- Carney Reveals Europe's Potential Achilles Heel in Brexit Talks
This morning, BoE Governor Mark Carney discussed the risks of a hard Brexit during his testimony to the UK Parliamentary Treasury Committee. There was renewed weakness in Sterling during his testimony.
Ironically, given the fall in Sterling, Carney explained why Europe’s financial sector is more at risk than the UK from a “hard” or “no-deal” Brexit. We wonder whether Juncker and Barnier appreciate the threat that a “no-deal” Brexit poses for the EU’s already fragile financial system?
When asked does the European Council “get it” in terms of potential shocks to financial stability, Carney diplomatically commented that “a learning process is underway.” Having sounded alarm bells about clearing in his last Mansion House speech, he noted “These costs of fragmenting clearing, particularly clearing of interest rate swaps, would be born principally by the European real economy and they are considerable.”
Calling into question the continuity of tens of thousands of derivative contracts, he stated that it was “pretty clear they will no longer be valid”, that this “could only be solved by both sides” and has been “underappreciated” by Europe. Moving on to the possibility that there might not be a transition period, Carney had a snipe at Europe for its lack of preparation “We are prepared as we should be for the possibility of a hard exit without any transition…there has been much less of that done in the European Union.”
Maybe it’s Europe, not the UK, that needs the transition period most.
In Carneys view “It’s in the interest of the EU 27 to have a transition agreement. Also, in my judgement given the scale of the issues as they affect the EU 27, that there will ultimately be a transition agreement. There is a very limited amount of time between now and the end of March 2019 to transition large, complex institutions and activities…If one thinks about the implementation of Basel III, we are alone in the current members of the EU in having extensive experience of managing the transition for individual firms of various derivative and risk activities from one jurisdiction back into the UK. That tends to take 2-4 years. Depending on the agreement, we are talking about a substantial amount of activity.”
Returning to the theme of financial stability, he stated “As a general thing, in an uncooperative outcome, at least initially, the UK will be long financial services. We will have more capacity, capital, individuals, collateral in the UK. The EU will be short of financial services because not all of that capacity will be able to go across. The entire economic impacts are greater for the UK but, from a financial stability perspective, they are greater for the EU.”
On further questioning, Carney outlined the other two major issues, along with derivatives and wholesale banking, which would be affected, i.e. cross-border provision of insurance (UK domiciled entities would be unable to pay out) and data protection and transfer (there is more data in the UK which is relevant to the EU than vice versa).
Summing up, Carney stated “These issues are bigger for Europe than they are for us, but they’re material for us.” That comment prompted the following question “In which case we have much more leverage in order to get a deal?” The diplomatic reply was “I wouldn’t want to use financial stability issues as leverage. I wouldn’t want them to be addressed in a bloodless technocratic way in the interests of all the citizens.” Didn’t he just describe Juncker’s modus operandi.
- Could the Next Fed Appointment Crush the Housing Market?
As the end of Federal Reserve Chairwoman Janet Yellen’s first term approaches, financial markets are beginning to digest the increased likelihood that US President Donald Trump will opt to appoint a more hawkish individual to the position. Even though the Federal Reserve is largely expected to continue tightening monetary policy over the coming months as it pares down the balance sheet and contemplates a dovish hike, Trump’s appointment could send shockwaves through the housing market.
One of the nastier side effects of operating at or near the zero-bound for interest rates has been the rapid expansion of asset valuations. Lower interest rates encourage individuals and companies to finance their purchases and then reinvest for more aggressive returns. However, this rapid valuation expansion has not been limited strictly to financialized assets, but also physical assets like real estate. When seen in the context of the more hawkish leanings of Trump’s recent Fed Chair interviewees, the Administration’s next Fed appointment could pose the risk of a serious correction across asset classes.
Fed Frontrunners Exhibit More Hawkish Bent
Financial news outlets have been rife with reports covering the potential picks for Fed Chairman, with two of the leading candidates including Economist John Taylor and former Federal Reserve Governor Kevin Warsh. Taylor, who currently serves as an economics professor at Stanford University, received high marks from Trump according to a Bloomberg report on the matter. Trump was purportedly very impressed with his credentials, though unlike other candidates, Taylor is among the fiercest advocates of having policy measures closely reflect economic conditions.
The “Taylor Rule”, titled after the economist, stipulates rates should rise when inflation is running at an elevated pace or unemployment is below the “full employment” threshold and should fall in the opposite scenario. Applying this set of rules to current economic conditions indicates that the key Fed Funds rate should be 3.74% to reflect high levels of employment and rising prices. At nearly 3 times the present rate, a selection of John Taylor to chair the Fed could rapidly dampen overextended valuations in equities and the housing market. Already his interview with Donald Trump caused a palpable dip in gold prices considering his overtly hawkish stance.
By comparison, Kevin Warsh has also advocated for a tighter monetary policy regime, greater deregulation, and a general makeover of the Central Bank. His attitude towards reform has won him positive mentions as well. However, his overall degree of hawkishness and stated desire to overhaul the inflation target could put him at the epicenter of a dramatic policy shift that departs from the more cautious approach of current Chair Janet Yellen.
Factors Outside the Fed’s Control
While easy to label the rebuilding efforts in Texas and Florida as positive for the overall housing market, this deals more with the supply angle than demand. On the buy side, a Fed determined to raise interest rates will assuredly presage rising mortgage costs which could in turn subject buyer interest to some downside as financing costs climb. Though it is tempting to cite the foreclosure rate at an 11-year low as a sign of strength, it does not necessarily imply that the housing market is on stable footing, especially as prices reach past the realm of affordability.
