- Former Swiss "Banker Of The Year" Sentenced To 4 Years For Misusing Company Expenses
Former Swiss "Banker Of The Year" Sentenced To 4 Years For Misusing Company Expenses
A Swiss banker once dubbed “banker of the year” is now on his way to serving 4 years in prison for millions of dollars of misuse of company expenses.
Former Raiffeisen Switzerland Chief Executive Pierin Vincenz was sentenced last week after a fraud trial that exposed his lavish spending of his company’s money, according to SCMP.
SCMP called it “one of Switzerland’s highest-profile corporate crime trials in decades”.
Vincenz was also aquitted on several other counts, was fined 840,000 Swiss francs and was ordered to pay 1.6 million francs in damages. He was found to have used business expenses for private purposes.
Vincenz’ lawyer attests his innocence and said they would appeal the verdict.
During trial, Vincenz explained that a 200,000 franc expense bill, mostly for strip clubs, was “largely business related”. He also defended a 700 franc dinner he had with a woman he met on Tinder, claiming he was considering her for a real estate job.
But the judge had other thoughts, stating: “[His] understanding, whereby practically all expenditures of a business person fall under disposable company expenses so long as any remote connection to the business activity exists, clearly went too far.”
The judge continued: “The relationship maintenance he carried out in cabarets, strip clubs and contact bars was no longer in the primary interest of Raiffeisen.”
Vincenz was also ordered to pay Raiffeisen more than 260,000 Swiss francs and another firm 1.3 million francs for “damages incurred by another firm over a corporate transaction”.
Is that a nice way of saying the checks he wrote at the strip club never cleared?
Tyler Durden
Mon, 04/18/2022 – 02:45 - Germany's Economic Minister Warned Of Unrest If Russian Gas Is Immediately Cut Off
Germany's Economic Minister Warned Of Unrest If Russian Gas Is Immediately Cut Off
Federal Minister for Economic Affairs and Climate Action Robert Habeck confirmed Russian assessments that Germany’s immediate cutoff of that country’s gas would provoke unrest in heart of that European leader. He revealed in an interview that “An immediate embargo on [Russian natural] gas would threaten social peace in Germany”, though such a scenario is indeed seriously being considered due to the immense pressure being put upon the EU by its American overlords as of late.
Another contributing factor is the bloc’s reluctance to comply with President Putin’s geo-economic judo move late last month that newly designed unfriendly countries such as EU’s members pay for gas with rubles.
All of this goes to show just how fundamentally Russia’s ongoing special military operation in Ukraine changed the geostrategic situation in Europe. Prior to the onset of that campaign, the bloc was already experiencing massive unrest driven by its population’s refusal to continue complying with what many of them regarded as the politically motivated epidemiological policies imposed by their governments. Now, however, Germany might descend into an even more intense crisis in the event that the US successfully pressures it to immediately cutoff imports of Russian gas. This prediction that was just made by none other than its own Minister for Economic Affairs should lead to a rethinking of Russia’s assessment.
Up until this point, it was considered to be nothing more than so-called “Russian propaganda” for anyone to make such a prediction, but now it’s literally the official position of the German government itself. Given the “politically correct” standards imposed upon the population by their leaders, society cannot openly ask why Germany is now “parroting Russian propaganda” since Moscow can never be extended credence under any circumstances. Nevertheless, those among the population who remember the prior narrative that was just recalled will likely start questioning what’s really going on and potentially distrust the “official narrative” even more than they already do.
The lesson to be learned is that even so-called “adversaries” like Russia are sometimes correct in their assessments even if some suspect that they might be making them for partially ulterior motives such as to provoke panic and/or influence policymaking. In this particular example, however, Russia and those who share its multipolar worldview were simply trying to make the masses aware of the interconnected humanitarian and political consequences connected with Germany’s potentially immediate cutoff of gas from that country. The self-inflicted destabilization of the EU’s largest country would only serve American interests by weakening its economic rival, though that’s likely why it wants that scenario.
Tyler Durden
Mon, 04/18/2022 – 02:00 - Alex Jones Mulls Strategic Bankruptcy For Media Empire
Alex Jones Mulls Strategic Bankruptcy For Media Empire
Media host Alex Jones is being advised by restructuring advisers on how to proceed after being hit with several lawsuits related to statements Jones made following the 2012 Sandy Hook school massacre.
Options for Jones’ businesses – including Infowars and Free Speech Systems – include a Chapter 11 bankruptcy, which would allow them to continue operating while pausing civil litigation against them, according to Fortune, citing an anonymous source with knowledge of the matter.
Jones and his companies last year were found liable in a defamation lawsuit brought by relatives of children killed in the 2012 Sandy Hook school massacre after Jones called the shootings a hoax. A trial in Connecticut to determine the size of the damages has yet to take place. He was also found liable in similar proceedings in Texas. -Fortune
Attorneys for Jones claim the defamation lawsuit was filed as part of a strategy to silence Jones’ free speech on matters of public interest, according to court documents.
“[T]his suit is only the latest in Plaintiffs’ efforts to silence those who openly oppose their very public ‘herculean’ efforts to ban the sale of certain weapons, ammunition and accessories, to pass new laws relating to gun registration and to limit free speech,” reads Jones’ motion to dismiss.
Jones was slapped with default judgements in Connecticut and Texas, after he failed to turn over financial information and other documents, which his legal team compared to a “collections action” and a “fishing expedition.”
In March, Jones appeared for a deposition rather than pay hefty fines, after lawyers representing the families of Sandy Hook shooting victims sought his arrest for skipping a court-ordered deposition.
A Connecticut trial to determine the size of damages Jones faces has yet to take place.
Tyler Durden
Sun, 04/17/2022 – 23:00 - China To Deploy Most Advanced Fighter Jet To Disputed East And South China Seas
China To Deploy Most Advanced Fighter Jet To Disputed East And South China Seas
By Andrew Thornebrooke of The Epoch Times,
The Chinese military is deploying its most advanced fighter jet to hotly contested regions in the East and South China Seas, according to Chinese state media.
A Chinese J-20 stealth fighter performs at the Airshow China 2018 in Zhuhai, south China’s Guangdong Province on November 6, 2018. The J-20 stealth fighter jet will begin its deployments as part of training sessions, per Chinese state-owned media outlet Global Times.
A Chinese colonel said that the deployments ensured China’s military was “ready and capable of wielding its sword.”
The J-20 was originally built using Russian parts, namely engines, which have since been reverse engineered and improved upon in China. This has allowed the regime to domestically produce the jet. It appears designed to contend with the U.S. F-22 and F-35.
Relatively little is known of the aircraft, popularly referred to as the “Mighty Dragon.” It entered service in 2017, and is a stealth fighter like the American F-35. It is unclear, however, whether it will fulfill an all-purpose and multi-mission role, or if it will specialize in one domain, such as air superiority.
Gen. Kenneth Wilsbach, commander of the U.S. Pacific Air Forces, said in March that an American F-35 had a close encounter with the J-20 over the South China Sea last year, but that it was still too early to tell what role the aircraft would play in a large-scale military conflict.
“We recently had, I wouldn’t call it an engagement, but we got relatively close to the J-20s with our F-35s in the East China Sea and were relatively impressed with the command and control that was associated with the J-20s,” Wilsbach said.
“It’s a bit early to tell exactly what they want to do with the J-20,” Wilsbach said. “All we’ve really seen it do is air superiority.”
The Chinese Communist Party (CCP) has made innumerable territorial claims to various parts of the South and East China Seas in the past, and has even gone so far as to construct artificial islands containing military outposts to expand its footprint in the South China Sea. Thus, the deployment will likely support the regime’s expansionist ambitions.
A report by the State Department published in January found that the methods used by the CCP to artificially inflate its territorial claims had “no coherent legal basis” in international laws or norms.
The expansion, and now the J-20s deployment, will likely continue to heighten tensions between the United States and the CCP, as experts warn that the communist regime is the most likely actor to engage American forces in a military conflict.
The deployment of the J-20s might in this regard be seen to mark a continued effort by the CCP to escalate military tensions and demonstrate its own prowess as a global military power.
Earlier in April, for example, the regime made a similar effort when it delivered new missile systems to Serbia. On that occasion, six Chinese military aircraft flew through NATO airspace. Some of them had removed the coverings of their chaff and flare countermeasures—defensive systems to help evade missile attacks—in an apparent effort to signal that they were ready to engage in conflict.
The CCP’s chest thumping is not without its risks, however. The deployment of the J-20 likely means longer deployments and further-reaching patrols by the Chinese forces, which could see them come into more close encounters with the U.S. military.
On the reverse of the coin, the opportunity will also present the United States and its allies with the opportunity to collect vital diagnostic data on the J-20 in the wild, thus providing valuable insights to uncovering its weaknesses and ultimately defeating it, if necessary, in combat.
Tyler Durden
Sun, 04/17/2022 – 22:30 - Easter Miracle: Ever Forward Cargo Ship Freed From Chesapeake Bay
Easter Miracle: Ever Forward Cargo Ship Freed From Chesapeake Bay
The Ever Forward container ship was freed on Easter Sunday morning after being stuck in the Chesapeake Bay for more than one month.
Bloomberg vessel data shows the massive 334-meter-long container ship was pulled free from 24 feet of mud around 0700 ET and embarked on a journey down the bay around 0720 ET. By 0900 ET, the vessel crossed underneath the Chesapeake Bay Bridge and is currently outside of Annapolis.
This was the third attempt to free the vessel after dredging crews worked endlessly for a month to remove 84,000 cubic yards of mud from around the ship that strayed off course, out of a shipping lane, and got stuck on March 13. Last week, 500 of the nearly 5,000 containers were unloaded off the vessel to lighten the weight.
Maritime news website gCaptain provided details of how Ever Forward was refloated:
“Two anchor barges and five large tugboats pulled the ship astern and sideways until she was dislodged. The salvage crews received help from a full moon and a spring tide to release the ship that had been stuck for more than a month.”
