Jun 01

Today’s News 1st June 2018

  • Facebook Use Among Teens Plummets 30% In Three Years

    Facebook, which has until recently dominated the social media landscape among America’s youth, is now just the fourth most popular online platform among teens between ages 13 and 17, with just 51% saying they use it, according to a new survey from the Pew Research Center. Facebook use among teens pales in comparison to YouTube (85%), Instagram (72%) and Snapchat (69%). Twitter is fifth with just 32% of teens reporting using the platform. 

    The decline in Facebook use is stunning compared to Pew’s 2014-2015 study, in which 71% of teens reported being Facebook users, and other platforms such as Instagram and Snapchat were nowhere near today’s figures, at 52% and 41% respectively.

    Meanwhile 95% of teens now have a smartphone or access to one, while 45% of teens say they are online on a near-constant basis, fueling ever-growing online activities.

    This shift in teens’ social media use is just one example of how the technology landscape for young people has evolved since the Center’s last survey of teens and technology use in 2014-2015. Most notably, smartphone ownership has become a nearly ubiquitous element of teen life: 95% of teens now report they have a smartphone or access to one. These mobile connections are in turn fueling more-persistent online activities: 45% of teens now say they are online on a near-constant basis. –Pew

    Breaking down teen use of Facebook by household income, 70% of teens from households making under $30,000 per year report using Facebook, while just 36% of teens from households making $75,000 or more are on the platform. 

    Notably, lower-income teens are more likely to gravitate toward Facebook than those from higher-income households – a trend consistent with previous Center surveys. Seven-in-ten teens living in households earning less than $30,000 a year say they use Facebook, compared with 36% whose annual family income is $75,000 or more. -Pew

    How teens view the impact of social media

    Pew also asked the teenagers how they thought the use of social media affected their lives – and found no clear consensus. 

    A plurality of teens (45%) believe social media has a neither positive nor negative effect on people their age. Meanwhile, roughly three-in-ten teens (31%) say social media has had a mostly positive impact, while 24% describe its effect as mostly negative.

    Given the opportunity to explain their views in their own words, teens who say social media has had a mostly positive effect tended to stress issues related to connectivity and connection with others. Some 40% of these respondents said that social media has had a positive impact because it helps them keep in touch and interact with others. Many of these responses emphasize how social media has made it easier to communicate with family and friends and to connect with new people: -Pew

    “I think social media have a positive effect because it lets you talk to family members far away.” (Girl, age 14)

    “I feel that social media can make people my age feel less lonely or alone. It creates a space where you can interact with people.” (Girl, age 15)

    Others in this group cite the greater access to news and information that social media facilitates (16%), or being able to connect with people who share similar interests (15%):

    “My mom had to get a ride to the library to get what I have in my hand all the time. She reminds me of that a lot.” (Girl, age 14)

    “It has given many kids my age an outlet to express their opinions and emotions, and connect with people who feel the same way.” (Girl, age 15)

    Smaller shares argue that social media is a good venue for entertainment (9%), that it offers a space for self-expression (7%) or that it allows teens to get support from others (5%) or to learn new things in general (4%).

    “[Social media] allows us to communicate freely and see what everyone else is doing. [It] gives us a voice that can reach many people.” (Boy, age 15)

    There is slightly less consensus among teens who say social media has had a mostly negative effect on people their age. The top response (mentioned by 27% of these teens) is that social media has led to more bullying and the overall spread of rumors.

    “People can say whatever they want with anonymity and I think that has a negative impact.” (Boy, age 15)

    “Because teens are killing people all because of the things they see on social media or because of the things that happened on social media.” (Girl, age 14)

    Video Games

    84% of teens say they own or have access to a game console at home, and 90% say they play video games of any kind (whether on a computer, game console or cell phone). 

    While a substantial majority of girls report having access to a game console at home (75%) or playing video games in general (83%), those shares are even higher among boys. Roughly nine-in-ten boys (92%) have or have access to a game console at home, and 97% say they play video games in some form or fashion.

    There has been growth in game console ownership among Hispanic teens and teens from lower-income families since the Center’s previous study of the teen technology landscape in 2014-2015. The share of Hispanics who say they have access to a game console at home grew by 10 percentage points during this time period. And 85% of teens from households earning less than $30,000 a year now say they have a game console at home, up from 67% in 2014-2015. -Pew

    Read the report here: 

  • The Sinister Choreography Of The MH17 Probe To Smear Russia

    Authored by Finian Cunningham via The Strategic Culture Foundation,

    The Dutch-led probe into the 2014 Malaysian airliner disaster has the hallmarks of a psychological operation to frame-up Russia and to justify further sanctions and aggression from the NATO powers.

    The so-called Joint Investigation Team (JIT) released an update last Thursday on its ongoing probe into the MH17 air disaster over Eastern Ukraine, in which all 298 people onboard were killed. The JIT’s latest release moves the accusation of culpability closer to Russia, with the team claiming that an anti-aircraft Buk missile, which allegedly shot down the plane, was brought into Ukraine by Russia’s 53rd Brigade based in Kursk, southwest Russia.

