- At Least 20 Killed (6 Children) After Turkish Airlines 747 Crashes Into Kyrgyzstan Residences
Turkish Airlines Flight 6491, a cargo plane, has crashed into a residential area near the Kyrgyzstan capital of Bishkek, killing at least 20 people and injuring others, according to local authorities say.
The Boeing 747 was flying from Hong Kong to Manas International Airport, which is located just northwest of the Kyrgyz capital Bishkek.
As BNONews.com reports, photos and videos from the scene showed a large fire burning shortly after the crash, and subsequent images after the fire was extinguished showed that multiple buildings were completely destroyed.
At least 15 buildings were affected.
Kyrgyzstan's Ministry of Emergency Situations said more than 20 people had been killed in the crash, though it provided no further details. The health ministry had earlier put the death toll at 16, which included 15 people on the ground, of whom 6 are children.
It was not immediately clear how many people were on board the aircraft when it went down, though a Boeing 747 cargo plane typically carries a crew of at least two people. Turkish Airlines did not immediately respond to a request for information.
RT reports that among those killed are three crew members, RIA Novosti news agency reported. One of the crew members survived the crash, the local Emergencies Ministry said, as cited by TASS.
Members of the Kyrgyzstan government, including Vice prime minister Mukhammetkaliy Abulgaziev, are at the scene, according to reports.
All flights to and from Kyrgyzstan’s Manas airport have been suspended until further notice, RIA Novosti reported, citing local sources.
- US Military Deploys Nuke-Spotting Radar To Monitor North Korea
The Sea-based X-Band Radar has deployed out of Pearl Harbor after North Korean dictator Kim Jong Un recently said his country was in the "final stages" of test-launching an intercontinental ballistic missile. Media sources reported that the SBX was being sent about 2,000 miles northwest of Hawaii to watch for a possible North Korean launch in coming months. The Pentagon downplayed the floating radar's Monday departure.
As The Honolulu Star Advertiser reports, dispatching the "SBX" out to sea sends "a very clear strategic message of deterrence to the ICBM threat of the North Korean leader that has intensified since first announced on Jan. 1," said Riki Ellison, chairman of the Missile Defense Advocacy Alliance, a Virginia-based nonprofit that advocates a strong U.S. missile defense.
Media sources reported that the SBX was being sent about 2,000 miles northwest of Hawaii to watch for a possible North Korean launch in coming months. The Pentagon downplayed the floating radar's Monday departure.
"The SBX's current deployment is not based on any credible threat; however, we cannot discuss specifics for this particular mission while it is underway," Navy Cmdr. Gary Ross, a Defense Department spokesman, said in an email.
Kim said in a Jan. 1 speech that North Korea was prepping for an ICBM test launch.
"The SBX deployed in the Pacific Ocean enhances and boosts the probability of kill for each of the current 37 and soon to be 44 (ground-based interceptors) in both Alaska and California, if fired at a North Korean ICBM," Ellison said Thursday in an MDAA release.
If the North Korean test ICBM does not target U.S. or allied territory, the SBX would be in a position "to collect invaluable precision data on the warhead and debris of a North Korean ICBM test-flying in space," the release said.
Defense Secretary Ash Carter also suggested this week that the United States might just monitor the launch if it didn't appear to be a threat.
The more than 280-foot-tall SBX is topped by a golf ball-like dome containing a phased array radar and is a hard-to-miss sight at its mooring off Ford Island. The powerful radar, which is only operated at sea, acquires, tracks and discriminates the flight characteristics of ballistic missiles.
TheUnion of Concerned Scientists reported $2.2 billion SBX is designed for long-range precision tracking and discrimination of warheads from other objects, but it "has a number of serious limitations, including a very limited electronic field of view."
Based on shortcomings of the SBX, the U.S. Missile Defense Agency announced plans to develop by 2020 a long-range discrimination radar in Alaska, the scientific group said.
- In Scathing Attack, CIA Director Brennan Warns Trump To "Watch What He Says"
The departing CIA director John Brennan has launched a scathing attack on Donald Trump, warning the President-elect does not fully understand the threat posed to the US by Russia.
"I think Mr. Trump has to understand that absolving Russia of various actions it has taken in the past number of years is a road that he needs to be very, very careful about moving down."
As Reuters reports, Brennan's comments, during an interview on "Fox News Sunday," exposed the simmering tensions between the president-elect and the intelligence community he has criticized and is on the verge of commanding.
"Spontaneity is not something that protects national security interests and so therefore when he speaks or when he reacts, just make sure he understands that the implications and impact on the United States could be profound," Brennan said.
"It's more than just about Mr. Trump. It's about the United States of America."
"What I do find outrageous is equating intelligence community with Nazi Germany," Brennan said. "I do take great umbrage at that."
Brennan also questioned the message it sends to the world if the president-elect broadcasts he does not have confidence in the United States' own intelligence agencies.
"The world is watching now what Trump says and listening very carefully. If he doesn’t have confidence in the intelligence community, what signal does that send to our partners and allies as well as our adversaries?"
"There is no basis for Mr Trump to point fingers at the intelligence community for 'leaking' information that was already available publicly,"
Speaking earlier on Sunday, President Barack Obama's chief of staff Denis McDonough said the intelligence community was "staffed by an unbelievably cadre of professionals" and he dismissed the notion that they would seek to undermine Mr Trump's victory as the President-elect has suggested. As Jacob G. Hornberger warns:
In a truly remarkable bit of honesty and candor regarding the U.S. national-security establishment, new Senate minority leader Charles Schumer has accused President-elect Trump of “being really dumb.”… for taking on the CIA and questioning its conclusions regarding Russia.
“Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you…. He’s being really dumb to do this.”
[…]
No president since John F. Kennedy has dared to take on the CIA or the rest of the national security establishment […] They knew that if they opposed the national-security establishment at a fundamental level, they would be subjected to retaliatory measures.
