- Atoms For Peace Vs Atoms For War: The Only Fix For Iran-US Relations
Atoms For Peace Vs Atoms For War: The Only Fix For Iran-US Relations
Authored by Matthew Ehret via The Strategic Culture Foundation,
War hawks in Israel and Washington have been quick to denounce Iran’s nuclear power ambitions for years with the repeated excuse that “Iran has so much oil that nuclear energy is irrelevant for them- unless they wanted to build an Islamic Bomb!”
Hogwash. As we shall come to see, not only has Iran’s Supreme Leader Ayatollah Khamenei created a 2003 fatwa declaring nuclear weapons forbidden under Islamic Law, but Iranian leaders were already calling for the need to transition to a new and superior form of energy in order to escape the geopolitical constraints of oil politics over 70 years ago… ironically through the help of the USA!
On December 8, 1953 a speech was delivered at the United Nations by President Dwight D. Eisenhower which has come to be known as his Atoms for Peace speech. As flawed as Eisenhower was as a political leader, this speech did provide a valuable gateway out of the unwinnable Cold War logic of Mutually Assured Destruction that had officially begun with the Soviet Union’s first detonation of their own atomic bomb in 1949. The U.S. had itself been reeling over an 8 year internal coup begun in 1945 over the Anglo-American deep state which had purged much of the U.S. intelligentzia of genuine patriots under the FBI-run red scare and 1947 creation of the CIA. Using a talented hive of sociopaths under the direction of the Dulles Brothers, the Deep State had perverted U.S. foreign policy by launching the Korean War in 1950, and worked as Britain’s dumb giant in the overthrow Iran’s nationalist leader Mohammed Mossadegh in August 1953 when the later attempted to nationalize Britain’s Anglo-Iranian Oil Company in 1951.
Though a competent General, Eisenhower was admittedly naïve and only realized the full extent of what had gone on under his watch during his last days as President in 1961 as outlined in his Military Industrial Complex speech.
This part of history is vitally important to revive now, since Eisenhower’s efforts to undo the terrible injustice caused by America’s complicity in the Iranian regime change as well as broader threat of nuclear annihilation remains the only functional pathway to a durable peace in Iran or globally today. Unless Trump breaks from neo-con pressure in ways that Eisenhower failed to do throughout the 1950s, and returns to this spirit, the future looks bleak indeed.
Atoms for Peace and the Birth of Iranian Atomic Energy
In his 1953 speech, Eisenhower laid out the threats and opportunities which the peaceful use of the atom created:
“The United States knows that if the fearful trend of atomic military build-up can be reversed, this greatest of destructive forces can be developed into a great boon, for the benefit of all mankind. The United States knows that peaceful power from atomic energy is no dream of the future. The capability, already proved, is here today. Who can doubt that, if the entire body of the world’s scientists and engineers had adequate amounts of fissionable material with which to test and develop their ideas, this capability would rapidly be transformed into universal, efficient and economic usage?”
The president listed several domains where the peaceful application of the atom would be of value to humanity saying:
“Experts would be mobilized to apply atomic energy to the needs of agriculture, medicine and other peaceful activities. A special purpose would be to provide abundant electrical energy in the power-starved areas of the world.”
He ended by dropping the conceptual bombshell which shook the foundations of the newly emerging Deep State by calling for a joint U.S.-Russia alliance to cooperate on deploying this new technology around the world under a spirit of goodwill and mutually assured survival when he said this vision would “allow all peoples of all nations to see that, in this enlightened age, the great Powers of the earth, both of the East and of the West, are interested in human aspirations first rather than in building up the armaments of war.”
An earlier attempt to establish U.S.-Russia entente was made by Stalin who welcomed a meeting with the newly elected President in December 1952. Stalin’s death in March 1953 ended this potential.
Many of the world’s nations who have suffered the most under the hands of the “dumb giant” deep state America in recent decades actually found a close ally in this better America. One might be surprised to discover that Atoms for Peace established the creation of atomic energy programs for Argentina, Brazil, India, Pakistan and Iran (to name but a few), through providing training to thousands of students internationally, as well as providing nuclear technology transfers, and financing (most of which ended in the wake of JFK’s assassination).
In 1955 the first International Conference on the Peaceful Uses of Atomic Energy took place in Geneva under the leadership of Dr. Homi Bhaba (father of Indian Atomic Energy), and in 1957 the USA and Iran signed the Cooperation Concerning Civil Uses of Atoms that set the foundation for the 1959 creation of the Tehran Nuclear Research Center. Over the coming year, the first generation of Iranian nuclear scientists were trained in MIT and in 1967, the USA supplied Iran with a 5 megawatt research reactor and enriched uranium fuel. By 1969, the pace of nuclear development both within America and abroad had dropped drastically due in large measure to the deep state takeover of western governments and the imposition of a new logic of empire and post-industrial consumerism. This mis-anthropic agenda took the form of the 1970s CFR/Trilateral Commission-led “Controlled Disintegration of the Economy”.
The Controlled Disintegration Agenda
An important recipe in this Controlled Disintegration agenda took the form of the 1973-74 oil shocks which saw oil prices skyrocket four-fold as tankers replete with oil were kept harbored off the coasts of America under direction of Henry Kissinger. This operation was laid out in full by historian William Engdahl in his 1992 Century of War: Anglo-American Oil Politics and the New World Order.
An unexpected effect was that the Shah of Iran announced that his nation would refocus its energy policies on aggressive nuclear power development, funded by its vast oil revenues. In 1974 the Shah created the Iranian Atomic Energy Organization (IAEO) saying “Petroleum is a noble material, much too valuable to burn… we envision producing, as soon as possible 23 000 mW of electricity using nuclear plants.”
In 1976, Iran’s nuclear energy budget was increased from $36 million to a whopping $1 billion and commitments to build 23 reactors were arranged with companies in Germany, France and the USA. Even President Ford, in a rare moment of sovereign thinking agreed to provide Iran with a reprocessing facility to complete the fuel cycle. Things were proceeding well as the two first 1190 mW reactors built by Germany were 80% and 50% completed when the Shah was suddenly overthrown by a regime change operation put into motion by none-other than the CFR’s Zbigniew Brzinzski, Cyrus Vance and Henry Kissinger in 1979. Within weeks ALL contracts were cancelled and the two reactors remained unbuilt for decades. A parallel derailing of a pro-nuclear orientation occurred with the execution of Prime Minister Zulfikar Ali Bhutto who documented his fight with Kissinger over the latter’s denial of Pakistan’s right to access nuclear power.
Russia Revives Atoms for Peace
The anti-nuclear tides began to slowly turn in Iran’s favor in 1992 when China began supplying nuclear fuel to Iran and in 1995 Russia began to assist in the completion of the unfinished reactors. In 2011, the first 1000 mW reactor came online and a 2nd reactor was begun anew in 2019 under the guidance of Rosatom with several more planned for the coming decade.
While the American neocons and their Zionist brethren have continued a policy of asymmetric war, cyber war, economic war, assassination of Iranian nuclear scientists (and now military officials), Russia has proven herself to be the true heir to the spirit of Eisenhower’s Atoms for Peace.
Rosatom has taken up the torch of nuclear energy diplomacy with gusto in recent years by providing valuable nuclear power assistance to both Iran and Turkey while aggressively building nuclear power reactors at home. The fact that these three nations are the guarantors of the Astana Peace Process for Syria should also not be missed.
Russia has also demonstrated an enlightened interest in assisting African nations in their nuclear ambitions with agreements signed with South Africa, Egypt, Zambia, Ghana, Rwanda, Uganda, Sudan, Kenya, Ethiopia, Congo and Nigeria with scores of imperially-minded racists in London screaming of the “inappropriateness” of this advanced technology to the ‘dark continent’.
Under the guiding win-win framework of China’s Belt and Road Initiative, Iran and the world has been given a master key to permanently throw off the threat of nuclear annihilation. Does President Trump have the moral and intellectual stamina to resist the neo-con pressure now and return America to its better traditions or will he permit himself to be used as a tool of the deep state by unleashing the nuclear dogs of war?
Tyler Durden
Sun, 01/12/2020 – 23:30 - Timelapse Maps: Stunning Overviews Of Our Changing Planet
Timelapse Maps: Stunning Overviews Of Our Changing Planet
Humankind’s impact on the world is obvious, but, as Visual Capitalists’ Nicholas LePan notes, our spatial patterns are sometimes difficult to recognize from the ground.
Publicly accessible, high-quality satellite imagery has been a game changer in terms of understanding the scope of forces such as urbanization and land use patterns.
Google Timelapse Maps
Google Earth’s timelapsed satellite maps capture the drastic changes the planet’s surface has undergone over the past 34 years. Each timelapse comprises 35 cloud-free pictures, which have been made interactive by the CREATE Lab at Carnegie Mellon University.
Three different satellites acquired 15 million images over the past three decades. The majority of the images come from Landsat, a joint USGS/NASA Earth observation program. For the years 2015 to 2018, Google combined imagery from Landsat 8 and Sentinel-2A. Sentinel is part of the European Commission and European Space Agency’s Copernicus Earth observation program.
Deforestation, urban growth, and natural resource extraction are just some of the human patterns and impacts that can be visualized.
Editor’s note: to view the following timelapses, press the play button on any map. You can also view individual years in the time periods as well. On slower internet connections you may need to have patience, as the series of images can take some time to load or display.
Cities and Infrastructure
Urban Growth: Pearl River Delta, China
Up to 1979, China’s Pearl River Delta had seen little urbanization. However in 1980, the People’s Republic of China established a special economic zone, Shenzhen, to attract foreign investment. In the following years, buildings and paved surfaces rapidly replaced the rural settings around the river delta. This is the Lunjiao area just south of Guangzhou.