    Then on Friday, the day after the high-profile JIT presentation, a news report compiled by US-based McClatchy News and UK-based self-styled online investigative website Bellingcat was published claiming to have identified a senior Russian military intelligence (GRU) officer as being involved in the transport of the missile system.

    The Russian GRU officer is named as Oleg Vladimirovich Ivannikov. The report includes a photograph of the named man, who is said to have at least one residential address in Moscow and who used the call sign “Orion”. Tellingly, the McClatchy report claims that news of identifying the Russian military officer was not known by the JIT when it made its presentation the day before. But McClatchy reported that the Dutch-led investigators now want to arraign “Orion”.

    Over the weekend, the Dutch, Australian and British governments upped the ante by formally accusing Russia, and demanding that Moscow pay financial compensation to families of the crash victims.

    Most of those onboard the doomed MH17 were Dutch, Malaysian and Australian nationals.

    What we are seeing here is a choreographed sequence trying to give the public impression that developments in the probe are taking a natural course based on “evidence” imputing blame to Russia. The same technique of media psychological operation can be seen in the Skripal poisoning affair in which Moscow is blamed for trying to assassinate a former spy in England. Allegations, purported evidence, and then sanctions (expulsion of Russian diplomats) all follow a choreographed sequence.

    On the MH17 incident, Russia has vehemently denied any involvement in the passenger plane’s downing. Moscow says its own investigation into the incident points to the Kiev regime’s armed forces as being responsible, possibly using their stock of Soviet-era Buk anti-aircraft missiles. Significantly, Russia’s investigative results have been spurned by the JIT, while Moscow’s offers of contributing to the probe have been rebuffed. As in the Skripal affair, where the British authorities have also refused Russia’s offers of joint investigation, or Russia’s ability to independently verify the supposedly incriminating data.

    In a dramatic twist, Russia’s Ministry of Defense said that the missile casing displayed by the Dutch investigators bore features dating the weapon to 1986 when Ukraine was a Soviet Republic. The Russian military said that all such Buk models were replaced by its forces in 2011. Therefore, the alleged offensive weapon presented by the JIT last week could not have come from Russian forces. Besides, Moscow denies that any of its brigades crossed into Ukrainian territory.

    The JIT, which includes investigators from Holland, Belgium, Australia, Malaysia and – invidiously – Ukrainian secret services, openly acknowledged in its presentation last week that it is cooperating with the Britain-based Bellingcat website. The latter is cited for its analysis of videos purporting to show the transport of a Russian military Buk convoy through Eastern Ukraine at around the time of the airliner being shot down. Those videos have already been exposed as fabrications.

    Now it seems rather strange that the JIT was reported by McClatchy as not knowing of Bellingcat’s next “scoop” published the following day in which it claims to identify a Russian military officer, named as Oleg Ivannikov or Orion, for being involved in coordinating the transport of the Buk convoy, which the JIT says came from the 53rd Brigade in Russia’s Kursk.

    The JIT and Bellingcat have collaborated in a previous update to its MH17 probe, in 2016, when the dubious videos were presented as purportedly showing the Buk convoy traversing Eastern Ukraine back to Russia. Bellingcat was cited again in the JIT’s update last Thursday.

    That raises the question of why the information claiming to identify the Russian military officer was not available to JIT, even though the latter has worked closely with Bellingcat before? It was the next day when the McClatchy-Bellingcat news report came out, seemingly separate to the JIT presentation.

    The sequence suggests a concerted effort to “build” a public perception that “clues” into the cause of the air crash and the incrimination of Russia are being assembled in an independent manner. When, in reality, the sequence is actually a deliberately orchestrated media campaign, to more effectively smear Russia.

    Bellingcat’s media activities indicate that it is not the supposed “independent online investigative website” it claims to be. During the Syrian war, it has helped to peddle claims that videos sourced from the White Helmets are “authentic” when in fact there is strong evidence that the White Helmets have been fabricating videos of atrocities on behalf of NATO-sponsored terrorists in order to smear the Syrian government and its Russian ally.

    For the Dutch-led JIT to associate with Bellingcat as a source of “evidence” is a matter of grave concern as to the probe’s professional credibility.

    Moreover, what is also fatally damaging to the MH17 probe is that the Ukrainian secret services (SBU) under the control of the Western-backed Kiev regime, which came to power in the NATO-backed February 2014 coup d’état, is the source for much of the so-called evidence implicating Russia or the pro-Russian separatists in Eastern Ukraine for shooting down the MH17 airliner.

    The dubious videos cited by the JIT and Bellingcat were sourced from the SBU. Those videos were purportedly posted on social media at the time of the plane crash by anonymous members of the public. The Russian government has dismissed those videos as fake.

    The latest claims by McClatchy and Bellingcat of identifying a Russian military officer are based on allegations that mobile phone intercepts are attributable to the man named as Orion. Bellingcat appears to have expended a lot of effort trawling through digital phone books to identify the individual. The report also relies on embellishment of Orion’s alleged secret military career in Ukraine and South Ossetia by way of lending a sense of credibility and sinister innuendo.

    However, the bottomline is that McClatchy and Bellingcat both admit that they are relying on the Ukrainian secret services for their phone intercepts, as they had previously for the videos of the alleged Russian Buk convoy.

