- NATO Flounders In The Middle East
NATO Flounders In The Middle East
Authored by Brian Cloughley via The Strategic Culture Foundation,
Never reluctant to poke its nose into regions where it has no commitments or relevance, the Nato military alliance is stumbling round in Iraq, the crucible of Middle Eastern disruption. Following the U.S. drone-strike killing of Iranian General Soleimani and the deputy commander of Iraq’s Popular Mobilization Forces, Abu Mahdi al-Muhandis, Nato’s Secretary General, Jens Stoltenberg, came out predictably with expressions of support for the assassinations.
Nobody in the West (and probably precious few elsewhere, other than Iran, if numbers could be independently ascertained) could in any way be supportive of Soleimani and the barbarous forays he directed that resulted in the deaths of so many innocent people. He deserved to be brought to justice — which does not mean that it was morally defensible or legally permissible to kill him.
And please take a moment to think about the driver of the car he was in, who was also blasted to bits. What possible justification could there have been for killing him? It couldn’t be claimed by even Pompeo or Trump that he had been planning to attack America or Americans. This pawn on the board of revenge was killed by a missile fired by a U.S. attack drone. And he will pass out of memory as quickly as the flash of the explosion that blew him apart. But in terms of morality and international law he is just as important as any general, and responsibility for his death lies firmly at the door of the White House.
The obvious course of action in the case of Soleimani would have been to institute proceedings for an alleged international criminal to be brought to the attention of the International Court of Justice (ICC), but we can forget that, because the United States “is not a party to the ICC’s Rome Statute and has consistently voiced its unequivocal objections to any attempts to assert ICC jurisdiction over U.S. personnel.” The fact that the ICC “investigates and, where warranted, tries individuals charged with the gravest crimes of concern to the international community: genocide, war crimes, crimes against humanity and the crime of aggression” is objectionable to the Washington Establishment because it is possible that U.S. citizens could be investigated.
But Stoltenberg, a supposed internationalist, ignores the ICC (which is recognised by only 14 of Nato’s 29 members), and all that he could come up with after the killings was the absurd adjuration that “Iran must refrain from further violence and provocations.”
The violence was a U.S. drone strike. The provocation was a U.S. drone strike. And the fact that Iranian and Iraqi citizens were butchered in Iraq by a drone-fired missile on the orders of a Nato member country appears to mean nothing to the head of that alliance.
Stoltenberg probably doesn’t remember that, as pointed out by a perceptive analyst, “NATO is the only organization in modern history that has had significant involvement in the arrest of people indicted by an international criminal tribunal; NATO was instrumental in assisting with arrests for the International Criminal Tribunal for the former Yugoslavia” which in the 1990s was a major development. Unfortunately, Nato has moved further and further away from international conventions and legal requirements — as abundantly demonstrated by its catastrophic war against Libya in 2011 — and has been drawn ever closer to the go-it-alone interventionist style of its most powerful member state.
And now President Trump is calling the shots around the world, which includes demanding that Nato become more deeply involved in the festering quagmire of destruction and despair that the U.S. has created in the Middle East.
Following a telephone call between Trump and Stoltenberg on January 8, Nato issued a statement that “The President asked the Secretary General for NATO to become more involved in the Middle East. They agreed that NATO could contribute more to regional stability and the fight against international terrorism. They also agreed to stay in close contact on the issue. NATO plays a key role in the fight against international terrorism, including through training missions in Iraq and Afghanistan and as a member of the Global Coalition to Defeat ISIS.”
What exactly does Trump mean by “more” involved in the shambles he has expanded in the Middle East? More troops? More drones? More extermination of innocent people who happen to be earning their living by driving a car?
Trump’s emphasis became clearer the day after he spoke with Stoltenberg, when he told reporters at the White House that “I think that NATO should be expanded and we should include the Middle East, absolutely. We can come home, largely come home and use NATO. We caught ISIS, we did Europe a big favour.” In addition to the staggering irony that, as noted by Reuters, the murdered Soleimani “played a major role in the fight against Islamic State militants in the region”, Trump “joked that the organisation could be called NATO-ME, or NATO plus the Middle East. He said he floated the possible name to NATO Secretary General Jens Stoltenberg.”
Nato headquarters made no mention of the cretinous “NATO-ME” attempt at humour (if indeed it was that) which is not surprising because some Nato countries were taking action to secure the safety of their troops who Trump’s assassination strike had placed in greater jeopardy of their lives — without informing Nato or any individual member with troops in the region that there was about to be a major escalation in violence in the Middle East.
On January 7 it was reported that some Nato countries were withdrawing and relocating troops, with Germany moving 30 of its 130 personnel out of the country and Romania “relocating” all of its 14 soldiers. Of Croatia’s 21 troops, 14 were moved to Kuwait and seven returned home. Latvia and Denmark sent their troops to Kuwait, but Britain, with Nato’s largest non-US contingent, of some 400, did not announce any action to safeguard its personnel, and prime minister Boris Johnson unconditionally supported the killing of Soleimani, saying “we will not lament his death.”
Nobody expected Johnson or any other western politician to say they regretted Soleimani’s killing, and it was a typical Johnson comment — but there are reasons why Johnson constantly supports Trump, not the least of which is the British economy. (Morality and international law are irrelevant.)
When Britain leaves the European Union it will have to negotiate trade arrangements with many blocs and countries, not the least being the United States. There is therefore no possibility that Johnson would boldly go where many have gone before, and annoy Trump by contradicting him, because the petulant spiteful Trump would immediately refuse to engage in trade discussions.
Nato is on the UK’s back burner, and if supporting Trump’s policies about the Middle East and Nato is politically necessary, then so be it. Johnson agrees with Stoltenberg’s statement that “For me it’s no surprise that the United States is calling for Nato to do more, because that has actually been the message from the United States for a long time. . . We are looking into what more we can do.” But it is most unlikely there could be a Nato consensus about continuing a presence in Iraq, and if Trump demands additional military commitment by Nato countries, as seems apparent from his statement that “We can come home, largely come home and use NATO” in the Middle East he will put Stoltenberg and Nato nations’ leaders in an impossible situation.
Nato is floundering in the Middle East, and the best thing it could do would be to withdraw its military forces from the region. They have achieved nothing, and the future is bleak, to put it mildly. Get out now.
Tyler Durden
Wed, 01/15/2020 – 02:00 - Saudi Arabia Carried Out Record Number Of Executions In 2019
Saudi Arabia Carried Out Record Number Of Executions In 2019
Saudi Arabia’s shortage of executioners didn’t stop the kingdom from carrying out a record number of death sentences in 2019, according to the non-profit Reprieve, which monitors how KSA handles capital punishment.
According to figures provided to ABC News, KSA executed 184 people last year, including 90 foreign nationals. The most common crime committed by the prisoners who were put to death was drug smuggling (82 were executed for smuggling narcotics) while 57 were executed on murder charges.
That’s compared to a total of 22 executions in the entire US.
Notably, KSA has seen a rise in killings since 2015, when Reprieve first started keeping track.
In 2014, 88 people were executed, with that number nearly doubling to 157 executions in 2015. Executions stayed at around that level until last year, when the state killed 35 more people than they had in 2018.
As we reported at the time, the Saudis killed 37 people in a single day, including a student who was supposed to be on his way to college in the US, which prompted Rep. Rashida Tlaib to lash out at the kingdom.
It’s not publicly known how many prisoners are currently on death row in Saudi Arabia. However, among those awaiting “imminent execution” are Ali al-Nimr, Abdullah al-Zaher and Dawood al-Marhoon, all of whom were sentenced to death for their roles in anti-government protests during the Arab Spring, nearly a decade ago.
Ali al-Nimr, Abdullah al-Zaher and Dawood al-Marhoon, pictured above
Maya Foa, Reprieve’s director, called on the US and UK to call out the kingdom’s record of executions in the “strongest possible terms,” arguing that that international pressure “can make a difference.”