Urban Growth: Cairo, Egypt
The present-day location of Cairo has been a city for more than 1,000 years, and its constrained urban footprint is now bursting at the seams thanks to Egypt’s population growth. A new city is being built in the nearby stretch of desert land (agricultural land is scarce) that will one day replace ancient Cairo as Egypt’s capital. If the government’s ambitious plans are realized, this desert boomtown could have a population of over 6 million people.
The Egyptian state needed this kind of project a long time ago. Cairo [is] a capital that is full of traffic jams, very crowded. The infrastructure cannot absorb more people.
– Khaled el-Husseiny Soliman
Urban Growth: Phoenix, Arizona
According to estimates from the U.S. Census Bureau, Phoenix is the fastest-growing city in the United States. Over the past two decades, the suburb of Chandler evolved from agricultural uses to sprawling residential developments. This pattern was repeated in a number of cities in the Southern U.S., most notably Las Vegas.
Construction: The Brandenburg Airport, Germany
Berlin’s long overdue Brandenburg Airport began construction in 2006, with the airport initially expected to open in 2011. However, the airport has been subject to numerous delays and the airport now has a new opening date. Berlin Brandenburg Airport is now expected to open on Oct. 31, 2020.
Megaproject: Yangshan Port
The Port of Shanghai became one of the most important transportation hubs in the world after the completion of its offshore expansion – the Yangshan Port.
Building this massive port was a gargantuan engineering feat. First, land reclamation was used to connect two islands 20 miles southeast of Shanghai. Next, the port was connected to the mainland via the Donghai Bridge, which opened in 2005 as the world’s longest sea crossing. The six-lane bridge took 6,000 workers two and half years to construct.
In 2016, the Port of Shanghai was the largest shipping port in the world, handling 37.1 million twenty-foot container equivalents.
Resource Extraction
Mining: Chuquicamata, Chile
Chuquicamata is the largest open pit copper mine by volume in the world, located 800 miles north of the Chilean capital, Santiago. In 2019, Chile’s national mining company Codelco initiated underground mining at Chuquicamata.
Deforestation: Ñuflo de Chávez, Bolivia
Ñuflo de Chávez is one of the 15 provinces of the Bolivian Santa Cruz Department. Satellite images of southern Ñuflo de Chávez illustrate deforestation from agrarian expansion in the jungles of the Amazon. From the air, the deforestation takes on a unique grid pattern with circular clearings. Developed as part of an organized resettlement scheme, each circle is anchored by community amenities and housing, and surrounded by fields of soybeans cultivated for export.
According to Brazil’s National Institute for Space Research, 8.4 million soccer fields of land have been deforested in the Amazon over the past decade.
Shale Gas Boom: Odessa, Texas
The small town of Odessa sits in the middle of one of the most productive shale gas regions in the world, the Permian Basin. The region is expected to generate an average of 3.9 million barrels per day, roughly a third of total U.S. oil production. While the gas may come from underground, the pursuit of this source of energy has drastically altered the landscape, marking the terrain with roads, wells, and housing for workers.
Changing Environment
Drying of the Aral Sea: Kazakhstan and Uzbekistan
It took almost 30 years to make a sea disappear. When the Soviet Union diverted the Amu Darya and Syr Darya rivers to irrigate cotton and rice fields in the 1960s, it turned the Aral Sea into a desert. Once the world’s fourth largest lake, the region is struggling to restore water levels and aquatic habitats.
Glacier Retreat: Columbia Glacier, Alaska, USA
The Columbia Glacier is a tidewater glacier that flows through the valleys of the Chugach Mountains and into Alaska’s Prince William Sound. Increased temperatures initiated a retreat in the length of the glacier over three decades ago. Once in motion, a glacier’s retreat accelerates due to glacial mechanics. It is one of the most rapidly changing glaciers in the world.
Changing Rivers: Iquitos, Peru
Not all change is from humans. There are natural physical processes that continue to shape the Earth’s surface. For example, rivers that experience heavy water flows can be altered through erosion, changing the bends.
Better Perspectives, Better Decisions?
Often, the greatest impacts that occur are out of sight and mind. However, with the increasing availability of satellite technology and improved distribution of images through platforms such as Google Timelapse, the impact of human activity is impossible to ignore.
The bulk of visible changes come from human economic activity, because it is more easily observable on a smaller time scale. However, it’s also worth remembering that there are still many natural processes that take generations, if not thousands of years to affect change.
It is one thing to hear the facts and figures of humankind’s impact on the environment, but to see the change is a whole other story.
Tyler Durden
Sun, 01/12/2020 – 23:05 - Downing Of PS-752 Already Being Used To Smear MH-17 Skeptics
Downing Of PS-752 Already Being Used To Smear MH-17 Skeptics
Authored by Max Parry via Off-Guardian.org,
When the Pentagon confirmed the assassination of Iranian Major General Qasem Soleimani, U.S. President Donald Trump took to social media to post a single image of the American flag to the adulation of his followers.
Unfortunately, most Americans are ignorant of the other flag synonymous with U.S. foreign policy, that of the ‘false flag’ utilized to deceive the public and stir up support for endless war abroad.
While the chicken hawk defenders of Trump’s reckless decision to murder one of the biggest contributors in the defeat of ISIS salivated over possible war with Iran, their appetite was spoiled by Tehran’s retaliatory precision strikes of two U.S. bases in Iraq that deliberately avoided casualties while in accordance with the Islamic Republic’s right to self-defense under Article 51 of the United Nations charter.
The reprisal successfully deescalated the crisis but sent a clear message Iran was willing to stand up to the U.S. with the backing of Russia and China, while Washington underestimated Tehran which forewarned the Iraqi government of its impending counterattack so U.S. personnel could evacuate.
In the hours following the ballistic missile strikes, reports came in that a Boeing 737 international passenger flight scheduled from Tehran to Kiev, Ukraine had crashed shortly after takeoff from Imam Khomeini International Airport, killing all 176 passengers and flight crew on board.
Initial video of the crash of Ukrainian International Airlines Flight 752 (PS752) showed that the aircraft was already in flames while descending to the ground, leading to speculation it was shot down amid the heightened political crisis between Iran and Washington. In the days following, a second obscure video surfaced which only increased this suspicion.
Meanwhile, Western governments quickly concluded that an anti-aircraft surface-to-air missile brought PS752 down and were eager to point the finger at Iran before any formal investigation. Many people, including this author, were admittedly skeptical as to how a plane taking off from Tehran could have been mistaken five hours after the strikes in Iraq.
Nevertheless, those with reservations turned out to be wrong when days later the Islamic Revolutionary Guard Corps (IRGC) came clean that its aerospace forces made a “human error” and accidentally shot the passenger plane down after mistaking it for a incoming cruise missile when it flew close to a military base during a heightened state of alert in anticipation of U.S. attack.
Many have noted that Iran’s honorable decision to take responsibility for the catastrophe is in sharp contrast with Washington’s response in 1988 when the U.S. Navy shot down Iran Air Flight 655 scheduled from Tehran to Dubai over the Strait of Hormuz in the Persian Gulf, killing all 290 occupants, after failing to cover it up.
Just a month later, Vice President George H.W. Bush would notoriously state he would “never apologize for the United States of America. Ever. I don’t care what the facts are.”
Although he was not directly referring to the incident, one can only imagine what the reaction would be if Iranian President Hassan Rouhani were to say the same weeks after shooting down the Ukrainian plane, let alone an American one.
Predictably, Tehran’s transparency has gone mostly unappreciated while the Trump administration is already trying to use the disaster to further demonize Iran.
Oddly enough, Ukrainian International Airlines is partly owned by the infamous Ukrainian-Israeli oligarch, politician and energy tycoon Igor Kolomoisky, who was notably one of the biggest financiers of the anti-Russian, pro-EU coup d’etat which overthrew the democratically elected government of Viktor Yanukovych in 2014.
Kolomoisky is also a principal backer of current Ukrainian President Volodymyr Zelensky whose dubious phone call with Trump resulted in the 45th U.S. president’s impeachment last month.
In another astounding coincidence, Kolomoisky’s Privat Group is believed to control Burisma Holdings, the Cypress-based company whose executive board 2020 presidential candidate Joe Biden’s son Hunter was appointed to following the Maidan junta.
The former Vice President admitted that he bribed Ukraine into firing its top prosecutor who was looking into his son’s corruption by threatening to withhold $1 billion in loan guarantees.
Kolomoisky, AKA “the Chameleon”, is one of the wealthiest people in the ex-Soviet country and was formerly appointed as governor of an administrative region bordering Donbass in eastern Ukraine following the 2014 putsch. He has also funded a battalion of volunteer neo-Nazi mercenaries fighting alongside the Ukrainian army in the War in Donbass against Russian-speaking separatists which the military aid temporarily withheld by the Trump administration that was disputably contingent upon an investigation of Biden and his son goes to.
In 2014, another infamous plane shootdown made international headlines when Malaysian Airlines Flight 17 (MH17) scheduled from Amsterdam to Kuala Lumpur was shot down over the breakaway Donetsk People’s Republic (DPR) in eastern Ukraine, killing all 298 passengers and crew.
From the get-go, the Obama administration was adamant that the missile which shot down the Boeing 777 came from separatist rebel territory.
However, Malaysian Prime Minister Mahathir bin Mohamad denounced the charges brought against the Russian and Ukrainian nationals indicted in the NATO-led investigation, dismissing the entire probe as a politically motivated effort predetermined to scapegoat Moscow and exclude Malaysian participation in the inquiry from the very beginning.
Mohamad is featured in the excellent documentary MH17: Call for Justice made by a team of independent journalists which contests the NATO-scripted narrative and reveals that the Buk missile was more likely launched from Ukrainian Army-controlled territory than the DPR. One of Kolomoisky’s hired guns could also have been responsible.
Shamefully, Iran’s admission of guilt in the PS752 downing is already being used by establishment propagandists to discredit skeptics and conflated with similar contested past events like MH17 in order to intimidate dissenting voices from speaking up in the future.
