavated — to China.
Beijing-administered airports in Greenland, however, could pose a strategic threat to America’s ally, Canada. Also at risk under such a scenario would be the US military facility in Thule, Greenland, which serves as an early-warning node for a nuclear attack on the North American continent. To counter this potential threat, the Trump administration and fellow NATO member state, Denmark — which owns Greenland — have preempted China’s plans by agreeing to finance the proposed airports. But China’s drive for eventual primacy in the Arctic region also extends to the Danish-owned, self-governing network of the 18 Faroe Islands, located midway between Norway and Iceland in the North Atlantic Ocean.
The US and China currently are competing for influence in the Faroe Islands, with Beijing offering to increase the importation of fish on condition that the islanders agree to utilize China’s wireless network system with fifth-generation technology (5G) administered by Huawei, and Washington attempting to block the use of Huawei networking equipment on the islands due to the company’s intelligence-gathering cooperation with the Chinese regime.
Although China is a latecomer to great-power competition in the Arctic, its Arctic profile could rise quickly if Moscow pools its efforts with Beijing. The Russian Air Force has long had a separate branch for polar aviation, and Russia maintains an extensive nuclear- and diesel-powered fleet of icebreakers. China’s friendly relations with Russia could lead to a powerful polar alliance.
In July 2017, Chinese President Xi Jinping and Russian President Vladimir Putin signed a “Joint Declaration on Further Strengthening Comprehensive, Strategic and Cooperative Partnership,” which included plans to cooperate on projects along Russia’s Northern Sea Route. No other nation has invested more energy, accumulated lessons-learned or extracted more resources in the environmentally challenging polar conditions than Russia.
If Moscow works in tandem with Beijing, China could emerge quickly as a potent competitor for influence in the Arctic. Let us hope that Washington is able to prevent this from happening.
Tyler Durden
Fri, 01/10/2020 – 02:00 - Israel Unveils Breakthrough Aerial 'Laser Sword' Missile Intercept System
Israel Unveils Breakthrough Aerial ‘Laser Sword’ Missile Intercept System
“It’s a game-changer” — declared Gen. Yaniv Rotem, head of Israel’s Defense Ministry’s (IDF) Directorate of Research and Development, in a Jerusalem Post interview profiling the county’s newest breakthrough laser targeting technology.
The IDF unveiled what’s being described as an aerial ‘laser sword’ which can take out multiple types of airborne threats such as drones, rockets and anti-tank missiles. This after a decade-long program focusing on defensive measures using lasers, and amid a broader global trend which has seen the United States, Russia and China tout its own laser systems, most currently used by naval vessels.
Artistic rendering via “Israel Defense” news site. Defense Minister Naftali Bennett on Wednesday boasted that the breakthrough “makes the security apparatus more lethal, more powerful and more advanced,” as the IDF plans to integrate its laser technology into current systems. “This technology enables the development of highly effective operational systems that will serve as an additional layer of defense to secure the State of Israel by air, land and sea,” a ministry statement said.
But like with other recent claims of powerful laser weapons, such as out of Chinese defense companies, the burden of ‘proof’ over whether the lasers are indeed powerful and effective enough to actually make intercepts is another thing and remains to be seen in action.
Citing a top official, The Jerusalem Post notes the program has grown successful over many painstaking years: “The ministry has been working for more than 10 years on powerful laser technology to enable the development of platforms to intercept a variety of threats, he said.”
And further, said the official: “It has carried out a number of successful interceptions of targets, including mortar shells, drones and antitank missiles, at a variety of ranges over the years.”
Specifically the latest breakthrough touted by the ministry relates to the precision and concentration of the laser beam’s power.
“According to Oster, the ministry was able to take several laser beams and, with an advanced algorithm, connect them to get one strong beam that is able to intercept and take down a variety of threats,” according to the report, citing the Defense Ministry’s Directorate of Research and Development head of the Optronics Department, Dubi Oster.
“During a war, missile interceptors will at one point run out, but with this system, as long as you have electricity, you have a never-ending supply,” another official working on the program said. “This is a weapon that you can’t see or hear,” the official said, adding that each offensive weapons intercept could conceivably only cost a few dollars in electricity.
Defense Minister Naftali Bennett referenced the high-tech system as a defense “laser sword. He stated to the Jerusalem Post that “we will add a laser sword when dealing with threats from the North or the South,” adding that “The enemies of Israel better not test our resolve or our abilities.”
Illustrative file image Reports on the program earlier last year referenced one of the particular applications as the ‘Iron Beam’ — a mobile High-Energy Laser Weapon System (HELWS).
Despite the high claims, the IDF has yet to offer video proof of successful field tests, which could still be years away. Laser technology employed for defensive and offensive purposes has been notoriously ‘weak’ at extended distances, given the beam’s power disperses and decreases rapidly beyond very close proximity.
Tyler Durden
Fri, 01/10/2020 – 01:00 - The Risk Of Nuclear War Is Growing
The Risk Of Nuclear War Is Growing
Authored by Andreas Kluth, writer & editor at Bloomberg Opinion. Previously editor-in-chief of Handelsblatt Global.
It’s been 75 years since Hiroshima and Nagasaki were incinerated, and 50 years since the Nuclear Non-Proliferation Treaty took effect. And yet the world is today in greater danger of nuclear war than at any time since the Cuban Missile Crisis.
In its confrontation with the U.S., Iran appears hell-bent on getting nukes, and could do so within a year. If it does, Saudi Arabia and Turkey will almost certainly follow suit. Israel is already armed. Asia has several nuclear hotspots. And in the most frightening scenario, at any point bombs could fall into the hands of terrorists or other “non-state” groups that are hard to retaliate against and thus to deter.
To slow this proliferation of nukes, the world still relies mostly on the Nuclear Non-Proliferation Treaty, known as NPT, which currently has 191 signatories. Every five years, diplomats gather for a review conference (RevCon), and the next one, in New York, starts in April. Expectations are low, fears are high. If diplomats and the public read up on game theory, their dread would grow more.
When the treaty was negotiated in the 1960s, it was meant to be a grand bargain. The five countries that already had nukes (the U.S., the Soviet Union, the U.K., France and China) would keep them but promise to work toward eliminating them. All other signatories would forswear nuclear weapons in return for help from the big five in using civilian nuclear technology as an energy source. (Israel, Pakistan, India and South Sudan never signed, and North Korea withdrew.)
Has the treaty been a success? Its fans claim that without it even more states might have nukes today. Skeptics worry that the system requires a benevolent hegemon, i.e. the U.S., to police it, but that under President Donald Trump this credible and predictable benevolence is gone.
If allies — Japan, South Korea or Taiwan, say — can no longer be absolutely sure that the U.S. would retaliate on their behalf against a nuclear strike on them — say, by North Korea or China — what’s to keep them from wanting to go nuclear themselves? And what’s to keep other adversaries from doing the same as a hedge against such an outcome?
That’s where game theory comes in. It’s a branch of mathematics that’s been used since the 1960s in nuclear scenarios. The initial games included simple classics such as “chicken” and “the prisoner’s dilemma.” One disturbing insight is that, depending on the game, even rational players acting rationally can end up in situations (called Nash equilibria) that are disastrous for everybody.
When analyzed with game theory, the NPT looks like a terrible idea. The problem is it still lets countries of all stripes gain entry-level nuclear technology for civilian use. However, once a country, like Iran, learns to build a nuclear reactor — by enriching uranium — it’s just one small step from making bombs. That in turn forces adversaries to sprint to the same point. The result is a “soft arms race” like the current one in the Middle East.
Game theory also offers plenty of reasons to worry once soft arms races turn into hard ones. That’s because the world has become more complex since the Cold War. Back then, the U.S. and the Soviet Union used game theory to find a stable strategy for avoiding the worst: mutually assured destruction. (The acronym – MAD — says it all.) It rested on various assumptions. Both sides, for example, must be able to retaliate even after being struck, which is why the U.S., Russia and now also China are so keen to be able to deploy from land, sea, air or even space.
By today’s standards, those old games are laughably simple. They had two players, both assumed to be “rational,” an assumption few people make confidently about some world leaders today. Worse, the number of players keeps growing. So do the permutations of new weapons, such as small nukes for tactical uses or hyper-sonic missiles that give adversaries no time to weigh responses. This leads to a spectacular increase in the possible decisions and responses — and miscalculations. The math quickly gets complex beyond normal human capacities.
Games include, for example, perfectly rational but slippery strategies such as brinkmanship, when actors deliberately “let the situation get somewhat out of hand” just to make it “intolerable to the other party.” The problem is that such situations — such as the skirmishes last year between India and Pakistan, both nuclear powers — can easily go from somewhat, to totally, out of hand.
Another difficult strategy is posturing, to deceive adversaries about one’s own risk appetite (as when Trump tweets about “fire and fury”). Some games also include, quite realistically, a chaotic actor such as nature, more commonly known as “shit happens.”
One mathematical problem is that many of these games need to be played for an unimaginable number of rounds before a Nash equilibrium becomes clear. That might seem acceptable when game theory is applied to economic problems such as how to design the best type of auction for 5G wireless spectrum. In a nuclear context, it would be game over for Homo sapiens.
But game theory also offers a glimmer of hope. A huge problem, in games and reality, is that players either don’t know, or can easily misread, the minds of their adversaries. This can be fixed by adding a mediator, in effect a trusted adviser who selectively provides and withholds information to the enemies, while introducing strategies such as “regret minimization.”
Let the search be on for such mediators, ideally in time for the RevCon in April. The U.S., Russia and China could also use mediation. The former two casually shrugged off one arms-control treaty last year and seem blasé about rescuing the only remaining one, called New START, which expires in a year. China, thinking more about power and destiny than survival, is boosting its arsenal to catch up with them.
Everyone involved needs to understand that nuclear war is not a game.
Tyler Durden
Thu, 01/09/2020 – 23:45 - Visualizing How Chinese Financing Is Fueling Megaprojects Around The World
Visualizing How Chinese Financing Is Fueling Megaprojects Around The World
On a mountaintop a few miles north of the bustling streets of Harare, Zimbabwe, a curving, modern complex is beginning to take shape. This building, once completed, will be the home of the African country’s parliament, and the centerpiece of a new section of the capital city.
Aside from the striking design, Visual Capitalist’s Nick Routley notes that there’s another unique twist to this development – the entire $140 million project is a gift from Beijing. At first glance, gifting a country a new parliament building may seem extravagant, but the project is a tiny portion of China’s $270 billion in “diplomacy spending” since 2000.
AidData, a research lab at the W&M Global Research Institute, has compiled a massive database of Chinese-backed projects spanning from 2000–2017. In aggregate, it creates a comprehensive look at China’s efforts to grow its influence in countries around the world, particularly in Africa and South Asia.