Considering income growth has kept nowhere near the same pace as price growth for homes according to the monthly Case-Shiller home price index, the lack of affordable solutions may be another factor that hurts demand and concurrently weighs on pricing. For the year through July, average hourly earnings climbed by 2.50% while housing prices of 20 major US metropolitan areas increased by 5.80% over the same period. With price growth outpacing wages by such a significant margin, the surge in values should be a worrying sign for prospective buyers thinking about diving in while mortgage rates remain not far from record lows.
However, a more concerning indication apart from unaffordability is the degree to which flipping has reemerged. The move is eerily reminiscent of the years leading up to the last financial crisis as lending standards are relaxed. House flipping reached the highest point since 2007 during the second quarter of 2017 and nearly 35% of the transactions were accompanied by mortgages. Even Goldman Sachs is getting into the flipping game with its recent acquisition of Genesis Capital LLC, a move designed to help the institution build a bigger presence in the lending sphere. Should mortgage rates rise in tandem with interest rates, it could spell doom for this substantial portion of residential real estate activity.
The Fed as the Deciding Factor
With the shortlist for the next Federal Reserve Chair realistically narrowed down to 5 candidates, those under consideration for the job have significantly more hawkish leanings than current Chair Janet Yellen and her predecessor Ben Bernanke. While ultimately housing prices are a function of the interaction of supply and demand, demand largely behaves inverse to interest rates. As rates climb, mortgage costs will echo the gains, potentially reducing interest. Should demand fall, housing prices are likely to experience a correction as well after a near 8-year unabated rise in values. Considering the unaffordability aspect and the degree of house flipping, the approaching Fed appointment has a higher propensity to cause a downturn compared to another leg of the ongoing housing market rally.
- Washington: The Bleeder Of The 'Free World'?
Authored by Finian Cunningham via The Strategic Culture Foundation,
Among the many self-flattering epithets it gives itself, the US has always claimed to be the “leader of the free world”. It’s a rather patronizing notion that America views itself as a selfless protector and benefactor of its European allies and others. This fairytale depiction of the world is coming to a rude awakening as American power buffets against the reality of a multi-polar world.
Less a world leader and more like a blood-sucking leech on international relations.
We got a clear view of the contradiction in America’s narcissistic mythology with US President Donald Trump’s announcement that he was disavowing the multinational nuclear accord with Iran last Friday.
Trump didn’t axe American participation in the deal just yet, but he has put it on notice that he or the US Congress may terminate the accord over the next two months. How’s that for high-handed arrogance?
However, there was near-unanimous push back around the world to Trump’s disparagement of the Joint Comprehensive Plan of Action (JCPOA), which was originally signed in July 2015 by the US, Russia, China, European Union and Iran. All the signatories uniformly rebuked Trump’s attempt to undermine the deal, which is supposed to lift international economic sanctions off Iran in return for curbs on Iran’s nuclear program.
While Trump accused Iran of “multiple violations” of the accord, all the other stakeholders asserted satisfaction that Iran has in fact fully implemented its obligations to restrict uranium enrichment and weaponization of its nuclear program. The UN watchdog, the International Atomic Energy Agency, also responded to Trump’s claims by reaffirming that eight consecutive monitoring reports have found Iran to be fully compliant with the JCPOA.
Britain, France and Germany, as well as Russia and China, have firmly said that the nuclear deal – which took two years to negotiate during Barack Obama’s tenure in the White House – is not for renegotiation. A point which was reiterated too by Iranian President Hassan Rouhani.
The deal is also written into international law, having been ratified unanimously by the UN Security Council back in 2015. In a stinging admonishment to Washington, the EU’s foreign policy chief Federica Morgherini said: “This deal is not a bilateral agreement … The international community, and the European Union with it, has clearly indicated that the deal is, and will, continue to be in place.”
Russia also denounced Trump’s over-the-top aggressive rhetoric towards Iran. The American president was almost foaming at the mouth when he labelled Iran “the world’s top terror sponsor” and accused Tehran of fueling conflict across the Middle East. Moscow said such rhetoric was unacceptable and inappropriate. Iran dismissed Trump’s accusations as baseless lies.
Evidently, Russia, China and the Europeans do not share America’s debased caricature of Iran. And who in their right mind would? The hackneyed American allegations against Iran are – as usual – not backed up with any evidence. They rely on bombastic assertion repeated ad nauseam. It is especially ironic and odious for Washington to accuse others of sponsoring terrorism, given the litany of illegal wars it has launched across the Middle East and the steadily emerging evidence of US links to terror groups in Syria’s six-year war.
Thus, the commitment by all the signatories – except Washington – to the Iranian nuclear deal is a stunning rejection of Trump’s aggressive stance towards Iran.
Ahead of Trump’s anticipated disavowal of the JCPOA on Friday, Germany’s foreign minister Sigmar Gabriel warned that such a move would “drive a wedge between Europe and the US”. Significantly, Gabriel said that Trump’s spurning of the accord was “driving the EU towards Russia and China”.
France’s finance minister Bruno Le Maire also warned the US not to interfere in Europe’s growing commercial ties with Iran. He was quoted as saying: “The US must not appoint itself as the world’s police man”.
Trump’s hostility towards the Iran nuclear treaty has created dissent within his own cabinet. His secretary of state Rex Tillerson and the defense secretary James Mattis are among those who were urging Trump to uphold the JCPOA. In the Congress, there are also many opponents to Trump’s desire to axe the deal, even among his Republican party. It remains to be seen if the Congress will call for new sanctions on Iran over the next 60 days, as Trump has requested. If Congress does, it will mean the US crashing out of the accord.
