- International Relations: The Calm Before The Storm?
Authored by Thierry Meyssan via The Voltaire Network,
All international problems are currently suspended, awaiting the results of the US mid-term elections. The partisans of the old international order are gambling on a change of majority in Congress and a rapid destitution of President Trump. If the man in the White House holds fast, the protagonists of the war against Syria will have to admit defeat and move on to other battle fields. On the other hand, if Donald Trump should lose the elections, the war on Syria will immediately be revived by the United Kingdom.
The current situation – extending from the Russian response to the destruction of its Ilyuchin-20 to the US mid-term elections on 6 November – is uncertain. All the protagonists of the war in Syria are waiting to see whether the White House will be able to pursue its policy of breaking away from the current international order, or if Congress will become the opposition and immediately trigger the process for the destitution of President Trump.
The origins of the war
It has become clear that the initial project by the United States, the United Kingdom, Israël, Saudi Arabia and Qatar will not be realised. The same goes for France and Turkey, two powers that entered the war against Syria somewhat later.
What we need to remember is not the way in which we were informed about the start of the events, but what we have discovered about them since. The demonstrations in Deraa were presented as a « spontaneous revolt » against « dictatorial repression », but we now know that they had been in preparation for a long time.
Syrian anti-government protesters demostrate in Daraa
We also need to free ourselves of the illusion that all the members of a Coalition, united in order to achieve the same goal, share the same strategy. Whatever the influence of one or the other, each State conserves its own history, its own interests and its own war objectives.
The United States pursued the strategy of Admiral Arthur Cebrowski, which was the destruction of the State structures in the Greater Middle East. For this they relied upon the United Kingdom, which implemented Tony Blair’s strategy aimed at placing the Muslim Brotherhood in power throughout the region. And also on Israël, which rebooted the strategy of Oded Yinon and David Wurmser for regional domination. The necessary weapons were stored in advance by Saudi Arabia in the Omar mosque. Qatar stepped in by inventing the story about the children whose nails were torn out.
At that time, Saudi Arabia was not seeking to impose a new form of politics on Syria, nor even to overthrow its government. Riyadh’s intention was exclusively to prevent a non-Sunni from becoming President. By some strange historical evolution, the Wahhabites, who, two centuries ago, considered both Sunnis and Chiites as heretics and called for their extermination if they failed to repent, are today presenting themselves as the defenders of the Sunnis and the killers of the Chiites.
As for the tiny emirate of Qatar, it was exacting its revenge after the interruption of its gas pipeline in Syria.
France, which should have taken part in the conspiracy by virtue of the Lancaster House agreements, was sidelined because of its unexpected initiatives in Libya. The Minister for Foreign Affairs, Alain Juppé, attempted to push France into rejoining the conspirators, but the ambassador in Damascus, Eric Chevallier, who could see the distortion of facts on the ground, resisted as far as humanly possible.
When France was once again admitted to the group conspiracy, it continued its 1915 objective of the colonisation of Syria, pursuing the Sykes-Picot-Sazonov agreements. Just as the French mandate over Syria was considered to be transitory compared with the lasting colonisation of Algeria, it is considered, in the 21st century, as secondary to control of the Sahel. Besides which, while attempting to realise its old engagement, Paris pushed for the creation of a national home for the Kurds, on the model used by the British in 1917 for the Jews in Palestine. In order to do so, it allied itself with Turkey which, in the name of Atatürk’s « national oath », invaded the North of Syria in order to create a State to which the Turkish Kurds could be expelled.
While the war objectives of these first four aggressors are mutually compatible, those of the latter two are not compatible with the others.
Besides which, France, the United Kingdom and Turkey are three old colonial powers. All three are now trying to impose their power over the same throne. The war against Syria has thus reactivated their old rivalries.
The Daesh episode within the war against Syria and Iraq
At the end of 2013, the Pentagon revised its plans within the framework of the Cebrowski strategy. It modified its initial plans, as revealed by Ralph Peters, and substituted the plan by Robin Wright for the creation of a « Sunnistan » straddling Syria and Iraq.
However, in September 2015, the deployment of the Russian army in Syria, as an obstacle to the creation of « Sunnistan » by Daesh, ruined the projects of the six principal partners in the war.
Free Syrian Army, Jabhat al-Nusra, Ahrar al-Sham flags in Syria
The three years of war that followed had other objectives – on the one hand, to create a new state straddling Iraq and Syria within the framework of the Cebrowski strategy, and, on the other, to use Daesh to cut the Silk Road that Xi Jinping’s China were seeking to reactivate – thus maintaining continental domination over the « Western » part.
The Syrian / Russian victory and the reversal of the United States
The affair of the destruction of the Ilyuchin-20 on 17 September 2018 handed Russia the occasion to terminate this extended war and come to an agreement with the White House to stand against other aggressors. This is a rerun, on a smaller scale, of the Russian / US reaction to the Suez crisis of 1956.
Moscow has not only given the Syrian Arab Army anti-aircraft missiles (S-300’s), but has also deployed an entire integrated surveillance system. As soon as this system is operational, and Syrian officers have been trained to use it, which will take three months at the most, it will be impossible for Western armies to over-fly the country without permission from Damascus.
President Trump announced in advance that he intends to withdraw US troops from Syria. He went back on this decision under pressure from the Pentagon, then agreed with his general officers to maintain pressure on Damascus as long as the United States were excluded from the peace negotiations in Sotchi. The deployment of the Russian armies – for which the White House had probably given its agreement – provided President Trump with the occasion of forcing the Pentagon to back off. It would have to withdraw its troops, but it could maintain the presence of its mercenaries (as it happens, these would be the Kurds and Arabs from the Democratic Forces).
The Syrian Minister for Foreign Affairs, Walid el-Mouallem, speaking before the General Assembly of the UNO, demanded the immediate and unconditional withdrawal of the foreign forces of occupation, US, French and Turkish.
If the United States leave, then the French and Turkish troops will be unable to stay. The Israëlis would no longer be able to overfly and bomb the country. The British have already left.
However, Tel-Aviv, Paris and Ankara still hope that President Trump will lose the elections of 6 November and will be fired. They are therefore awaiting the results of this fateful election before they decide.