Beijing has ramped up the volume and sophistication of its public diplomacy overtures, […] but infrastructure as a part of its financial diplomacy dwarfs Beijing’s other public diplomacy tools.
– Samantha Custer, Director of Policy Analysis, AidData
Below, we’ll look at three diplomacy spending hotspots around the world, and learn about key Chinese-funded megaprojects, from power plants to railway systems.
1. Pakistan
In 2015, Chinese President Xi Jingping visited Islamabad to inaugurate the China-Pakistan Economic Corridor (CPEC), kicking off a $46 billion investment that has transformed Pakistan’s transportation system and power grid. CPEC is designed to cement the strategic relationship between the two countries, and is a portion of China’s massive One Belt, One Road (OBOR) initiative.
One of the largest projects financed by China was the Karachi Nuclear Power K2/K3 project. This massive power generation project is primarily bankrolled by China’s state-owned Exim Bank which has kicked in over $6.6 billion over three phases of payments.
Billions of dollars in Chinese capital has also funded everything from highway construction to renewable energy projects across Pakistan. Pakistan’s youth unemployment rate sits as high as 40%, so jobs created by new infrastructure investments are a welcome prospect. In 2014, Pakistan had the highest public approval rating of China in the world, with nearly 80% respondents holding a favorable view of China.
2. Ethiopia
Ethiopia has seen a number of changes within its borders thanks to Chinese financing. This is particularly evident in its capital, Addis Ababa, where a slew of transportation projects — from new ring roads to Sub-Saharan Africa’s first metro system — transformed the city.
One of the most striking symbols of Chinese influence in Addis Ababa is the futuristic African Union (AU) headquarters. The $200 million complex was gifted to the city by Beijing in 2012.
Though Ethiopia is a clear example of Chinese investment transforming a country’s infrastructure, a number of other African nations have experienced a similar influx of money from Beijing. This financing pipeline has increased dramatically in recent years.
3. Sri Lanka
In the wake of political turmoil, Sri Lanka is increasingly looking to China for loans. From 2000 to 2017, over $12 billion in loans and grants have poured into the deeply-indebted country.
Perhaps the most contentious symbol of the relationship between the two countries is a port on the south coast of the island nation, at a strategic point along one of the world’s busiest shipping lanes. The Hambantota Port project — which was completed in 2011 — followed a now familiar path. Eschewing an open bidding process, Beijing’s government financed the project and hired a state-owned firm to construct the port, primarily using Chinese workers.
By 2017, Sri Lanka’s government was burdened by debt the previous administration had taken on. After months of negotiations, the port was handed over with the land around it leased to China for 99 years. This handover was a strategic victory for China, which now has a shipping foothold within close proximity of its regional rival, India.
John Adams said infamously that a way to subjugate a country is through either the sword or debt. China has chosen the latter.
– Brahma Chellaney
Playing the Long Game
Africa’s economic rise will likely be a major contributor to global growth in coming years. Already, six of the 10 fastest growing economies in the world are located in Africa. China is also the top trading partner on the continent, with the United States sitting in third place.
OBOR spending has also earned China plenty of influence in the rest of Asia as well. If the ambitious megaproject continues along its current trajectory, China will be the central player in a more prosperous, interconnected Asia.
Tyler Durden
Thu, 01/09/2020 – 23:25 - Paul Craig Roberts: The Justice Department Is Devoid Of Justice
Paul Craig Roberts: The Justice Department Is Devoid Of Justice
Authored by Paul Craig Roberts,
In the United States the criminal justice (sic) system is itself not subject to law. We see immunity to law continually as police commit felonies against citizens and even murder children and walk away free. We see it all the time when prosecutors conduct political prosecutions and when they prosecute the innocent in order to build their conviction record. We see it when judges fail to prevent prosecutors from withholding exculpatory evidence and bribing witnesses and when judges accept coerced plea deals that deprive the defendant of a jury trial.
We just saw it again when federal prosecutors recommended a six month prison sentence for Lt. Gen. Flynn, the former head of the Defense Intelligence Agency accused of lying to the FBI about nothing of any importance, for being uncooperative in the Justice (sic) Department’s effort to frame President Trump with false “Russiagate” charges. The Justice (sic) Department prosecutor said:
“The sentence should adequately deter the defendant from violating the law, and to promote respect for the law. It is clear that the defendant has not learned his lesson. He has behaved as though the law does not apply to him, and as if there are no consequences for his actions.”
That is precisely what the Justice (sic) Department itself did for years in their orchestration of the fake Russiagate charges against Trump.
The prosecutor’s hypocrisy is overwhelming.
The Justice (sic) Department is a criminal organization. It has no sense of justice. Convicting the innocent builds the conviction rate of the prosecutor as effectively as convicting the guilty. The Horowitz report of the Justice (sic) Department’s lies to the FISA court did not recommend a six-month prision sentence for those Justice (sic) Deplartment officials who lied to the government. Horowitz covered up the crimes by converting them into “mistakes.” Yes, they are embarrassing “mistakes,” but mistakes don’t bring prison sentences.
Gen. Flynn, who was President Trump’s National Security Advisor for a couple of weeks before Mueller and Flynn’s attorneys manuevered him into a plea bargain, allegedly lied to the FBI about whether he met with a Russian. Flynn and his attorneys should never have accepted the proposition that a National Security Advisor shouldn’t meet with Russians. Henry Kissinger and Zbigniew Brzezinski met with Russians all the the time. It was part of their job. Trump originally intended to normalize the strained relations with Russia. Flynn should have been meeting with Russians. It was his job.
Ninety-seven percent of felony cases are resolved with plea bargains. In other words, there is no trial. The defendant admits to guilt for a lighter sentence, and if he throws in “cooperation,” which generally means giving false evidence against someone else in the prosecutor’s net, no sentence at all. Flynn was expected to help frame Trump and Flynn’s former business partner, Bijan Rafiekian, on an unrelated matter. He didn’t, which means he is “uncooperative” and deserving of a prison sentence.
Plea bargains have replaced trials for three main reasons.
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One is that the defense attorney doesn’t want the hard work of defending his client.
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One is that the majority of defendants cannot afford to pay the cost of defense.
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One is that refusing to plea guilty and demanding a trial angers both the prosecutor and judge.
Trials take time and provide a test of often unreliable police and prosecutorial evidence. They mean work for the prosecutor. Even if he secures a conviction, during the same time he could have obtained many more plea bargain convictions. For the judge, trials back up his case docket. Consequently, a trial means for the defendant very high risks of a much longer and more severe sentence than he would get in exchange for saving prosecutor and judge time and energy. All of this is explained to the defendant by his attorney.
It was explained to Gen. Flynn. He agreed to a plea, most likely advised that his “offense” was so minor, no sentence would be forthcoming. Flynn later tried to revoke his plea, saying it was coerced, but the Clinton-appointed judge refused to let him out of the trap.
Now that we know the only Russiagate scandal was its orchestration by the CIA, Justice (sic) Department, and Democrats, failing to cooperate with the special counsel investigation of alleged Russian interference in the 2016 election is nonsensical as we know for a definite fact that there was no such interference.
This is how corrupt American law has become. A man is being put in prison for 6 months for not cooperating with an investigation of an event that did not happen!
If Trump doesn’t pardon Flynn (and Manafort and Stone), and fire the corrupt prosecutors who falsely prosecuted Flynn, Trump deserves no one’s support.
A president who will not defend his own people from unwarranted prosecution is not worthy of support.
In Flynn’s case, we cannot dismiss the suspicion that revenge against Flynn was the driving factor. Gen. Flynn is the official who revealed on television that Obama made the willful decision to send ISIS or whatever we want to call them into Syria. Of course, the Obama regime pretended that the jihadists were moderates seeking to overthrow the alleged dictator Assad and bring democracy to Syria. Washington then pretended that it was fighting the mercenaries it had sent into Syria. Even though the presstitutes did their best to ignore Flynn’s information, Flynn gave extreme offense by letting this information out. That bit of truth-telling was Flynn’s real offense.
Tyler Durden
Thu, 01/09/2020 – 23:05 -
- Libya's Haftar Rejects Russia-Turkey Ceasefire Plan After Huge Advances
Libya’s Haftar Rejects Russia-Turkey Ceasefire Plan After Huge Advances
When Russia’s President Putin attended the launch ceremony for the TurkStream natural gas pipeline this week, at the top of the list of difficult geopolitical crises addressed with Turkey’s Erdogan was the rapidly unfolding Libya war.
Some analysts say that the new Libya conflict and war for control of the oil and gas rich North African country between Benghazi-based Gen. Khalifa Haftar and the UN-recognized GNA in Tripoli is set to dominate world headlines in 2020 alongside the US-Iran showdown. Pundits were surprised when on Wednesday the Turkish and Russian presidents agreed to jointly issue an urgent call for ceasefire in Libya proposed to start from Saturday (Jan.12) midnight.
That surprise cooperative agreement (given Russia and Turkey back separate sides of the war) to come to the negotiating table was swiftly rejected Thursday by Haftar and his Libyan National Army (LNA). This as the death toll continues to climb as Haftar is vowing the ongoing siege of Tripoli is the “final offensive” to wrest control of the city. Haftar went so far as the call his offensive a war against “terrorists” that cannot cease until definitive victory.
Prior Russian defense minister meeting with Gen. Khalifa Haftar, via Mil.ru In a video statement, Haftar’s military spokesman said, “We welcome [Russian President Vladimir] Putin’s call for a ceasefire. However, our fight against terrorist organizations that seized Tripoli and received support of some countries will continue until the end,” according to Al Jazeera.
At least 1,000 people have been killed since the LNA’s military offensive began months ago — though fighting has been sporadic for years — with at least 5,000 others wounded, according to United Nations estimates.
Meanwhile, Turkish troops are said to have touched down in the Libyan capital earlier this week after Turkey’s parliament voted through a plan for military assistance to the besieged GNA. This after reports that Ankara has actually sent Turkish-backed Syrian militants with the FSA as mercenaries to assist in the campaign.
Currently pro-Haftar forces are claiming to be a mere few kilometers away from the center of Tripoli. “The Libyan Army is now in Tripoli, and they are positioned only a few kilometers from the city center,” an LNA military spokesman said in an Arabic statement Thursday.
Also crucial is that days ago the LNA said it captured Sirte, held by forces loyal to the GNA since 2016, which lies some 280 miles east of the capital Tripoli, and was an important highly modernized city previously favored for development under Gaddafi before his 2011 summary execution by NATO-backed ‘rebels’.