In theory, of course, the EU, Russia and China can continue to uphold the nuclear accord with Iran and conduct international trade and investment without the Americans. Russia and China have signed major oil and gas pacts with Iran over the past two years.
The European states have also lined up huge commercial projects and investments with Tehran in sectors of energy, engineering and infrastructure. Germany and France in particular have seen their exports to Iran soar since the signing of the JCPOA. With Iran’s 80 million population and vast oil and gas reserves, the Persian nation represents lucrative opportunities for Europe, given too the geographical proximity.
But the US is still able to exert tremendous power over international banking to the extent that it is having a chilling effect on other countries doing business with Iran. The European states are particularly vulnerable to American pressure.
In a Bloomberg report, it headlined: ‘Trump's Iran Decision Throws Uncertainty Into Business Plans’.
The report goes on: “Since a landmark nuclear agreement freed Iran’s economy from crippling economic sanctions, investors eager to tap the country’s energy reserves and its 80 million consumers have waited for signs it was safe to enter the market in full force… Donald Trump is about to signal that they should keep waiting.”
The US view of Iran is so warped – much of it from relentless propaganda demonizing the Islamic Republic – that it is evidently incapable of normalizing relations as it is obligated to do under the multilateral nuclear deal. Trump ironically accused Iran of “not living up to the spirit of the accord” when it is the US that has worked assiduously to undermine it.
Since Trump took office, he has reportedly cancelled all export licenses to Iran. His administration and the Congress have slapped more “secondary sanctions” on Iran over allegations that it is destabilizing the Middle East and for its support to Syria’s President Bashar al-Assad.
These bilateral US sanctions inevitably have a deterrent effect on other nations doing business with Iran out of fear that they may be penalized in the future. Long-term investments over several years are prone to prohibitive risks due to the uncertainty about what Washington’s capricious policy towards Iran will be.
America’s unilateral, hegemonic conduct – accentuated under Trump – is rapidly alienating other nations. This president seems to operate a “withdrawal doctrine”, as Richard Haass, president of the DC-based Council on Foreign Relations, commented. Trump’s contempt for multilateral obligations peaked with his announcement back in June on backing out of the Paris Climate Accord. It has peaked again with his repudiation of the UN-backed Iran nuclear deal.
What is becoming increasingly apparent is that US unilateralism is all about pandering to its own selfish interests. Trump’s administration has hit Russia with more sanctions and has warned that European energy companies involved in developing the Nord Stream 2 gas project with Russia’s Gazprom will also be sanctioned. The flagrant agenda here is for the US to replace Russia as Europe’s gas supplier, selling its own more expensive fuel to Europe.
Likewise US hostility and sanctions on Iran are not just limited to its own perverse policies.
Washington also wants to block others from also doing legitimate business and trade with Iran. For the Europeans struggling to boost their flagging economies, the impediments being thrown in their way by the US over Iran are another source of resentment towards American unilateralism.
This is not the idealized conduct of the self-proclaimed “leader of the free world”. America is increasingly seen as the “bleeder” – a declining power which wants to suck the economic lifeblood from others in order to sustain itself. This untenable American unipolar craving is inevitably hastening the reality of a multipolar world, as Europeans in particular realize that they can no longer afford to prop up America’s economic obesity.
- Ethereum (ETHUSD) Daily MACD Trying to Negatively Cross
Ethereum (ETHUSD) Weekly/Daily
Ethereum (ETHUSD) sold off sharply yesterday and continues sliding in today’s Asia morning, arguably breaking below ascending wedge support (on the weekly/daily chart). ETHUSD is now just a day’s volatility away from the psychologically key 300 whole figure level. A ETHUSD break below 300 in the next day or so would likely confirm the first red weekly candle in 5 weeks. Bears will be patiently awaiting any deeper slide in the next few weeks to below the September low, which would signal the start of a downtrend of lower lows. The October high so far is lower than the August high, which was also lower than the June high. Weekly RSI, Stochastics and MACD are showing signs of fatigue, and are increasingly weighed down by the already weak daily equivalents.
Bitcoin (BTCUSD) Weekly/Daily
Bitcoin (BTCUSD) has defied bears so far, and remains in a strong uptrend. Nevertheless, BTCUSD appears to have made a short-term top just below 6000 as leading Alt Coin Ethereum (ETHUSD) increasingly weakens. The tiring daily RSI and Stochastics, and soon to negatively cross daily MACD do not bode well for BTCUSD bulls today. Nevertheless, upchannel support (on the daily and weekly chart) coincides with the psychologically key 5000 whole figure level and should contain the pullback these next few days assuming the weekly MACD blue line has not flattened and turned lower by then.
Click here for today’s technical analysis on Cocoa
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- Trump Plans Massive Increase In Federal Immigration Jails, Report
Following a 43% year over year surge in illegal immigrant arrests between January 22, 2017 and September 9, 2017, the USA Today is reporting that the Trump administration is quietly reaching out to private prison operators with requests to house some 4,000 detainees of the Immigration and Customs Enforcement Agency (ICE).
The Trump administration is planning an increase in federal immigration jails across the country for the thousands of additional undocumented immigrants its agents are arresting.
In recent weeks, the Immigration and Customs Enforcement (ICE) agency has put out requests to identify privately-run jail sites in Chicago, Detroit, St. Paul, Salt Lake City and southern Texas, according to notices published on a federal contracting website. It did not publicly announce its plans to house 4,000 more detainees at the facilities.
The detention expansion would represent the latest step in President Trump’s efforts to crack down on illegal immigration.
And here is an example of one Request for Information posted to FedBizOpps.gov for an “existing, renovation or new construction” facility in South Texas.
Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE) is issuing a Request for Information (RFI) to identify one or more facilities (existing, renovation, or new construction) to be turnkey ready and able to provide housing, medical care, guard services, meals, and the day to day needs for approximately 1000 ICE adult male and adult female detainees within 50 ground-commute miles of Interstate 35. If utilizing multiple facilities, there may be no less than 200 beds per facility. The preference is for facilities to be dedicated for ICE detainees exclusively, but shared facilities may be considered. ICE anticipates issuing a single award, indefinite delivery – indefinite quantity (IDIQ) contract for this requirement.
This RFI is issued to identify potential sources that can provide the physical structure, equipment, personnel, and vehicles in a properly staffed and secure environment under the authority of the Immigration and Nationality Act, as amended. The intent of this RFI is to obtain market information in accordance with FAR 15.201(e) for planning purposes and to determine appropriate strategies to meet the Agency’s requirements. If the results of market research and other factors indicate that it is in the Government’s best interest, ICE may release Requests for Proposals (RFP) for these potential requirements in the near future. However, this RFI is issued solely for information and planning purposes and does not constitute a Request for Proposal (RFP) or a commitment to an RFP in the future. Responses to this notice are not considered offers and cannot be accepted by the Government to form a binding contract. Responders are advised that the Government will not pay for any information or administrative cost incurred in response to this announcement and information submitted in response to this RFI will not be returned.
Currently, ICE houses anywhere between 31,000 and 41,000 detainees each day in federal prisons, privately-operated facilities and local jails.
Of course, the director of policy studies at the Center for Immigration Studies said it’s by no means a coincidence that 4 out of the 5 cities identified by the Trump administration for new detention facilities are in so-called “santuary cities” where local police forces have been instructed to not cooperate with federal ICE agents.
Trump supporters say the new jails are necessary to tackle an estimated 11 million undocumented immigrants.
Jessica Vaughan, director of policy studies at the Center for Immigration Studies, which backs Trump’s immigration enforcement, noted that four of the cities identified for new jails — Chicago, Detroit, St. Paul and Salt Lake City — are all “sanctuary cities.”
One of the core disputes is that some cities refuse to detain undocumented immigrants in their local jails for federal immigration agents.
“ICE cannot rely on local law enforcement agencies to cooperate with them in holding deportable criminal aliens, so they have to acquire their own space that they control,” Vaughan said. “This is very encouraging.”
ICE still has a long way to go before it can open any facilities. The notices invite private companies to provide information on possible locations, and whether it would be necessary to build new facilities or renovate existing ones.
Meanwhile, reports of the new facilities was welcome news to shareholders of GEO Group, one of the largest private pension operators in the country, which has rallied over 60% since Trump’s election and is one of the most likely recipients of any new awards.
- If North Korea Can Kill 90% Of Americans In A Year, Why Did DoD Just Defund The Congressional EMP Commission?
Authored by Daisy Luther via The Organic Prepper blog,
At a House hearing yesterday, experts warned members of Congress that a North Korean EMP attack could kill 90% of Americans within one year, calling it an “existential threat.”
But despite this looming crisis, the Department of Defense has decided now was the time to defund the Congressional committee that has been studying the threat since 2001.
The Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack has been around for nearly two decades, but their efforts have mostly been restricted to making sure that the U.S. national command authority and U.S. strategic forces could continue to function. Meanwhile “no major efforts were then thought necessary to protect critical national infrastructures.” Apparently, the plan was that our defense would be so effective, no further steps were needed.
This has all changed with recent strides in nuclear weaponry by North Korea. The results of an EMP strike could be apocalyptic.
With the development of small nuclear arsenals and long-range missiles by new, radical U.S. adversaries, beginning with North Korea, the threat of a nuclear EMP attack against the U.S. becomes one of the few ways that such a country could inflict devastating damage to the United States. It is critical, therefore, that the U.S. national leadership address the EMP threat as a critical and existential issue, and give a high priority to assuring the leadership is engaged and the necessary steps are taken to protect the country from EMP. (source)
What a lot of people didn’t know was that just a couple of weeks ago, Sept. 30, 2017, the Department of Defense terminated the funding for the EMP Commission. At the same time, “North Korea detonated an H-Bomb that it plausibly describes as capable of “super-powerful EMP” attack and released a technical report “The EMP Might of Nuclear Weapons” accurately describing what Russia and China call a “Super-EMP” weapon.” The EMP Commission has been urging EMP preparedness on a national level for 17 years, but no one has been listening, despite alarming strides toward that goal in just the past six months.
Recent events have proven the EMP Commission’s critics wrong about other highly important aspects of the nuclear missile threat from North Korea:
- Just six months ago, most experts thought North Korea’s nuclear arsenal was primitive, some academics claiming it had as few as 6 A-Bombs. Now the intelligence community reportedly estimates North Korea has 60 nuclear weapons.
- Just six months ago, most experts thought North Korea’s ICBMs were fake, or if real could not strike the U.S. mainland. Now the intelligence community reportedly estimates North Korea’s ICBMs can strike Denver and Chicago, and perhaps the entire United States.
- Just six months ago, most experts thought North Korea was many years away from an HBomb. Now it appears North Korea has H-Bombs comparable to sophisticated U.S. two-stage thermonuclear weapons.
