- Leaked Docs Reveal Large-Scale Effort Of British Govt To Use Anti-Russian Media & Influencers To "Weaken Russian State"
Leaked Docs Reveal Large-Scale Effort Of British Govt To Use Anti-Russian Media & Influencers To “Weaken Russian State”
The usage of propaganda and disinformation by global and regional actors as a tool to promote their interests has been an open secret for a long time. However, the dominating mainstream narrative is that the main sources of propaganda and disinformation is Russia, China, Iran or at least North Korea, while the so-called West is innocent and all what Western special services and MSM do is fiercely trying to repel the Russia or China or Iran etc –led wave of disinformation. In fact, this narrative itself is a large-scale and rough propaganda construct as the dominance of the Western governments together with Big Tech is obvious for any neutral observer. Therefore, it is logical that the main source of propaganda, disinformation, likes, half-lies and other variants of media forgeries is Western states and mainstream media. The ongoing and unprecedented censorship campaign against sources of information that provide coverage and analysis that do not fit the Western mainstream is another proof of this situation.
The text below was released by Russian state-run news agency RT and authored by Kit Klarenberg. Being funded by the Russian government, RT logically tries to make public to the general audience obvious facts of foreign meddling in Russian internal affairs. However, the British propaganda campaign covered in this text is just one of the numerous examples of similar clandestine and not very clandestine efforts.
Leaked papers allege massive UK govt effort to co-opt Russian-language anti-Kremlin media & influencers to ‘weaken Russian state’ (source):
For all its alarmism about Russian ‘propaganda’ and ‘misinformation’, the UK government appears to be behind a multi-million-pound push to boost negative coverage of the Russian state, both in Russia and neighbouring countries.
At a European Union summit in November 2017, then-UK prime minister Theresa May announced plans to designate Russia a “hostile” state, and pledged to spend in excess of £100 million over the next five years on tackling the alleged threat of Kremlin “disinformation” internationally.
Now, hacktivist collective Anonymous has released what appear to be internal UK Foreign, Commonwealth & Development Office (FCDO) files that shed significant light on how vast and ominous these efforts can be.
According to the papers, Whitehall has sought contractors to covertly infiltrate media and civil society at multiple levels – all under the aegis of schemes to, among other things, improve literacy, promote cultural activities, ensure “balance and plurality” in media reporting, and counteract propaganda.
Supporting anti-Kremlin media
One of these contractors, Zinc Network (more on them later) explained in its pitch documents that it was in the process of “delivering audience segmentation and targeting support for two of Russia’s leading independent media outlets – Meduza and MediaZona”.
The former is a Russian-language online newspaper and news aggregator based in Riga, Latvia. The latter is an investigative platform focused on Russia’s judicial, law enforcement and penal system, founded by two members of controversial punk rock band Pussy Riot.
As the pair “[lacked] the expertise and tools” to “promote content effectively to new audiences”, Zinc was working diligently to ensure their output reached as many eyes and ears as possible. In the process, the contractor conducted “weekly mentoring sessions with specialists from the outlets”, “adjusting their editorial and commercial strategy accordingly” and creating “common framings of issues.”
Prior to the release of these documents, any suggestions that Meduza and MediaZona – which both consistently publish content highly critical of the Russian state – were not only privately coordinating to ensure a consistent editorial line, but receiving assistance from a UK government contractor to do so, would surely have been dismissed as Russian propaganda, conspiracy theory, fake news, or worse.
It seems likely Meduza’s relationship with Whitehall, direct or indirect, conscious or unconscious, extends far further than this collaboration. Several contractors reference the outlet in the leaked files, in relation to numerous other FCDO-funded and directed projects.
For instance, in pitch documents submitted by another contractor, Albany, Meduza is mentioned alongside ETV+, which is the Russian-language service of the Estonian broadcaster; Latvia’s LTV, Lithuania’s LRT Re:Baltica – the website of the Baltic Centre for Investigative Journalism – and other Russian-language platforms as a potential “long-term partner”, for which “new programming” could be funded and developed.
That this programming was to be explicitly anti-Moscow in character is starkly underlined by a section on “creating narrative games which encourage participation through social media and mobile platforms.”
“Meduza is a leading proponent of these games which, for the most part, embrace political themes (e.g. Putin Bingo, ‘help Putin get to his meeting with the Pope on time’ and ‘help the Orthodox priest get to his church without succumbing to earthly pleasures’),” Albany notes.
These “satirical games” would make the “valid point” that “the offer of a fairer, respectful and caring society is better than that of an arrogant, nationalistic regime.” Proposed themes include helping “the whimsical Russian exile preserve his cultural identity in the face of British political correctness”, and “the oligarch’s son conceal his unseemly wealth on his first day at university”.
Such surreal proposal excerpts would be laughable, were it not for the fact they amply underline the extraordinary lengths London is determined to go to in service of demonizing, destabilizing and isolating Russia nationally and internationally.
The contractors
The contractors involved – including the aforementioned Zinc and Albany – all boast staff possessed of such clearances, individuals who previously served at the highest levels of government, the military and security services. They furthermore have extensive experience in conducting information warfare operations on London’s behalf the world over. For instance, several shadowy companies named in the leaked papers feature prominently in leaked documents related to Whitehall’s far-reaching propaganda blitz in Syria.
As such, the companies clearly wouldn’t be at all obvious candidates to lead programs genuinely concerned with strengthening civil society, improving journalistic standards, or combating disinformation – but of course, these programs aren’t.
Zinc Network (previously known as Breakthrough Media) is a seasoned veteran of clandestine Whitehall-funded information warfare campaigns at home and abroad. It has a long, deplorable history of cynically co-opting genuine civil society voices to covertly further Whitehall’s interests, without their knowledge or consent, and often with serious real-world consequences.
One programme Zinc bid for is Support for Independent Media in the Baltic States. The leaked papers include the FCDO’s statement of requirement for the project, as well as the details that were spelled out to contractors at a meeting convened June 2018 by FCDO Counter Disinformation & Media Development (CDMD) chief Andy Pryce, along with a parallel operation in Eastern Partnership countries.
Stating openly the endeavor – set to cost up to £6 million in 2018-2021 – is ultimately concerned with “weakening the Russian state”, Pryce warned attendees against “unauthorised disclosures of activity”, and noted that “for security reasons”, some suppliers “will not wish to be linked to the FCDO.”
He went on to list numerous ways in which journalists and media organizations in target countries could not only be co-opted via funding, but outright “acquisition” of content. Sponsoring public broadcasters was said to provide “easy wins” given “light touch governance” locally, a euphemism for corruption and lack of regulation.
He professed to be “audience agnostic” when asked about targeting people under-18, and said there was “scope for gender sensitivity in programming” – “Girls on HBO is the type of thing but in Ukraine.”
It’s a bizarre suggestion which amuses at first glance, until one considers at least five television serials in Estonia, Latvia and Lithuania were produced by Zinc Network under the auspices of the program, including the region’s first Russian-language kids’ show.
It’s troubling in the extreme that millions of people – among them many children – may have watched this programming, without any idea it was created to surreptitiously extol anti-Russian, pro-Western propaganda, let alone that the UK government bankrolled its production as part of a dedicated psyops effort.
Such disquiet is amplified by Albany specifically seeking to exploit “young Russian speakers” in the Baltics “as agents of change”, to “influence their parents’ and grandparents’ generations and amplify a distinct ‘Euro-Baltic’ identity” in a separate project.
Co-opting social media influencers
Other leaked documents reveal Zinc’s activities in the region were already sizable by the time it submitted proposals for the project, to the extent of maintaining“an in-house team of Russian speaking producers, digital researchers and digital growth strategists.”
Zinc maintained a secret network of Russian-speaking social media influencers, to promote “media integrity and democratic values” – curiously, its relationship with these individuals is said to have involved “daily management”.
Recruited via YouTube, Facebook, VK and Instagram, the company “[helped] them build their brands and improve their content in order to grow their audience share,” and “[established] a co-owned channel on YouTube to host their content, help them access one another’s audiences, co-creating content that tackled complex social issues.”
Moreover though, one file indicates Zinc taught these influencers how to “make and receive international payments without being registered as external sources of funding” and “develop editorial strategies to deliver key messages”, while minimizing their “risk of prosecution” and managing “project communications” to ensure the network’s existence, and indeed the UK government’s central role in creating it, were kept “confidential”.
In other words, they appear to have operated, and may continue to, as effective paid agents of the British state, Zinc “assisting” them in crafting slick propaganda furtively propounding Whitehall-approved “key messages”, which was then broadcast globally under the guise of citizen journalism.
The identities of the influencers, and their cognisance of the insidious role they were playing by collaborating with the company, is presently unknown. Although, unlike viewers, the influencers would’ve at least been aware their “independent” content was in fact co-produced in a London office.
ENGAGE, ENHANCE, ENABLE, EXPOSE
There are hundreds of papers in Anonymous’ leak, and the above is just scratching the surface. The FCDO’s wide-ranging, secret campaign apparently consists of four pillars, or ‘strands’ – ENGAGE, ENHANCE, ENABLE, EXPOSE. One document circulated to contractors pitching for the assorted, lucrative programmes therein – dubbed “Theory of Change” – sets out the activities, output, outcome, and impact of the respective strands, both in isolation and in tandem with one another.
EXPOSE’s activities are defined as “real-time debunking, support to investigative journalism, capacity building, networking between NGOs” – yet its output, outcomes, and impact are redacted, hidden in an already classified document, indicating its operations and objectives are extremely sensitive indeed, and one requires a senior security clearance to know them.
For all the mainstream media’s alarmist chatter of the threat of Kremlin “disinformation”, not a single example of anything even remotely comparable to the full-spectrum, multi-channel, on- and offline, global assault on perceptions outlined in this article has ever been attributed to Moscow, or any other “hostile” state.
It is truly staggering that for all the documents’ references to transparency, truth and democracy, these mammoth, multi-million-pound initiatives have been conducted in total secrecy for years without any public oversight, or even awareness among British citizens – let alone target audiences overseas – of their operation.
Tyler Durden
Mon, 02/22/2021 – 02:00 - 'A Tale Told By An Idiot': The Second Impeachment Of Donald Trump
‘A Tale Told By An Idiot’: The Second Impeachment Of Donald Trump
Authored by Martin Sieff via The Strategic Culture Foundation,
The first impeachment of Donald Trump in 2019 was no tragedy. It was always a farce. The second impeachment, in which Trump was acquitted on the night of Saturday, February 13 did not even rise to that. It was a hiccup, a non-event. The most solemn procedure in the sacred constitutional process of the United States did not even rise to the entertainment value of a bout of naked mud wrestling.
Washington during the week of the Second Great Impeachment Trial was a fascinating non-place to be. The skies were grey. It was quite cold: About minus Five Degrees Celsius most days. There was a thin sprinkling of tired, dirty snow on the ground. The city was deserted. More virulent mutations of the COVID-19 virus from the United Kingdom and South Africa were said to be on the loose.
