May 13

Today’s News 13th May 2018

  • Trump's Pyrrhic Victory: The US Opts For A Path That Can Only Lead To War

    Authored by Philip Giraldi via The Strategic Culture Foundation,

    Nearly everyone loses by President Donald Trump’s decision on Tuesday to withdraw from the Joint Comprehensive Plan of Action (JCPOA) relating to Iran’s nuclear energy program and to reinstate the “highest level” of sanctions while also threatening secondary sanctions on any country that “helps” the Iranians.

    The whole world loses because nuclear proliferation is a disaster waiting to happen and Iran will now have a strong incentive to proceed with a weapons program to defend itself from Israel and the United States.

    If Iran does so, it will trigger a regional nuclear arms race with Saudi Arabia and Egypt undoubtedly seeking weapons of their own.

    Iran and the Iranian people will lose because their suffering economy will not now benefit from the lifting of sanctions and other economic inducements that convinced it to sign the agreement in the first place.

    And yes, even the United States and Israel will lose because an agreement that would have pushed back by ten or fifteen years Iran’s timetable if it were to choose to develop a weapon will now be reduced to a year or less. And the United States will in particular lose because the entire world will understand that the word of an American president when entering into an international agreement cannot be trusted.

    The only winners from the withdrawal are President Donald Trump and Prime Minister Benjamin Netanyahu, who will enjoy the plaudits of their hardline supporters. But their victory will be illusory as the hard reality of what they have accomplished becomes clear.

    Failure of JCPOA definitely means that war is the only likely outcome if Tel Aviv and Washington continue in their absurd insistence that the Iranians constitute a major threat both to the region and the world. A war that might possibly involve both the United States and Russia as well as Iran, Saudi Arabia and Israel would devastate the region and might easily have potential to escalate into something like a global conflict.

    The decision to end the agreement is based on American domestic political considerations rather than any real analysis of what the intelligence community has been reporting. Deep-pocketed Iran-hating billionaires named Sheldon Adelson, Rebekah Mercer and Paul Singer are now prepared to throw tens of millions of dollars at Trump’s Republican Party to help it win in November’s midterm elections.

    Those possessed of just a tad more foresight, to include the Pentagon and America’s European allies, have strongly urged that JCPOA be continued, particularly as the Iranians have been fully in compliance, but there is a new team in Washington. America’s just-confirmed Secretary of State Mike Pompeo did not exactly endorse the ludicrous Israeli claim made by Benjamin Netanyahu two weeks ago that Iran has a secret weapons of mass destruction program currently in place, but he did come down hard against the JCPOA, echoing Trump in calling it a terrible agreement that will guarantee an Iranian nuclear weapon. The reality is quite different, with the pact basically eliminating a possible Iranian nuke for the foreseeable future through degradation of the country’s nuclear research, reduction of its existing nuclear stocks and repeated intrusive inspections.

    The failure of the JCPOA is not about the agreement at all, which is both sound and workable. There is unfortunately an Israeli-White House construct which assumes that Iran is both out to destroy Israel, for which no evidence has been revealed, as well as being singularly untrustworthy, an odd assertion coming from either Washington or Tel Aviv. It also basically rejects any kind of agreement with the Iranian government on principle so there is nowhere to go to “fix” what has already transpired.

    The United States has changed in the past seventeen years. The promotion of policies that were at least tenuously based on genuine national interests is no longer embraced by either political party. A fearful public has allowed a national security state to replace a constitutional republic with endless war as the inevitable result. Presidents once constitutionally constrained by legislative and judicial balance of power have successfully asserted executive privilege to become like third world dictators, able to make war without any restraint on their ability to do so. If America survives, historians will no doubt see the destruction of the JCPOA as the beginning of something new and horrible, where the government of these United States deliberately made a decision to abandon a beneficial foreign treaty to instead opt for a path that can only lead to war.

  • "We Are Telling People To Plan For The Worst": Hawaii Braces For Explosive New Eruptions

    A little over a week after Hawaii’s Kilauea volcano erupted, The Big Island is now bracing for a series of explosive eruptions which could occur within days or weeks, hurling boulders the size of small cars, creating a giant ash cloud, and oozing even more of the hot magma which has already claimed at least 36 structures and forced thousands to evacuate. 

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    Geologists believe the hardest hit by the new activity will be the Leilani Estates in the southwestern Puna district, around 20 miles south of Hilo where all 1,900 residents have already been evacuated. 

    “We are telling people to plan for the worst. They should have a Plan A, a Plan B and a Plan C,” said county official Roann Okomura, who helps operate one of the evacuation shelters.

    As a lava lake at Kilauea’s summit drains inside the volcano, magma is running underground. It could burst to the surface as large, fast-moving and intensely hot lava flows and produce higher levels of toxic gases, Hawaiian Volcano Observatory scientist-in-charge Tina Neal said.

    …

    In addition, Kilauea, one of the world’s most active volcanoes, threatens to begin a series of explosive eruptions within days or weeks that could form huge clouds of volcanic smog, or vog, and hurl boulders as big as small cars. –Reuters.

    “What will take a turn for the worse in terms of hazard is if hotter, fresher magma makes it to the surface, and that could be what is coming,” Neal told a conference call on Friday. “Once a new batch of hotter, gassier magma makes it to the surface we might see larger, higher eruption rates.”