    The SBU and its Kiev masters have an obvious axe to grind against Moscow. Their partisan position, not to say potential liability for the air crash, thus makes the JIT and subsequent Western media reporting highly suspect.

    Such close involvement of a Western media outlet (McClatchy) with a fake news engine (Bellingcat) and Ukrainian state intelligence is indicative of coordinated public psychological operation to smear Russia.

    The prompt responses from Western governments calling for criminal proceedings against Moscow are further indication that the whole effort is an orchestrated campaign to frame-up Russia.

  • Death Of American Exceptionalism – China Overtakes America In "Healthy Life Expectancy"

    For the first time ever, China has overtaken America in healthy life expectancy at birth, according to a new report. “Healthy life expectancy” is defined by years lived in good health or without significant illness.

    The report, from the World Health Organization (WHO), reveals Chinese newborns could experince 68.7-years of healthy life ahead of them, compared to just 68.5-years for American babies. While the margin between healthy life for both countries is minuscule, the crossover represents the understanding that America is in decline.

    Though Americans born in 2018 can still expect a longer life — 78.5-years to be exact, compared to China’s 76.4-years; however, the last ten years of an American’s life is usually plagued with significant health-related problems.

    “The lost years of good health that are a factor in calculating healthy life expectancy at birth are lower for China, Japan, Korea and some other high-income Asian countries than for high income ‘Western’ countries,” said WHO spokeswoman Alison Clements-Hunt.

    The data also shows that America is one of the only five countries, along with Afghanistan, Georgia, Grenadines, Saint Vincent, and Somalia, where healthy life expectancy at birth is reversing.

    Since 2005, the outlook for Singaporean babies has never been better, who can live free of significant health-related issues until 76.2-years, followed by Japan, Spain, and Switzerland.

    In overall global life expectancy rankings, America places 40th among all other countries, while China ranks 37th.

    China has seen a dramatic improvement in overall life expectancy in recent years. Meanwhile, overall life expectancy in the United States peaked in 2014 at 79-years, which Reuters calculates that China could overtake the United States around 2027.

    “Chinese life expectancy has increased substantially and is now higher than for some high-income countries,” said Clements-Hunt.

    The WHO’s numbers reflect that something is not quite right in America. The Centers for Disease Control (CDC) confirmed in December that the average American life expectancy at birth declined in 2016 for the second consecutive year – the first multiyear decline since 1963, when a flu epidemic led to a rash of deaths as hundreds of thousands of elderly Americans succumbed to the virus.

    Clements-Hunt believes drug overdoses and worsening wealth inequality could be some of the trends responsible for declining American life expectancy.

    “The increasing rates of drug overdose deaths, mainly from opioids, suicides, and some other major causes among younger middle-aged Americans, particularly in less affluent area,” she said.

    While it is no mystery that American Exceptionalism is declining, China, on the other hand, is gradually accelerating with a healthier workforce that will be the needed energy in its economy to dethrone the American Empire in the next decade. Significant changes are coming to the global economy and while today’s data from the WHO does not seem substantial, remember, a critical component of any economy besides robots is the human factor.

  • Lawsuit Exposes How The Government's "Justice" System Keeps The Poor, Poor

    Authored by Mac Slavo via SHTFplan.com,

    It’s not a secret that government’s want to seize as much from the producers as possible to bloat their power-hungry heads.  But a new lawsuit is actually giving the details on just how the government uses the “justice” system to keep the poor in dire states of poverty.

    The ACLU of North Carolina, the Southern Poverty Law Center, and the Southern Coalition for Social Justice have slapped the state of North Carolina with a federal lawsuit over the state’s practice of suspending drivers’ licenses over unpaid tickets.

    According to Splinter News, in North Carolina, the DMV (Department of Motor Vehicles) is required by state law to automatically revoke a license after it receives notice from the court that a person has failed to pay their fines or penalties or associated costs. The lawsuit alleges that this state law violates the Fourteenth Amendment.

    The Fourteenth Amendment reads:

    All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

    The two plaintiffs in the case are 27-year old Seti Johnson and 31-year old Sharee Smoot. According to the lawsuit, Johnson is unemployed and can’t afford to pay off a traffic ticket as well as support his three children. He was able to save up $700 to get his license back last year, but before he was able to finally pay it off, he was hit with another ticket for $100 plus $208 in court costs. He covered the $100 ticket, but still owes $228 in court costs, and will lose his license sometime around the end of July. Although Johnson just got a new job, the lawsuit says, “he will have to either forego the job and figure out a different way to get his children to school, daycare, and the doctor’s office, or he will have to illegally drive.”

    “I’d previously fallen behind on my rent and sacrificed the needs of my children just to keep my license,” Johnson said in a statement provided by the ACLU of North Carolina. “I cannot afford to do that again. This has to stop.”

    Smoot, a single mother who works at a call center 45 minutes away from her home to help support her grandmother as well as her nine-year-old daughter said:

    “I just want a fair chance to take care of my family. I can’t afford to pay the tickets right now, but that shouldn’t prevent me from having a driver’s license.”

