- The Kagans Are Back; Wars To Follow
Authored by Robert Parry via The Strategic Culture Foundation,
The Kagan family, America’s neoconservative aristocracy, has reemerged having recovered from the letdown over not gaining its expected influence from the election of Hillary Clinton and from its loss of official power at the start of the Trump presidency.
Former Assistant Secretary of State for European Affairs Victoria Nuland, who pushed for the Ukraine coup and helped pick the post-coup leaders. (She is the wife of neocon theorist Robert Kagan.)
Back pontificating on prominent op-ed pages, the Family Kagan now is pushing for an expanded U.S. military invasion of Syria and baiting Republicans for not joining more enthusiastically in the anti-Russian witch hunt over Moscow’s alleged help in electing Donald Trump.
In a Washington Post op-ed on March 7, Robert Kagan, a co-founder of the Project for the New American Century and a key architect of the Iraq War, jabbed at Republicans for serving as “Russia’s accomplices after the fact” by not investigating more aggressively.
Then, Frederick Kagan, director of the Critical Threats Project at the neocon American Enterprise Institute, and his wife, Kimberly Kagan, president of her own think tank, Institute for the Study of War, touted the idea of a bigger U.S. invasion of Syria in a Wall Street Journal op-ed on March 15.
Yet, as much standing as the Kagans retain in Official Washington’s world of think tanks and op-ed placements, they remain mostly outside the new Trump-era power centers looking in, although they seem to have detected a door being forced open.
Still, a year ago, their prospects looked much brighter. They could pick from a large field of neocon-oriented Republican presidential contenders or – like Robert Kagan – they could support the establishment Democratic candidate, Hillary Clinton, whose “liberal interventionism” matched closely with neoconservatism, differing only slightly in the rationalizations used for justifying wars and more wars.
There was also hope that a President Hillary Clinton would recognize how sympatico the liberal hawks and the neocons were by promoting Robert Kagan’s neocon wife, Victoria Nuland, from Assistant Secretary of State for European Affairs to Secretary of State.
Then, there would have been a powerful momentum for both increasing the U.S. military intervention in Syria and escalating the New Cold War with Russia, putting “regime change” back on the agenda for those two countries. So, early last year, the possibilities seemed endless for the Family Kagan to flex their muscles and make lots of money.
A Family Business
As I noted two years ago in an article entitled “A Family Business of Perpetual War”: “Neoconservative pundit Robert Kagan and his wife, Assistant Secretary of State Victoria Nuland, run a remarkable family business: she has sparked a hot war in Ukraine and helped launch Cold War II with Russia and he steps in to demand that Congress jack up military spending so America can meet these new security threats.
Prominent neocon intellectual Robert Kagan. (Photo credit: Mariusz Kubik, http://www.mariuszkubik.pl)
“This extraordinary husband-and-wife duo makes quite a one-two punch for the Military-Industrial Complex, an inside-outside team that creates the need for more military spending, applies political pressure to ensure higher appropriations, and watches as thankful weapons manufacturers lavish grants on like-minded hawkish Washington think tanks.
“Not only does the broader community of neoconservatives stand to benefit but so do other members of the Kagan clan, including Robert’s brother Frederick at the American Enterprise Institute and his wife Kimberly, who runs her own shop called the Institute for the Study of War.”
But things didn’t quite turn out as the Kagans had drawn them up. The neocon Republicans stumbled through the GOP primaries losing out to Donald Trump and then – after Hillary Clinton muscled aside Sen. Bernie Sanders to claim the Democratic nomination – she fumbled away the general election to Trump.
After his surprising victory, Trump – for all his many shortcomings – recognized that the neocons were not his friends and mostly left them out in the cold. Nuland not only lost her politically appointed job as Assistant Secretary but resigned from the Foreign Service, too.
With Trump in the White House, Official Washington’s neocon-dominated foreign policy establishment was down but far from out. The neocons were tossed a lifeline by Democrats and liberals who detested Trump so much that they were happy to pick up Nuland’s fallen banner of the New Cold War with Russia. As part of a dubious scheme to drive Trump from office, Democrats and liberals hyped evidence-free allegations that Russia had colluded with Trump’s team to rig the U.S. election.
New York Times columnist Thomas L. Friedman spoke for many of this group when he compared Russia’s alleged “meddling” to Japan’s bombing of Pearl Harbor and Al Qaeda’s 9/11 terror attacks.