The Bellingcat ‘investigative journalism’ collective which made its name incriminating Moscow for the MH17 tragedy are the principle offenders. Bellingcat bills itself as an ‘independent’ citizen journalism group even though its founder Eliot Higgins is employed by the Atlantic Council think tank which receives funding from NATO, the U.S. State Department, the National Endowment for Democracy (NED), George Soros’ Open Society Foundation NGO, and numerous other regime change factories.
Despite its enormous conflict of interest, Bellingcat remains highly cited by corporate media as a supposedly reputable source. At the outset, nearly everything about the PS752 tragedy gave one déjà vu of the MH17 disaster, including the rush to judgement by Western governments, so it was only natural for many to distrust the official narrative until more facts came out.
None of this changes that the use of commercial passenger jets as false flag targets for U.S. national security subterfuge is a verifiable historical fact, not a ‘conspiracy theory.’
In 1997, the U.S. National Archives declassified a 1962 memo proposed by the Joint Chiefs of Staff and Department of Defense for then-Secretary of State Robert McNamara entitled “Justification for U.S. Military Intervention in Cuba.”
The document outlined a series of ‘false flag’ terrorist attacks, codenamed Operation Northwoods, to be carried out on a range of targets and blamed on the Cuban government to give grounds for an invasion of Havana in order to depose Fidel Castro.
These scenarios included targets within the U.S., in particular Miami, Florida, which had become a haven of right-wing émigrés and defectors following the Cuban Revolution.
In addition to the sinking of a Cuban refugee boat, one Northwoods plan included the staging of attacks on a civilian jet airliner and a U.S. Air Force plane to be pinned on Castro’s government:
8. It is possible to create and incident which will demonstrate convincingly that a Cuban aircraft has attacked and shot down a chartered civil airliner enroute from the United States to Jamaica, Guatemala, Panama or Venezuela. The destination would be chosen only to cause the flight plan route to cross Cuba. The passengers could be a group of college students off on a holiday or any grouping of persons with a common interest to support chartering a non-scheduled flight.
9. It is possible to create an incident which will make it appear that Communist Cuban MIGs have destroyed a USAF aircraft over international waters in an unprovoked attack.
Although Operation Northwoods was rejected by then-U.S. President John F. Kennedy – which many believe was a factor in his subsequent assassination – Cuban exiles with the support of U.S. intelligence would later be implicated in such an attack the following decade with the bombing of Cubana Airlines Flight 455 in 1976 which killed all 73 passengers and crew on board.
In 2005, documents released by the National Security Archive showed that the CIA under then-director George H.W. Bush had advanced knowledge of the plans of a Dominican Republic-based Cuban exile terrorist organization, the Coordination of United Revolutionary Organizations (CORU), at the direction of former CIA operative Luis Posada Carriles to blow up the airliner.
The U.S. later refused to extradite Carriles to Cuba to face charges and although he never admitted to masterminding the bombing of the jet, he publicly confessed to other attacks on tourist hotels in Cuba during the 1990s and was later arrested in 2000 for attempting to blow up an auditorium in Panama trying to assassinate Castro.
In 1962, the planners of Operation Northwoods concluded that such deceptive operations would shift U.S. public opinion unanimously against Cuba.
World opinion and the United Nations forum should be favorably affected by developing the international image of Cuban government as rash and irresponsible, and as an alarming and unpredictable threat to the peace of the Western Hemisphere.”
The same talking points are used by the U.S. government to demonize Iran today.
Initially, some Western intelligence sources also concluded that it was a malfunction or overheated engine that brought PS752 down in corroboration with the Iranian government’s original explanation until the narrative abruptly shifted the following day.
That they were so quick to hold Iran accountable without any investigation gave the apparent likelihood that PS752 could have fallen prey to a Northwoods-style false flag operation designed to further isolate Iran and defame its leaders after they took precautions to avoid U.S. casualties in their retaliatory strikes for the killing of Soleimani.
Maintaining the image of Iran as a nefarious regime is crucial in justifying hawkish U.S. policies toward the country and Iran’s noted restraint in its retaliation put a dent in that impression, so many were suspicious and rightly so.
It was also entirely plausible that U.S. special operations planners could have consulted the Northwoods playbook replacing Cuba with Iran and the right-wing gusanos who were to assist the staged attacks in Miami with the Iranian opposition group known as Mujahedin e-Khalq (MEK/People’s Mujahedin of Iran) to do the same in Tehran.
In July of last year, Trump’s personal lawyer and former New York City Mayor Rudolph Giuliani gave a paid speech at the cult-like group’s compound in Albania where he not only referred to the group as Iran’s “government-in-exile” but stated the U.S’s explicit intentions to use them for regime change in Iran.
The MEK enjoys high-level contacts in the Trump administration and the group was elated at his decision to murder Soleimani in Baghdad.
From 1997 until 2012, the MEK was on the State Department’s list of terrorist organizations until it was removed by the Obama administration after its expulsion from Iraq in order to relocate the group to fortified bases in Albania and the NATO protectorate of Kosovo.
The latter disputed territory is a perfect fit for the rebranded group having been founded by another deregistered foreign terrorist organization, the al-Qaeda linked Kosovo Liberation Army (KLA), whose leader, Hashim Thaçi, presides over the partially-recognized state. The MEK are no longer designated as such despite the State Department’s own account of its bloody history:
During the 1970s, the MEK staged terrorist attacks inside Iran to destabilize and embarrass the Shah’s regime; the group killed several US military personnel and civilians working on defense projects in Tehran. The group also supported the takeover in 1979 of the US Embassy in Tehran. In April 1992 the MEK carried out attacks on Iranian embassies in 13 different countries, demonstrating the group’s ability to mount large-scale operations overseas.”
Declassified documents revealing the sinister plans in Operation Northwoods which shockingly made it all the way to the desk of the president of the United States and the foreknowledge of Cubana Airlines Flight 455 are just two examples of solid proof that false flag attacks against civilian passenger planes are a part of the Pentagon’s modus operandi as disclosed in its own archives and there is no reason to believe that such practices have been discontinued.
That the U.S. is still cozy with “former” terror groups like MEK seeking to repatriate is good reason to believe its use of militant exiles for covert operations like those from Havana has not been retired.
If there were jumps to conclusions that proven serial liars could be looking for an excuse to stage an attack to lay the blame on Iran, it is only because the distinct probability was overwhelming.
Even so, a stopped clock strikes the right time twice per day and that is all Iran’s acknowledgment of its liability proves — that even the world’s most unreliable and criminal sources in Washington and Langley can be accurate sometimes, even if by accident.
Stay skeptical.
* * *
Tyler Durden
Sun, 01/12/2020 – 22:40 - 12 Shot, 5 Fatally As Baltimore Murder Crisis Erupts In New Year
12 Shot, 5 Fatally As Baltimore Murder Crisis Erupts In New Year
Baltimore City Police (BCP) responded to multiple shooting on Saturday that left five people dead, reported CBS 13 Baltimore.
In total, 12 people were shot, and five died on Saturday. The shootings were widespread and weren’t concentrated in a single neighborhood.
All of the shootings and deaths occurred in low-income neighborhoods where wealth inequality is at extreme levels. These communities would be on the brink of social unrest if another Freddie Gray incident occurred.
Baltimore City broke the murder record of the century in 2019, recorded 347 homicides for the year, breaching 342 seen in 2015 and 2017.
With about 602,000 residents, the city’s homicide rate hit 57 per 100,000 residents last year, one of the highest rates in the country.
Last year was the 5th year the city recorded murders over 300, due mostly to the Ferguson effect post-2015 riots and socio-economic deterioration in the town.
Out of control murders, extreme wealth inequality, and an out of control opioid epidemic comes as the total population in the city crashed to a 100-year low, many are fleeing the city for the suburbs as the local economy continues to dive deeper into a depression, never recovered since 2008.
Violent crime in the city has gotten so bad that the murder wave has spread to Baltimore County.
Homicides in the county recorded 50 for 2019, surpassing the previous high of 42, set during the crack epidemic of the early 1990s, according to FBI statistics. On a yearly change, homicides in the county are up 85%.
County homicides usually fluctuate in the low 20s. It wasn’t until the 2015 riots that murders started to increase.
Please do yourself a favor this year and avoid traveling to Baltimore.
Tyler Durden
Sun, 01/12/2020 – 22:15 - Here's Why Trump Tipped Israel Off To Soleimani Strike: They Helped With Intel
Here’s Why Trump Tipped Israel Off To Soleimani Strike: They Helped With Intel
This latest revelation should not surprise anyone who has been actively following the exploits of the current Trump Administration and its partner organization, Israel’s Netanyahu government.
According to a recent report released by the Times of Israel, it was officials in Tel Aviv who provided the White House with the key intelligence details leading to the targeted double assassination of Iranian Quds Force leader, General Qasem Soleimani, and senior Iraqi PMU commander, Abu Mahdi al-Muhandis, on January 3rd.
The illegal assassinations prompted an Iranian missile strike on two US bases in Iraq, and bringing Washington and Tehran dangerously close to a larger military confrontation, until Trump stood down in the face of reprisals by Iran and its allies in the region.
This latest news also validates previous analysis by 21WIRE which concluded that Israel has been the primary source of “intelligence” provided to the White House, relating to the recent chain of events involving the United States, Iraq and Iran.
Netanyahu Lied About Involvement
This also indicates that Israeli PM Benjamin Netanyahu was lying last week when he told ministers that the killing of Soleimani was “carried out solely by the US,” and that Israel was not involved. According to Axios:
“Netanyahu told Security Cabinet ministers Monday that the killing of Iranian Gen. Qasem Soleimani was carried out solely by the U.S. and that Israel was not involved in any way and must not be dragged into the escalating conflict, two ministers who attended the meeting told me.”
This calculated move to walk-back his previously hawkish stance on Soleimani and Iran appears to have been a shrewd and cynical political maneuver to avoid being implicated in the political maelstrom which ensued in Washington – where US Senators and Congressional Representatives were demanding the White House present any of the illusive intelligence relating to the successive incidents. Their calls were met with complete stonewalling from the Trump Administration who claimed that any discussion into the matter would be ‘helping the enemy.’