If it happens that Donald Trump should win the mid-term elections in Congress, another question will arise. If the Western powers give up on the battle in Syria, where will they go to continue their endless war? This is indeed a reality on which all experts agree – the Western ruling class has become so swamped in bad blood and hubris that it is unable to accept the idea of being geared back behind the new Asian powers.
Wisdom would dictate that once the war is lost, the aggressors should withdraw. But the intellectual disposition of the West prevents them from doing so. The war here will cease only when they find a new bone to gnaw on.
Syrian President Bashar Assad, Russian President Vladimir Putin and Russian Defence Minister Sergei Shoigu watch the troops marching at the Hemeimeem air base in Syria, on Monday, Dec. 11, 2017
Only the United Kingdom has given its response any thought. It is clear by now that although London maintains its diplomatic pressure on Syria via the Small Group, its attention is already focused on the revival of the « Grand Game » which saw the Crown confront the Tsar throughout all of the 19th century. After having invented the Skripal affair, and on the model of the « Zinoviev Letter », London has just ’caught’ the Russian Exterior Intelligence Services red-handed in their attempt to discover what is being plotted against them by the Organisation for the Prohibition of Chemical Weapons (OPWC).
This geopolitical doctrine is independent of the events which serve as its pretext. The « Grand Game » was the strategy of the British Empire. Its resumption by the current United Kingdom is the consequence of Brexit and the policy of « Global Britain ». Just as in the 19th century, this anti-Russian configuration will lead in time to an exacerbated rivalry between London and Paris. On the contrary, should Theresa May fail, along with the questions concerning Brexit and the maintenance of the United Kingdom in the European Union, all these projections will be cancelled.
If France is now studying the possibility of leaving the Middle East in order to concentrate on the Sahel, the position of the United States is a lot more problematic. Since 9/11, the Pentagon has enjoyed a certain autonomy. The ten combat Commanders of the armed forces no longer receive orders from the president of the Joint Chiefs of Staff Committee, but only from the Secretary of Defense.
With time, they have become the veritable « viceroys » of the « American Empire » – a function which they do not wish to see reduced by President Trump. Some of them, like the Commander for South America (SouthCom), intend to continue with the Cebrowski strategy, despite the admonitions of the White House.
So there remains much uncertainty. The only positive step taken concerns Daesh – for three years, the Western powers pretended to be fighting this terrorist organisation, while at the same time supplying them with weapons. Today, Donald Trump has ordered the cessation of this experience of an explicitly terrorist state, the Caliphate, and the Syrian and Russian armies have pushed the jihadists back. The Westerners have no desire to see their friends, the « moderate rebels », now qualified as « terrorists », turn up in their countries en masse. Consequently, whether they admit it or not, they hope they will all be killed in Syria.
It is the US mid-term elections which will decide whether the war continues in Syria or move on to another battle field.
- Meet The New Air Force Helicopters Guarding Nuclear Bases
Boeing Co. was awarded a large contract to supply the US Air Force with new helicopters to guard intercontinental ballistic missile bases across the US, the Pentagon said.
The contract calls for 84 Boeing MH-139, a 15-seat medium-sized twin-engined helicopter developed and produced by AgustaWestland in Northeast Philadelphia, will replace the service’s aging Bell UH-1 Iroquois fleet, currently guarding nuclear bases in Montana, Wyoming, and North Dakota.
The Pentagon announced the contract on Sept. 24, is worth more than $375 million and covers the first four MH-139 helicopters, which the Air Force expects to take delivery by 2021. If all goes well, the full value of the contract would unlock, an estimated $2.4 billion, and supply the Air Force with 84 new helicopters and other maintenance services through 2031.
“Strong competition drove down costs for the program, resulting in $1.7 billion in savings to the taxpayers,” Secretary of the Air Force Heather Wilson said in a separate statement.
“A safe, secure and effective nuclear enterprise is job one,” Air Force Chief of Staff General David Goldfein, said. “It is imperative that we field a capable and effective helicopter to replace UH-1Ns providing security for our ICBMs [interconniental ballistic missiles] and nuclear deterrence operations.”
According to The Drive, the MH-139 for the Air Force will have high-tech sensors and machine guns on either side of the craft, among other weapons that are classified.
Depending on the MH-139’s mission, there are sub-variants of the helicopter for different tasks, such as search and rescue, transport, surveillance, and even an attack version.
However, its most visible mission will be conducting surveillance operations at ICBM silos and responding to any threats to those sites with machine guns and laser-guided missiles. There are also reports that some of these helicopters will be transporting nuclear warheads around the country.
- Brexit Negotiators Poised To Miss Deal Deadline As UK Hardliners Rebel
In what has become a depressingly persistent undercurrent to the ongoing Brexit negotiation trainwreck, it appears that UK Prime Minister Theresa May and her European counterparts, led by chief negotiator Michel Barnier, have once again set themselves up for failure. As both sides scramble to produce the framework for a “backstop” transition agreement, a process that has been fraught with seemingly intractable conflict despite the fact that it would be explicitly nonbinding, it’s looking increasingly likely that the UK and EU will miss another self-imposed deadline on Monday, as Bloomberg reports.
Investors had hoped that the backstop agreement, or at least a rough outline of a backstop agreement, would be finalized by Monday, allowing both sides more time to figure out what the economic relationship between the EU and UK will actually look like after the transition has begun.
The sticking point for May is the fact that the absence of a clear Parliamentary majority for the conservatives has put her in the uncomfortable position of trying to cater to a plurality of groups with different, sometimes opposing, demands, both in her own government and among the EU. In a piece published on its ‘Brexit Blog’ late last week, ING explained that the two most controversial aspects of any potential transition agreement involve what has been called the Irish border issue, and exactly how vague the wording on future trade should be.
We start with the Irish border issue:
Firstly, there’s the so-called Irish backstop, where discussions are beginning to get very technical. We dived into this in more detail last week, but ITV’s Robert Peston reports that the EU could be prepared to accept British demands for an all-UK customs union to be built into the Irish backstop solution. In exchange, the UK would need to accept that regulatory checks could arise between Northern Ireland and the British mainland if they leave the single market in future.
Some reports indicate this could be settled in time for the EU Council meeting next week, but as ever the challenge is ‘wording’ it in such a way that will convince MPs to vote in favour of the agreement. That’s where the second part of the agreement comes in – the political declaration on future trade – and this is where there seems to be more disagreement on the way forward.