    Sixteen fissures have opened up on the eastern flank of Kilauea since its initial eruption eight days ago – oozing relatively cool, slow moving magma left over from a similar incident in 1955. Scientists now worry that fresh magma from deeper within the earth is about to come surging behind it. 

    In other words, what’s happened over the last eight days was just “cleaning out the pipes” so to speak. 

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    Yesterday we reported on a series of powerful earthquakes which have hit The Big Island since it Kilauea began erupting. 

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    In Pahoa, the nearest village to Kilauea, some schools remained closed after the area was hit by a 6.9 magnitude earthquake on Friday, the biggest since 1975.

    Meanwhile, a new fissure opened up near the Puna geothermal power plant on Saturday, spattering lava less than a mile from the facility. There are still nearly 50,000 gallons of pentane stored at the site, according to Hawaii News Now.

    Compounding worries is a text message sent to residents of the southeast corner of the island by County authorities warning them of a wind change that would bring rising levels of sulfur dioxide gas, which can be fatal if inhaled in large quantities.

    Hawaii’s governor has warned that mass evacuations may be required as more fissures open in the ground and spew lava and gas into semi-rural residential areas on the east flank of Kilauea, one of the world’s most active volcanoes.

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    President Trump issued a disaster declaration for Hawaii on Friday, announcing that federal funding had been approved for local recovery efforts in the affected areas. 

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    “Additional designations may be made at a later date if requested by the state and warranted by the results of further damage assessments,” the White House added in a statement.

    Federal Emergency Management Agency (FEMA) chief Brock Long named deputy Federal Coordinating Officer Willie Nunn as the agency’s top official overseeing the relief efforts. 

    “As more fissures open and toxic gas exposure increases, the potential of a larger scale evacuation increases. A mass evacuation of the lower Puna District would be beyond current county and state capabilities, and would quickly overwhelm our collective resources,” Ige said.

    “Federal assistance would be necessary to enable us to successfully conduct such large-scale operations.” 

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  • The Deep State Mob Targets Nunes

    Authored by Julie Kelly via The Center for American Greatness,

    In an absurd tweet on Wednesday, Lawfare’s executive director suggested that Rep. Devin Nunes (R-Calif.) should be replaced as chairman of the House Intelligence Committee:

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    That wasn’t even the most moronic tweet in Susan Hennessey’s arsenal. She went on to warn how “the intelligence oversight system is based on trust. Without trust it is irretrievably broken. The [Intelligence Community] and [Department of Justice] don’t trust Nunes and he cannot perform his job functions.” Get that? The Intelligence Community and the Justice department—which have proven to be as political and devious as a Chicago ward boss—are the white hats and Nunes is the black hat.

    That is not ignorance on Hennessey’s part: it’s calculated deception.

    Fortunately, it’s unlikely that House Speaker Paul Ryan (R-Wis.) will heed an unreasonable demand from a political partisan tied to the left-leaning Brookings Institution.

    But it does unveil the latest tactic of the Left (and some on the Right) to discredit and ultimately oust Nunes, the only Republican on Capitol Hill who appears to have his act together when it comes to exposing the players behind the Trump-Russia election collusion scheme.

    The Deep State Mob is continuing to squeeze the California congressman after he again threatened to impeach Deputy Attorney General Rod Rosenstein for ignoring congressional subpoenas and withholding crucial documents from Congressional investigators. Nunes has minced no words about how the Justice Department and FBI have been “stonewalling” his committee’s investigation for months. And as Nunes inches closer to revealing the stinking core of what is potentially the biggest political corruption scandal in U.S. history, the Deep State Mob is trying to close in on him first.

    Nunes and other House Republicans want to find out exactly how and why the FBI’s counterintelligence operation into possible collusion between the Trump campaign and the Russian government began in the summer of 2016, and what intelligence sources either aided or instigated that probe. The latest showdown, according to the Washington Post, is because Nunes has issued a subpoena demanding that the Justice Department provide information about an unnamed individual referenced in a classified letter to Attorney General Jeff Sessions last month.

    While there are few details about the individual in question, the Wall Street Journal’s Kimberly Strassel intimates that the person could have been a mole inside the Trump campaign:

    We know Nunes’s request deals with a “top secret intelligence source” of the FBI and CIA, who is a U.S. citizen and who was involved in the Russia collusion probe. We might take this to mean that the FBI secretly had a person on the payroll who used his or her non-FBI credentials to interact in some capacity with the Trump campaign.

    Strassel, who has been carefully covering this scandal, has a hunch of who the source is but couldn’t confirm it.

    The Justice Department is fighting Nunes’s request on the basis that any disclosure would “risk severe consequences, including potential loss of human lives, damage to relationship with valued international partners, compromise of ongoing criminal investigations and interference with intelligence activities.” While Justice officials met with Nunes and committee member Trey Gowdy (R-S.C.) late Thursday, they did not allow them to see the information in question. Nunes indicated that he would continue to press the department to fulfill his request.

    Now Nunes’s foes are portraying him as a rogue actor – perhaps even a traitor – who is willing to see intelligence assets killed in order to carry water for President Trump. CNN national security analyst Asha Rangappa echoed the Justice Department’s warning that Nunes is risking lives to achieve political ends.