Maritime expert Sal Mercogliano tweeted the vessel will have its “hull surveyed and assessed for damage” off Annapolis, Maryland.
Mercogliano added: “Looks like Ever Forward was not using her engine and instead is under tow by Atlantic Salvor and Atlantic Enterprise … We saw some black smoke when the ship backed off the shoal. Not sure if there is not some sort of damage.”
After 30 long days, Ever Forward has risen as an Easter miracle was witnessed on the Chesapeake Bay.
Tyler Durden
Sun, 04/17/2022 – 22:00 - US, EU Sacrificing Ukraine To "Weaken Russia": Former NATO Adviser
US, EU Sacrificing Ukraine To "Weaken Russia": Former NATO Adviser
Former Swiss intelligence officer and NATO adviser Jacques Baud on the roots of the Ukraine-Russia war and its growing dangers.
As the Russia-Ukraine war enters a new phase, former Swiss intelligence officer, senior United Nations official, and NATO advisor Jacques Baud analyzes the conflict and argues that the US and its allies are exploiting Ukraine in a longstanding campaign to bleed its Russian neighbor.
Guest: Jacques Baud. Former intelligence officer with the Swiss Strategic Intelligence Service who has served in a number of senior security and advisory positions at NATO, the United Nations, and with the Swiss military.
TRANSCRIPT
AARON MATÉ: Welcome to Pushback. I’m Aaron Maté. Joining me is Jacques Baud. He has served in a number of senior security and advisory positions at NATO, the UN, and with the Swiss military. He is also a former strategic intelligence officer with the Swiss Strategic Intelligence Service. Jacques, thank you for joining me.
JACQUES BAUD: I thank you for inviting me.
AARON MATÉ: Let me just start by asking you to talk more about your background and how it has informed your visibility into the crisis in Ukraine.
JACQUES BAUD: Well, as you just said, I’m a strategic intelligence officer. I used to be in charge of the Warsaw Pact forces in strategic…that was during the Cold War, but still, I have a good visibility on what’s going on in Eastern Europe. I used to speak and read Russian as well, so that gives me some access to some documents. And recently I had been seconded to NATO as head of the struggle against proliferation of small arms. And in that capacity, I was involved in several projects from 2014 onwards with NATO in Ukraine. And so, I know the context quite well. I was also monitoring the possible influx of small armaments in the Donbas in 2014. And I have also worked—because in my previous assignment in the UN, I used to work on the restoration of armored forces, so when the Ukrainian armed forces got some problems with personnel issues, with suicide, with all these kind of things that you had in 2014, also problems in recruiting military—I was asked to participate on the NATO side on several projects in restoring Ukrainian armed forces. And so that’s a little bit, in a nutshell, my background regarding this area.
AARON MATÉ: You’ve written a lengthy article which I will link to in the show notes for this segment, and you lay out the causes of the Ukraine conflict in three major areas. There is the strategic level, the expansion of NATO; the political level, which is what you call the Western refusal to implement the Minsk agreements; and operationally, the continuous and repeated attacks on the civilian population of the Donbas over the past years and the dramatic increase in late February 2022.
Let me ask you to start there. Talk about what you call the dramatic increase on civilians inside the Donbas in February, the period that led to the Russian invasion, immediate period, and how this escalation of attacks, as you say, helped lead to this war, this Russian invasion.
JACQUES BAUD: Well, I think we have to understand, as you know, that the war in fact hasn’t started on 24 February this year. It started already in 2014. But I think that the Russians always hoped that this conflict could be solved on a political level, in fact; I mean the Minsk agreements and all that. So, basically what led to the decision to launch an offensive in the Donbas was not what happened since 2014. There was a trigger for that, and the trigger is two things; I mean, it came in two phases, if you want.
The first is the decision and the law adopted by [Volodymyr] Zelenskyy in March 2021—that means last year—to reconquer Crimea by force, and that started a build-up of the Russian armored for…not the Russian, [rather] the Ukrainian armored forces in the southern parts of the country. And so, I think the Russians were perfectly aware of this build-up. They were aware that an operation was to be launched against the Republics of the Donbas, but they did not know when, and, of course, they were just observing that, and then came the real trigger.
You may remember that—I think it was on the 16th of February—Joe Biden, during a press conference, told that he knew that the Russians would attack. And how would he know that? Because I still have some contacts, and nobody actually thought that the Russians—before end of January, beginning of February—I think nobody thought that the Russians would attack Ukraine. So, there must have been something that made Biden aware that the Russians would attack.
And this something, in fact, is the intensification of the artillery shelling of the Donbas starting on the 16th of February, and this increase in the shelling was observed, in fact, by the [Border] Observer Mission of the OSCE [Organization for Security and Co-operation in Europe], and they recorded this increase of violation, and it’s a massive violation. I mean, we are talking about something that is about 30 times more than what it used to be, because the last eight years you had a lot of violations from both sides, by the way. But suddenly on the 16th of February you had a massive increase of violation on the Ukrainian side. So, for the Russians, Vladimir Putin in particular, that was the sign that the operation—the Ukrainian operation—was about to start.
And then everything started; I mean, all the events came very quickly. That means that if we look at the figures, you can see that there’s, as I said, a massive increase from the 16th-17th, and then it reached kind of a maximum on the 18th of February, and that was continuing.
And the Russian parliament, the Duma, also was aware of this possible offensive, and they passed a resolution asking Vladimir Putin to recognize the independence of the two self-proclaimed Republics in the Donbas. And that’s what Putin decided to do on the 21st of February. And just after adopting the decrees, the law recognizing the independence of the two Republics, Vladimir Putin signed a friendship and assistance agreement with those two Republics. Why did he do that? So that would allow the Republics to ask for military help in case of attack. And that’s why, on the 24th of February when Vladimir Putin decided to launch the offensive, it could invoke Article 51 of the UN Charter that provides for assistance in case of attack.
AARON MATÉ: And as you noted, the OSCE documented a big increase in ceasefire violations, artillery firing on the rebel-held side, but do you think, based on what you observed of the positioning of Ukrainian troops, do you think that the threat of an imminent invasion or assault by the Ukrainian forces was real? Can you gauge that from how they were positioned on the other side of the front line?
JACQUES BAUD: Yes. Absolutely. I mean, we had reports, and those reports were available during the last couple of months. Since last year we knew that the Ukrainians were building up their forces in the south of the country, not on the eastern border with Russia but on the border with the contact line with Donbas. And, as a matter of fact, as we have seen from the 24th of February, the Russians had almost no resistance in the start of the offensive, especially in the north. And so, they could, what they have done since then, they could surround the Ukrainian forces in the south, in the southeast part of the country—that means between the two Republics of the Donbas and the Ukraine mainland, if you want. And that’s where the bulk of the Ukrainian forces are today. And according to the…that’s exactly the Russian doctrine to fight, I mean operational doctrine. Their main offensive was on the south, clearly, because the objective stated by Vladimir Putin—we can probably come back on these details later on—but this was demilitarization and denazification.
Both objectives, in fact, were about to be done or to be reached in the south of the country, and that’s where the main efforts of the offensive was done. In the offensive order, the effort against Kiev is a so-called secondary effort, and it had, as a fact, you had two functions basically. First of all, to put some pressure on the political leadership in Kiev because the name of the game is to bring the Ukrainians to the negotiations. That was the first objective of this second effort.
The second objective of this second effort was to bind or to pin down the rest of the Ukrainian armored forces so that they could not reinforce the main forces which are in the Donbas area. And that worked quite well. So that means that the Russians could surround, as I said, the main forces, the bulk of the armed forces—the Ukrainian armed forces. Once they have achieved that they could withdraw some troops from Kiev, and that’s what they have done since end of March. They have pulled several units in order to reinforce what they want; I mean their own forces to carry on under the main battle in the Donbas area. So now they are pulling, and they have pulled these troops from the Kiev area, and these troops will now help to flank for the vanguard, the offensive against the main forces in the Donbas. And that’s what some called the ‘mother of all battles’ that is currently going on in the Donbas area, where you have—nobody knows exactly the number of Ukrainian troops; estimates vary from sixty thousand to eighty thousand who are surrounded—and the forces would be cut in smaller cauldrons and then destroyed or neutralized.
AARON MATÉ: It’s pretty clear to me that Zelenskyy’s government had no interest in serious diplomacy on all the critical issues that could have avoided a war, and I think the main factor is what I presume to be US pressure behind the scenes, which we can’t fully prove now. But I imagine evidence of that might come out later. And certainly, the open hostility of Ukraine’s far right, who essentially threatened Zelenskyy’s life if he made peace with Russia. And these threats have dogged him throughout his presidency and continued right up to the eve of the invasion, and it led to people like his top security official saying in late January that the implementation of the Minsk accords would lead to Ukraine’s destruction—after Zelenskyy was elected on a platform of implementing Minsk—and that carried over to the final talks on implementing the Minsk accords that were brokered by Germany and France.
At those talks in February, Zelenskyy’s government all of a sudden refused to even speak to the representatives of the rebels, which makes an accord possible. And meanwhile you had developments like this, which we just learned about from The Wall Street Journal, which was that the German chancellor [Olaf] Scholz on February 19th told Zelenskyy that, quote, “Ukraine should renounce its NATO aspirations and declare neutrality as part of a wider European security deal between the West and Russia.” And this pact Scholz proposed would be signed by Biden and Putin, but Zelenskyy rejected this—rejected out of hand.
But my question is, because I think it’s pretty conclusive that the Zelenskyy-Ukraine side sabotaged diplomacy, but what about Russia? Do you think Russia exhausted all of its diplomatic options to avoid a war? For example, why not go to the UN and ask for a peacekeeping force in the Donbas? And second of all, if the aim is to protect the people of the Donbas, why invade far beyond the Donbas and not just go there?
JACQUES BAUD: Well, I think the Russians have totally lost faith in the West. I think that’s the main thing. They don’t trust the West anymore, and that’s why I think now they rely on a total victory on the military side in order to have some benefits in the negotiation.