The streets were empty. There were no protests, wall graffiti, slogans or demonstrations either for or against Trump. Nobody cared. It echoed the empty deserted ghostly state of the city during Joe Biden’s non-existent presidential inaugural on January 20. Once again, all that happened was that someone taped a badly handwritten note on the Capitol saying “impeachment” and everything that followed was just a badly acted chaotic play performed by autistic children.
No real human being gave a second’s care for either convicting Trump or acquitting him. Not a single firework was fired off in celebrate his acquittal. Not a single liberal committed ritual suicide, tried to burn themselves to death in front of the Senate or even bothered to throw a rotten tomato or an egg at a single Republican Senator who voted for acquittal. It was never real. It didn’t matter. Nobody cared.
Yet impeachment is supposed to Mean Something. Richard Nixon resigned in 1974 rather than melt into blubber beneath its merciless glare. Bill Clinton, who was widely suspected of being guilty of so much, beat an impeachment rap only for lying in public that he had slept with a naive young girl intern.
George W. Bush surely rated impeachment for his unprecedented incompetence in so many areas: He bankrupted the country: He destroyed civil liberties. He failed to prevent the killing of nearly 3,000 Americans on 9/11. He ignored Mississippi flood defenses thereby drowning of the city of New Orleans, killing thousands more. He unleashed unnecessary, endless wars on Iraq and Afghanistan. He got thosuands of youn g American soldeirs killed and ten thousands more hideously maimed for life – for nothing.
Yet the Democratic majorities that ran both chambers of Congress during the last two years of Bush’s presidency never had the guts or decency to dare to impeach him for any of these terrible, shameful things.
Bush’s successor Barack Obama blithely presided over the destruction of democracy in Ukraine, risking nuclear war with Russia. He locked the United States into a $1.5 trillion 30-years-long new nuclear arms race. He unleashed war, rebellion, anarchy and chaos in Yemen, Syria and Libya, killing untold millions more. The Republicans who controlled Congress never dared – or bothered – to impeach him either.
This non-existent second failed impeachment of Trump confirms what the world already learned in his farcical first impeachment in 2019. Impeachment as a solemn tool to preserve democracy, depose an unworthy national leader or mean anything at all is stone cold dead in the United States of America.
Like the rest of the Beloved, still so widely revered, more than 230-years-old US Constitution, impeachment has become a meaningless exercise in exhausted, archaic cliches. No one would ever dare to use it for anything that really mattered at all. Both Republicans and Democrats have repeatedly shown over the past 30 years that they are all too scared to.
The aging, absurd, senile and drooling old Democratic political elite in Washington were led over the edge of a political cliff yet again by House Speaker Nancy Pelosi, Democratic Senate Leader Chuck Schumer and House congressional “expert” Congressman Adam Schiff.
They will still revere and mindlessly follow them. Gadarene Swine are incapable of doing anything else.
The Democrats failed to discredit or even politically damage Trump. They revealed themselves as stupid, malignant fools, trying to impeach a powerless president who had already been cast out of office. They failed to plausibly document any of their charges against him. They made a mockery of President Biden’s half-hearted, dazedly delivered pledge of bipartisanship and burying of political enmities in his already forgotten Inaugural Address.
They also handed to the Republicans a perfect precedent for impeaching Biden and Vice President Kamala Harris if they regain control of Congress in 2022, assuming the ramshackle US political system can even survive until then.
The outcome of Trump’s second impeachment was therefore a catastrophe for the Democrats. It repeated Obama and Biden’s disastrous bungled start to their 2009 administration and it already heralds the rapid isolation and collapse of the Biden regime
Nearly 2,000 years ago, the mad Roman boy-emperor Caligula declared war on the God Neptune by collecting sea shells on the beaches of France and Belgium. Caligula had more credibility and success than Pelosi, Schumer and Schiff: At least he got the sea shells.
What we have just seen is another example of the compulsion of America’s liberal ruling elite to make a sick, discredited joke of what is left of their own collapsing and totally bankrupt political system.
What was the Second Impeachment of Donald Trump? Shakespeare gave us the answer in his Scottish Play more than 400 years ago.
It was a walking shadow, a poor player
That struts and frets his hour upon the stage,
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.
Tyler Durden
Sun, 02/21/2021 – 23:35 - Watch: US Army Conducts First Autonomous Vehicle Test At New Facility Near Baltimore
Watch: US Army Conducts First Autonomous Vehicle Test At New Facility Near Baltimore
US Army researchers began experimenting with autonomous vehicles at a new testing facility within Aberdeen Proving Ground (APG) in Middle River, Maryland.
APG allotted Army Research Laboratory (ARL) with 200 acres to prove and refine autonomous vehicles’ performance. The facility has been home to the service for nearly a century, where munitions and weapons have been tested.
“The one-of-its-kind research campus was established to advance Army knowledge of autonomy and intelligent systems through basic and applied research of unmanned technologies that integrate artificial intelligence, autonomy, robotics and human teaming elements in complex environments,” Jeffrey Westrich, an ARL program manager said.
Last month, Army researchers performed the first fully-autonomous vehicle test at ARL’s new testing grounds.
Westrich said, “the tests served to preliminarily prove the performance of the ARL Autonomy Stack for future, extended field testing.”
ARL’s Autonomy Stack is a software framework and collection of algorithms that are the brains of an autonomous vehicle.
Before recent field testing, Army researchers relied on computer-based modeling and simulation.
A video published on YouTube captured the field test as the autonomous vehicle navigated through a wooded area.
ARL plans more tests this year of autonomous vehicles to evaluate their artificial intelligence-enabled systems.
The timing of the test and upcoming ones comes as the Army has been receiving prototype light, medium, and heavy robotic combat vehicles to prepare for eventual fielding on the modern battlefield.
Last month, the service received two Robotic Combat Vehicle-Light unmanned ground vehicle prototypes.
In October, the Army said it was about to receive four 10-ton Ripsaw M5 Robotic Combat Vehicle prototypes.
Modernization of the service was supercharged under the Trump administration will likely continue under the new administration following a power struggle between the US and China for global dominance.
Bank of America’s equity strategist Haim Israel recently updated clients in a note describing the latest geopolitical flare-ups between both countries.
While the Army prepares for a future conflict with the need for weaponized robots, will the next battlefield domain be space?
Tyler Durden
Sun, 02/21/2021 – 23:10 - Canada To Follow Australia's Lead In Charging Facebook For Links
Canada To Follow Australia’s Lead In Charging Facebook For Links
Authored by Jazz Shaw via HotAir.com,
After blocking links to all news content in Australia, Facebook has reportedly “friended” the country again by coming back to the negotiating table, at least according to Prime Minister Scott Morrison. That doesn’t mean that Mark Zuckerberg has dropped his objections to Austrailia’s pending legislation that would force the social media giant to pay for links to Australian news content, however. Neither side seems to be backing down at this point.
Australia may not be in this battle alone, though.
We’re learning this weekend that Canada is drafting a similar measure and basically daring Facebook to impose a blackout on them as well. (NY Post)
Canada is poised to take on Facebook, following the example set by Australia, which began a war with the tech giant when the country’s publishers backed proposed legislation demanding payment for their content.
Canadian Heritage Minister Steven Guilbeault condemned Facebook’s actions as “highly irresponsible” last week when the social media giant removed all Australian news content from its sites in retaliation.
Guilbeault warned that Canada would be next in making sure Facebook paid for news content from Canadian publishers. Guilbeault is charged with drafting legislation in the next few months that would require Facebook and Alphabet Inc’s Google to pay up.
This whole “everyone hates Facebook” theme is turning into a trend. According to Canadian Heritage Minister Steven Guilbeault, he was recently in talks with representatives from Finland, France and Germany to discuss what to do about Facebook. He further indicated that the total number of nations considering joining such an alliance could quickly reach 15.
This is pretty much what I was talking about when I suggested that Facebook might come to regret starting this staredown with Australia. The Aussies probably only represent a fairly small percentage of Facebook’s total audience and the same can be said for Canada. But if they start losing a significant number of European countries as well, Mark Zuckerberg may have to go back to the drawing board and rethink his strategy. At some point, the cart is going to become too heavy for the donkey to pull it.
It’s not just fees for news content, either. More countries, including the United States, are discussing new regulatory action against the big social media companies and even the possibility of modifying antitrust laws. Facebook has managed to maintain some level of profitability, but its entire business model could evaporate if too many nations start cracking the whip in that fashion.
Before anyone comes to the table with Zuckerberg (aside from Australia, anyway), we should know exactly what we expect from Facebook in terms of “better behavior.” I really don’t understand the desire to charge them for links to news sites showing up on users’ pages. If people are republishing entire articles instead of excerpts and stealing protected images, then they need to have those posts taken down. But if it’s really just links and summaries, that sort of activity drives more traffic to the news sites so Facebook is basically doing marketing work for those sites for free.
It would be more beneficial if we could get Facebook, Twitter and all the rest to stop censoring conservative speech, but that would be pretty hard to build into legislation. And I somehow doubt that Congress would be interested in such a plan anyway, at least as long as the Democrats are in charge.
Once we see how many more countries are seriously willing to enter into an anti-Facebook alliance with Canada and Australia we’ll have a better idea of whether or not Mark Zuckerberg truly feels compelled to come to the table. But I still don’t have an inkling of what he might offer to stave off the impasse.
Tyler Durden
Sun, 02/21/2021 – 22:45 - These Are The World's Most-Searched Consumer Brands
These Are The World’s Most-Searched Consumer Brands
Strong brands create an emotional link with consumers, and tech brands are no exception.
In fact, Google, Amazon, Netflix, and even eBay rank as some of the most searched consumer brands worldwide. It’s hard to imagine life without these household names, but, as Visual Capitalist’s Dorothy Neufeld asks (and answers below) how do brand preferences shift and change across internet searches worldwide?
This graphic from Business Financing compiles 12 months of data from the Google Keyword Planner and other sources, to uncover the world’s most searched consumer brands.
Note: Due to data constraints, a number of countries on the map do not have sufficient information available.
In Tech We Trust
By far, the world’s most searched consumer brand is Google, which seems very convenient.
It ranks at the top in 100 countries—that’s nearly half of all countries on the planet. With over 90 billion visits monthly, Google has unparalleled dominance in brand loyalty and website traffic.
Top 3 Most Searched Consumer Brands
-
Google: 100 countries
-
Netflix: 45 countries
-
Amazon: 30 countries
Netflix, falling in second, ranks highest in 45 countries including Turkey, Brazil, and South Korea. In third, Amazon is the most popular in 30 countries. The only non-tech company in the top five is IKEA, in fifth place, after eBay.
Gaming the System
When it comes to sub-sectors of consumer brands, the gaming space tells an interesting story.
Namely, it is Epic Games—creator of Fortnite and Grand Theft Auto—that dominates global charts by a considerable margin. Founded in Potomac, Maryland, the company ranks at the top for 141 countries globally.
View the high resolution of this infographic by clicking here.
Additionally, Nintendo tops the list of 24 countries including Japan, Haiti, and Canada, while Paris-based Gameloft comes next in line.