Kennedy… After the Bay of Pigs, he vowed to tear the CIA into a thousand pieces and scatter them to the winds. He also fired CIA Director Allen Dulles, who, in a rather unusual twist of fate, would later be appointed to the Warren Commission to investigate Kennedy’s murder.
Kennedy’s antipathy toward the CIA gradually extended to what President Eisenhower had termed the military-industrial complex, especially when it proposed Operation Northwoods, which called for fraudulent terrorist attacks to serve as a pretext for invading Cuba, and when it suggested that Kennedy initiate a surprise nuclear attack on the Soviet Union.
[…]
Worst of all, from the standpoint of the national-security establishment, [Kennedy] initiated secret personal negotiations with Soviet Premier Nikita Khrushchev and Cuban leader Fidel Castro, both of whom, by this time, were on the same page as Kennedy.
[…]
Kennedy was fully aware of the danger he faced by taking on such a formidable enemy.
And, as we previously noted, to the extent that President Kennedy consciously stood up to the system, he paid the price for his attempt at independent wielding of power from the Oval Office.
It is a shuddering thought. A sharp lesson in history that must not be misinterpreted.
The implications for Trump are quite clear. If his refusal to take intelligence briefings, or follow CIA advice is serious, then serious consequences will follow. If Trump is serious about peace with Putin when they insist on war, there will be a problem.
The CIA director will likely be replaced by Mr Trump's pick Mike Pompeo next week.
- Trump's Delusion: Halting Eurasian Integration And Saving 'US World Order'
Submitted by Federico Pieraccini via Strategic-Culture.org,
The preceding three parts of this series analyzed the mechanisms that drive great powers.
The most in-depth understanding of the issues concerned the determination of the objectives and logic that accompany the expansion of an empire.
Geopolitical theories, the concrete application of foreign-policy doctrines, and concrete actions that the United States employed to aspire to global dominance were examined.
Finally, the last bit of analysis focused particularly on how Iran, China and Russia have adopted over the years a variety of cultural, economic and military moves to repel the continual assault on their sovereignty by the West with specific attention was given to the American drive for global hegemony and how this has actually accelerated the end of the 'unipolar moment', impelling the emergence of a multipolar world order.
In this fourth and final analysis I will focus on a possible strategic shift in the approach to foreign policy from Washington. The most likely hypothesis suggests that Trump intends to attempt to prevent the ongoing integration between Russia, China and Iran.
The failed foreign-policy strategy of the neoconservatives and neoliberals has served to dramatically reduce Washington's role and influence in the world. Important alliances are being forged without seeking the assent of the United States, and the world model envisioned in the early 1990s – from Bush to Kagan and all the signatories of the PNAC founding statement of principles – is increasingly coming undone. Donald Trump’s victory represents, in all likelihood, the last decisive blow to a series of foreign-policy strategies that in the end undermined the much-prized leadership of the United States. The ceasefire in Syria, reached thanks to an agreement between Turkey and Russia, notably excluded the United States.
The military, media, financial and cultural assault successfully prosecuted over decades by Washington finally seems to have met its Waterloo at the hands of the axis represented by Iran, Russia and China. The recent media successes (RT, Press TV and many alternative media), political resistance (Assad is still president of Syria), diplomatic struggles (negotiations in Syria without Washington as an intermediary) and military planning (Liberation of Aleppo from terrorists) are a result of the efforts of Iran, Russia and China. Their success in all these fields of operations are having direct consequences and implications for the internal affairs of countries like the United Kingdom and the United States.
The relentless efforts by the majority of Western political representatives for a successful model of globalization has created a parasitic system of turbo capitalism that entails a complete loss of sovereignty by America’s allies. Brexit and Trump have served as an expression of ordinary people’s rejection of these economic and political regimes under which they live.
In Syria, Washington and its puppet allies have almost exited the scene without achieving their strategic goal of removing Assad from power. Within the American political system, the establishment, spanning from Clinton to Obama, was swept away for their economic and political failures. The mainstream media, spewing an endless stream of propaganda aimed at sustaining the political elite, completely lost their battle to appear credible, reaching unprecedented peaks of partisanship and immorality.
Donald Trump has emerged with a new approach to foreign policy affairs, shaped by various political thinkers of the realist mould, such as Kenneth Waltz and John Mearsheimer. First on the to-do list is doing away with all the recent neoconservative and neoliberal policies of foreign intervention (Responsibility to Protect – R2P) and soft-power campaigns in favor of human rights. And there will be no more UN resolutions deviously employed as cover to bomb nations back into the stone age (Libya). Trump does not believe in the central role of the UN in international affairs, reaffirming this repeatedly during his campaign.
The Trump administration intends to end the policy of regime change, interference in the internal affairs of foreign governments, Arab Springs, and color revolutions. Such efforts, they argue, are ultimately ineffective anyway and are too costly in terms of political credibility. In Ukraine the Americans have allied themselves with supporters of the Nazi Stepan Bandera, and in the Middle East they finance or indirectly support al Qaeda and al Nusra Front. These tactics, infamously branded as 'leading from behind', never achieved their desired results. The Middle East is in chaos, with a Moscow-Tehran axis emerging and going from strength to strength. In Ukraine, the government in Kiev not only seems incapable of complying with the Minsk agreements but also of prosecuting a new military campaign with no guarantees from their European and American partners.
There is a wild card that Trump hopes to play in the first months of his presidency. The strategy will focus on the inherited chaotic situation in the Middle East and Ukraine. Obama will be blamed for the previous chaos, it will be argued that sanctions against the Russian Federation should be removed, and Moscow will be given a free hand in the Middle East. In one fell swoop, the future president may decide not to decide directly on the Middle East or on Ukraine, avoiding any further involvement and instead finally making a decision in the national interest of his country.
