Today’s News 16th October 2018

• Are We Headed For A US-Turkey "Fresh Start" After Brunson's Release?

  The FT editorial board says the time is ripe for rapprochement between the US and Turkey as Pastor Andrew Brunson, freed after two years of under Turkish captivity on charges of espionage, found himself sitting in the Oval Office across from President Trump less than a mere 24 hours after his release. 

  Is it time for a “fresh start” as FT suggests? 

  The freeing of the American pastor, who had been charged with espionage, ends a high-profile stand-off between the US and Turkey. It also provides an important opportunity to make a fresh start in the crucial relationship between Washington and Ankara. Turkey and the US matter to each other. For Washington, Turkey is an important member of Nato and a neighbour of Syria. It is a traditional ally of the US and has played a vital role in absorbing millions of Syrian refugees.

  No doubt Turkey would welcome it, as its economy was left reeling this summer as its relationship with Washington hit a low point, sending the lira into a death spiral, but the fact remains that it’s also a NATO ally which did more than any other to create that very refugee crisis in the first place.

  

  Turkey has indeed played a “vital role” in the crisis, as FT suggests, but more in the way of being both “arsonist” and “firefighter” as during most of the seven year long Syrian proxy war it used its border as the largest “jihadi highway” in modern history, facilitating the movement of al-Qaeda and ISIS terrorists into Syria to fight the Assad government.

  And of course, the United States was a key partner in this — as Joe Biden all but spelled out while speaking at Harvard in 2015 — when he blamed “US allies” including Turkey for the rise of the Islamic State. This is likely the reason why the White House has never fully and adequately called President Erdogan to account as a state sponsor of terror — simply put, each side probably has too much dirt on the other. 

  For the FT editorial board and the rest of the MSM, these established facts have long been ignored and swept aside, even though now fully acknowledged even within establishment academia. 

  But if Washington gets a “close regional ally” in a Middle East region where its regime change and imperialist ambitions have not changed, the Turks themselves also get an “insurance policy” by healing ties with the US. FT continues:

  For the Turks themselves, a close relationship with America is an important strategic insurance policy in a volatile region. But the attempted coup in Turkey in 2016 set off a train of events that threatened the US-Turkish alliance. The government of President Recep Tayyip Erdogan blamed the coup attempt on the followers of Fethullah Gulen, a Turkish religious leader based in the US. The mass arrests that followed the coup attempt swept up Mr Brunson, who was detained for two years. 

  “Insurance policy” is quite possibly the only accurate and fitting image FT offers in its op-ed: the two sides “need each other” in the way co-conspirators in a crime need each other to keep quiet, with the unspoken ability of each of further blackmail the other. 

  The release of Mr Brunson does not resolve all the issues between Washington and Ankara.

  The Erdogan administration remains furious about US support for Kurdish fighters in Syria, who the Turks insist are allies of Kurdish terrorists inside Turkey.

  The Americans are unsettled by Mr Erdogan’s wooing of President Vladimir Putin, and angered by his decision to buy a Russian air-defence system. That decision is seen by Washington as incompatible with Nato membership; it could trigger further economic sanctions against Turkey.

  Turkish companies could also be subjected to American secondary sanctions, when the US tightens its economic isolation of Iran, next month. Meanwhile Mr Erdogan’s increasingly autocratic behaviour at home — involving mass purges of the civil service and arrests of journalists — has drawn unfavourable attention in the US.

  This is a formidable list of problems.

  Overcoming all of them may not be possible. But there are some grounds for hope.

  The release of Mr Brunson ends an injustice that weighed heavily with evangelical voters in the US.

  The Syrian war may finally be coming to a close, which could make US support for the Kurdish rebels less of an issue. The threat of a crisis in US-Saudi relations should give the Trump administration an incentive to shore up ties with Turkey — another important regional power. The Erdogan government, meanwhile, is having to deal with a looming debt crisis. It needs goodwill in Washington.

  However, if the US and Turkey are to rebuild their relationship, both sides will need to show restraint.

  Ideally, the Turkish government should rethink its decision to buy Russian weaponry. Even if Turkey persists, the Trump administration should try to avoid a new round of economic sanctions. The Erdogan government, for its part, would do well to adopt a more understanding attitude to American aid for the Kurds in Syria, particularly if the US continues to provide intelligence co-operation on the terrorism threats facing Turkey. This kind of restraint will not be easy for either Mr Erdogan or Mr Trump — they are volatile and emotional leaders.

  But in the interests of both their nations, it is time for some pragmatism and careful diplomacy.

  

• How America Can Repair Its Damaged Relationship With Russia

  Authored by Nikolas Gvosdev via The National Interest,

  There is a way to break the dysfunctional cycle that hinders Moscow’s relationship with the West…

  

  George Beebe’s recent analysis has presented the policy community with a very useful paradigm for understanding recent alleged actions taken by the Russian special services in a number of Western countries: the Skripal Rorshchach test .

  Beebe is referring specifically to the attempted murder of former Russian double agent Sergei Skripal on British soil by use of a Soviet-developed nerve agent that sickened him and his daughter and killed several British citizens – amidst growing evidence of the involvement of officers of Russian military intelligence (the GRU). That case can be broadened to encompass a series of computer hacking/information warfare operations that were uncovered in the last several weeks in the UK, the United States, Canada and the Netherlands, which also have been attributed to the GRU. Now the discussion revolves around whether those who have been accused of taking action were doing so in contravention of or in support of the instructions of the Russian state.

  In every case, as Beebe points out:

  “The debate over the . . . evidence pivots on what one is inclined to believe about how Russia’s political system works and what Moscow aims to do in the world.”

  I would add a corollary to Beebe’s test:

  the debate also hinges on the view the government evaluating the evidence has on the desirability of engagement or disengagement with Russia.