Then there is the ‘wording’ on future trade that would include a “temporary customs arrangement.”
The idea is that this declaration will set out a vision for what the future trading relationship might look like.
Bear in mind; this is simply a political statement of intent – the nitty gritty details will be negotiated during the transition period after March 2019. And being a political statement, none of it will be legally binding. In other words, it’s going to be vague – but deciding exactly how vague seems to be proving a bit of a dilemma.
Plan A – at least from the EU’s perspective – is to make this as vague as possible, with reports suggesting a draft version originally due for release this week could contain as few as four pages and will be little more than a series of “annotated headlines”. The recent optimistic tone struck by the EU – including in the run-up to the recent Salzburg summit gives us a flavour of the sort of language the document is likely to contain. It’s likely to be heavy on words like ‘ambitious’ and ‘unprecedented’, but short on details on exactly what this means in practice.
Reports also indicate the EU is open to an ‘evolution clause’ that would leave Brussels open to an improved offer if the UK changes its mind on what it wants. The hope is that all of this will be enough to convince MPs from across the Brexit divide that whatever the declaration ends up saying is not set in stone, and that their own aspirations for the future agreement are still alive.
However, the UK government appears concerned that this vague approach will not be enough to win over lawmakers from the Northern Irish Democratic Unionist Party (DUP). DUP leaders are concerned about reports that the government now accepts the backstop would lead to regulatory barriers between Northern Ireland and the British mainland, and the party is reportedly considering voting against the forthcoming budget if the Prime Minister doesn’t change course.
With that in mind, a government spokesman said on Monday that the UK is looking for more “precise” wording on future trade in the declaration, presumably in a bid to reassure DUP MPs that the Irish backstop will never be needed.
Still, EU leaders bluntly informed May during last months’ Salzburg summit that her Chequers plan wouldn’t work. Yet, the EU’s push for a more vague ‘political statement’ might be accepted by hardline Brexit MPs, who also objected to Chequers…the whole situation is effectively one giant gordian knot of a problem.
What’s worse for May, early Sunday in London, the Brexiteer hardliners published an open letter signed by 63 Conservative MPs, including David Davis, the former Brexit secretary, Jacob Rees-Mogg, the chairman of the European Research Group of Eurosceptic backbenchers and former Brexit minister Steve Baker, the former Brexit minister. At the same time, Anne-Marie Trevelyan, a pro-leave MP, published an editorial in the Sunday Telegraph demanding that any possibility that the UK could remain in a “temporary customs arrangement” after the Brexit transition period ends in December 2020 be stricken from the final agreement – because leaving open the possibility would be tantamount to ignoring the political will of the 17.4 million Britons who voted for Brexit.
Meanwhile, Davis demanded in an editorial in the Sunday Times that Cabinet ministers should “exert their collective authority” and rebel against Theresa May’s proposed Brexit deal. All of this is happening amid even more conflicting reports, citing sources from the EU and sources from No. 10 Downing Street, affirming and denying that a deal had been reached.
Underscoring the hostility to a deal, the leader of Northern Ireland’s Democratic Unionist Party said Sunday that she would prefer a “no deal” Brexit to a “backstop” transition agreement that would require any borders between Northern Ireland and the UK, arguing that this would amount to the “annexation” of Northern Ireland by the EU, per CNBC.
While much work clearly remains ahead – and the eventuality that Parliament could at the last minute sink whatever backstop deal is “finalized” between May and the EU remains a very real possibility – analysts from ING still believe the backstop agreement will be reached. While that likely won’t happen this week, ING said, an agreement could be reached by an upcoming summit in November, with a Parliamentary vote taking place in December.
As a reminder, here’s a timeline of important Brexit-related events, and an outline of four possible post-Brexit Day scenarios.
Still, after pricing in the backstop deal’s success in recent weeks, traders might not feel comfortable with the two sides blowing a deadline set for this coming week, as it could cause some to question whether Barnier was being unrealistically optimistic in September when he predicted that a deal would be reached by the end of this month because so far, negotiators have failed to prove to the market that they can square the circle and create an agreement that is palatable both to the EU and to the many opposing factions in the UK’s Parliament.
- Cannabis Set To Disrupt $500 Billion Market Amid DEA Approvals And Canadian Legalization: Canopy Growth CEO
The CEO of Canadian marijuana producer Canopy Growth says that marijuana is set to disrupt $500 billion in global markets.
Bruce Linton – whose company recently shipped cannabis from Canada to the United States using a yet-undisclosed “DEA-approved partner,” told CNBC‘s Jim Cramer that the “back-of-the-envelope math” pencils out – between therapeutic cannabinoid treatments to a cultural shift from alcohol and tobacco to recreational pot use.
“We disrupt alcohol potentially, cigarettes potentially, in terms of smoking cessation,” he told Cramer. “We really disrupt pharmaceutical, because whether or not you’re geriatric care, you’re dealing with arthritic conditions, you’re someone who can’t sleep, you’re going through an oncology treatment, I think you’re going to find cannabinoid therapies really hit there.”
“And so you add all that together, plus the existing $200 billion illicit market, that pretty quickly gets you up around $500 billion,” Linton continued. “It sounds like a ‘How could it be?’ but just do a bit of the back-of-the-envelope math. It’s not crazy.“
Canopy made headlines last week after announcing several-billion-dollar investments from Corona parent company, Constellation Brands, as well as legal shipment of marijuana, a Schedule 1 drug, into the United States.
“Under [Drug Enforcement Administration] approval, we shipped, for the first time, legally — and I highlight ‘legally’ — cannabis from Canada to the U.S,” Bruce Linton, the co-founder, Chairman and CEO of Canopy Growth, told CNBC’s Jim Cramer.
“The DEA-approved partner, which we haven’t announced yet, can actually begin to do medical research, clinical trials if necessary, [and] create the data set that enables people to know when, what, where, and maybe it can become federally regulated in the U.S. with some input that way,” Linton said in an interview on “Mad Money.” –CNBC
The positive news for Canopy comes on the heels of competitor Tilray announcing DEA approval to import cannabis into the United States for medical research at the University of California San Diego’s Center for Medicinal Cannabis Research. As CNBC notes, California is one of eight states to fully legalize medical and recreational marijuana use, while thirty states currently legalize some form of medical marijuana.
