Today’s News 14th June 2022

• Russia Has Become India's Second Largest Oil Supplier
  Russia Has Become India’s Second Largest Oil Supplier

  The evidence that Russia is mostly unaffected by NATO sanctions continues to mount.  While some in the mainstream media claimed that Russian oil revenues would collapse this year along with their currency, it appears that the opposite has happened.  Russia’s currency is stable and their oil industry is thriving.

  Russia has recently replaced Saudi Arabia as the second largest oil supplier for India, a country with a population of over 1.3 billion people.  Iraq continues to act as their number one supplier.   

  

  This can be explained primarily by a shift in trade from west to east.  Russia is replacing US and European buyers by increasing sales to allies such as China and India, as well as removing the dollar as the reserve currency mechanism.  China and India alone represent over 30% of the global population, while China remains the largest manufacturing base in the world.  Ironically, western sanctions have made the Russia the most sought after exporter on the block as their oil is offered at a discount while energy prices skyrocket everywhere else due to inflation.

  Economic “experts” argued not long ago that China and India would not be able to increase their oil purchases to make up for lost markets in the US and the EU, but this is clearly untrue.  Does this mean that Russia is immune to economic instability?  No, Russia has many fiscal problems that will not be solved easily.  But, so does almost every other country today. 

  The importance of reports like this is often overlooked by the mainstream.  What we are seeing is a vast readjustment of global trade standards and a sharper division between eastern and western interests.  These are changes that would normally take years to develop, but now they are taking place within weeks or days.  Geopolitically, this division is likely to lead to further economic conflict and crisis, with oil and energy being a central pillar of concern for billions of people as 2022 drags on.

   

  Tyler Durden
  Tue, 06/14/2022 – 02:45

• Lagarde Capitulates As The Euro-Zone Divides
  Lagarde Capitulates As The Euro-Zone Divides

  Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

  I know you probably get tired of me saying this but the Euro-zone is headed for a massive crisis.  On Thursday, June 9th, the ECB came out with its policy statement, less than one week before the next FOMC meeting statement (June 14th).

  It was a doozy.  Christine Lagarde attempted early on to project that soothing calm central bankers are supposed to exude even when everything is collapsing around them.

  But, truly this was Lagarde’s ‘Baghdad Bob’ moment.  She stood up there and read the ECB’s policy statement off the teleprompter like she had something caught in her throat, likely the remnants of what is left of her conscience, because even she couldn’t swallow the bullshit she was slinging.

  

  We have inflation under control.  We will still grow in 2022 (BWAHAHAHA!) and growth will accelerate in 2023 and 2024.  These people haven’t gotten one quarterly forecast right in … forever, and yet they project this idea that they have any clue what GDP growth will be in 2024?

  But, as Zerohedge pointed out, Lagarde then reversed herself during the press conference, trying to resurrect the ghost of Mario Draghi, saying that she stands ready to do ‘whatever it takes’ to stabilize the situation.

  From ZH:

  She notes there are existing instruments with the reinvestment capacity under the PEPP.

  “And if it is necessary, as we have amply demonstrated in the past, we will deploy either existing or new instruments that will be made available.”

  Lagarde states that “within our mandate we are committed to preventing fragmentation risks within the euro area.”

  So some kind of asset purchase scheme for peripherals? The vagueness is intentional as it appears Lagarde is trying to pull off a Draghi ‘Whatever it takes’ moment while keeping her foot on the hawkish pedal.

  As The IIF’s Robin Brooks pointed out:

  If the ECB says to markets: “we will defend Italy’s spread,” markets will for sure test that statement. So – in effect – what the ECB did today is to raise the odds of markets trying to force its hand.All this is avoidable. Don’t hike. The Euro zone is going into recession…

  The end result was obvious to anyone with ears to hear, we are reluctantly following the Fed’s lead in ending QE hoping that someone will still think that Italian BTP’s trading at 65 bps above US Treasuries of the same maturity is a ‘good deal,’ and invest in a country that now carries increasing redenomination risk.  

  If it wasn’t so over-the-top moronic, it would be funny.   Now with the horrific US CPI print red-pilling a whole lot of investors that the Fed has the green light to be even more hawkish, the mad scramble is on to figure out where to park that money that’s been frozen by the clown show that is US domestic politics.

  The Fed’s in control here, but not in the way a lot of people think. The next level of insight that should begin to take hold, especially if the next CPI print is equally awful, will be what I’ve been saying for a year now….

  The Fed isn’t raising rates to combat inflation. The Fed is raising rates to break the ECB and Davos.

  Spread Eagled ECB

  Two months ago Italian debt, thanks to Lagarde’s lying and everyone’s front-running her trades, was trading at a premium to US debt.  Um, Chrissy, you’re going to need to see that spread vs. US debt be more like 650 bps (6.5%) rather than 65, if you want to attract even the average NFT investor at this point.

  

  The bond markets are all now moving away from the monetary experiments Lagarde inherited from Mario Draghi and she has neither the experience nor the gravitas to carry this charade off any longer.

  The big takeaway, and the reason why the euro had a mild bout of myocarditis Thursday Morning before collapsing on its way to the bathroom, is because Lagarde is open to creating a new, improved, QQEternity, alphabet soup program in the future if this ending QE ‘experiment’ doesn’t work.

  With the Fed now secure in its role as European liquidation agent, there’s nothing Lagarde can do other than follow the yellow brick road make the best of a terrible situation getting worse by the day.

  That said, I have to ask the serious question, are they really worried about Italy at this point?  It’s not like the folks at Davos Central didn’t manipulate the Italian political scene to achieve exactly this state of affairs. So, I honestly don’t think they care at all about Italy.

  In fact, I’d argue that they would rather have Mario Draghi ride Italy into the ground and turn the country into a smoking ruin in the hopes of saving the northern European currency bloc.  

  The whole point of putting Draghi in charge was to liquidate Italy.  Italy’s financial implosion would be just the cause celibre Davos has been trying to create to consolidate power within the ECB by taking complete control over its banking system when all the banks collapse.

  Think back to the Banco Popular implosion where it was forcibly liquidated by Draghi when he was ECB president and sold to Santander for $1.  The power that Draghi exhibited there was astounding. And it was a warning shot to investors that no one’s money is safe from the commissars at the ECB.

  While Draghi kept things together through strong-arming and, at the time, a sympathetic FOMC with Janet Yellen at the helm, the precedent was set then that the ECB has power over its member banks that the Fed doesn’t have. Today, looking at the situation, I’d say this is a very good thing.

  You’re going to see a lot of this going forward in Europe and too many commentators are not prepared for the idea that this is all deliberate.

  It’s not the plan they wanted, which was for this collapse of the Euro-zone to occur on their timetable not the markets, but it’s still the plan.  They hoped they’d have a compliant Fed putting the New York banks on notice that they have no friends left.

  Davos may be improvising here, because the Fed is clearly working them over the coals as Eurodollar markets dry up, but they are still trying to make the best of a bad situation.

  And that’s why Lagarde was trying to soften the market up by saying, “We have everything under control and still have tools.”  It’s all you ever hear from these central bankers, when, in reality, they have zero real clue anymore than we do.

  

  If the European banking system collapses in the way I am forecasting this is what will destroy the Eurodollar markets, as those banks which previously levered up their dollar balances will have zero ability to do so after they are absorbed by the ECB.

  Once this potential outcome is truly digested by the markets, and I think Friday’s complete shitshow was the beginning of that realization, then that’s when we are going to see rapid shifts in bond spreads, O/N money market rates and blow-outs in things like 1 month and 3 month USD LIBOR. 

  Speaking of that, the SOFR/1month LIBOR spread blew out to 44 bps on Wednesday.  After the ECB’s performance and the worse than expected US CPI print (8.6% vs. 8.3% expected), I’m having a hard time believing we won’t see a wider spread than the 53 bps we saw the day of the last FOMC meeting by Wednesday’s next FOMC meeting.

  

  The Political Fallout

  What is most important here is that the ECB being exposed as having no ‘there there’ undermines the political positions of nearly every major politician across the euro-zone.  It’s not like a banking crisis is going to make Olaf Scholz’ coalition in Germany stronger or Draghi’s caretaker government in Italy.  

  These guys will finally begin to feel real political anger for change as inflation eats away the middle class, high energy prices gut corporate profits and there is no end to the regulatory tyranny coming from Brussels, hell bent on forcing an anti-hydrocarbon agenda down everyone’s throat.  

  That said, you know Davos will try to keep a tight lid on the EU’s core, because it carries the most political power.  What they won’t be able to control, once this begins to unravel, is what the so-called periphery does.

  Bulgaria’s Davos-backed government lost a key partner this morning.  Boris Johnson is toast in the UK as the Night of the Tories Long Knives has come and gone. No one knows how to turn on their leadership like the Tories — Thatcher, May, now Johnson.

  Turkey has all but declared war on Greece over Erdogan’s creative interpretation Greece’s sovereignty, accusing it of militarizing islands in the Aegean. Estonia lost its majority last week over inflation not caused by Russia, but by their own rabid Russophobia.

  The economic realities of what Lagarde et.al. have set in motion but can’t control will be the collapse of nearly every major government in Europe over the next year or two while incentivizing countries like Hungary to declare independence from Brussels.

  This is why Lagarde was so keen to remind us that she is aware of ‘fragmentation risks’ and that she’s on top of it. Too bad this is more bucking bronco than bucolic burro. I’ve got the under on whether she lasts the 8 seconds or not. 

  The key is Russia continuing to grind out victories in Eastern Ukraine while using the time to reinforce its positions in the south and expose the utter bankruptcy of the West.   I told you that this was a race to someone’s Great Reset, not necessarily Davos’ when the war broke out.

  Putin is upping the operational tempo on the neolibs of The Davos Crowd in Europe and the White House and their neocon useful idiots in the US/UK foreign policy circles, Congress and intelligence services to create the ultimate geopolitical Russian cauldron for their avarice.

  Ukraine represents everyone’s existential threat.

  If the neocons lose, they are done as an influence within foreign policy circles in the West forever because they will have failed to penetrate Fortress Russia.

  If Davos loses, their grand plans for global domination become diminished to, at best, the European Union and some parts of the Commonwealth.

  If Russia loses, the entire Global South, fails to escape the fiat, debt-based slavery of the Western central banking cartel, because they will control the flow of Russian natural resources in such a way that they will not be stopped. More on this later.

  After Bojo the Bozo in the UK the big question is who’s next?

  There’s a lot of speculation that the German government will fall, but I’ve seen this story play out in Italy before.  The coalition could fail and the President Frank-Walter Steinmeyer, a Davos man through and through, will refuse to sanction new elections and should force the parties to cobble together a new technocratic government that will be indistinguishable in policy from the existing one.

  Since the Greens are embedded in nearly every state delegations to the German Bundesrat (upper house) there will be no real policy change since they control what legislation actually gets passed.

  This is why Scholz is so weak.  

  Since each state in the Bundesrat votes as a bloc, the Greens control 41 of the 69 votes there, giving them effective control over policy.  This was Merkel’s greatest achievement while Chancellor while also bamboozling Putin in to thinking the Minsk agreements were something other than a time-waster while NATO built and trained the Ukrainian army his men are now pummeling into dust.

  This is what she set up with each of the state governments, by refusing any AFD coalitions to form in any state, she ensured that no matter what happened, there would be no challenge to the Greens revolution of Germany’s legislative agenda.  

  Davos is setting up the failure of the German government to hand it to Brussels.  So, if the German government fails and Steinmeyer refuses to go for new elections, then the resultant caretaker government will be even weaker than Scholz’ government and ensure the complete betrayal of the German people to the EU.  

  And the worst part will be that they will still feel like they have control over what happens to them next because the German people are still told they control EU policy at the top.