  And, as recent European Union conclaves attempting to forge a coherent policy towards Russia – or the whipsawing in the United States itself between a Trump administration open to dialogue with Russia and a Congress determined to bring maximum pressure on Vladimir Putin’s government – make clear is how locked into pre-existing positions Western approaches to Russia remain.

  Arguably since 2007 and Vladimir Putin’s bombshell remarks at the Munich Security Forum, the West has been put on notice that Russia would seek to revise the parameters of the post–Cold War settlement, particularly in Europe and in Eurasia. It would seek to do so cooperatively wherever possible, but by use of both conventional and nonconventional force whenever necessary. Thus, Moscow has been prepared to engage both in conciliatory and hostile behavior with Western countries, sometimes even simultaneously, in pursuing its objectives.

  While this approach has not always been successful – with some spectacular miscalculations (such as the fallout from the Russian efforts to interfere with the 2016 U.S. elections) – it has nonetheless given the Kremlin the hallmarks of an overall grand strategy. In revealing remarks at the Moscow Energy Week press conference, Putin quipped that “special services mess with each other all the time” while at the same time calling for improved relations with the West.

  The West, on the other hand, approaches its relations with Russia through the prism of what Moscow “should” do rather than what it actually “is” doing. For some countries like Italy, Hungary, Austria, and to a lesser extent Germany and France, Russia “should” be a partner to Europe. Thus, these governments prefer to focus on areas of cooperation with Moscow and thus to minimize cases where Russia’s behavior is far less than constructive. For others – the United States most notably, Russia “should” conduct its domestic and foreign affairs in line with Western values, norms and preferences. When Russia deviates from such standards, the first instinct is to correct and punish. The current intra-Atlantic divergences (both within and between the countries of the West) on policy towards Russia stem from this basic divide – between those who see Russian transgressions as a distraction from Russia’s overall integration with the West versus those who see them as intrinsic to Russian statecraft and policy. So when the GRU is accused of hacking operations, one side is prepared to minimize the seriousness of the charges while the other is prepared to throw away all of the positives of the relationship in order to avenge. Swinging back and forth between these two binary choices does not lead to effective policy.

  For the past year, the dialogue for a “Sustainable Bipartisan U.S. Strategy Towards Russia” (informally known as the Mayflower Group) has been grappling with this very dilemma.

  On the one hand, Russia’s size, geopolitical position and military capabilities mean that the United States does not have the luxury of selective engagement and punishment, enacting penalties against Moscow that carry no costs or risks for the United States.

  At the same time, the need to sustain strategic stability in the relationship with another major nuclear power does not mean that the United States must meekly submit to all of Russia’s demands.

  The discussions have produced the outlines of what might be termed a 3-C paradigm: cooperate, compete and confront. In other words, the United States – and by extension the West – must be able to shift along the 3-C scale, safeguarding cooperation, for instance, in those areas that are vital to both countries (e.g. nuclear non-proliferation) while creating ground rules for areas where the two countries will compete (for instance, in energy sales around the world). Most importantly, the United States must be prepared to confront Russia – but to do so with a clear understanding of the costs and consequences. One of the things that has been quite frustrating in observing the back-and-forth in the U.S. Senate during the August hearings is the insistence on maximum confrontation with Russia in both military and financial terms – but with guarantees that there will be no negative blowback or consequences for the United States. This limitation – frankly admitted by the Obama administration in guiding how it imposed penalties on Moscow – weakens the deterrent impact and has contributed to a feeling in the Kremlin that penalties imposed by the West are survivable.

  The problem is that the Russian state takes the West’s protests less seriously than it should—and assumes that continuation of hostile action (such as hacking or poisonings) can continue with manageable consequences. In turn, Russia’s behavior inflames Western politicians who begin to contemplate much more stringent penalties or are prepared to sacrifice even areas of beneficial cooperation in order to punish the Kremlin. This begins to move us into lose-lose territory.

  A 3-C approach, guided by a sober assessment of costs and consequences, has the possibility of breaking this dysfunctional cycle. It assumes that enmity between Russia and the West is not inevitable but avoids a partnership at all costs approach. It provides a way to take advantage of openings to improve the relationship but to stand firm against Russian challenges to U.S. interests and values. Yet, at this point, the United States does not appear ready to develop this approach. It requires a degree of flexibility—to be able to impose or lift sanctions—that the Congress is unwilling to grant the president. It also requires an ability to think through priorities—not every Russian transgression or disagreement with Washington merits an all-out response.

  Perhaps the midterm elections will stabilize the American political system and lead to a modus vivendi between the president and Congress for the next two years, in which a more sustainable approach to Russia can take root. If not, then the dysfunction that has been observed for the last several years will deepen.

  

• World's "Worst Famine In 100 Years" Will Hit Yemen, U.N. Warns

  For a Saudi and Mohammed bin Salman (MbS) update that’s not directly related to the murder of journalist Jamal Khashoggi, a United Nations official on Sunday warned Yemen is now facing what could be “the worst famine in the world in 100 years” which is set to put “12-13 million innocent civilians at risk of starving,” according to the BBC. 

  Yemen’s war, which has involved intense Saudi-UAE-US coordinated airstrikes on civilian population centers going back to 2015 has been popularly dubbed “the forgotten war” due to its general absence from headlines and front page stories over the years.

  As a few analysts and war reporters have pointed out in recent days, it took the murder of one Washington Post contributor — who was one of the mainstream media’s own — for MbS to actually face any level of scrutiny, and yet the tens of thousands killed under Saudi coalition bombs is still largely taboo for the same mainstream to touch. 