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    In a one-two punch, Hennessey’s boss upped the attacks on Nunes during a discussion with former FBI Director James Comey on Friday. Benjamin Wittes, Lawfare’s editor and close Comey pal, rhetorically asked Comey, “what’s Devin Nunes gonna be able to tell his grandchildren? It’s a serious question. He is affirmatively acting in a fashion that some of us judged, you know, Edward Snowden very harshly for behaving in a fashion that puts at risk intelligence sources and methods when being told so by the senior levels of the Justice Department.” (Others have tried to get the “Nunes-Is-Literal-Snowden” trope going before. We’ll see if it finally takes off next week.)

    Comey, the consigliere of the Deep State Mob, anguished to his buddy about the lost values of the Republican Party: “This is my hope for the Republicans as a whole, that they realize that only a fool would trade the institutions and the values that actually unite us for the policy gains they think they’re getting from a president who is eroding and attacking those values.” Sounds like some sour grapes from the guy who lost his battle against Nunes to keep his memos secret.

    Fellow fired prosecutor Preet Bharara joined Comey in mocking Nunes this week. After a bogus storysurfaced that Nunes doesn’t read the intelligence information he receives, the former head of the DOJ’s Southern District of New York (yes, the same office assigned with investigating Trump lawyer Michael Cohen) tweeted this:

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    But it’s not just the Deep State Mob on the Left that is after Nunes: Their soulmates in the smoldering political ash heap that is the neoconservative movement are speaking out, too. In an egregiously flawed assist in Commentary, Noah Rothman gives aid and comfort to the Deep State Mob, incredibly by making Nunes the bad guy. Rothman accuses Nunes of causing the trust breakdown in the House Intelligence committee, the same committee whose ranking member is the despicable leaker Rep. Adam Schiff (D-Calif.). Rothman smugly claims that “there is no impartial assessment of his tenure as House Intelligence Committee chair in which he comes off as a competent steward of American national security or capable of the dispassionate oversight of the institutions that safeguard U.S. interests at home and abroad.”

    Rothman suggests that even Trump doesn’t trust Nunes and that’s why the president (for now) has acquiesced to the Justice Department’s stonewalling on the source subpoena. He wrongly claims that Nunes recused himself from the investigation early on, then calls Nunes an “obstacle in the way of truth” who should be removed.

    Any close observer of the unfolding story of how the disaster of the Obama Justice Department exploited our most trusted federal agencies to hatch the Trump-Russia scheme is either on the floor laughing or smashing things at Rothman’s absurd accusation.

    The Deep State Mob wants to destroy anything and anyone associated with Trump, particularly those who are brave enough to incur their wrath to get to the truth on behalf of the American people. Nunes isn’t a traitor: He’s a hero.

  • Giuliani Inserts Foot In Mouth, Says Trump "Denied" AT&T Merger

    The ever-affable Rudy Giuliani has once again stuck his foot in his mouth regarding his old friend and new boss, Donald Trump.

    In a Friday interview with the Huffington Post, Giuliani – seemingly in an attempt to defuse the Michael Cohen “consultancy” scandal – claimed that Trump “denied the merger” between AT&T and Time Warner, despite long-standing protocol designed to keep DOJ decisions independent from the executive branch in order to keep the department free of political influence by the White House. Apparently the previous administration didn’t get the memo either.

    Giuliani’s statement comes on the heels of revelations that Trump’s personal attorney, Michael Cohen, accepted a $600,000 payment right after the inauguration for “insights” into President Trump’s thinking.

    “The president had no knowledge of it.” Giuliani told the Post, adding “Whatever lobbying was done didn’t reach the president… He did drain the swamp … The president denied the merger. They didn’t get the result they wanted.”

    Cohen received $600,000 from AT&T, $1.2 million from Swiss pharmaceutical giant Novartis and $500,000 from an investment bank affiliated with a Russian oligarch, all following Trump’s unexpected election win in 2016.

    Giuliani said Cohen’s business relationships did not contradict Trump’s campaign promises to end “pay-to-play” schemes and to “drain the swamp” because Cohen did not get for his newfound clients what they wanted. –HuffPo

    Earlier in the week, AT&T said that they hired a company created by Cohen right after the inauguration – when it sorely needed government approval for the Time Warner deal, it hired a company created by Cohen in order to glean insights into the Trump administration.

    AT&T’s top Washington executive, Bob Quinn, said that Cohen didn’t conduct any lobbying work for them – while CEO Randall Stephenson told employees that hiring Cohen was “a big mistake” in an internal memo circulated on Friday. While not-so coincidentally according to NBC News, was AT&T’s Friday announcement of Quinn’s sudden retirement.  

    If in fact AT&T thought this would buy them an approval, one has to wonder if Cohen simply trolled AT&T for $600K and laughed all the way to the bank. They were about to acquire CNN after all – and in December of 2017 said they wouldn’t sell the network to satisfy a DOJ demand before trying to close the $85 billion deal.

    On the other hand – had AT&T agreed to sell CNN and the merger been approved, the Cohen payment would have the appearance of a successful “pay-for-play” deal.

    AT&T says it was contacted by special counsel Robert Mueller’s office in late 2017 and cooperated with the probe, according to the Wall Street Journal.

    “Our reputation has been damaged,” wrote Stephenson in the Friday memo. “There’s no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.”

    The FBI raided Cohen’s office, hotel and home last month amid an active federal investigation. Since the raid, there have been several mysterious leaks of information from various media outlets – such as the release of his bank records, or the claim that he arranged a $1.6 million payoff to a former Playboy model in late 2017 who says she was impregnated by a top Republican fundraiser, “according to people familiar with the matter” (96 hours after the raid).