I think Zelenskyy…I’m not sure exactly if he’s so reluctant to have peace. I think he cannot do it. I think from the very beginning he was caught between his…remember that he was elected with the idea of achieving peace in the Donbas. That was his objective; that was his program as president. But I think the West—and I would say the Americans and the British didn’t want this peace to occur. And of course, the Germans and the French who were the guarantors of the Minsk agreement for the Ukrainian side, they never really implemented this—their function. I mean, they have never done their job, clearly. And especially France, which is simultaneously a member of the Security Council. Because I will just remind you that the Minsk agreements were also part of a resolution of the Security Council. So, meaning that they have not only the signature of the different parties that was done in Minsk, but you have also the members of the Security Council who were responsible for implementation of the agreement, and nobody wanted to have this agreement made. So that means that, I think, there was a lot of pressure on Zelenskyy so that he wouldn’t even talk to the representatives of the two breakaway Republics.
And after that we have seen, by the way, that we have several indications that Zelenskyy was not completely, or is not completely, in control of what’s going on in Ukraine. I think the extreme, let’s say, nationalist extreme right—I don’t know exactly what is the right term because it’s a mixture of everything—but these forces definitely prevent him, or prevented him, so far to do anything. And we can see also that he’s back and forth regarding peace. As soon as he started, you may remember that at the end of February, as soon as Zelenskyy indicated that he might be willing to start negotiations, this was the time where these negotiations were to take place in Belarus. Within hours after Zelenskyy decided that, the European Union came with a decision providing for half a billion arms to Ukraine, meaning that the Americans, certainly, but I think the West as a whole, made every possible effort to prevent a political solution to the conflict, and I think the Russians are aware of that.
Now we have also to understand that the Russians have a different understanding of how to wage a war on the Western powers, especially the US. That means that in the West we tend to, if we negotiate, we negotiate up to a certain point and then negotiations stop, and we start war. And that’s war, period. In the Russian way of doing things, it’s different. You start a war, but you never leave the diplomatic track, and you go on both ways, in fact. You put mental pressure and you try to achieve an objective, also with diplomatic means. This is very much a Clausewitzian approach to war—when [Prussian general and military theorist Carl von] Clausewitz, as you know, defined war as the continuation of politics with other means.
That’s exactly how the Russians see that. That’s why during the whole offensive, and even at the very beginning of the offensive, they started, or they indicated they were willing, to negotiate. So, the Russians certainly want to negotiate, but they don’t trust the Western countries—I mean the West at large—to facilitate that negotiation. And that’s the reason why they didn’t come to the Security Council. By the way, they know that, probably, because, as you know, this physical war that we witness now is part of a broader war that was started years ago against Russia, and I think, in fact, Ukraine is just…I mean, nobody is interested in Ukraine, I think. The target, the aim, the objective is to weaken Russia, and once it will be done with Russia, they will do the same with China, and you can already see. I mean, we have seen that now, the Ukrainian crisis has overshadowed the rest, but you could have a very similar scenario happening with Taiwan, for instance. So, the Chinese are aware of that. That’s the reason why they don’t want to give up their, let’s say, relationship with Russia.
Now, the name of the game is weakening Russia, and you know that there have been several studies done by the Rand Corporation on extending Russia, overextending Russia, and so on, and where the whole scenario is…
AARON MATÉ: Just to explain that for people who aren’t familiar with it, Rand is a Pentagon-type think tank, and they did a study in 2019 looking at all the different ways in which the US could overextend and unbalance Russia, and the top option was to send weapons to Ukraine to fuel a conflict there that could draw Russia in, which is exactly what’s happened.
JACQUES BAUD: Absolutely. And I think that this is a complete design for weakening Russia, and that’s exactly what we see unfolding right now. We could have anticipated that, and I think Putin anticipated that. And I think he understood that, if on the end of February, I mean, on the 24th of February, or let’s say just before because he had to make the decision before, but in the days before deciding on the offensive, he understood that he could not do nothing. He had to do something. The Russian public opinion would never have understood why Russia would remain just observing the Donbas Republics being invaded or destroyed by Ukraine. So, nobody would have understood that. So, he was obliged to go. And then, I think…and that’s what, if you remember what he said on the 24th of February, he said regardless of what he would do, the amount of sanctions he will receive would be the same. So basically, he knew that the slightest intervention in the Donbas would trigger a massive launch of sanctions, so he knew that. So, then he decided, ‘Okay, then I have to go for the maximal option,’ because one option would have been just to reinforce, don’t mess with the Republics and just defend the Republics on the line of contact. But he decided to go for the larger option, which is to destroy those forces that threatened Donbas.
And that’s where you have those two objectives. Demilitarization, which is not the whole demilitarization of all Ukraine, but it was to suppress the military threat that was on the Donbas; that’s the main objective of that. There’s a lot of misunderstanding of what he said and, of course, he was not very clear, but that’s part of the Russian way of communicating and doing things. They want to keep options open, and that’s the reason why they say the minimum things and they just say what’s necessary. And this is exactly what Putin meant on the 21st, what he said about suppressing the military threat against the Donbas. Denazification had nothing to do with killing Zelenskyy or destroying the leadership in Kiev. That was definitely not the idea, and, as a matter of fact, as I said, the main way they conceive war is to combine a physical action and diplomatic action. So that means that in such a way of doing you have to keep a leadership and you have to keep them in order to negotiate, and that’s why there was no way you would kill or destroy the leadership in Kiev.
So, denazification was basically not about the 2.5 percent of the extreme right in Kiev. That was about the 100 percent of Azov people in Mariupol and Kharkov, and this kind of thing. So, we tend to misunderstand because some people said, ‘Well, but, you know, why denazify? Because there is only 2.5 percent of political rightwing parties, only 2.5 percent or something like that, so it’s meaningless. So, why denazify? It makes no sense.’ But it was not about that. It was definitely about those groups that were in fact recruited from 2014 by the Ukrainians in order to, let’s say, I would say pacify or control. I don’t know exactly what’s the right word for that, but to fight in Donbas. These people were extremists, fanatics, and these people were dangerous.
AARON MATÉ: And one of the points you make in your article, which I didn’t know, is that part of the reason why Ukraine had this need for militias, far-right militias and foreign mercenaries, is because of a high rate of defection inside its own military ranks, people not wanting to serve, and even defecting to the other side of the rebellion in the Donbas.
JACQUES BAUD: Exactly. In fact, I noticed that, as I told you, I was in NATO and was monitoring the influx of weapons in the Donbas, and what we noticed is that we couldn’t identify import of weapons or export of weapons from the Russian side to the Donbas. But what we could see is that you had a lot of Ukrainian units who defected, in fact, and complete battalions. And in 2014, most of the heavy artillery that the Donbas gained were from defectors. The whole units defected with ammunition and people and all that. The reason is that the Ukrainian army was based on a territorial…was manned and organized on a territorial way. That means you had a lot of Russian-speak[ers] in the armed forces. Once they were sent to fight in the Donbas, they didn’t even want to fight their own colleagues and Russian-speaking people, so they preferred to defect.
And in addition to that you had in 2014, I mean in 2014 to 2017, in that period the leadership of the Ukrainian army was extremely poor. You had a lot of corruption. I’m not sure that the military was prepared for such a kind of war, in fact, because the war that was fought at that time by the rebels was very similar to what you can see in the Middle East today, or in the last years. That made very mobile units moving around very rapidly, much faster than the heavy units that the Ukrainian army had, and, as a result, if we see the pattern of the different battles that were fought in 2014, 2015, you could see that the Ukrainians could never lead. They had never the initiative. The initiative was always with the rebels. And it was not guerrilla. That’s important to say. It was kind of extremely mobile warfare. And in addition to that you had, I think, the army was not really prepared to fight in general. So, you had a lot of suicides, you had a lot of alcohol problems, you had a lot of accidents, you had a lot of murders within the Ukrainian army.
And that led a lot of young Ukrainians to leave the country, because they didn’t want to join the army. And what I’m saying is, I mean, it was recorded and reported by official reports in the UK and the US, I think. They made some very interesting reports on the low rate of recruitment of individuals, because people didn’t want simply to join the army. And that’s the reason why NATO was involved, and I was involved in such a program, trying to reshuffle the image of the army and find solutions to improve the recruitment condition of the army, and things like that.
But the solutions that were provided by NATO were in fact institutional solutions that would take time, and in order to compensate with lack of personnel and probably to have more aggressive military personnel, they started to use internationalists and mercenaries, as a matter of fact. Nobody knows exactly the number of these paramilitaries or extreme rights militias. Reuters put the figure at one hundred thousand. I’m not able to verify that, but that was a figure given by Reuters. And that seems to fit what we can observe now in the different regions of the country. So, these paramilitaries took a major role not in mobile warfare, and I would say [not in] the normal field warfare, but they were used in maintaining order within cities. And that’s exactly what you have today in Mariupol, for instance, where you had those people, because they are not equipped for field operations. They are equipped for urban warfare. They have light equipment, they have some armored vehicles, but they don’t really have tanks, anything like this.
So, this is definitely units that are meant for urban warfare. That’s what they do in major cities. And these guys are extremely fanatic, we can say, and they are extremely dangerous. And that explains the way Mariupol, the battles and the extremely brutal fights that you have in Mariupol as an example, and we probably will see the same thing in Kharkov, for instance.
AARON MATÉ: As we wrap, I want to ask you about some of the recent atrocities that we’ve seen reported. There were reports of mass civilian killings by Russia inside the town of Bucha and also killings of Ukrainian forces, and then you had the attack on the train station in Kramatorsk. I’m wondering if you’ve evaluated both of these incidents and what you make of them.
JACQUES BAUD: Well, there are two things in that. And the first is that the indication we have on both incidents to me indicates that the Russians were not responsible for that. But, in fact, we don’t know. I think that’s what we have to say. I mean, if we’re honest, we don’t know what happened. The indications we have, everything, all the elements we have tends to point at Ukrainian responsibilities, but we don’t know.