While that may or may not be true, we imagine neither country would be willing to jeopardize such a mutually beneficial relationship.
Even evidence that Saudi officials were involved in orchestrating 9/11 couldn’t do that.
Instead, the jump in executions will inevitably be used by human rights advocates to bash Crown Prince Mohammad bin Salman, who has tried to enact liberal reforms like allowing women to drive while aggressively eradicating any whiff of criticism (for an example see what happened to dissident journalist Jamal Khashoggi).
Tyler Durden
Wed, 01/15/2020 – 01:10 - Globalization – The Most Ancient And Ever-Failing Utopia
Globalization – The Most Ancient And Ever-Failing Utopia
Authored by Marin Guentchev and Hristo Guentchev via The Epoch Times,
Today, many regard the America First doctrine as being treacherous to America’s allies. Actually, the opposite is true. This is why…
Globalization—A New Term for an Ancient Idea
We still remember the eloquent speaker coming to our school in what was at that time communist Bulgaria. He would argue that internationalism—a concept that seeks to unify all nations—was inevitable. In the mid-1980s, it became clear that the only inevitable outcome of internationalism was failure.
Around the same time, however, Theodore Levitt, writing in the Harvard Business Review, brought another term into use—”globalization.” To us Eastern Europeans, its resemblance to internationalism was, and still is, very alarming.
[Note: Despite some differences in definition, the terms imperialism, internationalism, and globalism share one similarity—they all seek to ultimately create a homogeneous humanity by eliminating territorial fragmentation and lifting national boundaries.]
Today, proponents of globalization argue that it’s a new and unstoppable trend. However, history tells us that the drive toward a homogeneous humanity is perhaps the most ancient, universal, and subconscious utopia that people have sought to achieve.
So far, every attempt to realize this utopia has failed miserably. We need to recall, for example, the Babylonian Empire of Nebuchadnezzar II, Greece under Alexander of Macedon, the Islamic Caliphates, Napoleon’s France, or the USSR.
Today, nation-states still dominate the world stage. Why? Why does the initial success of globalization always end with a return to a fragmented world?
Fragmented Humanity—A Judeo-Christian Concept
The concept of a fragmented humanity is deeply rooted in the Western worldview. The Biblical story of the Tower of Babel—present in both Judaism and Christianity, but not in Islam, Buddhism, and Hinduism—describes how God splits up a monolithic humanity into different linguistic groups and spreads them across the world.
Indeed, with the emergence of language and geographical separation, humanity acquired the essential instruments of group construction, leading to the later rise of nations. The fundamental point here is that—in contrast to other major value systems—Judaism and Christianity view a fragmented humanity as part of a Divine plan.
Benefits of Fragmentation
The main advantage of a fragmented world is that it offers a competitive environment for economic, social, and juridical systems—a driving force of human progress. When there is rivalry, especially within a common domain that allows for the exchange of goods, knowledge, and skills, the results can be stunning (e.g., Ancient Greece, Renaissance Italy, and pre-Bismarckian Germany).
The fundamental rejection of a homogeneous humanity is probably one of the reasons why Jews and Christians have produced the most competitive and prosperous period of human civilization. As German sociologist Max Weber wrote in “General Economic History”: “This competitive struggle [among the European nation states] created the largest opportunities for modern western capitalism.”
Another benefit of fragmentation is that it limits inequality. A certain level of inequality promotes economic growth; yet, excessive disparities may lead to social unrest and revolutions. Price’s Law, which predicts the distribution of wealth in society, states that the square root of a population owns 50 percent of the total output it produces. In other words, inequality is a direct function of the size of the population: The more populous a community, the greater the interpersonal disparities within it.
Fragmentation of the world may also prevent conflicts by creating a more stable global political environment. A good example is the impact of territorial unification and fragmentation in European politics.
German historian Ludwig Dehio, in “Gleichgewicht oder Hegemonie,” saw the five hegemonic power-building events in the last five centuries in Europe—Spain of Philip II, France of Louis XIV, Napoleon’s Empire, Germany of Wilhelm II, and the Third Reich of Adolf Hitler—as a direct result of the political instability prompted by the removal of borders and unification.
The more profound point here is that, in the long term, fragmentation along national borders can actually promote economic progress and political stability, whereas globalization ends up hampering socioeconomic development, increasing inequality, and ultimately provoking large-scale conflicts.
America First – Snatching Victory from the Jaws of Globalization
Currently, it appears that global elites are using the resources of the United States and the European Union to pursue globalization by promoting liberal-left values.
The America First doctrine is a definite sign that President Donald Trump has rejected globalism and embraced economic nationalism. This policy not only strengthens the United States but also sends an explicit message to its allies: “The globalist agenda is dead. Start caring about your own countries!”
Now America’s allies—confronted with this new reality—are forced to accept that their own countries and citizens will have to come first—an encounter that will make them more self-reliant, less globalist, and ultimately stronger.
Proof of the success of this policy is the recent unprecedented increase in military spending of almost all European NATO member states.
Conclusion
Recent political events—the 2016 Brexit vote, the last U.S. presidential election, the 2019 re-election of the Law and Justice Party in Poland, and Boris Johnson’s landslide election victory in the UK—reveal that this latest attempt at globalization is losing ground.
If history has taught us anything about globalization, it’s that once on the retreat, it can’t be retrieved—a development that’s tragic for the “progressive” political commissars, but beneficial to ordinary people.
Tyler Durden
Wed, 01/15/2020 – 00:25 - Israel "Grounds" Tesla's Autopilot
Israel “Grounds” Tesla’s Autopilot
Israel’s Ministry of Transport and Road Safety is worlds ahead of the NHTSA and NTSB in the United States.
The Israeli organization has decided to “ground” Tesla’s Autopilot feature and has told Tesla that it must notify the country’s customers that they are not allowed to use the car’s autonomous capabilities, according to Israeli publication CTech.
The autonomous driving system was first launched in 2013 and, while only offering limited capabilities, was sold to the world in a presentation where Elon Musk alluded to being able to sleep or watch a movie while driving. Musk has also demonstrated the feature while not abiding by the company’s own rule of needing to maintain the driver’s hands on the steering wheel.
This has led to a litany of accidents over the last several years, many of which we have documented on this site, involving Autopilot.
(Source: @Keubiko Twitter) But the ban in Israel looks to be part of a wider rule application. “Since autonomous driving has not been approved in Israel, the ministry asked the company to make sure its customers are aware of the limitation,” Calcalist reported.
Tesla has reportedly received a license to import just 20 cars to Israel in 2020, according to The Jewish Press. The restriction is due to the company not meeting all local bureaucratic licensing criteria, the most important of which is maintaining a local repair center (who would have thought?).
While the ban may be part of a wider application, perhaps the NHTSA could learn some “ground-up” common sense from Israel’s Ministry of Transport and Road Safety regardless. If it hasn’t been tested and has been sold as something as it isn’t – why let American citizens beta test these features on open roads full of innocent people?
And further, how can you stand idly by and ignore the fatal accidents that continue to occur?
We digress…
Tyler Durden
Wed, 01/15/2020 – 00:05 - How The US Runs Iraq
How The US Runs Iraq
What ever happened to Iraq? Is it not an independent country with a democratic government thanks to the 2003 US invasion? So says Washington.
The murder of senior Iranian military commander Qassem Soleimani suddenly shone a strobe light on ‘independent’ Iraq, and what we saw was not pretty.
Welcome to the new Imperialism 101.
Iraq’s population is estimated around 39 million. The pre-war Iraq of 2003 was broken into three parts by the US-British invasion: the Shia majority; Kurds in the north; and Sunnis, with scatterings of other ethnicities. Iraq remains fragmented into hostile groups.