    Elliott Broidy, a GOP donor, right, and his wife, Robin Rosenzweig (2014)

    Michael Cohen, whose office, home and hotel room were raided by federal agents this week, arranged the payments to the woman on behalf of Elliott Broidy, a deputy finance chairman of the Republican National Committee with ties to Mr. Trump, the people familiar with the matter said. Mr. Broidy, a Los Angeles-based venture capitalist, works on the Republican committee with Mr. Cohen, who is also a national deputy finance chairman. –WSJ

    Giuliani, the former mayor of New York and US Attorney of the office now investigating Cohen, assumed the lead on Trump’s private legal team handling the Mueller investigation in the hope of wrapping it up as soon as possible. He said on Friday that he doubts Trump would be able to speak with the special counsel investigation before his June 12 summit with North Korean leader Kim Jong Un. 

    He said the fact that Cohen has become involved in the probe shows that Mueller has been unable to make headway on the idea of collusion between the Trump campaign and Russia. He blamed much of Cohen’s involvement on adult film actress Stormy Daniels and her new lawyer, Michael Avenatti. They have been trying to break a non-disclosure agreement she signed promising not to discuss an affair she said she had with Trump a decade ago in return for $130,000. –HuffPo

    Giuliani says that Cohen did nothing wrong. 

    “They’re buying his advice. It can turn out to be good or bad,” he said. “There’s a lot of people in Washington who are paid for their advice.” Which, of course, is the reason why Washington is just one giant “swamp” which Trump once upon a time vowed to drain.

  • An "Audible Gasp" Was Heard When The Chicago Fed Unveiled Its "Solution" To The Pension Problem

    Submitted by Mark Glennon of Wirepoints

    An audible gasp went out in the breakout room I was in at last month’s pension event cosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.

    Evidently, that wasn’t reality-shock enough. This week the Chicago Fed published that proposal formally. It’s linked here.

    It surely ranks among the most blatantly inhumane and foolish ideas we’ve seen yet.

    Homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000.

    Is the Chicago Fed blind to human consequences? Confiscatory property tax rates have already robbed hundreds of thousands, maybe millions, of Illinois families of their home equity — probably the lion’s share of whatever wealth they had.

    Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values. Across Illinois, the average is a sky-high 2.67 percent, the highest in the nation.

    In south Cook County they already average over 5%. Most of those communities are working class, often African-American. The Fed says maybe you could make the tax progressive by exempting lower values, but that’s very difficult to do and, if you did somehow exempt the poor and working class, the bill pushed to the others would be astronomical.

    Those rates have already plunged many communities into death spirals, demanding an immediate solution, but the Chicago Fed apparently wants to pour on more of the accelerant.

    Don’t they understand that people won’t build on or improve property when property taxes are that high? When taxes are 3 percent to 6 percent, any value you add to your home is going to be taxed at that high rate forever. Have they never been to our communities with countless disrepaired, abandoned homes and commercial properties, which are the result?

    Get this, which is part of the Fed’s reasoning:

    “New taxes wouldn’t affect people thinking of moving to Illinois. While they would have to pay higher property taxes, that would be offset by not having to pay as much for their new homes. In addition, current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden quickly.”

    In other words, just confiscate wealth from current owners because they will pay, whether they stay or not, through an immediate reduction in home value.

    This proposed tax would only address the five state pensions. What about the other 650-plus pensions in Illinois, particularly those for overlapping jurisdictions in Chicago which are grossly underfunded? The Fed was asked that at last month’s seminar and they, without explanation, said they didn’t bother to cover that.

    I’ve earlier met Rick Mattoon, one of the Chicago Fed authors of the proposal. He’s a smart, likeable guy who I thought had lots of interesting information. For the life of me, however, I can’t understand how he would put his name on this proposal.

    Property can’t leave, so seize it. That’s the basic idea.

  • Army's New Weapon: Special Goggles Allow Soldiers To Shoot Around Corners

    The United States Army recently awarded BAE Systems $97 Million in orders for new night vision goggles and thermal weapon sights for the Enhanced Night Vision Goggle III and Family of Weapon Sight-Individual (ENVG III/FWS-I) program. The all-in-one weapon sight system allows soldiers to acquire and eliminate enemy targets through a wireless connection that transmits the weapon’s crosshairs and surrounding imagery directly into the soldier’s goggles.

    BAE Systems ENVG III/FWS-I integrated system uses a wireless connection that transmits the weapon sight’s aim point and surrounding imagery directly into the soldier’s goggles. (Source: BAE)

    With both units wirelessly integrated, soldiers are on the verge of using weapon sight imagery and aim to point technology that can wirelessly transmit the gun’s sights to the soldier’s goggles with one click of a button – for a quick tactical edge during close combat warfare.

    In other words, soldiers are about to receive futuristic devices that replace traditional night vision goggles with integrated systems, and allow troops on the battlefield to “shoot around corners, see-through dense vegetation, and smoke, plus distinguish friend from foe,” said USA Today.

    “It is no longer just a night vision device,” said Army Col. Christopher Schneider, the project manager for the system that can be worn night and day. “The enemy cannot see we are targeting him until we pull the trigger.”