Canada will fully legalize adult marijuana use next Wednesday, October 17, which is expected to result in a massive windfall for producers such as Canopy.
Linton says that Canada’s legalization has forced governments worldwide to consider how they can get in on the action.
“Last week I was in the EU, the U.K. They know about Oct. 17 intimately and they’re trying to figure out, ‘Hm, if we’re a government or businesses, how do we quit ignoring cannabis and govern it, regulate it, tax it and turn it into something that might be medicinal and for sure a much better formatted product for a party?'” he said.
“And so what’s going to be the big bump isn’t just Canada,” he said. “If we do it right, Canopy leads. That gives us the position globally that then, all of a sudden, you add a zero or two to the number of people we’re trying to serve.”
Watch:
- S-400s Don't Solve India's Geostrategic Dilemma
Authored by Pepe Escobar via The Asia Times,
…but Modi emphasizes that Russia has always ‘stood shoulder-to-shoulder with India in the energy sector and our goals’…
The 2018 India-Russia summit may have turned out to be one for the ages. The stakes superficially centered on whether India would seal the acquisition of five S-400 missile defense systems from Russia for $5.43 billion.
The deal was clinched immediately after Indian Prime Minister Narendra Modi and Russian President Vladimir Putin finalized their get-together in New Delhi. Negotiations started in 2015. The S-400s will be delivered in 2020.
So what’s next? Trump administration sanctions against India under the Countering America’s Adversaries Through Sanctions Act (CAATSA)?
If only such a geopolitical game-changer was that clear-cut.
This is a weapons deal that involves Russia, India and China – a key, if not the key BRICS and Shanghai Cooperation Organization (SCO) triad. The new reality is that all of these BRICS/SCO members are now able to deploy the highly effective S-400s.
But that does not mean that two of them – India and China – would necessarily have to deploy S-400s against each other in case of a unilateral attack.
Putin was adamant to stress that Russia will turbo-charge bilateral cooperation with India not only in the SCO but at the UN and the G20 as well. Modi for his part reaffirmed both India and Russia favor a multipolar world.
Modi hopes Russia would help India develop its space program – which includes New Delhi possibly sending Indian astronauts into space by 2022. He emphasized Russia has always “stood shoulder-to-shoulder with India in the energy sector and our goals.”
“Our goals” crucially include Russia and India in synch in terms of preserving the JCPOA, known as the Iran nuclear deal. An inevitable consequence is that India will not refrain from buying Iranian oil and gas, even if threatened with American sanctions.
The Trump administration might even waive sanctions against India if – according to the National Defense Authorization Act – President Trump decides that New Delhi has not undermined US strategic interests by buying Russian missiles.
The verdict, of course, remains absolutely open.
Make your mind up, New Delhi
At the Russian-Indian Business Forum, Economic Development Minister Maksim Oreshkin was adamant that India and Russia are bound to increase trade and investment towards a “trade turnover of $30 billion… and increasing investments to $50 billion by 2025.”
New Delhi suggested last month the creation of a special economic zone (SEZ) for Russian business – on top of an already discussed “green corridor” for smoother trade.
All that fits the framework of historically warm Russia-India relations. Yet the Big Picture is way more nuanced as it highlights the finer points of Eurasia strategic balance between the three big BRICS/SCO partners.
Putin and Xi Jinping have already established that the New Silk Roads, known as Belt and Road Initiative (BRI) and the Eurasia Economic Union (EAEU) will be merging in multiple fronts.
That would leave New Delhi as the odd partner out. India is not aligned with BRI and is frankly opposed to one of BRI’s flagship projects; the China-Pakistan Economic Corridor (CPEC). Nothing that could not be solved by Beijing, for instance, fine-tuning the CPEC route bordering Kashmir.
Moscow and Beijing for their part are extremely aware that India may be used by Washington as a Trojan Horse to undermine Eurasia integration.
Evidence to support it include the recent Communications Compatibility and Security Agreement (COMCASA) which de facto converts New Delhi into a US military ally; the new status of India as Washington’s only “major defense partner”; and India’s role in the Trump administration’s revival of the Quad (alongside Japan and Australia), something interpreted by Beijing as an attempt to encircle it in the South China Sea.
The problem is the ultra-nationalist Hindus in Modi’s BJP party actually support encirclement and/or containment of China. The never enounced key reason is economics. Were India to join BRI, the BJP fears a Made in China onslaught would simply destroy Indian domestic industries, much as what happened to some industry sectors in BRICS member Brazil, China’s top trade partner in Latin America.
What Beijing and Moscow want is for their comprehensive strategic partnership – and synergy – to advance a BRI/EAEU-led Eurasia integration process. It’s not clear this is India’s strategic priority.
Washington’s strategic priority is quite clear: divide and rule, by all means, the BRI-EAEU-BRICS-SCO concerted drive for Eurasian integration and global multipolarity.
So, with the S-400s a done deal, the ball really is in New Delhi’s court. A much vaunted, official “multi-alignment” policy still leaves the fundamental geostrategic question up for grabs; will India lean towards American-style Divide and Rule, disguised as Balance of Power, or in favor of a multi-polar drive for Eurasia integration?
- Meet The Finance Professor Exposing Rigged Markets One Academic Paper At A Time
Finance professor John Griffin, along with his doctoral student companion, Amin Shams, were the two academics that drew market-moving conclusions about bitcoin last year, while the digital currency was trading around $20,000. After sifting through 2 terabytes of trading data, they alleged that bitcoin was being manipulated by someone using the cryptocurrency Tether to purchase it. Tether remains a relatively little-known crypto, which is pegged to one US dollar. Part of its appeal is that it can “stand in” for dollars when necessary, according to Bloomberg.
Griffin and Shams authored a paper in June, with the results of their findings ultimately catalyzing many digital assets to move lower, despite the fact that the CEO of Tether publicly denied that its currency was used to prop up bitcoin.
Griffin works at the University of Texas at Austin, and has become quite an unpopular figure on Wall Street for similar work he has done in the past on ratings companies, the VIX and investment banks. In most of his findings, he claims that these well-known financial instruments and players are, in one way or another, rigged. And the professor seems to enjoy exposing precisely that: rigged, manipulated markets and shady players.
“I not only want to understand the world, but make it better,” he told Bloomberg.