The seizure of Sirte, now confirmed under Gen. Haftar’s control, is considered a major blow to the Tripoli unity government.
But a military stalemate is likely to continue, considering Turkey has vowed to prevent a Haftar takeover of the country over the objections of his backers like Egypt and the UAE. For this reason the LNA has been given orders to shoot at any Turkish plane or ship which enters Libyan space. Already Turkish drones have reportedly been downed on a couple of occasions over the past month.
Tyler Durden
Thu, 01/09/2020 – 22:45 - The Kerfuffle War – Trump's Iran De-escalation Succeeds
The Kerfuffle War – Trump’s Iran De-escalation Succeeds
Authored by Joaquin Flores via The Strategic Culture Foundation,
Just like that, it was over. General Mark Milley, chairman of the Joint Chiefs of Staff called it ‘a kerfuffle’. A letter was sent to their Iraqi peers that the U.S was repositioning troops out of Iraq in accordance with legislation from Iraq ending the U.S military presence in the war-torn country, and suddenly then it was retracted by higher-ups. Running interference, Mark Esper backed Milley and said it was ‘an honest mistake’. It all went down within a day of the irrational assassination of Iran’s Soleimani.
The immediate termination of Chewning and Sweeney, at the same time as the assassination of Soleimani and Iran’s response raises some big questions. In the near future it will be of critical importance to get to the bottom of any possible relationship that Esper and his subordinates Chewning and Sweeney – who both served as Defense Secretary Esper’s Chiefs of Staff – had to the assassination of Soleimani. The assassination and any number of possible Iranian responses, can push the U.S into a broad and open military conflict with Iran. Such a war would also be Trump’s undoing.
We might otherwise be led to believe that Chewning and Sweeney’s sudden departure has something to do with Ukraine and the recent release of unredacted emails relating to L3Harris Technologies and funding in Ukraine. These of course also relate to the case against Trump and any possible impeachment. But the timing and symbolism of these as concurrent with the provocation against Iran and the blowback, as well as Esper’s backing of the ‘Kerfuffle theory’, lends strong credence to an Iran connection.
The connection to impeachment cannot be denied, but the necessity of uncovering its potential relation to Iran is tremendously important because it directly relates to larger constitutional and practical questions of the president’s ability to have a Department of Defense that works either for or against U.S strategy as formulated and executed by its democratically elected leadership, as opposed to its permanent bureaucratic administration. This is what Trump and his supporters quite rightfully refer to as the ‘Deep State’.
Were elements in the defense department working towards a heightened brinksmanship that the president did not really want? It would be far from the first time in history that such was the case.
Because the proverbial excrement rolls down-hill, was Esper involved in ordering Soleimani’s assassination which Trump was not informed of until it was too late, or until after? Chewning and Sweeney’s fate may be understood here. The ‘kerfuffle’ which was the withdrawal statement would then be a simple ruse to distract from the actual reasons that Chewning and Sweeney were terminated – acting without orders, insubordination, and even treason.
Trump’s Balancing Policy on Iran and America’s leadership crisis
One undeniable point is that a war with Iran works entirely against Trump’s middle-east policy and his prospects for re-election.
What the Trump administration seeks most now is a de-escalation with Iran. Given that Trump has fueled a rumor mill including the possible ending of sanctions if Iran doesn’t respond, or that there will be no further attacks if Iran’s response is ‘reasonable’, all exists in the unspoken framework that Trump inherently recognizes the ‘guilt’ of the U.S in its irrational act, while it is nevertheless politically impossible to frame it overtly as such.
Impeachment against Trump has now been used several times to push him to act aggressively in the middle-east, contrary to his policy and self-interest. On all the ‘impeachment threat – then strike’ occasions, Trump ordered strikes on predictable targets – targets so predictable and oddly executed, that Syrian and Iranian forces barely felt them. There appears to be at the very least an ‘unspoken communication’ at play, where strikes are made to assuage political needs but not to inflict serious damage. If Trump really wanted an excuse to strike Iran, he’s had it before.
There was precisely such an opportunity when subversives in government hatched a plan to push Trump into a war with Iran, when two planes were sent to violate Iranian airspace – one manned, the other unmanned – flying in close proximity. This created the chance that Iran’s downing of either plane could be used as a pretext for a major war-creating strike on Iran.
Despite Trump’s acting reasonably, government actors and media attempted to create a sensation where Trump was ridiculed for ‘calling off’ a planned retaliation in the aftermath of the downed drone. The same liberal media and Democratic Party establishment that attacked Trump’s de-escalation then from a hawkish perspective, today manifest as doves who suddenly oppose Trump’s reckless hawkishness.
Here, in the aftermath of the drone incident, a Trump policy was formulated – and it’s a policy that figures prominently in de-escalation in the aftermath of the assassination of Soleimani and Iran’s measured response.
The policy is this – if Iran kills Americans, then the U.S escalates. If the U.S does something provocative, then Iran is actually allowed to respond militarily, so long as American personnel are not killed.
Iran’s striking of the al-Asad airbase was predictable. That Trump has decided to officially declare that there were no U.S casualties has indicated his real stance. In all reality, the predictability of the target was such that American soldiers would have been repositioned out of that base, so that Iran could assuage its own popular-democratic needs in terms of legitimacy, without forcing the U.S. to respond again further.
Between an AIPAC rock and an Anti-War Hard-spot
A war with Iran would push the anti-war sentiments of independent voters away from Trump, and towards a more revitalized and mobilized Democrat Party anti-war base. Trump needs an anti-war base to be re-elected, and war with Iran pushes that base towards nearly any Democrat candidate.
At the same time, Trump also needs the continued support from America’s Christian Zionist evangelical ‘Israel Firsters’, as well as the infamous AIPAC, not only to be re-elected, but to maintain the support in the senate against impeachment.
That conflict between Trump’s two greatest populist strengths – between Trump’s anti-war base and his Christian Zionist base – largely defines his weakest political spot. That’s why it’s the best place to attack him.
Trump for his part, has a frenemy relationship with AIPAC, and has worked hard to build his profile with Christian Zionist voters even to the extent that this might limit AIPAC’s influence on them. He has purchased a lot of AIPAC support along the way by tearing up the JCPOA and recognizing the Golan Heights and Jerusalem as Israel’s capital. This is capital he will have to spend to maintain support in the Senate.
All together this means that while Trump may or may not have personally sought the assassination of Soleimani, he must take credit for it for any number of reasons. In brief, these relate again to the Zionist base and AIPAC, as well as needing to appear in control of the very country that he is nominally the president of. When Trump refused to go to war over the downing of the un-manned drone, the liberal media monopoly accused him of being soft on Iran and indecisive.
Israel for its part is not tremendously happy with either of the two competing U.S policies. They have been pushing a ‘bomb Iran’ line for years, so that Israel’s conquest of Iraq may come to be. They are also not happy that the U.S presence in the region will come to an end. Trump may or may not have green-lit Soleimani’s assassination, but in either even its result will be the purchase of political capital that he can use towards ending the anti-ISIS campaign in Iraq. The reality is that the U.S is being pushed out either way. Soleimani’s assassination has only strengthened that resolve.
Simultaneously, the anti-war sentiment in the U.S. is one that both led to Trump’s election and can lead to Trump’s undoing. Americans love sabre rattling and posturing. They also hate war.
To wit, in the immediate aftermath of the Soleimani assassination, the well-known American communist group – the PSL – and its anti-war front organization ‘ANSWER’ have already received incredible donations from deep-pocketed Democrat Party sponsors at the local party level, to stage the first significant anti-war demonstration since the Bush presidency. While PSL/ANSWER members and activists have been laudable in their consistent opposition to all American wars for capital and empire, they only seem to magically receive the funds for permits, advertising, organizing, and staging anti-war marches when a Republican is president. The secondary slogan of these mobilizations was ‘Dump Trump’. ‘Dump Obama’ was never a slogan seen at the non-existent mass mobilizations against the Libyan, Ukrainian, and Syrian wars. Trump’s refusal to take the Democrat-laid war bait, means he can pull off an end-run around the Democrat and deep-state plot.
Democrats also don’t want war with Iran, they only want that Trump loses the anti-war vote. They can force him into these compromised positions by coordinating with the ‘permanent administrative military-intelligence bureaucracy’, by coordinating with AIPAC. The Democrat’s plan is therefore pretty simple: use impeachment to force him to strike at Iran (or get Trump to take credit for a strike that the deep-state pulled off), and then use that entanglement to tank his re-election prospects. Then Democrats ride in on an anti-war ticket, restart JCPOA, and move towards integrating Iranian elites into the EU economy. Israel could ultimately guarantee its piece of Iraq and its Greek pipeline deal in due course, with a reformed and EU friendly Iran, ready to make major compromises with Israel. Maybe this is what Biden means by ‘restorationist’ – restoring the traditional left/right political divide which has empowered the Atlanticist status quo.
A Backroom deal? Iran’s Measured Response and Trump’s face-saving
The successful attack on the US’s al-Asad airbase in Iraq was characterized by Iran’s Supreme Leader Khamenei has characterized as a ‘slap’.
Interestingly, Khamenei’s language used is strategic, and uses a sleight of hand to take the steam from possible opponents. It is clear that Khamenei has said today that while the attack on the airbase is just a slap, and that Iran’s full response will come in the future, he has in fact set up that the solution will be political and diplomatic. He did so in a creative way which appeals to hardliners, saying that any solution could not simply be political and diplomatic, but rather more than this. This sort of double-speak does not reflect any moral lapsus, but is necessary for Iran’s greater geopolitical aims and serves the greater good.
De-escalation requires that both parties save face, and can come away with tangible minor victories and agree that the real underlying dispute is resolved in the future.
This reluctance to engage militarily is beyond the mere politics of justifying American casualties, but points to broader considerations of U.S power projection in the region in the aftermath of the failure of the Obama administration policy of overthrowing the government of Syria.
To understand the events at play requires a multi-dimensional and realist understanding of motivations and relationships, and how relationships work at the level of statecraft. And so in a way that would be popularly understood – as in Game of Thrones – just because you’re invited to the banquet or receive a high-honored appointment, doesn’t mean that are you indispensable or even a friend. Trump’s ‘GoT’ relationship with Israel and even his own cabinet, needless to say any number of Pentagon bosses, is precisely this. Bolton and Pompeo are such frenemies, as have been any number of ‘here today, gone tomorrow’ members of the Trump administration, more or less foisted and forced upon the chief executive by Trump’s opponents in the permanent administration and his partisan opposition, and within the Republican Party itself.