What disturbs me in the whole thing is not so much that we don’t know, because in war there’s always such situations, there are always situations where you don’t know exactly who is really responsible. What disturbs me is that Western leaders started to make decisions without knowing what’s going on and what happened. And that’s something that disturbs me quite deeply, that before having any result of any kind of inquiry, of investigation, and I mean international, impartial investigation, without having that we start already to take sanctions, to make decisions, and I think that illustrates how the whole decision-making process in the West was perverted. Since February or even before, in fact, because we had a similar thing after the hijacking—or not hijacking, by the way, it was not a hijacking—but the incident in Belarus with this Ryanair flight. You may remember last May, last year, that people started to react just minutes after the incident was reported in the press, even they didn’t know what was going on! So, that’s this way of doing from the political leadership in Europe, I mean the European Union, but also in European countries. That disturbs me as an intelligence officer. How can you make a decision with such impact on populations or on whole countries that disturbs even our own economies? So, it tends to backfire on us. But we take decisions without even knowing what’s going on, and that, I think, indicates an extremely immature leadership that we have in the West in general. That’s certainly the case in the US, but I think in this example of the Ukraine crisis shows that the European leadership is not better than what you have in the US. It’s probably even worse, I think, sometimes. So, that’s what should worry us, that you have people deciding based on nothing, and that’s extremely dangerous.
AARON MATÉ: Jacques Baud, he is a former strategic intelligence officer with the Swiss Strategic Intelligence Service, also served in a number of senior security and advisory positions at NATO, the UN, and the Swiss military. Jacques, thank you very much for your time and insight.
JACQUES BAUD: Thank you for everything. Thank you.
Tyler Durden
Sun, 04/17/2022 – 21:30 - First Photos Of Sinking Russian Moskva Warship Emerge Online
First Photos Of Sinking Russian Moskva Warship Emerge Online
Update(2115ET): The first purported image of the sunken Moskva missile cruiser has emerged online late Sunday and began circulating widely. The photograph taken by an unknown source, likely in the Russian Navy aboard one of the emergency assisting ships, purports to be from the morning after it was distressed – as it began to sink reportedly off the coast of Odessa.
Newest photo from 15 April 2022. Damaged Moskva. pic.twitter.com/BSgnS2mJXg
— Мike Right (@BormanIke) April 17, 2022
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The Ukrainians said they scored a direct hit on the Russian Navy’s Black Sea flagship vessel with two Neptune anti-ship missiles, while the Kremlin version is that an overnight fire broke out, igniting munitions and that it sank in the process of being towed after over 500 crew were safely evacuated.
#war Photo of the damaged cruiser Moskva in the Black Sea in 15 April 2022.⚠️
First impressions of this shocking photo. Life-saving equipment (rescue rafts) on board are missing, which means they were dropped into the water during the rescue operation./1 pic.twitter.com/WREeqmSvtA— Capt(N) (@Capt_Navy) April 17, 2022
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The inflatable liferaft containers abeam the radar unit (white canisters) are missing, presumably used in evacuation of the ship. Fire nozzles running unattended. Comparison image from 2012. pic.twitter.com/4zQgQDa9xP
— Andy Hall (@AndyHal15523851) April 17, 2022
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The photo remains unconfirmed, but so far among a number of military and maritime analysts a consensus is emerging that it appears genuine.
Below is another photo which is also now being circulated…
* * *
Update(1618ET): At least a couple thousand Ukrainian troops are still said to be surrounded and holed up in the giant Azovstal steelworks in the decimated city of Mariupol.
UK media is also reporting that a second British soldier has been captured in Mariupol by Russian forces. This after 28-year old Aiden Aslin from Nottinghamshire had reportedly surrendered last week as Russian forces advanced. And now The Guardian reports Sunday that a former UK soldier was just captured, and is being paraded before Russian media cameras:
Shaun Pinner said he had been fighting alongside Ukrainian marines when Vladimir Putin’s forces invaded nearly eight weeks ago.
The 48-year-old former British soldier appeared tired and bruised in a short propaganda video aired by Russian media on Saturday night.
He says: “Hi, I’m Shaun Pinner. I am a citizen of the UK. I was captured in Mariupol. I am part of the 36 Brigade First Battalion Ukrainian Marines.”
“I was fighting in Mariupol for five to six weeks and now I’m in Donetsk People’s Republic.”
Breaking: former British soldier Shaun Pinner who previously served in Royal Anglian Regiment has been captured by Russian forces in Mariupol. pic.twitter.com/xPkyS2K7d8
— Global Thinker (@talkrealopinion) April 16, 2022
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The details of Pinner’s capture remain unclear, but he had already been living in Ukraine for four years with his wife in Donbas. “The former Royal Anglian Regiment soldier said in January that he was based in trenches 10 miles outside Mariupol,” The Guardian noted.
UK’s foreign office has said it is seeking to get in contact with Pinner via his family members to arrange his release from Russian custody, but say their options are extremely limited due to wartime conditions. His being shown on Russian state media has stirred outraged among UK officials.
British fighter Shaun Pinner has been captured by Russian troops and paraded on state TV https://t.co/AmsJlhXIeQ
— LBC (@LBC) April 16, 2022
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Earlier a Ukrainian official said that Mariupol was totally destroyed, describing that the once proud port city had been “wiped off the face of the earth” after weeks of relentless shelling and bombing.
* * *
Pavlo Kyrylenko, Ukraine’s governor over Mariupol, has said Friday that the city of Mariupol has been “wiped off the face of the earth” after weeks of relentless shelling and missile strikes from Russian forces.
“The enemy may seize the land Mariupol used to stand on, but the city of Mariupol has been wiped off the face of the earth by the Russian Federation, by those who will never be able to restore it,” he said. “To restore Mariupol, that is something only Ukraine can do.”
Image: Associated Press As to the fate of the city, he described that at this point it is “no more” and that in reality the Russians have nothing left to seize. Meanwhile, Reuters is reporting that “Russia gave holdout Ukrainian soldiers an ultimatum to lay down arms on Sunday in the pulverised southeastern port of Mariupol, which Moscow said its forces almost completely controlled in what would be its biggest capture of the nearly two-month war.”
All of this comes just after Ukrainian defense ministry spokesman Oleksandr Motuzyanyk said that for the first time Russia used long-range bombers to attack Ukrainian positions in the port city.
“On April 14, two Russian strategic heavy bombers Tu-95/-160 have launched cruise missiles hitting the territory of Ukraine from Krasnodar Krai of Russian Federation airspace,” he said. “Also for the first time from the start of the armed aggression bombs were dropped by a long-range bombers Tu-22M3. This airstrike took place, hitting Mariupol.”
Earlier last week Mariupol mayor’s estimated that over 10,000 civilians had died over the course of the war which had seen the city on the Sea of Azov attacked and besieged from nearly the start of the invasion.
Footage shows airstrikes from Tu-22M3 long range strategic bomber targeting the Azovstal factory in which the last remains of Azov are holding themselves up. pic.twitter.com/GC7zTs8cTC
— UkraineMaps (@MapsUkraine) April 15, 2022
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He had described that dead bodies “carpeted the streets” – though it was impossible for outside observers to verify the high death estimate given.
The AP had reported, “The mayor of the Ukrainian port city of Mariupol said Monday that more than 10,000 civilians have died in the Russian siege of his city, and that the death toll could surpass 20,000…”
On Sunday Bloomberg reports that Russia could be contemplating a naval landing of forces to overwhelming the final holdout Ukrainian troops in and around the city:
Ukraine warned of a possible Russian naval landing operation at Mariupol in addition to new air strikes. Russia called on remaining forces in the besieged city to surrender. Many are thought to be within the massive Azovstal steelworks; Moscow said “foreign mercenaries” are among them, citing intercepted conversations.
Footage from earlier today shows Tu-22M3 long range strategic bomber refueling in-air above Vyazma, Russia. pic.twitter.com/Hdm4AZV93Y
— UkraineMaps (@MapsUkraine) April 15, 2022
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Recently United Nations officials warned that the true civilian death toll in the country may never be known, that it’s likely significantly higher than current official estimates.
Tyler Durden
Sun, 04/17/2022 – 21:15 - Boise's Pandemic-Driven Housing Boom Begins To Crack
Boise's Pandemic-Driven Housing Boom Begins To Crack
Cracks in one of the nation’s hottest housing markets could be an early indication that the virus pandemic work-from-anywhere housing boom could cool as mortgage rates soar and affordability become an issue.
In a weekend op-ed, Bloomberg’s Jonathan Levin wrote, “If you’re wondering where the U.S. real estate market might start to show its first cracks, keep an eye on Boise, Idaho.”
Levin is right. During the pandemic, Boise saw a massive influx of Californians purchasing homes in the region. Now the rush could be stalling.
Zillow data shows the average home price in Boise rose just 0.4% in March, down from 4.1% in June.
“The slowdown is hitting some Western mountain towns now, but it’s also likely to catch up with Austin, Texas; Phoenix; and Tampa, Florida, among others,” Levin noted.
He spoke with Oxford Economics economist Oren Klachkin about Boise home prices being a staggering 70% over what prices are deemed affordable to the median household income in the area. Thank Californians for this bubble.
“It’s making it harder for first-time homebuyers and locals to afford houses,” Klachkin said.
The incredible pace of gains is not sustainable, and slowing demand could suggest prices will eventually reverse.
Zillow Senior Economist Jeff Tucker said the cities that experienced the largest house price gains due to migration flows would be hit the hardest in a downturn.
Last week the average 30-year mortgage rose above 5% for the first time in a decade, threatening to cool the nation’s red-hot housing market by inducing an affordability crisis.
BofA economist Alex Lin recently showed clients that housing affordability is now at the lowest level since 2007, about a year before the housing bubble imploded.
The National Association of Realtors recently estimated that 9 million homebuyers had been priced out of the market this year because of higher interest rates.
In March, we discussed the “Housing Affordability Is About To Crash The Most On Record“ and “Biggest Housing Affordability Shock In History Incoming.”
We even pointed out that cracks have already shown up in overall markets as sellers reduced asking prices this spring season. There’s also a slowdown in pandemic-driven second-home buying.