    However, this is a national problem not limited to North Carolina and stems from law enforcement looking to extort money for victimless crimes, and having the state in charge of driver’s licenses. In fact, a Washington Post report from earlier this month found that over 7 million people around the country may have had their licenses revoked for traffic debt-related reasons, although that number could be much higher. It’s just another way that both law enforcement and the justice department, as a whole, kneecaps the poor.

    To read about how it all began, see here.

    Extorting money from people for victimless crimes (most traffic violations are victimless) does not function to prevent any violent crime or crime with victims. The drug war does not help anyone, and the era of time in which the people of the US were most free, proves that this is the formula for prosperity. Even given the vastly different technology and capabilities of today, it would seem that this formula of freedom for prosperity would add up.

    The problem is, we aren’t free and haven’t been for quite some time.  And no matter who gets elected, we get more police, more violence, more “criminals”, and higher taxes. 

    But, it is time we began opening our eyes to the issue instead of repeating the “we’re free” lie. The best way to end poverty is not to throw money at it but to increase the rights and freedoms of everyone.

    And in case you were wondering just how much all this newly militarized policing costs the average joe taxpayer, Statista’s Niall McCarthy notes that approximately $6 billion of excess Department of Defense property has been transferred to U.S. law enforcement agencies since 1990. Under the 1033 Program, all sorts of items from laptops to assault rifles have been passed from the military to the police. These fall into two categories – controlled items (like drones or helicopters) and uncontrolled items (like office furniture and tools).

    Even though police militarization has become increasingly controversial, particularly in the wake of Ferguson when mine-resistant vehicles and heavily armed officers appeared on the streets, the flow of weaponry has continued without interruption. A recent RAND analysis of the situation found that in fiscal years 2015 to 2017, the value of uncontrolled transfers came to $1.2 billion while controlled items had a value of $775 million.

    Infographic: How Much Is The Police's Military Equipment Worth? | Statista

    You will find more infographics at Statista

    RAND found that the current value of all excess Department of Defense items held by law enforcement agencies across the U.S. today stands at $1,888,559,339.

    The infographic above takes a closer look at a selection of equipment from the analysis and how much it’s currently worth. There are 849 mine-resistant vehicles in operation at U.S. police departments and they have a value of just under $583 million. Elsewhere on the list, 64,689 5.56 millimeter rifles have been transferred to law enforcement and they are worth $27.83 million while the grand total for all aircraft in the program comes to around $433 million.

  • Wicked Weather: Midwest Jumps From Coldest April To Hottest May On Record

    “After an incredibly chilly April, May rebounded significantly, featuring record heat late in the month across the Midwest and while not official yet, May could go down as the warmest May on record nationally thanks to this late-month heat surge.

    A plethora or heat records were broken this past weekend, including Minneapolis, MN soaring to 100°F. This broke the record daily record for May 28 and reaching 100°F for only the second time in recorded history. This intense heat has since abated, but more above normal temperatures are expected into early June across a majority of the Plains and Midwest,” explained Ed Vallee, head meteorologist at Vallee Weather Consulting.

    “April featured record-breaking cold, particularly across the Upper Midwest, compared to normal. May has rebounded significantly with record heat this past weekend in the Midwest, and above normal temperatures across a majority of the country,” Vallee added.

    According to the weather desk of Radiant Solutions, “Memorial Day weekend felt more like the peak of summer for many in the Central US.” Here are some peak highs from earlier this week:

    • Chicago set record highs of 97 and 95 degrees Sunday and Monday, only the second time it has endured back-to-back 95 degree days in May on record.

    • Milwaukee and Toledo established record highs for May of 95 degrees (Sunday) and 98 degrees (Monday), respectively.

    • Omaha and Green Bay, Wis., set record highs on four straight days Friday to Monday.

    • Des Moines set record highs on three straight days Saturday to Monday, including its earliest 99-degree reading on record Sunday.

    • Muskegon, Mich., hit 96 degrees Tuesday, a monthly record.

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    Jonathan Erdman, a Weather Channel Meteorologist, said over 1,900 daily heat records were tied or broken across the United States in late May.

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    During the course of May, above average temperatures covered almost the entire Continental United States.

    Last week, a preliminary analysis showed that a drought developing in the Southwest could be on par with the Dust Bowl era of the 1930s.

    “The epicenter of this drought is where the states of Utah, Colorado, Arizona and New Mexico all come together, but it is also devastating areas of north Texas, Oklahoma and Kansas as well. Portions of seven states are already at the highest level of drought on the scale that scientists use, and summer won’t even start for about another two months.

    If we don’t start seeing some significant rainfall, it won’t be too long before massive dust storms start devastating the entire region. The mainstream media is finally beginning to wake up and start reporting on this crisis, and some reporters are choosing to make a direct comparison between this drought and the Dust Bowl conditions during the Great Depression.”

    Victor Murphy, a National Weather Service Climate Service Program Manager, said, “the avg. monthly temp for the CONUS for May is 64.6F, thru 5/28. NCEI shows the all-time CONUS record being 64.71F in May 1934. With blast furnace temps across much of CONUS next 2 days, the Dust Bowl era record should fall.”