Did Trump make a backroom deal with Iran? Probably not – there was a high public dimension to Trump’s offers, and a recent history where an unspoken language was developed. Iran has demonstrated a high level of intelligence, restraint, intuition, and strategic thinking in its several thousand year-old civilization. There is no reason to think that they wouldn’t have understood and inferred everything explained in this article, and much more, without needing a direct conversation with Trump which no doubt would have led to yet another impeachment fandango.
Tyler Durden
Thu, 01/09/2020 – 22:25 - NHTSA Opens Probe Into Fatal December Wreck Where Tesla Slammed Into A Fire Truck
NHTSA Opens Probe Into Fatal December Wreck Where Tesla Slammed Into A Fire Truck
For years we have been waiting for the slightest clue that someone – anyone – at the NHTSA had a pulse as it related to a seemingly neverending slew of recent Tesla wrecks, many of which seem to have been worsened or outright catalyzed by the use of Autopilot.
This week, the NHTSA showed a small blip of a pulse when it was reported by Bloomberg that the agency would be investigating the December 29 crash of a Tesla that slammed into a parked fire truck on an Indiana highway.
We reported on the crash on December 29, just moments after it happened. The 23 year old wife of the driver died of her injuries after being transported to the hospital. The 25 year old driver survived with injuries.
According to the Greencastle Banner-Graphic, the accident took place in Cloverdale, IN.
The fire truck was in the eastbound lands of the interstate when a Tesla ran into the rear of the truck, causing “heavy damage” to both.
Both the driver and the passenger were unconscious and trapped after the accident. Both occupants were extricated from the vehicle.
The truck had its emergency lights flashing while it was in the midst of responding to an earlier crash.
There is no word yet on whether or not Autopilot played a role in the accident. The state police plans on reconstructing the crash and says that drugs and alcohol were not a factor.
Of the 23 total accidents the NHTSA has reviewed involving driver assist technologies, 14 have involved Teslas, the agency said.
Tyler Durden
Thu, 01/09/2020 – 22:05 - Tverberg: Expect Low Oil Prices In 2020; Tendency Toward Recession
Tverberg: Expect Low Oil Prices In 2020; Tendency Toward Recession
Authored by Gail Tverberg via OurFiniteWorld.com,
Energy Forecast for 2020
Overall, I expect that oil and other commodity prices will remain low in 2020. These low oil prices will adversely affect oil production and several other parts of the economy. As a result, a strong tendency toward recession can be expected. The extent of recessionary influences will vary from country to country. Financial factors, not discussed in these forecasts, are likely also to play a role.
The following are pieces of my energy forecast for 2020:
[1] Oil prices can be expected to remain generally low in 2020. There may be an occasional spike to $80 or $90 per barrel, but average prices in 2020 are likely to be at or below the 2019 level.
Figure 1. Average annual inflation-adjusted Brent equivalent oil prices in 2018 US$. 2018 and prior are as shown in BP’s 2019 Statistical Review of World Energy. Value for 2019 estimated by author based on EIA Brent daily oil prices and 2% expected inflation.
Figure 2 shows in more detail how peaks in oil prices have been falling since 2008. While it doesn’t include early January 2020 oil prices, even these prices would be below the dotted line.
Figure 2. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.
Oil prices can temporarily spike because of inadequate supply or fear of war. However, to keep oil prices up, there needs to be an increase in “demand” for finished goods and services made with commodities. Workers need to be able to afford to purchase more goods such as new homes, cars, and cell phones. Governments need to be able to afford to purchase new goods such as paved roads and school buildings.
At this point, the world economy is struggling with a lack of affordability in finished goods and services. This lack of affordability is what causes oil and other commodity prices to tend to fall, rather than to rise. Lack of affordability comes when too many would-be buyers have low wages or no income at all. Wage disparity tends to rise with globalization. It also tends to rise with increased specialization. A few highly trained workers earn high wages, but many others are left with low wages or no job at all.
It is the fact that we do not have a way of making the affordability of finished goods rise that leads me to believe that oil prices will remain low. Raising minimum wages tends to encourage more mechanization of processes and thus tends to lower total employment. Interest rates cannot be brought much lower, nor can the terms of loans be extended much longer. If such changes were available, they would enhance affordability and thus help prevent low commodity prices and recession.
[2] World oil production seems likely to fall by 1% or more in 2020 because of low oil prices.
Quarterly oil production data of the US Energy Information Administration shows the following pattern:
Figure 3. Quarterly World Crude Oil and Natural Gas Liquids production, based on EIA international data through September 2019. This is a fairly broad definition of oil. It does not include biofuels because their production tends to be seasonal.
The highest single quarter of world oil production was the fourth quarter of 2018. Oil production has been falling since this peak quarter.
To examine what is happening, the production shown in Figure 3 can be divided into that by the United States, OPEC, and “All Other.”
Figure 4. Quarterly world crude oil and natural gas liquids production by part of the world, based on international data of the US Energy Information Agency through September 30, 2019.
Figure 4 shows that the production of All Other seems to be steady to slightly rising, more or less regardless of oil prices.
OPEC’s oil production bobs up and down. In general, its production is lower when oil prices are low, and higher when oil prices are high. (This shouldn’t be a surprise.) Recently, its production has been lower in response to low prices. Effective January 1, 2020, OPEC plans to reduce its production by another 500,000 barrels per day.
Figure 4 shows that oil production of the United States rose in response to high prices in the 2010 to 2013 period. It dipped in response to low oil prices in 2015 and 2016. When oil prices rose in 2017 and 2018, its production again rose. Production in 2019 seems to have risen less rapidly. Recent monthly and weekly EIA data confirm the flatter US oil production growth pattern in 2019.
Putting the pieces together, I estimate that world oil production (including natural gas liquids) for 2019 will be about 0.5% lower than that of 2018. Since world population is rising by about 1.1% per year, per capita oil production is falling faster, about 1.6% per year.
A self-organizing networked economy seems to distribute oil shortages through lack of affordability. Thus, for example, they might be expected to affect the economy through lower auto sales and through less international trade related to automobile production. International trade, of course, requires the use of oil, since ships and airplanes use oil products for fuel.
If prices stay low in 2020, both the oil production of the United States and OPEC will likely be adversely affected, bringing 2020 oil production down even further. I would expect that even without a major recession, world oil supply might be expected to fall by 1% in 2020, relative to 2019. If a major recession occurs, oil prices could fall further (perhaps to $30 per barrel), and oil production would likely fall lower. Laid off workers don’t need to drive to work!
[3] In theory, the 2019 and 2020 decreases in world oil production might be the beginning of “world peak oil.”
If oil prices cannot be brought back up again after 2020, world oil production is likely to drop precipitously. Even the “All Other” group in Figure 4 would be likely to reduce their production, if there is no chance of making a profit.
The big question is whether the affordability of finished goods and services can be raised in the future. Such an increase would tend to raise the price of all commodities, including oil.
[4] The implosion of the recycling business is part of what is causing today’s low oil prices. The effects of the recycling implosion can be expected to continue into 2020.
With the rise in oil prices in the 2002-2008 period, there came the opportunity for a new growth industry: recycling. Unfortunately, as oil prices started to fall from their lofty heights, the business model behind recycling started to make less and less sense. Effective January 1, 2018, China stopped nearly all of its paper and plastic recycling. Other Asian nations, including India, have been following suit.
When recycling efforts were reduced, many people working in the recycling industry lost their jobs. By coincidence or not, auto purchases in China began to fall at exactly the same time as recycling stopped. Of course, when fewer automobiles are sold, demand for oil to make and operate automobiles tends to fall. This has been part of what is pushing world oil prices down.
Sending materials to Asia for recycling made economic sense when oil prices were high. Once prices dropped, China was faced with dismantling a fairly large, no longer economic, industry. Other countries have followed suit, and their automobile sales have also fallen.
Companies operating ships that transport manufactured goods to high income countries were adversely affected by the loss of recycling. When material for recycling was available, it could be used to fill otherwise-empty containers returning from high income countries. Fees for transporting materials to be recycled indirectly made the cost of shipping goods manufactured in China and India a little lower than they otherwise would be, if containers needed to be shipped back empty. All of these effects have helped reduce demand for oil. Indirectly, these effects tend to reduce oil prices.
The recycling industry has not yet shrunk back to the size that the economics would suggest is needed if oil prices remain low. There may be a few kinds of recycling that work (well sorted materials, recycled near where the materials have been gathered, for example), but it probably does not make sense to send separate trucks through neighborhoods to pick up poorly sorted materials. Some materials may better be burned or placed in landfills.
We are not yet through the unwind of recycling. Even the recycling of materials such as aluminum cans is affected by oil prices. A March, 2019, WSJ article talks about a “glut of used cans” because some markets now prefer to use newly produced aluminum.
[5] The growth of the electric car industry can be expected to slow substantially in 2020, as it becomes increasingly apparent that oil prices are likely to stay low for a long period.
Electric cars are expensive in two ways:
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In building the cars initially, and
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In building and maintaining all of the charging stations required if more than a few elite workers with charging facilities in their garages are to use the vehicles.
Once it is clear that oil prices cannot rise indefinitely, the need for all of the extra costs of electric vehicles becomes very iffy. In light of the changing view of the economics of the situation, China has discontinued its electric vehicle (EV) subsidies, as of January 1, 2020. Prior to the change, China was the world’s largest seller of electric vehicles. Year over year EV sales in China dropped by 45.6% in October 2019 and 45.7% in November 2019. The big drop in China’s EV sales has had a follow-on effect of sharply lower lithium prices.
In the US, Tesla has recently been the largest seller of EVs. The subsidy for the Tesla is disappearing in 2020 because it has sold over 200,000 vehicles. This is likely to adversely affect the growth of EV sales in the US in 2020.
The area of the world that seems to have a significant chance of a major uptick in EV sales in 2020 is Europe. This increase is possible because governments there are still giving sizable subsidies to buyers of such cars. If, in future years, these subsidies become too great a burden for European governments, EV sales are there are likely to lag there as well.
[5] Ocean going ships are required to use fuels that cause less pollution as of January 2020. This change will have a positive environmental impact, but it will lead to additional costs which are impossible to pass on to buyers of shipping services. The net impact will be to push the world economy in the direction of recession.
If ocean-going ships use less polluting fuels, this will raise costs somewhere along the line. In the simplest cases, ocean-going vessels will purchase diesel fuel rather than lower, more polluting, grades of fuel. Refineries will need to charge more for the diesel fuel, if they are to cover the cost of removing sulfur and other pollutants.
The “catch” is that the buyers of finished goods and services cannot really afford more expensive finished goods. They cut back in their demand for automobiles, homes, cell phones and paved roads if oil prices rise. This reduction in demand is what pushes commodity prices, including oil prices, down.