    BAE Systems promotional video titled: Own the night with ENVG III/FWS-I

    (By integrating night vision goggles and weapon-mounted thermal sights into one system, BAE Systems’ Enhanced Night Vision Goggle III and Family of Weapon Sight-Individual (ENVG III/FWS-I) solution makes darkness a tactical advantage for the dismounted soldier. (Source: BAE Systems via YouTube)

    “Aiming to provide the most technically advanced and lightweight solution possible, our goggles allow soldiers to quickly detect and engage targets for a tactical edge,” Marc Casseres, director of Precision Guidance and Sensing Solutions at BAE Systems, said in a recent BAE press release.

    “When fully integrated with the FWS-I weapon sight, the combined solution provides superior imagery and a target acquisition capability that can greatly increase mission success and survivability,” he added.

    The high-tech goggles are part of the United States Department of Defense (DoD) modernization program to keep the United States Armed Forces technologically ahead of China and Russia, which, in recent years, has shown they are quickly catching up. USA Today notes that the DoD has spent more than 17 years in Afghanistan and Iraq, as China and Russia have studied the various strategies and technologies deployed on the Middle East battlefield.

    “Our adversaries have been studying our strengths and our vulnerabilities and are developing capabilities to exploit those vulnerabilities,” Gen. Mark Milley, the Army’s chief of staff, warned in a speech last year.

    “They have steadily eroded our competitive advantage and are rapidly closing the capability gap that we have long enjoyed,” he added.

    A thermal sight on an M4 service rifle is connected wirelessly to the new night vision goggles attached to a soldier’s helmet. (Source: Jack Gruber, USA Today)

    Integrated situational awareness and thermal targeting system. (Source: BAE) 

    USA Today points out that America’s rapid modernization program is the most significant in five decades, as China and Russia’s technological advancements have alarmed U.S. military officials.

    “With U.S. involvement in Iraq and Afghanistan winding down, the Army has embarked on its largest modernization programs since the Vietnam War nearly five decades ago to overhaul its weapons, training and tactics.

    The post-Vietnam revamping transformed a large draft Army with discipline and other problems into a smaller all-volunteer fighting force equipped with modern weapons and better-trained troops.

    The problems are not as desperate now, but officials are worried about the progress that Russia and China have made. Technological breakthroughs are cheaper and happen faster than decades ago when America could count on its advantages in industry and technology to power the military

    “We still maintain overmatch, but they are closing the gap,” Army Undersecretary Ryan McCarthy said in a recent interview.

    McCarthy said that Army is in the process of establishing a Futures Command headquarters — based in an urban environment with close relationships to academic institutions and local industry. The Army wants a location that “will help us think differently and get more people from the country to help us solve problems,” he explained.

    At $23,000 a pop, the Army plans to field 36,000 FWS-Is and 64,000 ENGV IIIs to combat teams in the second half of 2018.

    A soldier with the advanced goggles will be able to fire an assault rifle around corners or above his or her head because of the wireless sights attached to the Picatinny rail of the weapon. The ability to field the goggles before the next war breaks out will be critical for urban warfare in densely populated cities.

    “We won’t be able to avoid the dense urban terrain or the megacities in the future,” said Maj. Gen. Maria Gervais, deputy commanding general of the Army’s combined arms center at Fort Leavenworth, Kan.

    War is coming. The Army is preparing.

  • Trump's Neocon Folly: Goodbye Nuke Deal, Hello Global Debt Crisis

    Authored by Tom Luongo,

    At least it is confirmed for us.  Donald Trump wants regime change in Iran.  His cancellation of the JCPOA was a decision born his myopia.  He has surrounded himself with people who reinforce his view and manipulate him via his vanity.

    And the price of implementing his current plan will be a global debt crisis which no one will escape.  The problem will be very few will see the links.

    He wants to remake America and the world in his image while undoing anything President Obama touched.  Most of this I’m wholly on board with.  Obama was a vandal.  So, however, were Bush the Lesser and Bill Clinton.

    We’re All Neocons Now

    We have a leaked (yeah, right) memo explaining this is the plan.  But, we didn’t need this if we were being honest with ourselves.  Nothing Trump has done since he’s been in office has been contra to this goal; overthrowing the theocracy in Iran.

    In fact, it has been a step-wise move in this direction with each decision he’s made.  Commentators I respect and have learned at the knee of still want to give Trump the benefit of the doubt.  Not me.

    It’s right there in plain text.

    Trump has capitalized on the insane Deep State opposition to his presidency to politicize this goal and get his base to ab-react for regime change, when he explicitly said that was off the table at his inauguration.

    If the Democrats and Merkel want to stay in the deal, then the deal must be bad.  Obama Bad, Trump Good.  Trump is Orange Jesus.  He knows stuff, man.

    What was a worry about Israeli influence in his administration in 2017 has now morphed into a call to duty to create chaos in Iran to assuage the American ego by saving the Iranian people from themselves.

    You have to hand it to these folks, they understand how to run a successful mass psy-op.  Beware the Master Persuader, as Scott Adams would put it, his skills can be put to any use.

    These men and their Deep State handlers/billionaire donors have had a strategic goal for decades, remake the Middle East for Israel and the Oil Complex, bottle up Russia and China.

    Donald Trump’s patriotism is revealed to be jingoism.  But, he made this clear in his speech to the U.N. last year.  At some point you have to put away childish things and face the world we’ve got.

    And that world is one of extreme uncertainty.