  

  A top United Nations official who monitors Yemen, Lise Grande, told the BBC: “We predict that we could be looking at 12 to 13 million innocent civilians who are at risk of dying from the lack of food.”

  She explained, “I think many of us felt as we went into the 21st century that is was unthinkable that we could see a famine like saw in Ethiopia, that we saw in Bengal, that we saw in parts of the Soviet Union, that was just unacceptable. Many of us had the confidence that that would never happen again and yet the reality is that in Yemen that is precisely what we are looking at.”

  The U.N.’s Humanitarian Coordinator for Yemen further condemned a Saudi coalition airstrike on Sunday that killed at least 15 civilians near the port city of Hodeida. Grande said, “The United Nations agencies working in Yemen unequivocally condemn the attack on civilians and extend our deepest condolences to the families of the victims.”

  

  The attack reportedly occurred on what’s being described as a transport minibus in what is the third major air strike on a civilian bus since August. 

  Pro-Houthi rebel media said that five members of the same family were killed in the vehicle, and added that a number of the casualties were women and children. 

  Meanwhile a prominent humanitarian group working in the region, The Norwegian Refugee Council, has called such attacks tragically “routine” in a statement: “Attacks that kill and maim civilians are no longer an anomaly in Yemen’s war,” the group said. “The drumbeat of assaults on men, women and children is one that has become appallingly routine,” it added.

  MSNBC has run 455 segments on Stormy Daniels and zero on the war in Yemen over the past year, which seems insane but is, apparently, true. https://t.co/EaWUJVYizS

  — Evan Hill (@evanchill) July 25, 2018

  https://platform.twitter.com/widgets.js

  Estimates have put the civilian death toll in the war anywhere ranging from 10,000 to as high as 70,000 — a number difficult to come by as the Saudi coalition has blockaded the countries main humanitarian aid entry port of Hodeida. The U.N. most recent numbers puts the number of displaced at approaching 500,000 people. 

  As what the U.N. is now calling the “world’s worst famine in 100 years” is set to make Yemenis’ misery even worse, we wonder if the mainstream will actually give it coverage for a change. But we won’t hold our breath as this humanitarian disaster can’t be blamed on Putin or Assad. 

  

• The Khashoggi Extortion Fiasco

  Authored by Ghassan and Itbah Kadi via The Saker Blog,

  A mystifying diplomatic escalation ensued following the disappearance of Saudi Washington Post columnist, Jamal Khashoggi, after visiting the Saudi Consulate in Istanbul, Turkey.

  

  Why would the United States of America make such a fuss over the disappearance of a non-American citizen? Why would America turn a blind eye to the Saudi killing of thousands of Yemeni civilians and the starving of millions others and then make “threats” against Saudi Arabia after one single Saudi journalist disappeared and has presumably been murdered by Saudi authorities?

  

  And since when did Erdogan worry about human rights? After all, this is the same man whose army has committed countless atrocities against Syria and Turkish Kurds.

  And the repercussions did not stop at the official level. Even Western business leaders are cancelling trade deals with Saudi Arabia and asking its government for explanations.

  Let us not forget that America does not only ignore the war on Yemen, but it also assists the Saudis and supplies them with arms and intelligence. What’s behind the sudden U-turn? Why would the President of the United States of America be personally involved in this?

  

  Furthermore, Saudi Arabia has a long history of persecuting dissidents and suppressing any opposition. So once again, why was Khashoggi singled out in this instance to become such a person of interest to the USA? His status as a journalist and columnist for Washington Post certainly does not answer this question.

  And back to Erdogan, the man who reached the cliff-edge with America on a number of strategic and trade issues, why would he be concerned about the “murder” of a foreign journalist allegedly at the hand of his own government? According to the story, the “murder” was committed at the Saudi Consulate, and technically, Turkey has no jurisdiction within this diplomatic precinct albeit it is within Turkey.

  The story has been elevated to the level of news headlines even in news breaks. This statement is not meant to either vindicate Saudi Arabia or to justify forfeiting the blood of Mr. Khashoggi, but when the West acts at this level of hypocrisy, something has to be amiss, and the question is what is it?

  If we rewind the clock and take into account the timeline of events, this is what we find:

  2nd of October 2018. Khashoggi walks into the Saudi Consulate in Istanbul. Unless tampered with, the date is confirmed on the CCTV video presented in this link:

  

  3rd of October, President Trump, unprovoked, said that Saudi Arabia would not survive for two weeks on its own without American protection and demanded that Saudi Arabia should pay for that protection.

  5th of October. Crown Prince Mohamed Bin Salman was quick to respond. In his interview with Bloomberg the Crown Prince reiterated that Saudi Arabia has been around since 1744, 30 years before the United States came to existence. The date of 1744 is in reference to the smaller Emirate of Diriyah which was established by Mohamed bin Saud before the King Abdul Aziz expanded his territory to the current borders. In referring to this date, the Prince was saying that Saudi Arabia stood on its own feet before any alliance with America, but he is conveniently ignoring the fact that before any petrol was discovered, external threats were not an issue. In his interview, he later on referred to the Saudi ability to withstand the Obama years, claiming the Obama administration worked against Saudi interests. Though he did not name Syria, he was undoubtedly referring to Syria among other things.

  From that day onwards, the sequence of events escalated quite rapidly. As I write this, President Trump is talking about taking severe measures against Saudi Arabia, but not severe enough to cancel the USD 110 Bn arms deal. The mention of the arms deal could well be a hint made by Trump in order to remind the Saudis how reliant they are on America. After all, Saudi Arabia is bogged down in a war with Yemen that it is unable to win even with America support.

  

  Is it by coincidence that in the middle of this kerfuffle Turkey suddenly decided to release American Pastor Andrew Brunson after more than two years of house arrest?