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  • China Holds The Cards In Trump's Trade War

    Authored by Tom Luongo,

    The Trump administration continues to play hardball games with China on trade.  The latest news has China angry over Trump going forward with 25% tariffs on an array of Chinese goods after having reached a deal earlier over phone-maker ZTE.

    As Bloomberg notes, the announcement by Trump, which seemed to tear up an agreement reached only 10 days ago in Washington, is the latest twist in a trade dispute between the U.S. and China that has rattled financial markets for months and could threaten the broadest global upswing in years, according to the International Monetary Fund.

    That said, if Bloomberg is upset about this policy from Trump I’m inclined to be sympathetic.  But, that’s just me being churlish.  Reality is that this kind of behavior only adds fuel to the building devaluation fire building in Beijing.

    I discuss why China can and should aggressively devalue the Yuan over the next few months to assist its central Asian partners, namely Iran and Turkey, resist aggressive U.S. sanctions policy over at Strategic Culture Foundation:

    Secondly, China devalues the Yuan alongside these struggling emerging market countries’ currencies, not to the same degree but enough to still encourage capital inflow into China, to soften the blow and make the Yuan more attractive to procure needed goods in international markets.

    And, since Trump doesn’t dare sanction Chinese banks without destroying the U.S. economy, this is just one of the paths available for countries like Turkey, Iran and the EU-27 to circumvent Trump’s aggressive trade war.

    China’s moves are bigger than simply the petroyuan.

    As I pointed out last week, China is preparing a broad swath of new metals futures contracts through the London Metals Exchange.  This is in addition to the gold futures contract launched last year.

    The more alternatives that countries like Turkey, Venezuela and Iran have to keep their supply chains full  the better they can resist the obvious push towards regime change which is what the sanctions are trying to achieve.

    These moves are subtle.  They operate below the headlines in the practical world of actual markets, not the avaricious dreams of Certified Crazy People like John Bolton, Mike Pompeo and Nikki Haley.

    China’s central bank and its finance ministry are staffed with people who cut their teeth in Western bond and commmodity pits not M.B.A. programs at Ivy League schools.

    It’s one of Trump’s real advantages as a President, his real world experience.  But, it’s also one of his failings as well.  He’s never really run a successful deal on people like the Russians and the Persians.  The former see through his nonsense and the latter he hasn’t been allowed to negotiate with because of U.S. policy.

    It’s a weakness in that he doesn’t get the cultural imperatives and their sense of history.  They are looking at remaking the world for the next century.  Trump is trying to get through the next election.

    *  *  *

    Please support the production of independent and alternative political and financial commentary by joining my Patreon and subscribing to the Gold Goats ‘n Guns Investment Newsletter for just $12/month.

  • Why Turkey And Argentina Are Doomed, In One JPMorgan Chart

    It was all the rage in 2017.

    Not long after contrarians like Jeff Gundlach and Russell Clark said to go long Emerging Markets, suddenly everyone was doing it, either as a standalone trade or as part of a pair trade shorting one or more DMs. Of course, maybe all they were doing was indirectly shorting the USD, which was arguably the biggest driver behind EM outperformance. But, in no small part due to the recent surge in the dollar, after outperforming developed equity markets by 20% in 2016-2017, EM is underperforming by 2.5% so far this year.

    Of course, it’s not just the dollar, but also interest rates, which until the recent Italian fiasco, were at 4 year, or greater, highs.

    And, as JPM’s Michael Cembalest writes in his latest “Eye on the market” note, investor fears are predictably focused on the impact of rising US interest rates and the rising US dollar on EM external debt, and on rising oil prices.

    And yet, despite the occasional scream of terror from EM longs who refuse to throw in the towel, a closer look shows that the market reaction has been orderly so far, with two exceptions: Argentina and Turkey, which are leading the way down. However, as the JPM Asset Management CIO shows below, the collapse in these two countries has been largely a function of state-specific/idiosyncratic reasons.

    The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.

    Below, Cembalest lays out his concise justification why while both Turkey and Argentina appear to be doomed, one should not extrapolate their unique problems to the rest of the EM complex:

    • On Turkey (0.9% of the MSCI EM Index), President Erdogan lost a battle with markets when he finally agreed to  higher interest rates to defend the lira. The big risk, (as we noted earlier in the wee)k, is the inadequacy of Turkish international reserves to cover its short term external debt, particularly since some reserves could evaporate if it looks like capital controls will be imposed. There’s also $80 bn in Spanish bank exposure to Turkish borrowers. Turkey looks like an unstable EM economy of the 1980’s and 1990’s, and is a country whose problems should not be over-generalized. This goes double for Argentina.
    • With Argentina dominating EM headlines again, let’s remember what country we are talking about here and not overgeneralize its problems. As shown above, Argentina spent the last 3 years borrowing an enormous amount of money; it has defaulted on its international debt 7 times since its independence in 1816; and spent most of the last decade in investment purgatory (it was jettisoned from the MSCI EM Equity index into the MSCI Frontier Equity Index alongside countries like Lebanon and Kenya).

    Putting Argentina in context, JPMorgan’s cluster model illustrates how risky the Latin American country has been for investors. In the chart below, the closer countries are to each other, the more similar they are with respect to competitiveness, regulation, investor protections, labor markets and ease of doing business. Like Bangladesh and Zimbabwe, Argentina lies at the outer edge of this known universe, far from other EM countries like China, Peru, Indonesia and Mexico and Vietnam, and lightyears away from the developed world. Only in a world of financial repression by central banks could a country like this issue an oversubscribed 100-year bond.