  When in reality all that will happen is the EU will fracture along capital efficiency lines and the euro will drive it into bankruptcy, forcing real political fracturing. Eastern Europe will break off the moment the EU tries to enforce the energy embargo on Russia, especially if Russia gains Odessa and access to the Danube river system. Watch Bulgaria carefully as the next Soros-backed junta to fall completely to the economic reality of a dying EU.

  Good job, Chrissie, you’ve achieved the exact opposite of what you intended, which is a unitarian banking and political system.  Because, as always, people respond to incentives.  In the US, we said no to Climate Change, CBDC’s and gun control.  In Russia, they said no to debt and Nazis.  And in China, they simply said no to oligarchs who weren’t Chinese.

  Pretty easy to tear up the EUSSR under this scenario. Pretty easy to see what happens next.

  Tyler Durden
  Tue, 06/14/2022 – 02:00

• The Five Stages Of Totalitarianism
  The Five Stages Of Totalitarianism

  Authored by Walker Larson via The Mises Institute,

  Fears of a growing totalitarian tendency in the US have swelled during 2020–22. But how close are we really to a totalitarian state? How have such regimes come about historically and what are the warning signs?

  This article will answer these questions by examining totalitarian regimes in the eighteenth and twentieth centuries and the pattern by which they came to power.

  

  Stage 1: Discontent and Rumblings

  Every new order rises on the ruins of the old.

  Those who would establish a new regime must tap into or generate dissatisfaction with the status quo. However much those desiring a reset may despise the old order, they can’t accomplish much without harnessing or fabricating a similar attitude in the public. Then the revolutionary totalitarian appears as the solution to these problems.

  The Reign of Terror in Revolutionary France, for example, didn’t begin with blood but with bread. Between 1715 and 1800, the population of Europe doubled, creating food shortages among the French people. Many of the French people resented the King’s growing centralized authority. In addition, the ideas of the “Enlightenment” thinkers were stirring up revolutionary feeling. Finally, the French government was massively in debt due to the many wars of the eighteenth century, and it increased taxation even on nobles.

  It was these sufferings and fears, combined with the machinations of the secret societies (admitted by the Marquis de Rosanbo at the Chamber of Deputies session of July 1, 1904) that led the to the revolution and the totalitarian Jacobin government. The Reign of Terror came after the fall of the king and the ancien régime, which the revolutionaries accomplished in part because of the problems and suffering in French society prerevolution.

  The Bolshevik Revolution in Russia in 1917—which established a totalitarian regime so bloody that it would make the Reign of Terror look like a mere red drop in the guillotine bucket—followed a similar blueprint. The Bolshevik communists exploited the sufferings of the Russian people for revolutionary purposes. What were these sufferings? The Russian people had lost faith in Tsar Nicholas II and his government, Russia contained restless ethnic minorities, and the poorly equipped and led Russian armies were losing against the Germans in World War I. Russia’s failures in the war led to demoralization and disrupted the economy. In January 1917, transportation to cities like Petrograd broke down, and this caused food and fuel shortages, and, eventually, riots.

  Not long after the rise of Bolshevism in Russia, Adolf Hitler became involved with the Nazi Party during the Weimar Republic. Struggling postwar Germany bubbled with discontent. The Treaty of Versailles had been harsh: Germany was expected to accept full responsibility for the war, pay massive indemnities to the Allies, surrender large amounts of territory, possess no military worth speaking of, and be monitored by Allied troops. In the years following the war and the treaty, the German economy suffered mightily, including through hyperinflation. When Germany defaulted on some of its payments, French and Belgian troops occupied Germany’s richest industrial region, the Ruhr district, which only made Germany poorer and the people angrier.

  Stage 2: The False Savior and the First Revolution

  After identifying and appealing to the people’s discontent, the totalitarian presents himself as a savior. In stage 2, the revolutionary totalitarian enacts a dramatic change to “solve” the problems and discontent of stage 1.

  To find a solution for its debt crisis, the French government called the Estates General assembly to advise the king on what to do. The Third Estate quickly claimed full governmental authority as the “National Assembly.” The National Assembly wanted to draw up a new constitution that would change the nature of the government to deal with injustices. After the storming of the Bastille, peasants in rural areas revolted against their lords. The National Assembly declared feudalism abolished and introduced the Declaration of the Rights of Man and of the Citizen. With the execution of Louis XVI on January 21, 1793, the first stage of the revolution was over. The regicide left a massive power vacuum. Various groups struggled to fill this hole, but in the end, the Jacobins—the radicals—dominated the new revolutionary government.

  In the Russian Revolution, the Bolsheviks took advantage of the food riots that began early in 1917. When the military began siding with the rioting workers, rather than restoring law and order, Tsar Nicholas knew all was lost. He abdicated on March 2, 1917 (and was later shot). The Bolshevik-run Petrograd Soviet quickly took control of post-tsarist Russia. Their slogan—Peace, Land, and Bread—attracted many frightened and angry people to them as to a savior. On November 6–7, they staged a coup that finally overturned the provisional government.

  The initial rise of Nazism in Germany was less bloody but similarly based on messianic promises. Capitalizing on the resentment in Germany due to the Versailles Treaty and global economic downturn in 1929, the Nazi Party grew in size and influence. The Nazis had attempted a violent coup in November 1923 but had failed, and they turned to legal means of gaining control of the government. Due to Hitler’s skill with propaganda, the Nazi Party won more and more of the vote by the early 1930s. Eventually, it was the second-biggest political party in the country. At this point, Hitler was demanded that President Paul von Hindenburg appoint him chancellor, which Hindenburg agreed to in 1933. This was not a violent revolution, but the failed 1923 attempt shows the party’s violent tendencies.

  Stage 3: Censorship, Persecution, Propaganda, and the Ending of Opposition

  In stage 3, the initial upheaval of stage 2 has passed. The old order has been fundamentally changed, and now various forces begin to react. The rising totalitarian government faces many enemies, often dubbed “counterrevolutionaries” or “extremists.” Here in its infancy, the new order must struggle to gain more power and maintain that which has been acquired. For this reason, it sets about combatting its enemies through censorship and persecution.

  As soon as they had gained sway over their countries, the first move of totalitarians like Hitler and Vladimir Lenin was to censor opposition and put out propaganda. Each of these totalitarian leaders also gained control of education and had secret police forces to monitor and even kill anyone designated as an enemy. Another strategy was to establish youth organizations to indoctrinate citizens in the state’s propaganda from an early age and tear their loyalties away from family or religion. Religion was almost universally persecuted once these regimes came to power.

  Finally, Hitler and Lenin outlawed (either de jure or de facto) all political parties and views besides their own after coming to power.1 Totalitarians create a one-party system that often maintains a façade of democracy.

  Stage 4: The Crisis

  Stage 4 prepares the way for the totalitarian government to grasp total control over those under its rule. It consists of a crisis moment, which may be either a real threat or a false flag that seems to threaten the nation.

  By 1793, the French Revolution was at a crisis point. Defenders of the old order rose up on all sides to crush the new order. Austrian and Prussian armies encircled France, while the Vendéean peasants revolted against the revolutionary government and army. And so, in the name of “public safety,” the government decided to take harsh measures against all enemies of the revolution. And so, of course, they needed more control. This was the task of the Committee of Public Safety, and it suffered from no scruple in its methods.

  On August 3, 1918, Lenin was shot after giving a speech at a factory. While recovering in the hospital, he wrote to a subordinate, “It is necessary secretly—and urgently—to prepare the terror.” This initiated a campaign of mass killings and detentions by the government, known to history as the Red Terror. As always, the justification for these acts was the “emergency” indicated by the attempted assassination. The “radicals” and “counterrevolutionaries” were allegedly “at the gate,” and it was necessary to use extreme measures to deal with this imminent “threat.” So the rhetoric went. And so it always goes.

  Hitler also used a “state of emergency” to justify his clampdown. On February 27, 1933, the Reichstag went up in flames. In response, Herman Gorrin, minister of the interior, ordered a raid on Communist headquarters, allegedly for evidence of sedition and a Communist plot to attack public buildings. This, in Hitler’s mind, was the signal for seizing complete control. On February 28, the cabinet abolished freedom of speech, assembly, privacy, and the press. Around four thousand people were arrested that night. This “crisis,” with the usual language about safety and countering threats, ushered in totalitarianism in Germany.

  Stage 5: Purges, Genocide, and Total Control

  Using the crisis of stage 4 as an excuse, the totalitarian government now seizes absolute control over the lives of its citizens. The regime overcomes the enemies of stages 3 and 4. It begins brutally enforcing its “utopia” and ideology on the populace. This stage also sees the greatest atrocities committed against the populace because resistance to the totalitarian regime has been crushed. The people are defenseless and demoralized. Nothing stands between the regime and its victims. This stage involves mass killings as the regime liquidates any remaining enemies while seeking to control every detail of citizens’ lives.

  During the latter stages of the French Revolution, the Committee of Public Safety received dictatorial powers to defeat anyone who opposed the revolutionary government. During 1793–94, the CPS eliminated rival revolutionary groups before passing a law that suspended citizens’ rights to a public trial or legal assistance and gave the jury only two options, acquittal or death. The result was horrifying: throughout France, three hundred thousand suspects were arrested, seventeen thousand were executed, and about ten thousand died in prison or without trial.

  But it was nothing compared to the Red Terror and Joseph Stalin’s purges. The party used the attempted assassination of Lenin as justification for intense persecution of its enemies. Tens of thousands of people became victims, as discussed in Richard Pipes’s The Russian Revolution. But Lenin’s handiwork was only a precursor to Stalin’s “purges” of political enemies. Historians are divided on just how many people Stalin killed, but estimates reach as high as sixty million.

  Estimates of the people killed by Hitler and his Nazi Party vary as well. According to the United States Holocaust Memorial Museum, the figure stands at seventeen million, but only God knows for certain.

  In addition to carrying out mass killings, established totalitarian regimes seek to control everyday life through measures like censorship, propaganda, gun control, and internal passports.

  The United States in 2022

  So is the United States headed for totalitarianism? Here we move from facts to speculation—a risky business. The answer is not straightforward. But if we are careful to avoid exaggeration, some useful comparisons can be made.

  • Have any forces in the US taken advantage of real or imagined problems in the country to stir up discontent and even violence? The death of George Floyd and the associated claims of systemic racism in 2020 gave rise to violent and destructive riots. Fortunately, this has calmed down, but, like in pre-Soviet Russia, ongoing tensions surrounding racial minorities continue to threaten more social unrest. This unrest could intensify if predictions of food shortages and increasing inflation come true in the coming months and years.

  • Has any figure or group presented themselves as a savior with the solution to our problems, a solution that will require the curtailing of individual rights? Are freedom of assembly, freedom of speech, due process, or religious rights under attack? The covid pandemic was used by governments around the world to justify vast restrictions on personal freedom, including limitations on freedom of assembly, the closing of religious centers, and censorship of information or viewpoints that opposed the official covid narrative and dictates. Many of these public officials presented themselves as “experts” whose forceful policies were “necessary” for “public safety.” Entities such as the World Economic Forum and many global leaders continue to discuss the need for a “Great Reset,” in part as a response to the “threat” of covid. This reset includes everything from redesigning health systems and education to the implementation of vaccine passports. This is presented to us as our “salvation” from covid and other dangers, including racism.

  • Are we experiencing any censorship in the US? Are our media sources independent and objective or coerced and controlled? As the recent Musk/Twitter debacle has highlighted, Big Tech bears responsibility for censoring certain information and views with increasing regularity in recent years, and particularly conservative voices.

  • Does the US live under a one-party system? As far as we can tell, the answer to this question is no. However, if the claims of election fraud abounding since the 2020 elections are true and the fraud remains unremedied, we effectively live in a one-party system, since one party can maintain power indefinitely through illegal means. But that is a substantial if.