A sustainable strategy may finally be attained by remaining passive towards the developments in the Middle East, especially on the Syrian front, leaving it firmly in Russian hands, while emphasizing at the same time the effort against Daesh in cooperation with Moscow. Another wise choice would see Kiev falling by the wayside, trashing Ukrainian ambitions to regain the Donbass and recover Crimea. Finally, removing sanctions would allow the next president to strengthen the alliance with European partners (a diplomatic necessity that Trump must make as the new president). Over two years the EU has suffered from economic suicide in the name of a failed policy strategy imposed by Washington. The Trump presidency will seek to normalize relations between Moscow and Washington as well as with European allies more willing to actively collaborate with the Trump administration.
The Middle East will accordingly see a decline in violence, increasing the chances of seeing an end to the conflict in Syria. This plan for the initial phase of the Trump presidency has been widely announced during the months leading up to his election, both by himself or by members of his staff.
The implicit message is to seek dialogue and cooperation with all nations. Probably what lies behind these overtures is actually an explicit willingness to try to break the cooperation between Russia, Iran and China. The motivations for this action stem from the implications for the United States if a full military, cultural and economic alliance between Beijing, Moscow and Tehran is formed. It would almost ultimately consign the United States to irrelevance on the grand chessboard of international relations.
More realistically, Trump aims to shift the focus of the United States from the Atlantic to the Pacific, where the largest US commercial interests will reside in the future; a shift of focus from the Middle East to the South and East China Seas. The geopolitical reasons behind this decision, and the guiding theories behind it, were addressed particularly in the first article of this series. In summary, Trump intends to accelerate Obama’s Asian pivot, bringing about profound changes to US foreign policy. Smoking the peace pipe with Russia will free up resources (to "build up our military" in naval terms) to be focused in the Pacific. He intends to emphasize the importance of bilateral relations between allies ("free riders" Japan and South Korea) to focus on containing China.
The wildcard that Trump hopes to play in breaking the alliance is called Russia. Thanks to previous peace talks developed with Moscow, Trump hopes for a reprise of Kissinger's strategy with China in 1979, with the addition of a promise of non-interference in the Middle East against Iran and Syria by the United States. In an exchange unlikely to happen, the American administration is hoping to convince the Kremlin that no action will be taken in the Middle East against Moscow and its allies, including Iran, in exchange for help in containing the Republic of China.
With this in mind, Trump’s choice of a very questionable personality to liaise between Washington and Tel Aviv, combined with the strong rhetoric of Trump against the Islamic Republic of Iran, and the equally harsh responses from Tehran to the threats of the future president, seem to satisfy the roles and rhetoric of all parties involved. No actions, only rhetoric. For Tehran and Tel Aviv it is easier to argue that to sign an agreement. The Iranian nuclear deal will, for this reason, continue to be a major point of tension, but also the guarantor of unlikely military action.
The real problem for the future administration in this strategy is offering a consistent plan of non-interference in the Middle East. Putin is well aware, in any case, that Washington is not able to intervene and change the fate of the balance of power that is forming in the Middle East. Trump’s indirect offer not to take action in the Middle East is at best a bluff that will not last long. Trump ignores (or, being a good negotiator, pretends not to want to see) that very few cards in his deck can be attractive to Moscow. The alliance between Moscow, Beijing and Tehran is firm and certified by strategic exchanges in many fields, a trend promising tremendous growth. The war in Syria has shown the results of effective coordination between the three nations. The addition of the Islamic Republic of Iran to the Shanghai Cooperation Organization (SCO) will further strengthen security ties, without forgetting that the north-south corridor between Russia and Iran also ensures stability in an area of ??the globe where the danger of subversive terrorism is very high..
During the period of sanctions, Russia and China signed the most important and immense trade agreement in history, sealing Moscow’s turn toward the east. Such a move involves a level of strategic planning that goes well beyond the four years of a presidential term. If Trump hopes to achieve cooperation of some kind with Putin to further his grand strategy, he is deluding himself. However, he must out of necessity cooperate against terrorism in the Middle East with Russia and moderate Washington’s allies in the region who support terrorist. He will be forced to remove sanctions and reset the international relationship between Washington and Moscow, freeing the EU from a counterproductive situation in opposing the Russian Federation. He will probably then decide to ignore permanently the matter of Ukraine and Crimea, burying one of the tactics and strategies that was the cornerstone of the neoconservatives, namely an attempt to prepare the Ukrainian army to face the Russian Federation militarily, then drawing in NATO into an all-out war.
Trump knows he is in an inferior negotiating position vis-a-vis Moscow and Beijing. He is well aware that effecting a rupture of relations between China, Russia and Iran is almost impossible. The only advantage, from his point of view, is having more room to negotiate with Moscow, given the abysmal levels of relations between Putin and Obama.
Naturally, if Trump should really embark on such a mission of dividing the Eurasian continent, he is likely to expect very specific guarantees about the future attitude of Moscow towards Beijing. Putin will have very few problems in playing him to his advantage. Moscow has everything to gain from this situation. Trump hopes to have on his side the Russian Federation, then proceed to convince countries like Japan, the Philippines and South Korea that containing China is the only viable strategy for limiting China’s influence and future domination over Asia. These actions will provoke the opposite effects to those intended, thereby promoting further integration of Eurasia (AIIB and Silk Road 2.0), as shown by Obama’s Asian pivot. Any attempt to impose a new Asian pivot will end up in flames, as has been the case with the commercial Trans-Pacific Partnership Agreement.
In the meantime, with the removal of sanctions, many EU countries will finally be able to resume their energy and technology integration with the Eurasian continent, especially with Russia. Japan will in all likelihood be able to sign a peace treaty with Russia without violating its obligations to Washington.