- Just six months ago, most experts claimed North Korean ICBMs could not miniaturize an ABomb or design a reentry vehicle for missile delivery. Now the intelligence community reportedly assesses North Korea has miniaturized nuclear weapons, and has developed reentry vehicles for missile delivery, including by ICBMs that can strike the U.S.1
After massive intelligence failures grossly underestimating North Korea’s long-range missile capabilities, number of nuclear weapons, warhead miniaturization, and proximity to an H-Bomb, the biggest North Korean threat to the U.S. remains unacknowledged—nuclear EMP attack. (source)
So, for 17 years, this group has been ringing the warning bell and no one has been listening. Now that the threat is at our doorstep, their funding has been pulled. Something doesn’t add up.
The technology exists for a North Korean EMP attack
A successful attack doesn’t even require a Super-EMP weapon. The Commission concluded that even a primitive weapon could successfully render our infrastructure obsolete.
“Therefore, terrorists or state actors that possess relatively unsophisticated missiles armed with nuclear weapons may well calculate that, instead of destroying a city or military base, they may obtain the greatest political-military utility from one or a few such weapons by using them—or threatening their use—in an EMP attack.” (source)
But that isn’t the worst of in. In 2004, two Russian generals told the EMP Commission that their design for a Super-EMP weapon was “accidentally transferred to North Korea.”
Let that sink in. Somehow, North Korea has had their hands on the design for an incredibly powerful EMP weapon for more than a decade. The report says:
In 2004, two Russian generals, both EMP experts, warned the EMP Commission that the design for Russia’s Super-EMP warhead, capable of generating high-intensity EMP fields over 100,000 volts per meter, was “accidentally” transferred to North Korea. They also said that due to “brain drain,” Russian scientists were in North Korea, as were Chinese and Pakistani scientists according to the Russians, helping with the North’s missile and nuclear weapon programs.
In 2009, South Korean military intelligence told their press that Russian scientists are in North Korea helping develop an EMP nuclear weapon. In 2013, a Chinese military commentator stated North Korea has Super-EMP nuclear weapons.
Super-EMP weapons are low-yield and designed to produce not a big kinetic explosion, but rather a high level of gamma rays, which generates the high-frequency E1 EMP that is most damaging to the broadest range of electronics. North Korean nuclear tests, including the first in 2006, whose occurrence was predicted to the EMP Commission two years in advance by the two Russian EMP experts, mostly have yields consistent with the size of a Super-EMP weapon. The Russian generals’ accurate prediction about when North Korea would perform its first nuclear test, and of a yield consistent with a Super-EMP weapon, indicates their warning about a North Korean Super-EMP weapon should be taken very seriously. (source)
The report says that while everyone is focused on the future, when Pyongyang may develop “highly reliable intercontinental missiles, guidance systems, and reentry vehicles”, a North Korean EMP attack wouldn’t require that level of accuracy.
EMP attack does not require an accurate guidance system because the area of effect, having a radius of hundreds or thousands of kilometers, is so large. No reentry vehicle is needed because the warhead is detonated at high altitude, above the atmosphere. Missile reliability matters little because only one missile has to work to make an EMP attack against an entire nation. (source)
It would be a strategic initial strike to take down the American power grid to disable the maority of the country before undertaking any other form of attack.
How would a North Korean EMP attack be likely to occur?
Potential vehicles of attack are submarines or freighters, which could launch an EMP weapon to the relatively low altitude of 30 kilometers over the United States. Unsettlingly, “even a balloon-lofted warhead detonated at 30 kilometers altitude could blackout the Eastern Electric Power Grid that supports most of the population and generates 75 percent of U.S. electricity.”
A more likely choice would be a satellite.
A Super-EMP weapon could be relatively small and lightweight, and could fit inside North Korea’s Kwangmyongsong-3 (KMS-3) and Kwangmyongsong-4 (KMS-4) satellites. These two satellites presently orbit over the United States, and over every other nation on Earth– demonstrating, or posing, a potential EMP threat against the entire world.
North Korea’s KMS-3 and KMS-4 satellites were launched to the south on polar trajectories and passed over the United States on their first orbit. Pyongyang launched KMS-4 on February 7, 2017, shortly after its fourth illegal nuclear test on January 6, that began the present protracted nuclear crisis with North Korea.
The south polar trajectory of KMS-3 and KMS-4 evades U.S. Ballistic Missile Early Warning Radars and National Missile Defenses, resembling a Russian secret weapon developed during the Cold War, called the Fractional Orbital Bombardment System (FOBS) that would have used a nuclear-armed satellite to make a surprise EMP attack on the United States. (source)
The report goes on to explain that our defense systems are completely unready for any of these scenarios.
There’s a lot of misinformation about the threat of EMPs.
The report counters a great deal of misinformation about the threat of EMPs. While no one really wants to consider the devastating effects, many “uninformed persons posturing as experts” completely deny the possibility. However, the Commission says that the empirical basis for an EMP attack is better established than that of a cyber attack.
They offered numerous examples of hard data regarding the effects of EMPs.
- The U.S. STARFISH PRIME high-altitude nuclear test in 1962 over Johnston Island that generated an EMP field over the Hawaiian Islands, over 1,300 kilometers away, causing widespread damage to electronic systems.
- Six Russian EMP tests 1961-1962 over Kazakhstan that with a single weapon destroyed electric grids over an area larger than Western Europe, proving this capability six times.
- 30 years (1962-1992) of U.S. underground nuclear testing that included collecting data on EMP effects.
- Over 50 years of testing by EMP simulators, still ongoing, including by the Congressional EMP Commission (2001-2008) that proved modern electronics are over 1 million times more vulnerable to EMP than the electronics of 1962.
- “Radio Frequency Weapons were used in separate incidents against the U.S. Embassy in Moscow to falsely set off alarms and to induce a fire in a sensitive area.”
- “In Kzlyar, Dagestan, Russia, Chechen rebel commander Salman Raduyev disabled police radio communications using RF transmitters during a raid.”