Fast Fashion: Shoe Dog At the Top
Since its founding in 1964, Nike has become a remarkable brand builder. In fact, Nike is the most searched fashion brand among 49 countries.
Interestingly, founder Phil Knight only began to fully understand branding power after the company reached $1 billion in revenues. After a series of failures and missteps in the mid-1980s, Nike switched its focus from marketing and manufacturing, to instead, zeroing in on the consumer.
View the high resolution of this infographic by clicking here.
Like Nike, Swedish retailer H&M has a long history dating back to 1947. Prior to the pandemic, the fast-fashion retailer operated 5,000 stores globally. Since pandemic tailwinds, however, H&M plans to close 250 physical stores in 2021 and focus more on online sales.
Big Macs are Here to Stay
When you look closer at the most searched fast food chains, McDonald’s ranks highest on a global level, but not by far.
KFC comes in second, topping the list of 65 countries including Russia, Peru, and Thailand. Meanwhile, Pizza Hut, which is owned by the same parent company as KFC, attracted the highest number of searches in America.
View the high resolution of this infographic by clicking here
On the other hand, Antarctica curiously ranks Baskin Robbins at the top, but this could be influenced from a low volume of searches in the region.
Consumer Brand Outliers
If there’s one recurring trend across the top consumer brands, it’s that they are unsurprisingly dominated by big players concentrated in America.
However, notable outliers are present. In China, search engine Baidu ranks as the top consumer brand on the internet. On the other hand, the Vatican’s most-searched gaming company is Canada-based BioWare, which developed the Mass Effect series (no pun intended).
Meanwhile, in Saint Helena—the island where Napoleon was exiled and later died—has Burger King as its most searched fast food brand. As it happens, the remote island appears to have no Burger King, or any other fast food chains. Kenya’s top fashion brand is Louis Vuitton, while Turkmenistan’s is Gucci.
Despite these differences, many consumer preferences, at least according to search volume, appear strikingly similar on global levels. As many of these multinational brands continue to gain even greater market share, the implications for the global consumer will be interesting to watch in the next year, or even decade.
Tyler Durden
Sun, 02/21/2021 – 22:20 -
- Biden's Post-Trump NATO-Reset Points To Fading US Global Power In Multipolar World
Biden’s Post-Trump NATO-Reset Points To Fading US Global Power In Multipolar World
Via The Strategic Culture Foundation,
A month after his inauguration, President Joe Biden’s administration formally engaged on the international stage this week to set out key foreign policies.
His Secretary of Defense Lloyd Austin addressed a two-day NATO summit via video link in which he relayed the message from Biden that the US would re-engage with transatlantic European allies. Four years of Donald Trump’s abrasive America First policy was being jettisoned in place of a more smooth, consensual approach under Biden.
President Biden would himself address videoconferences of the Group of Seven nations held Friday, as well as the annual Munich Security Conference over the weekend. A major development is the Biden administration’s announcement that it is ready to rejoin the international nuclear accord with Iran, thereby repudiating Trump’s rejection of that deal. It remains to be seen, however, just what the Biden administration will want in exchange for honoring its signature to the treaty which was negotiated in 2015.
Other policy reversals include US troops remaining in Germany in contrast to Trump’s plan to draw down numbers. That sounds like another exercise in repairing relations with the Europeans.
Previously, Biden also announced he would negotiate with Russia on extending the New START treaty limiting nuclear weapons. The latter move is cautiously welcomed. But, again, it remains to be seen.
There’s no doubt about the change in style. The Biden administration is promising to be collegiate about strategic decision-making with European allies. The bullying rhetoric used by Trump for hectoring European members to spend more on NATO military commitments has been ditched by Biden. The Washington establishment was acutely concerned that Trump’s transactional tirades were alienating European allies and undermining the 30-nation NATO alliance, which in turn was diminishing America’s authority and frustrating its interests.
Historically, the United States relies on NATO as a conduit to project its power and influence over Europe. This was its fundamental objective when NATO was first set up in 1949 at the start of the Cold War against the Soviet Union. In recent decades, NATO has assumed an ever-expanding purpose for American imperial power projection, encompassing not just Western Europe but all of Europe right up to Russia’s borders. NATO has become a vehicle for American hegemonic ambitions holding sway over the Balkans, Caucasia, North Africa and the Middle East, Africa and Asia-Pacific.
For an organization that nominally originated for maintaining security in the North Atlantic, it sounds rather odd indeed to hear its spokesmen talk now about the need for NATO to confront China. That oddly expanded global mission reflects the real but unspoken fact that NATO is all about serving American global ambitions.
Former President Trump was too ignorant or obsessed with money-grubbing financial costs – “we’re being ripped off” he would repeatedly complain with regard to NATO – to realize the strategic bigger picture of what the alliance is really purposed to serve.
Under a new man in the White House – an old-time establishment operative – there is seemingly a more consensual approach with allies. Nevertheless, underlying the liberal lexicon there is the same old mantra of hostility towards Russia and China.
Lloyd Austin, the Pentagon chief, told European allies this week that there would have to be “more burden sharing” in order to confront the “threats” allegedly posed by Russia and China. Biden continued the same theme of confronting Russia and China during his G7 and Munich conferences over the weekend.
American hegemonic ambitions required to satisfy its corporate capitalism are dependent on a zero-sum geopolitics. The globe must divided into spheres of influence as in the earlier Cold War decades. There must be antagonism to thwart genuine cooperation which is anathema to American capitalism. Indeed, it can be said that the Cold War never actually ended when the Soviet Union dissolved more three decades ago. America’s imperialist ideology continued under new guises of “fighting terrorism”, “democracy promotion and nation building”, or more recently “great power competition” with Russia and China.
The bottom line is that NATO is more important than ever for enabling Washington’s global power ambitions given the demise of American capitalism and the rise of China and Eurasia.
NATO provides a crucial political cover for what would otherwise be seen as naked American imperialism.
The contradiction, however, is that the world is increasingly moving towards a multipolar realm where nations are more interdependent and integrated in economic relations. Russia and China are major trading and investment partners with Europe, not adversaries, and even less so enemies. The latter depiction is absurd.
The only people claiming that Russia and China are a “threat” are the Americans, regardless of who is sitting in the White House, whether Republican or Democrat. (Well, not the only people. There are minor figures in Europe, such as the reactionary, rightwing Baltic politicians, who also spout Russophobia and Sinophobia in dutiful deference to their American mentors.)
Thus it can be adjudged that there will be no fundamental post-Trump reset of NATO under Biden. The organization remains what it has always been, a war machine to advance American imperialist objectives of hegemony. The only difference is the Biden administration is more savvy about projecting a more palatable image and rhetoric about “consensus”, “diversity” and “burden sharing”.
This revamped, yet in essence ideologically rigid, NATO suffers serious dissonance in practical relations with the real world of multipolar evolution. Biden will try to cohere NATO members to America’s global ambitions but those same members are inevitably aligning with the rest of the world out of their own political and economic self-interest. The more militaristic NATO tries to become at the goading of the Americans and their European flunkies like Secretary General Jens Stoltenberg, the more the alliance is likely to unravel. Its imperialist function is no longer fit for purpose nor viable in today’s world.
The more the US pushes NATO as its vehicle, the more it is apparent that the battery of American power is running flat.
Tyler Durden
Sun, 02/21/2021 – 21:55 - Russian Stealth Jet Tests Realistic Mockup Of New "Intra-Fuselage Hypersonic Missile"
Russian Stealth Jet Tests Realistic Mockup Of New “Intra-Fuselage Hypersonic Missile”
The superpower rivalry, sparked by the Cold War between the US and Russia, continues to this day. If that’s in stealth fighter jets or hypersonic weapons, there’s a race between both countries to field these weapons. Russia appears to be ahead in hypersonic weapon development as the US has yet to field these weapons. Still, the US is ahead of Russia when it comes to fielding stealth jets.
The ultimate fighter jet is a fifth-generation fighter with a weapon bay that can carry hypersonic missiles. Both the US’ Lockheed Martin F-35 Lightning II and Russia’s Sukhoi Su-57 weapon bays are too small to carry hypersonic missiles.
SU-57
However, Russian defense industry sources told Sputnik News that the Su-57 is undergoing tests on its ability to carry hypersonic weapons internally.
“Russian media reported earlier this week that a realistic mockup of a new “intra-fuselage hypersonic missile” was being carried by an Su-57 for test flights. The details of the weapon are vague; however, it is likely the same weapon reported to have been developed in February 2020,” Sputnik said.
At the moment, Russia’s Mikoyan MiG-31 carries the Kh-47M2 Kinzhal, an air-launched hypersonic missile that can travel at Mach 10, on its belly. The Tupolev Tu-160 supersonic bombers can also carry the Kinzhal.
With the Kinzhal measuring 26 feet long, and the Su-57’s 14-foot-long internal weapons bay, Russia has embarked on a task to make the world’s smallest hypersonic missile.
SU-57’s Weapons Bay
“No extant hypersonic weapon has been so small, as all have been the size of large cruise missiles or air-launched ballistic missiles,” Sputnik said, adding that “such a weapon might be powered by an air-breathing scramjet, a type of advanced rocket engine used to attain ultra-fast speeds, such as that currently being developed by India.”
Ever since the Soviet Sputnik satellite entered orbit in 1957, both countries have been on a militarization path to gain an edge over one another.
Tyler Durden
Sun, 02/21/2021 – 21:30 - Hide And Seek: How Drug Traffickers Get Creative At Sea
Hide And Seek: How Drug Traffickers Get Creative At Sea
Authored by Katie Jones via InsightCrime.org,
Drug traffickers engage in a creative game of hide and seek with coast guards and other security forces that board their ships at sea.
Rubén Navarrete, a Mexican Navy captain based in the western state of Michoacán, told Televisa News last November that those dedicated to maritime smuggling could only be restricted by one thing: their own imagination. A spate of recent seizures prove his point as traffickers have been getting more inventive with hiding places both above and below deck.
InSight Crime looks at some of the most popular and creative ways narcotics have been concealed aboard ships over the years and how this continues to evolve.
1. Anchor
In some cases, drugs have been stored in the same compartment as the anchor, to which few people would have access. In 2019, media reports shared how nearly 15 kilograms of cocaine had been found concealed in a vessel’s anchor compartment, as it was docked in the Dominican Republic’s Puerto Caldera.
Otherwise, anchors have been used to facilitate the delivery of drugs once a ship has reached its point of arrival. In 2017, Spanish authorities announced the seizure of more than a ton of cocaine from a Venezuelan flagged vessel at high sea. The nation’s Interior Ministry detailed how law enforcement agents had observed around 40 suspicious packages onboard, that were linked by ropes and fixed to two anchors.
This was reportedly so crew members could throw illicit loads into the sea in the shortest time possible, to avoid being detected. Authorities observed how two of the crew tried to achieve this before being caught out with four other people who were onboard.
The anchor’s use in drug trafficking has been based on pragmatism, often attracting smugglers planning to make an express, maritime delivery.