In general, the removal of sanctions on Russia will accelerate many projects placed on hold by tensions between Washington and Moscow. Trump’s attitude, if he decides to have an aggressive posture towards Beijing, will force the Chinese elite to see what lies in store for it. Washington does not intend to have joint relations with Beijing. Trump has repeatedly reiterated the thoughts of Mearsheimer, a prominent contemporary geopolitical theorist, who states that in less than a decade China’s growth will likely pose a threat to the United States as a superpower. Mearsheimer argues that within a few years, thanks to the growth of nominal GDP and demographic increase, the Republic of China will be the first military power in the world to dominate Asia. Trump intends to concentrate all his efforts, in terms of foreign policy, on this factor. To succeed, he understands that he needs to have on his side several regional players (Japan, South Korea, Vietnam, India, the Philippines), especially the Russian Federation, as well as oversee a sea change that will transfer the attention in Washington from the Atlantic to the Pacific .
This period of time will represent for Moscow, Beijing and Tehran a time to make definitive choices, a season in which the national policy-makers of these nations will have to understand what road to embark on. For Tehran, the cards are dealt face up, with a predetermined role as regional power. For Moscow and Beijing the issue is far more complicated. Much will depend on how Beijing intends to oppose openly any hostile action of Trump. Moscow has for many years openly questioned the world order led by Washington. Beijing understandably seems reluctant to engage in direct confrontation. In all likelihood, Trump and his realist foreign-policy attitude will lead the Chinese elite to understand that Washington considers itself to be the only one entitled to grant world order. The Chinese elites need to understand that the only sustainable path for the future is the construction, with all actors, of a multipolar world that includes Washington, New Delhi, Moscow, Tehran, London and Brussels. Realistically, it is hard to think that the new administration would alter the strategic partnership formed between China, Iran and Russia. After all, Trump would retrace the same steps of his predecessors, simply by changing the angle of approach and trying to further shuffle the cards of international relations. The decision to improve the world through cooperation and mutual respect does not exactly match the aspirations of the American deep state that seeks war, chaos and conflicts.
The big difference we will see with a candidate like Trump is easy. Once all diplomatic efforts have failed against Beijing, instead of doubling down with military or terrorist efforts, the strategy will be abandoned in silence. The strong expressions against Beijing, the feared increase in military spending for the Pacific (to satisfy the industrial-military apparatus), and the rhetoric against Iran (to appease the Israel lobby), will be used to moderate the deep state’s intentions, while Trump will try to focus on economics and security (counter-terrorism) and much less on foreign policy.
Series Conclusion.
This series has sought to invite readers to reflect on the epochal events that are occurring. The global hegemonic project that was supposed to be realized with a Clinton presidency has been stopped. The inevitable military confrontation with Russia, Iran and China has been averted thanks to the preventive actions of these countries together with the defeat of the Democratic candidate. A huge blow has been delivered to the establishment, with its impulse toward globalism and US imperialism.
The emergence of a multipolar world order has altered the way nations interact with each other in the field of international relations. Washington is no longer the only referent, and it is this that represents a pivotal transition from a unipolar world dominated by Washington. The mechanisms that regulate the great powers have varied in form and content, leading to an almost unprecedented international situation. The future multipolar world order, historically unstable, will in fact hold the promise of stability thanks to the actions of opposing nations to the American superpower. United they will stabilize the world.
The key to a sustainable future world order is the synergy between the newly formed Beijing, Moscow and Tehran axis as an economic, military and cultural counterweight to the US. The union and the alliance of these three nations has created a new super-pole, able to balance effectively the often destructive actions of Washington. Rather than a multipolar world order, we are actually faced with a situation of two superpowers, one of which is based on the integration between dozens of nations on more than two continents. It is a new era that will accompany us over the coming decades. The unipolar world is over – forever!
- Davos Elite Eat $40 Hot Dogs While "Struggling For Answers", Cowering in "Silent Fear"
For those unfamiliar with what goes on at the annual January boondoggle at the World Economic Forum in Davos, here is the simple breakdown.
Officially, heads of state, captains of industry, prominent academics, philanthropists and a retinue of journalists, celebrities and hangers-on will descend Tuesday on the picturesque alpine village of Davos, Switzerland, for the World Economic Forum;
Unofficially, it’s the world’s biggest echo chamber, where wealthy, influential and/or powerful people, yet vastly out of touch with the rest of the world, sit down with other wealthy, influential and/or powerful people who are just as out of touch, to validate to each other that nobody really knows anything (also known as the “ratings agency effect”), but because the press is there and fails to point out that these emperors of industry, commerce, entertainment and politics are naked in hopes of maintaining their annual invitation and direct access, everyone goes home happy. And just as clueless.
Hence Trump.
Case in point, as Reuters fondly recalls, last year, the consensus here was that Trump had no chance of being elected (actually, last January the world’s elites were far more worried about plunging markets as we pointed out in “How Billionaires Are Investing In 2016: “The Only Winning Move Is Not To Play The Game“).
Trump was elected. His victory, less than half a year after Britain voted to leave the European Union, “was a slap at the principles that elites in Davos have long held dear, from globalization and free trade to multilateralism.”
We’ll get to Trump in a second, but first some more on the background of this festival which revels in everything the populist backlash of 2016 found excerable, courtesy of the NYT.
Who Attends the Conference?
More than 2,500 people will attend this year’s conference from 90 different countries, paying up to $50,000 per person to attend (that of course excludes the ultra-celebrities who get in for free). In fact, so many people are attending, some of the local staff may sleep in shipping containers. Most of the participants are corporate executives, but more than two dozen heads of state and government are expected to attend. Theresa May, the prime minister of Britain, and Xi Jinping, president of China, are attending the conference for the first time this year. Xi is the first Chinese president to attend the event, and will also be the star attraction. His presence is being seen as a sign of Beijing’s growing weight in the world at a time when Trump is promising a more insular, “America first” approach and Europe is pre-occupied with its own troubles, from Brexit to terrorism.