  Not really; not if we connect the dots.

  One logical explanation of the recent series of events lies in the fact that they carry the hallmarks of extortion. As a matter of fact, Trump’s mention of the inability of Saudi Arabia to survive for more than two weeks without American protection is in itself a prelude for extortion. This is the same logic and language used by Mafia bosses with shop owners.

  President Trump runs America like a corporation. To him, it’s all about money. Given America’s dire economic position, he will not leave a single stone unturned if it is concealing a single dollar.

  Dr. Skidmore from Michigan University argues that USD 21 Tn has gone missing from the coffers of the Ministries of Defense and Housing alone in the years between 1998 and 2015. He speculates that Trump did not know about this when he became president. Revelations of this kind and magnitude make Trump’s task to fix the economy even more out of reach:

  The current situation is reminiscent of an article I wrote back in 2012.  From this article I quote the following:

  “The USA is always accused of keeping its hands on the oil resources of the Middle East. For fairness, by-and-large, it is “only” controlling its flow, but still paying for it; albeit in printed money.

  A bankrupt, desperate and oil-thirsty USA may feel compelled to threaten oil-rich countries with air-strikes and even nuclear attacks…..

  ….In an escalated situation, at stage two, an isolated oil-thirsty USA may become tempted to literally steal this oil. The USA may start with easy, close targets such as Venezuela. A desperate USA with a radical President in the Whitehouse will possibly be tempted to take over by force the oil fields of such soft targets. This can be the beginning of a long path of piracy.

  How far can this path be pursued is anyone’s guess. The next target can be a puppet state like Qatar, even Saudi Arabia itself.

  In such a desperate stage, the USA can only rely on its nuclear supremacy in order for it to be able to force its way. It will not have the financial resources to put boots on the ground, and any ensuing internal strife potentially caused by financial woes will add to the expense and risks of this exercise.”

  Even though those words were written only six years ago, a lot has changed in the global balance of power since then and the world is no longer unipolar. With fracking, America is also now less reliant on Saudi oil, but is in desperate need for Saudi money. The diminishing American military power on one hand, and the military rise of Russia and China on the other hand, are forcing America to explore other pursuits. This is why the Trump administration is into the trade sanction mode. But sanctions alone are not enough, and America is likely to be using the Khashoggi story as a pretext to extort protection money from the Saudis; pay up or we will turn the whole world against you.

  The Saudis don’t deserve any sympathy at all. They have literally been getting away with murder for decades under the watchful eye of their American big brother and ally. The near future will put the extortion theory to the test. If the Americans and Saudis strike a money-for-protection deal followed by an easing of the anti-Saudi rhetoric, then we will know the theory is accurate and that they are both back in business. They may strike a face-saving deal in which the Saudis do not look like they have succumbed to pressure, thereby paying America in ways that do not carry the label of protection money. But, in any manner in which moneys are paid by the Saudis, they are extortion funds and nothing short of piracy.

  So how does Turkey fit into this picture?

  Turkey’s economy has suffered greatly after the recent American sanctions and the Turkish Lira went into a nosedive.  The impasse between the two NATO allies is multi-faceted and includes opposing views on dealing with very sensitive issues such the Kurdish question, ISIS, Russian presence in Syria, Iran, as well as Turkey’s regional ambition for a resurrected pan-Muslim leadership.

  Now, Turkey is not only at odds with America and American policies, but also sees Saudi Arabia as an obstacle that stands in the way of its Muslim leadership aspirations. Turkey sees Saudi Arabia as the Wahhabi rival to the Muslim Brotherhood faction to which Erdogan belongs. So, when the Khashoggi story surfaced, Turkey and America found common interest in being anti-Saudi; albeit for different reasons. To capitalize on the events, Turkey offered a sweetener to the Americans, releasing the American Pastor, Andrew Brunson, making it look like a legal court decision. Turkey expects the world to believe that on such sensitive international legal matters decisions can be made without the approval and directives of Erdogan himself. In the world of politics, pigs do fly.

  Both Erdogan and Trump claim there was no deal behind the release of the Pastor, and perhaps there wasn’t but, the Khashoggi incident gave Erdogan an opportunity to take a step towards some type of conciliation with America. But even in the absence of a deal, Erdogan will expect his reward; the least of which would be the lifting of the American trade sanctions. That said, the restoration of the American-Turkish that preceded the war on Syria will have to wait; if that is at all achievable. After all, Turkey has established strong links with Russia and has bought the S-400 ground-to-air state-of-the-art missile systems. But Erdogan hedges his bets on the principle of keeping a foot in each door.

  The interesting question to ask here is the following; if this whole drama is indeed a false flag for an extortion process, how is it that Trump is receiving the full support of the American media, his “sworn” enemies, the organizations he calls “fake news”? Is the story too hot for them to resist? Are they a part of the extortion process or, are they totally stupid enough to go with the flow? Alternatively, is the Deep State behind Trump on this one and instructing the media to do the same?

  Ironically, the bipartisan American Senate Foreign Relations Committee, headed by Senator Corker, has sent a letter to Trump asking him to investigate the disappearance of Khashoggi and report back to the committee within 120 days.  Does this mean that the Democrats are behind Trump in his anti-Saudi push? They seem to be.

  It seems that American lawmakers, media, and the Deep State are all united against Saudi Arabia until it relents and pays up. How Saudi Arabia will manage to weasel out of this trap, if it can, remains to be seen.

  

  America does not have to cancel the USD 110 Bn arms deal with Saudi Arabia. All it has to do is delay deliveries. Ironically, as if the recent developments are not worrying enough for the Saudis, on the 8th of October, the Yemeni Army has made advances into the Saudi territory and any disruption to the flow of American arms to the Saudis can have serious consequences on that seemingly unwinnable war.