Its Shia are confusingly allied to the US and Iran. The killing of Maj. Gen. Soleimani by the Americans has thrown this alliance of convenience into confusion. Iraqi Kurds are close to the CIA and Israel’s Mossad intelligence. The Sunnis are left adrift, without any foreign patrons except for other feeble Arab states.
The US maintains a modest garrison of 5,000 infantry in Iraq and 3-5 air bases, as well as the gigantic fortified US Embassy in Baghdad’s heavily guarded Green Zone which contains one of the world’s largest CIA bases. Angry mobs demonstrating in front of the embassy triggered off the chain of events that led to Trump’s murder of Gen. Soleimani. That an impeached president should be murdering foreign figures is a question that Congress must ask.
Before he was murdered, Osama bin Laden called this monster Baghdad embassy and its twin in Kabul, `crusader fortresses.’ That is indeed their role, and to serve as the nerve center for all Mideast operations by the US. Iraq enjoys some of the world’s largest oil reserves. Where the profit from Iraq’s mammoth oil exports go remains a closely guarded secret.
Combined with Saudi Arabia – also controlled by the US – Iraq gives Washington control of the bulk of Mideast oil. The US no longer relies on oil from the Mideast, being self-sufficient – at least for now. But dominating the Mideast gives the US huge influence over China, Japan, India, and Europe, all of whom import oil from there. This is the main pillar of US world power and the supremacy of the dollar.
Returning to Iraq, Washington has imposed an air exclusivity zone there. Real control of flat, largely barren Iraq comes from the air. US war planes based there and in Qatar can blast anything that moves in Mesopotamia. Imperial Britain ruled Iraq the same way, using the RAF to smash all opposition to the British-installed puppet ruler in Baghdad. In the 1920’s Churchill even authorized the RAF to use poison gas against rebellious Iraqi Kurds (as well as Afghan Pashtun tribes).
US-ruled Iraq is not allowed to have a real air force, only a handful of light aircraft. The same ban applies to Afghanistan. Iraq’s so-called army, a mob of unruly militias of the type the Ottomans used to call ‘bashi-bazouks,’ is of little military value though partly equipped by US weapons. They are increasingly being attacked by US warplanes.
The US really runs Iraq from three large air bases that were the target of the recent bloodless Iranian missile attacks. Iraq’s current US-approved prime minister Abdul-Mahdi and its feeble parliament have voted for the ouster of all US forces from Iraq. Good luck to them. Washington will likely ignore Iraq’s supposedly ‘democratic’ government and continue to act as the sultan of Iraq.
Iraq has become the central military base and inexhaustible oil reservoir for the US that was envisaged by the Bush administration and its neocons. That is a major step in the total US domination of the Mideast and its energy resources.
Israel has achieved its long sought goal of removing Iraq from the confrontation over Palestine. With Egypt under a US-imposed dictator, that leaves only demolished Syria to stand up to Israel. The Saudis are gleefully stabbing their ‘brother’ Arabs in the back, as they always have done.
Never in the past half-century have we seen the Arab states so pathetically feeble. Never have we seen Israel so strongly guiding US Mideast policy, including the murder of Gen. Soleimani.
Tyler Durden
Tue, 01/14/2020 – 23:45 - Major Winter Storm Threatens Millions In Northeast This Weekend
Major Winter Storm Threatens Millions In Northeast This Weekend
A powerful winter storm is expected to dump snow and ice across the Midwest and Northeast this weekend.
Early indications suggest wintry precipitation is possibly Saturday as the winter storm transitions from Midwest states to the Mid-Atlantic and Northeast, while heavy snow could fall in some areas.
We noted on Monday how the Global Forecast System (GFS) data shows Old Man Winter will return to the Northeast on Friday with average temperatures from Washington, D.C., to Boston around 25 to 34 degrees. This could make conditions ripe for a snowstorm over the weekend.
The National Weather Service (NWS) is projecting that snow and ice could be seen on early Saturday for Mid-Atlantic states, with mixed precipitation in the afternoon. The further north, the higher the probability of significant snowfall.
“Although confidence continues to increase on the potential for a winter storm for parts of our area (above average confidence for this time range, in fact), it is still too early to get into specifics on timing and amounts of different precipitation types given … this is still 4 to 5 days away,” NWS said Tuesday.
Henry Margusity, a meteorologist for Weather Madness, provides several weather charts that indicate the storm could quickly impact tens of millions of folks in the Mid-Atlantic and Northeast this weekend.
Margusity provides another chart showing the winter precipitation could start early Saturday morning in the Baltimore–Washington Metropolitan Area and move up the Interstate-95 corridor in the Northeast through Saturday afternoon into the evening.
“As you can see on the image above, this will be a widespread snow and ice event covering many states from the Plains to the Northeast. The snow will be in general 1-6 inches but locally 8-9 inch amounts will occur. Ice is probably marginal in this storm as the snow will change to just rain in the changeover locations shown in pink on the map,” Margusity said.
Tyler Durden
Tue, 01/14/2020 – 23:25 - Shocking Number Of Young Americans Say Other Countries Are Better
Shocking Number Of Young Americans Say Other Countries Are Better
Authored by Mary Rose Corkery via CampusReform.org,
Over a third of young Americans do not believe that the United States is the greatest country in the world.
In a recent Pew Research poll, 47 percent of Democrat and Democrat-leaning Americans between the ages of 19-29 prefer other countries over the U.S, while 19 percent of Republicans within the same age group agree.
The poll also showed that 36 percent of this age group say other countries are greater than the U.S.
The survey was conducted as part of a larger study by the Pew Research Center in September about partisanship as “the dividing line in the American public’s political attitudes.”
The findings showed that within the age group of 19-29, 47 percent of adult Democrat and Democrat-leaning individuals believe that there are other countries better than the United States, while within the same age group, 19 percent of Republican and Republican-leaning individuals agree. That leaves only 53 percent of young Democrats who prefer the United States to any other country, while 81 percent of young Republicans favor America.
The same survey found 36 percent of all young Americans within the ages of 19-29 believe other countries are better than the U.S, leaving only 64 percent who believe in American exceptionalism.
When the same age group was asked their opinion about America being a military superpower, 55 percent of Democrats in the same age group responded that they wouldn’t mind if other countries could be as militarily powerful as the U.S. Even a sizeable percentage of Republicans of the same age group agreed, with 38 percent agreeing with their Democrat counterparts.
Tyler Durden
Tue, 01/14/2020 – 23:05 - SoftBank Chairman To Help Oversee Construction Of New Indonesian Capital
SoftBank Chairman To Help Oversee Construction Of New Indonesian Capital
Indonesia has assembled a star-studded team to oversee the construction of its new capital city on the island of Borneo – a move that’s intended to alleviate some of the pressure on rapidly-sinking Jakarta.
Indonesian President Joko Widodo, known to millions as Jokowi, has selected Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan, the man whom the NYT recently described as the Arab world’s most powerful ruler, comparing him favorably to Saudi Arabian Crown Prince MbS, to chair the committee responsible for overseeing the construction of the capital.
Also joining the board: Former UK PM Tony Blair, and – get this – SoftBank Chairman and founder Masayoshi Son.
Indonesia is counting on a mix of private and state-owned entities to bear about 80% of the cost of building the capital, a “cost” that has been estimated at $34 billion. The city’s precarious situation was highlighted again last week after a brutal monsoon flooded Jakarta and the surrounding area.
The crown prince accepted Jokowi’s offer to lead the committee during a meeting in Abu Dhabi this week where investment deals worth $22.8 billion were signed between companies from the UAE and Indonesia.
The fact that the plan to build a new capital is a public-private partnership suggests that these board members were likely picked for one reason: They either have connections around the world, or direct control over billions of dollars of capital.