Griffin’s work has become popular reading within the DOJ and the Commodity Futures Trading Commission, according to Bloomberg. These regulators – many of them low on resources, time and staff – welcome any additional help they can get (the SEC’s budget has forced it into a hiring freeze and the CFTC budget was cut by Congress in March of this year).
John Reed Stark, a former attorney in the SEC’s enforcement division, stated: “It’s incredibly helpful to have an expert of Griffin’s caliber.”
After spending the beginning of his tenure as a professor tackling little-known and inconsequential parts of the market, he started to feel the need to take on bigger tasks. In fact, he claims that part of the Bible spoke to him, when he read a passage that motivated him. It stated “Have nothing to do with the fruitless deeds of darkness, but rather expose them.”
His targets – like the VIX index, owned by CBOE Global Markets – say that he misreads data. In response to work that he did on the VIX, CBOE stated his “…academic paper’s analysis and conclusions are based upon a fundamental misunderstanding about how VIX derivatives are traded and settled.”
In 2017, Griffin’s work revealed that one or more market participants had been trading S&P 500 options in a way to artificially boost or depress the VIX, which would then have an impact on VIX futures. They argued that the volume of S&P 500 options would spike suspiciously at times, but only in the contracts that were used to help price the VIX. He claimed these trades simply didn’t make sense unless somebody was trying to manipulate the VIX.
And he’s not buying the explanation given to him by the CBOE: “There is no doubt we understand how the market works,” he said.
As a result, the CBOE has been sued many times over for this supposed manipulation. Meanwhile, riffin says he’s not going to work with any individual plaintiffs, but he does not rule out the possibility that he may work as a consultant in the future – if he can get paid.
Every time he publishes a new paper, he gets more attention. His paper on the alleged bitcoin manipulation has been downloaded more than 20,000 times and was cited by the SEC when the regulator rejected a bitcoin ETF that would have made it easier for retail investors to trade the crypto.
And as he continues to expose one fraud after another, Griffin – unlike Goldman – is truly doing God’s work.
- The New 'Disappeared'
Authored by Nina L. Khrushcheva via Project Syndicate,
From China to Saudi Arabia, today’s authoritarian regimes are suddenly and covertly abducting people, including well-known figures and high-ranking officials, to be detained or worse. It’s an old and effective tactic for silencing opponents, but those reviving its use may end up regretting their decision.
From the military juntas that ruled Argentina and Chile in the 1970s and 1980s to Joseph Stalin’s iron-fisted regime in the Soviet Union, dictatorships have a long history of making their detractors “disappear.” Today, this sinister practice seems to be making a comeback.
Under the military regimes in Chile or Argentina, a person might be tossed into the sea from a helicopter, never to be found. They might be killed and then burned beyond recognition or coated in lime, to accelerate decomposition, and buried in an unmarked grave.
In Stalin’s Soviet Union, someone could be picked up and taken to the Lubyanka (the KGB headquarters) or some other nightmarish facility at any moment. During the purges of the 1930s and later, members of the Communist Party were particularly vulnerable, and millions of Soviet citizens disappeared forever in prisons or the gulag.
Today, modern authoritarians are reviving such behavior, suddenly and covertly snatching people, including well-known figures and high-ranking officials, to be detained or worse. In many cases, the “vanished” do eventually resurface, but with an apparently transformed perspective on their past work or the government that detained them. Here, China and Saudi Arabia stand out – though they are by no means alone – for orchestrating a series of increasingly brazen abductions or vanishings of their detractors.
China was behind last month’s disappearance of Interpol President Meng Hongwei on a trip from France, where Interpol is based, to Beijing, where he also served as vice minister of public security. Meng’s abduction was particularly shocking, because many Chinese trumpeted his 2016 appointment to Interpol’s highest post – which made him the first Chinese citizen to lead a major global institution – as a sign that the country had finally arrived at the top tier of the international order.
Yet Chinese President Xi Jinping was willing simply to throw away that public relations victory. Eventually, it was announced that Meng had been detained and was being investigated for bribery. The decision, justified as part of China’s ongoing anti-corruption campaign – an endeavor that critics say is a cover for eliminating political figures disloyal to Xi – revealed an utter lack of regard, or even contempt, for world opinion.
In fact, Xi is something of a serial kidnapper. Since he came to power in 2012, all sorts of people – from small-scale book publishers in Hong Kong (including some holders of non-Chinese citizenship) to Chinese business leaders – have been covertly kidnapped and returned to China. After a long period of silence and seclusion, they emerged to renounce their past work.
That is what happened to Fan Bingbing, China’s biggest movie star, who disappeared last July, when her previously very active account on the Sina Weibo social media platform (China’s answer to Twitter) suddenly went silent. No one knew what happened, but it was assumed that the government had something to do with it, and businesses with which she had spokesperson deals cut ties with her.
Finally, Fan resurfaced earlier this month, issuing a groveling apology for having evaded taxes, for which she will now face massive fines. Tellingly, her statement included plenty of praise for the Communist Party of China, which she credited for her success as an actress. It was all depressingly familiar, recalling as it did the pathetic confessions of Nikolai Bukharin, the editor of the Communist Party newspaper Pravda, and others during Stalin’s purges.
Saudi Arabia has also executed a series of high-profile, politically motivated kidnappings. Last year, Saudi Arabia’s Crown Prince Mohammed bin Salman ordered the detention of Lebanese Prime Minister Saad Hariri, who was on an official visit to Riyadh. Hariri was isolated even from his bodyguards and forced to resign. Weeks later, and evidently enlightened to his captors’ satisfaction, he was permitted to return to Lebanon and resume his role as its elected leader.
Then, last week, Jamal Khashoggi, an exiled Saudi journalist, vanished after entering Saudi Arabia’s consulate in Istanbul to obtain a document confirming his divorce, so that he could marry a Turkish woman the next day. His fiancée waited at the consulate’s entrance; he never reemerged.
Khashoggi’s disappearance is further evidence of how little regard today’s authoritarians have for national borders when it comes to silencing their detractors. Precisely what happened to Khashoggi is still unknown, but Turkey’s government, led by President Recep Tayyip Erdoğan, has insisted that he was killed while in the consulate.