  Any whichever way, Saudi Arabia has definitely chosen the wrong time to move on Khashoggi, if it did. After all, we don’t really know what happened to him, and we cannot even zero out the possibility that he was kidnapped or killed by other operatives including Americans and Turkish. The media are busy focusing on their alleged attempts to find out what happened to Mr. Khashoggi, how he was killed, what torture was he subjected to, how was his body removed from the consulate etc. We will probably never find out the truth about what happened to him, but what is perhaps more pertinent and conceivable is to establish who benefits from the fall-out and how.

  America, and the West in general, never really liked Saudi Arabia. At best, the West tolerated the ultra-conservative undemocratic suppressive kingdom of sand that exported fundamentalism and terror, but this can all change with a stroke of a pen and Saudi Arabia may soon find itself in need of protection from its protector.

   

  

• Is The NYC Luxury Real-Estate Market On The Verge Of A Full-Blown Collapse?

  After New York City developers ignored affordable housing for years in favor of the fatter profit margins on luxury development (spurred on by what looked to be an extremely durable post-crisis recovery), the chickens are finally coming home to roost, as the Financial Times explains, what appeared to be an uncomfortable pullback in sales prices for luxury homes – spurred by a retraction in bids at a time of expanding supply – is now poised to metastasize into a full-blown market rout with implications beyond New York City.

  

  To wit, the number of unsold homes in Manhattan has plunged by 40% through September compared with the first nine months of 2017. This translated into a median sales-price decline of 9%. And while the slowdown has already spread from Manhattan’s luxury market throughout the rest of the island, some brokers believe NYC is the canary in the coalmine warning of a broader housing-market pullback after nearly a decade of untrammeled growth.

  “We’re in the middle of a US housing slowdown, with Manhattan’s prime market the first and most sensitive to react,”says Jonathan Miller of Miller Samuel, a local property appraiser.

  Still, the overabundance of unsold homes is most acute in the luxury market, where the ratio of sold to unsold homes has exploded over the past year, as the FT points out. And what’s worse, these figures don’t incorporate what brokers call “shadow inventory” – unsold homes that are being kept off the market by anxious brokers fearful of provoking a panic.

  Here’s a helpful breakdown of sales data detailing the slowdown in the NYC housing market:

  • During the third quarter of this year the average Manhattan home took 137 days to sell. Some 42 per cent of homes priced above $10m were on the market for more than 180 days
  • Homes priced above $3m comprised 30 per cent of inventory and 15 per cent of sales in the third quarter of 2018
  • Currently, the sales tax (including state and city tax and state mansion tax) for a new $2.5m home in Manhattan is 2.8 per cent

  The stock of unsold luxury homes has been piling up. For properties priced above $3 million, the ratio of homes sold to those currently for sale in Manhattan has gone from 1:3 to 1:6 in a year, according to Stribling. For homes priced above $10m, the ratio is 1:10. Though one broker at Stribling said the real figure could be closer to 1:15, given that developers are probably low-balling their figures, anxious about sending the market even lower.

  This has led to a buildup in “shadow inventory” as one broker called it.

  “They are holding back homes that they would otherwise be actively marketing, and which would therefore show up in inventory figures,” he says. Inventory figures are being “significantly manipulated” by the practice of excluding this so-called shadow inventory, according to Miller.

  In the most rarefied stratum of the market – homes worth $10 million or more – prices have fallen by roughly 30% since the peak in 2014.

  “In the market north of $10m, you’re seeing prices off anywhere from 10 to 30 per cent from the peak in 2014,” says Miller. In the third quarter of this year, the average home sold above $10m went for 13 per cent less than its asking price, the biggest discount of any price bracket tracked by Stribling. 

  Prices are being squeezed as a chasm opens up between bids and asks. Total inventory is set to expand from 6,300 in 2017 to 7,900 in 2019, even as the number of apartments sold is expected to drop from 1,900 to 1,800.

  Much to the chagrin of high-end developers, the poster children for the dearth of sales in the Manhattan housing market are the members of “Billionaires Row”. During New York City’s post-crisis property boom, many developers focused on luxury housing, which typically can be sold at a higher premium, yielding fatter profits, at the expense of affordable housing. The result has been a glut at the high end of the market, while the average renter is struggling with housing costs at or near all-time highs.

  

  (Courtesy of the FT)

  And with 22 more luxury towers set to hit the market between now and 2020 (including the Central Park Tower, which will become the second-tallest building in the US) prices are poised for an even larger drop.

  In the past three years, nine new residential skyscrapers (many include commercial tenants, too) taller than 200m were built in Manhattan, according to the Council on Tall Buildings and Urban Habitat. Between the beginning of this year and the end of 2020, 22 more are set to join them, providing another 1,412 floors to a total height of 3.6 miles.

  These will include Central Park Tower – which will become the US’s second tallest building, reaching up 472m, when it is completed in 2020 – and 111 West 57th Street, will reach to 435m when completed next year.

  Beyond 2020, the crush of unsold inventory could create a vicious cycle as developers are forced to put more inventory on the market as their conviction that this drop in prices was merely a blip begins to fade.

  “Many of these were held back in 2015 when the market started to turn when there was a belief that this was a blip. Now that these firms’ lenders can’t wait any longer, so many of the homes that are likely to come online through 2018 and 2019 will be the larger, high-value units.”

  One factor driving the housing glut in NYC is the Republican tax reform law that went into effect earlier this year. Its cap on itemized deductions related to state and local taxes (including NYC’s not-inconsiderable property tax rate) has made it more economical to rent instead of buy. Ironically for NYC real-estate developers (a group that includes President Trump), this tax law couldn’t have come at a worse time. Property taxes on new developments are particularly high, with one broker estimating that buyers of a $3 million condo will pay $44,000 a year in property taxes to the city, not including other unrelated taxes.