Does this mean that SoftBank sees an opportunity to profit in Indonesia? Investing in a new capital city is a bold move, there’s not much in the way of precedent, but a hefty return would help revive SB’s reputation, which took another hit last week following reports that robot-pizza maker Zume, another one of SB’s portfolio companies, has burned through most of its working capital, including a $350 million investment from the company.
But there’s no question that the government needs to make this new capital work. As one of the world’s largest megacities, Jakarta is extremely overpopulated given the fact that the entire city is build on top of a swamp.
Jokowi is hoping private industry and state-run companies will step up and cover at least 80% of the cost of the new city, presumably leaving the Indonesia state on the hook for the rest.
Hopefully, this process will be better-managed than the WeWork IPO…
Tyler Durden
Tue, 01/14/2020 – 22:45 - Cops Acquire "Nasal Ranger" Smell-Amplifier To Crack Down On Marijuana Users
Cops Acquire “Nasal Ranger” Smell-Amplifier To Crack Down On Marijuana Users
Authored by Matt Agorist via TheFreeThoughtProject.com,
In case after infuriating case, the Free Thought Project has reported on instances of horrifying rights violations all stemming from a police officer claiming to smell a plant. We have seen both women and men sodomized and raped — often times in public — as cops search for this smell. We have seen entire families held hostage, women and children beaten up, rampant sexual assault, and all of it stemming from a plant smell. Now, police are arming themselves with a “smell amplifier” to go after those who’d dare grow or partake in a plant—in a state where recreational marijuana is legal.
In December 2018, the state of Michigan legalized recreational marijuana. According to the city council in the town of Bessemer, however, the most common complaint from residents in the town is the smell of weed. Despite it being legal, cops are now arming themselves with new smell technology to go after those who dare partake in a legal plant in the legal state.
The Daily Globe reported that the Michigan town of Bessemer has voted to spend approximately $3,400 to purchase a device to smell marijuana plants and train police officers in its use.
“The city of Bessemer stinks,” council member Linda Nelson said.
“You can smell marijuana everywhere. We’ve got people who can’t sit in their backyard because the smell from their neighbor is so bad.”
Council Member William McDonald added, “It’s time we do something,” even though he said the cost of the equipment posed some concern for him, the Globe reported.
As Newsweek reports:
Michigan law enforcement has been struggling with the ramifications of marijuana use since it was legalized. In November 2019, Newsweek reported that state police were still receiving calls about marijuana smoke and odor but lacked the jurisdiction to investigate them unless they suspect that it was being consumed by underage users.
While it is legal to grow marijuana in Michigan, the state’s statute mandates that the plants cannot be visible to the naked eye or grown outside of an enclosed, secure area.
This move by the city to acquire a smell device to catch “stinky” marijuana users and growers highlights a problem that still plagues the United States — the bureaucracy’s addiction to the war on drugs. A recent article out of Forbes pointed out just how bad this problem has become.
Despite an increasing number of states legalizing marijuana, arrests for the beneficial plant continue to increase. As Forbes reports:
According to new data released by the FBI in October, there were 663,367 marijuana arrests in the country in 2018.
That’s one every 48 seconds, and represents an uptick from the 659,700 cannabis busts American police made in 2017, and from 2016’s total of 653,249.
The jump comes despite the fact that there are now 11 states where marijuana is legal for adults over 21.
“Americans should be outraged that police departments across the country continue to waste tax dollars and limited law enforcement resources on arresting otherwise law-abiding citizens for simple marijuana possession,” NORML Executive Director Erik Altieri said. We agree.
Now, cops are reverting back to smell technology they used when weed was illegal nationwide. This is a dangerous move in the wrong direction for many reasons.
As TFTP reported in June, an infuriating video was shared with the Free Thought Project showing North Carolina cops violate the rights of multiple innocent people because one of them smelled marijuana. No marijuana was found, but that didn’t stop cops from holding a family and their guests hostage for over an hour to look for it.
Also in June, TFTP reported the case of Erica Reynolds, 37, who is seeking $12.5 million in damages accusing police of sexual assault and battery, wrongful arrest, false imprisonment, gross negligence and intentional infliction of emotional distress. The reason for this sexual assault and battery? Cops smelled weed.
Just last September, TFTP reported on another case in which Chanel Bates, 26, was leaving a restaurant when she was targeted by police who claimed they smelled marijuana. The officers’ olfactory intuition was then used as the justification to detain, savagely beat, and kidnap the entirely innocent woman who had caused harm to no one. The infuriating and disturbing scene was captured on video.
There is at least one state moving in the right direction, however. As TFTP reported in August, the violence associated with cops claiming to smell weed has gotten so out of hand that one top court in Maryland is doing something about it. The court ruled that police are not justified in searching a person based solely off of the smell of marijuana.
This ruling is a major boon for freedom and will only serve to improve police and citizen interactions by removing one of the ways police can harass individuals. Hopefully it will spread to other states like Texas where tyrant cops like Parris smash in people’s heads for the smell.
In the land of the free, cops will claim to smell a plant on you and use that claim to violate your body in the most horrific way. And some people still have the audacity to call this “justice.”
Tyler Durden
Tue, 01/14/2020 – 22:25 - China Deceleration Continues As Stocks Price-In Massive Rebound
China Deceleration Continues As Stocks Price-In Massive Rebound
The World Bank trimmed its global growth forecast for 2020 due to a slowing China and a synchronized global downturn. This comes despite the Fed, ECB, and BoJ injecting upwards of $1.1 trillion into global markets in the past four months, along with cutting rates 80 times in the last 12 months.
The World Bank’s Global Economic Prospects report slashed 2020 growth by 0.2 percentage points to 2.5% from a June 2019 forecast.
China’s growth outlook for the year is one of stabilization, with growth expected to slip under the 6% mark. Still, there’s a significant risk that a disorderly unwinding of debt could slow the economy even further.
Over the last decade, China has been responsible for 60% of the world’s debt creation – and with the country continuing to slow, that doesn’t bode well for a massive global recovery that equity markets have already priced in.
To get a better view of China’s economy, we turn to Fathom Consulting, who developed the China Momentum Indicator 3.0 (CMI 3.0) that includes twelve measures of economic activity, including retail sales, unoccupied housing, and net trade.
Fathom has had a deep distrust for China’s official GDP data and created CMI 3.0 as an alternative measure of China’s economic activity.
CMI 3.0 prints around 4.7%, has stabilized since the middle of last year. There’s no indication that China’s economy will significantly turn up in early 2020, which means the global economy could continue to stagnate.
Slowing China has also weighed on crude oil prices.
Auto production in China will continue to slow with a decelerating economy.
Global stocks, juiced by trillions of dollars in money printing via central banks and 80 rate cuts, have already priced in a global recovery.
With no massive rebound expected in China in 1H20, this also means the probability of a significant rebound in the US is low. Equity markets are mispriced, thanks to an abundance of central bank liquidity.
Tyler Durden
Tue, 01/14/2020 – 22:05 - The "Last Hurrah" For Central Bankers
The “Last Hurrah” For Central Bankers
Authored by James Rickards via The Daily Reckoning,
We’ve all seen zombie movies where the good guys shoot the zombies but the zombies just keep coming because… they’re zombies!
Market observers can’t be blamed for feeling the same way about former Fed Chair Ben Bernanke.
Bernanke was Fed chair from 2006–2014 before handing over the gavel to Janet Yellen. After his term, Bernanke did not return to academia (he had been a professor at Princeton) but became affiliated with the center-left Brookings Institution in Washington, D.C.
Bernanke is proof that Washington has a strange pull on people. They come from all over, but most of them never leave. It gets more like Imperial Rome every day.
But just when we thought that Bernanke might be buried in the D.C. swamp, never to be heard from again… like a zombie, he’s baaack!
Bernanke gave a high-profile address to the American Economic Association at a meeting in San Diego on Jan. 4. In his address, Bernanke said the Fed has plenty of tools to fight a new recession.