  • Are we witnessing mass arrests or mass killings? We clearly have not progressed into stage 5–type mass arrests and killings at this time, although the data on adverse reactions surrounding the covid vaccine is concerning. Still, that data, even if accurate, does not definitively show that premeditation or a totalitarian regime is the culprit behind these injuries and deaths. Yet the possibility, I think, should not be ruled out entirely.

  One final point must be made. Though troubling similarities exist between the trajectory of the US and the historical examples of totalitarianism outlined above, we must avoid both the extremes of an alarmist fatalism and a starry-eyed state of denial. On the one hand, the events of the past few years in our country are grim. On the other, history does not work like a machine, and many factors are at play here. I do not claim to know the future, and I do not believe in historical determinism. In the end, whether the United States is headed for totalitarianism or not is largely up to us and whether or not we resist these trends.

  Tyler Durden
  Mon, 06/13/2022 – 23:40

• China Flips Out After WHO Says Lab-Leak Theory Needs Further Study
  China Flips Out After WHO Says Lab-Leak Theory Needs Further Study

  China is fuming after a Thursday report by the World Health Organization concluded that while Covid-19 is likely from animals, further study is required to explain how it jumped to humans – including the possibility of a lab-leak.

  

  An expert panel convened by the WHO’s scientific advisory group recommended “further investigations” into the lab-leak theory, and noted that there “has not been any new data made available” to come to any conclusions.

  The recommendation is a sharp departure from the agency’s initial report, which ruled that a lab origin was “extremely unlikely.”

  “All hypotheses must remain on the table until we have evidence that enables us to rule certain hypotheses in or out,” said WHO director-general Tedros Adhanom Ghebreyesus at a June 9 press conference. “This make[s] it all the more urgent that this scientific work be kept separate from politics.”

  As the Epoch Times notes, the report stated in a footnote that three panel members from Russia, Brazil, and China objected to the recommendations, saying there is “no scientific evidence” to question the commission’s previous conclusion from March 2021.

  The report was written by a team, named the Scientific Advisory Group for the Origins of Novel Pathogens (SAGO), which was tasked with advising the WHO on investigations into pathogens that might trigger the next pandemic, as well as studying the origins of the current pandemic.

  The 27-member group was established last autumn following criticism from a dozen countries that raised concerns about WTO’s COVID-19 origins study, due to a lack of transparency and access to crucial data from China.

  Key Data Missing

  The 52-page preliminary report said “key pieces of data” are still missing to determine how the COVID-19 pandemic began.

  The group said current data suggested a zoonotic origin of the novel coronavirus. The closest genetically-related virus was beta coronaviruses identified in bats in China and Laos, it added.

  “However, so far neither the virus progenitors nor the natural/intermediate hosts or spill-over event to humans have been identified,” it stated.

  The scientific advisory group believes the Huanan seafood market in Wuhan, where the first infections were recorded in China, “played an important role early in the amplification of the pandemic.” The team called for further studies into information such as environmental and animal samples taken from the market.

  In the summer of 2021, the Office of the Director of National Intelligence assessed that one US intelligence agency determined with “moderate confidence” that the virus most likely emerged from a Chinese government lab in Wuhan.

  China is pissed

  As the Washington Examiner notes, Chinese officials slammed the report – with Foreign Ministry spokesman Zhao Lijian saying on Friday that the theory was nothing more than a politically motivated lie driven by “anti-China” sentiments.

  

  “The lab leak theory is totally a lie concocted by anti-China forces for political purposes, which has nothing to do with science,” he said, adding “We always supported and participated in science-based global virus tracing, but we firmly opposed any forms of political manipulation.”

  Zhao then suggested that the virus actually originated in a US military lab, citing “highly suspicious laboratories such as Fort Detrick.”

  

  More via the Epoch Times:

  Jamie Metzl, who sits on an unrelated WHO advisory group, has suggested that the Group of Seven industrialized nations set up their own COVID-19 origins probe, saying WHO lacks the political authority, expertise, and independence to conduct such a critical evaluation.

  Metzl welcomed WHO’s call for a further investigation into the lab leak possibility but said it was insufficient.

  “Tragically, the Chinese government is still refusing to share essential raw data and will not allow the necessary, full audit of the Wuhan labs,” he told The Associated Press. “Gaining access to this information is critical to both understanding how this pandemic began and preventing future pandemics.”

  In Washington, a Republican-led subcommittee in the House of Representatives on the COVID-19 pandemic wrote in a tweet: “Americans were smeared as ‘conspiracy theorists’ for asking whether #COVID19 came from a lab leak. Now, the WHO is asking the same questions.”

  “WE NEED ANSWERS,” added the committee, which is headed by Rep. Steve Scalise of Louisiana.

  Tyler Durden
  Mon, 06/13/2022 – 23:20

• Bovard: Supreme Court Tortures The Constitution Again, This Time With 'State Secrets'
  Bovard: Supreme Court Tortures The Constitution Again, This Time With ‘State Secrets’

  Authored by Jim Bovard via The Libertarian Institute/FFF.org,

  The Supreme Court ruled in March that Americans have no right to learn the grisly details of CIA torture because the CIA has never formally confessed its crimes. The case symbolizes how the rule of law has become little more than legal mumbo-jumbo to shroud official crimes. And it is another grim reminder that Americans cannot rely on politically approved lawyers wearing bat suits to save their freedoms.

  In 2002, the CIA captured Abu Zubaydah, a Palestinian radical, in Pakistan and falsely believed he was a kingpin with al Qaeda. The CIA tortured him for years in Thailand and Poland. As Justice Neal Gorsuch noted, the CIA “waterboarded Zubaydah at least 80 times, simulated live burials in coffins for hundreds of hours,” and brutalized him to keep him awake for six days in a row. The CIA has admitted some of the details of the torture, and Zubaydah’s name was mentioned more than a thousand times in a 683-page Senate report released in 2014 on the CIA torture regime. But the Supreme Court permitted the CIA to pretend that the case is still secret.

  

  The Holy Relic of “State Secrets”

  This case turned on the invocation of a holy bureaucratic relic of dubious origin—“state secrets.” As the court’s 6–3 ruling, written by Justice Stephen Breyer, noted, “To assert the [state secrets] privilege, the Government must submit to the court a ‘formal claim of privilege, lodged by the head of the department which has control over the matter.’” This is akin to permitting the Wizard of Oz to rotely certify that his curtain must remain closed for the good of all the munchkins in Oz. After a federal agency announces that it is entitled to secrecy, the court should exercise its traditional “reluctance to intrude upon the authority of the Executive in military and national security affairs,” Breyer wrote. Breyer neglected to explain how self-government can be reconciled with near-total secrecy of an elected government’s foreign and military policies.

  The court upheld a “state secrets” claim to block Zubaydah’s lawyers from serving subpoenas on the psychologist masterminds of the CIA torture program to learn the details of his interrogation in Poland. The court’s ruling also blocks Polish investigators seeking information about the crimes committed at a CIA torture site in their nation.

  This case illustrated the fantasy world that permeates official Washington, D.C., controversies. In 2019, federal Judge Richard Paez rejected the CIA’s privilege claim because “in order to be a ‘state secret,’ a fact must first be a ‘secret.’” Even the president of Poland admitted that crimes were committed at that CIA torture site in his country.

  But the Supreme Court disregarded common sense, ruling that “sometimes information that has entered the public domain may nonetheless fall within the scope of the state secrets privilege.” According to the Supreme Court, “truth” depends solely on what federal officials have publicly confessed. ACLU attorney Dror Ladin groused, “U.S. courts are the only place in the world where everyone must pretend not to know basic facts about the CIA’s torture program.”

  It gets worse. Then-CIA chief Mike Pompeo asserted that exposing details of torture in Poland could hinder foreign spy agencies’ partnerships with the CIA. The court upheld “state secrets” to aid the CIA in “maintaining the trust upon which those relationships [between spy agencies] are based.” The court warned, “To confirm publicly the existence of a CIA [torture] site in Country A, can diminish the extent to which the intelligence services of Countries A, B, C, D, etc., will prove willing to cooperate with our own.”

  The court acted as if it was merely smoothing the path for a Girl Scout troop to sell cookies at a shopping center instead of shrouding a “crime against humanity” (the United Nations’ verdict on torture). Pompeo bluntly described the CIA modus operandi: “We lied, we cheated, we stole. It’s like we had entire training courses.” The CIA’s long record of lawless assassinations did nothing to deter the deference it received from the court. Instead, the “mutual trust” between conniving spy agencies is more important than the trust that Americans should have in their own government.

  Regarding high value detainee Abu Zubaydah, here’s a bizarre story about his treatment I broke a decade ago that may come up before SCOTUS: his left eye was removed while he was being held incommunicado in Thailand & his atty said AZ still doesn’t know whyhttps://t.co/cg1OIEb3EE

  — Jason Leopold (@JasonLeopold) October 19, 2021

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  State Secrets and the War on Terror

  In his decision, Justice Breyer stressed, “Obviously, the Court condones neither terrorism nor torture, but in this case we are required to decide only a narrow evidentiary dispute.” But the Supreme Court necessarily condones any crime it helps cover up. The court’s sweeping rulings on state secrets and sovereign immunity have provided a get-out-of-jail-free card for Bush-era torturers and torture policymakers. No victim of Bush-era torture has received justice in federal courts.

  State-secrets claims multiplied after the start of the war on terror. The Bush administration routinely invoked state secrets to seek “blanket dismissal of every case challenging the constitutionality of specific, ongoing government programs,” according to a study by the Constitution Project. In 2007, federal judge Harry Pregerson groused that the “bottom line here is the government declares something is a state secret, that’s the end of it. The king can do no wrong.” In 2009, a federal appeals court slammed the Obama administration’s use of state secrets: “According to the government’s theory, the judiciary should effectively cordon off all secret government actions from judicial scrutiny, immunizing the CIA and its partners from the demands and the limits of the law.” The Obama administration invoked the state-secrets doctrine to justify refusing to disclose the standards it used to place Americans and others on the assassination list of suspected terrorists.

  As author Barry Siegel noted, in the vast majority of cases where state secrets are invoked, “judges rule blindly, without looking at the disputed documents underlying the State Secrets claims…They choose, instead, to trust the government—the ultimate act of faith.” Eventually, instead of a good excuse for breaking the law, all that is necessary is to claim that an excuse exists, even if the excuse is secret.

  The Origin of State Secrets

  Gorsuch noted that the Supreme Court created the doctrine in a 1953 case in which the Pentagon claimed “state secrets” to cover up the details of an Air Force crash. Half a century later, the government declassified the official report of the crash. It contained no national-security secrets but instead detailed how gross negligence had caused the crash (which killed three people). Yet the Supreme Court clearly has no shame about being conned by the Pentagon and other federal agencies.

  State secrets is akin to a fraudulent religious miracle that was not exposed until after it became canonized. During oral arguments at the court last November, Chief Justice John Roberts talked as if the state-secrets doctrine was on a moral and legal par with habeas corpus, which was specifically mentioned in the original Constitution even prior to the Bill of Rights. Justice Brett Kavanaugh, a former Bush administration lawyer, whooped up the state-secrets doctrine as “foundational to the national security of the country.” Gorsuch, on the other hand, observed that “it seems that the government wants this suit dismissed because it hopes to impede the Polish criminal investigation and avoid (or at least delay) further embarrassment for past misdeeds.”