- “In June 1999 in Bellingham, Washington, RF energy from a radar induced a SCADA malfunction that caused a gas pipeline to rupture and explode.”
- “In 1999, a Robinson R-44 news helicopter nearly crashed when it flew by a high-frequency broadcast antenna.”
- North Korea used a Radio Frequency Weapon, purchased from Russia, to attack airliners and impose an “electromagnetic blockade” on air traffic to Seoul, South Korea’s capital. The repeated attacks by RFW also disrupted communications and the operation of automobiles in several South Korean cities in December 2010; March 9, 2011; and April-May 2012.(source)
The threat is real. So, again, why would the Department of Defense withdraw funding from the Commission that wants to take steps to harden our infrastructure against this possibility?
What would the aftermath of an EMP attack look like?
The Commission cited several examples of real-world electrical grid failures and their catastrophic consequences.
- The Great Northeast Blackout of 2003–that put 50 million people in the dark for a day, contributed to at least 11 deaths, and cost an estimated $6 billion—originated from a single failure point when a powerline contacted a tree branch, damaging less than 0.0000001 (0.00001%) of the system.
- The New York City Blackout of 1977, that resulted in the arrest of 4,500 looters and injury of 550 police officers, was caused by a lightning strike on a substation that tripped two circuit breakers.
- The Great Northeast Blackout of 1965, that effected (sic) 30 million people, happened because a protective relay on a transmission line was improperly set.
- India’s nationwide blackout of July 30-31, 2012—the largest blackout in history, effecting (sic) 670 million people, 9% of the world population—was caused by overload of a single high-voltage powerline.
- India’s blackout of January 2, 2001—effecting 226 million people—was caused by equipment failure at the Uttar Pradesh substation.
- Indonesia’s blackout of August 18, 2005—effecting 100 million people—was caused by overload of a high-voltage powerline.
- Brazil’s blackout of March 11, 1999—effecting 97 million people—was caused by a lightning strike on an EHV transformer substation.
- Italy’s blackout of September 28, 2003—effecting 55 million people—was caused by overload of two high-voltage powerlines.
- Germany, France, Italy, and Spain experienced partial blackouts on November 4, 2006 effecting (sic)10-15 million people—from accidental shutdown of a high-voltage powerline.
- The San Francisco blackout in April 2017 was caused by the failure of a single high voltage breaker (source)
My mind immediately goes to the down-grid disaster occurring right now in Puerto Rico.
The death toll from such a disaster would be unprecedented:
The result could be to shut down the U.S. electric power grid for an indefinite period, leading to the death within a year of up to 90 percent of all Americans—as the EMP Commission testified over eight years ago.
We’re talking about the deaths of more than 270 million people.
President Trump signed an Executive Order in May called “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure” which will hopefully harden our country against both cyber attacks and EMPs. The Commission provided a list of actionable suggestions on pages 11-14 of this report, but will the steps be undertaken before it’s too late? Especially now that they’re defunct.
How do you prep for something so massive?
It doesn’t seem as though the government is very interested in taking steps to protect our power grid. We can look at what is happening in Puerto Rico as a glimpse of the apocalyptic future that would follow such an attack. Restoring power after an EMP could take multiple years, and things in America would never be the same after a sustained change in our way of life.
The result of an EMP attack would be a protracted blackout that would put at risk the lives of millions of people. Climate control, a lack of off-grid survival skills, looting, lawlessness, lack of medication, starvation, waterborne disease – all of these threats to our survival cannot be overlooked. If you haven’t read the book One Second After, I recommend you do so for a fictionalized yet nonetheless realistic look at life after the grid. If that doesn’t inspire you to prepare for such an event, nothing will.
The best resource for preparing for an attack like this is Disaster Preparedness for EMP and Solar Storms, by Dr. Arthur T. Bradley. A NASA scientist, Dr. Bradley has spent years studying the aftereffects of such a catastrophe. His book dispels many myths an provides realistic, lifesaving information. My personal plan is a low-tech one – I am not spending a fortune on generators and fancy gadgets I wouldn’t be able to use once the fuel runs out.
Preparing for something this massive is beyond the scope of this article. I strongly encourage you to begin researching and create your own low-tech plan. Don’t put it off until you get your perfect homestead in the boondocks or you talk your family members into it. Disasters like this don’t wait for a convenient time – in fact, strategically speaking, the less convenient it is, the more the attacker benefits.
If World War 3 starts off with an EMP, it renders many of our plans moot. We have been warned in the strongest terms possible, but will it be enough?
- Chicago Politician Pushes Ban On Businesses Banning Cash
In July, Visa officially entered the global 'war on cash', adding to a long list of academics, elites, and bankers urging the removal of one of the last freedoms 'for the good of the rest of us'. However, if Alderman Edward Burke has his way, that 'war on cash' will end in Chicago after he submitted an ordinance at last week's City Council meeting to ban businesses from banning cash.
According to the ordinance, "credit card giant Visa announced it is 'launching a major effort to encourage businesses to go cashless," through a campaign called the Visa Cashless Challenge offering $500,000 for 50 businesses to go cash-free.
As DNAInfo.com reports, the ordinance cites Argo Tea, SweetGreen, Epic Burger and Goddess and the Baker as Chicago businesses that have already gone cashless, but the stores themselves don't seem to have had any issues…
Xuan Tea, a shop at 1816 N. Milwaukee Ave. in Bucktown, opened in September and is credit card-only.
"It's been working out fine. Some are taken aback initially, but we haven't had any problems with it," manager Will Quanstrom said.