Maybe mortgage rates provide some insight into what may happen next to housing prices…
Boise’s cooling may suggest some of the hottest housing markets post-pandemic could be due for a slowdown, or worse: a reversal in prices.
Tyler Durden
Sun, 04/17/2022 – 21:00 - Chinese Slowdown, Much More Than COVID
Chinese Slowdown, Much More Than COVID
The most recent macroeconomic figures show that the Chinese slowdown is much more severe than expected and not only attributable to the covid-19 lockdowns.
The lockdowns have an enormous impact. 26 of 31 China mainland provinces have rising covid cases and the fear of a Shanghai-style lockdown is enormous. The information coming from Shanghai proves that these drastic lockdowns create an enormous damage to the population. Millions of citizens without food or medicine and rising suicides have shown that the infamous “zero covid” policy often disguises mass population control and repression.
It is easy to use the covid-19 lockdowns as the reason for the weakening of the Chinese economy but that would be a gross simplification. The problem is deeper.
China is going through a severe slowdown caused by the burst of the enormous real estate bubble and the crackdown on the private sector, which has led to a cut in investment growth.
According to Nomura Research, China faces the worst slowdown since the covid outbreak in 2020 and the world should be worried about a further slide, as the challenges persist. Official GDP figures may be massaged to deliver the government’s target, but all other macro figures point to a much weaker growth.
We must remember that there are two ways in which the Chinese government “boosts” real GDP: By publishing a low inflation and GDP deflator figure and by massively increasing credit and infrastructure spending. However, those two cannot disguise the importance of the weakening of the Chinese economy, because it is now structural.
The collapse of the real estate bubble is the biggest problem. A research paper by Kenneth Rogoff and Yuanchen Yang estimated that the real estate sector accounts for around 29% of China’s GDP. It is impossible for the Chinese government to offset the impact of such a massive part of the economy with other high-growth sectors. Furthermore, real estate’s impact on the job market is hard to substitute. Economist George Magnus warned that the impact of the real estate collapse would last for years.
To add to a difficult real estate problem, the government intervention on the private sector, called “crackdown”, makes it even more difficult to boost growth with other industries and businesses. The fear of constant political intervention is leading to a massive slowdown in foreign direct investment growth as well as fear of deploying capital and taking risks in the Chinese economy only to suffer grave penalties from the authorities when profits arrive.
The extent of the deterioration of the Chinese economy is evident in the recent leading indicators. The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) slumped to 25-month low of 48.1 in March 2022, signalling contraction. The Caixin Services PMI plummeted to 42.0 in March from 50.2 in February, dropping below the level that separates growth from contraction. This reading indicates the sharpest activity decline since February 2020.
The political intervention on the technology sector, which is one of the leading job creators in China, has sparked fears of frozen headcounts and layoffs, according to various media reports. Additionally, the decision of the central bank of cutting reserve requirements for banks has not avoided a significant decline in credit growth, as reported by JP Morgan.
To all this we must add a currency, the yuan, which is used in less than 3% of global transactions, according to Reuters, due to the extreme capital controls and the exchange rate fixing imposed by the central bank. Confidence in the local currency is low due to the extreme intervention on the currency market, which is preventing China from having a truly international means of payment.
China’s high debt is also a problem. Total debt stands above 300% of GDP, according to the IIF. The ECB points out that China’s debt-to-GDP ratio for the entire private sector now stands at over 250% and the corporate component of this debt is the highest in the world. The ECB points also to the risk created because a “significant proportion of funding is supplied to the corporate sector by non-bank financial institutions” leading to higher risk-taking and a shadow banking system that leads to large inefficiencies and solvency challenges.
The aggressive and misguided lockdowns are affecting supply chains and activity, but the structural problems of rising intervention in the currency and industries as well as a heavily indebted economic model are likely to drag on real growth and jobs for a long time.
Tyler Durden
Sun, 04/17/2022 – 20:30 - Value Of Jack Dorsey's First Tweet Plummets 99% As NFT Market Craters
Value Of Jack Dorsey's First Tweet Plummets 99% As NFT Market Craters
A man who paid $2.9 million last March for an NFT of Twitter co-founder Jack Dorsey’s first tweet is set to lose almost everything on the digital investment.
Crypto entrepreneur Sina Estavi made headlines last year after snapping up Dorsey’s tweet, which reads: “just setting up my twttr.”
The Iranian-born Estavi expected to make more than 15x on the investment, listing it on popular NFT marketplace OpenSea last week for $48 million. He vowed to send 50% of the proceeds to charity.
I decided to sell this NFT ( the world’s first ever tweet ) and donate 50% of the proceeds ( $25 million or more ) to the charity @GiveDirectly
🖇 https://t.co/cnv5rtAEBQ pic.twitter.com/yiaZjJt1p0— Estavi (@sinaEstavi) April 6, 2022
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Unfortunately for Estavi, the top bid as of this writing is just $30,739 – a loss on paper of roughly 99% what he paid.
NFTs exist on the blockchain alongside cryptocurrencies, and serve to authenticate digital assets.
“My offer to sell was high and not everyone could afford it,” Estavi told Reuters, adding that he’s not sure he’ll sell it anymore. “It’s important to me who wants to buy it, I will not sell this NFT to anyone because I do not think everyone deserves this NFT,” he said.
Prices for NFTs have cratered in recent months after last year’s digital ‘tulip mania’ saw incredible activity in the space – with monthly sales of NFTs totaling almost $5 billion last August, according to the WSJ, citing NFT data aggregator CryptoSlam. In March, sales dropped to $2.4 billion.
At the market’s peak, over 200,000 NFT sales were taking place each day, dropping to 10,000 – 30,000 daily trades most recently.
via nonfungible.com “I don’t think it’s surprising that we’re seeing a little cooling off like we’re seeing in other markets as well,” said Jonathan Victor, NFT and gaming lead at Protocol Labs in a statement to the Journal, adding that some of the NFTs which have sold for millions of dollars are akin to high-end art.
“There isn’t a clear formula to say ‘this is how much this should cost,” he said.
When it comes to Dorsey’s first tweet, “You have a price that’s set by one person who thought this was a fair value.” Sometimes, others just don’t agree.
Tyler Durden
Sun, 04/17/2022 – 20:00 - The Bond Market Is Calling For A Recession In Mid-2023… But That Has Not Eased Inflation Expectations
The Bond Market Is Calling For A Recession In Mid-2023… But That Has Not Eased Inflation Expectations
By Marcel Kasumovich,head of research at One River Asset Management and Paul Ebner, digital portfolio manager
1/ Market sentiment is a curious thing. For any idea to win the day, it needs to become a consensus opinion. Yet, once any idea is the consensus, investors fear being part of the herd. Asset manager surveys are useful guideposts for being alert to such cycles. None does it better than the long, rich, independent history of the Fund Manager Survey (FMS) from BofA. And at a time of unprecedented macro crosscurrents, it is worth taking stock of positioning.
2/ Are you part of the herd? Investors are demonstrating strong conviction in the latest survey. Uncertainty be damned. Yes, fund managers have built an above-average cash cushion in response to future unknowns. But that is where the indecisive investor mindset ends. Investor expectations for growth and corporate profits are the worst since 2008. Recession risk is the greatest concern. A conventional allocation to such a backdrop would be short stocks, long bonds, and long the US dollar. Instead, the consensus is powerfully positioned long commodities and an extreme short in bonds.
3/ Structural inflation. That is the central theme in the positioning of asset managers. The surveys do not foresee recession curing current inflation ills. It is also not a message unique to market sentiment surveys. Bond markets are emphasizing the same point. The curvature of short-term interest rate futures provides one of the most precise indicators of the business cycle. Expectations have shifted to a more rapid monetary tightening, with rate cuts in the second half of next year (Figure 1). The interpretation is simple – the wisdom of the bond-market crowd is calling for US recession to start in the middle of next year. But this has not eased market inflation expectations – to the contrary, they have quietly risen to cycle highs.
4/ Where does digital fit into the consensus equation? Interestingly, surveys say that it doesn’t. Investors are trading with a recency bias. And most recently, digital assets have been linked to equity markets, not inflation. The correlation between the S&P 500 and our Core Digital Index jumped to an all-time high on a one-month rolling basis, up nearly four times since the end of last year. Investors are steering portfolios to guard against inflation and don’t see a role for digital. It is also evident in perceptions of crowded trades by fund managers. Bitcoin was considered the most crowded three times in the BofA FMS since 2013, twice since the start of last year. Today, it doesn’t crack the top five of importance.
5/ But investors are forgetting the longer, cyclical properties of digital assets. Correlations are easy to calculate. They also change a lot and often depend on time-specific circumstances. One way to humanize the historic properties of digital assets is through the lens of relatable macro episodes. To that end, we classify 12 macro episodes into four themes since the start of our
indices in 2017: gold cycles, credit tightening, economic downturns, and rising inflation expectations. Figure 2 illustrates the average daily returns for our digital indices filtered through those macro periods. There are two striking results.6/ First, digital does not follow gold cycles – at all. There is always Twitter excitement when gold is outperforming digital assets and vice versa. It’s noisy entertainment. We parsed gold cycles into positive and negative cycles to be sure that the result was robust. It is. In fact, digital asset performance was the strongest during downturns in the price of gold. There is a lot more to digital than the yellow metal.
7/ Second, the cyclicality of digital assets is more geared to inflation. Periods of rising inflation expectations have disproportionately higher returns for broader digital assets. Our Size-Tilt Index averaged a daily return of 162 basis points in those periods compared to bitcoin’s average daily return of 28 basis points since our Indices began. These gains also dwarf the average daily decline in periods of credit tightening and economic downturns, where the Size Tilt Index was down 60 basis points and 54 basis points for bitcoin on average per day.
8/ The dynamic path of our indices in cyclical episodes is also enlightening (Figure 3). In the negative scenario, the average performance across the benchmarks is not very different. The distinction across drawdowns, however, is notable, and much larger with Size Tilt, that leans to smaller assets. It is a critical reminder that high-volatility assets and leverage do not mix. To benefit from the upward drift in Size Tilt seen in the inflationary growth scenario, you cannot get stopped out in the negative drawdown. Volatility is best managed with unleveraged exposure.