  Gorsuch, whose dissent was joined by Justice Sonia Sotomayor (the most liberal member of the court), warned that granting “utmost deference” to the CIA would “invite more claims of secrecy in more doubtful circumstances—and facilitate the loss of liberty and due process history shows very often follows.” Law professor Steve Vladeck said the “ruling will make it much harder, going forward, for victims of government misconduct that occurs in secret to obtain evidence helping to prove that the conduct was unlawful.” A confidential report in February revealed that the CIA is vacuuming up masses of personal information from American citizens, probably in violation of federal law. But don’t expect to learn the tawdry details or the names of victims because of the state-secrets doctrine.

  The first sentence of the Associated Press report on the ruling perfectly summarized the decision: “The Supreme Court sided with the government.” Swallowing state-secrets claims vivifies how the Supreme Court has become the guardian of Leviathan Democracy. Federal agencies are creating trillions of pages of new secrets each year. The majority of Supreme Court justices have no problem with federal agencies systematically blindfolding American citizens to the actions of the federal government.

  When Justice Breyer, who wrote the court decision, announced his impending retirement, the media gushed over his long record of pragmatism at the high court. William James, the system’s philosophical godfather, declared that pragmatism means “that ideas become true just in so far as they help us to get into satisfactory relations with other parts of our experience.” James explained that “any idea upon which we can ride…is true instrumentally.” Breyer was popular with places like The Washington Post because of his endless deference to federal agencies on cases involving the Fourth Amendment (prohibiting unreasonable searches) and other issues. In D.C., covering up torture is pragmatic because it permits all three branches of the government to con the American people into believing that their rulers are on a leash. The most celebrated pragmatists in recent Washington history have all been “useful idiots for Leviathan.”

  Bipartisan Support for State Secrets

  Some Washington pundits had expected that Biden’s election would result in a revival in civil liberties after the purported Trump reign of darkness. But even before the state-secrets case, the Biden administration urged a court to dismiss a lawsuit brought by an American citizen who claimed he had been tortured in Egypt, because the alleged torturer had diplomatic immunity because he works for the International Monetary Fund. (Previously, the IMF was only permitted to torture economies.)

  Biden’s embrace of the state-secrets doctrine is tricky to reconcile with his other rhetoric. In his inaugural address last year, Biden proclaimed, “Each of us has a duty and a responsibility as citizens, as Americans and especially as leaders…to defend the truth and defeat the lies.” In a speech last year to Congress, Biden declared, “America is rising anew, choosing…truth over lies.” Last December, Biden issued an executive order to “rebuild trust in government.”

  But why should anyone trust a government that refuses to admit crimes about which the entire world knows? The same legal arguments used to shroud Bush-era torture will be used in coming years to cloak abuses by the Biden administration and future presidents. The state-secrets doctrine presumes “government knows best, and no one else is entitled to know.”

  The state-secrets doctrine provides a license for federal agencies to lie to their victims and to federal judges. In 2005, a Stanford University graduate student, Rahinah Ibrahim, went to San Francisco International Airport to catch a flight to Hawaii. Instead, she was handcuffed and locked up overnight because her name was on the No Fly list. She was eventually permitted to fly to her home country, Malaysia, but was prohibited from returning to the United States. She sued to discover why she was blacklisted, launching an eight-year battle that entailed more than $3 million in legal costs.

  Attorney General Eric Holder warned that “disclosure that an individual is not a subject of an FBI counterterrorism investigation could likewise reasonably be expected to cause significant harm to national security.” Holder also swore that the feds were not invoking “state secrets” to conceal “administrative error” or to “prevent embarrassment.” In 2014, federal judge William Alsup obliterated the official storyline when he disclosed that Ibrahim had been banned from flying simply because an FBI agent in 2004 “checked the wrong box” on a terrorism investigation form. The feds carried out a nine-year cover-up to preserve Americans’ blind faith in FBI paperwork.

  Shortly after the Supreme Court swallowed the state-secrets claim in the Polish torture case, it effectively acceded to state secrets in one of the most appalling FBI abuses of the war on terror. Beginning in 2006, the FBI sent Craig Monteilh, a former Drug Enforcement Administration informant, into mosques in southern California to gather evidence against Muslims at worship. His FBI handlers gave Monteilh permission to sleep with Muslim women he targeted and to secretly tape record their pillow talk. He also placed a recording device to covertly tape Muslim therapy sessions. National Public Radio noted the surveillance “yielded no results and proved a huge embarrassment to the bureau” after Monteilh went public in 2012 to denounce his own behavior and the FBI. Monteilh encouraged mosque members to engage in bombing and other violence. He was part of an army of 15,000 FBI informants recruited after 9/11 who fueled pervasive entrapment operations.

  When three members of the mosque filed a lawsuit against the FBI, the feds invoked “state secrets” to torpedo their long-lasting case. The New York Times aptly summarized the result in early March: “Supreme Court Sides With F.B.I. in Case on Spying on Muslims.” Justice Samuel Alito’s opinion stressed that “we have never suggested that an assertion of the state secrets privilege can be defeated by showing that the evidence was unlawfully obtained.”

  The state secrets doctrine has been an anti-Constitution scandal for at least 20 years. The feds’ sway over damning information is boundless—at least until some scofflaw like Edward Snowden or Julian Assange or Daniel Hale obliterates federal credibility.

  “No free government can survive that is not based on the supremacy of the law” is the motto chiseled above the entrance to the Justice Department headquarters. But “supremacy of the law” now means little more than the Supreme Court recycling legal mummeries to hide federal atrocities. How many official crimes can democracy survive? Unfortunately, the answer is a secret.

  Tyler Durden
  Mon, 06/13/2022 – 23:00

• US Seeks To Expand Monkeypox Testing As Narrative Keeps On Rolling
  US Seeks To Expand Monkeypox Testing As Narrative Keeps On Rolling

  The Biden administration is working to expand monkeypox testing capabilities beyond a narrow group of public health labs, as infectious disease experts are now suggesting that testing for the virus needs to become part of routine care.

  

  As the Epoch Times notes, Centers for Disease Control and Prevention (CDC) Director Dr. Rochelle Walensky said during a conference call on Friday that her agency is working with the Food and Drug Administration (FDA) and Centers for Medicare and Medicaid Services (CMS) to expand testing capacity to include commercial laboratories.

  At present, monkeypox testing is done through a network of 69 public health laboratories, which send results to the CDC for confirmation.

  So far, there have been 50 confirmed cases in the US across 16 states, while roughly 300 monkeypox tests have been administered.

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  “There is not enough testing going on now for monkeypox in the United States,” said Dr. Tom Inglesby, director of the Johns Hopkins Center for Health Security. “The commercial labs are used to working with healthcare providers from across the country, moving samples around quickly, reporting results quickly in a way that providers understand and expect.”

  Meanwhile, as Off-Guardian notes, Monkeypox hysteria continues – with The Atlantic publishing a recent piece suggesting that Monkeypox “Could be nothing,” or “Could Be the Next Syphilis.”

  Nature asks, “can the global outbreaks be contained?”

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  That said, there has been some pushback to the ‘dire’ sounding headlines – with the CDC declaring that it was “very unlikely” Monkeypox is airborne (in response to a NYT article claiming it can become so), and the Washington Post noting that “Number of monkeypox cases grows, but U.S. officials say overall risk is low.”

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  And despite monkeypox’s relatively low transmission rate, as we noted on Sunday, the Biden administration has ordered 500,000 more doses of monkeypox vaccine.

  Denmark-based biotech group Bavarian Nordic, the manufacturer of the vaccines, said that the U.S. Biomedical Advanced Research and Development Authority (BARDA) has placed the order, to be delivered later this year.

  “With the previous order from BARDA for 1.4 million doses of liquid-frozen JYNNEOS, awarded in 2020, this order will bring the total U.S. inventory of the vaccine to nearly 2 million doses,” the company announced on Friday. Many of the 1.9 million doses are being held by the company until the U.S. government requests them.

  The 500,000 vaccine doses will be manufactured using bulk materials that are owned by the United States under previous contracts with BARDA, and are currently stored with the company.

  “The majority of this bulk, however, will be converted to approximately 13 million freeze-dried doses of JYNNEOS during 2023-2025,” Barvarian Nordic said.

  Tyler Durden
  Mon, 06/13/2022 – 22:40

• Gun Rights Groups Respond To Senators' Bipartisan Gun Control Framework
  Gun Rights Groups Respond To Senators’ Bipartisan Gun Control Framework

  Authored by Jack Phillips via The Epoch Times (emphasis ours),

  The National Rifle Association (NRA) and Gun Owners of America (GOA) both issued statements Sunday after a bipartisan group of senators announced they’d reached an agreement on a gun control and safety package.

  “Here we go again, Republican legislators compromising your rights and getting nothing in return,” GOA wrote in a Twitter post, referring to proposals in the framework deal.

  “Federal dollars to bribe your state legislators into enacting unconstitutional ‘red flag’ laws, which could allow a court to seize your weapons, without any due process, simply based on anonymous tips.”

  

  It added that the bill would entail “wait periods and extensive review for those under 21 seeking to exercise their Second Amendment rights … we will not allow the government to make those who can vote and fight our wars second class citizens.”

  The proposal, which has the backing of 10 Republicans in the Senate, includes initiatives to support state crisis intervention orders, an enhanced review process for gun buyers under the age of 21, expansions on various mental health programs, a ban on straw purchases, and other measures.

  Notably, the framework bill includes a red flag provision giving “resources to states and tribes to create and administer laws that help ensure deadly weapons are kept out of the hands of individuals whom a court has determined to be a significant danger to themselves or others,” according to a news release from the senators on Sunday.

  The NRA, meanwhile, said that it is “committed to real solutions to help stop violence in our communities. We encourage our elected officials to provide more resources to secure our schools, fix to our severely broken mental health system and support law enforcement,” according to a statement released to Fox News.

  “As is our policy, the NRA does not take positions on ‘frameworks’. We will make our position known when the full text of the bill is available for review,” the NRA added.

  But overall, the group will “continue to oppose any effort to insert gun control policies, initiatives that override constitutional due process protections and efforts to deprive law-abiding citizens of their fundamental right to protect themselves and their loved ones into this or any other legislation,” the statement continued.

  President Joe Biden, Senate Minority Leader Mitch McConnell (R-Ky.), Senate Majority Leader Chuck Schumer (D-N.Y.), and various gun control activists lauded lawmakers for the bipartisan agreement. Biden and Democrats signaled that while they support the bill, they want even more gun-control policies enacted.

  “Today, we are announcing a commonsense, bipartisan proposal to protect America’s children, keep our schools safe, and reduce the threat of violence across our country,” 20 senators said in a news release on Sunday. “Families are scared, and it is our duty to come together and get something done that will help restore their sense of safety and security in their communities.”

  The measure does not include more controversial gun control measures pushed by Democrats such as bans on semiautomatic rifles or magazines that hold 10 rounds or more, or raising the age to purchase certain firearms like AR-15-style rifles from 18 to 21.

  “Today’s announcement of a bipartisan gun-safety framework is a good first step to ending the persistent inaction to the gun violence epidemic that has plagued our country and terrorized our children for far too long,” Schumer said in a statement. “Once the text of this agreement is finalized, I will put this bill on the floor as soon as possible so that the Senate can act quickly to advance gun-safety legislation.”

  Tyler Durden
  Mon, 06/13/2022 – 22:20

• Mexico President Slams "Immoral" NATO Proxy War in Ukraine
  Mexico President Slams “Immoral” NATO Proxy War in Ukraine

  The president of Mexico has condemned NATO’s approach to the war in Ukraine – labelling it “immoral.” 

  “How easy it is to say, ‘Here, I’ll send you this much money for weapons.’ Couldn’t the war in Ukraine have been avoided? Of course it could,” said President Andrés Manuel López Obrador.  