He included quantitative easing (QE), negative interest rates and forward guidance among the tools in the toolkit. He estimates that combined, they’re equal to three percentage points of additional rate cuts. But that’s nonsense.
Here’s the actual record…
That QE2 and QE3 did not stimulate the economy at all; this has been the weakest economic expansion in U.S. history. All QE did was create asset bubbles in stocks, bonds and real estate that have yet to deflate (if we’re lucky) or crash (if we’re not).
Meanwhile, negative interest rates do not encourage people to spend as Bernanke expects. Instead, people save more to make up for what the bank is confiscating as “negative” interest. That hurts growth and pushes the Fed even further away from its inflation target.
What about “forward guidance?”
Forward guidance lacks credibility because the Fed’s forecast record is abysmal. I’ve counted at least 13 times when the Fed flip-flopped on policy because they couldn’t get the forecast right.
So every single one of Bernanke’s claims is dubious. There’s just no realistic basis to argue that these combined policies are equal to three percentage points of additional rate cuts.
And the record is clear: The Fed needs interest rates to be between 4% and 5% to fight recession. That’s how much “dry powder” the Fed needs going into a recession.
In September 2007, the fed funds rate was at 4.75%, toward the high end of the range. That gave the Fed plenty of room to cut, which it certainly did. Between 2008 and 2015, rates were essentially at zero.
The current fed funds target rate is between 1.50% and 1.75%. I’m not forecasting a recession this year, but if we do have one, the Fed doesn’t have anywhere near the room to cut as it did to fight the Great Recession.
I’m not the only one to make that point. Here’s what former Treasury Secretary Larry Summers said:
[Bernanke] argued that monetary policy will be able to do it the next time. I think that’s pretty unlikely given that in recessions we usually cut interest rates by five percentage points and interest rates today are below 2%… I just don’t believe QE and that stuff is worth anything like another three percentage points.
Summers goes on to call Bernanke‘s speech “a kind of last hurrah for the central bankers.”
He’s right. But if monetary policy isn’t the answer, what does Summers think the answer is?
Fiscal policy. The government is going to have to spend money directly into the economy instead of relying upon some trickle-down “wealth effect” to stimulate the economy.
Here’s what Summers said:
“We’re going to have to rely on putting money in people’s pockets, on direct government spending.”
Remember the term “helicopter money”? Milton Friedman coined the term 50 years ago when he made the analogy of dropping money from a helicopter to illustrate the effects of aggressive fiscal policy.
That’s essentially what Summers is advocating. It might sound a lot like the idea behind Modern Monetary Theory, or MMT, but it’s not necessarily the same thing. MMT takes helicopter money to a whole new level, and Summers has actually been highly critical of MMT.
But the idea of direct government spending to stimulate the economy is the same, and it’s gaining traction in official circles.
There’s good reason to believe it’s coming to a theater near you. And maybe sooner than you think.
Tyler Durden
Tue, 01/14/2020 – 21:45 - Half Of All US Restaurants Are Struggling With Rising Labor Costs
Half Of All US Restaurants Are Struggling With Rising Labor Costs
In the one year since New York City implemented a mandatory $15 minimum wage, businesses have been struggling with the increased labor costs, Fox News reported previously. “They’re cutting their staff. They’re cutting their hours. They’re shutting down,” said Queens Chamber of Commerce president, Thomas Grech – who reports seeing an uptick in small business closures over the past six to nine months. “It’s not just the rent.”
Bronx Chamber of Commerce president Lisa Sorin notes that the increase has hurt small businesses the most, while Manhattan employers and their customers can afford to pay more to compensate. “It’s almost like a whirlwind of keep up or get out,” she said.
This dynamic was reflected in a Gothamist survey, which revealed that NYC restaurants are ‘thriving’ amid the $15 minimum wage, but acknowledges “Nearly 50 percent of respondents to the Hospitality Alliance’s survey said they would have to eliminate jobs in 2019 to make do.”
It’s not just New York, however, that is suffering as a result of rising labor costs. According to a new report by Restaurant Dive, nearly half, or 48% of all US restaurants, are finding that rising labor costs have become a major challenge for restaurant operators.
With a historically low employment rate, restaurants are having trouble attracting and retaining quality labor. Low employment means job applicants tend to have the upper hand when it comes to settling for a certain wage or seeking better pay elsewhere.
Other labor-related pressures involve a new minimum salary for overtime eligibility from the Department of Labor, and growing consumer interest in seeing a $15 minimum wage become federal law. The DOL is also proposing further changes to rules regarding tip pooling and tip credit, which has been a particularly confusing subject for the industry during the past few years.
Fortunately technological innovations are offering restaurant operators a few ways to tackle some of the labor-related challenges identified in the study. Outback is tapping AI technology to analyze diner interactions with staff, for example, including lobby cameras and wait time tracking. Mangers review the data in real-time so that any poor reviews in the making can be remedied before the guests leave the restaurant.
Robotics and automation also made a debut in the restaurant space, but luckily for minimum wage workers at least for now, overall adoption has been low especially among large operations that have more difficulty rolling out systems to automate tasks. Small chains, those with less than 50 units, were more likely to say they would use automation in the future. That hasn’t stopped large chains, however. McDonald’s piloted an automated fryer in the kitchen last year as well as voice-activated drive-thrus in Chicago. It’s also introducing automated beverage equipment. The endeavor is designed to reduce customer wait times while making employees’ jobs easier. Freeing them up from some of these more mundane tasks allows them to focus on cultivating a better customer experience through interaction and service. Futurists are betting on robots to take over even more restaurant operations during the coming decade.
While technology seems to be addressing some of the labor-related pains, training and retention have ample opportunity for improvement as well. A few brands have invested in better training opportunities for employees like Denny’s partnership with Magic Johnson focusing on leadership training and McDonald’s women-focused career excellence and Women in Tech initiatives. To boost retention rates, chains like Starbucks, Noodles & Company, Chipotle, Shake Shack and Sweetgreen bulked up employee benefits last year.
Tyler Durden
Tue, 01/14/2020 – 21:25 - Mike Flynn Withdraws Guilty Plea Due To Government's 'Bad Faith, Vindictiveness, And Breach Of Plea Agreement'
Mike Flynn Withdraws Guilty Plea Due To Government’s ‘Bad Faith, Vindictiveness, And Breach Of Plea Agreement’
One week after federal prosecutors changed their tune in the Michael Flynn case – recommending he serve up to six months in prison for lying to investigators regarding his contacts with a Russian diplomat, the former National Security Adviser withdrew his guilty plea Tuesday afternoon.
In a 24-page court filing, Flynn accuses the government of “bad faith, vindictiveness, and breach of the plea agreement,” and has asked his January 28th sentencing date to be postponed for 30 days.
🚨🚨🚨
General Flynn has moved to withdraw his guilty plea due to the “government’s bad faith, vindictiveness, and breach of the plea agreement.” pic.twitter.com/Qp5JcQjXmB
— Techno Fog (@Techno_Fog) January 15, 2020
According to Flynn’s counsel, prosecutors “concocted” Flynn’s alleged “false statements by their own misrepresentations, deceit, and omissions.”
“It is beyond ironic and completely outrageous that the prosecutors have persecuted Mr. Flynn, virtually bankrupted him, and put his entire family through unimaginable stress for three years,” the filing continues.
“The prosecutors concocted the alleged ‘false statements’ (relating to FARA filing) by their own misrepresentations, deceit, and omissions.” pic.twitter.com/o47WO8qClX
— Techno Fog (@Techno_Fog) January 15, 2020
These parts are very important – the DOJ’s allegations of guilt don’t match up to the record.
Link to Exhibit #9:https://t.co/uVa4pWDHV0 pic.twitter.com/Nj71GANpDs
— Techno Fog (@Techno_Fog) January 15, 2020
Prosecutors initially recommended no jail time over Flynn’s cooperation in the Russiagate probes, however they flipped negative on him after he “sought to thwart the efforts of the government to hold other individuals, principally Bijan Rafiekian, accountable for criminal wrongdoing.”