Evidence that ship owners cannot really pass the higher refining costs along comes from the fact that the prices that shippers are able to charge for shipping seems to be falling, rather than rising. One January article says, “The Baltic Exchange’s main sea freight index touched its lowest level in eight months on Friday, weighed down by weak demand across all segments. . .The Index posted its biggest one day percentage drop since January 2014, in the previous session.”
So higher costs for shippers have been greeted by lower prices for the cost of shipping. It will partly be ship owners who suffer from the lower sales margin. They will operate fewer ships and lay off workers. But part of the problem will be passed on to the rest of the economy, pushing it toward recession and lower oil prices.
[6] Expect increasingly warlike behavior by governments in 2020, for the primary purpose of increasing oil prices.
Oil producers around the world need higher prices than recently have been available. This is why the US seems to be tapering its growth in shale oil production. Middle Eastern countries need higher oil prices in order to be able to collect enough taxes on oil revenue to provide jobs and to subsidize food purchases for citizens.
With the US, as well as Middle Eastern countries, wanting higher oil prices, it is no wonder that warlike behavior takes place. If, somehow, a country can get control of more oil, that is simply an added benefit.
[7] The year 2020 is likely to bring transmission line concerns to the wind and solar industries. In some areas, this will lead to cutbacks in added wind and solar.
A recent industry news item was titled, Renewables ‘hit a wall’ in saturated Upper Midwest Grid. Most of the material that is published regarding the cost of wind and solar omits the cost of new transmission lines to support wind and solar. In some cases, additional transmission lines are not really required for the first additions of wind and solar generation; it is only when more wind and solar are added that it becomes a problem. The linked article talks about projects being withdrawn until new transmission lines can be added in an area that includes Minnesota, Iowa, parts of the Dakotas and western Wisconsin. Adding transmission lines may take several years.
A related issue that has come up recently is the awareness that, at least in dry areas, transmission lines cause fires. Getting permission to site new transmission lines has been a longstanding problem. When the problem of fires is added to the list of concerns, delays in getting the approval of new transmission lines are likely to be longer, and the cost of new transmission lines is likely to rise higher.
The overlooked transmission line issue, once it is understood, is likely to reduce the interest in replacing other generation with wind and solar.
[8] Countries that are exporters of crude oil are likely to find themselves in increasingly dire financial straits in 2020, as oil prices stay low for longer. Rebellions may arise. Governments may even be overthrown.
Oil exporters often obtain the vast majority of their revenue from the taxation of receipts related to oil exports. If prices stay low in 2020, exporters will find their tax revenues inadequate to maintain current programs for the welfare of their people, such as programs providing jobs and food subsidies. Some of this lost revenue may be offset by increased borrowing. In many cases, programs will need to be cut back. Needless to say, cutbacks are likely to lead to unhappiness and rebellions by citizens.
The problem of rebellions and overthrown governments also can be expected to occur when exporters of other commodities find their prices too low. An example is Chile, an exporter of copper and lithium. Both of these products have recently suffered from low export prices. These low prices no doubt play as major part in the protests taking place in Chile. If more tax revenue from the sales of exports were available, there would be no difficulty in satisfying protesters’ demands related to poverty, inequality, and an overly high cost of living.
We can expect more of these kinds of rebellions and uprisings, the longer oil and other commodity prices stay too low for commodity producers.
Conclusion
I have not tried to tell the whole economic story for 2020; even the energy portion is concerning. A networked self-organizing system, such as the world economy, operates in ways that are far different from what simple “common sense” would suggest. Things that seem to be wonderful in the eyes of consumers, such as low oil prices and low commodity prices, may have dark sides that are recessionary in nature. Producers need high prices to produce commodities, but these high commodity prices lead to finished goods and services that are too expensive for many consumers to afford.
There probably cannot be a “one-size-fits-all” forecast for the world economy. Some parts of the world will likely fare better than others. It is possible that a collapse of one or more parts of the world economy will allow other parts to continue. Such a situation occurred in 1991, when the central government of Soviet Union collapsed after an extended period of low oil prices.
It is easy to think that the future is entirely bleak, but we cannot entirely understand the workings of a self-organizing networked economy. The economy tends to have more redundancy than we would expect. Furthermore, things that seem to be terrible often do not turn out as badly as expected. Things that seem to be wonderful often do not turn out as favorably as expected. Thus, we really don’t know what the future holds. We need to keep watching the signs and adjust our views as more information unfolds.
Tyler Durden
Thu, 01/09/2020 – 21:45 -
- Disgraced Connecticut Hedge Fund Manager Bilked Investors Out Of $20M In "Ponzi-Like Fraud"
Disgraced Connecticut Hedge Fund Manager Bilked Investors Out Of $20M In “Ponzi-Like Fraud”
A Connecticut hedge fund manager has pleaded guilty to deliberately misleading his LPs and eventually bilking them out of a total of $20 million over a roughly three-year period, according to an affidavit filed Thursday.
According to the complaint, filed in the Southern District of New York, Jason Rhodes, 47, of Rowayton, Conn., along with several co-conspirators, raised funds from about two dozen investors from 2013 to 2016, claiming their money would be invested and manged by “high-performing” portfolio managers.
But their money was instead diverted to a a variety of personal uses, including a $1 million payment to settle an unrelated civil lawsuit, a trip to Dubai, a luxury timeshare and an investment in a trucking company Rhodes co-owned with his wife.
According to the affidavit, between November 2013 and December 2016, Rhodes and a bevy of accomplices-turned-state-cooperators “willfully and knowingly” altered account statements and misled their LPs – primary members of wealthy families – out of a combined $19.6 million via a “Ponzi-like” scheme that involved using fresh money from new investor-victims to pay back older investors.
As many readers are undoubtedly thinking, Rhodes’ scheme essentially involved taking a page out of the Bernie Madoff playbook, without the decades of fraudulently advertised market-beating returns.
Of course, the fraud at Sentinel – the name of Rhodes’ firm – unfolded on a much smaller scale: Sentinel was a decidedly “boutique” firm with only 25 investors and a grand total of about $20 million under management. The firm raised most of its money by pitching wealthy families, and apparently had some success. And by the time the Rhodes and his partners were caught, they had squandered pretty much all of this money.
According to the affidavit, Sentinel marketed itself as having access to “high-performing portfolio managers” who helped guide two separate funds at Sent one of which focused on M&A arbitrage, and another that was a simple long-short equity fund.
Rhodes co-founded Sentinel with Mark Varacchi, who is named in the affidavit as an unindicted co-conspirator. In addition to leading the firm, Rhodes acted as chief risk officer, and also was the sole individual at the firm with signatory authority over Sentinel’s prime brokerage accounts. Before Sentinel, Rhodes served as the managing director for risk management at “an institutional risk management firm”, and also claimed to have worked as a “senior risk manager” at another unnamed multi-billion dollar hedge fund.
Varacchi and another named co-conspirator, Steven Simmons, both previously pleaded guilty to conspiracy to commit fraud.
According to the section of the affidavit that detailed Rhodes’ fraudulent scheme, Rhodes created several sub-accounts at his prime broker, ostensibly to hold funds belonging to different LPs.
Then, between 2013 and 2016, Rhodes delivered no fewer than 26 ‘wire out’ requests to his prime broker with the stated purpose that the money being withdrawn would be used to cover redemptions.
But in each of these instances, the funds were instead transferred to private accounts that Rhodes controlled. A complete breakdown can be found below:
Instead of being returned to clients, he money was used to pay back prior investors, and to cover the firm’s operating expenses, while some was also used for “personal” expenses by Rhodes and his co-conspirators.
At one point in 2013, Rhodes told one co-conspirator that he needed to take $80k out of the firm’s accounts to invest in a “trucking business”. In another violation, Rhodes took a portion of a $5 million investment from an LP and improperly used it to settle a civil lawsuit filed against Rhodes & Co.
The scheme started to unravel in 2015, when an LP asked for documentation verifying their $4 million-plus position in the fund, at a time when the accounts for both of Sentinel’s Radar-branded funds had just over $1 million left. Unwilling to risk their fraud being discovered, Rhodes altered documentation from his prime broker to try and misrepresent to the investor the amount of money available in their sub-account.
However, the LP eventually did discover the discrepancy, and threatened to report Rhodes to the authorities if their money wasn’t returned. To accomplish this, Rhodes worked with Simmons to try and solicit more money from other LPs at the firm with the goal of using that money to pay back the other LP before they decided to report Rhodes to the SEC.
Eventually, this pile of lies, dodges and poor investments caught up with Rhodes, who has now pleaded guilty. It’s unclear when he will be sentenced.
Rhodes is copping to four counts, including conspiracy to commit securities and wire fraud, securities fraud, wire fraud and investment advisor fraud.
Read the full indictment below:
u.s. v. Jason Rhodes Complaint by Zerohedge on Scribd
Tyler Durden
Thu, 01/09/2020 – 21:25 - Did Trump Just Blow Up His Goal Of Isolating Iran?
Did Trump Just Blow Up His Goal Of Isolating Iran?
Authored by John Bradley via The Spectator,
A blood-red flag was raised over the Jamkaran mosque in the Iranian holy city of Qom last week, one normally reserved to commemorate the death of martyrs. This time, it was intended as a call to arms. ‘We have unfurled this flag so that all [Shia] believers in the world gather around it to avenge Qassem Soleimani’s blood unjustly shed,’ said the mosque’s leader. In Tehran, there were calls for bloody retribution for the air strike that killed Iranian general Soleimani — and everywhere, talk of all-out war. If it was also intended to strike the fear of Allah into the hearts of Iran’s Sunni Arab enemies, it certainly succeeded.
In Riyadh, there was panic. The Saudi crown prince, Mohammed bin Salman, hastily sent an anti-war delegation to Washington and London. At home, his officials emphasised that the kingdom had not been consulted beforehand about the drone strike. ‘Please don’t blame us,’ was the message to Tehran. The Emirati foreign minister likewise called for restraint, warning of the devastating consequences for the Persian Gulf if war between the US and Iran were to break out.
The foreign minister of the UAE’s arch rival Qatar, home to a US air base that would be a crucial launching pad for any American war against Iran, went one step further. He visited Tehran, met with President Hassan Rouhani and offered his condolences. ‘Qatar understands the deep pain and sadness that the Iranian people and government are enduring,’ he said.
This unified Sunni Arab response to Soleimani’s murder is hardly what Washington had envisaged. After all, from the beginning of his presidency, Donald Trump’s Middle East strategy — orchestrated by his son-in-law, Jared Kushner — was aimed at fomenting an alliance between Israel and the Sunni Gulf Arab states (particularly Saudi Arabia and the Emirates) against Shia Iran.