    And speaking of Argentina’s ill-fated 100-year bond issued less than a year ago, it is already down 20% from its December peak with what JPM says are “are echoes here from 2001, when Argentina issued new debt just a few months before defaulting on it.”

  • Malaysia's Mahathir's Reforms Could Put Saudi, UAE On The Spot

    Authored by James Dorsey via The Turbulent World of Middle East Soccer blog,

    Newly elected Malaysian Prime Minister Mohammed Mahathir is adopting policies that could reshape the Southeast nation’s relations with powerful Gulf states.

    A series of anti-corruption measures as well as statements by Mr. Mahathir and his defense minister, Mohamad (Mat) Sabu, since this month’s upset in elections that ousted Prime Minister Najib Razak from office, are sparking concern in both Saudi Arabia and the United Arab Emirates.

    Mr. Mahathir, who has cautioned in recent years against widespread anti-Shiite sectarianism in Malaysia, has questioned together with Mr. Sabu Malaysia’s counterterrorism cooperation with Saudi Arabia.

    Mr. Mahathir has also reinvigorated anti-corruption investigations of Mr. Razak,  whom Qatari media have described as “Saudi-backed.”

    Mr. Razak is suspected of having syphoned off billions of dollars from state-owned strategic development fund 1Malaysia Development Berhad (1MDB). The fund as well as Saudi and UAE entities allegedly connected to the affair are under investigation in at least six countries, including the United States, Switzerland and Singapore.

    Apparently anticipating a possible change in relations, political scientist Abdulkhaleq Abdulla, whose views are often seen as reflecting UAE government thinking, disparaged Mr. Mahathir and the Malaysian vote days after the results were announced.

    Mr. Abdullah focused on Mr. Mahathir’s age. At 92, Mr. Mahathir is the world’s oldest elected leader.

    Mr Abdulla also harped on the fact that Mr. Mahathir had been Mr. Razak’s mentor before defecting to the opposition and forging an alliance with Anwar Ibrahim, Mr. Mahathir’s former deputy prime minister and an Islamist believed to be close to the Muslim Brotherhood, whom he helped put behind bars.

    UAE Crown Prince Mohammed bin Zayed is known for his intense opposition to political Islam, including the Brotherhood.

    “Malaysia seems to lack wise men, leaders, statesmen and youth to elect a 92-year-old who suddenly turned against his own party and his own allies and made a suspicious deal with his own political opponent whom he previously imprisoned after fabricating the most heinous of charges against him. This is politics as a curse and democracy as wrath,” Mr. Abdulla said on Twitter, two days after the election.

    Similarly, Malaysian officials have signalled changing attitudes towards the Gulf. Seri Mohd Shukri Abdull, Mr. Mahathir’s newly appointed anti-corruption czar, who resigned from the Malaysian Anti-Corruption Commission (MACC) in 2016 as a result of pressure to drop plans to indict Mr. Razak, noted that “we have had difficulties dealing with Arab countries (such as) Qatar, Saudi Arabia, (and the) UAE.”

    Those difficulties are likely to recur.

    Mr. Sabu, the new defense minister, noted in a commentary late last year that Saudi (and UAE) wrath was directed “oddly, (at) Turkey, Qatar, and Iran…three countries that have undertaken some modicum of political and economic reforms. Instead of encouraging all sides to work together, Saudi Arabia has gone on an offensive in Yemen, too. Therein the danger posed to Malaysia: if Malaysia is too close to Saudi Arabia, Putrajaya would be asked to choose a side.”

    Putrajaya, a city south of Kuala Lumpur, is home to the prime minister’s residence and a bridge with four minaret-type piers that is inspired by Iranian architecture.

    Mr. Sabu went on to say that “Malaysia should not be too close to a country whose internal politics are getting toxic… For the lack of a better word, Saudi Arabia is a cesspool of constant rivalry among the princes. By this token, it is also a vortex that could suck any country into its black hole if one is not careful. Indeed, Saudi Arabia is governed by hyper-orthodox Salafi or Wahhabi ideology, where Islam is taken in a literal form. Yet true Islam requires understanding Islam, not merely in its Quranic form, but Quranic spirit.”

    Since coming to office, Mr. Sabu has said that he was reviewing plans for a Saudi-funded anti-terrorism centre, the King Salman Centre for International Peace (KSCIP), which was allocated 16 hectares of land in Putrajaya by the Razak government. Mr. Sabu was echoing statements by Mr. Mahathir before the election.

    The opening of the centre was twice postponed because Saudi Crown Prince Mohammed bin Salman cancelled his planned attendance. Malaysian officials said the kingdom had yet to contribute promised funds for the centre.

    Shahriman Lockman, an analyst with the Kuala Lumpur-based Institute of Strategic and International Studies cautioned that Malaysia would have manoeuvre carefully.

    “Whether we like it or not, whatever we think of them, Saudi Arabia is a major player in the Muslim world and in the Middle East. Their administration of the haj makes it crucial for Muslim-majority countries to get along with them,” Mr. Lockman said.