The question now is whether or not Israel also provided the White House the illusive intelligence that prompted Trump’s illegal assassination orders – the mysterious intelligence which claimed there were “imminent threats” to the United States. Elected representatives are still waiting.
The new reports now reveal how Israeli intelligence officials provided President Trump the location and reconnaissance data which resulted in the state-sanctioned murder of Soleimani. Details of the operation also appeared in an NBC News report:
Armed with a tip from informants at the airport in the Syrian capital of Damascus, the CIA knew exactly when a jet carrying Iranian Gen. Qassem Soleimani took off en route to Baghdad. Intelligence from Israel helped confirm the details.
Once the Cham Wings Airlines Airbus A320 landed, American spies at Iraq’s main airport, which houses U.S. military personnel, confirmed its exact whereabouts.
Three American drones moved into position overhead, with no fear of challenge in an Iraqi airspace completely dominated by the U.S. military. Each was armed with four Hellfire missiles.
(…) On large screens, various U.S. officials watched as an Iraqi militia leader walked up a set of stairs to greet the leader of Iran’s Quds Force as he emerged from the airplane. It was past 1 in the morning, so the black and white infrared imagery wasn’t very clear. No faces could be seen.
It is important to note that from the onset of the Trump presidency, Israel has played a visible role in directing US policy regarding Iran. In fact, the current round of hostilities between the US and Iran was started when the White House unilaterally withdrew from the landmark international JCPOA Iran Nuclear Agreement in May 2018. Leaked recordings reveal that Israeli PM Benjamin Netanyahu boasted about his own role in convincing the White House to unilaterally withdraw from the JCPOA deal.
Tyler Durden
Sun, 01/12/2020 – 21:50 - Feds To Bill California Fire Victims If PG&E Doesn't Pay $4 Billion Owed: Report
Feds To Bill California Fire Victims If PG&E Doesn’t Pay $4 Billion Owed: Report
The Federal Emergency Management Agency (FEMA) is prepared to bill California wildfire victims to recover a portion of some $4 billion it says it’s owed by Pacific Gas & Electric Co. (PG&E), in the event the debt isn’t resolved under the utility’s bankruptcy case, according to the San Francisco Chronicle.
The reimbursement would cover costs from the government’s response to fires in 2015, 2017 and 2018. According to the report, any payment to FEMA would have to come from the company’s $13.5 billion allocation intended to settle claims from fire victims. FEMA’s claim would consume around 30% of the settlement. Victims’ lawyers are now battleing the agency, which told the Chronicle that it is compelled to first seek reimbursement from the utility – otherwise “individual victims would be on the hook if they get settlement money that duplicates funds already paid by the federal government,” according to the report, citing FEMA regional administrator Bob Fenton.
FEMA has “no interest” in reducing the amount of settlement funds made available to fire victims, said Fenton.
“What we are interested in doing is holding PG&E responsible and accountable for the billions of dollars taxpayers provided to assist individuals and communities affected by the wildfires,” he added. “The last thing I want to do is have to go after these individuals that have received claims from the bankruptcy where certain parts of that claim may duplicate funding that we’ve already given them. … It’s much easier up front to go ahead and simply deal with PG&E directly.”
As we have noted, PG&E’s latest bankruptcy – the second in two decades – has been a total mess, with US Bankruptcy Judge Dennis Montali stripping the utility of exclusive control over its recovery process as the utility attempts to modernize its infrastructure and battle annual fires.
After filing for bankruptcy one year ago this month, the company won court approval to deal with victims’ attorneys, as well as a separate $11 billion settlement to deal with insurance company claims.
That said, the company needs to meet several requirements to move forward with the rest of their case – including the formulation of a broader bankruptcy exit plan.
FEMA has asserted about $3.9 billion in bankruptcy claims against PG&E because of the 2015 Butte Fire, the 2017 wildfires in Wine Country and the 2018 Camp Fire. Court papers show that only about $282 million of the total relates to individual assistance FEMA gave to victims of the disasters — the rest is for aid provided to other government agencies and administrative costs.
The maximum amount of funding FEMA could possibly seek to recoup from individual victims would be even less than $282 million, according to FEMA spokesman David Passey. He said the individual assistance figure includes nonfinancial help, such as temporary housing, that the agency provided to disaster victims and would not try to recoup. –San Francisco Chronicle
In response to FEMA’s attempt to recover money from PG&E, 40 Congressional Democrats criticized the agency in a sharply worded letter claiming that the $4 billion sought “puts at risk the possibility that the thousands of families still struggling to rebuild their lives will not receive the restitution they deserve,” adding that the “inequality of this situation is evident.”
Former FEMA director and Democrat James Lee Witt also criticized the agency’s efforts to collect – telling the Santa Rosa Press Democrat that it was an “unusual” and “inappropriate” request.
Eric Goodman, an attorney for a committee of fire victims involved in the PG&E bankruptcy case, said FEMA’s defense of its $3.9 billion request “doesn’t hold any water” with him. Goodman’s firm is asking Montali to reject FEMA’s claim, in part because he says the relevant section of a federal law cited by the agency would apply only if the company intentionally started fires. –San Francisco Chronicle
“They haven’t alleged that PG&E is an arsonist,” Goodman said.
PG&E, meanwhile, told the Chronicle that FEMA’s request is inappropriate, and that the agency “does not have a valid legal claim against the company.”
The request is expected to come under consideration by Montali at a hearing next month.
Tyler Durden
Sun, 01/12/2020 – 21:25 - Ron Paul: US Wants To "Own Iran" Like It Did When The Shah Was In Power
Ron Paul: US Wants To “Own Iran” Like It Did When The Shah Was In Power
Authored by Adam Dick via The Ron Paul Institute for Peace & Prosperity,
President Donald Trump is offering plenty of justifications for the US government’s recent military actions against Iran, including that the actions were taken to prevent the deaths of Americans and to prevent a war. Not so, says former US House of Representatives member and presidential candidate Ron Paul in a Wednesday interview with host Ernest Hancock at Declare Your Independence.
Incessant US attacks on Iran from sanctions to the killing last week of Iran General Qassim Suleimani, says Paul, are a consequence of a different policy that the US has had “for a long time” and that is endorsed by both the Republican Party and the Democratic Party, as well as the deep state.
Paul, in the US-Iran-relations-focused interview, describes this policy as follows:
We want to own Iran like we owned it when we had the Shah in power, and nobody’s going to be happy until that happens.
Listen to Paul’s complete interview here.
For an introduction to the US effort to place the Shah in power in Iran, aid the Shah’s government for the following 25 years, and, for the 40 years since the Shah’s departure, regain control over Iran, read Jacob Hornberger’s February of 2019 article “Understanding Why Iranians Bash the US Government.”
Tyler Durden
Sun, 01/12/2020 – 21:00 - Toronto In Panic Following Erroneous Nuclear Meltdown Alert
Toronto In Panic Following Erroneous Nuclear Meltdown Alert
Around 7:25 am Sunday, the Canadian province of Ontario sent out a mass alert notifying residents of an “incident” at Pickering nuclear power station near Toronto, reported CP24 Toronto.
“Emergency staff are responding to the situation,” the alert read, which was sent to cells phones across the province.
It went on to say, “There has been NO abnormal release of radioactivity from the station…People near the Pickering Nuclear Generating Station DO NOT need to take any protective actions at this time.”
About an hour later, a retraction alert was tweeted by Ontario Power Generation (OPG), followed up by a 9 am mass text telling residents that the incident at Pickering was a false alarm.
Important update: the alert regarding #Pickering Nuclear was sent in error. There is no danger to the public or environment.
— Ontario Power Gen (@opg) January 12, 2020
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“There is no danger to the public, there was no radiological event and what I can tell you is that we are working with the province to investigate what happened,” OPG spokesperson O’Neal Kelly told CP24.
Solicitor General Sylvia Jones, who oversees and runs the Provincial Emergency Operations Centre, said the false alarm was a routine internal training exercise that was accidentally released to the public.
Please see my statement in response to the Pickering Nuclear Generating Station emergency alert. There was no incident at the Pickering Nuclear Generating Station that should have triggered public notification. Nor was there ever any danger to the public or environment. pic.twitter.com/F9dnQCCWgD
— Sylvia Jones (@SylviaJonesMPP) January 12, 2020
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“There was no incident at the Pickering Nuclear Generating Station that should have triggered the public notification. Nor was there ever any danger to the public or environment,” Jones said.
Pickering Mayor Dave Ryan tweeted Sunday that he was “very surprised” when he received the alert, but quickly discovered it was sent by error.
Like many of you, I was very troubled to have received that emergency alert this morning. While I am relieved that there was no actual emergency, I am upset that an error such as this occurred. I have spoken to the Province, and am demanding that a full investigation take place.
— Mayor Dave Ryan (@mayordaveryan) January 12, 2020
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“I’m very angry and very concerned that this has occurred,” Ryan told Global News.
“We’ve demanded a full investigation and I’ve had confirmation from our local MPP that an investigation will be undertaken. We’ll understand what has happened, why, how and what’s going to be done to ensure it doesn’t happen again.”
And the last time a major municipality made a communications error and alerted citizens of Armageddon was several years ago in Hawaii when officials said the island was under ballistic missile attack.
Tyler Durden
Sun, 01/12/2020 – 20:35 - "In State Of Shock" – Former CIA Spook Warns Dems, Deep State "Getting Desperate" To Stop Trump
“In State Of Shock” – Former CIA Spook Warns Dems, Deep State “Getting Desperate” To Stop Trump
Via Greg Hunter’s USAWatchdog.com ,
Former CIA Officer and counter-terrorism expert Kevin Shipp says the threat of outright war with Iran is over – for now.