2. Containers
One of the most common ways traffickers have attempted to smuggle drugs overseas has been through concealing illicit substances among supplies onboard, often located in the ship’s principal hold or hull. The “gancho ciego” or “rip-on rip-off” technique has commonly been used to send cocaine across the Atlantic, meaning smugglers regularly attempt to conceal drugs in containers which have already undergone checks carried out by customs officials.
As InSight Crime reported last year, scrap metal shipments have posed a sizeable problem for authorities in this respect, due to scanners being unable to pick up on smaller quantities of drugs when they are hidden among vast volumes of scrap. Equally, authorities have found it more difficult to deploy sniffer dogs to detect drugs in such cases, as the animals may get injured when performing their duties.
Otherwise, illicit substances have commonly been smuggled in among foodstuffs. In October of last year, Spain’s Civil Guard announced it had seized over a ton of cocaine at high sea. Authorities reportedly found the drug between bags of maize on a ship traveling from Brazil to the Spanish province of Cádiz.
And at the end of 2019, authorities in Italy discovered close to 1.3 tons of cocaine within a refrigerated container carrying bananas, which had arrived from South America. This followed a record seizure made at the nation’s Port of Livorno earlier that year, where over half a ton of the drug was found concealed in a container seemingly carrying coffee from Honduras.
Given the widespread use of this technique, the United Nations Office on Drugs and Crime (UNODC) has worked with the World Customs Organization (WCO) to carry out a worldwide container control program, in an attempt to combat such efforts.
3. Captain’s Cabin
Drugs have previously been seized from inside the captain’s personal belongings. Such attempts are rarely revealed, requiring a significant level of corruption on a captain or crew’s behalf to work effectively.
Last year, Uruguay’s naval forces seized five kilograms of cocaine in the front cabin of a Chinese flagged ship, which had reached Montevideo from Brazil, according to media reports. Subrayado revealed how the captain himself had denounced the illicit load on discovering it.
On the other hand, in 2018, authorities in Paraguay detained a ship’s captain, after he was accused of smuggling drugs among his personal possessions in the cabin, Ultima Hora reported, citing the Attorney General’s Office. Officials reportedly seized over 150 kilograms of cocaine at the nation’s Port of Asunción, just as the drugs were about to be transported to Europe on behalf of a ‘known trafficker’ who allegedly worked for a Paraguayan criminal organization.
4. Funnel
Another potential hiding place for traffickers seeking to export illicit wares has been close to a given ship’s funnel. This is incredibly rare, however it has been known to occur.
El Tiempo’s archives suggest that over two decades ago, in 1996, authorities found cocaine hidden in ships belonging to Peruvian armed forces. Following a spate of related seizures, just under 30 kilograms of cocaine were discovered in a compartment near to the funnel of a ship belonging to the navy, anchored three miles from the Lima port of Callao. Days later, another 25 kilograms of the drug were reportedly found in the hold of the same ship.
This hiding place has rarely been used when reported seizures are considered, perhaps due to difficulties in smugglers being able to get close to a vessel’s funnel without being detected, and the limited quantity of illicit substances a given group would be able to conceal there.
5. Vents
Traffickers have been concealing drugs inside the vents along ship hulls, as smuggling below deck has taken off.
In 2019, InSight Crime reported that a trafficking network headed by Colombians had been sending cocaine to Europe from the Peruvian ports of Pisco and Chimbote, principally through employing divers to weld sealed packets of the drug into vents located in the hulls of ships. Up to 600 kilograms were reportedly smuggled per ship, without the crew’s knowledge.
In September of that year, Spanish authorities seized just over 50 kilograms of cocaine concealed in the submerged part of a merchant ship, after it reached the island of Gran Canaria from Brazil, EFE reported. According to the media outlet, officials detailed how part of the illicit load had been found inside a manipulated vent below deck.
And months later, in December 2019, police in Ecuador revealed how divers had discovered over 300 kilograms of cocaine hidden in the lower vents of a maritime vessel. According to authorities, the cocaine was seized before it could be smuggled onward to Mexico and the Dominican Republic.
When drugs are concealed below deck, ship vents are perhaps one of the most popular hiding places traffickers use, even if divers are typically required to facilitate this.
6. Water Inlets
Staying below deck, criminal actors have used water inlets to conceal drugs and facilitate trafficking operations. While this hiding place is less common than traditional favorites, sophisticated networks have been working with divers to store packets of illicit substances inside such valves.
Last August, media outlets shared how authorities in Chile had detained a group of 15 suspects (including Chilean, Peruvian and Venezuelan nationals) after they had allegedly worked to transport drugs from Peru to the country’s northern region of Antofagasta and the western zone of its capital, Santiago. The organization had reportedly been concealing drugs within the water inlets of a Peru-flagged merchant ship.
The vessel’s water inlets were reportedly used so a diver who formed part of the illicit network could extract concealed packets of drugs as the ship passed Chile’s northern port city of Mejillones. Reports from local media suggested the diver had been reaching the vessel on a boat with an electric motor which made little noise, to avoid being detected. On dismantling the group, authorities reportedly seized 1.7 billion pesos (over $2.3 million) worth of drugs, including over 20 kilograms of cocaine, more than 180 kilograms of marijuana, as well as smaller quantities of ketamine, LSD and MDMA.
This method is more complex than simply hiding drugs in a container located in the ship’s hull in that it typically requires somebody reliable on the other end to dive down and collect clandestine packages, all while avoiding maritime authorities.
7. The Hull
An increasingly popular approach adopted by traffickers has been to hide drugs below deck, within or attached to a ship’s watertight hull. Divers are often employed by criminal groups to facilitate such operations.
In 2019, InSight Crime shared how ship hulls have been increasingly used to facilitate drug trafficking, particularly by smugglers taking advantage of vessels disembarking from Ecuador and Peru. Criminal groups have picked up on how attaching drug shipments to the hulls of ships makes illicit substances near imposible to detect using standard inspection procedures.
However, officials have been combatting such cunning attempts. In 2018, Chile’s navy detailed how authorities had detained members of a gang working to smuggle drugs in the hulls of ships headed from Colombia to the nation. Authorities seized over 350 kilograms of “creepy” style marijuana, after a ship which had originally disembarked from Taiwan arrived at Chile’s Port of San Antonio, following a stop in Colombia. At the port, maritime police intercepted three Colombian divers as they attempted to pass seven packages of the drug from the ship’s hull to a fishing boat manned by two Chilean nationals.
In November of last year, Televisa News interviewed a naval diver based in Lázaro Cárdenas in Mexico’s state of Michoacán, who claimed such methods have been putting authorities at risk, with trained divers searching for illicit substances in crocodile-filled waters, in some cases.
8. Fuel Tank
While we may be more used to seeing drugs concealed in car fuel tanks, smugglers on ships have replicated this tactic.
Last April, the Trinidad and Tobago Guardian reported on how the island nation’s coast guard had intercepted a ship carrying an estimated $160 million worth of cocaine. Sources consulted by the media outlet revealed officials had discovered 400 kilograms of the drug in the vessel’s fuel tanks, adding that they had to perform a “destructive search” to reach the cocaine, as the hidden stash was kept in a secret enclosure, tightly wrapped in waterproof material.
On a smaller scale, back in 2015, authorities in the Dominican Republic seized just short of 80 packets of presumed cocaine, onboard a vessel destined for Puerto Rico, according to Diario Libre. The drugs had been found spread across six buckets located in the boat’s fuel tank compartment.
This method is far from the most common used by maritime smugglers and its intricacy has varied from case to case. However, through its ability to accommodate everything from drug-filled buckets to illicit packages wrapped in impermeable material, a ship’s fuel compartment should not be discounted as a hiding place.
9. Torpedoes
The so-called “torpedo method” has been highly popular among smugglers. Criminal groups have been filling makeshift tubes (also known as “torpedoes”) with drugs, tying such containers to the bottom of ship hulls with rope, so illicit loads may be cut off at high sea if authorities get too close.
In 2018, police in Colombia discovered 40 kilograms of cocaine inside a sealed torpedo attached to a ship destined for the Netherlands. A police news release detailing the seizure explained how divers may take advantage of a vessel’s drainage level system to attach such containers with hooks, ahead of transatlantic journeys lasting up to 20 days.
SEE ALSO: Peru Finds ‘Narco-Torpedo’ on Boat
Two years earlier, InSight Crime reported on how this method had been applied extensively by traffickers based in Colombia.
In 2015, authorities in the nation caught 14 people suspected of being in a gang dedicated to smuggling drugs in cylinders attached to ship hulls. To facilitate the group’s operations, illicit divers — one of whom was reportedly linked to the navy — bolted the containers to stabilizer fins of vessels, according to El Heraldo. The media outlet added that the cylinders were manufactured by a metal working expert, who also covered them with fiber glass.
But torpedoes have not just been bolted to ships setting sail from Colombia. As far back as 2011, InSight Crime reported on how Peruvian police had found just over 100 kilograms of cocaine hidden inside a makeshift torpedo attached to the bottom of a boat in a Lima port.
The torpedo method is intricate and often requires specialist involvement, from trained divers to metal workers producing the containers. However, this technique has become increasingly popular with traffickers who want to minimize the risk of being caught with illicit loads at high sea.
10. Engine Room
Drugs have been frequently hidden in rooms restricted to select crew members, often implicating those with inside knowledge in such cases.
In 2014, police in Ecuador seized over 20 kilograms of cocaine, found in a ship which had arrived at the nation’s Port of Manta from Singapore. According to authorities, the drugs were discovered in the vessel’s engine room, in two packages: a suitcase and a jute sheath.
Three years later, authorities reportedly found just under 90 kilograms of cocaine in the engine room of a steamship docked at the Port of Palermo in Colombia, according to El Heraldo. Media reports suggested the load was ultimately headed for Brazil. But before the vessel could disembark, tip-offs led authorities to find the drugs in one of the ship’s most restricted places.
Nearly two decades ago, a Colombian naval training ship was found with over 26 kilograms of cocaine and heroin in its engine room. At the time, media outlets said the drugs could have been linked to self-defense groups in Cúcuta.
While this restricted room has been used to conceal smaller quantities of drugs, it is far from a popular place for smuggling to occur, particularly without some form of insider knowledge.
11. Propellor
In a particularly creative move, traffickers have been known to hide drugs under the propellors of maritime vessels.
Last December 8, the US Customs and Border Patrol (CBP) shared how police divers in Puerto Rico’s port of San Juan had found just under 40 kilograms of cocaine worth approximately $1 million under a cargo vessel’s bow thruster, inside two marine net bags.
Roberto Vaquero, assistant director of field operations for border security in Puerto Rico and the U.S. Virgin Islands stated that smugglers had been using “very creative means to conceal their illicit drug loads into the international supply chain”.
Using a vessel’s propellors to do so is perhaps one of the most innovative albeit among the least reported ways in which smugglers have been moving illicit loads.
12. Store Room
A ship’s sail store room is out of bounds for most, but traffickers have found a way to use it to their advantage.
Naval training ships have been mobile transit hubs for drugs in the past through the use of restricted spaces. Off limits storage rooms have been used to conceal illicit loads during transatlantic voyages.