  López Obrador didn’t elaborate on how, but fair to say a peaceful resolution would have centered on the negotiation of:

  • Some form of independence for the eastern Ukraine provinces of Donetsk and Luhansk

  • A Ukraine government pledge that it will not join NATO

  • Ukraine’s recognition that Crimea is now part of Russia 

  The increasingly dismal prospects for Ukraine’s military now seem to point to a negotiated end to the war that embraces those same three elements, but perhaps with Donetsk and Luhansk—which together comprise the Donbas region—joining Russia outright.

  Though we’re likely to end at the same position—or worse, from a Western view—the Biden White House and NATO member countries were content to first wage a weapon-industry-enriching proxy war that took a terrible human toll on Ukraine, paired with economic warfare that’s causing despair and hunger for people in the United States, Europe and around the world.  

  U.S.-NATO policy is tantamount to saying, “I’ll supply the weapons, and you supply the dead,” said López Obrador. “It is immoral.”

  His comments come as Russian forces continue to strengthen their position in the Donbas, while having already secured a “land bridge” of territory connecting Russia to Crimea, which Russia annexed in 2014.

  The remarks were López Obrador’s second display of independence from Washington in recent days. Last week, he refused to attend the U.S.-hosted Summit of the Americas, in protest of Biden’s exclusion of Cuba, Nicaragua and Venezuela.  

  Explaining his refusal, López Obrador said, “I believe in the need to change the policy that has been imposed or centuries, the exclusion, the desire to dominate…the lack of respect for the sovereignty of the countries, the independence of every country.”

  Mexico voted for a U.N. resolution condemning Russia’s invasion of Ukraine, but López Obrador has otherwise proclaimed, “Our posture is neutrality.” 

  López Obrador is a member of the Morena party. A month after Russia’s invasion of Ukraine, six Morena members were among a group of Mexican legislators who launched a “Mexico-Russia Friendship Committee,” which applauded Russian Ambassador Viktor Koronelli when he addressed the group in March.  

  “For us this is a sign of support, of friendship, of solidarity in these complicated times in which my country is not just facing a special military operation in Ukraine, but a tremendous media war,” Koronelli said. “Russia didn’t start this war, it is finishing it.”

  Tyler Durden
  Mon, 06/13/2022 – 22:00

• Housing Affordability Hits Record Low As Mortgage Rates Soar To 6.1%
  Housing Affordability Hits Record Low As Mortgage Rates Soar To 6.1%

  Back in March, when the average mortgage rate was still “only” 4.5%, we anticipated the coming rate explosion and warned that “Housing Affordability Is About To Crash The Most On Record.” Fast forward to today when the latest 30Y average mortgage has just surged to a stunning 6.13% from 3.25% at the start of the year …

  

  … the highest rate since the great housing crash of 2007/2008, in the process sending housing affordability – just as we warned – to the lowest on record.

  

  Alas, it’s about to get even lower, because a simple back of the envelope calculation reveals that the jump in mortgage rates from 3.25% to 6.13% means that new homebuyers face an average monthly payment on a typical new $350,000 mortgage (the median existing home sale price is just under $400K) that has gone up from $1523 to $2128, a 40% increase in 6 months!

  Another way of putting this: at a 6.13% mortgage (and rates will still keep rising for a long time with the Fed now set to hike between 125bps and 150bps in the next two months), the average home price needs to fall 30% to reach pre-covid affordability.

  Whether it was intended or not, the Fed is about to unleash the biggest housing crisis since the bursting of the 2007 bubble. It also means that in a few weeks, the Fed’s scramble to undo the damage it has done to the US economy will make March 2020 seems like a walk in the park.

  Tyler Durden
  Mon, 06/13/2022 – 21:40

• "Our Country Is In A Nosedive" – Trump Issues 12-Page Rebuttal Of "Sham" Jan6 Committee Investigation
  “Our Country Is In A Nosedive” – Trump Issues 12-Page Rebuttal Of “Sham” Jan6 Committee Investigation

  As Nancy Pelosi’s Jan 6 Hearings complete their second day of the ‘show trial’, former President Trump has issued a 12-page rebuttal to the testimony and ‘evidence’ presented to the American public (well a few of them anyway given the ratings fail).

  “Seventeen months after the events of January 6th, Democrats are unable to offer solutions,” Trump said in a statement released through his Save America PAC.

  “They are desperate to change the narrative of a failing nation, without even making mention of the havoc and death caused by the Radical Left just months earlier. Make no mistake, they control the government. They own this disaster. They are hoping that these hearings will somehow alter their failing prospects.”

  

  Trump begins his rebuttal by taking on the Democrats directly:

  “Our nation is SUFFERING. Our economy is in the gutter. Inflation is rampant. Gas prices have reached an all-time high. Ships are unable to unload cargo. Families cannot get needed baby formula. We are an embarrassment around the world.”

  A certain Democrat once said, “It’s the economy, stupid.”

  Well, Trump states: “Democrats now seem to think that Americans are ‘stupid’. They are not. “

  “As we near the midterm elections, we’re watching the Swamp creatures circle the drain as true Americans step up to replace the corrupt Establishment with patriots who will fight for our freedoms,” Trump says in Monday’s 12-page statement.

  “People are desperate,” he adds, confirming the record low UMich sentiment readings last week and record low approval rating for President Biden.

  “Rather than solving problems, Democrats are rehashing history in hopes of changing the narrative,” Trump explains.

  Trump goes on to say that The January 6th ‘Unselect’ Committee is “disgracing everything we hold sacred about our Constitution.”

  *  *  *

  Read former President Trump’s full rebuttal below:

  Tyler Durden
  Mon, 06/13/2022 – 21:20

• Japan To Bolster Deterrence Capabilities Against "Rule-Flouting Actors": Defense Minister
  Japan To Bolster Deterrence Capabilities Against “Rule-Flouting Actors”: Defense Minister

  Authored by Aldgra Fredly via The Epoch Times,

  Japan’s defense minister vowed on Saturday to bolster the country’s deterrence capabilities and boost its alliance with the United States, citing Japan’s position as a frontline opponent of “rule-flouting actors.”

  

  Speaking at the Shangri-La Dialogue in Singapore, Defense Minister Nobuo Kishi said that Japan is at the frontline of “a competition” between countries defending the rules-based order and those attempting to change it by force.

  “At present, not only is Japan surrounded by actors that both possess or are developing nuclear weapons and ignoring the rules, but also, year by year, they are becoming more open in their disregard for them,” he said.

  Kishi said that Russia had intensified its military activities in the Far East and the Pacific, while China continued attempts to unilaterally change the status quo in the South and East China Seas.

  The joint military activities between the two major military powers are “increasingly concerning,” he said, emphasizing the need to defend the stability of the Taiwan Strait, where Beijing has increased its military presence.

  Kishi noted that Japan would secure the necessary defense budget and accelerate the reinforcement of defense capabilities.

  Prime Minister Fumio Kishida has planned to increase the country’s defense spending to 2 percent of its gross domestic product within the next five years, according to the policy roadmap released by his administration on June 7.

  “We will also further elevate the Japan–U.S. alliance, which is a foundation for peace and prosperity in the Indo–Pacific region, and we will strengthen its deterrence and response capabilities,” Kishi remarked.

  Kishi also met with his Chinese counterpart Wei Fenghe on the sidelines of the Shangri-La Dialogue summit, during which he raised concerns about the Chinese aircraft carrier Liaoning conducting military drills near Japan’s islands.

  He urged China to exercise “restraint” in making unilateral attempts to change the status quo in the East China Sea, near the Japanese-controlled Senkaku Islands, which China also claims and calls the Diaoyu Islands.

  During the meeting, Kishi reiterated that Taiwan’s security is important to Japan and the international community. The two ministers also agreed to promote defense dialogue, according to the Japanese Defense Ministry.

  The escalation of Chinese military activities in East Asia has heightened Tokyo’s concerns about the self-ruled island. Taiwan, along with its neighbor, Japanese-controlled Okinawa, contain Beijing’s forces.

  Eight Chinese naval vessels, including the Liaoning aircraft carrier, passed between islands in Japan’s southern Okinawa chain on May 2. Japan claimed that Chinese fighter jets took off from and landed on an aircraft carrier near Okinawa more than 100 times from May 3 to May 7.

  In December 2021, former Japanese Prime Minister Shinzo Abe warned that an armed invasion of Taiwan would pose a serious threat to Japan, given that Japan’s Senkaku Islands, Sakishima Islands, and Yonaguni Island are only 100 kilometers (62 miles) from Taiwan.

  “A Taiwan emergency is a Japanese emergency, and therefore an emergency for the Japan–U.S. alliance,” he said, adding that Japan and Taiwan must work together to protect freedom and democracy.

  Tyler Durden
  Mon, 06/13/2022 – 21:00

• Goldman Joins 75bps Rate Hike Bandwagon, Warns It Will Trigger Recession
  Goldman Joins 75bps Rate Hike Bandwagon, Warns It Will Trigger Recession

  First JPM, and now Goldman has fallen in line and following the unexpected reversal from WSJ Fed-whisperer, Nick Timiraos, the vampire squid not only also expects the Fed to hike 75bps on Wednesday, but warns that by doing so the Fed “risks” sparking a recession, which of course is not a risk but is precisely what the Fed is aiming at at this point because as we explained yesterday, the deterioration in the labor force absent a recession would be too slow to resolve the inflation problem in the near term.

  Goldman’s Jan Hatzius, who hardly enjoys being upstaged by a Millennial Hilsenrath-wannabe reporter, first throws shade at Timiraos, saying that his report from earlier today, which we profiled previously, and according to which Fed officials are likely “to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week” is a “departure” from another article that Timiraos published just yesterday that characterized such a move as “unlikely.”

  As such, Goldman’s best guess is “that the article is a hint from the Fed leadership that a 75bp rate hike is coming at the June FOMC meeting on Wednesday.” In other words, this is just the latest confirmation of what everyone long suspected, that the WSJ is the Fed’s media conduit, just as Citadel is its markets conduit. It also confirms that the Fed really has no idea what it is doing, and is literally making up policy from one day to the next.

  In any case, now that all this new Fed information has come to light, and which was likely prompted by “the upside surprise in the May CPI report and the further rise last Friday in the Michigan consumer survey’s measures of long-term inflation expectations that has likely been driven in large part by further increases in gas prices”, Goldman has joined JPM in immediately revising its forecast to include 75bp hikes in June and July. This would quickly reset the level of the funds rate at 2.25-2.5%, the FOMC’s median estimate of the neutral rate. Goldman then expects a 50bp hike in September and 25bp hikes in November and December, for an unchanged terminal rate of 3.25-3.5%. This is less relevant as by then the US will be in a deep recession.

  Separately, Goldman is also revising its forecast of the dot plot, and now expects the median dot to show 3.25-3.5% at end-2022, and also expects the median dot to show two further hikes in 2023 to 3.75-4%, followed by one cut in 2024 to 3.5-3.75%. Again, what happens in 2024 and 2023 is irrelevant.

  The last point is most important because it confirms what we have said since January: the Fed is hoping to push the US into a recession…

  Goldman: “inflation risks—rather than improving growth expectations—have driven the recent hawkish pivot,”

  Translation: the Fed is i) either hiking into a stagflation or ii) hiking with hopes of creating a recession

  — zerohedge (@zerohedge) January 15, 2022

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  … something not even Goldman can deny any more, to wit:

  Over the last month we have argued that market pricing was in roughly the right place in the sense that the drag from tighter financial conditions, in conjunction with the sizeable fiscal drag this year, puts the economy on the somewhat below-potential growth trajectory that we think is needed to rebalance supply and demand.

  The additional tightening of financial conditions on Friday and Monday, driven by a rise in terminal rate expectations to about 4%, would imply a meaningful further drag on growth that goes somewhat beyond what we think policymakers intend at this point or should be targeting to have the best chance of bringing down inflation without a recession. That is the main reason we have a terminal rate forecast and a probability-weighted funds rate path that are below market pricing.