9/ Historic analyses provide a foundation for discussion – no more, no less. Investors are charged with the far more creative and difficult task of understanding how things will be different. Investor sentiment provides a glimpse – inflation will be persistent, and investors are skeptical of the role digital will play. But investors are focused on a meaningful shift from recent history – a long period of persistent inflation and weaker real activity. Can digital assets perform in that world? The short answer is yes. The same recency bias impacting sentiment is constraining expectations on the role the digital ecosystem plays in a new macro environment.
10/ Consider the role of digital in generational austerity. The good fortune of the older generation is imposing austerity on the younger one. Asset prices, housing costs, student debt, and higher taxation are obstacles to the next generation of entrepreneurs. Austerity is a matter of survival. The “Young and Austere” can innovate in the digital ecosystem in a far more efficient manner. From design to architecture and financial services, the cost of operating in the digital world is far less than the ‘real’ world and there are fewer barriers to entry. Fashion week in Decentraland becomes the headline act, not the footnote that it was last week. Digital assets and their role in portfolios can’t be reduced to a 3-year or 30-day correlation. It is an ecosystem that will flexibly adjust to its environment, including the new macro world order. So, too, will our indices.
Tyler Durden
Sun, 04/17/2022 – 19:30 - Bird Flu Outbreak "Above And Beyond Rate Of Spread" Observed In 2015, Warns Industry Expert
Bird Flu Outbreak "Above And Beyond Rate Of Spread" Observed In 2015, Warns Industry Expert
The bird flu outbreak has only been spreading around the US for two months, and some industry experts are warning the rate of spread could be worse than the devastating 2015 outbreak.
On Friday, the US Department of Agriculture (USDA) announced yet another state where the contagious strain of highly pathogenic avian influenza has been detected. Idaho is the 27th state where the virus has been found since February.
WaPo spoke to Gro Intelligence (ag data experts) senior research analyst Grady Ferguson who tracked the last outbreak in 2015, saying this one could be more disruptive to the poultry and egg markets.
Ferguson said that 66 days into the outbreak, 1.3% of all US chickens had been affected, and 6% of the US turkey flock. In 2015, he said, only .02% of total chickens were affected at this same time. The number rose to 2.5% of chickens infected at the outbreak’s peak, and more than 50 million were culled.
So far, the bird flu tsunami wave across 27 states has infected 27 million chickens and turkeys, forcing farmers to “depopulate” or cull flocks to prevent spreading.
“We are above and beyond the rate of spread, we saw in 2015.
“Last time, 81 percent of the cases were in the fourth and fifth month, as things exploded. What chicken egg prices did last time affected the market for years. We are two months into the outbreak now, and the safety protocols haven’t worked. I don’t want to be a Chicken Little, but I think it’s going to be worse than last time,” he said.
National egg prices are off the charts for this time of year. The average retail cost for a dozen large eggs across the country has jumped to nearly $3, up from $1.20 in early January.
Ferguson warned soaring egg prices “will make higher prices for all baked goods and a wide variety of processed foods from cupcakes to salad dressing. Restaurants will have a harder time justifying why they should give you a three-egg omelet for a dollar. And on the chicken meat side, the situation is also worse than it was last time.”
Besides sky-high egg prices, retail chicken breast prices per pound have surpassed a decade high.
The emerging poultry crisis will feed into record-high food inflation that will continue decimating households’ budgets.
Tyler Durden
Sun, 04/17/2022 – 19:00 - Shades Of Gray In The Russia-Ukraine War
Shades Of Gray In The Russia-Ukraine War
Authored by Sheldon Richman via The Libertarian Institute,
If you’re looking for morality tales — clashes between the clearly good and the clearly bad — I suggest you look elsewhere than to the geopolitical theater. There we find only conflicts between shades of darker gray.
This seems to have been the case throughout history. Empires and would-be empires vied with rival empires and would-be empires for territory, resources, taxpayers, and soldiers. No surprise: governments will be governments, and that’s not good. This is not to say the shades of gray did not differ at all, perhaps even significantly on occasion, but the objective was always, first and foremost, booty and control of people. The interests of commoners were rarely if ever the cause.
We see this in Russia’s war on Ukraine. Let’s be clear: Vladimir Putin and his Russian government freely chose to send military forces across the border into Ukraine. Their military personnel complied. They ultimately are responsible for their choices and therefore the death, injury, and mayhem that is taking place. (I make an exception for proven false-flag operations on the Ukrainian side, should any come to light.)
NATO file image Now that the issue of primary culpability is out of the way, we can go on to talk about contributory culpability. I hope I’ve left little room for anyone to argue assigning contributory culpability to others is intended to let the Russian government personnel off the hook.
What sort of culpability do I have in mind? It’s on the order of setting a trap and loading it with bait in order to lure a target. Russia had to choose to step into it, but those who set the trap did not have to do what they did. Hence, they contributed to a terrible situation.
Many experts analysts have long pointed out that the U.S. government at least since the late 1990s has knowingly been provoking Russia by expanding NATO up to the country’s western border, incorporating most of the allies and some of the republics of the late Soviet Union. For years the U.S. government and other NATO officials have talked publicly about inviting the former republics Ukraine and Georgia to join. Everyone knew that Ukraine was an especially sensitive matter because it had long been a buffer between Russia and states to the west, Poland in particular. The Soviet Union had been invaded three times in the 20th century, twice by Germany and once by Poland, both NATO members since the demise of the USSR.
The warnings against NATO’s march eastward were too many to count and came from people as diverse as Henry Kissinger and Noam Chomsky, Soviet-rollback guru Paul Nitze and Soviet-containment architect George Kennan.
The current director of the CIA, William J. Burns, warned in 2008, when he was George W. Bush’s ambassador to Russia, that no Russian leader — conservative or liberal — would ever stand for the admission of Ukraine and Georgia into NATO. Burns’s leaked memo was written shortly after publicly NATO declared that it welcomed applications for membership from those states.
That was 14 years ago and six years before the U.S. State Department helped foment a Nazi-backed coup that drove a Russia-friendly but democratically elected president from power — even though he had been making concessions to the opposition in the streets, including a call for early elections. What motivated the U.S. government was that president’s intention to reject an exclusive economic and political relationship with the European Union in order to accept a loan with liberal terms from Russia.
“One of Poland’s most prominent journalists, Konstanty Gebert, said he is quitting what many regard as the country’s newspaper of record after it demanded that he describe Ukraine’s controversial Azov Battalion as ‘far-right’ instead of ‘neo Nazi.'”https://t.co/JAvbzD7N5l
— Glenn Greenwald (@ggreenwald) April 16, 2022
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Aside from the overt NATO talk, there’s the matter of the U.S. government’s putting missile launchers in Poland and Romania. As outfitted, they are for defensive anti-missile missiles, but that could be changed. Moreover, defensive missiles obviously can be useful in an offensive campaign. Remember that Donald Trump, the reputed Russian agent, had earlier denounced the Reagan-era treaty that banned intermediate-range nuclear weapons from Europe and elsewhere. No one could have been surprised when all this was worrisome to the Russians. (Recall what happened in 1962 when the Soviet Union tried to put missiles in Cuba. John F. Kennedy imposed a naval blockade on the island and was ready to launch a nuclear war if the missiles were not removed.)
Since the Russian invasion, Joe Biden and his foreign policy people have denounced Russia sanctimoniously for its violations of international law and brutality, including the inexcusable deaths of noncombatants. It is not inappropriate to ask when an American president has ever respected international law when it was inconvenient for U.S. objectives. In the 21st century alone, American presidents have launched illegal aggressive wars in the Middle East and other places to effect regime change and other geopolitical objectives even partially on behalf of other states, such as Israel. In the process Americans have killed untold noncombatants. They have tortured prisoners. They have wreaked sickening destruction, creating hordes of refugees — and so on. Yet day after day, lying American officials — but I repeat myself — admonish Putin for his bad behavior. There’s nothing like setting a good example.
The Ukrainian leaders must also share in the blame. Those leaders who have been West-leaning have not been shy about aspiring to join NATO, knowing full well how the Russians would interpret those words. Since the 2014 coup — in response to which Russia annexed a long-standing security area, the Crimea with its Russian naval base, to keep it out of NATO hands — Ukrainian presidents could have made overtures to Russia, assuring that they would not seek NATO membership and offering to make Ukraine neutral in the manner of Austria since 1955. They did not do that, even though the current president, Volodymyr Zelensky, a former comedian and actor, was elected on a peace-with-Russia platform.
Superficially, Zelensky is an appealing figure. He’s young and charismatic, and he wears t-shirts. His country has been invaded, which of course puts him in a sympathetic light when he appears on television. But is that the whole story of the man? It also seems that despite the terms of the Minsk agreements, he has been unwilling to talk to leaders in the heavily Russian-ethnic Donbas region, in the far east of Ukraine, about home-rule. Two provinces there, Luhansk and Donetsk, have since declared their independence, which Russia has recognized. The Ukrainian military has been shelling the area since the 2014 coup, and Donbas forces have fought back. The casualties on both sides have been high.
Moreover, as Jacques Baud, an intelligence expert who has worked for NATO, the UN, and Swiss strategic intelligence writes:
On [March 24, 2021], Volodymyr Zelensky issued a decree for the recapture of the Crimea, and began to deploy his forces to the south of the country. At the same time, several NATO exercises were conducted between the Black Sea and the Baltic Sea, accompanied by a significant increase in reconnaissance flights along the Russian border. Russia then conducted several exercises to test the operational readiness of its troops and to show that it was following the evolution of the situation. [Aaron Mate’s video interview with Baud is here.]
Baud also writes, “In violation of the Minsk Agreements, the Ukraine was conducting air operations in Donbass using drones, including at least one strike against a fuel depot in Donetsk in October 2021. The American press noted this, but not the Europeans; and no one condemned these violations.”