On the other hand, Trump has decided not to officially send a member of his team as it would “betray his populist-fueled movement.” Likewise German chancellor Merkel will be absent, worried about her own image ahead of the 2017 German elections.
Aside from politicians, Shakira and the actor Forest Whitaker are to receive awards this year. Expected attendees include Sheryl Sandberg, COO at Facebook; Matt Damon; Formula One driver Nico Rosberg; and Alibaba’s Jack Ma. While only 17% of last year’s participants were women, according to the forum, this year the number is not expected to change.
How Are These People Kept Safe?
All of those dignitaries need security. During the conference, Davos transforms into a fortress. Roadblocks restrict traffic on the city’s main streets and checkpoints spring up outside each venue. At the Congress Center, where the main panels take place, and at each hotel that hosts parties and talks, attendees pass metal detectors, armed guards and beneath the watchful eyes of sharpshooters. In the past, the conference was targeted by protesters associated with the anticapitalist Occupy movement. In 2013, members of the Ukrainian activist group Femen were arrested after a topless demonstration. The Swiss government estimated it will spend 8 million Swiss francs, about $8 million, on security, but said that number could increase if there were a credible threat to the conference. “Switzerland is still not regarded as a priority target for jihadist terrorists,” the Federal Council said on its website. “On the other hand, even on Swiss soil, the interests of states participating in the military coalition against the so-called Islamic State face an increased threat.”
Is It as Elitist as It Sounds?
Yes. The meeting runs on a tiered system of colored badges denoting just how important one is, or is not. White badges are for attendees able to attend any official event and make full use of the forum’s facilities. Orange badges are reserved for the 500 journalists who cover the forum, but are not allowed at some parties. Other badges, like purple ones, denote technical or support staff and limit their holders to a few areas. Local hotels like the Belvedere and the InterContinental often sell their own badges to the bankers and consultants who descend upon Davos to strike deals and chat up clients. These souls camp out at the hotels, renting rooms for business meetings by day and soiree hopping at night.
What About the Parties?
Beyond the boring, ineffective, and circle-jerking lectures and panel discussions, a much more important agenda unfolds after sunset. One notable event, according to the NYT, is a simulation of a refugee’s experience, where Davos attendees crawl on their hands and knees and pretend to flee from advancing armies. It is one of the most popular events every year. The theme of this year’s conference is “Responsive and Responsible Leadership.” But attendees like to play as hard as they work.
There are several official cocktail receptions, but the action really lies in a galaxy of events hosted by corporations. Some are small, intimate dinners that feature the likes of Leonardo DiCaprio and Bono. Others are dazzling affairs worthy of a modern day Gatsby: JPMorgan Chase, for example, has previously taken over the Kirchner Museum Davos for drinks with its chief executive, Jamie Dimon, and Tony Blair, the former British prime minister. Google’s annual party at the InterContinental Hotel has become the hottest ticket in town. The investor Anthony Scaramucci, now an adviser to Donald J. Trump, for years has hosted a reception at the famed Hotel Europe featuring a sometimes eye-popping list of high-end Champagne and Bordeaux red wine. A more recent up-and-comer is hosted by Salesforce.com, a business software maker, whose chief, Marc Benioff, is one of the forum’s most ardent boosters. Last year’s Salesforce party included Mr. Benioff flying in scores of fresh flower leis and a band from Hawaii, as Eric Schmidt of Google and other tech notables danced in a corner. Several years ago, Sean Parker of Napster and Facebook fame, hosted an over-the-top gathering that featured stuffed animal heads shooting laser beams out of their eyes. And the Russian billionaire Oleg Deripaska has thrown opulent gatherings at a nearby villa where the Champagne flowed freely For a nightcap, the Davos crowd traditionally retires to the Tonic Bar at Hotel Europe, sipping cocktails while the forum fixture Barry Colson leads the crowd in Billy Joel singalongs.
* * *
With the background of the event covered, we once again focus on the key topic at hand, namely quite ironic “social and wealth inequality” – which incidentally has been a core topic for the past several years, demonstrating just how clueless Davos really is, and of course Trump.
Just so readers can get a sense of just how delightfully surreal this whole event is, one of the most prominent panels is called “Squeezed and Angry: How to Fix the Middle-Class Crisis“
Its description: “Poor employment prospects and low-income growth in many developed economies have laid the groundwork for the rise of populism. Did policy-makers ignore these trends or do too little to redress them? What can be done to restore growth in the middle class and confidence in the future?“
Who are these experts on the woes of the middle class? Read em and weep: Ray Dalio – a billiionaire who encourages spying on his employees; Christine Lagarde – a convicted criminal and tax evader, head of an organization that takes from the poor and gives to the world’s creditors; and Larry Summers, a firm believer, and doer, in wealth redistribution from the middle classes to the wealthy.
* * *
While in previous years the Davos party was not to be spoiled with any actual concerns about the real world violating the inner sanctum of the world’s uber-poseurs, this year something has changed.
Beneath the veneer of optimism over the economic outlook lurks acute anxiety about an increasingly toxic political climate and a deep sense of uncertainty surrounding the U.S. presidency of Donald Trump, who will be quite symoblically, even if purely accidentally, inaugurated on the final day of the forum.
And with Trump’s election come worries that the ivory towers inhabited by the 2,500 or so Davosites, are far less sturdy than previously believed. “Regardless of how you view Trump and his positions, his election has led to a deep, deep sense of uncertainty and that will cast a long shadow over Davos,” said Jean-Marie Guehenno, CEO of International Crisis Group, a conflict resolution think-tank.
Moises Naim of the Carnegie Endowment for International Peace was even more blunt, suggesting that the people in Davos are even more clueless than usual, which is saying quite a lot.