  What does this mean for stocks? Luckily, another Goldman strategist, David Kostin, gave the answer over the weekend:

  

  Tyler Durden
  Mon, 06/13/2022 – 20:42

• Volcker And Inflation…
  Volcker And Inflation…

  Via AdventuresInCapitalism.com,

  For my entire career, Paul Volcker has been deified. In fact, I cannot think of an unelected government official, since the Generals of WW2, who is held in such esteem—which may also be a function of how terrible most government functionaries are.

  As JPOW suddenly pretends that Volcker was his boyhood hero, I think it’s worth re-examining Volcker’s inflation fight.

  Of course, everyone knows the high-level story; Volcker broke the back of inflation by taking rates into the stratosphere, inducing a recession, taking the heat from politicians and the populace, and sticking to his principles. He had only one mission; defeating inflation. Nothing stood in his way, and he kept at it until the mission was accomplished.

  As a result of Volcker’s sacrifices, we’ve since experienced four consecutive decades of economic boom. Or that’s how everyone seems to remember the situation today.

  What if there were other contributing factors?

  

  Let’s explore some of the other components that may have contributed to inflation peaking during Volcker’s tenure;

  • Oil was one of the primary causes of the 1970s inflation and everyone remembers the oil crisis. During the decade, oil ran all the way from $2 to $39. However, the flipside to this story is that with a lag, high oil prices will eventually incentivize production. The issue was that the US specifically disincentivized US producers and importers. Ronald Reagan signed an Executive Order in January of 1981 to eliminate oil price controls and then removed Jimmy Carter’s idiotic Windfall Profits Tax a few years later. As expected, global production expanded rapidly and with the removal of price controls, that production flooded into the US. By the middle of the decade, despite repeated production cuts by OPEC, there was a global glut of oil and by 1985, oil had collapsed all the way to $7. It wasn’t interest rates that made oil decline, it was government policy on the deregulation side, along with rapid production increases from non-OPEC countries.

  • President Reagan’s Economic Recovery Tax Act was signed into law in August of 1981, designed to reduce tax rates and incentivize investment by rewarding risk-taking by businesses. In particular, the Accelerated Cost Recovery System served to accelerate depreciation, reducing taxes for those that invested in productive capacity. Once again, government policy, not interest rates led to an increase in investment and ultimately supply, helping to tame inflation.

  • It wasn’t just Reagan working on de-regulation; The Staggers Act of October 1980, deregulated the railroads, The Motor Carrier Act of July 1980, deregulated the trucking industry, and the Airline Deregulation Act of October 1978 effectively deregulated transport industries. The net effect was dramatic price competition, better ability to invest and innovate, and the ability to eliminate unprofitable business that was funded by profitable business. Almost immediately after passage, pricing for transport services collapsed and the ease of transporting goods expanded.

  

  • Organized labor was also dealt a near-fatal blow when Reagan fired the air traffic controllers in August of 1981. This may have reduced the wages for a generation of middle-class workers, but it sure wasn’t inflationary. It also accelerated the decline of unions which had already peaked out as a percentage of workers. More importantly, it reduced the militancy of unions and took the teeth out of their ability to disrupt businesses, leading to better efficiency and lower costs for consumers.

  

  • At the same time, when it comes to macroeconomics, demographics equals destiny. In this case, Volcker simply got lucky. Think of the Baby Boom generation, the last of whom was born in 1964. By 1982, these last Boomers hit 18 and started joining the workforce. The eldest Baby Boomers, born in 1946, were already 36 by then. Look at the massive increase in workers starting in the late 1970s and into the 1980s, which tamped down wages and tamed inflation—especially as female participation in the workforce expanded dramatically. This added labor slowed a key component of the inflation.

  

  I could continue into the weeds of the various policy changes along with a bit of luck on the demographics side, but I’ve hit enough of the high points to give you a flavor of what was afoot while Volcker was supposedly single-handedly taming inflation. What’s interesting is that despite rapidly accelerating fiscal deficits during the 1980s, inflation continued to subside. Was the decline in inflation due to a short-term spike in interest rates, mostly reversed a few years later? Or, due to longer-term policy changes that unleashed supply, while improving competition and efficiency? It clearly was a combination of the two, but I believe that far more of the credit should go to the policy side, not the monetary side.

  This all has interesting implications as the policy apparatus is going haywire under the current administration.

  From repeated attacks on energy, to crazy regulations designed to force people out of the labor force, to all the carbon nonsense, to the extreme fiscal deficits, to all the other asinine regulation; the policy side currently appears to be overwhelming the monetary side when it comes to inflation.

  

  Here’s my alternative view; what if monetary actions mostly serve to impact the price of risk assets, while fiscal mostly impacts the economy’s growth rate, and government policy mostly controls for inflation? As I’ve experienced the interplay of these three factors over more than two decades as an investor, I increasingly think that this is the case. Sure, there is plenty of cross-over. For instance, the S&P wealth effect is increasingly as important for consumer spending as are interest rates, allowing home equity to get tapped. Hence the price of risk assets bleeds into the overall economy. However, I am mostly of the view that these three buckets (monetary, fiscal and policy) control for a substantial percentage of the changes in their respective key categories (risk assets, GDP and inflation), hence why inflation is now accelerating at roughly the rate of government policy mistakes. Meanwhile, the Fed will take interest rates to a level where it nearly detonates the financial system, yet it cannot impact the price of oil.

  Coming full circle here, Volcker is still a hero of mine. At the time, he was one of the most hated people in our government, yet he continued forward with his rate plan because he knew it was the right thing to do. He had conviction and didn’t bend to the mob. Ultimately, he was part of the solution. I just think that our collective knowledge has evolved in a way that most people are ignoring many of the other factors that may have had a much greater role in reducing the runaway inflation of the 1970s. If we forget that tax and regulatory policy were the primary factor in reducing inflation, we are bound to repeat Carter’s inflation disaster.

  

  *  *  *

  If you enjoyed this post, subscribe for more at http://www.adventuresincapitalism.com

  Tyler Durden
  Mon, 06/13/2022 – 20:20

• Sirens Blare Across Downtown Chicago As Tornado Warning In Effect
  Sirens Blare Across Downtown Chicago As Tornado Warning In Effect

  A tornado warning has been issued across the Chicago metropolitan area and parts of northern Cook County Monday evening, according to the National Weather Service (NWS). 

  Tornado sirens can be heard across Chicago as a potentially dangerous weather system hits the metro area. 

  The tornado sirens near by brothers place in Uptown are insanely creepy pic.twitter.com/Xg5Uq3GtRH

  — Jennnnayyy (@chitown2socal) June 13, 2022

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  Chicago’s tornado sirens blaring ahead a powerful tornado warned storm! 🌪🔊

  Video sent in by: Art Shaikh#weather #tornado #stormhour #chicago pic.twitter.com/fHJLSkDHtA

  — Nash Rhodes (@NashWX) June 13, 2022

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  Tornado sirens going off in Downtown Chicago #ILwx #chicago #tornadowarning pic.twitter.com/8giVTXxEUY

  — Danielle Dozier News 19 (@DanielleDozier) June 13, 2022

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  A tornado 🌪 ugly right now here in the Windy City #Chicago take care people, the siren 🚨 is activated throughout the city it’s dangerous ⚠️ #Cubs @Cubs @cachorros @hgomez27 pic.twitter.com/XyqhxqB62I

  — Mike Rodriguez | Univision 🍥 (@mikedeportes) June 14, 2022

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  NWS Chicago tweeted wind gusts hit 84 mph at O’Hare International Airport. 

  [6:46 PM 6/13] Gusting to 84 mph at #Chicago-O’Hare right now! #ilwx

  — NWS Chicago (@NWSChicago) June 13, 2022

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  Meteorologists are telling people in the metro area to seek immediate shelter. 

  Time to seek shelter in #Chicago! #Tornado warning in place, as well as large hail, high winds, and torrential rain moving in! #ilwx pic.twitter.com/TZNMKljxCr

  — Chris McBee (@McBeeWX) June 13, 2022

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  Possible tornadic circulation is being reported. 

  Very dangerous storm moving through #Chicago!

  A possible tornadic circulation is located near Cicero right now just west of the rail yard near the Chick-Fil-A on Harlem Ave. Midway next!

  Meanwhile, an 80 mph cold-air wraparound about to sock La Grange, Bedford Park, Riverview. pic.twitter.com/MXO3ccut4W

  — Matthew Cappucci (@MatthewCappucci) June 14, 2022

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  Look at the rotation on tornado warning #Chicago. pic.twitter.com/sLjxaoCmJG

  — Bill Karins (@BillKarins) June 14, 2022

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  We still see some rotation in the Midway area where there is over 80 mph winds. This is a dangerous storm. Take shelter. #awsc #chicago pic.twitter.com/l75STYiiBY

  — America’s Weather Streaming Channel (@awscyoutube) June 14, 2022

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  Breaking: it appears the circulation near Maywood, Illinois — part of the #Chicago metro — may have produced a tornado or significant straight-like wind damage.

  Preliminary reports of the “entire roof of a [third] floor apartment removed” from the emergency management. https://t.co/Rpg7xh3NiD pic.twitter.com/P3woNRvA42

  — Matthew Cappucci (@MatthewCappucci) June 14, 2022

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  *Developing

  Tyler Durden
  Mon, 06/13/2022 – 20:15

• Xi Widens Legal Basis For PLA Troop Deployments Amid Soaring Taiwan Tensions
  Xi Widens Legal Basis For PLA Troop Deployments Amid Soaring Taiwan Tensions

  At a moment the Pentagon is warning Beijing about its heightened military maneuvers around Taiwan, China’s President Xi Jinping has just signed an order which fundamentally expands the conditions under which People’s Liberation Army (PLA) troops can be deployed.

  The freshly signed and promulgated order introduces a legal framework to deploy troops in “non-war military actions” which takes effect Wednesday, according to state media. It could have significant repercussions for tensions with the US and Washington allies like Australia or Japan in places like the South China Sea and the Taiwan Strait, given the order loosens the conditions under which it’s possible to initiate “military operations other than war” which involves operations that do not explicitly involve direct conflict or combat.

  

  According to a list in state-run Global Times, the Xi-backed initiative will seek to standardize usage of PLA troops in non-military situations such as the following:

  “disaster relief, humanitarian aid, escort, and peacekeeping, and safeguard China’s national sovereignty, security and development interests…”

  And additionally, “The outlines aim to prevent and neutralize risks and challenges, handle emergencies, protect people and property, and safeguard national sovereignty, security and development interests, and world peace and regional stability, the Xinhua News Agency reported on Monday.”

  Concerning this last justification on the list (and perhaps taking a page from America’s ‘Global War on Terror/GWOT’ playbook), it’s the “counter-terrorism” angle that could perhaps prove most elastic, and up for wide interpretation as Beijing readies potential new ways to wield the PLA as a blunt and powerful force enacting policy.

  As GT writes, “The Chinese armed forces are also responsible for counter-terrorism, anti-pirate and peacekeeping missions, including regular escort missions in the Gulf of Aden and waters off Somalia as well as UN peacekeeping missions, providing public security goods to the international community, the expert said.”

  JUST IN – China’s Xi orders the introduction of a legal framework to deploy troops in “non-war military actions.” pic.twitter.com/b3zReb0dNt

  — Disclose.tv (@disclosetv) June 13, 2022

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  “By carrying out these operations overseas, in some cases, the Chinese troops can prevent spillover effects of regional instabilities from affecting China, secure vital transport routes for strategic materials like oil, or safeguard China’s overseas investments, projects and personnel, analysts said, noting that this is likely why Xinhua described the outlines as being capable of safeguarding China’s national sovereignty, security and development interests,” the state media report adds.