"Mostly everyone has a credit card in their pocket, even if they're just out for a jog. It's easier and it's simpler for us. We don't have to go to the bank, or count drawers out." The tea shop has a sign at the front counter that says it only takes credit cards.
Nevertheless, as DNAInfo.com notes, the ordinance, however, points out that credit card companies typically tack on a 1 percent to 3 percent fee on transactions, "a business cost typically passed on to consumers via increased pricing."
Burke called his ordinance a "fair and equal access" issue and calls out Visa's repression of the poor and young…
"A 'no cash' sign is a 'not welcome' sign for many without ready access to credit, including those who are low- or fixed-income, homeless, undocumented, young or victims of identity theft," he said.
It adds that those under 18 can't apply for credit cards, making a cash ban "de facto age discrimination," while many low-income families can't even afford to open a bank account.
The ordinance would make it illegal to decline cash as payment at any business in retail sales or food and drink, under the penalty of fines starting at $1,000 and up to $2,500 a day.
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As we noted previously, this ongoing push for a cashless society in Europe, Asia, and the Americas is about much more than just phasing out paper money – it’s about central planners solidifying control over the public’s wealth. This ongoing merger of corporate and government interests is the definition of crony capitalism. Regardless of the blatant collusion, the choices individuals make will still ultimately decide the direction for the future. Buying material goods on credit has become a lifestyle for millions, but the long-term costs of those decisions must be understood if there’s any chance for progress.
Americans have made a huge mistake by running up a staggering $1 trillion dollars in credit card debt with an average interest rate of over 16%. Thanks to the Federal Reserve system, companies like Mastercard, Discover, and American Express can issue bonds paying extremely low-interest rates to the investors while simultaneously lending that money out to credit card holders at sky high rates. Companies will always take advantage of opportunities to increase profits, but the people’s willingness to keep borrowing from them is at the core of the problem.
Access to cheap capital has been extended to the largest corporations for over a decade, but when it comes to small businesses or individuals there is a completely different set of standards. The pressure to consistently increase revenues and stock prices has led to an unnatural parasitic relationship between these companies and their customers. Cash is one of the last options that allows people a way to avoid dealing with this kind of shakedown.
More than 30% of all payments in the U.S. are still conducted in cash, but financial intermediaries that charge processing fees are joining with the State and central banks to ensure the public has no room to innovate.
- FBI Uncovered Russian Bribery Plot Before Obama Approved Uranium One Deal, Netting Clintons Millions
As the mainstream media continues to obsess over $100,000 worth Facebook ads allegedly purchased by Russian spies in 2016 seeking to throw the presidential election, we’re almost certain they’ll ignore the much larger Russian bombshell dropped today in the form of newly released FBI documents that reveal for the very first time that the Obama administration was well aware of illegal bribery, extortion and money laundering schemes being conducted by the Russians to get a foothold in the atomic energy business in the U.S. before approving a deal that handed them 20% of America’s uranium reserves…and resulted in a windfall of donations to the Clinton Foundation.
As we pointed out last summer when Peter Schweizer first released his feature documentary Clinton Cash, the Uranium One deal, as approved by the Obama Administration, netted the Clintons and their Clinton Foundation millions of dollars in donations and ‘speaking fees’ from Uranium One shareholders and other Russian entities.
Russian Purchase of US Uranium Assets in Return for $145mm in Contributions to the Clinton Foundation – Bill and Hillary Clinton assisted a Canadian financier, Frank Giustra, and his company, Uranium One, in the acquisition of uranium mining concessions in Kazakhstan and the United States. Subsequently, the Russian government sought to purchase Uranium One but required approval from the Obama administration given the strategic importance of the uranium assets. In the run-up to the approval of the deal by the State Department, nine shareholders of Uranium One just happened to make $145mm in donations to the Clinton Foundation. Moreover, the New Yorker confirmed that Bill Clinton received $500,000 in speaking fees from a Russian investment bank, with ties to the Kremlin, around the same time. Needless to say, the State Department approved the deal giving Russia ownership of 20% of U.S. uranium assets
Now, thanks to newly released affidavits from a case that landed one of the Russian co-conspirators, Vadim Mikerin, in jail, we learn that not only was the Obama administration aware the Russians’ illegal acts in the U.S. but it may have also been fully aware that “Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow.” Per The Hill:
Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.
Federal agents used a confidential U.S. witness working inside the Russian nuclear industry to gather extensive financial records, make secret recordings and intercept emails as early as 2009 that showed Moscow had compromised an American uranium trucking firm with bribes and kickbacks in violation of the Foreign Corrupt Practices Act, FBI and court documents show.
They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill.
Of course, when Schweizer’s book first made Uranium One a political hot topic in 2015, both the Obama administration and the Clintons defended their actions and insisted there was no evidence that any Russians or donors engaged in wrongdoing and there was no national security reason for anyone to oppose the deal. That said, we now know that the FBI was aware of wrongdoing going back to at least April 2009 even though the deal wasn’t approved until October 2010.
But FBI, Energy Department and court documents reviewed by The Hill show the FBI in fact had gathered substantial evidence well before the committee’s decision that Vadim Mikerin — the main Russian overseeing Putin’s nuclear expansion inside the United States — was engaged in wrongdoing starting in 2009.
The first decision occurred in October 2010, when the State Department and government agencies on the Committee on Foreign Investment in the United States unanimously approved the partial sale of Canadian mining company Uranium One to the Russian nuclear giant Rosatom, giving Moscow control of more than 20 percent of America’s uranium supply.