The 67-year-old Rafiekian, an Iranian-American and Flynn’s former business partner, was charged with illegally acting as an unregistered agent of a foreign government. Prosecutors accused Flynn of failing to accept responsibility and “complete his cooperation” – as well as “affirmative efforts to undermine” the prosecution of Rafiekian.”
More on this from attorney and researcher @Techno Fog:
After Flynn refused to lie for prosecutors (Van Grack), they retaliated by:
1) Reversing course and labeling Flynn a co-conspirator
2) Improperly contacted Flynn’s son
3) Put Flynn’s son on the witness list for intimidation purposes (never called as a witness) pic.twitter.com/fP4hpVXfGY
— Techno Fog (@Techno_Fog) January 15, 2020
“The govt’s tactics in relation for Mr. Flynn’s refusal to ‘compose’ for the prosecution is a due process violation that can and should be stopped dead in its tracks by this Court” pic.twitter.com/ttcFGmyPv7
— Techno Fog (@Techno_Fog) January 15, 2020
Read the filing below:
Tyler Durden
Tue, 01/14/2020 – 21:05 - New Video Shows 2 Iranian Missiles Striking Doomed Passenger Jet
New Video Shows 2 Iranian Missiles Striking Doomed Passenger Jet
Another video of the moment UIA Flight 752 was blown out of the sky by Iranian missiles has emerged, according to the NYT, which verified the footage before reporting on it.
For the first time, the world can clearly see two missiles – fired from an Iranian military base 8 miles from the plane – strike the plane less than 30 seconds apart.
The footage helped answer a question that had perplexed experts: why did air control lose touch with the plane’s transponder just before the crash.
The plane didn’t go down immediately. After the strike, the plane appears to have tried to circle back toward Tehran’s international airport. But minutes later, it exploded and the debris rained down to earth, narrowly missing the village of Khalaj Abad.
Somehow, NYT reporters have confirmed that the video was filmed on the roof of a building near the village of Bidkaneh, roughly four miles from he military site.
The NYT also debunked another one of the Iranian government’s claims: That the strike was due to ‘human error’, as one missile operator mistook the plane for a cruise missile. This doesn’t jive with the plane’s flight path: Since it had just taken off, it would have still been ascending, not descending toward a target on the ground, like missiles do.
The new video was uploaded to YouTube by an unnamed Iranian user at around 2 am on Tuesday. It’s unclear how the times verified the video, but the four bylines attached to the story would suggest that it took some serious legwork. Oddly, the date visible on the footage is “2019-10-17” – years before the day the plane was downed on Jan. 8.
Despite initially denying the IRGC’s role in bringing down Flight 752, Tehran has tried to spin its response to the attack as ‘transparent’ and fair – largely to quell an outpouring of anger by frustrated Iranians, who took to the streets for a string of protests soon after the incident. However, whoever uploaded the video best be careful: Iranian media have reported that the man who filmed an earlier video of the missile striking the plane has been arrested.
Watch the video verified by the NYT below:
Tyler Durden
Tue, 01/14/2020 – 20:45 - Saxo Bank: "We Are Putting Out An Early Warning: A Sharp Correction In Equities Could Be Imminent"
Saxo Bank: “We Are Putting Out An Early Warning: A Sharp Correction In Equities Could Be Imminent”
Submitted by Peter Garnry, Head of Equity Strategy, Saxo Bank
Equities are getting frothy with short squeeze and momentum accelerating technology stocks higher. This has led to the highest top five concentration in the S&P 500 eclipsing the dot-com bubble in a sign of destabilisation and increased fragility.
We are putting out an early warning to investors as a sharp correction in equities could be imminent. Our overall longer term view is still positive on equities, but sharp moves up are typically followed by rapid declines. In today’s equity update we also talk about equity valuations and earnings season.
The first two weeks of the year have seen a tremendous acceleration in technology stocks with the sector by far outperforming all other sectors. As we talk about in today’s Market Call podcast we are witnessing an epic short squeeze in Tesla and other heavily shorted stocks. In higher echelons of the market the FANG+ Index is accelerating at an unprecedented pace showing clear signs of frothy behavior. It mimics the move leading up to the volatility explosion in February 2018. While we laid out our asset allocation view yesterday as overweight Europe and EM equities, and overweight equities vs bonds, the short-term dynamic could get ugly here when the short squeeze and momentum have exhausted itself.
In VIX we are observing a increase in net positioning although from a very low level but could signs that bigger players in the futures and option markets are preparing for increase in volatility. On the other, the forward curve in VIX futures is still not sending any distress signals, but these things change fast and the catalyst may be very subtle.
The rapid rise of the large US technology stocks has catapulted the five largest stocks on market value to reach an index weight of 18%, the highest level observed in the S&P 500 in 25 years. Increased concentration risk is a clear sign of fragility increasing and the system is destabilizing underneath the surface. It’s historically a recipe for violent moves so it should definitely be on investors’ radar.
As we hinted at in our equity update yesterday the equity valuation expansion might be fueled by investors anchoring their long-term interest rate expectations at a continuing lower level increasing the equity risk premium and hence allowing higher multiples on earnings. With the lower anchoring and dual stimulus coming from the monetary and fiscal side we cannot rule out that equity valuation will reach new all-time highs before the party ends. But the current move seems too aggressive, and the probability of a sudden large drop in equities could happen anytime. Investors should consider reducing equity exposure somewhat here or add some downside protection.
The earnings season kicks into gear today with the first big names (Citigroup, JPMorgan Chase and Wells Fargo) reporting Q4 earnings. Consensus is looking for strong EPS y/y figures for JPMorgan Chase and Citigroup due to base effects from a very weak Q4 2018. Wells Fargo which is a more pure banking play is expected to show slightly negative y/y EPS growth. All there financials are expected to show negative q/q growth numbers. But overall analysts are looking for decent numbers from financials compared to other industries. In aggregate S&P 500 is expected to deliver its fourth straight negative y/y EPS growth in Q4 for the first time since the financial crisis. However, the real price action lies in the outlooks which should be improving given the recent macro backdrop and better signs coming out of Asia.
Tyler Durden
Tue, 01/14/2020 – 20:25 - Navy: Releasing UFO Files Would Cause 'Exceptionally Grave Damage To US National Security'
Navy: Releasing UFO Files Would Cause ‘Exceptionally Grave Damage To US National Security’
A trove of classified materials associated with an infamous UFO incident marked TOP SECRET are so sensitive that their release would cause “exceptionally grave damage” to US national security according to the Navy.
The files, related to the 2004 encounter between the USS Nimitz and a series of strange, “Tic Tac” shaped UFOs, were sought through a Freedom of Information Act (FOIA) request by researcher Christian Lambright, according to VICE’s Motherboard.
In response, the Navy told Lambright in a letter that it had “discovered certain briefing slides that are classified TOP SECRET. A review of these materials indicates that are currently and appropriate Marked and Classified TOP SECRET under Executive Order 13526, and the Original Classification Authority has determined that the release of these materials would cause exceptionally grave damage to the National Security of the United States,” according to the report.
“We have also determined that ONI possesses a video classified SECRET that ONI is not the Original Classification Authority for,” the letter continues.
“The Department of Defense, specifically the U.S. Navy, has the video. As Navy and my office have stated previously, as the investigation of UAP sightings is ongoing, we will not publicly discuss individual sighting reports/observations,” Susan Gough, a Pentagon spokesperson, told Motherboard. “However, I can tell you that the date of the 2004 USS Nimitz video is Nov. 14, 2004. I can also tell you that the length of the video that’s been circulating since 2007 is the same as the length of the source video. We do not expect to release this video.” –VICE
Higher resolution?