“There is a consensus that something huge is going on, global and in many respects unprecedented. But we don’t know what the causes are, nor how to deal with it.“
Brilliant.
* * *
Meanwhile, in an attempt to figure out the causes and “how to deal with it”, the participants in the World Economic Forum, which runs from Jan. 17 to 20, will partake in such panels as the abovementioned “Squeezed and Angry: How to Fix the Middle Class Crisis”, “Politics of Fear or Rebellion of the Forgotten?”, “Tolerance at the Tipping Point?” and “The Post-EU Era”.
The central question in Davos, a four-day affair of panel discussions, lunches and cocktail parties that delve into subjects as diverse as terrorism, artificial intelligence and wellness, is whether leaders can agree on the root causes of public anger and begin to articulate a response… aside from the forum participants themselves of course.
A WEF report on global risks released before Davos highlighted “diminishing public trust in institutions” and noted that rebuilding faith in the political process and leaders would be a “difficult task”. Guy Standing, the author of several books on the new “precariat”, a class of people who lack job security and reliable earnings, believes more people are coming around to the idea that free-market capitalism needs to be overhauled, including those that have benefited most from it.
“The mainstream corporate types don’t want Trump and far-right authoritarians,” said Standing, who has been invited to Davos for the first time. “They want a sustainable global economy in which they can do business. More and more of them are sensible enough to realize that they have overreached.”
But Ian Bremmer, president of U.S.-based political risk consultancy Eurasia Group, is not so sure, and he recounted ro Reuters a recent trip to Goldman Sachs headquarters in New York where he saw bankers “rejoicing in the elevators” at the surge in stock markets and the prospect of tax cuts and deregulation under Trump. Both Goldman CEO Lloyd Blankfein and his JP Morgan counterpart Jamie Dimon will be in Davos.
It remains to be seen if there will be as much “elevator rejoicing” when the market finally crashes under Trump, an inevitable outcome which some speculate is precisely why Trump was allowed to become president: so that all the blame on the grand crash, once it, happens can be placed on him.
Others are less worried about the impact of Trump, and more concerned that the pace of technological change and the integrated, complex nature of the global economy have made it more difficult for leaders to shape and control events, let alone reconfigure the global system. The global financial crisis of 2008/9 and the migrant crisis of 2015/16 exposed the impotence of politicians, deepening public disillusion and pushing people towards populists who offered simple explanations and solutions.
The problem, says Ian Goldin, an expert on globalization and development at the University of Oxford, is that on many of the most important issues, from climate change to financial regulation, only multilateral cooperation can deliver results. And this is precisely what the populists reject. “The state of global politics is worse than it’s been in a long time,” said Goldin. “At a time when we need more coordination to tackle issues like climate change and other systemic risks, we are getting more and more insular.”
* * *
Whatever the reason, sense of dread that things are moving, changing beyond the participants’ control will be all too tangible.
It is also why, as Bloomberg reported today, the World Economic Forum will convene a special meeting in Washington this year to discuss issues raised during the president-elect’s campaign “and the populist wave that swept him to victory” WEF founder Klaus Schwab told Bloomberg Television on Sunday. The gathering will explore U.S. investment and job-creation opportunities for companies that participate in the forum, he said.
“It’s very natural that with the new administration we plan a major event in the U.S. to see what are the implications of the new president and how the business community could engage,” Schwab said in advance of the forum’s 47th annual meeting in the Swiss ski resort of Davos. “We have to be responsive to the call.”
“People have become very emotionalized, this silent fear of what the new world will bring,” Schwab said in the town’s hulking conference center. “We have populists here and we want to listen. We have to respond to these individuals’ fears and to offer solutions. It’s not just enough to listen; we have to provide answers and that’s what were here for in Davos.”
No, that’s what you were there for in Davos in 2013, 2014, 2015 and 2016, and you did nothing. Now it’s too late as the pendulum has already swung.
That, however, is not obvious to the forum organizers who will enjoy another blockbuster year. Business is booming for the WEF and Schwab, 78, said he has no plans to abandon or alter its annual retreat. Revenue is up 45% in the past five years and staff have increased by about a third – with employees earning an average of 135,000 Swiss francs, ($133,875) which rises to 213,000 Swiss francs with the addition of costs such as pensions and healthcare.
“Our salary structure is completely in line with others such as the Bretton Woods organization, the World Bank or the International Monetary Fund,” Schwab said. “We also have to be competitive with organizations like Goldman Sachs and McKinsey. We are competing for the same talent.”
How does Schwab reconcile the glaring hypocricy of the world’s wealthiest debating social injustice and wealth inequality? Simple:
Despite the glitzy parties that have become the hallmark of the annual gathering, Schwab said his aim is not to celebrate the “outrageous excesses of life,” but rather to create a “global village,” where participants can mull weighty issues facing the world without the distractions of a large city. And he insists that as the power and beliefs of business and political leaders face unprecedented challenges, the meeting is needed more than ever.
Schwab says the WEF’s annual meeting, where companies host lavish parties awash in champagne and rare vintage wines, attendees pay $50,000 and thousands of soldiers and police stand guard, remains an appropriate forum to discuss political issues like the rise of populism and seek solutions to society’s biggest problems. Unfortunately, that’s all it is, as no concrete, revolutionary decisions can ever take place within the confines of this giant echo chamber.
Schwab concludes by saying that “the right solution will require a lot of effort and many steps in the right direction. I am optimistic that in a new multi-polar world we still have the notion of a joined and shared destiny” but adds that his “biggest fear is that we will believe there are very simple answers to very difficult questions.”
Actually, herr Klaus Schwab, there are other far more tangible things you and your peers should be afraid of, but somehow we doubt that those will become apparent while eating $40 hot dogs.