    Back to the Future

    As I said the other day, Trump wants to reset the clock back to 2012.  Bottle up Iran, cut its ties to the world.  Remove 1 million barrels of oil per day from the markets (for his Saudi weapons customers “Look!  Yuge JOBS!”). And bully our allies into getting the plan to atomize Syria back on track.

    But, it’s not 2012.  It’s 2018 and everything is different.  Iran has friends it didn’t have then.  Yes, there is local unrest and unhappiness which could grow.  The rial is falling like a rock, people in Iran can’t get dollars.  Not solely because Trump has cut them off from the dollar but because Iran has.

    It anticipated this move by him and the chaos of today turns into the de-dollarization of tomorrow.  These people still think destroying a national currency is the path to political change. It’s a dangerous gambit that doesn’t always work.

    It didn’t work with Russia in 2014/5.  It’s not working in Venezuela today. And if those countries have friends, China for Russia in 2015, Russia and others for Venezuela today, then the longer the regime stays in power once the worst of the crisis hits, the lower the probability regime change becomes.

    I told everyone last year the Saudi gambit to isolate Qatar wouldn’t work.  If they didn’t get regime change in Doha within two weeks, then the government would survive.  It has and now it is free to pursue whatever it wants, having finally bought a 19% stake in Russian state oil giant Rosneft.

    Trump has been signaling this moment for almost two years.  Do you think Russia, Iran and China have not been game-planning this?  When the attack on the ruble began in 2014, Putin did the unthinkable.  In doing so revealed his central bank’s disloyalty.

    By demanding to free-float the ruble, under objection from his economic advisor Alexander Kudrin and central bank President Elvira Nabullina, Putin stabilized the situation quickly.  Then he ordered the Bank of Russia to assist payment of more than $50 billion in Russian corporate debt denominated in dollars from central bank reserves.

    China opened up ruble/yuan swap lines to help funnel dollars into Russia.  The Bank of Russia had to abandon IMF-style austerity and serve Russian interests first rather than continue playing into the hands of U.S. hybrid war tactics.

    Iran has these people as its friends now.  They are committed to its survival.  They may not be committed to the IRGC staying in Syria post-ISIS/Al-Qaeda, but they are committed to an Iran aligned with them for the road ahead.  And that Road has a Belt attached to it.

    Because they know that if they lead the opposition to U.S. aggression, then they will gain allies over time.  In acting this way Trump is revealing the U.S. to be the repressive, messianic global oligarch of the world order it claims the Iranian Islamic Republic to be over its citizens.

    Everyone will get in line behind the Orange Emperor or suffer his wrath.  Why?  Because Bibi Netanyahu can’t sleep at night?  Get that psychopath a plushie and leave a night light on for pity’s sake.

    It also has an EU wanting to establish itself as a separate power from the U.S.  Angela Merkel and French Poodle Emmanuel Macron both want an independent EU foreign policy and a Grand Army of the EU to put down any internal rebellions.

    China can and will assist Iran in overcoming the sanctions.  So will Turkey, who did so in 2012. Will it be enough save the Islamic Republic?  Possibly.  If that happens will the U.S. get what it wants?

    Most probably not.  National Security Advisor and Certified Crazy Person John Bolton wants to put the Saudi-backed MEK (Mujahedeen-e-Khalq), a cult-like Sunni group with zero support in Iran.  You’ll hear in the coming days about how great these guys are.

    Just like U.S. NGO-backed Russian agitator Alexei Navalny is promoted in the Western press even though he can’t get 2,000 people to march in Moscow on the day of Putin’s inarguration.

    Sanctions Cut Both Ways

    Russia, ultimately, has the sanctions hammer in its control of the uranium market.  It’s also a major supplier of both titanium and aluminum.  The U.S. has never considered sanctioning the first two and it’s plan to sanction Rusal has been close to a disaster.

    Trump believes in the primacy of the U.S. threat both militarily and financially so much that he’s willing to project it everywhere and at everyone to get what he wants in Iran.  We thought he reluctantly signed those new sanctions last summer.  Nonsense.

    If so, he wouldn’t be using those new powers in ways that are the height of hubris.  Explicit in his threats to Iran and his demands that are, as Alexander Mercouris put it at The Duran yesterday, “so extreme that no sovereign state could ever accept them and retain its independence.”

    So, let’s again put away childish things and think that Trump will not take this to whatever point he thinks is necessary to get his desired outcome.

    But, in doing this he will upset world financial markets already fragile from a decade of QE and an explosion of cheap dollar-denominated debt.  The Fed is raising interest rates. Bond traders are resisting raising rates at the long-end of the U.S. Treasury yield curve, causing it to flatten dangerously.

    Trump wants a continued weaker dollar but geopolitical uncertainty creates dollar demand because so much of the world’s debt and trade is based in it.  For over a year Foreign Central Banks have been parking U.S. Treasury purchases with the Fed as the dollar weakened.

    Now that trend has firmly changed.

    The Dollar Debt Bomb

    Moreover, the ECB is trapped at the negative-bound.  Mario Draghi keeps telling everyone he has no Plan B.  He will keep being the marginal (or only) buyer of EU sovereign debt until the market finally pukes all over him.

    If Trump is serious about putting sanctions on any foreign entity that does any business with Iran then that will set off chain reactions around the globe.  It’s why I’m not sanguine about EU leadership standing up to Trump in the long run.

    But it’s a real opportunity for Merkel et. al. to establish a new pole in the proposed multi-polar world advocated by Putin and Chinese Premier Xi Jinping.