In August 2014, after a Spanish navy training ship arrived home following a six month cruise, authorities seized 127 kilograms of cocaine from a storage room where the folded sails were kept, El País reported. The media outlet suggested that very few people had access to this space.
During its voyage, the ship had stopped off in Cartagena, Colombia and then in New York. Three of its crew members were accused of selling drugs to traffickers in the US state, according to El País.
Such incidences are rare and usually rely on the direct involvement of corrupt officials or armed forces themselves.
13. Nets
Traffickers have been using nets attached to ships to their advantage, predominantly to bring drugs aboard.
In June 2019, media outlets revealed how traffickers had snuck over 16.5 tons of cocaine onto a cargo ship, following a billion-dollar drug bust in the US state of Philadelphia. It was reported that the ship’s second mate told investigators he had seen nets near the ship’s crane that contained bags with handles for transporting the cocaine, confessing that he and about four others had hoisted the bags onto the ship and loaded them into containers, after being promised a paycheck of $50,000 by the vessel’s chief officer.
This tactic has been used to facilitate the popular “gancho ciego,” or “rip-on, rip-off” technique.
Tyler Durden
Sun, 02/21/2021 – 21:05 - Watch Out, Chinese Money May Start Trickling Away
Watch Out, Chinese Money May Start Trickling Away
By Ye Xie, macro commentator at Bloomberg Markets Live
Three things we learned last week:
1. Beijing is considering relaxing restrictions on capital outflows.
China will ease restrictions on investing abroad, including raising the QDII quota for institutions and studying the feasibility of allowing individuals to buy foreign securities within their annual limit, a State Administration of Foreign Exchange official said Friday. Currently, Chinese residents are allowed to purchase up to $50,000 a year of foreign currencies, but the funds can only be used for purposes such as traveling and studying, not for buying overseas property, securities or life insurance.
The authorities have already taken a slew of steps since late last year to encourage outflows and temper inflows in a bid to slow the yuan rally. To underscore the appreciation pressure, Friday’s data showed China’s current account surplus surged to $130 billion in the fourth quarter, the most since 2008.
The move also shows that PBOC is reluctant to directly intervene in the currency market, opting to let market flows determine exchange rates, according to Morgan Stanley.
2. Rising real yields have yet to do much damage to markets.
Ten-year real yields rose 20 bps last week, the most since the U.S. lockdowns in March. While global equities fell from a record, cyclical sectors such as industrial stocks outperformed along with metals. Both signal that markets are upgrading the growth outlook with fiscal stimulus and vaccine rollouts, and higher yields can be digested.
3. Central banks are in no rush to withdraw stimulus.
Fed officials signaled massive bond purchases will continue for “some time.” Australia’s central bank expects “very significant” monetary support will be needed as it’ll take years to meet its inflation and unemployment goals, according to minutes of the February meeting. In China, the PBOC showed a steady hand last week, signaling the small liquidity drain it conducted shouldn’t be taken as a sign of tightening.
Tyler Durden
Sun, 02/21/2021 – 20:28 - United Airlines Investigating Leak Of Ted Cruz's Cancun Flight Details
United Airlines Investigating Leak Of Ted Cruz’s Cancun Flight Details
Authored by Ivan Pentchoukov via The Epoch Times,
United Airlines has confirmed that it is investigating a potential leak of the flight data on Sen. Ted Cruz’s (R-Texas) trip to Cancun, Mexico.
“It’s against United’s policies to share personal information about our customers and we are investigating this incident,” the airline told The Hill in a statement. The Epoch Times has sent a request to confirm the statement.
Politico was the first to report the internal investigation. An airline executive told the news outlet at the time that if the employee who leaked the data is found they could be fired and that no option is off the table.
Cruz boarded a flight to Cancun as millions of Texans were left without power and heat amid a freak winter storm. He has since apologized and said the trip was “obviously a mistake.”
Prior to Cruz’s return flight, Skift reporter Edward Russell cited a United Airlines source to disclose the departure time of Cruz’s Cancun-Houston trip.
“Spoke to a source at United Airlines, Senator Ted Cruz rebooked his flight back to Houston from Cancun for this afternoon at around 6 a.m. today (Thursday). He was originally scheduled to return on Saturday,” Russell wrote.
Leaks of flight information are rare even though tens of thousands of United Airlines employees have access to flight data, Politico reported.
Beyond seeking a presidential emergency declaration, senators have virtually no official role to play in emergency response. Cruz nonetheless summoned a political firestorm by leaving the state while millions struggle.
Cruz said in a statement on Feb. 18 that, “with school canceled for the week, our girls asked to take a trip with friends. Wanting to be a good dad, I flew down with them last night and am flying back this afternoon.”
“My staff and I are in constant communication with state and local leaders to get to the bottom of what happened in Texas,” he added, referring to the power outages and, in some cases, loss of water.
He said that Texans “want our power back, our water on, and our homes warm.”
Tyler Durden
Sun, 02/21/2021 – 20:15 - 'Watch Your Back': Cuomo Accused Of "Gangster" Threats Against "Flood" Of People
‘Watch Your Back’: Cuomo Accused Of “Gangster” Threats Against “Flood” Of People
A flood of politicians and other public figures have come forward to accuse New York Governor Andrew Cuomo (D) of gangster-like behavior, including multiple threats ranging from ‘watch your back’ to ‘bullying, mistreatment and intimidation,’ according to Forbes.
Key allegations via Forbes:
- Nate McMurray, a two-time House candidate in Western New York, told Forbes that after criticizing Cuomo for plans to attend a Buffalo Bills game, he received a call from a Cuomo aide on New Years Eve that began “you motherf***er,” before devolving into threats like “you’re done in politics.”
- McMurray said he took down his tweet after the call because he was “scared” and looking for a job after his run, adding that he’s heard from people in both Cuomo’s staff and the New York legislature about a “pervasive culture of fear that has trickled down from his office.”
- “We’ve all been yelled at by someone in that administration,” Marc Molinaro, a Republican county executive in upstate New York who ran against Cuomo in 2018, told Forbes, adding, “It’s unacceptable but how they operate.”
- Alessandra Biaggi, a Democratic state senator, told the New Yorker Cuomo once asked her to “tell me again how your grandfather’s career ended,” which she perceived as a threat given that her grandfather, Mario Biaggi, resigned over a corruption scandal – though a Cuomo spokesperson told the New Yorker it was about the “importance of integrity in government.”
- Fox News meteorologist Janice Dean tweeted that she was told by someone close to the Cuomo family to “‘Watch my back,’” when she began speaking out against him prolifically over the coronavirus-related deaths of her parents, who were both nursing home residents.
“It’s like gangster stuff,” said McMurray, who says Cuomo and team tried to push him out of a 2018 House race. “We’ve had three terms of Gov. Cuomo, I think it’s time to move on,” he added.
According to Assemblyman Ron Kim, Cuomo demand he “cover up” for an aide who admitted to concealing COVID-19 nursing home deaths over fears that the Trump DOJ would use it against them.
“I can destroy you,” Kim claims Cuomo told him – an allegation aide Rich Azzopardi says isn’t true, and that Kim is “lying.”
Meanwhile, it appears even Biden spox Jen Psaki can’t find the words to condemn Cuomo’s actions which potentially resulted in thousands of unnecessary deaths.
Biden’s press secretary repeatedly refuses to condemn Andrew Cuomo’s actions that led to the deaths of thousands of elderly New York nursing home residents. pic.twitter.com/0VPApRtUV2
— Arthur Schwartz (@ArthurSchwartz) February 21, 2021
Tyler Durden
Sun, 02/21/2021 – 19:50 - Coinbase Valued At $100 Billion, More Than CME, ICE, CBOE And Nasdaq
Coinbase Valued At $100 Billion, More Than CME, ICE, CBOE And Nasdaq
Bitcoin’s explosive price surge in the past year which has pushed its market cap well over $1 trillion for the first time, has not only benefited the cryptocurrency and its peers, but has sent shockwaves across downstream sectors which cater to providing access to the soaring demand for crypto exposure around the world.
And few “conventional” companies have benefited more from bitcoin’s ascent than Coinbase, which according to The Block Crypto was valued at a stunning $100 billion in its latest private round sale ahead of the crypto exchange’s long-awaited direct listing.
As The Block reports, the average clearing price for shares on Nasdaq Private Market continues to tick higher since the first secondary sale four weeks ago. As an aside, Axios notes that Coinbase launched a secondary share sale via Nasdaq Private Markets (f.k.a. Second Market) last month, offering up to 1.8 million shares in weekly batches. The goal was to help Coinbase determine a reference price for its public offering, which will be done via direct listing instead of IPO.
The most recent cleared price was $373 a share, which would imply a valuation of about $100 billion. That’s an increase from the first average cleared price of $200 in January, when an initial batch of 75,000 shares was sold on Jan. 29.
Coinbase launched a secondary share sale via Nasdaq Private Markets (f.k.a. Second Market) last month, offering up to 1.8 million shares in weekly batches. According to Axios, the goal was to help Coinbase determine a reference price for its public offering, which will be done via direct listing instead of IPO. That said, it’s “unclear if the secondary share sale is still useful to Coinbase for the purpose of determining a reference point for direct listing, given the upward surge.”
In any case, the latest reference prices mean that the value of Coinbase has nearly doubled in less than two month; it also means that the crypto exchange is now more valuable than all incumbent exchanges such as NYSE parent ICE, the CBOE, the CME and the Nasdaq.
When compared to its traditional equity peers, the Coinbase valuation is absolutely staggering, as its $100BN valuation represents a 132X Fwd EBITDA multiple compared to a 17.8x average for its peer group.
According to Axios, the $100BN price tag means that Coinbase could go public at a higher initial valuation than any other U.S. tech company since Facebook.
If Coinbase is worth a staggering $100 billion, we wonder what that means for crypto-focused fintech names such as Silvergate Capital, which is the leading bank for crypto startups (its clients include the Winklevoss twins’ Gemini exchange, Paxos, bitFlyer and Kraken) and which at last check had a market cap of just $4 billion.
Tyler Durden
Sun, 02/21/2021 – 19:33 - Remember When Fauci Called Ebola Quarantines "Draconian", Warned Of "Unintended Consequences"
Remember When Fauci Called Ebola Quarantines “Draconian”, Warned Of “Unintended Consequences”
Authored by Jordan Schachtel via The Dossier substack,
When it came to a proposed mandatory quarantine for his colleagues, and not the American general public, Dr. Fauci was singing a very different tune on quarantines, which the government health bureaucrat has now been championing in the United States for the better part of an entire year.
In 2014, at the height of the Ebola outbreak in Africa, concerns were rising in America about the possibility of the disease spreading across the country. With a genuinely horrifying 40 percent case fatality rate (which is at least 40 times higher than the CFR of COVID-19), and a several week incubation period for infectees, state governors acted to pursue mandatory quarantines for healthcare workers returning to the U.S. from regions where the virus was spreading.