  

  And among the apartments for which brokers do manage to find a buyer, many of them are turning around and putting the unit up for rent within six months. According to Street Easy, a total of 1,313 recently sold apartments were listed for rental within six months, the highest number since the firm started collecting data twelve years ago. This increase in housing supply can effectively negate the sale’s impact on the broader market, since potential buyers may choose to rent instead.

  

  Undeterred, developers are adopting a smorgasbord of tactics, from moving up commission payments to incentivize brokers, to offering to shoulder some of the tax burden incurred by buyers.

  Nonetheless, developers are trying a range of tactics to avoid cutting prices. To incentivise brokers, they are shifting commission payments forward from the date on which a sale is closed to the date on which it is agreed, which may be two years earlier, says Derderian.

  Buyers are being lured with offers to pay transfer taxes, covering mansion tax – an additional 1 per cent sales tax on homes costing more than $1m – free parking spots (which currently set you back $750,000 at the soon-to-be completed residential tower at 220 Central Park South), interior upgrades or cash back to spend on the apartment.

  The advantage for developers of such perks is that they limit the price cuts, flattering the state of the market with the official price figures, Derderian says.

  When it was launched, buyers of homes in Beekman Residences in Downtown were being offered a $10,000 gift card to spend at the hotel in the same building. If the market’s current trajectory continues, that may not cover the bar tab to drown their sorrows.

  But these tactics can only work for so long. Eventually, sellers will need to reckon with what has become a fundamental imbalance in the NYC housing market. And the irony is, renters, who have fewer affordable options than ever before, won’t find much relief amid the dropoff in development that will almost certainly ensue.

  

• Mish: Warning! Civilization At Risk, Crisis By 2040, And Other Nonsensical Climate BS

  Authored by Mike Shedlock via MishTalk,

  The amount of climate scaremongering in the past few weeks is stunning. And it’s all pure bullshit.

  

  Check out these headlines.

  Wall Street Journal: U.N. Panel Warns Drastic Action Needed to Stave Off Climate Change

  New York Times: Major Climate Report Describes a Strong Risk of Crisis as Early as 2040

  The Intercept: FOSSIL FUELS ARE A THREAT TO CIVILIZATION, NEW U.N. REPORT CONCLUDES

  Earther: We Have a Decade to Prevent a Total Climate Disaster

  MarketWatch: Drastic action needed to prevent climate catastrophe, U.N. panel warns

  Daily Caller: AL GORE: ‘WE’RE RUNNING OUT OF TIME’ ON GLOBAL WARMING

  Q&A

  Q.What do all of those headline have in common?

  A. They are all based on the same study. The study is riddled with huge numbers of blatant errors making the study for lack of better words, pure bullshit.

  Riddled With Errors

  Watts Up With That reports BOMBSHELL: audit of global warming data finds it riddled with errors

  • Almost no quality control checks have been done: outliers that are obvious mistakes have not been corrected – one town in Columbia spent three months in 1978 at an average daily temperature of over 80 degrees C. One town in Romania stepped out from summer in 1953 straight into a month of Spring at minus 46°C. These are supposedly “average” temperatures for a full month at a time. St Kitts, a Caribbean island, was recorded at 0°C for a whole month, and twice!

  • Sea surface temperatures represent 70% of the Earth’s surface, but some measurements come from ships which are logged at locations 100km inland. Others are in harbors which are hardly representative of the open ocean.

  • The dataset starts in 1850 but for just over two years at the start of the record the only land-based data for the entire Southern Hemisphere came from a single observation station in Indonesia. At the end of five years just three stations reported data in that hemisphere. Global averages are calculated from the averages for each of the two hemispheres, so these few stations have a large influence on what’s supposedly “global”.

  • According to the method of calculating coverage for the dataset, 50% global coverage wasn’t reached until 1906 and 50% of the Southern Hemisphere wasn’t reached until about 1950.

  • In May 1861 global coverage was a mere 12% – that’s less than one-eighth. In much of the 1860s and 1870s most of the supposedly global coverage was from Europe and its trade sea routes and ports, covering only about 13% of the Earth’s surface. To calculate averages from this data and refer to them as “global averages” is stretching credulity.

  • When a thermometer is relocated to a new site, the adjustment assumes that the old site was always built up and “heated” by concrete and buildings. In reality, the artificial warming probably crept in slowly. By correcting for buildings that likely didn’t exist in 1880, old records are artificially cooled. Adjustments for a few site changes can create a whole century of artificial warming trends.

  • Data prior to 1950 suffers from poor coverage and very likely multiple incorrect adjustments of station data. Data since that year has better coverage but still has the problem of data adjustments and a host of other issues mentioned in the audit.

  • Another implication is that the proposal that the Paris Climate Agreement adopt 1850-1899 averages as “indicative” of pre-industrial temperatures is fatally flawed. During that period global coverage is low – it averages 30% across that time – and many land-based temperatures are very likely to be excessively adjusted and therefore incorrect.

  Complex Systems Reduced to Single Variable

  Also consider Watts Up With That Weekly Climate and Energy News Roundup 331.

  A participant in the IPCC, who resigned, atmospheric physicist Richard Lindzen was Alfred P. Sloan Professor of Meteorology at MIT. He is noted for his work in dynamic meteorology, atmospheric tides, ozone photochemistry, quasi-biennial oscillation, and the Iris hypothesis. Lindzen is certainly qualified to talk about the physics of the atmosphere, where the greenhouse effect occurs. Several key points of the talk are summarized below.