The Navy also wouldn’t comment on higher on whether a higher resolution version of the video existed.
In November, Popular Mechanics reported that several original witnesses to the Nimitz incident viewed longer, higher resolution footage of the UFO encounter. According to the report, “Gary Voorhis, a Petty Officer who served on the Princeton, a ship in Nimitz fleet, told Popular Mechanics that he “definitely saw video that was roughly 8 to 10 minutes long and a lot more clear.” Others, such as Commander David Fravor, have stated that longer videos of the incident probably do not exist. “
Luis Elizondo, the former Pentagon staffer and the man who played a key role in making the Navy video public, told Motherboard that straightforward messaging does not seem to be the Pentagon’s strong suit. When the New York Times ran its 2017 story concerning the Nimitz UFO incident, it also broke the existence of $22 million dollar UFO investigation program called AATIP, the Advanced Aerospace Threat Identification Program, and that Elizondo, a career intelligence officer, ran the project. The Pentagon has repeatedly changed its story since then; as recently as last month, the Pentagon said that AATIP had nothing to do with UFOs.
“The Pentagon has a long history of sometimes providing inaccurate information to the American people,” Elizondo said. “This is true as recently as this week regarding the draft memo involving Iran, and two weeks ago when the press finally received the truth about Afghanistan despite 18 years of statements to the contrary.” –VICE
“As in the case involving UAPs, I can only hope that the inconsistent message is due to the benign results of a large and cumbersome bureaucracy and not something more nefarious like a cover-up or deliberate misinformation campaign,” added Elizondo, who told the publication that he’s “not able to comment further on the existence of a longer video due to my obligations involving my NDA with the Government and the fact that I am no longer employed with the U.S. Government. However, as I stated before, people should not be surprised by the revelation that other videos exist and at greater length.”
Tyler Durden
Tue, 01/14/2020 – 20:05 - Instability Rising: Why 2020 Will Be Different
Instability Rising: Why 2020 Will Be Different
Authored by Charles Hugh Smith via OfTwoMinds blog,
In 2020, increasing monetary and fiscal stimulus will be the equivalent of spraying gasoline on a fire to extinguish it.
Economically, the 11 years since the Global Financial Crisis of 2008-09 have been one relatively coherent era of modest growth, rising wealth/income inequality and coordinated central bank stimulus every time a crisis threatened to disrupt the domestic or global economy.
This era will draw to a close in 2020 and a new era of destabilization and uncertainty begins.
Why will all the policies that have worked so well for 11 years stop working in 2020?
All the monetary/fiscal policies of the past decade were simply extreme versions of tried-and-true policies that central banks and governments have used for the past 75 years to restore growth in a recession or financial crisis: lower interest rates, increase credit/liquidity, and ramp up government spending (i.e. deficit spending) to compensate for declining private-sector spending.
These policies were designed to be short-term stimulus programs to jump-start the economy out of a slowdown (recession), which typically lasted between 9 and 18 months.
These policies are now permanent, as the system is now dependent on these policies. Any reduction in central bank stimulus causes a market crash (witness the 20% drop in 2018 as the Fed slowly raised interest rates from near-zero) and any reduction in deficit spending threatens to trigger a recession.
The problem is that these policies create distortions that cannot be fixed with more of what caused the distortions in the first place: more extreme monetary and fiscal stimulus.
Systemic distortions include:
A. Soaring wealth-income inequality across the entire global economy.
B. Dependence on asset bubbles to generate the “wealth effect” that encourages spending by the top 5% who own two-thirds of the assets bubbling higher.
C. Dependence on asset bubbles to generate capital gains and property tax revenues for state/local governments.
D. Loss of cost discipline: the solution across the entire spectrum–government, corporate and household–is now to borrow more, not trim costs via innovation or increases in productivity and efficiency.
E. Reliance on debt to fund spending leads to rising defaults which will collapse the system. (Soaring auto-loan defaults are the canary in the coal mine.)
F. Zero interest rates have generated over-capacity/over-production as everyone seeks a return on capital by expanding market share. Now there are global gluts in everything from autos to natural gas to electronics.
G. With the yield on savings now less than zero due to inflation, investors must gamble in the asset-bubble casino as this is only available way to earn a return.
H. Buffers are thinning. I’ve discussed this in depth over the years; dependence on stimulus lowers systemic resilience, rendering the entire system increasingly vulnerable to a phase-shift that fatally destabilizes the system.
I. Prior to the 2008-2019 era, the “real economy” of sales, wages and profits led the stock market. Now the stock market dominates the real economy, as the central banks have turned the stock market into the ‘signaling device’ that all is well and the source of bringing demand forward (i.e. the wealth effect).
In Mohammed El-Erian’s words: “The Fed can’t pull back because it’s worried it will disrupt markets that can be a spillover on the economy. The Fed’s in a lose, lose, lose situation, they can’t stay where they are, they can’t do more, they can’t do less.”
In Andy Xie’s words: “The Fed has gone from the financial bubble’s hostage to its guardian.”
J. There are limits on encouraging more borrowing by lowering interest rates to zero. Even at zero interest rates, income must be devoted to paying principal. At some point, all available income is already consumed in debt service. Anecdotally, we’re already there: zombie corporations (that only survive by increasing their debt loads) are becoming more numerous, and households burdened with student loans, auto loans, credit cards and mortgages cannot afford more debt even at zero interest.
Policy makers are now trapped. Unable to reverse the policies that have created the distortions lest that crash the system, they only have two responses, neither of which actually address the distortions undermining the system:
1) push extremely distorting policies to new extremes, or
2) attempt policy-tweaks–higher taxes on the wealthy, etc.–that ignore the causes of the distortions. These policy tweaks are the classic “band-aids treating cancer.”
The abject failure of these policies (short-term turned into permanent, with all the resulting long-term distortions) is now visible to all, and we’re seeing articles in the most influential mainstream media outlets questioning the current versions of global capitalism; for example, the new issue of Foreign Affairs magazine is devoted to The Future of Capitalism, an implicit confirmation that the current version, dependent on extremes of debt, speculation and stimulus, has no future.
Is there a way out? No. That these policies have not restored “organic growth” (i.e. growth that isn’t dependent on zero interest rates, speculative bubbles and tens of trillions of dollars in permanent stimulus) must be accepted, along with the need for a painful re-set.
The odds of this happening are near-zero, as politicians who cause economic pain lose the support of the populace.
This leaves us with the pain of ever-greater distortions, which will drive economic instability, fragmentation, social disorder and financial crashes.
Inherently unstable systems can appear stable for quite some time as the instability builds beneath the placid surface.
In 2020, increasing monetary and fiscal stimulus will be the equivalent of spraying gasoline on a fire to extinguish it. These two charts summarize the disastrous consequences of permanent monetary stimulus: wages’ share of the economy are in relentless decline, while the equally relentless rise of financialization has generated soaring wealth / income inequality that increasingly threatens to rip our society and economy to shreds.
This essay was drawn from the Musings Reports, which are emailed weekly exclusively to patrons and subscribers.
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Tyler Durden
Tue, 01/14/2020 – 19:45 - Trump Slams Apple For Refusing To Unlock Terrorist's iPhone, But FBI Has Other Options
Trump Slams Apple For Refusing To Unlock Terrorist’s iPhone, But FBI Has Other Options
President Trump joined Attorney General William Barr on Tuesday, slamming Apple Inc. for refusing to extract data from two iPhones that belonged to the Saudi Air Force Lieutenant who went on a rampage at Naval station Pensacola last month, killing three.
“We are helping Apple all of the time on TRADE and so many other issues, and yet they refuse to unlock phones used by killers, drug dealers and other violent criminal elements,” Trump tweeted, adding “They will have to step up to the plate and help our great Country, NOW! MAKE AMERICA GREAT AGAIN.”