On MSNBC’s “Morning Joe” show, Friedman demanded that the Russia hacking allegations be treated as a casus belli: “That was a 9/11 scale event. They attacked the core of our democracy. That was a Pearl Harbor scale event.” Both Pearl Harbor and 9/11 led to wars.
So, with many liberals blinded by their hatred of Trump, the path was open for neocons to reassert themselves.
Baiting Republicans
Robert Kagan took to the high-profile op-ed page of The Washington Post to bait key Republicans, such as Rep. Devin Nunes, chairman of the House Intelligence Committee who was pictured above the Post article and its headline, “Running interference for Russia.”
Gen. David Petraeus posing before the U.S. Capitol with Kimberly Kagan, founder and president of the Institute for the Study of War. (Photo credit: ISW’s 2011 Annual Report)
Kagan wrote: “It would have been impossible to imagine a year ago that the Republican Party’s leaders would be effectively serving as enablers of Russian interference in this country’s political system. Yet, astonishingly, that is the role the Republican Party is playing.”
Kagan then reprised Official Washington’s groupthink that accepted without skepticism the claims from President Obama’s outgoing intelligence chiefs that Russia had “hacked” Democratic emails and released them via WikiLeaks to embarrass the Clinton campaign.
Though Obama’s intelligence officials offered no verifiable evidence to support the claims – and WikiLeaks denied getting the two batches of emails from the Russians – the allegations were widely accepted across Official Washington as grounds for discrediting Trump and possibly seeking his removal from office.
Ignoring the political conflict of interest for Obama’s appointees, Kagan judged that “given the significance of this particular finding [about Russian meddling], the evidence must be compelling” and justified “a serious, wide-ranging and open investigation.”
But Kagan also must have recognized the potential for the neocons to claw their way back to power behind the smokescreen of a New Cold War with Russia.
He declared: “The most important question concerns Russia’s ability to manipulate U.S. elections. That is not a political issue. It is a national security issue. If the Russian government did interfere in the United States’ electoral processes last year, then it has the capacity to do so in every election going forward. This is a powerful and dangerous weapon, more than warships or tanks or bombers.
“Neither Russia nor any potential adversary has the power to damage the U.S. political system with weapons of war. But by creating doubts about the validity, integrity and reliability of U.S. elections, it can shake that system to its foundations.”
A Different Reality
As alarmist as Kagan’s op-ed was, the reality was far different. Even if the Russians did hack the Democratic emails and somehow slipped the information to WikiLeaks – an unsubstantiated and disputed contention – those two rounds of email disclosures were not that significant to the election’s outcome.
Former Secretary of State Hillary Clinton and Sen. Bernie Sanders. (NBC photo)
Hillary Clinton blamed her surprise defeat on FBI Director James Comey briefly reopening the investigation into her use of a private email server while serving as Secretary of State.
Further, by all accounts, the WikiLeaks-released emails were real and revealed wrongdoing by leading Democrats, such as the Democratic National Committee’s tilting of the primaries against Sen. Bernie Sanders and in favor of Clinton. The emails of Clinton campaign chairman John Podesta disclosed the contents of Clinton’s paid speeches to Wall Street, which she was trying to hide from voters, as well as some pay-to-play features of the Clinton Foundation.
In other words, the WikiLeaks’ releases helped inform American voters about abuses to the U.S. democratic process. The emails were not “disinformation” or “fake news.” They were real news.
A similar disclosure occurred both before the election and this week when someone leaked details about Trump’s tax returns, which are protected by law. However, except for the Trump camp, almost no one thought that this illegal act of releasing a citizen’s tax returns was somehow a threat to American democracy.
The general feeling was that Americans have a right to know such details about someone seeking the White House. I agree, but doesn’t it equally follow that we had a right to know about the DNC abusing its power to grease the skids for Clinton’s nomination, about the contents of Clinton’s speeches to Wall Street bankers, and about foreign governments seeking pay-to-play influence by contributing to the Clinton Foundation?
Yet, because Obama’s political appointees in the U.S. intelligence community “assess” that Russia was the source of the WikiLeaks emails, the assault on U.S. democracy is a reason for World War III.
More Loose Talk
But Kagan was not satisfied with unsubstantiated accusations regarding Russia undermining U.S. democracy. He asserted as “fact” – although again without presenting evidence – that Russia is “interfering in the coming elections in France and Germany, and it has already interfered in Italy’s recent referendum and in numerous other elections across Europe. Russia is deploying this weapon against as many democracies as it can to sap public confidence in democratic institutions.”