    The worry now is a technical breakout of the U.S. 10 year above 3.05%.  U.S./EU credit spreads   With the dollar strengthening low loan servicing costs become big quick.  Anyone who has/had an adjustable rate mortgage understands this viscerally.

    With China no long buying U.S. debt, it is free to funnel dollars to Iran through proxies and its own oil trade to keep things from escalating.  That lack of recycling of its trade surplus is part of what kept the dollar weaker longer.  Now that the dollar is rising, we can safely say that that effect has been over-run.

    China can and will put pressure on the Saudis by buying more Iranian oil.  Expect Iran now to cut it’s monthly tender price to undercut Saudi Arabia on a forward basis.  In 2012 U.S. sanctions made it difficult for shippers to insure oil shipments and that was part of the reason they were initially so successful.

    With the Fed tightening, reserves of the U.S. banking system are falling thanks to excess reserves being mobilized. The U.S. budget will strain from rising debt servicing costs, now above 8.6% of total outlay, compared to less than 8% this time last year.  Again this puts upward pressure on the dollar as foreign markets are starved of dollars.

    Next, Trump wants more balanced trade with China and Europe and he’s willing to guy global trade to do it.  But that also means a stronger dollar in the long run as debt still needs to be serviced while trade is falling.

    Again, fewer exported dollars while the budget deficit grows.  Emerging Markets are already suffering horrendous capital outflows.  Just wait until things actually get bad.

    Eurodollar markets have been drained of their liquidity in recent months as U.S. corporates repatriate funds and, like Apple, buy back their stock.

    All of this points to reaping a whirlwind of dollar strength, not weakness, which to me, looks like the spark of the global debt crisis the Fed delayed for over a year by not raising interest rates sooner.  It bowed to IMF pressure in 2014/15 to delay raising rates.

    And the world is not prepared for the dollar spiking 20 or 30% over the next year.  It is not prepared for a shift in risk assets stocks to bonds.  A spiking dollar will create a perfect storm of debt defaults that will unleash chaos which will topple governments (and not Iran’s).

    Trump will not react well to this, claiming, like all U.S. Presidents that China is manipulating its currency down to harm us.  That’s utter nonsense.  As I’ve laid out, Trump is creating the very whirlwind he’s trying to avoid.

    It’s why the DOW is holding above 24,000.  And why the euro is about to collapse.

    Survival is Winning

    So, here we are.  This is why I keep saying China, Russia and Iran’s best moves politically are to do nothing overt.  Iran was not the aggressor the other day.  That’s another of Bibi’s blatant lies.

    Russia looks weak by not responding to Israel’s spastic flailing the other day, but it knows that time is on its side.  The SAA/IRGC and Russian forces continue to destroy pocket after pocket of resistance in Syria.

    Putin will continue to hold his water, waiting for the opportune moment to reverse his opponent.  Russia’s limit has not been reached in Syria yet.  Putin always does this.  It drives his critics and his supporters crazy.

    It’s geopolitical judo and he’s the master at it.  And when that reversal comes and Israel has been thrown flat on its back, Trump’s only move will be to settle.  Why speculate on what he’ll do.  Just watch and wait it out.  The signs are all there.

    When that happens John Bolton will retreat farther into madness, hopefully he’ll throw himself off a building and put us all out of his misery.  Let’s hope someone’s iPhone captures it for posterity’s sake.

    After a brief spasm in the financial markets thanks to Trump’s insane aluminum tariffs, Russian equities and the ruble are rallying.

    In fact the MICEX Index just put in its all-time highest weekly closing price.  Its sovereign debt markets are stable and the yield curve is widening.  Capital is flowing into Russia despite horrific U.S. sanctions.

    This is the model for Iran’s resistance.

    Russia is winning the financial war of attrition and the stronger it gets the more it can support Iran in the long run alongside China.

    This is the limit of Trump’s unwillingness to update his worldview from 2003.  He’s held this view of Iran his entire life and surrounded himself with the ‘experts’ to take Iran out.  Even if the Mullahs fall, the backlash from the process whatever form it takes will set the global debt markets aflame, a bonfire of Trump’s vanity.

    *  *  *

    To support work like this and find out how you can de-stress your investment portfolio as we live through a period of global geopolitical strife sign up for my Patreon and subscribe to the Gold Goats ‘n Guns Investment Newsletter.

  • Kansas Police No Longer Allowed To Have Sex With People They Pull Over

    Kansas police are going to have to stop having sex with people they pull over for traffic violations, after Governor Jeff Colyer (R) signed a new bill into law on Thursday outlawing sexual relations “during the course of a traffic stop, a custodial interrogation, an interview in connection with an investigation, or while the law enforcement officer has such person detained,” according to the Kansas City Star. 

    Because there’s nothing quite like love at first sight…

    Prior to the measure, Kansas was one of 33 states where consensual sex between police and an individual they detained was not a crime, according to the star. A similar bill was passed in New York last month specifying that people in police custody are unable to consent to sex.

    The bill, introduced by Rep. Cindy Holscher (D) “helps the person who was detained in their neighborhood or stopped for a ticket, that type of thing,” she told The Star.

    Holscher said she was also moved by a case in New York where a teenager claimed she had been raped by two police officers in the back of their van, but no charges were filed because the officers claimed the sex was consensual and therefore legal.