But, Shipp warns that Iran will change its strategy from overt conflict to covert conflict against the US…
“Iran has backed down. There is no question about that, and even their so-called missile strikes against the U.S. are basically just kicking sand, intentionally missing their target. Iran understands if they entered into a war with the U.S., they would be left with nothing more than a burnt stump. So, Iran is backing down…
What Iran is going to do is engage in asymmetrical warfare. I think they are going to start activating their sleeper cells in the United States and other countries like Saudi Arabia. We are going to start seeing attacks on easy targets in places like Iraq and activation of cells within the United States.”
Shipp is also an expert on the Deep State Shadow Government. Shipp says things are “quiet” on the prosecution of the failed coup plotters who tried to remove President Trump, but ‘that is a good thing.’ Shipp says,
“The evidence is already there to pass an indictment on Hillary Clinton and some of the others. So, there is not even an investigation in that regard…
Barr’s investigation is now a criminal investigation. They are trying to get a hold of Brennan’s (former CIA Director) emails and correspondence, through subpoenas, during this soft coup, and it looks like they are in the middle of that now, so, hence the silence. They are quiet now and that is a frustrating thing about any investigation…
They can’t come out and reveal where they are heading, especially when it comes to the CIA and intelligence agencies. You can’t tip your hand to the person you are investigating. Then they start destroying documents, and people start getting afraid and start covering things up.”
Shipp says the Democrats know they most likely will not win back the White House in the upcoming Presidential election.
“Their chance of winning in 2020, especially now with Trump’s success, is getting slim, and they are getting desperate.
When they get desperate, and they have done this before, I think we can count on voter fraud. They are going to have to use it, and they have used it before. In any event, they have very little chance of winning now, in my view, because the majority of Americans find their platform distasteful. So, I think this (voter fraud) is going to happen.”
Shipp says the Deep State is worried that Trump will have a second term:
“I think they (Deep State) are in a state of shock.
They want to get rid of Trump because for the first time in their careers, they can be prosecuted for what they have done. I think they are afraid of that, and that’s why John Brennan and others are coming out as mocking birds on CNN and MSNBC and constantly attacking the President.”
Join Greg Hunter as he goes One-on-One with former CIA Officer Kevin Shipp.
Tyler Durden
Sun, 01/12/2020 – 20:10 - Deepfake Artist Puts Scorcese To Shame With 'Irishman' De-Aging
Deepfake Artist Puts Scorcese To Shame With ‘Irishman’ De-Aging
An amateur Deepfake artist using free software took scenes of ‘de-aged’ actors from Martin Scorcese’s “The Irishman” and took them to the next level.
As Movieweb‘s Kevin Burwick notes, despite Netflix spending millions of dollars to ‘de-age’ Robert De Niro, Joe Pesci and Al Pacino, Scorcese’s CGI was mediocre to the point of distraction.
A scene showing De Niro’s Frank Sheeran, who is supposed to be in his 30s, beating down some mobsters looks more like a 50-year old doing the damage. It is pretty distracting and takes away from some of the greater parts of the movie for some viewers. The new DeepFake video does an excellent job of pulling off what Netflix and ILM could not do. –Movieweb
“All I can say about this, is HOLY SHIT” tweeted director Joe Carnahan, in response to the deepfake – to which someone replied “They are de-aging the already de-aged footage though. Hardly a fair comparison.”
They are de-aging the already de-aged footage though. Hardly a fair comparison.
— CarterNixon (@CarterNixon) January 9, 2020
“Then that’s what they should have been doing. Results is results, guys. We can say it’s 2k and wouldn’t hold up, yadda-yadda but the stuff on the right, looks better than the stuff on the left,” responded Carnahan.
Then that’s what they should have been doing. Results is results, guys. We can say it’s 2k and wouldn’t hold up, yadda-yadda but the stuff on the right, looks better than the stuff on the left.
— Joe Carnahan (@carnojoe) January 9, 2020
The footage on the right looks amazing and is genuinely more convincing than whats in the movie.
— Kamran Raja (@MrKamranRaja) January 9, 2020
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Tyler Durden
Sun, 01/12/2020 – 19:45 - Trump Allies Propose New Network To Compete With Fox
Trump Allies Propose New Network To Compete With Fox
Authored by Mike Shedlock via MishTalk,
Fox News is not pro-Trump enough for Trump allies. Their solution is something that amounts to a Trump News Network.
Hicks Equity Partners, a firm tied to Republican National Committee co-chair Thomas Hicks Jr., is pitching GOP donors on buyout of One America News Network.
Please consider Trump Allies Explore Buyout of Conservative Channel Seeking to Compete With Fox News
Allies of President Trump are pursuing an effort to acquire right-leaning news channel One America News Network, according to people familiar with the matter, in a bid to shake up a conservative media market that has been dominated by Fox News.
The investment firm Hicks Equity Partners is looking to acquire the channel and is pitching other wealthy GOP donors to arrange a bid of roughly $250 million for the channel’s parent company, the people said. The firm is owned by the family of Thomas Hicks Jr., co-chairman of the Republican National Committee and a close friend of Donald Trump Jr.
The efforts come as Mr. Trump has periodically rebuked Fox News for being too critical—despite its opinion-show hosts’ general support of his administration—and has praised One America News Network. The channel’s opinion programming is known among its cable-news peers for its praise of Donald Trump and its advocacy for conservative causes.
Some Republican donors say privately that Fox News isn’t doing enough to toe the party line, according to people familiar with the matter. They have noted, for instance, that the network doesn’t always carry the president’s full campaign rallies live on air, the people added.
Trump Blasts Fake News on Fox
Watching Fake News CNN is better than watching Shepard Smith, the lowest rated show on @FoxNews. Actually, whenever possible, I turn to @OANN!
— Donald J. Trump (@realDonaldTrump) August 7, 2019
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Fox News Like CNN
Both Commiecast MSNBC & Fake News CNN are watching their Ratings TANK. Fredo on CNN is dying. Don’t know why @FoxNews wants to be more like them? They’ll all die together as other outlets take their place. Only pro Trump Fox shows do well. Rest are nothing. How’s Shep doing?
— Donald J. Trump (@realDonaldTrump) December 15, 2019
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Trump News Network
Trump News Network – TNN – Yeah, that’s the ticket.
It will surely fix everything.
Tyler Durden
Sun, 01/12/2020 – 19:20 - Powell In 2014: "A Large Balance Sheet Might Prove A Magnet For Trouble Over Time"
Powell In 2014: “A Large Balance Sheet Might Prove A Magnet For Trouble Over Time”
Two years ago, when the Fed released the transcripts from its 2012 FOMC sessions, we first disclosed several passages stated by then governor Jerome Powell which almost convinced us that the former Carlyle partner would not pursue the catastrophic bubble-bust policies that had been enacted by his predecessors.
As a reminder, this is what Powell, who replaced Janet Powell as Fed chair in early 2018, said during the October 23-24, 2012 FOMC meeting – just one month after the Fed announced QE3:
I have concerns about more purchases. As others have pointed out, the dealer community is now assuming close to a $4 trillion balance sheet and purchases through the first quarter of 2014. I admit that is a much stronger reaction than I anticipated, and I am uncomfortable with it for a couple of reasons.
First, the question, why stop at $4 trillion? The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated. And we will be able to tell ourselves that market function is not impaired and that inflation expectations are under control. What is to stop us, other than much faster economic growth, which it is probably not in our power to produce?
And then the punchline:
[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.
Ah yes, the Fed’s “short volatility position” something which vol sellers over the past several years have grown to love and admire – occasional inverse VIX disasters like February 2018 notwithstanding.
But it was something that Powell said next that was an even more remarkable admission:
My third concern—and others have touched on it as well—is the problems of exiting from a near $4 trillion balance sheet. We’ve got a set of principles from June 2011 and have done some work since then, but it just seems to me that we seem to be way too confident that exit can be managed smoothly. Markets can be much more dynamic than we appear to think.
…
When you turn and say to the market, “I’ve got $1.2 trillion of these things,” it’s not just $20 billion a month— it’s the sight of the whole thing coming. And I think there is a pretty good chance that you could have quite a dynamic response in the market.
In retrospect, this observation by Powell turned out to be quite prophetic: after all, who can forget Powell’s “autopilot” comment on the Fed’s quantitative tightening, i.e., balance sheet unwind, which together with the Fed’s 2018 rate hikes, sent the S&P to a mini bear market when stocks tumbled in the last few months of 2018: “quite a dynamic response in the market” indeed, and one which forced Powell just days later to reverse on the Fed’s entire tightening policy and, several months later, to launch QE4.
Which, of course, is especially ironic in light of what Powell said next in the October 2012 FOMC meeting, which as we said earlier, almost gave us the impression that Powell was just the man to unwind a decade of capital misallocation even if meant the bursting of the biggest asset bubble in history:
I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.
Either year, one failed attempt at normalization and one
QE4NOT QE later launched by the very same Jerome Powell, and we can now safely scrap the “almost”: it is now without a doubt that the Fed is, as Powell said, “blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road” and that “investors really do understand now that we will be there to prevent serious losses.”And they have Fed Chair Powell to thank for that, whose historic flipflop will be one for the history books when the asset bubble finally bursts. But until then, contrary to his now iconic warning, it was Powell who took it upon himself to make it very “easy” for investors to make money and the Fed’s only job is to make sure they “have every incentive to take more risk, and they are doing so.“
* * *
With all this in mind, let’s fast forward to the transcripts of the 2014 FOMC meetings, which the Fed declassified on Friday, and where we got some more delightful pearls of wisdom and warnings from the current Fed chair, who now appears hell bent to do absolutely every single thing he so prudently cautioned his colleagues he Fed should not do.