- Why The Stock Market Has Soared (And We'll All Soon Know What It's Like To Be A Madoff Client)
Submitted by Chris Hamilton via Econimica blog,
What is driving the US stock markets to such amazing gains? While some corporations have seen increases in sales and most have innovated to reduce costs, lessen waste, and maximize efficiency, I'll focus on some of the other means that have driven profits higher helping to push US equities into record territory.
1- Declining % of profits going to Uncle Sam.
2- Minimal wage growth and holding the line on new hires.
3- Debt fueled stock buybacks and dividends at the expense of investment in mid and long term activities (R&D, cap-ex, exploration, etc.).
To represent the US market as broadly as possible, we'll use the Wilshire 5000 index, representing all 3600+ publicly traded US corporations (chart below vs. the 10yr Treasury rate).
Corporate Profits
First, profits —Way Up. The Wilshire 5000 vs. corporate profits (chart below).
But how have corporate after tax profits risen so fast?
Corporate Taxes
Pay less in taxes on rising profits…since 2000, profits have risen in excess of 300% while tax revenues half that.
Of those rising profits, corporations are keeping far more and giving far less to uncle Sam. Under Eisenhower, 50% of profits went to the Fed's to a low of 17% by the end of GW Bush's term. Perhaps a Republican Congress and Trump will get these tax revenues rescinded entirely???
Wages & Corporate Employees
The #1 cost to business is usually labor, so how about pay the rank and file employees less (chart below)? Dashed black lines represent old America where workers shared in the growth with growing wages (growing the capacity of the consumer base)…and in the solid black lines, the new America where wage growth has slowed to the lowest levels in US history despite record corporate profits.
But it's not just paying less, corporations also throttled back on hiring more employees…corporations consistently provided more US employment from 1970 until 2000…since 2000, not so much. Can't blame corporations for trying to save their way to prosperity and playing the game as it's legislated…but an economy without a growing base of consumers is a bit of a problem.
Corporate employment vs. Wilshire 5000…hmmm.
ZIRP = Buybacks and More Cheap Debt
When 2008 hit, private citizens and corporations simply couldn't / wouldn't take on any more debt. So the Federal Reserve made money free to corporations (enabling massive debt fueled buybacks) and amazing growth in Federal debt (ultimately a liability of the US taxpayers).
According to Reuters, half of the top 50 non-financial U.S. companies are now giving more money back to shareholders in buybacks and dividends than they make in profits – the first time that’s happened outside of recessionary periods. This is coming at the expense of R&D and innovation. These include Apple, Intel, IBM, Cisco, Home Depot, AT&T, Boeing, Pfizer, and so many more…detailed HERE.
Barron's notes, the result of the buybacks is that net equity issuance has been negative for the last several years and bears a striking resemblance to the period leading up to the 2008 financial crisis. The sheer level of buybacks is staggering. A Deutsche Bank report notes that Standard & Poor’s 500 companies pay out two-thirds of their earnings through buybacks and dividends. FactSet further notes that those same companies spent $166.3 billion on share buybacks in the first quarter, a post-recession high and one only surpassed by $178.5 billion in the third quarter of 2007…detailed HERE.
Federal Public Debt per Full Time Employee
The chart below shows the growth in federal public debt owed per US Full Time Employee. The average full time employee is now on the hook for $116 thousand (more than double the 2008 ratio). Otherwise, how would consumers continue consuming more if their incomes weren't rising and there weren't more employed among them (corporately or working full time)?
Finally, how full time jobs, federal debt (public), and the Federal Reserves FFR % have progressed to push financial asset prices into the stratosphere. Since 2007, an increase of 181% in federal public debt and 85% reduction in the federal funds rate cost of borrowing has created a 2.1% increase in full time jobs. This was truly the last hurrah.
Conclusion
The impact of the Fed's extended period of zero interest rate policy was the creation of illusory gains. However, many analysts expect a market correction to an outright market collapse while the technicians and bulls out there expect the bullish activity has much farther to run and attribute this to positive economic activity.
As for me, I believe we are in deep trouble and the market is now a matter of national security… the federal funds rates will surely be pushed into negative territory and asset prices rise unbelievably. For those thinking this is a "free market", the further gains in the equity market will be shocking. Detailed domestically HERE and globally HERE. The absolute disconnect of asset prices from economic activity is and will continue to be unlike anything we have seen.
This is no more of a "free market" than shooting a cow in a pasture is "hunting". "Invest" accordingly, but know full well the ill gotten gains will one-day, someday, sooner than later, be entirely gone and we'll all know what it felt like to be Bernie Madoff clients.
- Trump Responds To CIA Chief Brennan, Asks "Was He The Leaker Of Fake News?"
Just hours after John Brennan lashed out at the president-elect in an interview with Fox News, Donald Trump has responded by suggesting that the outgoing CIA Director may have been behind the publication last week of unverified and salacious intelligence connecting the president-elect to Russia….
.@FoxNews “Outgoing CIA Chief, John Brennan, blasts Pres-Elect Trump on Russia threat. Does not fully understand.” Oh really, couldn’t do…
— Donald J. Trump (@realDonaldTrump) January 16, 2017
much worse – just look at Syria (red line), Crimea, Ukraine and the build-up of Russian nukes. Not good! Was this the leaker of Fake News?
— Donald J. Trump (@realDonaldTrump) January 16, 2017
This is the most direct accusation yet in the escalating feud with Obama’s intelligence agencies. As we noted earlier, no president since John F. Kennedy has dared to take on the CIA or the rest of the national security establishment. They knew that if they opposed the national-security establishment at a
fundamental level, they would be subjected to retaliatory measures. To the extent that President Kennedy consciously stood up to the
system, he paid the price for his attempt at independent wielding of
power from the Oval Office. It is a shuddering thought. A sharp lesson in history that must not be misinterpreted. The implications for Trump are quite clear. If his
refusal to take intelligence briefings, or follow CIA advice is serious,
then serious consequences will follow. If Trump is serious about peace
with Putin when they insist on war, there will be a problem.The CIA director will likely be replaced by Mr Trump’s pick Mike Pompeo next week.