In 2011, the administration gave approval for Rosatom’s Tenex subsidiary to sell commercial uranium to U.S. nuclear power plants in a partnership with the United States Enrichment Corp. Before then, Tenex had been limited to selling U.S. nuclear power plants reprocessed uranium recovered from dismantled Soviet nuclear weapons under the 1990s Megatons to Megawatts peace program.
And guess who ran the FBI’s investigation into this particular Russian plot? As The Hill notes, the Mikerin probe began in 2009 under Robert Mueller, now the special counsel in charge of the Trump case, and ended in late 2015 under the controversial, former FBI Director James Comey who was relieved of his duties by President Trump.
Ironically, when the DOJ finally arrested Mikerin in 2014, following 5 years of investigations in a massive international bribery and money-laundering scheme, rather than publicly celebrate, they seemingly swept it under the rug. In fact, there was no public release concerning the case at all until a full year later when the DOJ announced a plea deal with Mikerin right before labor day.
Bringing down a major Russian nuclear corruption scheme that had both compromised a sensitive uranium transportation asset inside the U.S. and facilitated international money laundering would seem a major feather in any law enforcement agency’s cap.
But the Justice Department and FBI took little credit in 2014 when Mikerin, the Russian financier and the trucking firm executives were arrested and charged.
The only public statement occurred an entire year later when the Justice Department put out a little-noticed press release in August 2015, just days before Labor Day. The release noted that the various defendants had reached plea deals.
By that time, the criminal cases against Mikerin had been narrowed to a single charge of money laundering for a scheme that officials admitted stretched from 2004 to 2014. And though agents had evidence of criminal wrongdoing they collected since at least 2009, federal prosecutors only cited in the plea agreement a handful of transactions that occurred in 2011 and 2012, well after the Committee on Foreign Investment in the United States’s approval.
The final court case also made no mention of any connection to the influence peddling conversations the FBI undercover informant witnessed about the Russian nuclear officials trying to ingratiate themselves with the Clintons even though agents had gathered documents showing the transmission of millions of dollars from Russia’s nuclear industry to an American entity that had provided assistance to Bill Clinton’s foundation, sources confirmed to The Hill.
Perhaps this is what the “most transparent” President in history meant when he told Medvedev that he would have “more flexibility” after his 2012 election.
Below are the affidavits released today:
- US Army Is Preparing For Decades Of Hybrid Wars
Released on Monday, the US Army’s Training and Doctrine Command, or TRADOC, drafted a new strategy for how US ground forces will operate, fight, and campaign successfully across multiple domains—space, cyberspace, air, land, maritime—against all enemies in the 2025-2040 timeframe.
The new strategy calls for “super-empowered individuals and small groups”, who are mobile and can simultaneously fight in every domain of warfare, which will replace the conventional large units like today.
Since the end of the Cold War, US and Joint Forces have enjoyed considerable amounts of freedom across all domains. The purpose of this new concept is to prepare the US for an increasing number of actors who challenge US global hegemony.
The reported titled “Multi-Domain Battle: Evolution of Combined Arms for the 21st Century, 2025-2040?, repeats one key point over and over again according to Defense One.
Adversaries will make life as difficult as possible for U.S. troops by not declaring themselves to be the enemy, or, as the concept puts it, by “combining regular and irregular forces with criminal and terrorist enterprises to attack the Joint Force’s vulnerabilities while avoiding its strength.”
The world got a whiff of this new concept in Libya, Syria, and Ukraine through the use of local paramilitaries and proxy forces. “Adversaries have blurred the distinction between actions ‘below armed conflict’ and ‘conflict,’ enabling the achievement of strategic military objectives short of what the U.S. traditionally considers ‘war,” the report says.
Defense One then summarizes four more reasons why the US Army has to evolve onto a multi-domain battlefield or face the risk of losing America’s global empire:
- The exponential speed of information technology. U.S. forces can’t assume that they will have the best phones, drones, or computer hardware on the battlefield. As computers get smaller, cheaper, and more widely available, U.S. tech advantages will disintegrate.
- Warfare will be much more urban. Some 60 percent (conservatively) of the Earth’s population will live in cities in 2030, many in megacities with populations of more than 10 million. This is where adversaries will try to engage U.S. forces, not in open fields or deserts where today’s Army and it senormous battle vehicles have the advantage.
- The internet will be a key aspect of the battlefield, not just in terms of trading cyber attacks with enemy hackers but in the need to constantly and expertly shape global opinion about the conflict. Troll armies spreading fake news and disinformation, coupled with enough social-media traffic to overwhelm open-source analysts, could “complicate the [Army’s] ability to gain and maintain an accurate, up-to-date, intelligence-driven understanding of the situation, as well as control of the information environment,” the document says.
- Every bad guy becomes The Joker. The Army sees a rise of “Super-empowered individuals and small groups” who can “use access to cyberspace, space, and nuclear, biological, radiological, and chemical weapons of mass effects to change the battlespace calculus and redefine the conditions of conflict resolution.” Read that to mean: lone wolves and minescule teams with the power to rival many of today’s nation-states.
Glancing at the American Empire, there are nearly 800 military bases in more than 70 countries and territories abroad. To maintain this global force, the US Senate approved a $700 billion military bill this year. The amount eclipses $549 billion military spending cap established by 2011 Budget Control Act.
Summing up, America’s Army is going through a drastic overhaul after the failed conventional wars in the Middle East. The idea of small and decentralized nodes loosely connected operating across multiple domains–space, cyberspace, air, land, maritime seems to be today’s answer for tomorrow’s warfare. The concept has already been implemented in Libya, Syria, and Ukraine with not the best results. Meanwhile, as the American Empire unravels, the military–industrial complex is set to profit from years of war, as outlined in the report.
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