According to the Turkish authorities, two teams, totaling 15 people, flew from Riyadh to Istanbul on the day of Khashoggi’s appointment and left within hours. This, too, is grimly familiar to Russians: Stalin also had special assassination teams, one of which carried out the murder in Mexico of his archenemy, Leon Trotsky. Unsurprisingly, the Saudis have denied any wrongdoing. Khashoggi, they claim, left the consulate.
Russia’s own experience with government-orchestrated disappearances is not limited to the past. President Vladimir Putin’s regime has also been known to target detractors for elimination on foreign soil, as allegedly happened with the nerve-agent attack on the former Russian spy Sergei Skripal and his daughter Yulia in the United Kingdom in March.
The question is whether autocrats’ contempt for borders or sovereignty in silencing opponents is worth the cost. In the majority of the Western world, Putin is regarded as an outcast, Xi is flirting with a similar loss of credibility, and Prince Mohammed’s reputation as a reformer has been severely damaged, perhaps beyond repair. All of them may soon face a realization like that of Joseph Fouché, Napoleon’s police chief, after the abduction and sham trial of the Duke of Enghien: “It was worse than a crime; it was a mistake.”
- The Perfect Storm: Trade War Could Have "A Catastrophic Effect" On Toy Industry
The American toy industry is headed for turmoil as the Trump administration has placed tariffs of up to 25% on about half of all goods shipped from China.
Barbie dolls, Spider-Man action figures, and Transformers have so far escaped the wrath of President Trump’s new tariffs but could be affected if a full-blown trade war erupts next year between the world’s two largest economies.
According to the South China Morning Post, the latest round of trade tariffs has already affected children’s dress-up clothing, board games, and art item, with the US imposing a 10% tariff on those items last month. There are indications that these tariffs could rise to 25% on January 01.
If a full-blown trade war breaks out, it would cut nearly $10.8 billion out of the US economy and lead to a devastating loss of 68,000 American jobs, said Rebecca Mond, vice-president for federal government affairs at the Toy Association, a US-based trade organization.
She said tariffs would have a much more significant impact on China.
“About 85% of all toys sold in the US annually are produced in China.”
“China is an established manufacturing base. The infrastructure is there. It’s not a base that’s easily moved,” said Mond.
“Even with the increased duty rate, it’s still more expensive to bring manufacturing here in the United States than it would be to stay in China.”
A full-blown trade war has been forecast for 2019 by JPMorgan.
Mond said many toy companies are taking a wait-and-see approach for the remaining months in 2018. She added that shifting supply chains is not an easy task.
She added: “Are these tariffs going to last?” If they’re not, it certainly doesn’t make sense to change manufacturing for a short-term issue.”
Toys are one of the largest exports to the US from China, on a per annum basis.
Finished toys were the fourth largest product category imported into the US from China last year, accounting for $12.2 billion in products, according to the International Trade Commission.
Toys accounted for $24.3 billion in US sales in 2017, according to Euromonitor International.
The threat of a full-blown trade war could bring severe stress to toy producers at a time when the American toy industry is still recovering from the collapse of Toys “R” Us.
“The imposition of tariffs would come at a historically inopportune time for our industry considering the recent bankruptcy” of Toys “R” Us, Corinne Muray, director of government affairs at Mattel said in an open letter to the US Trade Representative in August, indicating that tariffs on children toys would be disastrous for the industry.
The Perfect Storm: The liquidation of Toys “R” Us “is already having a devastating impact on juvenile products and toy industries. Levying what is tantamount to an additional tax on the US industry at this time could have significant negative ramifications,” Muray added.
Mattel, the manufacturer of Barbie dolls and DC Comics characters, noted the company would have a tricky time rerouting its supply chains, and tariffs would ultimately punish the consumer by higher prices and reduced choice.
Last month, the Toy Association sent a letter to the Office of the US trade Representative indicating that Chinese producers have adapted to the “seasonal nature” of the industry, in which they make toys for six months of the year and produce other goods in the other half.
“Of even greater importance to US consumers, the US toy industry has invested in ensuring that Chinese suppliers produce toys that comply with strict US safety standards that protect America’s children and families while at play,” the Toy Association said in its letter. “Establishing a new manufacturing base elsewhere could thus force companies to move hastily (and at significant cost) to identify and educate new manufactures of these requirements and develop relationships with them to ensure that toys are, in fact, compliant.”
Hasbro CEO Brian Goldner spoke to analysts about shifting production away from China, but he made it clear that the shift would be to other low-wage countries — not back to the US. He said it would take many years to shift a small fraction of its supply chain in China elsewhere.
“There is absolutely no way that Hasbro can shift from China to another low-cost country overnight,” said Lutz Mueller, CEO of Klosters Trading, an expert on the industry. “They do not have infrastructure or supply chain in place.”
Lutz said small to medium-sized toy companies do not have the financial mobility to rework supply chains out of China; they could quickly go out of business if a full-blown trade war develops.
As for the mega toy companies, Mattel was already struggling before the Toys “R” Us implosion. Its stock is down -5.59% YTD with short-interest growing to about 16.40%.
Lutz also said Mattel would not file for bankruptcy, but a full-blown trade war would revive talks about it being acquired by its rival, Hasbro.
“Mattel is already teetering on edge,” he said.
“Hasbro has been trying to buy it for a while. Whether it can survive as an independent company with tariffs is a question mark.”
Here is how the story could play out: Multinationals reworking supply chains from China would likely disrupt trade flows. Already, global growth momentum is slowing from trade uncertainty and will continue into 2019. What comes next you ask? Well, a global growth scare sometime next year, and it could be just enough to reprice US risk assets.
As for the toy industry, if a full-blown trade war breaks out in 2019, like JPM, thinks, then it could spell disaster for yet another industry that is struggling to survive in President Trump’s trade war. To note, America’s farmers just received a bailout. Storm clouds are gathering.
- America, From Sears To Google (Or Why Silicon Valley Is Set Up For "The Mother Of All Government Smack-Downs")
Authored by Peter Zeihan via Knowledge Leaders Capital blog,
Today’s story begins with the once-behemoth that is the American retail firm, Sears. In the last week of September Sears’ stock dipped below $1 a share, reducing the company’s market value below $100 million. Sears may still linger on a bit, but when a big firm falls into penny-stock territory, its outright liquidation is a foregone conclusion.