For the purpose of this article, we will focus on the transcript of the FOMC April 29-30 2014 meeting, which was remarkable in that it was the first one where the Fed extensively discussed the Fed’s rate “liftoff” policy which would, after several delays, finally took place in December 2015 when the Fed hiked by 25bps from the “zero bound”, and then proceeded to hike another eight times before eventually cutting rates three times in the summer of 2019 (with stocks at all time highs). Nested inside a lengthy discussion of Powell’s view of the mechanics of liftoff – which focused on his view of the floor vs corridor system and where Powell concluded that “an administered floor approach may be simpler and cheaper than a corridor with a market rate” – Powell made the following statement:
I kind of think that a large balance sheet might prove to be a magnet for trouble over time, and those two considerations pull me in opposite directions, I admit. So I tentatively land on a floor system with the smallest possible balance sheet. But that brings you to the really interesting question, I think, that Governor Tarullo and Governor Stein were all over, and that is the use of the balance sheet for financial-stability purposes. Very, very interesting questions, and I don’t have a lot to add on them here today, but I think those are the things we are going to be talking about for years to come.
Well he was right, because almost six years later, not only are we still talking about these “things”, but the use, and role, of the Fed’s balance sheet for financial-stability purposes, has never been more topical at a time when the Fed’s balance sheet has grown by over $100 billion per month in the past 4 months, allegedly to stabilize the repo market but in reality to unleash a historic market melt-up that has sent us to the highest, and most overvalued, S&P on record.
Amusingly, a little later in the same April 2014 meeting, Powell, a former private equity professional, shared some views from the perspective of a PE professional.
As long as we’re talking about private equity, I do keep in reasonably close touch with what’s going on out there. I would say that prices are high, leverage is high, and equity is low—in all cases, not as bad as it was in 2007. Prices might be in the mid-9s. We talked about leverage. Equity contributions are in the low 20s. So, again, not as bad as in 2007, but, in all cases, it’s getting stretched.
This was in 2014, six years ago. Anyway, back to Powell, and the following delightful snippet why a decade of covenant lite deals means the zombies will ravage the world for a much longer time than most expected:
The other really important difference is that rates are incredibly low. They swap out a lot of the floating-rate debt anyway at very low rates. You put all of this into the mix—I’m not at all sure that there’s a big wave of defaults being cooked up here because coverage ratios are pretty good. Certainly, the equity returns are under a lot of threat. But there are no covenants. It’s going to be really hard to default or fail to pay.
In response to this summary, former Richmond Fed president Jeffrey Lacker had the perfect laconic summary: “No dysfunction to worry about.” None whatsoever.
Which brings us to the punchline: Powell’s parting words from the April 2014 FOMC, which as in the case of Oct 2012, were delightfully prophetic:
I see financial conditions as a potential risk down the road. The risk of continued rising froth in fixed-income markets, followed by a correction that could halt progress, is a real one. If this starts to have the feel of a classic credit cycle, then the level of damage when the cycle turns is hard to predict.
To summarize, after years of warning about the potentially catastrophic consequences of a giant balance sheet, ultra low rates and super easy monetary policy, Powell – now in charge of the world’s most important central bank (as Trump’s twitter account reminded him every so often) – gazed into the abyss of tighter financial conditions, higher rates and a smaller balance sheet… and quickly did everything he himself had warned years ago against doing.
Oh, and speaking of the Fed’s “magnetic” balance sheet, 4 months after his face to face with the “abyss”, Powell managed to undo more than half of the Fed’s entire “normalization.”
Tyler Durden
Sun, 01/12/2020 – 19:03 - UCLA Prof: "We Need To Seriously Question Ideal Of Private Home Ownership"
UCLA Prof: “We Need To Seriously Question Ideal Of Private Home Ownership”
Authored by Mary Rose Corkery via CampusReform.org,
University of California-Los Angeles professor made her views on climate change public in a recent op-ed, questioning American private homeownership in response to climate change, particularly California’s forest fires.
Professor Kian Goah, assistant professor of urban planning at UCLA, whose expertise includes urban ecological design, spatial politics, and social mobilization in the issues of climate change and global urbanization, argued in an op-ed for The Nation that what makes the California forest fires even worse is urban planning. Its subtitle reads, “if we want to keep cities safe in the face of climate change, we need to seriously question the ideal of private homeownership.”
“Yes, climate change intensifies the fires—but the ways in which we plan and develop our cities makes them even more destructive. The growth of urban regions in the second half of the 20th century has been dominated by economic development, aspirations of homeownership, and belief in the importance of private property,” she writes.
Goah compared two ideas of thought: The American tradition of private property ownership and the collective property theories.
She suggesting the cause of the issue is private homeownership and advocated for “more collective” cities.
Some examples she cited for public housing were put in practice by Ilhan Omar, Alexandria Ocasio Cortez, and Bernie Sanders. Another solution would be cooperative housing, and community land trusts.
She argues that public housing would put more power into the federal government as opposed to the “Jeffersonian agrarian ideal.” The “Jeffersonian agrarian ideal”, cheap energy, and individual property “have created the scorching landscapes we see today.”
Goah concluded with how one should seriously question the American Dream with obtaining private property in the face of modern issues.
“The ideals of the American Dream that have been instilled for more than 150 years will be difficult to dispel. Those deals have blinded us to other possibilities…
We need another kind of escape route—away from our ideologies of ownership and property, and toward more collective, healthy, and just cities.”
Campus Reform reached out to Goah but did not receive a response in time for publication.
Tyler Durden
Sun, 01/12/2020 – 18:30 - "Harsh Blow" – Boeing Supplier Cuts 2,800 Jobs Amid 737 Max Production Halt
“Harsh Blow” – Boeing Supplier Cuts 2,800 Jobs Amid 737 Max Production Halt
Just as Boeing’s departing CEO deployed his $62.2 million golden parachute last month as the 737 Max crisis persists, the first signs of supply chain problems for the Max was realized Friday when jet parts maker Spirit AeroSystems laid off thousands of employees, reported AP News.
The Wichita-based company announced 2,800 layoffs on Friday after Max production was halted this month, and the ungrounding of the aircraft remains unclear.
News of the layoffs come a day after Boeing published internal emails showing employees mocking Federal Aviation Administration (FAA) investigators and ridiculing engineers for their incompetence on Max design.
Spirit AeroSystems is the largest employer in Wichita and defines itself as a “significant supplier” to the Max program.
At least 40 aerospace firms are based in Wichita that manufactures parts for the production of the 737 Max. The layoffs at Spirit could be an indication that the Max supply chain is coming under pressure.
“The difficult decision announced today is a necessary step given the uncertainty related to both the timing for resuming 737 MAX production and the overall production levels that can be expected following the production suspension,” Spirit AeroSystems CEO Tom Gentile said in a statement.
“We are taking these actions to balance the interests of all of our stakeholders as a result of the grounding of the 737 MAX, while also positioning Spirit to meet future demand,” Gentile added.
The announcement of Spirit layoffs comes as manufacturing in the US continues to decelerate. Manufactures cut payrolls last month by 12,000, with concerns more job cuts could be seen in the weeks ahead.
Affected Spirit employees will be paid for two months; the layoffs start on Jan. 22.
Sen. Jerry Moran, a Kansas Republican, said the disruption of Boeing’s supply chain will have “short-term impacts” on the economy.
“The layoffs announced today [Friday] at Spirit AeroSystems have dealt a harsh blow not only to the company but also to Spirit suppliers and subcontractors,” Moran said. “I plan to continue working with the administration and Department of Defense to showcase the capabilities of Wichita manufacturers in an effort to diversify the industry and bring more job opportunities to the region.”
Economists from JPMorgan, Goldman, and Capital Economics recently said Boeing’s production cut could shave off up to 0.5% from the first quarter 2020 GDP. Boeing’s suppliers, such as Spirit, are already reeling from the uncertainty as layoffs are just starting.
Tyler Durden
Sun, 01/12/2020 – 18:05 - Hedge Fund CIO: Will The Fed Ever Be Held Accountable For Turbocharging Inequality That Poisons America
Hedge Fund CIO: Will The Fed Ever Be Held Accountable For Turbocharging Inequality That Poisons America
Submitted by Eric Peters, CIO of One River Asset Management
“I do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; and that I will obey the orders of the President of the United States and the orders of the officers appointed over me, according to regulations and the Uniform Code of Military Justice. So help me God,” pledged the 2.7mm young, courageous American soldiers that our Commanders-in-Chief sent to Iraq and Afghanistan Since 2001. Over 6,900 of them died there. Over 52,000 have been wounded. Bush, Obama and Trump spent over $6 trillion. 480,000 Iraqis, Afghanis and Pakistanis died, half civilians. Millions were displaced. Who is accountable? What are the consequences?
Overall“This airplane is designed by clowns who in turn are supervised by monkeys,” wrote one of Boeing’s employees, referring to their 737 Max. “I don’t know how to fix these things… it’s systemic. It’s culture. It’s the fact we have a senior leadership team that understands very little about the business and yet are driving us to certain objectives,” wrote another. “I still haven’t been forgiven by God for the covering up I did last year. Can’t do it one more time, the pearly gates will be closed,” wrote another. Boeing is our mightiest manufacturing exporter. A symbol of American greatness. Boeing’s board held the CEO accountable, fired him. The consequence for the catastrophe of his leadership? He walked away with $61mm in compensation.
Carlos Ghosn held an absurd press conference to clear his name, having fled Japan in box barely big enough to contain his greed and shamelessness. Set against Adam Neumann’s $1.7bln golden parachute, Ghosn perhaps believes Japanese consequences are overly harsh.
You see, accountability and consequences are both relative things. The less we hold ourselves accountable, the less accountable we become. And the lower the consequences we face, the more outraged we come to be when faced with the slightest consequence.
Not a single person was held accountable for the 2008 debacle. Nor for Iraq/Afghanistan. Earth’s sixth mass extinction is underway, Australia is burning, no global leader wants to seriously be held accountable, or suffer consequences. America least so. And the Fed led global central banks to accommodate all the above with easy money. Their policies turbocharged the inequality that poisons politics in ways more powerful than any elected official could have ever done. Are they ever held to account?