It begins to look as though Zelensky has cavalierly used the Ukrainian people for his own ends: instead of seeking peace, he sought or was willing to risk war with Russia, assuming the U.S. government and other NATO states would back him up with perhaps more than arms shipments. He still demands a NATO no-fly zone, which would all but assure a new world war and perhaps an all-out nuclear war. So he also shares in the responsibility.
As usual, there’s blame aplenty to go around.
Tyler Durden
Sun, 04/17/2022 – 18:30 - Portable Nuclear Device Missing In Eastern Pennsylvania
Portable Nuclear Device Missing In Eastern Pennsylvania
A portable nuclear device used in construction was reported missing Friday, according to the Pennsylvania Department of Environmental Protection (DEP).
DEP said the missing nuclear gauge contains “sealed sources of radioactive material” belonging to a construction company in Harleysville, a suburb of Philadelphia. The device was secured in a car when it was stolen. The vehicle has been recovered, but the device “was no longer inside and may have been discarded,” DEP said.
The state agency warned if the device is “badly damaged,” there is “potential for damage to the radioactive source and spread of contamination.”
The nuclear device is a Troxler Model 3440. Construction companies use it to evaluate if there are radioactive materials at job sites. The Troxler gauge contains Cesium-137 and Americium-241.
DEP tweeted an image of the missing device.
Norristown, PA – DEP Urges Public to Report Missing Portable Nuclear Gauge:https://t.co/2vft9YSf9g pic.twitter.com/j17SOAL3jt
— PA Department of Environmental Protection (@PennsylvaniaDEP) April 15, 2022
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“Anyone who finds the gauge should not handle it directly, but rather maintain distance, limit time of proximity, and immediately contact local authorities or the DEP’s Southeast Regional Office at 484-250-5900,” DEP tweeted. “A trained individual will recover the gauge.”
Anyone who finds the gauge should not handle it directly, but rather maintain distance, limit time of proximity, and immediately contact local authorities or the DEP’s Southeast Regional Office at 484-250-5900. A trained individual will recover the gauge.
— PA Department of Environmental Protection (@PennsylvaniaDEP) April 15, 2022
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This is the second time in about six months that a Troxler Model 3440 has gone missing in Pennsylvania. In Oct., DEP said another device was “inadvertently” left at a job site. It was later recovered, but for these issues to reoccur in a short period raises many eyebrows.
Tyler Durden
Sun, 04/17/2022 – 18:00 - China's Digital Yuan, Biggest Threat To The West, Is Overshadowed By Russian War, Kyle Bass Warns
China's Digital Yuan, Biggest Threat To The West, Is Overshadowed By Russian War, Kyle Bass Warns
Authored by Frank Fang and Jan Jekielek va The Epoch Times,
Russia’s war in Ukraine is obscuring one very alarming threat posed by the Chinese regime: its system of paperless money, warned hedge fund manager Kyle Bass.
“It is, I think, the single largest threat to the West in the last 50 years. And it’s being overshadowed by the Russian invasion of Ukraine,” Bass said during a recent interview on EpochTV’s “American Thought Leaders” program.
The Chinese digital currency, variously known as the digital yuan, digital renminbi, e-CYN, and e-yuan—is currently being developed by the Chinese regime through its central bank. Since the e-yuan is backed by the People’s Bank of China (PBOC), it is a central bank digital currency (CBDC) or simply the digital version of China’s fiat currency.
So far, pilot tests of the e-yuan are being carried out in more than 20 different Chinese cities and the money was made available to visiting foreigners through a mobile app for the first time during the 2022 Beijing Winter Olympics.
“This isn’t a simple digital payment app. This is an app that tracks where you are, what your name is, what your social security number is, [and] what all of your identifiers are. It has the geo-locating ability,” he explained.
Bass explained once the Chinese digital money is fully-developed and is made available to everyone outside of China, the Chinese regime could seek out certain e-yuan users, such as those in financial trouble, and corrupt them.
“Image if the Chinese government had access to every Tom, Dick, and Harry in America, and in Europe, and in Canada,” he said. “Imagine if they could cross-run an algorithm that says, let’s look for U.S. government employees that have Tinder that are short on cash—and maybe they’re married—and we can corrupt them immediately.”
“It gives them the ramp to corrupt anyone and everyone around the world that’s corruptible, which is a real national security problem,” he added. “So it’s a way they can export digital authoritarianism.”
China’s global rollout of its e-yuan has a very specific agenda, Bass said, which is to reduce its dependence on the U.S. dollar.
“About 87 percent of global transactions that China settles are settled in dollars,” he said. “They’re desperately short energy, they’re desperately short food, they’re desperately short basic materials, they have to go buy these things every day around the world, and no one trusts their currency, and they still have a closed capital account.”
“And so what do they have to do? They have to use their [U.S.] dollars to do so,” he said.
More than 80 countries in the world, including the United States, are exploring the issuance of CBDC, according to tracking by the Washington-based think tank Atlantic Council. So far Nigeria is among nine countries that have launched digital forms of their currencies.
In March, the White House issued an outline of President Joe Biden’s executive order on digital assets. The president was “placing urgency” on research and development of a U.S. CBDC, and issuing one was “deemed in the national interest.”
Several U.S. lawmakers have been keen to see the threat posed by the e-yuan properly addressed. In May last year, Reps. French Hill (R-Ark.) and Jim Himes (D-Conns.) introduced the 21st Century Dollar Act (H.R.3506), which would require the U.S. Treasury Department to include in a report for Congress any risks to the U.S. dollar posed by the digital yuan.
In March, Sen. Marsha Blackburn (R-Tenn.) and eight of her Republican colleagues introduced the Say No To the Silk Road Act (S.3784). If enacted, the legislation would require the U.S. Commerce Department and U.S. Trade Representative’s office to file reports on the e-yuan.
Additionally, the U.S. State Department would be required to put a warning on its website, warning U.S. citizens traveling to China “about the dangers of the digital yuan,” according to the text of the bill.
“There are some senators that you’ll see in the coming weeks are going to launch legislation to outlaw its use. And I believe that, that those that legislation must happen,” Bass said.
“The West needs to convene, and we need to ban it immediately,” he added. “You can’t have a little bit of cancer, you either have cancer, you don’t have cancer.”
Tyler Durden
Sun, 04/17/2022 – 17:30 - "The Light Is Killing Me" – Ukrainian Woman Describes Brutal Conditions Inside Shanghai Quarantine Center
"The Light Is Killing Me" – Ukrainian Woman Describes Brutal Conditions Inside Shanghai Quarantine Center
Facing an unprecedented level of backlash and widespread condemnation from the international press, Beijing said Sunday that it’s hoping to have localized COVID outbreaks in Shanghai under control by Wednesday. This would allow them to scale back COVID lockdown measures…but then again, that’s a big “if”.
The report also noted that the lockdown in Shanghai (which has been the focal point of China’s latest outbreak for weeks) has prompted locals to take to social media with tales of outrage and woe.
Here’s more from Reuters:
The target will require officials to accelerate COVID testing and the transfer of positive cases to quarantine centres, according to a speech by a local Communist Party official dated Saturday, a copy of which was seen by Reuters.
Ending community-level transmission has been a turning point for other Chinese localities that locked down, such as Shenzhen city which last month reopened public transport and let businesses go back to work shortly after achieving that target.
Shanghai has become the epicentre of China’s largest outbreak since the virus was first identified in Wuhan in late 2019, and has recorded more than 320,000 COVID infections since early March when its surge began.
Some of the complaints have even made it to the mainstream western media, thanks to the cooperation of a Ukrainian woman living in Shanghai. According to WSJ, she was taken to a government quarantine center, where she spent nearly three weeks, and was forced to remain even after testing negative for the virus – twice.
She described conditions that sounded more like a prison – perhaps in some ways worse. For example, she wasn’t allowed to shower for her entire stay.
Lights were kept on in the facility 24-7. She said the experience made her feel like a “COVID criminal”. Shanghai has built more than 100 makeshift hospitals with a total capacity of more than 160,000 beds, and the Ukrainian woman was situated in the Shanghai World Expo Exhibition & Convention Center complex.
“The light is killing me—it’s my main enemy here,” she said in an interview, the day before her release.
Despite being crammed in with thousands of strangers, and left without showers or much sanitation, she said there was at least one advantage to her situation when compared to that of her boyfriend, who remained free: at least she was getting three warm, decent meals per day at the facility, while her boyfriend was constantly worried about his shrinking food stockpile.
Tyler Durden
Sun, 04/17/2022 – 17:00 - 'Inflationary Psychology' Has Set In – Dislodging It Won't Be Easy
'Inflationary Psychology' Has Set In – Dislodging It Won't Be Easy
Authored by Richard Curtin via University of Michigan,
There is a high probability that a self-perpetuating wage-price spiral will develop in the next few years. Households have already become less resistant to paying higher prices and firms have become less resistant to offering higher wages. Prices and wages will continue to spiral upward until the cumulative erosion in inflation-adjusted incomes causes the economy to collapse in recession. It is like the children’s game of musical chairs: Everyone knows the game will end, but they feel compelled to keep racing around the circle at an ever-faster pace hoping their forced exit will leave them in the best possible position—even if it still means an inflation-adjusted loss.
This situation has been termed “inflationary psychology.” Consumers purposely advance their purchases in order to beat anticipated future price increases. Firms readily pass along higher costs to consumers, including the future cost increases that they anticipate. That’s what happened in the last inflationary age, which started in 1965 and ended in 1982: Expected inflation became a self-fulfilling prophecy. Many commentaries assert that the current situation is nothing like the situation faced in 1978-80. That’s true, but irrelevant. The more apt comparison would be to the five to ten years prior to that period, when inflation had not yet reached crisis levels. Government officials claimed they had the policy tools that could easily reverse inflation, just as they claim now.