We are helping Apple all of the time on TRADE and so many other issues, and yet they refuse to unlock phones used by killers, drug dealers and other violent criminal elements. They will have to step up to the plate and help our great Country, NOW! MAKE AMERICA GREAT AGAIN.
— Donald J. Trump (@realDonaldTrump) January 14, 2020
Barr said during a Monday press conference that Apple had provided no “substantive assistance” to support investigators trying to crack into the smartphones. His comments are part of an ongoing push by the US government to make such assistance standard practice in the future.
Barr says Apple “has not given any substantive assistance” in unlocking the Pensacola airbase shooter’s two iPhones https://t.co/b3LRFp18sG pic.twitter.com/MkTg6ZueJB
— CBS News (@CBSNews) January 13, 2020
https://platform.twitter.com/widgets.js
“We have asked Apple for their help in unlocking the shooter’s phones. So far, Apple has not given any substantive assistance,” said Barr. “This situation perfectly illustrates why it is critical that the public be able to get access to digital evidence once it has obtained a court order based on probable cause. We call on Apple on other technology companies to help us find a solution so that we can better protect the lives of American people and prevent future attacks.“
https://platform.twitter.com/widgets.js
Yet, according to Bloomberg, the FBI should have no trouble breaking into the phones – as they can go either exploit a range of security vulnerabilities – or they can hire a company such as Grayshift or Cellebrite – the latter of which is an Israel-based, Japanese-owned firm which helped the FBI access data from the phone of the shooter behind a 2016 attack in San Bernardino, California.
Mohammed Saeed Alshamrani, the perpetrator of a Dec. 6 terrorist attack at a Navy base in Florida, had an iPhone 5 and iPhone 7, models that were first released in 2012 and 2016, respectively. Alshamrani died and the handsets were locked, leaving the FBI looking for ways to hack into the devices.
“A 5 and a 7? You can absolutely get into that,” said Will Strafach, a legendary iPhone hacker who now runs security company Guardian Firewall. “I wouldn’t call it child’s play, but it’s not super difficult.” –Bloomberg
Security expert Neil Brook, who works with law enforcement agencies to unlock devices, did note that it’s possible the specific iOS versions running on the Pensacola shooter’s phones may have patched exploits, making it more difficult to access them – though it would still be possible.
“If the particular phones were at a particular iOS version, it might be as easy as an hour and boom, they are in. But they could be at an iOS version that doesn’t have a vulnerability,” said Broom.
According to the report, “Apple and security firms such as Cellebrite play a cat-and-mouse game nowadays. The iPhone maker releases a new device or a new version of its iOS operating system that locks everything down. Then security firms and researchers start probing, and often find ways to hack into the handsets after several months. Those exploits sometimes turn into tools that the FBI and police can use to access data on iPhones.”
Broom notes that Cellebrite and other security firms would “bend over backwards” to win a government contract.
“Our technology is used by thousands of organizations globally to lawfully access and analyze very specific digital data as part of ongoing investigations,” Cellebrite said in a statement. “As a matter of company policy we do not comment on any ongoing investigations.”
Another firm which could help the FBI is Atlanta-based Grayshift, which employs former Apple software security engineer Braden Thomas and has a product called GrayKey.
A new security flaw known as “Checkm8” affects chips in iPhones released between 2011 and 2017, according to Strafach and other researchers. That includes the iPhone 5 and iPhone 7.
“With the Checkm8 vulnerability, you should be able to get a forensically sound image of the file system, unless they had a crazy long passphrase,“ Strafach said.
The iPhone 7 includes the Secure Enclave, a dedicated chip for storing fingerprint data and other sensitive information on the device, but even that could be breakable, he said.
“It’s simply a question of whether the government will pay a contractor to get into these phones,” Strafach added. “If it can’t be done with the Checkm8 vulnerability, they can pay a contractor to do it.” –Bloomberg
To crack into phones, Cellebrite offers a “UFED Physical Analyzer” and a “Touch2” tablet which comes with PC software (“4PC”) – all costing around $15,000 per Broom, who added that there’s often an annual maintenance fee of more than $4,000.
For more advanced services, GrayKey and Cellebrite Premium offer an on-premise service for law enforcement agencies which can cost between $100,000 and $150,000.
“They already have these tools around the country. So they wouldn’t be paying anything more to break into these phones, they could just be waiting for a certain exploit like Checkm8 to become available,” said Broom.
That said, according to Yotam Gutman – marketing director at cybersecurity company SentinelOne, newer iPhones such as the iPhone 11 are much harder ‘if not impossible’ to crack… for now.
Tyler Durden
Tue, 01/14/2020 – 19:25 - Hickman: A Recession Is More Likely Than You Think
Hickman: A Recession Is More Likely Than You Think
Authored by Eric Hickman via AdvisorPerspectives.com,
Good economic news over the last couple months belies the fact that a recession could strike as soon as March 2020.
That good news has been plentiful: a phase one trade deal between the U.S. and China is presumably close to being signed, the December U.S. Labor jobs report exceeded expectations, the Federal Reserve didn’t lower rates at their December meeting, and developed-economy stock markets continue making new highs. The Fed’s mantra of, “the economy is in a good place” is the ethos of the moment.
But just behind those data points, many more are suggesting a deteriorating economy. The Citigroup U.S. Surprise index (which measures how far the aggregate of economic releases are above or below where economists estimate them to be) has fallen in recent months (see below). ISM Manufacturing, Durable Goods, Retail Sales, Leading Economic Indicators, and Existing Home Sales have all been lower than expectations in December and early January.
And yet the Fed repeats a version of the statement, “the economy is doing well because consumer spending and the labor market are strong”. And they are right – for now. Real personal consumption is growing at a reasonably healthy 2.4% (YoY%) and the 3.5% unemployment rate is at a near-50 year low (49.6 years). The problem is that these are the last segments of the economy to falter historically at the start of a recession. To the extent that the recession hasn’t started yet (I don’t think it quite has), the consumer and labor market should still be strong. In other words, there is an expected gap of time from when leading indicators (manufacturing, yield curve) show weakness to when coincident indicators (consumer and labor) show weakness. There is nothing to suggest one should extrapolate this consumer and labor strength, especially given the many leading recession signals we’ve already gotten.
In fact, the following five long-running standard recession signals triggered in 2019:
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Yield curve inversion, signaled 3/27/2019, data back to January 1971.
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Conference Board Jobs Gap YoY growth negative2, signaled 11/30/2019, data back to February 1968.
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Conference Board Leading Economic Indicators Peak3, signaled 7/31/2019 (tentative because it could make a higher peak), data back to January 1959.
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Initial Jobless Claims Trough4, signaled 4/12/2019 (tentative because it could make a lower trough), data back to January 1967.
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ISM Manufacturing first below 505 (contraction), signaled 8/31/2019, data back to January 1948.
The long history (49+ years) of these indicators can be used to get a sense of timing for when a recession may begin. I have measured historically how long these indicators signaled before (or after) the start of their accompanying recession. Comparing this time-frame to when these indicators triggered recently, suggests a range for when this recession may come. The chart below shows the time ranges (minimum amount of time historically to maximum amount of time historically) in which each indicator would suggest a recession start.
There are a few conclusions to this.
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First, five recession indicators have signaled.
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Second, there is nothing unusual in the timing that the recession hasn’t started yet.
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Third, no matter which of the five indicators you use, a recession will likely begin in 2020 and the average center-point of the indicators is in March, just a little over two months away.
Don’t confuse the Fed’s “on-hold” stance to have any more meaning than the hope that the consumer and labor market’s strength will continue. History suggests that this is not a good bet to make.
* * *
Eric Hickman is president of Kessler Investment Advisors, Inc., an advisory firm located in Denver, Colorado specializing in U.S. Treasury bonds.
Tyler Durden
Tue, 01/14/2020 – 19:05 -
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