This all matters because we head into America’s election. It is sure to be the most vitriolic in generations. Who will we hold accountable? What will be the market consequences?
Red Lines
America can assassinate anyone, anywhere, at almost any time with limited collateral damage. Few of our adversaries can. With today’s technology, we surely would’ve killed Osama bin Laden in Tora Bora in 2001 along with the senior Taliban leaders harboring him. We might’ve saved $6trln and 500k lives. Given that the US has this capability, might we rewrite the rules and adopt an assassination policy? Holding our adversaries to account, imposing a capital consequence when their leaders cross our Red Lines? Soleimani apparently thought the answer was no. How will our adversaries act in the future if they know they’re thus accountable?
Tyler Durden
Sun, 01/12/2020 – 17:40 - "I'm Spending All My Money To Get Rid Of Trump": Bloomberg
“I’m Spending All My Money To Get Rid Of Trump”: Bloomberg
U.S. presidential candidate Michael Bloomberg told Reuters over the weekend that his “number one priority is to get rid of Donald Trump. I’m spending all my money to get rid of Trump.”
Bloomberg spoke to Reuters on his campaign bus as he toured a 300 mile stretch of Texas on Saturday. He made several campaign stops where he drew several hundred people in Austin and even fewer in San Antonio. Many of the folks who attended said they were independents and recovering Trump supporters who had learned about Bloomberg through his massive advertising campaign on television.
“He’s better than Trump,” said Marcelo Montemayor, 75, who attended a Bloomberg gathering at a Taco restaurant in San Antonio.
Montemayor told Reuters he voted for Trump but worried the president’s ultra-conservative appointees to federal courts could threaten abortion rights.
Former NYC Mayor Mike Bloomberg making his pitch to voters in Texas this weekend. He’s on a bus tour making stops in San Antonio, San Marcos, Austin, Waco, and Dallas. Follow @kellyfphares for more! pic.twitter.com/6Xob4fln6W
— Madeleine Rivera (@MRiveraFoxNews) January 11, 2020
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Bloomberg’s media blitz has dominated television and radio across Texas and the nation in the last several months.
Mark Jones, a political expert at Houston’s Rice University, said Bloomberg had spent at least $15 million on ads in Texas through mid-January.
I am Obsessed with the spectacle of these Bloomberg Texas rallies
— wearing cowboy hat at Michael Bloomberg rally (@neoliberal_dad) January 12, 2020
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Since Bloomberg officially declared his candidacy on Nov. 24, he has already spent more than $37 million on television ads.
U.S. Senator Elizabeth Warren, a top Democratic presidential candidate, criticized Bloomberg for his media spending and said he’s trying to buy the election.
Among the Democratic candidates, Bloomberg ranks fifth in national public opinion polls, despite his massive ad spending that has dwarfed all other campaigns on both political aisles.
Heading towards the National Football League championship, Bloomberg is expected to drop millions of dollars on a 60-second television ad to reach hundreds of millions of people.
“You can’t get to 330 million people by shaking hands. Television is still the magic medium,” Bloomberg said.
“If the Super Bowl wasn’t a place to get to an awful lot of people, they wouldn’t be charging a lot, or nobody would be paying it. This is capitalism at work,” he added.
Bloomberg is worth an estimated $58 billion, ranks 6th richest US person and 14th richest in the world. There’s no telling how much Bloomberg will spend ahead of the 2020 US presidential election.
Tyler Durden
Sun, 01/12/2020 – 17:15 - Universal Basic Income: A Dream Come True For Despots
Universal Basic Income: A Dream Come True For Despots
Authored by Antony Sammeroff via The Mises Institute,
I’m sitting in the pub after a Skeptics Society meet up. I don’t go very often, but there was a famous author speaking, and living (as most of us do these days) in something of a social media bubble, this is a rare opportunity for me to actually get a window into what thinking people outside of my circle have to say on some of the issues of the day. A warm chat ensues over a pint with a couple of the other attendees, when miraculously the conversation at my table turns to the universal basic income (UBI). My neighbour gushes with vigour over its merits. He eagerly vows that it will solve innumerable problems facing our civilisation and I get the feeling he has been spreading the gospel at every available turn because this idea is the crucial one. If only he can get enough people to believe it…
I abstain from mentioning my book as I don’t want to prejudice his answers to any of my questions. I politely wait my turn, and then ask a simple question: “What do you think the potential disadvantages of the basic income would be, then?”
He replies, “There aren’t any.”
Trade-Offs Are Inescapable
Despite the heated disagreements between economists on just about every issue under the sun, there is probably one point that they are all actually unanimous on. That is the fact that every policy has winners and losers. Given that human wants are infinite but our means towards attaining those wants are limited, policies, by their nature, advantage some groups at the expense of others.
But the universal basic income seems unaffected. It’s going to cure poverty, eliminate stress, reduce crime, unleash entrepreneurship, emancipate women, save us from AI, and fight climate change. I’m not not exaggerating. I googled, and there are multiple articles claiming that, not only will the UBI save the economy from flatlining due to a lack of consumer demand by increasing consumption, but somehow also put a halt to global warming as well — contradictory as these two aims may seem.
Is the UBI is a flying unicorn that poops rainbows?
Perhaps so. Perhaps the laws of economics will be nullified around the good intentions of its advocates. Such is the strength and cavalier nature of the latter’s idealism.
Perhaps I’m being a little harsh on budding idealists, though. After all, this lad doesn’t have a background in economics, does he? He’s just looking for an easy way to save the world. Surely I should pick on someone my own size. Professional advocates of the UBI are bound to be more evenhanded in their consideration of the comparative advantages and disadvantages of the program and present a more nuanced view, aren’t they?
Well, not according to the titles of their books …
Rutger Bregman comes right out and calls his book advocating the UBI Utopia for Realists.
Annie Lowrey’s book Give People Money carries the subtitle “How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.”
Andy Stern and Lee Kravitz’s book Raising the Floor carries a subtitle claiming the UBI will, “Renew Our Economy and Rebuild the American Dream.”
Phillipe Van Parijs and Yannick Vanderborght entitled their book Basic Income: A Radical Proposal for a Free Society and a Sane Economy.
This boundless idealism scares me.
The Russians were also offered utopia after the tsars, as were the Chinese when Mao came to power. So if I deviate from my so-far-ecumenical tone in this new coda, it’s in part because people seem to too readily forget what the road to hell is paved with.
Trusting the World’s Regimes to Do Good?
Most people agree that politics is a dirty game and that political powers will inevitably be used to further the agenda of officeholders and their cronies. That said, despite being immersed in the current thinking regarding UBI for three years now, I have seen precious little worrying as to what the government — or a future government — might actually do once it has seized control over everyone’s purse strings.
After all, these governments are composed of the same people who launched a permanent war in the Middle East, wasting trillions of dollars on destroying millions of lives. These governments bailed out the banks from the public purse and gave themselves raises after telling the rest of the nation we had to tighten our belts. They have robbed the young of the opportunity to own a home by sending house prices through the roof and mean to leave them a nation in ruinous debt. They continue locking away huge numbers of people for decades for victimless crimes, leaving their children to be raised single-handed. They created an oligopoly of higher education provision forcing generations into student debt that cannot be defaulted on, and healthcare systems that are so restrictive that people must pay inordinate sums to get care or are otherwise forced onto government waiting lists so long that many of their conditions are chronic or untreatable before they are seen to.
Am I the only one who thinks these powers may be used for evil rather than good?
China’s “Credit System”
One such cautionary tale may be found in China.
If we take a look across to China, where they are instituting a “social credit system,” we might glean some insight into what may be in store for us with the UBI.
Under the Chinese social credit system the government judges their citizens’ behaviour and trustworthiness in order to assign each person a rating out of one thousand which the state can then improve or dock. If people play their music too loud, don’t pay a court bill, owe the government money, or are caught jaywalking, for example, they can lose certain rights, such as booking flights or train tickets. The government can have an individual’s internet speed throttled, or exclude a person from getting the best jobs. Parents can have their children banned from the best schools, be excluded from the best hotels, be publicly named and shamed as “bad citizens,” and even have the family dog taken away.
Now a basic income guarantee may begin universal, but as the years wear on and it proves expensive to provide, it might be that corners have to be cut in order to ensure its continued fungibility. Hardly anyone will object to the UBI being withdrawn from criminals, for example. And then perhaps for antisocial behaviour. People may have their universal basic income docked for committing petty crimes like littering the street. A few might moan that this is the beginning of a government social engineering program, but to most people this will seem like a quite a sensible and reasonable measure. After all, we all “benefit” from the benevolence of society providing our roads and schools, and now our basic income. So if some choose to repay society in disrespect, with such vulgar behaviour as littering, throwing away the ends of cigarettes, spitting on the street, failing to remove their dog foul, or what have you, why should society continue to furnish them with the fullness of a basic income? Besides, if their basic income is docked for several months they are unlikely to repeat the crime — they will soon learn their lesson. It will save money on law enforcement, lengthy court trials, and prison sentences as well, all of which are costly. Clipping people’s basic income will soon seem the most sensible and appropriate response to many crimes and misdemeanours. People may be sanctioned for things like not sorting out their recycling. After all, the government provides garbage disposal for us, and the environment is at stake. Governments are already looking at sanctioning people for this kind of behaviour, so the step would not be much of a leap. These steps will simply be designed to acclimatize people to the idea of being “nudged” in the right direction before more radical measures are taken to use the UBI to shape their behaviour.