    Kansas law previously said “there shouldn’t be sexual relations between police and persons in jail, but it didn’t say anything about if they had been stopped on the streets or were in their custody,” Holscher said. –The Star

    Kansas lawmakers say the new law was long overdue.

    “Those of us who have been there for a few years thought it was something that had already been taken care of in the law,” said Rep. John Carmichael, D-Wichita, an attorney and member of the Judiciary Committee.

    “She [Holscher] called me about this. I said, ‘You mean it’s not against the law?‘ She said, ‘No, it’s not,'” Carmichael said. “I checked with the revisor (of statutes) and it was not specifically against the law in Kansas.”

    “Most officers are great guys and women who are working hard, but there’s always the one,” he added. 

    Indeed…

  • Correlations Flashing Yellow Light

    Submitted by Nick Colas of DataTrek Research

    Asset price correlations remain at elevated levels, even as US stocks stage a mid-quarter rally. Why? We attribute it to continuing macro concerns about everything from the price of oil to future Fed policy, geopolitics, and long-term interest rates. Bottom line: don’t let your guard down. Still high correlations + even a small market shock = much higher volatility.

    At a naïve level, outperforming the S&P 500 has been easy in 2018: overweight Technology as much as you dare and snip your holdings of everything else in equal measure. Tech is up 9.2% on the year versus the market’s 1.8% advance. If you are a value investor, large cap Energy would have done the trick. After some hair-raising volatility in February the group is now up 6.2% in 2018.

    In practical terms, there’s a big problem with that notionally easy recipe. The correlations between Tech and the S&P 500 have been +0.95 since February’s volatility. Yes, Tech’s strong fundamentals have helped tremendously (the group has been down on the year only 2 days since Jan 1). But in terms of portfolio diversification, it is a dud.

    Large cap Energy’s ties to the S&P’s performance are somewhat looser, which when combined with the recent surge in commodity prices helps explain its YTD outperformance. Its price correlation to the S&P has been below the average industry sector for the last two months (0.71/0.76 vs. 0.75/0.80), so capital looking for less-correlated price momentum has elbowed its way into the group.

    All this is important for one reason: correlations define the utility of capital markets for investors as much as simply making money in the market. “Beating” a rising market by taking on more risk is relatively simple. Managing returns in the context of risk and uncertainty requires access to investments that move differently from each other. The more options here, the better for both investors (who can put more capital to work) and the societies that uses their capital to grow and prosper.

    US stocks and global capital markets have not delivered much on this point since 2008, price performance notwithstanding. Sector correlations in the S&P 500 were uniformly high from 2009 – 2016, as were the price relationships between foreign developed/emerging equity markets to US stocks. Last year saw the first real declines, which we attribute primarily to the 2016 US elections only because the data clearly shows that cause-and-effect.
    This year has been a roller coaster for correlations as much as stock prices, with February’s volatility pushing up the former as much as they depressed the latter.

    Here are three points on the most recent correlation data, calculated through yesterday’s close:

    1. US sector correlations still remain much higher than 2017: Over the last 30 days, the price correlation for the average S&P sector to the market as a whole is 0.75. In 2017, it was 0.55. That’s the difference between an r-squared of 56% now to 30% last year. In other words, the daily move in the S&P 500 “explains” +50% of any sector’s one-day price action now versus just 30% last year.
    2. Current correlation levels give a better picture of investor uncertainty than current VIX readings, which have declined of late: Correlations always spike during periods of market volatility such as earlier this year, but unlike the CBOE VIX Index they don’t typically fall quickly after a shock. Unwinding correlations takes longer because they more accurately reflect market uncertainty about longer-term macro factors like Fed interest rate policy, geopolitical concerns, financial stability, and long term interest rates. The VIX captures 30 days of expected volatility, after all, not 30 months.
    3. It’s not just US sector correlations that remain high: International equities, both in developed and emerging economies, are still clustering in terms of daily price performance around the S&P 500. The correlation between the US equity market and the MSCI EAFE developed market index was 0.83 last month, down only modestly from the 0.92 – 0.95 readings of the last 3 months. MSCI Emerging Market equity correlations to the S&P 500 ran 0.80 last month, down from 0.88 – 0.91.

    Bringing this analysis home to three investment insights:

    1. Don’t be lulled into a sense of false security now that the VIX is back to 13 and everything feels more “Normal”. Still-high correlations mean even small shocks will quickly transmit through to equity markets. We remain positive on US stocks for 2018, but the correlation math is clear. This isn’t 2017, with industry groups charting their own path and smoothing out the market bumps.
    2. Financials and Energy stocks are better positioned than most groups to show both less-correlated and positive returns. Consider two of the largest macro market concerns today: rising oil prices and higher long term interest rates. Should those eventually crimp economic growth, the best equity hedge will come through exposure to these groups. In our last reader survey (dated 3/30), Financials and Energy were 2 groups DataTrek readers favored most (along with Tech). We continue to agree with that sentiment.
    3. For those with long investment horizons (5 years plus): the return of high correlations in 2018 after last year’s decline is an important signal. Most long run asset allocation models use decades of price correlations to arrive at recommendations for equity/fixed income/other portfolio weights. The last 10 years may look like an anomaly there, with high correlations caused by the Financial Crisis and its aftermath. What if, however, it is the new normal condition? If so, that would argue for greater allocations to alternative assets in order to achieve better diversification in the future.

    Bottom line: stocks seem to have found their footing but this correlation data says we’re not out of the woods.

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