At the peak of the epidemic, governors in several U.S. states initiated a very targeted quarantine that only applied to healthcare workers who were arriving back into the country from impacted areas.
Dr. Fauci wasn’t happy about the fact that his colleagues were being subject to quarantines.
He went on a media blitz and hammered the quarantine policies that had been issued in New York, New Jersey, Illinois, Virginia, Maryland, Georgia and Florida, declaring them “unscientific” and “draconian.”
Fauci: Quarantine can discourage health care workers from volunteering to treat Ebola patients: http://t.co/UXE16MjT13
— AP Politics (@AP_Politics) October 26, 2014
https://platform.twitter.com/widgets.js
“The primary goal is to protect the American people, but there are ways to do that that may not necessarily have to go that far at all,” Fauci told NBC’s Chuck Todd.
1/ Australia’s quarantine of people who come from an area with some covid cases is in total breach of the science.
Even people returning from an area with Ebola but WITHOUT SYMPTOMS only need to be monitored, not quarantined. This is Fauci in 2014.https://t.co/vEDOTHN6ln pic.twitter.com/LVEzfnJ3Vj
— 🙂Sanjeev Sabhlok, Pope @Church of Reason& Liberty (@sabhlok) January 4, 2021
https://platform.twitter.com/widgets.js
“We have to be careful that there are [not] unintended consequences,” Fauci continued.
“We need to treat them, returning people with respect,” he added, in describing the quarantine orders as unnecessarily “draconian.”
“Go with the science,” Fauci advised. “You can monitor them in multiple different ways. You don’t have to put them in a confined place.”
The government health bureaucrat continued on his media mission, delivering a similar message to ABC’s Martha Radditz.
“We appreciate the fears of the American people, but you don’t want to have policy that would have negative unintended consequences… The scientific evidence is what needs to drive us,” Fauci said.
“If you put everyone in one basket, even people who are clearly no threat, then we have the problem of the disincentive of people that we need,” he added, in describing his colleagues as “heroes” who are “protecting America.”
.@NIH‘s Dr. Fauci: In #Ebola fight, quarantine could cause more damage if not done properly (by disincentivizing people from coming forward)
— America Tonight (@AmericaTonight) September 10, 2014
https://platform.twitter.com/widgets.js
Fauci, who had personally been in close contact with an infected Ebola patient, did not quarantine prior to his television appearances.
No quarantine for Anthony Fauci. He treated Nina Pham for Ebola but went on all five morning shows today: http://t.co/s3DK9Ipa8H
— Nick Timiraos (@NickTimiraos) October 26, 2014
https://platform.twitter.com/widgets.js
As we’ve discovered, the 50-year-tenured government health bureaucrat wasn’t always a fan of quarantines. As recently as 2014, he was emphatically against them.
Has “the science” changed that much in the last 6 years, or is something else afoot?
Tyler Durden
Sun, 02/21/2021 – 19:25 - Stunning Levels Of Air Toxins Found In New York's Subway System
Stunning Levels Of Air Toxins Found In New York’s Subway System
The air quality in the subway systems across the U.S. is almost downright toxic.
New research published last week shows high levels of pollution for subway riders, with the worst air quality coming from places like New York and New Jersey, according to The Guardian.
The report notes that tiny specks of pollution called PM2.5 were well above nationally determined safe daily levels of 35 micrograms per cubic meter in cities like New York, Washington and Philadelphia. The particles are likely “thrown up by train brakes or the friction between train wheels and rails”.
In New York, these particles measured 251 micrograms per cubic meter. Terry Gordon, a professor at New York University’s Grossman School of Medicine, who co-authored the research, said: “New Yorkers in particular should be concerned about the toxins they are inhaling.”
The level was even higher, coming in at 1,499 micrograms per cubic meter at Christopher Street in the West Village. This is about 77 times higher than above-ground air pollution and is a level “more commonly found near a large wildfire or during a building demolition”.
Gordon continued: “It was the worst pollution ever measured in a subway station, higher than some of the worst days in Beijing or Delhi. It just wasn’t believable. My colleague went down there and his airways were feeling tight after an hour or so.”
“People should be highly alarmed by these high levels,” he said. Pollutants were composed of iron and organic carbon produced “from the breakdown of fossil fuels or decaying plants and animals.” Gordon says more research is necessary to explain why pollution is so bad in some areas, and to figure out the health impact on commuters and transit workers.
The research found that people conducting a daily commute using Christopher Street were increasing their risk of an adverse cardiovascular event by 10%. And despite subway ridership falling due to the pandemic, many of the people who still use mass transit are frontline workers, on their way to help fight a virus that is known for attacking the lungs.
Gretchen Goldman, research director at the Union of Concerned Scientists, commented: “This is an important contribution, especially to our understanding of the disproportionate burden of air pollution faced by low-income communities and communities of color. As the scientific community works to better understand exposure and potential health effects of air pollution in the urban environment, I hope local decision makers use this valuable work to inform the best ways to address the known racial and socioeconomic inequities in air pollution exposure in US cities.”
Broadway in Boston, Second Avenue in New York City and 30th Street in Philadelphia also scored among the top polluted stations in the Northeast.
Tyler Durden
Sun, 02/21/2021 – 19:00 - FAA Orders Emergency Inspections Of Boeing 777s After United Engine Failure; Japan Grounds 777 Fleet
FAA Orders Emergency Inspections Of Boeing 777s After United Engine Failure; Japan Grounds 777 Fleet
Another day, another fiasco in the life of Boeing.
Just days after it started to appears that Boeing may finally emerge from its 2-year old debacle when the combination of the 737MAX crash and the covid travel slump cratered Boeing stock when the company reported solid earnings despite guiding to another “unexpected” delay in the rollout of 777X, on Sunday night U.S. aviation regulators ordered emergency inspections of fan blades on the type of engine that failed Saturday over suburban Denver, spraying metal debris over a wide area.
🎞️VIDEO OF ENGINE EXPLOSION
From the Dash Cam of Zach Allen In Broomfield: https://t.co/6Syowuy9yI pic.twitter.com/SVqE55TlPN
— Ryan Greene 📷 (@RyanCBS4) February 20, 2021
https://platform.twitter.com/widgets.js
Wow! Mark Moskovics’ Ring camera caught the moment this piece of debris came crashing down in his neighborhood in Broomfield. You can also hear other pieces coming down off-screen @CBSDenver pic.twitter.com/bnQI4MVGSo
— Conor McCue (@ConorMcCueTV) February 20, 2021
https://platform.twitter.com/widgets.js
FAA Administrator Steve Dickson said in a statement late Sunday that officials ordered the inspections after examining the hollow fan blade that failed, triggering the failure Saturday; the directive covers Boeing 777 airplanes equipped with certain Pratt & Whitney PW4000 engines and it “will likely mean that some airplanes will be removed from service.”
Dickson said the initial review of Saturday’s engine failure shows “inspection interval should be stepped up for the hollow fan blades that are unique to this model of engine, used solely on Boeing 777 airplanes.”
Statement from FAA Administrator Steve Dickson. pic.twitter.com/dGkUYuKNAL
— The FAA ✈️ (@FAANews) February 21, 2021
https://platform.twitter.com/widgets.js
According to Reuters, United Airlines is the only US operator with Boeing 777 airplanes that use the Pratt & Whitney PW4000 engines covered in the directive. Shortly after the FAA directive, United published a statement saying that “out of an abundance of caution” it would ground 24 B777 aircraft powered by P&W 4000 engines.
Meanwhile, Japan’s Civil Aviation Bureau ordered operators of the Boeing 777 involved in Saturday’s incident to halt operations, according to the FAA. This means that ANA Holdings and Japan Airlines will ground Boeing 777 planes they operate indefinitely. ANA operates 19 planes and JAL 13 with Pratt & Whitney’s PW4000 engine that saw a failure with United Airlines plane.
Tyler Durden
Sun, 02/21/2021 – 18:57 - White House Says HFT Tax "Worth Studying" After GameStop Debacle
White House Says HFT Tax “Worth Studying” After GameStop Debacle
In the aftermath of last week’s Robinhood hearing, the only quasi tangible policy proposal that emerged was the vague threat that democrats may consider implementing a transaction tax to slowdown the runaway expansion of HFTs which have bastardized modern market structure. To wit, House Financial Services Chairwoman Maxine Waters said she’s “very interested” and “certainly looking at” a financial transaction tax.
Needless to say, having criticized HFTs since 2009, we have been pushing for just such a “tobin tax” as it is also known, and on Friday we asked – jokingly – “If Dems pass a tobin tax will Virtu and Citadel threaten to uproot and take their microwave towers to Somalia?”
If Dems pass a tobin tax will Virtu and Citadel threaten to uproot and take their microwave towers to Somalia?
— zerohedge (@zerohedge) February 19, 2021
https://platform.twitter.com/widgets.js
But maybe it wasn’t a joke because according to CNN, in a move that could have seriously adverse consequences for artificially inflated markets, the White House supports studying the merits of a financial transaction tax – a move favored by progressives and despised by so called “market makers” on Wall Street who really just use HFT algos to frontrun traditional orderflow- in the wake of the GameStop trading frenzy.
The GameStop situation highlights the serious issues of investor protection and market integrity, a White House spokesperson told CNN Business on Sunday. The potential impact of a financial transaction tax on GameStop-like trading deserves additional study and can be part of a greater evaluation of such a tax for revenue and market stability, the spokesperson said.
For Democrats, most of whom are completely clueless on such arcane concepts as fragmented market structure, lasers and microwave towers at the
New YorkMahwah Stock Exchange, and latency arbitrage, a tobin tax would serve a far more tangible purpose: it would allow them to raise badly needed revenue, while also pretending to care about the health of financial markets.A 0.1% tax on stock, bond and derivative transactions could raise $777 billion for the federal government over a decade, according to a 2018 estimate by the nonpartisan Congressional Budget Office.
More importantly, a 0.1% transaction tax would also put such HFT giants as Virtu and Citadel Securities (if not the Citadel hedge fund) out of business overnight. Which is why such a tax would face fierce opposition from Wall Street and it’s unclear whether moderate Democrats would support it. Opponents warn it would backfire on retail investors by raising costs and making financial markets less liquid.
This means that centrist democrats are on collision course with the progressive socialist fringe, and very soon it will be revealed that whatever Wall Street want, Wall Street gets, even if it means socialists end up with nothing again.
“This approach has a long history of unintended consequences that will penalize workers, pensioners and American families,” a spokesperson for the Coalition to Prevent the Taxing of Retirement Savings told CNN Business. That coalition includes the New York Stock Exchange, Nasdaq and UBS. Citadel Securities and Virtu Financial, two high-speed trading firms that would be hurt by a financial transaction tax, are also members.
“An FTT will increase trading costs for investors — including individuals — undermine the competitiveness of our capital markets and harm the U.S. economy just as we work to recover from this pandemic,” the spokesperson said.
Then again, maybe Wall Street has a right to be worried: the level of populist anger and fury in the aftermath of the Gamestop debacle which has now shifted to nearly two decades of broken market structure made possible by Reg NMS could mean that maybe, just maybe, a transaction tax has a shot at passing: during a heated exchange at a hearing last week, Democratic congresswoman Rashida Tlaib pushed back against Citadel Securities founder Ken Griffin’s concerns about a tax.