- "Mainstream Mediasaurus"
- Why Is Obama Moving Troops Into Poland, Provoking Russia Right Before The Inauguration?
Submitted by Michael Snyder via The Economic Collapse blog,
January 20th cannot come soon enough. Instead of stepping back and trying to ensure a smooth transition for Donald Trump, Barack Obama has decided to go hog wild and use every ounce of presidential power still available to him. He has been establishing a bunch of new national monuments, he just stabbed Israel in the back at the United Nations, and on Thursday he even took time to give Joe Biden a Presidential Medal of Freedom. But one of the things that has people the most concerned is his endless provoking of Russia. Every few days it seems like Obama is doing something else to aggravate Russia, and if he wasn’t leaving office in about a week I am sure that the mainstream media would be full of speculation about a possible war.
Lame duck presidents are not supposed to make risky moves like this once a new president has been elected. On Thursday, we learned that U.S. troops have been permanently deployed to Poland for the very first time…
American soldiers rolled into Poland on Thursday, fulfilling a dream some Poles have had since the fall of communism in 1989 to have U.S. troops on their soil as a deterrent against Russia.
Some people waved and held up American flags as U.S. troops in tanks and other vehicles crossed into southwestern Poland from Germany and headed toward the town of Zagan, where they will be based. Poland’s prime minister and defense minister will welcome them in an official ceremony Saturday.
Poland was once a key member of the Warsaw Pact alliance, and the Russians are quite alarmed that U.S. troops will now be stationed so close to the Russian heartland. The following comes from ABC News…
“These actions threaten our interests, our security,” President Vladimir Putin’s spokesman Dmitry Peskov said Thursday. “Especially as it concerns a third party building up its military presence near our borders. It’s not even a European state.”
And it has also been announced that NATO troops will arrive in Lithuania in late January. If you will remember, Lithuania was actually part of the Soviet Union during the Cold War.
All of a sudden, Russia has become enemy number one. Barack Obama and Hillary Clinton say that Russia is to blame for Clinton’s election loss, and so at the end of December Obama expelled 35 Russian diplomats from the country.
That is the sort of thing that you do before a war starts.
Over in Europe, they are so freaked out about potential Russian interference in their elections that they are “erecting defenses to counter possible Russian cyber attacks”…
Nations in Europe, where Germany and France this year hold elections, are erecting defenses to counter possible Russian cyber attacks and disinformation to sway Western politics, but intelligence experts say this might be too little and too late.
The issue of Russian “influence operations” has taken on new urgency after U.S. intelligence agencies released a non-classified assessment that President Vladimir Putin ordered a campaign to move the U.S. election in favor of Donald Trump.
European nations and NATO are setting up centers to identify “fake news”, bolstering cyber defenses and tracking use of social media which target Russian-speaking communities, far-right groups, political parties, voters and decision-makers.
Back in 2012, Barack Obama mocked Mitt Romney for saying that Russia was a serious threat to our national security. He even joked that the 1980s were calling Romney because they wanted their foreign policy back.
At that time, Barack Obama boldly declared that the Cold War had been over for 20 years. But now here we are just four years later and Barack Obama has gotten us into a new Cold War. The crisis in Ukraine, the civil war in Syria, the price of oil, cyber-espionage and a whole host of other issues have brought tensions between the United States and Russia to a boiling point.
Many are hoping that relations with Russia will improve during the Trump administration, but the truth is that things could go either way.
It is important to remember that Trump will be surrounded by military people that are virulently anti-Russia. For example, retired Marine General James Mattis has been nominated to be Defense Secretary, and this week he told Congress that Russia is the “principal threat” to U.S. security…
While much of the hearing has so far been without controveries, in the most striking moment so far, Mattis told the Senate Armed Services Committee that Russia stands as the “principal threat” to the United States’s security. He said this is because of its actions and efforts to “intimidate” other countries.
Senator John McCain questioned Mattis to get his opinion on how much of a threat Russia represents. Mattis response was that the world order is “under biggest attacks since WW2, from Russia, terrorist groups, and China’s actions in the South China Sea”, agreeing with the neocon senator that Russia is trying to break up NATO.
“I’m all for engagement” with Russia, “but we also have to recognize the reality of what Russia is up to,” Mattis told Senator Jack Reed (D-Rhode Island).
There is a great deal of concern that Trump’s view of Russia could be significantly shaped by strong military men such as Mattis. Both Democrats and Republicans want Trump to become much more anti-Russia, and let us hope that he does not give in to the pressure.
Over in Russia, they view us very negatively as well. A Gallup survey taken in mid-2016 found that current U.S. leadership (the Obama administration) only had a one percent approval rating in Russia.
Yes, you read that correctly.
You can’t get much lower than one percent.
The Russians consider themselves to be the great force for good in the world, and they consider the United States to be the great force for evil. They openly talk about the possibility of nuclear war on their news broadcasts, and on one recent broadcast people were actually encouraged to locate the closest nuclear bomb shelter to their homes.
And in response to U.S. troops being deployed to Poland, the Russian government has deployed advanced anti-aircraft missile systems around Moscow…
Russia has deployed anti-aircraft missile systems around Moscow to protect the capital from attack in the latest sign Vladimir Putin is preparing for war.
The s-400 Triumph air defence system has been providing air cover for Russian forces in Syria since November, and is now being deployed on home soil.
It is capable of hitting moving airborne targets including planes and incoming missiles and has a range of 400km.
We should be very thankful that Barack Obama is leaving office, because right now we are on a path that leads to war with Russia.
Every American should be hoping that Donald Trump will work to greatly improve relations with the Russians, but all it would take is one wrong move for things to start deteriorating once again.
A new Cold War has begun, and the stakes are incredibly high…
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