  • “Nature has numerous examples of autonomous variability, including the approximately 11-year sunspot cycle and the reversals of the Earth’s magnetic field every couple of hundred thousand years or so. In this respect, the climate system is no different from other natural systems.

  • “Now here is the currently popular narrative concerning this system. The climate, a complex multifactor system, can be summarized in just one variable, the globally averaged temperature change, and is primarily controlled by the 1-2% perturbation in the energy budget due to a single variable – carbon dioxide – among many variables of comparable importance.

  • “This is an extraordinary pair of claims based on reasoning that borders on magical thinking. It is, however, the narrative that has been widely accepted, even among many sceptics.

  • “Many politicians and learned societies go even further: They endorse carbon dioxide as the controlling variable. And although mankind’s CO2 contributions are small — compared to the much larger but uncertain natural exchanges with both the oceans and the biosphere — they are confident that they know precisely what policies to implement in order to control CO2 levels.”

  • Sea level has been increasing by about 8 inches per century for hundreds of years, and we have clearly been able to deal with it. In order to promote fear, however, those models that predict much larger increases are invoked. As a practical matter, it has long been known that at most coastal locations, changes in sea level, as measured by tide gauges, are primarily due to changes in land level associated with both tectonics and land use.

  • The small change in global mean temperature (actually the change in temperature increase) is much smaller than what the computer models used by the IPCC have predicted. Even if all this change were due to man, it would be most consistent with low sensitivity to added carbon dioxide, and the IPCC only claims that most (not all) of the warming over the past 60 years is due to man’s activities. Thus, the issue of man-made climate change does not appear to be a serious problem. However, this hardly stops ignorant politicians from declaring that the IPCC’s claim of attribution is tantamount to unambiguous proof of coming disaster

  • Cherry picking is always an issue. Thus, there has been a recent claim that Greenland ice discharge has increased, and that warming will make it worse. Omitted from the report is the finding by both NOAA and the Danish Meteorological Institute that the ice mass of Greenland has actually been increasing. In fact both these observations can be true, and, indeed, ice build-up pushes peripheral ice into the sea.

  • Misrepresentation, exaggeration, cherry picking, or outright lying pretty much covers all the so-called evidence.

  Lindzen’s entire speech is much needed and worth reading. Simply because the IPCC names its process as science, does not make it science.

  

• Tether Tumbles Below Critical $1 Threshold As Dollar-Pegged Crypto Doubts Soar

  Update: Careful to quickly assuage any potential loss of the narrative and ‘full faith and credit’ of the ‘stablecoin’, Tether released a statement on USDT drop:

  “We would like to reiterate that although markets have shown temporary fluctuations in price, all USDT in circulation are sufficiently backed by U.S. dollars (USD) and that assets have always exceeded liabilities.”

  See, nothing to panic about.

  *  *  *

  The only cryptocurrency not rallying right now is the one pegged to the U.S. dollar.

  The week started off green for cryptocurrencies like Bitcoin, Ripple, and Ethereum. Collectively, the three of them rose by about 7% according to a CNBC article out early Monday morning. Bitcoin came close to topping $7,000 again, but digital currencies remain in the midst of a longer-term downtrend that has continued over the last year.

  

  This downtrend among all cryptos was exacerbated by the sharp moves lower in equity markets last week, which prompted billions of dollars of digital currency market cap to be wiped away. But Monday kicked off a new week and cryptos are all trying to bounce or pare their losses from last week (for now, at least).

  Interestingly enough, the only crypto not participating in the early week rally is Tether, a digital currency that is pegged to the US dollar. Tether was trading 2.5% lower, down to $0.965, after falling much lower earlier in the morning. 

  This chart of the carnage, as it happened on the Kraken exchange, was posted at about 2AM EST on Monday morning by Twitter user @Bitfinexed. It shows Tether printing as low as $0.85:

  

  The firm that runs the digital currency, Tether, Ltd., has recently been questioned about whether or not it holds enough “reserves” to match the amount of tokens in circulation. The company claims that it does.

  Charles Hayter, the chief executive of comparison site CryptoCompare, told CNBC: “There is concern about Tether and whether it is truly backed by dollars and rumors about USDT (tether) being delisted from various exchanges.”

  These delisting rumors probably aren’t helping quell volatility, either. This comes after one industry publication claims that Bitfinex, a cryptocurrency exchange connected to Tether, has suspended deposits in US Dollars, Euros, Sterling and Yen.

  Mati Greenspan, senior market analyst at eToro, told CNBC: “If the perception that tether can hold a stable value is called into question, traders who are holding USDT are most likely to shift their funds into other cryptos in order to hold their value.”

  

  The point of Tether isn’t necessarily to appreciate in value, but rather it is known as a “stablecoin” because it is supposed to, in theory, always trade around one dollar. The digital currency is seen as a way for those worried about the volatility of fiat-to-crypto exchange rates to ensure that they can reliably convert US dollars into digital currencies.

  From there, Tether can be used to purchase other digital currencies like Bitcoin and Ethereum.

  The question of whether or not Tether’s parent company holds enough in reserves is hardly the first controversy for the coin. We released a report days ago highlighting finance professor John Griffin, who, along with his doctoral student companion, Amin Shams, was one of the two academics that drew market-moving conclusions about bitcoin last year, while the digital currency was trading around $20,000. After sifting through 2 terabytes of trading data, they alleged that bitcoin was being manipulated by someone using Tether to purchase it.

  

  To us, Tether seems like a counterintuitive idea in the sense that it is backed by Fiat, which is the main problem that Bitcoin initially seeked to solve. Forgive us if we are not surprised when the only digital currency that tries to be more like the dollar instead of less like it, winds up being one of the firsts to collapse. 