U.S. Secretary of State John Kerry, flanked by Assistant Secretary of State for European and Eurasian Affairs Victoria “Toria” Nuland, addresses Russian President Vladimir Putin in a meeting at the Kremlin in Moscow, Russia, on July 14, 2016. [State Department Photo]
There’s been a lot of handwringing in Official Washington and across the Mainstream Media about the “post-truth” era, but these supposed avatars for truth are as guilty as anyone, acting as if constantly repeating a fact-free claim is the same as proving it.
But it’s clear what Kagan and other neocons have in mind, an escalation of hostilities with Russia and a substantial increase in spending on U.S. military hardware and on Western propaganda to “counter” what is deemed “Russian propaganda.”
Kagan recognizes that he already has many key Democrats and liberals on his side. So he is taking aim at Republicans to force them to join in the full-throated Russia-bashing, writing:
“But it is the Republicans who are covering up. The party’s current leader, the president, questions the intelligence community’s findings, motives and integrity. Republican leaders in Congress have opposed the creation of any special investigating committee, either inside or outside Congress. They have insisted that inquiries be conducted by the two intelligence committees.
“Yet the Republican chairman of the committee in the House has indicated that he sees no great urgency to the investigation and has even questioned the seriousness and validity of the accusations. The Republican chairman of the committee in the Senate has approached the task grudgingly.
“The result is that the investigations seem destined to move slowly, produce little information and provide even less to the public. It is hard not to conclude that this is precisely the intent of the Republican Party’s leadership, both in the White House and Congress. …
“When Republicans stand in the way of thorough, open and immediate investigations, they become Russia’s accomplices after the fact.”
Lying with the Neocons
Many Democrats and liberals may find it encouraging that a leading neocon who helped pave the road to war in Iraq is now by their side in running down Republicans for not enthusiastically joining the latest Russian witch hunt. But they also might pause to ask themselves how they let their hatred of Trump get them into an alliance with the neocons.
Russian President Vladimir Putin, following his address to the UN General Assembly on Sept. 28, 2015. (UN Photo)
On Wednesday in The Wall Street Journal, Robert Kagan’s brother Frederick and his wife Kimberly dropped the other shoe, laying out the neocons’ long-held dream of a full-scale U.S. invasion of Syria, a project that was put on hold in 2004 because of U.S. military reversals in Iraq.
But the neocons have long lusted for “regime change” in Syria and were not satisfied with Obama’s arming of anti-government rebels and the limited infiltration of U.S. Special Forces into northern Syria to assist in the retaking of the Islamic State’s “capital” of Raqqa.
In the Journal op-ed, Frederick and Kimberly Kagan call for opening a new military front in southeastern Syria:
“American military forces will be necessary. But the U.S. can recruit new Sunni Arab partners by fighting alongside them in their land. The goal in the beginning must be against ISIS because it controls the last areas in Syria where the U.S. can reasonably hope to find Sunni allies not yet under the influence of al Qaeda. But the aim after evicting ISIS must be to raise a Sunni Arab army that can ultimately defeat al Qaeda and help negotiate a settlement of the war.
“The U.S. will have to pressure the Assad regime, Iran and Russia to end the conflict on terms that the Sunni Arabs will accept. That will be easier to do with the independence and leverage of a secure base inside Syria. … President Trump should break through the flawed logic and poor planning that he inherited from his predecessor. He can transform this struggle, but only by transforming America’s approach to it.”
A New Scheme on Syria
In other words, the neocons are back to their clever word games and their strategic maneuverings to entice the U.S. military into a “regime change” project in Syria.
The neocons thought they had almost pulled off that goal by pinning a mysterious sarin gas attack outside Damascus on Aug. 21, 2013, on the Syrian government and mousetrapping Obama into launching a major U.S. air assault on the Syrian military.
But Russian President Vladimir Putin stepped in to arrange for Syrian President Bashar al-Assad to surrender all his chemical weapons even as Assad continued to deny any role in the sarin attack.
Putin’s interference in thwarting the neocons’ dream of a Syrian “regime change” war moved Putin to the top of their enemies’ list. Soon key neocons, such as National Endowment for Democracy president Carl Gershman, were taking aim at Ukraine, which Gershman deemed “the biggest prize” and a steppingstone toward eventually ousting Putin in Moscow.