“Let’s not gaslight the American people. Y’all will be fine with the tax,” she said. “Our folks are tired of bailing you all out when you screw up.”
One way to see just how serious Wall Street takes the threat is to keep an eye on markets: if a 0.1% tobin tax is truly close, the first thing to go in freefall – before Ken Griffin’s net worth of course – will be the S&P500.
Tyler Durden
Sun, 02/21/2021 – 18:43 - US Electricity Markets 101: All You Need To Know How Electricity Prices Are Set In The US
US Electricity Markets 101: All You Need To Know How Electricity Prices Are Set In The US
By Kathryne Cleary and Karen Palmer, from Resources for the Future
In the United States, how electricity is bought and sold varies by region of the country. While many cities, including Austin, Texas, Los Angeles, California and Nashville, Tennessee are served by municipally owned utilities and some rural areas are served by customer-owned rural cooperatives, the majority of electricity customers in the use are served by utilities that are owned by investors. These investor-owned electric utilities can be either regulated and operate as vertically integrated monopolies with oversight from state public utility commissions, or they can operate in deregulated markets where electric energy prices are set by the market with some federal oversight of wholesale market operations. These regulatory constructs determine how retail and wholesale electricity prices are set and how power plants are procured. This explainer discusses the different types of US electricity markets, how they are regulated, and implications for the future given ongoing changes in the electricity sector.
For definitions of bolded terms and other concepts related to the electricity grid and industry, check out “Electricity 101.”
Traditional Regulated Markets
Prior to the 1990s, most investor-owned electric utilities were regulated and vertically integrated, which means they own electricity generators and power lines (distribution and transmission lines). Today, while many states have abandoned this system in favor of deregulation, utilities that serve about one third of US electricity demand still operate under this construct.
Utilities in these traditionally regulated regions operate as a monopoly in their territories, which means that customers only have the option to buy power from them. In order to keep electricity rates reasonable for customers, state regulators oversee how these electric utilities set electricity prices. Retail electricity prices in these areas are set based on recovering the utility’s operating and investment costs including a “fair” rate of return on those investments (collectively called a revenue requirement). This revenue requirement must be approved by the state’s public utilities commission, which prevents utilities from overcharging customers for electricity.
Regulated utilities must also seek state approval for investments in power plants. Vertically integrated utilities decide which generators to build and then recover the costs of these investments through electricity rates. Because a utility’s investments determine its revenue requirement and thus its potential profit, many state regulators require utilities to demonstrate the necessity of future investments through an integrated resource planning (IRP) process. This process is used for long-term planning and requires each utility to demonstrate how it plans to meet customer electricity demand going forward and to justify any future investments. Notably, under this structure, customers bear the risk of investments because utilities can recover their costs through rates, regardless of how the power plant performs (for example, South Carolina electricity customers paid for nuclear plants that were never constructed).
Even though vertically integrated utilities generate their own electricity, many trade with other utilities during times of need. For example, during certain times of the year it may be cheaper for some utilities to purchase excess hydroelectric power from others rather than generate power using their own facilities. This type of wholesale bilateral trading is especially common in the west and southeast where most utilities are still regulated. These wholesale market transactions are subject to regulation by the Federal Energy Regulatory Commission (FERC).
Deregulated Markets
Beginning in the 1990s, many states in the US decided to deregulate–also known as restructure–their electricity systems to create competition and lower costs. This transition required electric utilities to sell their generating assets and led to the creation of independent energy suppliers that owned generators. Because power lines are a natural monopoly, electric utilities held onto these assets to become transmission and distribution utilities, and those natural monopoly functions continue to be regulated.
The biggest impacts resulting from deregulation were changes to retail and wholesale electricity sales, with the creation of retail customer choice and wholesale markets.
Retail Deregulation: Customer Choice
In deregulated areas, electricity customers have the option of selecting an electric supplier (known as customer choice) rather than being required to purchase electricity from their local electric utility, which introduces competition for retail electricity prices. Since many electric suppliers can exist within a region with customer choice, electric retailers offer competitive prices in order to acquire customers (contracts with generation suppliers typically offer the customer a fixed charge—dollars per kilowatt-hour of power—over a certain amount of time).
For consumers, there are pros and cons to selecting a supplier other than their local utility company. Retail competition can help lower a customer’s electric bill and also allow them to tailor their energy to their preferences, such as selecting a clean energy supplier. However, independent companies often require customers to sign contracts, which can lock them into a set electricity price for multiple years. While fixed rates could be beneficial for some customers, they could also negatively impact others if the rate they agree to ends up being more expensive than the rate set by the local utility. Also, it is important to note that customer choice is only applicable for the generation portion of a customer’s utility bill because transmission and distribution services are still provided by the local utility company, since these services are a natural monopoly (as discussed above). Consequently, only a portion of electric rates in these areas are set competitively.
For customers who choose not to select an independent power supplier, their local utility is still obligated to provide them with electricity that the utility will purchase from generators.
Wholesale Deregulation: Creation of Competitive Wholesale Markets
Unlike regulated states that plan for investment, deregulated states use markets to determine which power plants are necessary for electricity generation. As utilities and competitive retailers in deregulated regions do not generate their own electricity, they must acquire power elsewhere for their customers. Centralized wholesale markets—in which generators sell power and load-serving entities purchase it and sell it to consumers—provide an economically efficient method of doing so (discussed more in the next section). Notably, under this structure, investment risk in power plants falls to the electric suppliers and not to customers, unlike in regulated markets.
Following deregulation, regional transmission organizations (RTOs) replaced utilities as grid operators and became the operators of wholesale markets for electricity. These RTOs have evolved over time.
Regional Transmission Organization Map
Since many RTOs operate wholesale markets that encompass multiple states, they are regulated by FERC (with the exception of ERCOT, the Texas RTO). FERC has oversight of all wholesale power transactions on the two large interconnected grids: the eastern and western interconnects.
While regulated utilities base retail rates on a regulated rate of return on investments (as described above), deregulated retail utilities purchase electricity at market-determined wholesale prices and then sell that electricity to customers at market-determined retail prices, given competition from other retailers. RTOs typically run three kinds of markets that determine wholesale prices for these services: energy markets, capacity markets, and ancillary services markets.
Energy Markets
Energy markets are auctions that are used to coordinate the production of electricity on a day-to-day basis. In an energy market, electric suppliers offer to sell the electricity that their power plants generate for a particular bid price, while load-serving entities (the demand side) bid for that electricity in order to meet their customers’ energy demand. Supply side quantities and bids are ordered in ascending order of offer price. The market “clears” when the amount of electricity offered matches the amount demanded, and generators receive this market price per megawatt hour of power generated.
RTOs typically run two energy markets: the day-ahead and real-time markets. The day-ahead market, which represents about 95 percent of energy transactions, is based on forecasted load for the next day and typically occurs the prior morning in order to allow generators to prepare for operation. The remaining energy market transactions take place in the real-time market, which is typically run once every hour and once every five minutes to account for real-time load changes that must be balanced at all times with supply.
RTOs use energy markets to decide which units to dispatch, or run, and in what order. In the day-ahead market, RTOs compile the list of generators available for next-day dispatch and order them from least expensive to most expensive to operate. For example, since wind plants operate without fuel, they are able to bid $0 into the energy market and get dispatched first. Dispatching units by lowest cost allows the market to meet energy demand at the lowest possible price. During periods of high demand, wholesale prices rise accordingly because more high-cost units need to be dispatched in order to meet electric load.
Base wholesale market prices typically reflect the price for power when it is able to flow freely without transmission constraints across the RTOs territory. When that is not possible, RTOs account for congestion on transmission lines by allowing prices to differ in different locations. As a result, areas with high demand and scarce electric resources typically have higher prices than those with abundant generation relative to load.
Capacity Markets
Electricity retailers are required by the North American Electric Reliability Corporation (NERC), an independent organization that ensures grid reliability, to support enough generating capacity to meet forecasted load plus a reserve margin to maintain grid reliability. Some RTOs run a capacity auction to provide retailers with a way to procure their capacity requirements while also enabling generators to recover fixed costs, i.e. those costs that do not vary with electricity production, that may not be covered in the energy markets alone.
The capacity market auction works as follows: generators set their bid price at an amount equal to the cost of keeping their plant available to operate if needed. Similar to the energy market, these bids are arranged from lowest to highest. Once the bids reach the required quantity that all the retailers collectively must acquire in order to adequately meet expected peak demand plus a reserve margin, the market “clears”, or supply meets demand. At this point, generators that “cleared” the market, or were chosen to provide capacity, all receive the same clearing price which is determined by the bid price of the last generator used to meet demand.
Payments to generators in the capacity market are essentially a reward for that generator being available to operate and provide electricity if needed. Consequently, if generators are unavailable to operate during a time when they are called upon, they may face fees under capacity performance requirements.
Ancillary Services Market
RTOs use the ancillary services market to reward other attributes that are not covered in the energy or capacity markets. Ancillary services typically include functions that help maintain grid frequency and provide short-term backup power if a generating unit stops.
Variation Across Regions
Not all states fall neatly into one of these categories. Participation in RTOs and wholesale markets does not require retail customer choice or divestment of generation assets, and many states have chosen to embrace certain aspects of deregulation while maintaining some parts of regulation.
Some regulated states with vertically integrated utilities still join an RTO for grid services. In West Virginia, for example, utilities are rate-regulated and own their own generation, but the state still participates in wholesale markets in PJM, the mid-Atlantic RTO.
Some states have deregulated their wholesale markets but not retail markets. California, for example, is partially deregulated and formed its own RTO, the California Independent System Operator (CAISO), which operates the grid and wholesale markets. However, the state does not offer individual customer retail electricity choice, although communities can opt out of the local utility through community choice aggregation under which a company hired by the community buys power in wholesale markets for all residents who do not opt out of this arrangement.
The structure of wholesale markets varies across regions as well. For example, ERCOT, the RTO of Texas, does not run a capacity market and instead relies on price signals in the energy market alone to ensure reliability. High prices in the energy market, typically caused by low supply and high demand, provide an economic signal for more generators to enter the market, which can then lower energy prices and provide a signal that enough generating capacity is available to meet demand. CAISO similarly does not run a capacity market and relies on retailers to ensure resource adequacy to meet NERC reliability requirements.
The Future of Electricity Markets
Many states have policies in place that promote a long-term transition to cleaner renewable sources of energy, like wind and solar power. As renewable generators become a larger portion of the grid’s resources, complications may arise with the existing wholesale market structure in deregulated states. Renewable energy sources do not require fuel inputs to run since they use energy from the sun, wind, and other natural sources. Consequently, they are able to offer bids of $0 into the energy and capacity markets. As these sources make up a larger portion of the grid over time, these $0 bids can significantly reduce wholesale prices for energy and capacity and could discourage long-term investment for all resources. As a result, wholesale markets may need to adapt in the future to better accommodate different types of resources.