The goal for the hawks Trump has surrounded himself with was to isolate Iran diplomatically, then to confront the country militarily on multiple fronts. To this end, Trump gave the Saudis a free pass at every juncture, even when Bin Salman had the Washington Post columnist Jamal Khashoggi chopped to pieces and his remains cooked in a tandoori oven.
Israel, the Emirates and Saudi Arabia had been flaunting their new intelligence co-operation and their united front against what they saw as the growing Iranian menace. They flirted with closer diplomatic and cultural ties; at one stage, the idea of an ‘Arab Nato’ was floated. Leaked documents reveal that the Saudis — like the Israelis — had previously been pushing Washington for a direct US strike on Iran’s nuclear facilities.
So Trump could have been forgiven for thinking the Saudis would be elated at Soleimani’s demise. Instead, they and the Emiratis waved the white flag before a single shot was fired. As per Iran’s request: its military offered a truce with Arab states that distanced themselves from America. It said Sunni cities would only be directly targeted if they assisted any US response to its air strikes against US bases in Iraq (in which case Dubai would be the first city to be ‘destroyed’). At the same time, Israel and the US were considered by Iran ‘as one’.
General Jonathan Shaw, former commander of UK forces in Iraq, put it well: Iran’s objectives are political, not military. Their aim is not to destroy any American air base, but to drive a wedge between the US and its Arab allies — and the Soleimani assassination has achieved more to this end than anything that could have been cooked up in Tehran. The Sunnis are standing down and the US and Israel now once again face being without real friends in the region. When push came to shove, all Kushner’s efforts amounted to nothing. How elated the Iranians must be, even in the midst of such a setback.
For those who had been paying closer attention, there were in fact plenty of reasons to believe that the Saudi royal court would respond cautiously to Soleimani’s murder. There were also reasons for them to doubt Trump as an ally. America’s supposedly state-of-the-art defence systems didn’t detect the recent drone strike on Saudi oil facilities. Adding insult to injury, Trump ordered the return of American planes that had been en route to Iran for a retaliatory strike.
This led to a big rethink in Riyadh. Iran might have no navy or air force to write home about, but it does have more missiles than any other country in the region. The attacks on the US air bases in Iraq on Wednesday, and the earlier Saudi strikes, prove it knows how to use them. The damage to the Saudi oil industry if war breaks out, then, would be immense. Riyadh had to ask: if this were to happen, how certain could they be that Trump would come to their aid? It goes without saying that the bold Saudi drive to diversify their economy would come crashing down with the oil installations and water desalination plants. And Bin Salman could also kiss goodbye to the dream of mass tourism. No one but YouTube weirdos would want to visit a war zone.
More to the point, after losing faith in Trump — and seeing what the Iranian military was capable of — the Saudis had decided to talk. Extensive back-channel negotiations had been taking place to ease tensions with Tehran as well as with the Houthis in Yemen. In recent months, the Saudis and Iranians had been using intermediaries in Oman, Kuwait and Pakistan, and reconciliation talks were speeding up. The Iraqi Prime Minister has said that when Soleimani was killed, the general was not planning attacks on American soldiers (as the Pentagon claims) but was on his way to a meeting in Baghdad to discuss how to speed up Saudi-Iran peace talks.
Perhaps no one in Washington realised how quickly things were moving. Or perhaps they did, and killing Soleimani was an effort to stop that rapprochement taking place. Either way, the Saudis had every right to be angry, and after Trump met the Saudi delegation at the Oval Office this week unusually a transcript of the meeting was not released.
The behaviour of Washington since the strike will have underlined every Saudi fear about Trump’s reliability. The US military released a letter declaring it would withdraw from Iraq (as per its parliament’s recent instruction) but the Pentagon said it had been released in error. Trump then tweeted that he could hit Iran’s cultural sites, only to be contradicted by his Defence Secretary.
Just after Iranian missiles were fired at a US base in Iraq this week, an Iranian presidential adviser tweeted that Saudi Arabia could have ‘total peace’. It is not inconceivable that we will see closer ties being forged in the coming years between Iran and Saudi Arabia than between Saudi Arabia and Israel. Washington hawks will not be pleased, but it would be an easier — and perhaps more dependable — option for Riyadh. After all, ordinary Arabs have long considered Israel, not Iran, to be their main enemy.
What is certain is that Iran is now far more united. Its economy shrank by about 10 per cent last year, taken in Washington as proof that sanctions were working. The mullahs were in trouble and badly needed a cause to rally the nation behind. Soleimani’s assassination has given them one. The demonstrations in Iran over fuel price hikes a few months ago already seem like a thing of the past; those who had been on the streets protesting against the government have now turned out in its support. The crowd that marched in Tehran on Monday — chanting ‘Death to America’ — was one of the largest ever seen in the capital.
‘All is well!’ chirped Trump after the Iranian retaliation, signalling that he now sees this episode as at an end.
Iran’s foreign minister, Javad Zarif, offered his own verdict: that we have just witnessed the beginning of the end of the ‘malign US presence in West Asia’.
For Trump, it will be an awkward point. He set out to weaken Iran and its control over the Middle East – but may have ended up handing the region to the mullahs on a platter.
Tyler Durden
Thu, 01/09/2020 – 21:05 - Chinese Officials Confirm Latest Health Crisis Caused By SARS-Like Coronavirus
Chinese Officials Confirm Latest Health Crisis Caused By SARS-Like Coronavirus
With the pace of economic growth slowing, a restive Hong Kong, a devastating pig ebola plague and a newly aggressive America looking to counter its ambitions on the world stage, Beijing is already struggling with its fair share of domestic and geopolitical issues. The last thing it needs is another quintessentially east-asian public health crisis.
Headlines about a new pneumonia-like illness spreading through China have appeared in the Western press over the past week. Officials in the region, including in Hong Kong and Taiwan, have been fearful of the virus’s spread since Beijing delivered a notice warning about the virus on Dec. 31, when just 27 people were infected. As of Thursday, a little more than a week later, the number had risen to 59 – with seven in critical condition.
Now, it appears public health officials worst fears have been confirmed: Preliminary tests indicate the mysterious illness may be caused by a new coronavirus, according to lead scientist Xu Jianguo, who delivered the news to China’s official Xinhua news agency, according to the BBC.
Xu said he and his researchers found the “new type” of coronavirus by testing infected blood samples and throat swabs collected from 15 people.
Crucially, coronaviruses can be the cause of a wide range of illnesses, from common colds, to infections like the SARS virus that originated in China in 2002 and 2003 and ended up killing 700 people around the world.
Courtesy of the BBC
Beijing’s confirmation seems to affirm the WHO’s suspicion that a coronavirus could be to blame for the outbreak.
While identifying the virus type is a start for authorities, “further investigations” are still necessary, said Gauden Galea, The WHO representative for China. For example, pathology investigators still need to understand how the virus spreads.
So far, zero cases of human to human transmission have been confirmed, while the Wuhan cases are thought to have been caused through exposure to animals linked to a live seafood and animal market. Of note, no healthcare workers have fallen ill with the mystery virus.
Remember, the problem isn’t just that this virus is happening, it’s that it’s happening now, just before millions of Chinese travel to see family and friends during the Chinese New Year holiday.
Tyler Durden
Thu, 01/09/2020 – 20:45 - Citadel Securities Sues Quant Who Stole Its "ABC Strategy" Algo Which Made $50MM A Year
Citadel Securities Sues Quant Who Stole Its “ABC Strategy” Algo Which Made $50MM A Year
Three things are certain: death, taxes and quants suing other quants for stealing their secret, money-making algo sauce.
Ever since secretive quant giant Renaissance sued Millennium in the early 2000s for “expropriating” its quant trading strategies when it poached Russian quants Pavel Volfbeyn and Alexander Belopolsky, not a year passes without one or more high profile lawsuits gets lobbed between some of the most iconic HFT or quant funds. And 2020 is no different because as Bloomberg first reported, Citadel Securities, Ken Griffin’s market making firm, has sued a British hedge fund, GSA Capital, over its attempt to hire a senior Citadel trader amid allegations that GSA obtained “a secret trading strategy while using texts and Whatsapp messages to hide all traces of the plan.”
At the center of this lawsuit is what Bloomberg described as Citadel’s “ABC Strategy,” a closely-guarded automated trading strategy, i.e., algo, that cost Citadel “more than $100 million to develop” and which was generating more than $50 million a year trading stocks in the U.S. and Europe. And while there is little additional information, one can understand why an algo, especially one which appears to have involved “guaranteed” profits courtesy of high-frequency trading and consistently generated tens of millions in profits, would be a highly desired piece of source code for anyone to possess, especially an up and coming competitor that was seeking to “set up a new high-frequency trading business.”
Incidentally, for those unfamiliar with why HFT “market makers” are nothing short of money printers, look no further than Virtu, which as we reported back in 2015, had lost money on just one trading day in 6 years!
And yes, Citadel Securities, which is separate from Citadel’s hedge fund, is also wildly profitable: it made $3.5 billion in revenue in 2018, with profit margins that Ken Griffin has previously said should exceed 30%. The Citadel securities trading arm started as a high-frequency market-maker in options before pushing into equities (for those who say it is a very blurry line between prop and flow trading in HFT, you are absolutely right). Today, the firm dominates that realm, handling more than 1 of every 5 shares traded in the U.S., and has had a very close relationship with the likes of the millennials’ favorite trading platform, Robinhood Markets, which may also explain in part its profitability (and no, there is nothing wrong with payment for order flow – it is a decades-old practice that can be traced to the early years of electronic trading. In fact, it was pioneered by Bernie Madoff). For an extended profile of Citadel Securities, read the following Bloomberg profile.
In any case, that’s precisely the algo that GSA was going after when it set out to hire Citadel’s high-frequency trader, Vedat Cologlu, a 2007 Wharton grad and self-described “stat arb trader“, who helped operate and administer the models whose “returns were notably high given the low level of risk it took on.”
However, in its lawsuit, Citadel alleged that the UK fund wanted more:
GSA asked for sensitive information on his equity-trading including his profits and the speed of the trades. And then Cologlu handed over a plan that Citadel argues was based on its own confidential model, including the way the algorithm made predictions.
As noted above, the case which was filed last month, is the latest example of the lengths funds with proprietary trade secrets and automated strategies “where companies deploy computing power to identify trades promising the biggest mismatches or largest payoffs with the least amount of risk”, will go to protect their IP.
And in a world in which scalping dimes, nickels and pennies has become increasingly difficult now that virtually every HFT strategy has become commoditized (and cannibalized), the NYSE was forced to launch laser-based transmission towers to give the peasants using mere microwaves a leg up, it is perhaps not surprising that this latest case involves two market giants who would otherwise be able to coexist in any market but this one.