Sears (originally Sears, Roebuck and Company) is the iconic store of the American modernization experience. As a relative latecomer to the world stage, Americans got in on the industrial revolution significantly after most Western European nations. The vast majority of Americans lived on farms until late in the 19th century. Urban Americans had access to manufactured goods, but in rural regions most people made their own clothes and tools – or tapped the expertise of craftsmen in local towns. Most of these in-town purchases were managed via general stores where managers, knowing farmers had no alternatives, gouged on pricing, credit terms and selection.
Enter Sears.
Sears sourced manufactured goods from American cities (and abroad) and built a distribution network deep into every nook and cranny of the American territories. Starting with luxury goods in 1886 and rapidly moving into everyday products, by the turn-of-the-century Sears’ 500+ page mail order catalogues had become ubiquitous not just in cities, but in farmhouses. It was Walmart and Amazon all in one. Sears completely overhauled what Americans considered to be centuries-old economic norms and pushed cheap, high quality manufactured goods into every single home. Sears quickly became America’s largest firm and largest employer. Quite unwittingly, Sears started the United States on the long path to urbanization, the industrial age, and the destruction of the local retail store.
(Incidentally, when the British Empire brought its manufactures to German lands, the economic dislocation helped start a German civil war. So anytime you think Americans can’t handle transformative economic stress, please try to keep it in perspective.)
Sears’ near-death today is part of a similar economic transformation. Just as Sears was a physical manifestation of the Industrial Revolution, Sears’ end is part of the Digital Revolution. Gathering, processing and distributing information has been the bugaboo of corporate systems as long as there have been firms with a reach further than they could see. The steamship and telegraph obviously helped, but managing anything big first and foremost requires an information system.
The Digital Revolution thus far has reduced the cost of storing information to nearly zero. In the early 1980s storing a gigabyte of data cost roughly $500,000 and I think that’s without accounting for inflation (economists and techies don’t always have the best relationships when it comes to data comparisons). Today storing that same volume of data costs roughly three cents. Information transfer costs follow a similar path (part of why all publicly available email clients are available at no-cost).
With information now being in effect free, the biggest restraint on industrial expansion became … humans. Someone still needs to analyze and distribute the data, and then check up on the results. Humans in the data chain have become the general store managers of our time, gatekeepers to the consumers that escalate prices. Enter algorithms, designed from day 1 to remove humans from the data management equation. With the elimination of those pesky human barriers, the Digital Revolution reached out into the real world of sales and distribution and killed the job-destroying monster that preceded it. That’s remade how we design, order, manufacture, transport and warehouse goods. It allows us to instantly transmit architectural plans, military orders, payroll, and cat videos as well as get two-day (or less) deliveries for free.
The problem with algorithms is twofold. First, we have yet to figure out how to program in value judgments and ethics. Second, anything that introduces a hiccup into the information flow – say, fact-checking – increases the cost to something above zero. Just as Sears’ systematically cut out costs, algorithms and the human decision-makers who design and manage them see the human element as a block on progress. Something to be ruthlessly excised.
Photo courtesy of Peter Zeihan
That has set up Silicon Valley for the mother of all government smack-downs.
Let’s divide the American political spectrum into four rough blocks: the center-left, center-right, populist-right, and populist-left – and then look at how their view of Silicon Valley has radically shifted during the past three years.
America’s center-left originally adored Silicon Valley because they were corporate titans with social agendas that matched the center-left’s general political views – particularly when it came to social policies on issues such as education, gay rights, and multiculturalism. The center-left – epitomized by politicians such as Chuck Schumer and Diane Feinstein – saw Silicon Valley as remaking corporate America from within.
But as information transmission became free, this happy marriage collapsed. Silicon Valley resisted anything that might infringe upon information flow, including flows that harmed issues the center-left valued. For example, Russian attempts to spawn race riots or shift the direction of a presidential campaign, or the ISIS live-streaming of executions, or disinformation campaigns blaming train derailments on Hilary Clinton after she lost the election. Consequently, the center-left hasn’t simply dropped its support for the Valley, it now sees the Valley as a threat to democracy itself. The Valley’s chronic misogyny in the age of MeToo doesn’t help the Valley’s case with the center-left either.
America’s center-right – represented in Washington by folks such as Paul Ryan and Mitch McConnell – similarly were wedded to Silicon Valley’s aura. In the Valley the center-right saw a heavenly manifestation of what could be achieved with American know-how and new technology and a spirit of entrepreneurship in a low-regulatory environment.
This happy marriage has also ended. At first it was about politics: Valley CEOs started to get a bit too public with their enthusiasm for left-leaning issues, and charges erupted that some in the Valley were censoring right-leaning political viewpoints on platforms they controlled. But the center-right’s concerns soon deepened to something much more fundamental: much of the Valley committed to never working for the American government – most notably the intelligence community and the Defense Department. But Valley services remained fully available for sale so their work could benefit other government’s programs.
The idea that the political liberalism of Silicon Valley is better served by allying with Xi Jinping’s dissident eradication systems or Vladimir Putin’s systematic repression than the U.S. military requires mental contortions the center-right considers unfathomable. The center-right now doesn’t merely question the Valley’s ideology or even its patriotism, but its sanity. The most pro-business part of the American political spectrum is now firmly anti-Silicon Valley. Concerns about cybersecurity and the regulations those concerns will likely spawn is only the icing on the cake.
But as much credence as there is to the points of America’s centrist politicians, the concerns of the American populists are actually more valid.
The populist right started out furious with Silicon Valley. Whether the politician is Ted Cruz or Donald Trump, the Main Street verses Wall Street discourse is not only a powerful one, it is broadly accurate. The current manifestation of Silicon Valley is fundamentally designed to remove as much human labor from the economy as possible. It – statistically – is the greatest job-destroying machine in American history.
The populist left is, if anything, even more angry at the Valley. Algorithms and robots don’t pay taxes, but their profitable outputs still accrue. This concentrates the income of what used to benefit human laborers to the operators and designers back in San Jose. Politicians like Bernie Sanders and Elizabeth Warren are fundamentally correct when they assert this is a leading reason for America’s deepening economic inequality.
All four factions are correct.
All four factions are edging toward policies that would revoke the Valley’s unlimited license via some sort of constraining regulation.