Tyler Durden
Sun, 02/21/2021 – 18:35 - Dem Rep. Ro Khanna: 'We Don't Want' Small Businesses That Can't Pay $15 Minimum Wage
Dem Rep. Ro Khanna: ‘We Don’t Want’ Small Businesses That Can’t Pay $15 Minimum Wage
Trying to live the American dream but can’t pay $15 an hour minimum wage? Democratic Rep. Ro Khanna of California doesn’t think your business should exist.
During a Sunday discussion on CNN‘s “Inside Politics,” Khanna said that “low-wage businesses” who can’t pay $15 an hour are “underpaying employees” and suggested that “If workers were actually getting paid for the value they were creating, it would be up to $23.”
As Breitbart notes, however, the nonpartisan Congressional Budget Office predicted raising the federal minimum wage to $15 an hour by 2025 would cost 1.4 million Americans their jobs over the next four years, while reducing the number in poverty by 0.9 million. Specifically:
- The cumulative budget deficit over the 2021–2031 period would increase by $54 billion
- From 2021 to 2031, the cumulative pay of affected people would increase, on net, by $333 billion—an increased labor cost for firms considerably larger than the net effect on the budget deficit during that period.
- That net increase would result from higher pay ($509 billion) for people who were employed at higher hourly wages under the bill, offset by lower pay ($175 billion) because of reduced employment under the bill.
- Employment would be reduced by 1.4 million workers, or 0.9 percent
- The number of people in poverty would be reduced by 0.9 million
Fast food ordering kiosk companies and burger-flipping robot manufacturers must be salivating right now…
Watch (relevant portion at ~1:30):
Transcript via Breitbart:
Anchor Abby Phillip: “I know that you feel very strongly like many progressives about the minimum wage issue. Right now, at the same time, businesses, both large and small, are struggling in this pandemic economy, more than 9 million jobs have been lost in the last year, and they still aren’t back, and the problem is particularly acute in industries like retail and foodservice, which are more likely to pay minimum wage. I think the question that a lot of Republicans are posing and perhaps some moderate Democrats is timing. Is now the right time to increase it to $15? I should say the bill has stages, of course, but immediately it would go up about 30% right now. Is now the right time to do that?”
Khanna: “Abby, it’s absolutely the right time to give working Americans a raise. Let’s look at the facts. Amazon raised their wage to $15 nationally, not regionally. They have more jobs today. It didn’t hurt job creation or business. Target followed. They also did it nationally, more jobs.”
Phillip: “Large businesses like Amazon and McDonald’s, for example, can and perhaps should pay more, but I’m wondering what is your plan for smaller businesses? How does this, in your view, affect mom and pop businesses who are just struggling to keep their doors open, keep workers on pate roll right now?”
Khanna: “Well, they shouldn’t be doing it by paying people low wages. We don’t want low-wage businesses. Most successful small businesses can pay a fair wage. If you look at the minimum wage, it increased with worker productivity until 1968, and that relationship was severed. If workers were actually getting paid for the value they were creating, it would be up to $23. I love small businesses, I’m all for it, but I don’t want small businesses that are underpaying employees. It’s fair for people to be making what they’re producing. I think $15 is very reasonable in this country.”
* * *
Tyler Durden
Sun, 02/21/2021 – 18:10 - Are Yields About To Blast-Off: Here Are The 3 Things To Watch
Are Yields About To Blast-Off: Here Are The 3 Things To Watch
For many months, traders and strategists have been warning – and dreading – a sharp spike higher in both nominal yields and real rates, and last week they finally got it with Real Yields finally surging the most since March…
… and joining the historic post-covid rally in Breakevens…
… sent 10Y yields to 1.36% the highest level since the pandemic and just 14bps away from the 1.50% level that Nomura predicted would hammer stocks as systematic, quant and CTA funds start actively shorting 10Y futures.
And, with Treasury yields finally busting out of long-held ranges to levels last seen in the early days of the pandemic Bloomberg writes today that “the obstacles to higher yields in the world’s biggest debt market are slowly melting away” a theme echoed by Morgan Stanley which writes in its Sunday Start that there are three catalysts for a reflationary overshoot loom over the next month: i) Falling COVID-19 cases/hospitalisations; ii) Passage of US fiscal stimulus; and iii) Accelerating global growth.
Of course, the question is how much higher, and will growth names in particular, or the broader market in general, get hammered?
“The threat of higher borrowing costs is already looming over risky assets, from U.S. shares to emerging-market securities. So far, the pace of increase doesn’t appear to be alarming Federal Reserve officials, but traders will be monitoring Chair Jerome Powell’s testimony to Congress next week for any sign that he’s troubled by steeper long-term borrowing costs. Barring any such hint, the market is left to ponder the extent to which the reflation trade will drive up yields.”
“Before the pandemic, the 10-year yield was trading at about 1.6%, and if we are going to get back to what the economic situation was – give or take – back then, then there’s no reason why yields should be lower than that,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. Stanley, together with many of his peers, forecasts the 10-year yield will end the year at 2%, a level last seen in August 2019.
While the biggest driver of rising nominal yields in the past year has been the surge in breakevens – buoyed by rising commodity prices and, more recently, surging CPI, in the last week the market has also started watching real yields, which strip out inflation and are seen as a purer read on the growth outlook. As we showed on Friday, real rates reached an important milestone, with 30Y real yields rising above zero for the first time since June.
This, as Bloomberg’s Liz Capo McCormick writes, “is potentially an issue for risky assets as real rates are viewed as a gauge of companies’ capital costs.”
Putting the move in context, the median forecast in a Bloomberg survey is for 10-year Treasury yields to reach 1.45% in the fourth quarter (although the average is well higher due to several notably higher outlier predictions). Zachary Griffiths of Wells Fargo sees the rate between 1.3% and 1.5% by mid-year, with the low end possible if vaccine distribution falters or additional Covid-19 challenges surface.
To be sure, not everyone believes that the surge in yields will be a one way street. In the past two months, the record net short interest in Treasury futures and options across the leverage fund community has fizzled somewhat…
… while several prominent big bond bulls still expecting lower yields. Robert Tipp, chief investment strategist at PGIM Fixed Income warns the 10-year yield could sink back to around 1% by year-end. He also said that inflation expectations have risen too far (although if we are indeed at the start of a commodity supercycle, inflation expectations will rise much, much higher) and markets may also be ignoring that the economic boost from government stimulus will eventually fade, he says.
Here it is also worth pointing out that any time 30Y yields have sold off as aggressively as they did this week in the post-Covid era, they have always retraced much if not all of the move.
In any case, as Bloomberg further notes, bears have to watch various other bond market dynamics starting with international investors, who may step in to buy at some point, especially given currency-hedged returns have jumped, making it more attractive for Japanese investors to now buy US paper than, say, Italian debt. There is always the nuclear wildcard: any violent surge in long-term borrowing costs that tightens financial conditions or sparks illiquidity, would almost certainly see the Fed intervene and either boost asset purchases or implement Yield Curve Controls (which is essentially the same).
To be sure, so far there has been little hint of concern from the Fed (although the Fed is notorious at being dead wrong about everything, and then reacting to market moves long after they should have acted proactively). Take the always clueless New York Fed President John Williams who on Friday said rising yields show optimism toward the recovery.
Others echoed Williams’ view: “The reflation trade is going to stay,” said Chris McReynolds, head of U.S. inflation trading at Barclays Plc. “We’ll of course continue to see volatility around inflation expectations and actual inflation prints themselves. But you have to take the Fed completely at their word, that they are going to be behind the curve” in tightening policy even as the economy and inflation pick up.
There’s a clear market signal backing the view that the Fed is ominously behind the curve: as Capo McCormick writes, the sharp rise in the ratio between the prices of copper and gold, which has a solid track record predicting yields. The relationship typically works because copper is a cyclical commodity, and gold is a haven that’s sensitive to inflation and rates. A quick look at the chart below suggests that 10Y yields should be at whopping 3.0%!
In a Friday note from Morgan Stanley’s Andrew Sheets, the cross-asset strategist writes that the debate of “how much of a risk are higher rates” has been at the top of investors’ minds, and will remain so, although he is not forecasting a major rate move because in falling back to a traditional Wall Street justification, Sheets writes that “higher yields and breakevens suggests better growth, providing a potential offset of a higher discount rate. In Gordon Growth Model terms, better growth can allow investors to imagine ‘g’ rising faster than ‘r’.”
It would be one thing if our global macro strategists thought that our above-consensus growth forecasts would lead to a major overshoot in yields. But they don’t. They forecast the US 10yr at 1.45% by year-end. That’s higher from current levels, but not wildly so, as they think that ample liquidity and ‘cash on the sidelines’ will pull in bond demand at (modestly) higher yields.
That sanguine outlook certainly looks out of step with the recent rise in market fears about higher yields as demonstrated by the spike in the MOVE bond volatility index, which after trading near all-time lows has broken out in the past week.
Amid all these conflicting signals for where bond yields go next, Morgan Stanley listed 5 signposts to follow that would provide some early indication if “a much larger move in yields or Fed policy was afoot.”
- The inflation curve: One catalyst for this could be a scenario where inflation rose in a larger, sustained way. At the moment, this is not what US inflation expectations suggest. Markets expect (CPI)inflation to run at ~2.3%Y for the next five years, but 2.1%Y for the next 30 years. This would seem ideal from the Fed’s perspective; inflation rising in the near term, and then moderating. It is the opposite of a scenario where inflation spins out of control. This inversion is ‘unusual’, i.e., it’s not simply a function of quirks in the usual market pricing.
- Rate volatility: Expected volatility in interest rate markets also remains historically low (even after the recent rise show above in the MOVE chart). For non-rates investors, two reasonable questions are “will inflation get out of hand?” and “will rates get unusually volatile?” For the time being, the answer to both appears to be “no.”
- Investor fund flows: A third channel of risk would be higher yields causing investors to sell fixed income holdings, driving a cycle where weakness brings more weakness. So far, however, ETF fund flow data suggest little such activity. Focusing on US aggregate bond and US investment grade bond ETFs, cumulative flows remain near the highs.
Of the three list above, the first and last are slow-moving indicator, leaving the aptly named MOVE index as the best real-time measure of potential runaway yields.
So for all those concerned about a liquidation keep a close eye on the MOVE: should the current spike accelerate higher, not only are even higher yields coming, but should the 1.50% barrier be breached, the selloff will then quickly shift over into stocks.
Tyler Durden
Sun, 02/21/2021 – 17:45 - The inflation curve: One catalyst for this could be a scenario where inflation rose in a larger, sustained way. At the moment, this is not what US inflation expectations suggest. Markets expect (CPI)inflation to run at ~2.3%Y for the next five years, but 2.1%Y for the next 30 years. This would seem ideal from the Fed’s perspective; inflation rising in the near term, and then moderating. It is the opposite of a scenario where inflation spins out of control. This inversion is ‘unusual’, i.e., it’s not simply a function of quirks in the usual market pricing.
Digest powered by RSS Digest
Saving...