  The words “stability” and “instability” have precisely been applied to Taiwan of late, by both Beijing and Washington officials, while obviously supporting different sides of the ‘independence’ and sovereignty debate. In the latest example, on Sunday Bloomberg reported on a series of instances that Chinese officials have privately conveyed to their American counterparts that the Taiwan Strait does not constitute international waters, upping tensions given the Biden administration has been sailing navy warships through the contested waters on a monthly basis.

  Meanwhile according to pro-Beijing pundits…

  If Biden cannot accept the fact that Taiwan, Hong Kong, Xinjiang, Tibet, Inner Mongolia are all integral parts of China, his they/them army will have to face the might of the PLA. pic.twitter.com/yrUI6BNXvS

  — khan (@SameeraKhan) June 10, 2022

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  And prior to this, on Friday during the first ever face-to-face meeting between US Secretary of Defense Lloyd Austin and China’s defense minister Wei Fenghe, the latter warned his American counterpart that Beijing will “not hesitate to start a war” if Taiwan declares independence. Wei had warned Austin that “if anyone dares to split Taiwan from China, the Chinese army will definitely not hesitate to start a war no matter the cost” – defense ministry spokesman Wu Qian quoted the minister as saying during the meeting.

  Tyler Durden
  Mon, 06/13/2022 – 20:00

• CNN, CBS, NBC, ABC Sunday Shows Don't Cover Attempted Murder Of Supreme Court Justice
  CNN, CBS, NBC, ABC Sunday Shows Don’t Cover Attempted Murder Of Supreme Court Justice

  Authored by Zachary Stieber via The Epoch Times,

  Many news networks on June 12 omitted mention of the recent attempted murder of Supreme Court Justice Brett Kavanaugh, even though some touched on issues facing the nation’s top court.

  

  All Sunday morning shows on CNN, CBS, NBC, and ABC did not cover the attempted killing, which took place on June 8.

  Fox News covered the topic during “Fox News Sunday.”

  Several shows brought up the Supreme Court in other contexts.

  On CNN’s “State of the Union,” host Dana Bash noted that the Supreme Court is poised to strike down Roe v. Wade before asking Rep. Alexandria Ocasio-Cortez (D-N.Y.) about the upcoming midterm elections. Bash also mentioned the nation’s top court declined to take up a case involving elections in Pennsylvania.

  Chuck Todd, host of NBC’s “Meet the Press,” only mentioned the Supreme Court once, when asking Rep. Elaine Luria (D-Va.) about Supreme Court Justice Clarence Thomas’s wife.

  The Supreme Court was not brought up on CBS’s “Face the Nation” or ABC’s “This Week.”

  “It is stunningly unprofessional of major media outlets to consciously ignore news of the threat to Justice Kavanaugh,” Jeffrey McCall, a communications professor at DePauw University, told The Epoch Times in an email, describing what happened as “the journalism of omission.”

  The safety of Supreme Court justices is a highly important topic, especially with looming decisions on gun rights and abortion, McCall said.

  Representatives for the outlets did not respond to requests for comment.

  The bulk of coverage on the four shows was of the Jan. 6, 2021, breach of the U.S. Capitol, primarily through the lens of a House of Representatives hearing on the matter that took place on Thursday.

  A day earlier, according to court documents and a 911 call, a California man was dropped off by a taxi outside Kavanaugh’s home in Chevy Chase, Maryland, with the intention of breaking into the abode and murdering the justice.

  The man, Nicholas John Roske, walked down the street when he spotted law enforcement officers standing outside the house, and called the police on himself.

  On Fox News, host Bret Baier brought up the attempted murder when interviewing Sen. Chris Coons (D-Del.), a close ally of President Joe Biden. Baier noted that the lower chamber has yet to act on a bill that the Senate unanimously passed, which would increase security for all nine justices on the Supreme Court.

  “The House is working to add a provision that would allow the marshal of the Supreme Court to decide to extend protection to the staff and families of staff of the Supreme Court. I think that’s appropriate, that’s an acceptable compromise. More than anything I think the House needs to take it up and pass it early next week, and I’m optimistic after several conversations with House leadership that they will,” Coons said, before pivoting to the Jan. 6 hearing.

  Baier pressed Coons on protesters appearing outside the homes of Kavanaugh and others being in violation of federal law, which bars protesting outside the homes of judges with the intent of influencing them, as protesters have made clear is their intent.

  “We have to strike the right balance here between protecting freedom of speech in this country and ensuring that our justices and judges are safe,” Coons said. “do think we need to take stronger action to make sure that our federal judiciary is safe because that’s part of making sure our democracy is safe, which really is the core issue of the January 6 hearings, is how do we make sure that the fundamentals of our democracy, the safety and security of Congress, the peaceful transfer of power and I would also add the safety and security of our federal judiciary is ensured, we should act.”

  Tyler Durden
  Mon, 06/13/2022 – 19:40

• The Great Celsius Implosion: What Went Wrong And How Much More Will Bitcoin Drop
  The Great Celsius Implosion: What Went Wrong And How Much More Will Bitcoin Drop

  By Dylan Leclair and Namcios of Bitcoin Magazine

  The purpose of this issue will be twofold:

  • The first will be an in-depth look at the Celsius platform, and breakdown the design of the business/ecosystem to understand what went wrong.
  • The second is to detail the events that have transpired over the recent weeks with Celsius “yield generation” strategies, and update subscribers on the state of the market, with potentially big ramifications on the horizon.

  The following is written by Bitcoin Magazine’s Namcios, detailing Celsius’s core business operations.

  Celsius: Design And Assumptions

  This section takes a deep look at the inner workings of the project itself, as per its white paper, including some red flags in its design and backboning assumptions that could’ve served as a warning to investors – and can hopefully be applied to other projects to prevent similar losses in the future.

  “As more people join the Celsius ecosystem, the more everyone benefits,” per the white paper.

  

  Throughout its white paper, Celsius conflates terms and assumptions, pushing forward design decisions that don’t necessarily play along. One example of this is naming itself Celsius “network” while having an entire section dedicated to showing an “executive team.” It can be argued that networks don’t have executive teams, though Celsius has a few founders, a CEO, a COO and a CTO, as well as marketing and development departments. It also repeatedly refers to a “community” it seeks to create with its network, though the user can be certain that the executive team will almost always preserve its own self-interests instead of the community’s – which is what happened on Sunday as withdrawals were halted in the platform. (The withdrawal issue will be explored in length in a subsequent section.)

  

  Celsius fails to provide a proper explanation for why its project needs a token, as seen in the image above. The white paper simply states that its “lending and borrowing model requires a blockchain and an open ledger technology,” citing that such needs come “in order [for the project] to really gain traction.”

  Both can hardly be seen as factual responses to that question. In fact, the white paper in its entirety is more akin to a marketing deck or a pitch to investors than what a white paper should really be: a technical document explaining the engineering decisions behind the project’s design.

  Moreover, complex trading platforms exist in the world that handle very complex structures and settlement orders, meaning that a smart contract is also not a strong enough reason for a blockchain.

  Indeed, the real reason as to why Celsius needs a blockchain and an open ledger technology is to issue its CEL tokens – for which it built an ecosystem around to generate enough “traction.” Moreover, the CEL tokens also allowed the team to raise money from investors to build out the platform and wallet. Still, the issuance of credit could’ve been done without a blockchain, but in that case the team would’ve lacked an important motto for generating hype nowadays – “crypto,” “decentralized” and “blockchain.”

  The white paper demonstrates that Celsius performed a presale of CEL tokens (amounting to 40% of the total number of CEL tokens) at $0.20 per token and later did a crowdsale (amounting to 10% of the total number of CEL tokens) at $0.30 per token. While the presale occurred in Q4 2017, the crowdsale began in March 2018.

  

  Celsius details in its white paper how big of a role CEL plays in the project. In fact, all of the platform’s functionality – borrowing and lending – would only come into effect after the tokens were issued.

  CEL is an ERC-20 token, meaning that it is a fungible token deployed with a smart contract on Ethereum, that seeks to “create a value-driven lending and borrowing platform for all our members,” as per the white paper.

  Ownership of the token allowed users to join the Celsius platform, deposit cryptocurrency into the Celsius wallet, apply for dollar loans and pay interest on those loans at a discounted rate at launch. The document also outlined that after launch, the token would eventually enable users to lend cryptocurrency to gain interest, get rewards on cryptocurrency lent out and achieve “seniority” in the platform. Seniority sought to reward those opting to use CEL with better rates – a self-enforcing feedback loop of incentives that seek to generate more demand for CEL.

  This feedback loop extends beyond this dynamic to play a key role in the user acquisition and retention strategies for Celsius. In short, Celsius’ token dynamics assume that borrowers bring fees, which are converted into CEL tokens that get paid out to lenders after a fee cut, attracting more retail investors who are willing to put up their cryptocurrency as collateral to gain some of those fees, hence increasing the demand for CEL – driving up the price and allowing Celsius to spend more money on marketing and advertising to attract more users.

  

  “The system also creates a supply and demand cycle of the Celsius token (CEL),” the white paper states, referring to the platform composed of borrowers, lenders and the orchestrating Celsius service.

  All in all, Celsius’ design involves a mix of traditional and burgeoning technologies to market yields much higher than those available in traditional financial systems. The complex web of different moving parts was tentatively glued together with confluent incentives derived from the CEL token – which based itself on a reinforcing economy of issuance and distribution for the acquisition and retention of users.

  Play-by-Play Of Celsius Missteps

  Late Sunday evening, crypto exchange Celsius announced they were halting all withdrawals, transfers, and asset swaps on the platform. The platform, which offers users yield on their crypto assets, as well as the ability to borrow against, had been the subject of much scrutiny in recent weeks/months over their apparent yield-generation strategies.

  Throughout 2021, there were multiple arbitrage strategies that offered traders “risk-free return.” These strategies were the GBTC arbitrage, and the futures market contango. These strategies, which took advantage of pricing dynamics between spot market bitcoin and select derivatives (in this case the Grayscale Bitcoin Trust and bitcoin futures contracts) allowed for market neutral arbitrage, and for many individuals, funds and companies to capitalize on the massive “yield.”

  Many companies capitalized on this dynamic by offering native yield products, where they put on these trades with customer funds, and profited on the difference that was harvested against what was paid to customers. When the music was playing, this sort of strategy could be maintained, but as demand for yield products grew and the arbitrage in both the futures market and with GBTC disappeared, the ability to generate yield did also.

  In 2021 crypto yield services had the GBTC arbitrage and the massive contango (futures price above spot price) to arbitrage and secure *risk free* yield.

  That all was gone in late fall, and the largest emergent “yield product” in crypto became…

  UST on the Anchor product.

  — Dylan LeClair 🟠 (@DylanLeClair_) May 11, 2022

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  This dynamic caused Celsius to turn to increasingly exotic and risky instruments to generate “yield” for depositors. On May 3, before the LUNA/UST collapse, on-chain analysts documented Celsius sending funds into the anchor protocol.

  🚨#CelsiusNetwork sent 99,780 Ether ($275 million) to #Anchor protocol in the last two weeks- *half of it in the last 24 hours.*

  Is #Celsius so desperate for yield they are turning to the Anchor Ponzi? 🤨 (1/3)@Bitfinexed @DoombergT @ben_mckenzie @SilvermanJacob @concodanomics pic.twitter.com/GU1y9O0RvT

  — Dirty Bubble Media: 🌡⏰💣 (@MikeBurgersburg) May 3, 2022

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  Following the LUNA/UST collapse, rumors began to fly as to which companies/counterparties had been hit, and whether insolvencies were a worry, with Celsius being a key focus.

  Crypto contagion.