    The fact that Mr. Mahathir’s election has sparked hopes that he will move Malaysia away from Mr. Razak’s embrace of Saudi-inspired ultra-conservative Islam as a political tool, despite the prime minister’s history of prejudice towards Jews and past anti-Shiite record, is likely to reinforce Saudi and UAE concern that his moves could favour Iran.

    Mr. Mahathir has vacillated in his statements between banning Shiism to avert sectarianism and calling on Sunni Muslims in Malaysia to accept the country’s miniscule Shiite minority as a way of avoiding domestic strife.

    What is likely to concern the Saudis most is the fact that Mr. Mahathir has said that  accepting Shiites as fellow Muslims was necessary because of the growth of the Iranian expatriate community in Malaysia. Analysts say the presence has sparked a greater awareness of Shiism and Sunni animosity because of Mr. Razak’s divisive policies.

    Saudi and UAE worries about the reinvigorated anti-corruption investigation are rooted in the potential implication in the scandal of a Saudi commercial company, members of the Saudi ruling family, and UAE state-owned entities and officials.

    The investigation is likely to revisit 1MDB relationship’s with Saudi energy company PetroSaudi International Ltd, owned by Saudi businessman Tarek Essam Ahmad Obaid as well as prominent members of the kingdom’s ruling family who allegedly funded Mr. Razak.

    It will not have been lost on Saudi Arabia and the UAE that Mr. Mahathir met with former PetroSaudi executive and whistle blower Xavier Andre Justo less than two weeks after his election victory.

    A three-part BBC documentary, The House of Saud: A Family at War, suggested that Mr. Razak had worked with Prince Turki bin Abdullah, the son of former Saudi King Abdullah, to syphon off funds from 1MDB.

    UAE-owned, Swiss-based Falcon Bank has also been linked to the scandal while leaked emails documented a close relationship between Yousef al-Otaiba, the UAE’s high-profile ambassador to the United States and confidante of Prince Mohammed bin Zayed, and controversial Malaysian financier Jho Low, a 27-year-old Wharton graduate who helped Mr. Razak run 1MDB.

    The Wall Street Journal, citing not only emails, but also US court and investigative documents, reported last year that companies connected to Mr. Otaiba had received $66 million from entities investigators say acted as conduits for money allegedly stolen from 1MDB.

    The UAE embassy in Washington declined to comment at the time but admitted that Mr. Oteiba had private business interests unrelated to his diplomatic role. The embassy charged that the leaked emails were part of an effort to tarnish his reputation.

    Khaldoon Al Mubarak, an adviser to the government in Abu Dhabi who has also been implicated in the scandal, was reportedly detained in 2016 without charges and has been held in jail since.

    Bank statements and financial documents reviewed by The Wall Street Journal suggest that Mr. Al Mubarak facilitated the purchase by UAE deputy prime minister Sheikh Mansour Bin Zayed Al Nahyan’s brother of a $500 million yacht with 1MDB funds.

    “The impact of this election will reverberate far beyond Malaysia’s borders,” said Asia director of the Centre for Humanitarian Dialogue Michael Vatikiotis.

    Mr. Vatikiotis was looking primarily at the fallout of Mr. Mahathir’s victory in Southeast Asia and China. His analysis is however equally valid for Saudi Arabia and the United Arab Emirates, where it could also prove to be embarrassing.

  • Comey Grilled As Feds "Seriously" Consider Charging McCabe In Criminal Referral

    Federal investigators from the D.C. U.S. Attorney’s office recently interviewed former FBI director James Comey as part of an ongoing probe into whether former FBI #2 Andrew McCabe broke the law when he lied to federal agents, reports the Washington Post.

    Investigators from the D.C. U.S. Attorney’s Office recently interviewed former FBI director James B. Comey as part of a probe into whether his deputy, Andrew McCabe, broke the law by lying to federal agents — an indication the office is seriously considering whether McCabe should be charged with a crime, a person familiar with the matter said. –Washington Post

    What makes the interview particularly interesting is that Comey and McCabe have given conflicting reports over the events leading up to McCabe’s firing, with Comey calling his former deputy a liar in an April appearance on The View. 

    Justice Department Inspector General Michael Horowitz issued a criminal referral for McCabe following a months-long probe which found that the former acting FBI Director leaked a self-serving story to the press and then lied about it under oath. McCabe was fired on March 16 after Horowitz found that he “had made an unauthorized disclosure to the news media and lacked candor – including under oath – on multiple occasions.” 

    Specifically, McCabe was fired for lying about authorizing an F.B.I. spokesman and attorney to tell Devlin Barrett of the Wall St. Journal – just days before the 2016 election, that the FBI had not put the brakes on a separate investigation into the Clinton Foundation, at a time in which McCabe was coming under fire for his wife taking a $467,500 campaign contribution from Clinton proxy pal, Terry McAuliffe. 

    The WSJ article  reads:

    New details show that senior law-enforcement officials repeatedly voiced skepticism of the strength of the evidence in a bureau investigation of the Clinton Foundation, sought to condense what was at times a sprawling cross-country effort, and, according to some people familiar with the matter, told agents to limit their pursuit of the case. The probe of the foundation began more than a year ago to determine whether financial crimes or influence peddling occurred related to the charity.