GSA was spun out of Deutsche Bank AG in 2005 and manages around $7.5 billion. Citadel Securities, the market making division of Citadel, of course needs no introduction (even though we provide one above). Citadel’s legal filing names GSA founder and majority owner Jonathan Hiscox as a defendant, alongside other officials including the chief technology officer. As Bloomberg notes, it has yet to file its formal defense, but said Wednesday it rejects the claims and plans to vigorously defend itself.
According to the Citadel complaint, GSA officials must have been aware of the need for secrecy because they regularly sought to keep details of the courtship out of emails where they could be easily discovered. In May 2019, GSA’s head of recruitment Douglas Ward emailed a junior employee saying that the job interview questions be “Kept off e-mail.”
“GSA well knew that Mr. Cologlu’s responses would contain or would be derived from Citadel’s confidential information and hoped to conceal their wrongful conduct,” Citadel’s lawyers said in the filing dated Dec. 16.
It’s not just stealing top secret money printing golden goose “algos” – trading firms and hedge funds, who have for long used fat pay checks to lure employees, have hit a wall when it comes to the top talent – especially in a market where the vast majority of hedge funds underperformed the market – and have been engaged in an intense battle to hire and retain talent. The latest front line is to recruit technologists who are seen as key to future-proof trading strategies.
As Bloomberg notes, Cologlu – who earned more than $700,000 in 2018 as a quant researcher – was looking for a move after 11 years at Citadel. The firm cited messages saying Cologlu was keen to build out his own business and believed there was a market to trade European stocks. GSA for its part dubbed the plan “Project High Speed Rail” and was making moves to enter the high-speed algorithmic trading business by joining the Turquoise trading facility run by the London Stock Exchange, according to the lawsuit.
Yet while quants and math PhDs may be brilliant at spotting patterns and correlations, they seem to lack even the most rudimentary common sense, and Cologlu sent Citadel’s trading plan to his work email account, which was promptly noticed by Citadel and an investigation began. The GSA recruiter speculated Cologlu had “been called out by Citadel.” That was indeed the case, and Cologlu confirmed to the Citadel legal team that he’d provided GSA with the trading strategy plan. It was unclear what happened next: according to the lawsuit, Cologlu has been suspended, but a person familiar with the situation said he has left the company.
At that point Citadel claims that it confronted GSA about its meetings with Cologlu, and an internal lawyer agreed to cooperate and shredded the hard copies of Cologlu’s trading plan. In addition to damages, Citadel is seeking an injunction to stop GSA from using any of its confidential information, and has also asked the judge to order GSA to destroy all paper and computer copies of the information.
Tyler Durden
Thu, 01/09/2020 – 20:25 - Is Iraq About To Become A Chinese Client State?
Is Iraq About To Become A Chinese Client State?
Authored by Simon Watkins via OilPrice.com,
Following the political and popular backlash in Iran over details of its plans to make the Islamic Republic effectively a client state through various multi-layered oil and gas deals, China has switched its attention for the moment to Iran’s close ally and neighbour, Iraq. Like Iran, Iraq has enormous and still relatively underdeveloped oil and gas reserves, it is an irreplaceable geographical stepping stone in China’s ‘One Belt, One Road’ programme, and it is in need of major ongoing funding. China already has leverage over Iraq as the leading oil company (Rosneft) of its close geopolitical ally, Russia, already has effective control over the oil and gas infrastructure of the north Iraq semi-autonomous region of Kurdistan, and Chinese companies operate on a number of fields in south Iraq. Last week saw key developments in China’s cornerstone project of making Iraq into a client state.
The first of these developments was the announcement from Iraq’s Finance Ministry that the country had started exporting 100,000 barrels per day (bpd) of crude oil to China in October as part of the 20-year oil-for-infrastructure deal agreed between the two countries. As highlighted by OilPrice.com, the broad framework of this arrangement was agreed last September during a visit by Iraq’s then-Prime Minister Adel Abdul Mahdi to Beijing, with the purpose of expanding China’s then US$20 billion of investment in Iraq in addition to the US$30 billion or so in annual trade between the two countries. According to last week’s statement, Chinese firms Zhenhua Oil and Sinochem were the importers of the Iraqi barrels involved, and OilPrice.com understands that all trade financing surrounding these exports – and many of those to come – have been done by the China Export and Credit Insurance Corporation.
This arrangement neatly rolls into China’s wider plan for Iraq (and Iran) as it aims to gradually increase its presence across the country, just as it has done in many countries in Africa in what has been regarded by many as a new wave of colonisation, as analysed in depth in my new book on the global oil markets. For Iraq and Iran, China’s plans are particularly far-reaching, OilPrice.com has been told by a senior oil industry figure who works closely with Iran’s Petroleum Ministry and Iraq’s Oil Ministry. China will begin with the oil and gas sector and work outwards from that central point. In addition to being granted huge reductions on buying Iranian oil and gas, China is to be given the opportunity to build factories in both Iran and Iraq – and build-out infrastructure, such as railways – overseen by its own management staff from Chinese companies. These are to have the same operational structure and assembly lines as those in China, so that they fit seamlessly into various Chinese companies’ assembly lines’ process for whatever product a particular company is manufacturing, whilst also being able to use the still-cheap labour available in both Iraq and Iraq.
The railway infrastructure in Iraq, such as it is, will be built out after the completion of the network in Iran by China, allowing for the transport of all manufactured products from China into, ultimately, Europe. In this context, late last year saw Iran’s Vice President, Eshaq Jahangiri announce that Iran had signed a contract with China to implement a project to electrify the main 900 kilometre railway connecting Tehran to the north-eastern city of Mashhad. Adjunct to this, Jahangiri added that there are also plans to establish a Tehran-Qom-Isfahan high-speed train line and to extend this upgraded network up to the north-west through Tabriz. Tabriz, home to a number of key sites relating to oil, gas, and petrochemicals, and the starting point for the Tabriz-Ankara gas pipeline, will be a pivot point of the 2,300 kilometre New Silk Road that links Urumqi (the capital of China’s western Xinjiang Province) to Tehran, and connecting Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, and then via Turkey into Europe. Once the plans for this are making substantial progress then China will extend the transport links into Iraq to the West.
In the meantime, Iraq has been working on new laws that will regulate the operation of a reconstruction agency, the primary function of which, according to the source, will be ensure that China “is allowed to just get on with things, without the usual red-tape.” Only recently, for example, Iraq’s Electricity Minister Louay al-Khateeb wrote:
“China is our primary option as a strategic partner in the long run…We started with a US$10 billion financial framework for a limited quantity of oil to finance some infrastructure projects…[but] Chinese funding tends to increase with the growing Iraqi oil production, [and is] to be used differently from the previous policies, through construction, investments and operationalization [sic] of the reconstruction council.”
The second key announcement in this vein made last week from Iraq was that the Oil Ministry has completed the pre-qualifying process for companies interested in participating in the Iraqi-Jordanian oil pipeline project. The U$5 billion pipeline is aimed at carrying oil produced from the Rumaila oilfield in Iraq’s Basra Governorate to the Jordanian port of Aqaba, with the first phase of the project comprising the installation of a 700-kilometre-long pipeline with a capacity of 2.25 million bpd within the Iraqi territories (Rumaila-Haditha). The second phase includes installing a 900-kilometre pipeline in Jordan between Haditha and Aqaba with a capacity of 1 million bpd. Iraq’s Oil Minister – for the time being, at least – Thamir Ghadhban added that the Ministry has formed a team to prepare legal contracts, address financial issues and oversee technical standards for implementing the project, and that May will be the final month in which offers for the project from the qualified companies will be accepted and that the winners will be announced before the end of this year. Around 150,000 barrels of the oil from Iraq would be used for Jordan’s domestic needs, whilst the remainder would be exported through Aqaba to various destinations, generating about US$3 billion a year in revenues to Jordan, with the rest going to Iraq. Given that the contractors will be expected to front-load all of the financing for the projects associated with this pipeline, Baghdad expects that such tender offers will be dominated by Chinese and Russian companies, according to the Iran and Iraq source.
“It will allow for infrastructural diversification for the China-Russia partnership that is now really gathering pace across the centre of the Middle East, to add to the plans we are seeing being put into place for Syria,” he told OilPrice.com last week.
Specifically, the entry of the hitherto virtually unknown Russian company, Stroytransgaz, into the hitherto equally unknown Block 17 of Iraq’s barren and lawless Anbar region recently:
“Is the absolute clear sign that the Iran-Iraq-Syria oil and gas pipelines system is now going ahead,” according to the Iran and Iraq source.
“This whole area is right in the centre of what the U.S. military used to call ‘the spine’ of Islamic State where the Euphrates flows westwards into Syria and eastwards into the Persian Gulf, extremely close to the border with Iran,” he said.
“Along the spine running from east to west are the historical ultra-nationalist and ultra-anti-West cities of Falluja, Ramadi, Hit and Haditha, and then we’re into Syria, and a short hop to the key strategic ports of Syria – Banias and Tartus – that also happen to be extremely important to the Russians,” he underlined. “With access to Jordan as well, China and Russia will have all of the key export and transport routes covered,” he concluded.
Tyler Durden
Thu, 01/09/2020 – 19:45 - Big(gest) Brother: US Starts Collecting DNA At Border Entry
Big(gest) Brother: US Starts Collecting DNA At Border Entry
The American surveillance state just turned the Orwell dial to ’11’…
In the latest escalation in the war on Liberty and Freedom in the land of the free, U.S. Customs and Border Protection (CBP) is beginning a pilot program this week to collect DNA at border entries.
By way of background, in August, a top government watchdog alerted President Trump and Congress that CBP, through a “disturbing” pattern of misconduct, has endangered the public for nearly a decade by failing to comply with a federal law requiring that the agency collect DNA samples from detained migrants.
The U.S. Office of Special Counsel (OSC) said CBP’s “noncompliance with the law has allowed subjects subsequently accused of violent crimes, including homicide and sexual assault, to elude detection even when detained multiple times by CBP or Immigration and Customs Enforcement (ICE).”
At the time, a DHS official told Fox News that the agency was now going to work closely with the DOJ on a “path forward” on DNA collection.
And now it is about to begin.
According to a privacy document posted Monday on the DHS site, the Department of Homeland Security (DHS), in partnership with the FBI, will collect DNA samples, obtained via buccal cheek swab, from some migrants and U.S. citizens, which will then be stored in FBI files for use in criminal investigations around the country.