Photo courtesy Peter Zeihan
Tesla is probably in the greatest danger. Technically, Tesla is a car firm, but its valuation and finance-raising systems mirror Silicon Valley rather than Detroit. That gives it access to ridonkulous amounts of cash – something necessary to pioneer fundamentally new technologies – but lands it with the metrics of a conventional automotive firm. Therein lies the rub.
When it comes to evolving ethics in a dynamic regulatory environment, most investors go with what they know. They know Tesla is a badly-run company that has yet to figure out how to move metal around its own factory floor. They know Tesla has almost never met a production goal. They know Tesla cannot break into the mass market (the cheapest available Model 3 is at fifty grand, with the subsidy). They know Tesla’s technology and materials science is insufficient to its goals. They know Tesla faces stiff, rising competition from more experienced market players.
They know Tesla is led by a CEO whose social media strategies mirror a broadly-disliked president. They know Tesla’s CEO has bet the firm’s future on a political ideology that provides subsidies that will not last. They know Tesla’s CEO sees no problem cross-subsidizing the firms of family members. And they know Tesla’s CEO has settled with the SEC on charges of stock manipulation which cost the firm that has never made a profit $20 million. There is no shortage of preexisting business norms and regulations that could bring Tesla down. Should the investment community ever believe Washington is coming for Silicon Valley, they will ditch the weak players first. It doesn’t get weaker than Tesla – ergo why the short-selling of Tesla is already so intense.
Facebook comes in second, and not simply for the role they’ve played in Russiagate. The firms’ unfettered and enthusiastic raping and selling of customer data has not simply shown no ethical constraints, but we now know Facebook actively markets its user data to scammers. Not via the web – dark or otherwise – but by sending sales reps to scammers’ convention and closing deals in person. The public trust has been lost. The question in my mind isn’t will Facebook be eclipsed and displaced by a rival, but will there be prison time for some of its executives?
Twitter may have a brighter future. Unlike Facebook, TeamTwitter admitted the role it played in Russiagate fairly early on and has taken steps to roll back the damage. Such public admissions combined with a sense of genuine regret – or at least a reasonable digital facsimile of regret – stand in stark contrast to Facebook whose grudging, plodding steps have the feel of a six-year-old who thinks moving a single pair of underwear to the hamper has cleaned up his room and thus should be allowed to go back outside to play. Are Twitter’s actions and contrition deep and fast enough? That’s a political question, but I give points for effort.
One likely path forward in regulation is the modification of Section 230 of the Communications Decency Act. To make a very long and technical legal explanation short, Section 230 stipulates information technology platforms are not publishers, and so are not responsible for any content they pass along. Without 230 we’d not have an Internet economy since all our infotech platforms would be liable for the accuracy of everything in every web page, blog post, pop-up ad and email.
To date, there have only been three carveouts: copyright infringement, child pornography and sex trafficking. Silicon Valley fought those carveouts tooth and nail, asserting first-amendment rights issues, but mostly being concerned about costs. The hilarity of deliberate inaccuracies currently punctuating American political information systems – Russiagate being the prime example – are pushing many political factions to consider a fourth carveout for foreign election interference. And while with some very skilled coding an algorithm can be taught to look for prostitutes, I’m guessing that determining whether an ad that slams or celebrates Hillary Clinton or Donald Trump is accurate will require the sort of judgement call only a human can make. And humans don’t work for free.
Amazon probably faces less pressure, and probably has more time. Yes, Amazon Prime and related subsidiaries are a very visible part and parcel of the whole job-destroying ethos that motivates Silicon Valley. But three issues pop up:
First, the damage to American retail is largely done. A stiff roll-back at this point would probably be counterproductive. And this is hardly the first American retail revolution: general stores to Sears to Walmart to Amazon. At each step the process is more capital intensive but less labor intensive with slimmer margins. Where do you draw the line? Do you draw a line? (A change to how Amazon is taxed, however, is an excellent idea).
Second, Amazon would operate in the red if not for a single unit that has nothing to do with getting a hairdryer to you: Amazon Web Services. AWS is the data management portion of Amazon which is wrapped up in nearly every data flow for every business in the country. It is well-run, faces competition, and has next to nothing to do with the retail arm. Splitting the two so that the wildly-profitable AWS cannot cross-subsidize the barely profitable (and until recently, unprofitable) Amazon Retail makes a wildly great deal of sense for all players. It would certainly preserve the value-added portion of Amazon that generates lots of new sources of economic activity rather than gutting old sources.
Third, Amazon is everywhere. I don’t say this to imply U.S. government entities cannot bring it down, but instead that Amazon’s retail activities are in every American county, complete with dozens of distribution centers and tax relationships. Should the regulatory floodgates open the result will be a thick, self-ambulatory tangle of regulations at the city, country, state and national level. It will be a rancid mess that Amazon leadership will be able to exploit to buy time and – most importantly – to shape in a way to mitigate end-impacts upon the firm.
Of the big boy digital firms, that leaves Google, whose recent actions put it into a category all its own:
Recent defections from Google’s development teams have exposed the firm’s work on a project they call Dragonfly, a search engine product for the Chinese market. Allegedly, Dragonfly tags certain search terms the Chinese government chooses that it thinks might indicate dissident behavior such as “how do I get a Canadian visa?” or “what happened in Tiananmen Square in 1989?” or “what is Falun Gong?” It then packages the request with other search data on the person in question, complete with IP and physical addresses and phone numbers and forwards the information on to the Chinese state. It’s a degree of privacy violation and government monitoring of civilians that would have disgusted Orwell.
If – and I emphasize the word “if” because I do not have a Dragonfly-style program covering Google HQ – Dragonfly is real, Google is in serious trouble. Collaborating with a dictatorship that is sliding into a cult of personality so complete Hitler would have salivated over the program violates every ethical and political norm of every political faction in the United States. Anything that puts Elizabeth Warren and Ted Cruz on the same side during Senate hearings should get everyone’s attention. And Google’s executives’ refusals to confirm or deny Dragonfly’s existence while under oath before Congress tends to shift my thinking that this is less bureaucratic bungling and more greed so all-consuming it constitutes treasonous behavior. It is exactly the sort of massive corporate miscalculation that has triggered catastrophic government crackdowns on major American firms in the past. The breakups of Standard Oil and Bell come to mind.
And it would happen under President Donald Trump. Make no mistake. Trump is no longer part of the party of the businessperson. Things in America have changed in politics too…
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