  A whole lot of funds/companies/products blew up their treasuries with UST yield on Anchor. Billions of $$ of promises – gone.

  I wouldn’t want to have any value in in a crypto yield product. I suspect we have some yet to be announced insolvencies here.

  — Dylan LeClair 🟠 (@DylanLeClair_) May 11, 2022

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  Given the opaque nature of the company’s operations, there wasn’t any way to know for certain whether the company was insolvent from an asset/liability standpoint, but merely the potential for such a situation made the risk/reward of using the platform’s yield products a bad trade-off.

  Not your keys, not your coins.

  Get your coins away from counter-parties. ESPECIALLY if you are lending it for a yield.

  Not a drill.

  Certain yield offering products were 110% using UST and anchor… and now there have likely been some blow ups.

  — Dylan LeClair 🟠 (@DylanLeClair_) May 11, 2022

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  The yield users receive for keeping assets on the Celsius platform is NOT sufficient enough to compensate for the tail risk of insolvency/collapse. Withdraw!

  I spread a similar message during the collapse of LUNA and was ridiculed for fear mongering. https://t.co/JSY2PklUCo

  — Dylan LeClair 🟠 (@DylanLeClair_) June 10, 2022

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  Aside from depositing user funds on the Anchor protocol for yield, it was uncovered that Celsius also had a large stake in stETH. stETH, a liquid derivative, allows users to stake their ETH in anticipation of the merge to proof-of-stake, while still having liquid access to their capital in the form of stETH. Similar to the GBTC redemption mechanism, once ETH is staked for stETH, it cannot be unstaked until “the merge” is successful.

  While this issue won’t delve deep into the weeds of Ethereum’s proof-of-stake system and the exotic derivatives complex that has been built around it, the purpose of mentioning stETH is to highlight another yield-generation strategy that went wrong for Celsius, as the stETHETH exchange rate began to break from 1.0.

  stETH is depegged, trading at .95

  Liq is drying up & smart money is pulling capital. Coupled w/ the rumoured risk of Celsius’ functional insolvency, there could be significant selling

  Me & @Riley_gmi & have been researching this for the past week

  Here is what we found pic.twitter.com/wtgFA779Np

  — CryptoJoe (@Crypto_Joe10) June 10, 2022

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  Celsius is a massive holder of stETH (Liquid staked ETH using Lido) to earn yield on their ETH waiting on the merge to PoS.

  However staked ETH cannot be unstaked, so there are secondary markets to trade stETHETH.

  The peg is currently breaking. https://t.co/36Gri5OkXL pic.twitter.com/eUrcDT2lry

  — Dylan LeClair 🟠 (@DylanLeClair_) June 10, 2022

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  With Celsius holding a large amount of stETH that was falling from its alleged peg, illiquidity worries increased further, with the market to buy ETH for stETH not nearly liquid enough for Celsius’ massive position to exit without sustaining massive losses. With an increasing number of users withdrawing their funds from the platform, and with cryptocurrency markets already selling off meaningfully over the weekend, Celsius announced they were pausing all withdrawals, swaps, and asset transfers on the platform.

  We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.

  We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.

  – Published statement on Celsius blog post.

  The biggest problem with Celsius’ operations was that it was increasingly obvious that the firm was taking extreme risk with user funds that were often not able to be properly quantified. Thus, when thinking of native “yield” on crypto assets, specifically with bitcoin which is absolutely scarce, it is important to understand that it’s not yield, but rather shorting extreme tail risk.

  Now, with the price of bitcoin trading at $23,100 at the time of writing, Celsius is on the verge of a margin call on 17,900 wBTC (wrapped bitcoin on Ethereum).

  17k wBTC owned by Celsius to be liquidated at 20.27k.

  Disastrous leverage unwind underway. https://t.co/4IDL0PoF03

  — Dylan LeClair 🟠 (@DylanLeClair_) June 13, 2022

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  The liquidation price level was at $20,272 before Celsius topped off the vault with additional collateral, pushing the liquidation price to $18,300. The main concern is that this liquidation level is completely transparent, and opportunistic speculators are currently indiscriminately selling to force Celsius to sell (either willingly covering or through forced liquidation).

  You can check the status of the vault here with live updates to liquidation levels.

  Market Implications

  Either way, the market is in a precarious position over the short term, with a likely partially-insolvent exchange doubling down on a margin position. If the history of bitcoin (and financial markets) have shown anything, it is that doubling down on a leverage position likely never ends well, with the worst part being that user funds are what’s being put at risk.

  With this in mind, the probability of a volatile wick to the downside looks likely. Short-term traders/speculators should be watching the status of the Celsius loan vault closely, as a liquidation would bring a couple hundred million dollars of selling pressure in short order.

  Lessons Learned

  As of late, novel narratives have been employed to drive retail customers to believe in the power of “blockchain technology” and “cryptocurrency” as drivers for a revamped financial system. However, as argued before, blockchain serves a very specific purpose – solve the double spending problem to port cash (peer-to-peer money) into the digital realm. This was achieved by Satoshi Nakamoto, who, after decades of research by many scientists and mathematicians, arrived at the design of Bitcoin – published in a proper white paper in 2008.

  From the point of view of users, three lessons can be learned.

  First, beware of self-reinforcing ecosystems. This was true for Terra’s UST project and is also true for Celsius. Terra and the Luna Guard Foundation have repeatedly said things along the lines of “generate enough demand” for the survival of UST, while Celsius’ white paper repeatedly makes the case that the more people join, the better it is for everyone. Notably, in the case of Celsius, the case that a lending and borrowing platform needs its own token is a hard one to make. (Hodl Hodl, for instance, allows truly peer-to-peer bitcoin-backed loans without the usage of a token – it only leverages an escrow system.)

  Second, if something seems too good to be true, it probably is. Celsius ported itself as an impossible-to-fail system that was secure and cared for its users while offering one of the highest yields and lowest rates on the cryptocurrency lending market. Celsius CEO Alex Mashinsky made the case that users could always withdraw funds from his platform, though on Sunday announced nobody was able to withdraw funds. The platform cited this decision had users’ best interests in mind, but that is hardly the case.

  Lastly, and this one is getting old – hold your own keys. If you don’t have full control over your bitcoin, meaning you can’t transact with whoever you want, whenever you want, you don’t own your bitcoin – someone else does. Depositing bitcoin into Celsius for some “risk-free” yields seemed like a good idea, until it wasn’t. If in doubt, always custody your own coins. Withdraw your bitcoin from exchanges and walk yourself through a self-custody solution that only you know the key to. Moreover, be extra careful when keeping a significant amount of your net worth in credit of a newly-founded company such as Celsius (CEL token). They can go under – just like Terra. As always, do you own research.

  * * *

  Post Script from ZH

  For those wondering what key price support/threshold levels are, the following thread lays it out: the crypto community is now set on forcing the liquidation of Celsius by depressing the price of bitcoin to the “liquidation” level of $18,388, which absent some miraculous bailout of Celsius, one should  “assume it happens any time.”

  Maker, Maker’s prop desk frens, Jump, Alameda, compound/aave mafia, mev squad, absolutely everyone– we need all hands on deck to help ensure this liquidation is successful. Assume it happens any time

  — ryanb.eth🐼 (@ryanberckmans) June 13, 2022

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  Tyler Durden
  Mon, 06/13/2022 – 19:24

• Ohio Passes New Law To Expedite Armed Teacher Training To Harden Schools
  Ohio Passes New Law To Expedite Armed Teacher Training To Harden Schools

  Ohio Gov. Mike DeWine signed a controversial bill into law Monday morning, expediting training for armed teachers and other adults to harden schools. 

  DeWine held a news conference announcing the signing of HB 99. It reduces the number of hours teachers need for firearms training from 700 hours to as little as 24 hours, with the goal of hardening schools quicker in the wake of the shooting in Texas last month that killed 19 elementary school students and two teachers. 

  Happening now: @GovMikeDeWine, flanked by @LtGovHusted, @RepThomasHall and Sen. Frank Hoagland (R-Mingo Junction), expected to announce the signing of HB99, allowing teachers to carry guns in schools with just 24 hours of training, far less than a cop. @SpectrumNews1OH pic.twitter.com/Nk5VE3tlNw

  — Josh Rultenberg (@JoshRultNews) June 13, 2022

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  DeWine said the 700-hour requirement prevented Ohio school districts from allowing employees to carry guns. Local school boards will authorize teachers to carry guns and can also decide to ban guns. He said, “this doesn’t require any school to arm teachers or staff — Every school will make its own decision.” 

  DeWine stated that his staff “worked with the General Assembly to remove hundreds of hours of curriculum irrelevant to school safety.” He thanked lawmakers for “passing this bill to protect Ohio children and teachers.”

  Training includes how to stop an active shooter, de-escalate a violent situation, and provide first-aid care. At least four hours will be “scenario-based or simulated training exercises” and “tactical live firearms training,” according to the law. 

  HB 99 is the second major gun bill that DeWine, a Republican, signed into law this year. The first eliminates the requirement for a license to carry a concealed handgun. 

  “We’ve heard people say ‘Do something,'” Republican State Senator Terry Johnson recently said on the Senate floor. “Well, this is something, and it’s a significant something.”

  Meanwhile, President Biden disagrees with “hardening schools” against potential school shooters and would instead enact strict gun control laws that limit law-abiding citizens from defending themselves or others against bad guys with guns. 

  There has also been an increasing number of teachers in conservative states volunteering to carry firearms. 

  Tyler Durden
  Mon, 06/13/2022 – 19:20

• US Official Admits Russian Energy Sales Outpacing Pre-War Levels
  US Official Admits Russian Energy Sales Outpacing Pre-War Levels

  Authored by Kyle Anzalone & Will Porter via The Libertarian Institute,

  US energy security envoy Amos Hochstein has acknowledged that Russia might be making more revenue from fossil fuels than before its February invasion of Ukraine. Washington has responded with waves of sanctions aiming to crush the Russian economy. 

  Hochstein made the comments during a hearing for the Senate Subcommittee on Europe and Regional Security Cooperation. In response to a question about whether Moscow was making more money now off its fossil fuel sales, Hochstein said, “I can’t deny that.”

  

  In May, the International Energy Agency said that Russia’s oil revenue was up 50% this year. Hochstein said the White House did not anticipate the spike in oil prices, noting that the demand for oil in 2022 is “far greater, stronger than anyone predicted.”

  Over the past three months, the US and its Western partners have heavily sanctioned Russian energy imports and attempted to pressure the rest of the world to do the same. Beyond Europe, however, the effort has largely been unsuccessful, as countries like India have boosted Russian oil purchases. 

  Hochstein went on to say that the Biden administration believes there will be a “ceiling” on the amount of Russian oil India will import. He did not clarify the White House’s reasoning for that assessment or what the ceiling might be. 

  As Reuters reviews, “The International Energy Agency said in May that Russia’s oil revenue was up 50% since the beginning of the year to $20 billion a month, with the EU taking the biggest share of its exports. The EU’s ban on Russian oil, expected to take full effect at the end of the year, could cut that revenue.”

  BREAKING: Russia earned EUR 93 billion in revenue from fossil fuel exports in the first 100 days of the invasion of Ukraine. The EU imported 61% of this, worth approximately 57 billion EUR.

  Read more: https://t.co/L9nFEQwl7G pic.twitter.com/O6BYbgpT3w

  — Centre for Research on Energy and Clean Air (@CREACleanAir) June 13, 2022

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  While the United States and its NATO allies claim to be crippling the Russian economy, the sanctions campaign does not appear to be having the intended effect, with the ruble recently becoming the best performing currency against the dollar this year. In the US, price inflation is rampant, with most Americans now paying over $5 per gallon for gas, and some nearly double that.

  Tyler Durden
  Mon, 06/13/2022 – 19:00

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