    …

    Some investigators grew frustrated, viewing FBI leadership as uninterested in probing the charity, these people said. Others involved disagreed sharply, defending FBI bosses and saying Mr. McCabe in particular was caught between an increasingly acrimonious fight for control between the Justice Department and FBI agents pursuing the Clinton Foundation case.

    So McCabe was found to have leaked information to the WSJ in order to combat rumors that Clinton had indirectly bribed him to back off the Clinton Foundation investigation, and then lied about it four times to the DOJ and FBI, including twice under oath. 

    McCabe vs. Comey

    Investigators from the D.C. U.S. Attorney’s office were likely to be keenly interested in Comey’s version of whether or not he knew about McCabe’s disclosure. 

    Comey and McCabe offered varying accounts of who authorized the disclosure for the article. They discussed the story the day after it was published, and Comey, according to the inspector general’s report, told investigators McCabe “definitely did not tell me that he authorized” the disclosure. -WaPo

    “I have a strong impression he conveyed to me ‘it wasn’t me boss.’ And I don’t think that was by saying those words, I think it was most likely by saying ‘I don’t know how this s— gets in the media or why would people talk about this kind of thing,’ words that I would fairly take as ‘I, Andy, didn’t do it,’ ” Comey said, according to the inspector general.

    During an April appearance on ABC’s The View to peddle his new book, A Higher Royalty Loyalty, where he called McCabe a liar, and said he actually “ordered the [IG] report” which found McCabe guilty of leaking to the press and then lying under oath about it, several times. 

    Comey was asked by host Megan McCain how he thought the public was supposed to have “confidence” in the FBI amid revelations that McCabe lied about the leak. 

    “It’s not okay. The McCabe case illustrates what an organization committed to the truth looks like,” Comey said. “I ordered that investigation.” 

    Comey then appeared to try and frame McCabe as a “good person” despite all the lying. 

    “Good people lie. I think I’m a good person, where I have lied,” Comey said. “I still believe Andrew McCabe is a good person but the inspector general found he lied,” noting that there are “severe consequences” within the DOJ for doing so.

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    Following McCabe’s firing, his attorney Michael R. Bromwich (flush with cash from the disgraced Deputy Director’s half-million dollar legal defense GoFundMe campaign), fired back – claiming that Comey was well aware of the leaks. 

    “In his comments this week about the McCabe matter, former FBI Director James Comey has relied on the Inspector Genera’s (OIG) conclusions in their report on Mr. McCabe. In fact, the report fails to adequately address the evidence (including sworn testimony) and documents that prove that Mr. McCabe advised Director Comey repeatedly that he was working with the Wall Street Journal on the stories in question…” reads the statement in part. 

    McCabe vs. the DOJ

    McCabe may also find himself at odds with the Department of Justice, as notes he kept allegedly detailing an interaction with Deputy Attorney General Rod Rosenstein raise questions about a memo Rosenstein wrote justifying Comey’s firing. While Rosenstein’s memo took aim at Comey for his mishandling of the Clinton email investigation, McCabe’s notes suggest that Trump told Rosenstein to point to the Russia investigation. Rosenstein’s recommendation ultimately did not mention Russia. 

    McCabe’s interactions with Rosenstein could complicate any potential prosecution of McCabe because Rosenstein would likely be involved in a final decision on filing charges. McCabe has argued that the Justice Department’s actions against him, including his firing, are retaliatory for his work on the Russia investigation. -WaPo

    As the Washington Post notes, lying to federal investigators can carry a five-year prison sentence – however McCabe says he did not intentionally mislead anyone. The Post also notes that while Comey’s interview is significant, it does not indicated that prosecutors have reached any conclusions. 

    Lying to Comey might not itself be a crime. But the inspector general alleged McCabe misled investigators three other times.

    He told agents from the FBI inspection division on May 9, 2017, that he had not authorized the disclosure and did not know who had, the inspector general alleged. McCabe similarly told inspector general investigators on July 28 that he was not aware of one of the FBI officials, lawyer Lisa Page, having been authorized to speak to reporters, and because he was not in Washington on the days she did so, he could not say what she was doing. McCabe later admitted he authorized Page to talk to reporters.

    The inspector general also alleged that McCabe lied in a final conversation in November, claiming that he had told Comey he had authorized the disclosure and that he had not claimed otherwise to inspection division agents in May.

    Michael Bromwich replied in a statement: “A little more than a month ago, we confirmed that we had been advised that a criminal referral to the U.S. Attorney’s Office had been made regarding Mr. McCabe. We said at that time that we were confident that, unless there is inappropriate pressure from high levels of the Administration, the U.S. Attorney’s Office would conclude that it should decline to prosecute. Our view has not changed.

    He added that “leaks concerning specific investigative steps the US Attorney’s Office has allegedly taken are extremely disturbing.”

    Whatever Comey told federal investigators, we suspect it eventually boiled down to “McCabe didn’t tell me,” squarely placing responsibility for the leaks – and the lies, on McCabe’s shoulders. 

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