In China people can have their social credit score docked for buying too many videogames. Under the UBI, there are bound to be complaints that some people are taking advantage of the system but are not contributing, and that that is bad for them as well as for society. It will therefore seem sensible to save money, and encourage people into better habits, by docking their universal basic income if they spend too much time playing on the computer, on clicking around on social media. The government will likely have many bright ideas as to what kind of activities they should be getting up to instead. They may soon also want to reward people for good behaviour, like contributing to charity or volunteering. But how long can such a system remain impartial? How long before people start creating malignant causes to launder and take advantage of free government money? How long before the government starts to select which causes are worthy and which are not? The government rewarding specific activities with public funds supplants the market system with a “bribocracy” where people can climb the ladder not by directly providing goods and services that others are willing to pay for, but by finding out what the government approves of and collecting brownie points. If spying on neighbors and reporting their so-called antisocial behaviour qualifies, then the government will have found a role for the new class of sycophants — the idea becomes all the scarier. It would not be the first time governments have called upon their citizens to tell on their neighbor.
In China people can have their social credit score docked for posting fake news online. We may, of course, ask, fake according to whom? After all, the Chinese government maintains that the Tienanmen Square Massacre of 1989 was “fake news” drummed up by the West to undermine the regime. Closer to home, the mainstream media was entirely complicit in selling the war on Iraq to the public, but I very much doubt we will see people being sanctioned for posting news from mainstream sources such as the BBC or MSNBC. Our leaders are above falsifying our historic records and sending embarrassing incidents down the memory hole for permanent deletion. The purse strings of the universal basic income also present a grave threat to freedom of speech. Anyone who has been following the “woke wars” on Twitter and other social media platforms will have heard of people receiving lifetime bans for tweeting things like “Men are never women.” Now whether you believe such a message is transphobic or otherwise, you may at least believe that someone has the right to tweet it, and be duly educated as to the wrongs of their action by other users. The universal basic income could easily become the new weapon to wield against those who hold unpopular opinions or those that are simply no longer politically correct. It will be first used to strike against unpopular groups such as racists, misogynists, homophobes, and bigots. Not many people will come to their defense when they lose their basic income for spreading hate. But one day you yourself may hold an unpopular opinion that is relatively benign. Maybe you will say that people shouldn’t have their basic income docked just because they say unpopular things on the internet. You will not just be slapped with a Twitter ban, you will potentially lose $1000 a month.
Conservative Charles Murray states in Losing Ground, his book advocating the UBI, that it would require people to have a “universal passport” and “known bank account.” I don’t think it’s unrealistic to imagine that people may soon be forced to accept a mandatory government ID card in order to claim their basic income. Before long they will be asked to show it in order to get into venues and government buildings. Then at the airport to get on a plane. Then simply to board a train or a bus. Then to get into a bar. Then to get into a restaurant. Then show it to any policeman who asks to see it. Before long, every public place we go we’ll be asked to show our ID card. Failure to produce it may result in a penalty to our UBI. You will need to show your ID card in order to vote, and before long not voting may result in a penalty to your UBI as well. In a time of war you will be asked to enlist in the military or risk losing your UBI for denying your patriotic duty. Just as states freeze the assets of suspected fraudsters, they will soon be freezing the “known bank accounts” of political dissidents. By the time they come for those with radical ideas about freedom from government tyranny there will be precious few left to speak out for us.
Far from creating a futuristic utopia where — once our security needs are met — we are all liberated to pursue our dreams, become great scientists, scholars, artists, and entrepreneurs, the universal basic income threatens a totalitarian horror the likes of which we are used to seeing imagined only on The Twilight Zone and The Outer Limits.
Certainly the poor, who depend solely on their handouts to survive, will quickly become very cautious of what they say and do, but even reasonably affluent people will think twice before risking a sum that is high enough to live on. The UBI will institutionalise the state as each of our patrons — and us as wards of the state. Once this relationship is established we will enter into a frightening era where the government is our provider and the UBI can easily be weaponized by our rulers to shape us into compliance.
Tyler Durden
Sun, 01/12/2020 – 16:50 - Ex-Marine Impersonates Trump Security Member, Gets Arrested Heading Towards Marine One
Ex-Marine Impersonates Trump Security Member, Gets Arrested Heading Towards Marine One
A former US marine who was dishonorably discharged a decade ago for “serious offenses” was busted last week for posing as a member of President Trump’s security team in a bid to get near Marine One – the president’s helicopter.
37-year-old Brandon M. Magnan of Naples, FL – a registered sex offender – was driving a Honda Pilot with an unidentified male passenger around 3pm on January 5, when he bluffed his way through two security checkpoints using falsified credentials bearing the seals of the Marines and the Marine Corps Executive Flight Detachment, according to the New York Times.
Magnan was attempting to breach protective zone established around Atlantic Aviation – which provides hangar space, jet fuel and flight support services – ahead of President Trump’s planned departure from Palm Beach to Washington.
It wasn’t clear why Mr. Magnan was trying to get near the helicopter. Marine One, which is piloted and protected by the Marine Corps unit known as HMX-1, is used to transport the president for shorter trips, the Secret Service said.
Mr. Trump was spending his winter vacation in Palm Beach, Fla., at his private Mar-a-Lago resort at the time of the episode with Mr. Magnan. –NYT
Magnan was charged January 6 for impersonating an officer or employee of the United States, according to a criminal complaint filed by the Secret Service. The former marine – who was dishonorably discharged after being convicted at a court-martial for “serious offenses” – was spotted by a Sheriff’s deputy who noticed that he was not wearing a Marine Corps uniform, as is standard during presidential travel.
The deputy contacted Trump’s actual security detail, who identified Magnan’s credentials as fake. When he was confronted by law enforcement, he said that he was a retired member of HMX-1, the official designation for Marine One.
Mr. Magnan is listed in the Florida Department of Law Enforcement Sex Offender registry for convictions in 2010 in military court related to abusive sexual conduct and sodomy.
In one case, a lance corporal testified that he fell asleep in a hotel room with Mr. Magnan after the Marine Corps ball and awoke to find Mr. Magnan’s hand in his pants and over his boxer shorts, according to military court records.
Mr. Magnan was released on a $100,000 bond, according to court records. –NYT
If convicted for the security breach, Magnan faces a maximum of three years in prison and a fine of $250,000 as well as a year of supervised release. A hearing is scheduled for January 27.
Tyler Durden
Sun, 01/12/2020 – 16:25 - "The Other 1 Percent": Morgan Stanley Spots A Market Ratio That Is "Unprecedented Even During The Tech Bubble"
“The Other 1 Percent”: Morgan Stanley Spots A Market Ratio That Is “Unprecedented Even During The Tech Bubble”
Authored by Morgan Stanley’s chief equity strategist, Michael Wilson
The Other 1 Percenters
Income inequality has become a hot topic. The top 20% has done exceptionally well over the past several decades, while the average American has not kept pace. Though this is a political issue, it’s also an economic one. As legend has it, Henry Ford paid his workers more so they could afford to buy his cars. Whether that was his real goal or it was just PR, paying employees a better wage is good for the economy, if not the bottom line.
American workers did pretty well during the second half of the 20th century with regard to getting their fair share. Based on the National Income and Products Accounts, employee compensation as a percentage of Gross Value Added held fairly steady between 61% and 65%. But after 2001 that all changed, and labor’s share began to drop until it reached below 57% in 2012.
What happened? While I wouldn’t attribute all of the decline to just one factor, a big driver was globalization. Companies also faced increasing pressure to be more efficient in a world of deflationary pressures. Since 2012, employee compensation has climbed back the the low end of the old range. As the economy recovered from the financial crisis, labor markets tightened and workers have gotten more of the pie. But we’ve also seen a backlash against globalization and further outsourcing. This reaction has resulted in legislation to increase the minimum wage by 20-50% in many states, with inflation-indexed increases in the future.
We have written a great deal about the rise in labor costs over the past year and the negative impact on corporate margins. In fact, this is the primary reason why earnings growth in 2019 was negative for most US companies while the economy enjoyed another strong year of growth driven by, you guessed it, the consumer. In fact, this shift of profits from capital to labor has led to an unbalanced economy in which consumption boomed in 2019 but capital investment growth actually went negative in the second half of the year.
The bottom line is that the average worker is doing well, thanks in part to the higher ratio of corporate earnings coming their way and a tax cut that benefited the middle class more than the rich, given the $10,000 limitation on real estate and state income tax deductions. Generally speaking, this is a good-news story that suggests we are in the process of dealing with income inequality, even if it’s long overdue and may be happening too slowly.
There’s another form of inequality – corporate – that is much less appreciated.
In a world of low growth, limited pricing power and now rising costs, it’s clear that bigger is better and scale matters. This is also the main reason why we’ve been underweight US small caps since July 2018, a relative trade that is now up close to 20%. Small-cap companies can’t offset rising labor costs with technology as easily as large caps, nor do they have the same access to the record-low cost of capital.
Finally, the rising regulatory and cyber costs over the past decade favor larger-cap companies, who can spread such costs across a larger revenue base. Against this backdrop, it should come as no surprise that new business formation is still well below pre-crisis levels. In short, the big get bigger as they continue to eat the small guy’s lunch. To me, this is unsustainable and potentially a bigger risk to the economy and markets than the very important issue of individual income inequality.
Markets understand this dynamic, which is why small caps have underperformed so significantly over the past 18 months and, quite frankly, over this entire cycle. But this phenomenon is manifesting itself in other ways. Capital concentration is following corporate inequality like never before. Currently, the top five companies in the S&P 500 (the other 1 percenters) make up 18% of the total market cap.
A ratio like this is unprecedented, including during the tech bubble. During 2019, the net income concentration for the 1 percenters didn’t keep pace with their market cap concentration, similar to what happened during the 1999 concentration peak.
I think this divergence is the result of the extraordinary liquidity being provided by the world’s central banks, which is flowing to the most liquid and largest names in the S&P 500. This also recalls 1999, when the Fed expanded its balance sheet at the end of the year and early in 2000 as a precaution against Y2K disruption.
The bottom line: this income/market cap divergence looks likely to continue over the near term, given the Fed’s expected balance sheet expansion through April. More importantly, if we’re right, these companies will then need to deliver on the income side of the inequality divide or risk a sharp decline in price.
Tyler Durden
Sun, 01/12/2020 – 16:00
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