The program, effective January 6, 2020, CBP will begin collecting DNA from any person who is subject to fingerprinting – including U.S. citizens, lawful permanent residents, and migrants (who are arrested at the border, already convicted of a crime, or facing criminal charges).
The statement adds that obtaining the DNA samples was “previously not feasible because of operational exigencies and resource limitations.”
The three-year pilot program will take place in the Detroit Sector and those who present at the Eagle Pass Port of Entry in southwest Texas.
Don’t want your privacy invaded? Too bad, failure to comply will be a misdemeanor.
As Bloomberg notes, privacy and oversight groups have expressed concern that the government has other, faster ways of verifying migrant identities that won’t create a massive database that could be used to target innocent individuals for surveillance.
Remember, it’s for your own security; and besides, if you have done nothing wrong, what have you got to fear from providing the government with your DNA?
As a reminder, DHS already expects to have face, fingerprint, and iris scans of at least 259 million people in its biometrics database by 2022.
The Orwellian police state is upon us, but don’t expect it to improve at all. In fact, as George Orwell said: “If you want a vision of the future, imagine a boot stamping on a human face – forever.”
Tyler Durden
Thu, 01/09/2020 – 19:25 - 93 Of Illinois' 102 Counties Have Lost Population Since 2010
93 Of Illinois’ 102 Counties Have Lost Population Since 2010
Authored by Ted Dabrowski and John Klingner via Wirepoints.org,
If you’re wondering how widespread Illinois’ problems really are, check out the below chart based on U.S. Census data. It shows that 93 of the state’s 103 counties have shrunk since 2010. Illinois’ population has dropped by 170,000 people since the turn of the decade and few of the state’s counties have been spared.
Illinois has lost more population than any other state in the country and it was one of just four states to shrink since 2010. The other three states were West Virginia, Connecticut and Vermont. By comparison, states like Indiana added 200,000 to its population, while fast growing states like Tennessee and South Carolina added more than 400,000 each. Florida, Texas and California have added millions to their populations since 2010.
Illinois’ population loss across so many counties is a reflection of the state’s outlier status on many of the nation’s economic, demographic and financial metrics. Illinois has the nation’s most costly pension crisis, one of the highest tax burdens, falling real home prices and a general lack of economic opportunity. It’s also one of the most corrupt states in the country.
Cook County lost the most population of any county in Illinois over the 2010-2018 period. The county lost nearly 19,000 people. Winnebago was second with a loss of 11,000. St. Clair was third with a population drop of 9,300.
Macon, Peoria, Madison, Vermilion, LaSalle, Rock Island, and Kankakee counties rounded out the top ten biggest losers of population.
At the other end, only nine of the state’s 102 counties managed to gain population over the period. Kane County grew by 18,000, largely offsetting Cook County’s losses. Another collar county, Will, gained 13,500. Kendall County was next with an increase of 12,500.
The only other counties to show growth were DuPage, Champaign, McLean, Monroe, Grundy, Williamson – just nine counties in all.
The downstate problem
Collectively, Illinois’ downstate counties have suffered the worst loss of population, by far. The whole region lost nearly 120,000 people between 2010 and 2018 – more than 2.5 percent of its total population.
Three (DuPage, Will and Kane) of the five collar counties gained population, leaving the collar counties as the only growth area in Illinois.
However, that increase was largely at the expense of Cook County. Previous migration data shows many new collar residents come from Cook County.
Cook County itself lost 19,000, or 0.4 percent, of its total population over the 2010-2018. That’s on top of the more than 200,000 people it lost in the decade prior to that.
A 0.4 percent loss may not sound like much, but compared to the nation’s largest counties, Cook County is an outlier. Wirepoints analyzed the population change for the nation’s 50 most populous counties and found that Cook was one of just seven counties to lose population since 2010.
Think whatever you want about Illinois politics, but it’s being categorically rejected year after year by far too many residents.
Until the state’s policies are flipped on their head – until Illinoisans finally get the big pension and spending reforms the state desperately needs – expect many more to uproot their lives to find opportunities elsewhere.
Read more about Illinois’s financial and out-migration crisis:
Tyler Durden
Thu, 01/09/2020 – 19:05 - Israel Bombs Weapons Depot Run By Iranian Militia
Israel Bombs Weapons Depot Run By Iranian Militia
Tensions continued to climb in the Middle East Thursday evening as reports of another air strike have been confirmed, but this time, it was the Israelis doing the shelling.
According to reports by domestic and western media, the Israeli air force carried out an attack against an Iran-backed militia reportedly headquartered on the border between Syria and Iraq.
Tribal sources in Iraq apparently told reporters that the Israeli shelling targeted trucks and individuals associated with Iranian-backed militias near the Iraqi-Syria border. Artillery and shelling was also reported, though it’s unclear who fired those shots. The weapons are believed to have been destined for Hezbollah.
Casualties have been reported, though the exact number is so far unclear.
Sources claimed that the airstrikes were targeting weapons shipments, according to the Washington Post. The Kataib Imam Ali, an Iran-backed militia, was apparently moving weapons, possibly in preparation for a strike against US interests.
Al Mayadeen reported that the strikes targeted ballistic missile warehouses run by the group. The warehouse was situated outside of the city of Al Bukamal
Reports tonight of airstrikes in eastern Syria against a convoy of the Kataib Imam Ali, an Iranian backed Iraqi militia. Most likely by Israel, which regularly hits the area. A reminder that this isn’t just about the US & Iran
— Liz Sly (@LizSly) January 9, 2020
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The attack comes just hours after Iranian officials, including President Rouhani and a top IRGC commander, warned that Iran’s retaliation for the killing of IRGC General Qasem Suleimani wasn’t yet over, and Tehran publicly washed its hands of its proxies, claiming it couldn’t be held responsible for actions committed in its name.
Tyler Durden
Thu, 01/09/2020 – 18:45 - House Votes to Limit Trump's Power to Strike Iran Without Congress
House Votes to Limit Trump’s Power to Strike Iran Without Congress
After being repeatedly ignored by presidents dating back to Ronald Reagan when it comes to the US’s ever-expanding military commitments around the globe, Congress finally decided to try and take some of that discretionary power back.
Using President Trump’s latest attack on Iranian interests as justification, Democratic leader and House Speaker Nancy Pelosi successfully passed a resolution that would force Trump to go to Congress for authorization before taking any further actions against Iran.
The vote in the Dem-controlled House was 224 to 194 in an almost entirely party-line vote. The vote has long been expected, and although a few Republican senators have decided to join Democrats in supporting the measure in the Senate, it’s still a few votes shy of passing, according to the latest vote totals circulating in the press.
Nancy Pelosi
By pressing ahead with her War Powers Resolution, Pelosi ignited a debate that many thought had been settled: For years, presidents have had authority to unilaterally authorize military action. Remember that time Barack Obama ordered the killing of Osama bin Laden? He didn’t need to go to Congress for that.
But by capitalizing on all the unfounded speculation about Trump starting WWIII, Pelosi sought to raise the issue, in an attempt to win a few Republican votes. Unfortunately for her, Republicans remained united in support of the president by equating support for Pelosi’s resolution with support for America’s enemies, according to the New York Times.
According to CNN, the resolution states that “when the United States military force, the American people and members of the United States Armed Forces deserve a credible explanation regarding such use of military force,” and also that “Congress has not authorized the President to use military force against Iran”
In considering it’s response, the Senate has a few options: it can move ahead with the House-passed measure or endorse a different version introduced by Sen. Tim Kaine.
Of course, without Republican in the upper chamber, the resolution is “largely symbolic” – just another Democratic attempt to poison public opinion against the president before election day.
Unfortunately for them, polls suggest that so far, this approach isn’t working.
Tyler Durden
Thu, 01/09/2020 – 18:21 - Video From Outside Jeffrey Epstein's Cell "No Longer Exists," Government Says
Video From Outside Jeffrey Epstein’s Cell “No Longer Exists,” Government Says
A new Rasmussen poll shows that just 21 per cent of Americans believe Jeffrey Epstein killed himself while 52 per cent believe he was murdered.
It should come as no surprise that so few people believe the official narrative as The Epoch Times’ Zachary Stieber reports that video footage from outside Jeffrey Epstein’s cell actually “no longer exists,” the government said in a new letter, less than a month after prosecutors initially said the footage wasn’t available, before quickly saying in an update that the footage had been found.
Writing to U.S. District Judge Kenneth Karas, prosecutors Maurene Comey and Jason Swergold said there was a mix-up when they asked the Metropolitan Correctional Center (MCC) to preserve the footage from outside the cell.
Epstein was found unconscious with marks around his neck early July 23, 2019. Epstein’s cellmate at the time was accused murderer Nicholas Tartaglione. The defendant’s lawyer requested video footage from outside Epstein’s cell from July 22 and July 23, 2019.
Prosecutors told the defense on Dec. 19, 2019, that it confirmed with staff at the center that the footage was preserved. On Jan. 3, the center provided the government with a copy of the video it preserved.
Here is today’s letter in full explaining how surveillance video from the night of Jeffrey Epstein’s alleged first suicide attempt in July no longer exists because MCC jail inadvertently preserved video from wrong cell. pic.twitter.com/s1eO6KRozj
— Bryan Llenas (@BryanLlenas) January 9, 2020
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“After reviewing the video, it appeared to the government that the footage contained on the preserved video was for the correct date and time, but captured a different tier” than the one where Epstein and Tartaglione’s cell was, prosecutors wrote in the letter.
Legal counsel at MCC told prosecutors that the computer system at the center listed a different cell for Tartaglione, leading to staff preserving the wrong video.
While the center has a backup system in place to house all video footage for its Special Housing Unit, where Epstein and Tartaglione were being held, the FBI reviewed the system as part of a separate investigation “and determined that the requested video no longer exists on the backup system and has not since at least August 2019 as a result of technical errors.”
Jeffrey Epstein in a July 2019 mugshot. (Department of Justice)
The update is the third change in the government’s position on the video footage.
On Dec. 18, 2019, Swergold, the assistant U.S. attorney, told Karas in court that nobody could find the video. A day later, he and Comey wrote to Karas to tell him that the government confirmed with staff at the MCC that the video was preserved.
Epstein, 66, died about two weeks after the July 23, 2019, incident. He was awaiting trial on child sex trafficking charges.
The government letter also came a day after a judge in Florida denied an effort to release records from the 2006 grand jury that indicted Epstein on a felony prostitution count.
“It sounds like a fishing expedition to me,” Chief Circuit Judge Krista Marx told Assistant State Attorney Marshall Levering Evans, the South Florida Sun-Sentinel reported. She added, “I’m not understanding how it will be helpful and to what end.”
Tyler Durden
Thu, 01/09/2020 – 18:11
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