  

• Veritas Undercover Exposes MO Sen. McCaskill Hiding Liberal Agenda From Moderate Voters: "People Just Can't Know That"

  In the third undercover video filmed by Project Veritas  during the ongoing 2018 election season, Missouri Senator McCaskill’s considerably more liberal views – “essentially the same as [Obama’s]” – are exposed as she and her campaign staff conceals them in order to court moderate voters… and she needs them as her and her opponent are essentially tied:

  

  Via ProjectVeritasAction.com,

  Said James O’Keefe, founder and president of Project Veritas Action:

  “This undercover report shows just how broken our political system has become. Senator McCaskill hides her true views from voters because she knows they won’t like them.” 

  Senator McCaskill Talks Gun Bans on Tape

  Senator McCaskill revealed her intention to vote on various gun control measures in undercover footage:

  MCCASKILL: “Well if we elect enough Democrats we’ll get some gun safety stuff done. They won’t let us vote on it, we’ve got 60 votes for a number of measures that would help with gun safety, but McConnell won’t let ’em come to the floor.”

  JOURNALIST: “Like bump stocks, ARs and high capacity mags…?”

  MCCASKILL: “Universal background checks, all of that… But if we have the kind of year I think we might have I think we could actually be in a position to get votes on this stuff on the floor and we’d get 60 [votes]…”

  JOURNALIST: “So you would be on board with the bump stocks and… high capacity mags.”

  MCCASKILL: “Of course! Of course!”

  Despite her strong views on gun control, Senator McCaskill does not tend to promote them on the campaign trail or on her website. Rob Mills, who works on Senator McCaskill’s campaign, says that is “…because she has a bunch of Republican voters.”

  Another individual who works on Senator McCaskill campaign, Carson Pope, adds that “…a semi-automatic rifle ban is more so what she would support.”

  “People just can’t know that.”

  According to Mills, Senator McCaskill conceals her support of Moms Demand Action, a gun control group, and other similar organizations because they would “…hurt her ability to get elected.”

  MILLS: “But she doesn’t openly go out and support groups like ‘Mom’s Demand Action’ or just like other groups that are related to that. Because that could hurt, her ability to get elected. Because people like see that and they’re like well I don’t want to support her even though they stand for the same policies…”

  MILLS: “She’s worked out stuff with Mom’s Demand Action to make sure that she can support their goals without supporting the organization openly. And you know, Mom’s Demand Action does the exact same thing. Like a lot of our volunteers are actually from there. She’s really good about strategy and making sure she has a goal and can get there.”

  Nicolas Starost, another individual who works on Senator McCaskill’s campaign, explains how President Obama won’t campaign for Senator McCaskill in Missouri despite their similar views on politics. Starost says this is because Senator McCaskill needs to distance herself from the Democratic party to appeal to more voters:

  STAROST: “Because of how like, cause he’s a very liberal candidate. And like… Claire distancing herself from the party is gonna help her win more votes than it will saying like: “Oh here’s Obama, the former President of the United States, to now speak on my behalf.” Which is unfortunate because I love Obama to pieces, and I’d love to see him come here.”

  JOURNALIST: “And they essentially have the same views on everything?”

  STAROST: “Yeah. People just can’t know that.”

  Impeachment

  Another individual who works on Senator McCaskill’s campaign, Glen Winfrey, explains plans for the impeachment of President Trump:

  JOURNALIST: “So, here’s the real question, Claire holds off on impeachment to get the moderate. What do we tell the moderates when we drop the impeachment hammer afterward?”

  WINFREY: “Get over it. It was a national security question. That information was confidential, and she did her duty by not revealing the information until afterward.”

  

• Obese Millennials Are "Threatening National Security," New Study Finds

  Once again, millennials are making a mess of things, and this time it could “threaten national security,” according to a new report which found that approximately 71% of millennials aged 17 to 24 – the prime age to enlist in America’s armed forces and fight a foreign war in the Middle East – are non-recruitable, with obesity disqualifying about 31% of them. 

  

  The Council for a Strong America, a nonprofit team of law enforcement leaders, retired admirals and generals, business executives, pastors, and prominent coaches and athletes who promote solutions that ensure America’s next-generation is “citizen-ready,” published the study on Wednesday, called “Unhealthy and Unprepared,” warns that America’s rising number of overweight millennials are going to have a significant impact on the military’s ability to win a future war. 

  “Out of all the reasons that we have future soldiers disqualify, the largest – 31% – is obesity,” Maj. Gen. Frank Muth, head of Army Recruiting Command, said Wednesday at AUSA’s annual meeting in Washington, D.C. 

  

  This year, the Army missed its recruiting goals for the first time since 2005, and the study warned: as the obesity epidemic grows, these recruiting challenges will continue unless immediate countermeasures are enacted to promote healthy lifestyles for youth. 

  

  The report offered several ideas on how to suppress the out of control obesity epidemic ravaging millennials. One solution is to focus on nutrition and physical activity from a young age, which can condition children to live healthier lifestyles to prepare for any career.

  Proper nutrition and physical activity are the building blocks of a stronger and healthier generation that will ultimately increase the military’s future recruiting goals before the next conflict with Russia and or China. The report said it starts with parents and educators that teach children about healthy eating and exercise habits, while state and federal officials must adopt public school programs that promote nutrition and encourage physical activity from an early age.

  

  Meanwhile, American exceptionalism is waning, and it’s not only due to fast food. The Army missed recruiting goals this year, which should serve as a warning: the US is ill-prepared to engage in a military conflict.

  The study concluded and said: “trends in obesity must be reversed before our national security is further comprised.” And while the report did offer some token solutions how to fix the obesity problem, the damage has already been done, and to reverse such a dramatic trend will take decades; the question is whether America’s next armed conflict will wait that long?

  

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