Those policies, however, repeatedly failed across administrations, from Lyndon B. Johnson’s surtax, to Richard Nixon’s wage and price controls, to Gerald Ford’s public relations “Whip Inflation Now” campaign, and Jimmy Carter’s fireside pleas to diminish material aspirations. Only after Paul Volcker was appointed Federal Reserve chair and raised the fed funds rate to 20% in 1980 did inflation begin to fall. He pushed up rates aggressively, by 10 percentage points in just six months. The resulting 10% unemployment rate was needed to reduce inflation by 10 percentage points.
Today’s mantra is, “This time is different.” Supply disruptions were said to be transient, and the inflation rate would soon fade. The University of Michigan’s survey confirmed that shortages were important, and those shortages played an initial role in raising inflation expectations. Awareness of shortages has remained high, mentioned by half of all consumers in the past nine months. Nonetheless, shortages are no longer associated with higher inflation expectations—their inflation expectations now differ by less than one-tenth of a percentage point.
Consumers quickly adopted the notion that inflation had multiple causes, focusing on the growth in federal spending and expansionary monetary policy as the dual driving forces. Pandemic transfers and relief payments produced extraordinary increases in household incomes. The income gains meant that household budgets could easily withstand higher prices. These transfers meant survival for many households, with some quickly exhausting their funds. Most workers still remained employed and boosted their spending. A good deal of those funds were added to their savings and reserves, which will constitute a more-lasting offset to higher prices.
Several other associated findings from the University of Michigan’s consumer sentiment survey are also relevant. Although consumers have increasingly expected higher inflation, they have also expected a strong job market and rising wages, especially among consumers under age 45. In the year ahead, wage gains will continue to reduce resistance to rising prices among consumers, and the ability of firms to easily raise their selling prices will continue to reduce their resistance to increasing wages. Thus, the essential ingredients of a self-perpetuating wage-price spiral are now in place: rising inflation accompanied by rising wages.
The Federal Reserve has the difficult task of balancing reductions in inflation against job losses. When consumers were recently asked which was the more critical problem facing the nation, nearly nine-in-ten cited inflation. The erosion in living standards due to rising inflation was the most common complaint when consumers were asked to describe in their own words how their finances had recently changed. While the initial rise was among the lowest-income households, those complaints have rapidly spread to middle- and upper-income households. Surging gas, food, and housing prices have forced nearly all families to go through the painful process of deciding which normally purchased items they could no longer afford.
Importantly, the majority of today’s consumers did not experience the accelerating inflation of the 1970s. Most have personally experienced only very low inflation, with a few short-lived spikes in oil prices. This lack of experience has magnified their reactions to the higher inflation rate that now prevails. Another critical characteristic of the earlier inflation era was frequent temporary reversals in inflation, only to be followed by new peaks. That same pattern should be expected in the months ahead.
Most consumers expect the government to undertake policy actions to curb inflation. Indeed, the largest proportion of consumers in the past half-century have expected the Fed to hike interest rates. Given that the fed funds rate had lingered for an extended period near zero, that was not a hard call to make. What was perhaps more surprising was that the quarter-point hike the Fed adopted in March was simply too small to signal an aggressive defense against rising inflation. Instead, it signaled the continuation of a strong labor market along with an inflation rate that would continue to rise.
Much more aggressive policy moves against inflation may arouse some controversy. Nonetheless, they are needed. Adam Smith’s legendary invisible hand describes how individuals acting in their own self-interest can create unintended benefits for the entire society. Unfortunately, the country now faces the potential for an inflationary hand that can transform self-interested decisions into losses for the entire economy.
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Richard Curtin is a research professor at the University of Michigan and has directed the consumer sentiment surveys since 1976.
Tyler Durden
Sun, 04/17/2022 – 16:30 - Drug And Alcohol Abuse Slowing Labor Force Participation Rate, Fed Study Finds
Drug And Alcohol Abuse Slowing Labor Force Participation Rate, Fed Study Finds
Drug and alcohol abuse are starting to negatively effect the labor force participation rate, according to a new study by Federal Reserve Bank of Atlanta researcher Karen Kopecky, Jeremy Greenwood of the University of Pennsylvania and Nezih Guner of the Universitat Autonoma de Barcelona.
The study was reported last week by Bloomberg in this writeup.
What it found was that between 9% and 26% of the decline in prime-age labor-force participation between February 2020 and June 2021 was due to “increased substance abuse”.
Labor force participation between ages 25 and 54 has yet to full recover since March 2020’s plunge, the report says. So far, the Fed has blamed that on “issues with child care and elder care, in-person schools being closed, concerns about getting sick and extra unemployment benefits.”
The labor force participation rate remains one of the key factors that the Fed is hoping to influence as they move to raise rates throughout the year.
The study noted: “Once started, drug and alcohol abuse is difficult to stop for many people…an increase in substance abuse during the pandemic would mean lower labor-force participation rates even after the pandemic has ended.”
The decline in participation was disproportionately helped along by Americans without a college degree, the report says.
The news comes despite the participation rate rising to 62.4% last month, which marks a two year high. But, as Bloomberg notes, this remains 1% lower than prior to the pandemic.
Tyler Durden
Sun, 04/17/2022 – 16:00 - The Greatest Danger To The Political-Corporate-Media Triumvirate Is That Musk Is Right
The Greatest Danger To The Political-Corporate-Media Triumvirate Is That Musk Is Right
Twitter’s board of directors gathered this week to sign what sounds like a suicide pact. It unanimously voted to swallow a “poison pill” to tank the value of the social media giant’s shares rather than allow billionaire Elon Musk to buy the company.
The move is one way to fend off hostile takeovers, but what is different in this case is the added source of the hostility: Twitter and many liberals are apoplectic over Musk’s call for free speech protections on the site.
Company boards have a fiduciary duty to do what is best for shareholders, which usually is measured in share values. Twitter has long done the opposite. It has virtually written off many conservatives — and a large portion of its prospective market — with years of arbitrary censorship of dissenting views on everything from gender identity to global warming, election fraud and the pandemic. Most recently, Twitter suspended a group, Libs of Tik Tok, for “hateful conduct.” The conduct? Reposting what liberals have said about themselves.
The company seemingly has written off free speech too. Twitter CEO Parag Agrawal was asked how Twitter would balance its efforts to combat misinformation with wanting to “protect free speech as a core value” and to respect the First Amendment. He responded dismissively that the company is “not to be bound by the First Amendment” and will regulate content as “reflective of things that we believe lead to a healthier public conversation.” Agrawal said the company would “focus less on thinking about free speech” because “speech is easy on the internet. Most people can speak. Where our role is particularly emphasized is who can be heard.”
Not surprisingly, selling censorship is not a big hit with most consumers, particularly from a communications or social media company. The actions of Twitter’s management have led to roller-coastering share values. While Twitter once reached a high of about $73 a share, it is currently around $45. (Musk was offering $54.20 a share, representing a 54 percent premium over the share price the day before he invested in the company.)
Notably, Musk will not trigger the poison pill if he stays below 15 percent ownership of the company. He could push his present stake up to 14.9 percent and then negotiate with other shareholders to take greater control.
Another problem is that Twitter long sought a private buyer under former CEO Jack Dorsey. If Musk increases his bid closer to $60, the board could face liability in putting its interests ahead of the company’s shareholders.
Putting aside the magical share number, Musk is right that the company’s potential has been constrained by its woke management. For social media companies, free speech is not only ethically but economically beneficial — because the censorship model only works if you have an effective monopoly in which customers have no other choice. That is how Henry Ford could tell customers, back when he controlled car-making, that they could have any color of Model T “as long as it’s black.”
Of course, the Model T’s color was not a critical part of the product. On the other hand, Twitter is a communications company selling censorship — and opposing free speech as a social media company is a little like Ford opposing cars.
The public could be moving beyond Twitter’s Model T philosophy, however, with many people looking for access to an open, free forum for discussions.
Censorship – or “content modification,” as used in polite company – is not value maximizing for Twitter, but it is status enhancing for executives such as Agrawal.
It does not matter that consumers of his product want less censorship; the company has become captive to its executives’ agendas.
Twitter is not alone in pursuing such self-defeating values. Many in the mainstream media and many on the left have become some of the loudest advocates for corporate censorship.
The Washington Post’s Max Boot, for example, declared, “For democracy to survive, we need more content moderation, not less.”
MSNBC’s Katy Tur warned that reintroducing free speech values on Twitter could produce “massive, life- and globe-altering consequences for just letting people run wild on the thing.”
Columnist and former Clinton Labor Secretary Robert Reich went full Orwellian in explaining why freedom is tyranny. Reich dismissed calls for free speech and warned that censorship is “necessary to protect American democracy.”
He then delivered a line that would make Big Brother blush:
“That’s Musk’s dream. And Trump’s. And Putin’s. And the dream of every dictator, strongman, demagogue and modern-day robber baron on Earth. For the rest of us, it would be a brave new nightmare.”
The problem comes when you sell fear for too long and at too high a price.
Recently, Rep. Madeleine Dean (D-Pa.) agreed with MSNBC analyst John Heilemann that Democrats have to “scare the crap out of [voters] and get them to come out.”
That line is not selling any better for the media than it is for social media, however. Trust in the media is at a record low, with only 7 percent expressing great trust in what is being reported. The United States ranks last in media trust among 46 nations.
Just as the public does not want social media companies to control their views, it does not want the media to shape its news. In one recent poll, “76.3% of respondents from all political affiliations said that ‘the primary focus of the mainstream media’s coverage of current events is to advance their own opinions or political agendas.’”
Thus, an outbreak of free speech could have dire consequences for many in the political-corporate-media triumvirate. For them, the greatest danger is that Musk could be right and Twitter would become a more popular, more profitable company selling a free speech product.
Poison pill maneuvers are often used to force a potential buyer to negotiate with the board. However, Twitter’s directors (who include Agrawal and Dorsey) have previously limited their product to advance their own political preferences. This time, federal law may force them to fulfill their fiduciary duties, even at the cost of supporting free speech. The problem for the board will occur when the “nightmare” of free speech comes in at $60 a share.
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Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. Follow him on Twitter @JonathanTurley.
Tyler Durden
Sun, 04/17/2022 – 15:30
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