It fell to Assistant Secretary Victoria “Toria” Nuland to oversee the “regime change” in Ukraine. She was caught on an unsecured phone line in late January or early February 2014 discussing with U.S. Ambassador to Ukraine Geoffrey Pyatt how “to glue” or “to midwife” a change in Ukraine’s elected government of President Viktor Yanukovych.
Several weeks later, neo-Nazi and ultranationalist street fighters spearheaded a violent assault on government buildings forcing Yanukovych and other officials to flee for their lives, with the U.S. government quickly hailing the coup regime as “legitimate.”
But the Ukraine putsch led to the secession of Crimea and a bloody civil war in eastern Ukraine with ethnic Russians, events that the State Department and the mainstream Western media deemed “Russian aggression” or a “Russian invasion.”
So, by the last years of the Obama administration, the stage was set for the neocons and the Family Kagan to lead the next stage of the strategy of cornering Russia and instituting a “regime change” in Syria.
All that was needed was for Hillary Clinton to be elected president. But these best-laid plans surprisingly went astray. Despite his overall unfitness for the presidency, Trump defeated Clinton, a bitter disappointment for the neocons and their liberal interventionist sidekicks.
Yet, the so-called “#Resistance” to Trump’s presidency and President Obama’s unprecedented use of his intelligence agencies to paint Trump as a Russian “Manchurian candidate” gave new hope to the neocons and their agenda.
It has taken them a few months to reorganize and regroup but they now see hope in pressuring Trump so hard regarding Russia that he will have little choice but to buy into their belligerent schemes.
As often is the case, the Family Kagan has charted the course of action – batter Republicans into joining the all-out Russia-bashing and then persuade a softened Trump to launch a full-scale invasion of Syria. In this endeavor, the Kagans have Democrats and liberals as the foot soldiers.
- Paul Craig Roberts Exposes "The Conspiracy Against President Trump"
Authored by Paul Craig Roberts,
Listening yesterday to the broadcast of testimony by FBI Director Comey and National Security Agency Director Admiral Michael Rogers before the House Intelligence Committee (an oxymoron) made it clear that the Democrats, Comey, and Rogers intend conflict with Russia.
The Republicans, for the most part, were interested to know how security leaks targeted at Trump Republicans came from meetings at which only the CIA Director, NSA Director, and FBI director were present. Of course, they did not get an answer, which shows how powerless congressional oversight committees are. Comey repeatedly said that he could not tell the committee anything, because it would confirm that a press leak was true. But, he said, speaking generally and of no specific leak, most leaks come from “someone who heard something” and passes it on to the media, which also explains the inaccuracy of some leaks. In other words, don’t blame us.
The Democrats were out in force to demonize Russia, Putin, and everyone, especially Trump Republicans, who speaks to a Russian even if the person is still a private citizen, as was Gen. Flynn when he recommended to the Russian ambassador that Russia not respond in kind to President Obama’s expulsion of Russian diplomats over Christmas.
The Democrats bestowed yet another demonic title on Putin. In addition to being “the new Hitler,” a “thug,” and a “Mafia don,” today Putin became a “tarantula in the center of the spy web.”
The Democrats’ position was that Flynn, by discouraging a Russian tit for tat, had interfered with the Obama regime’s policy of worsening relations between the US and Russia. Some Democrats saw this as treason. Others saw it as proof that Flynn and Trump are in Putin’s pocket, and still others see it as even worse.
The Democrats were also very concerned about lobbyists, if they be Republican, working for Russian interests, including Tillerson, the Secretary of State. The fact that every country employs lobbyists and that the lobbyists don’t always register as foreign agents, such as Israel’s lobbyists, or if news reports at the time were correct, neocon Richard Perle who represented Turkey in Washington.
Democrats were also after Gen. Flynn for saying that he had not received money from the Russian government. Flynn received a fee for attending the 10th Anniversary celebration of RT in Moscow. Is RT, a news organization, the Russian government? Its budget is supported by the Russian government, but how does this differ from the US government’s support of the budgets of National Public Radio, Radio Free Europe/Radio Liberty, Voice of America? Does this mean that everyone who gives an interview to NPR, Radio Liberty, and VOA is an American agent in the pocket of the US president? If you attend a function of one of these organizations, does it make you an “American agent/dupe”? Will there be a list of these people?
What the Democrats tried to do yesterday was to criminalize everyone who works for better relations between the US and Russia. To be for peace between the nuclear powers is to be a Russian agent and to be put on a list. The Democrats insisted that Russia was an enemy out to get us, and the Democrats had no difficulty getting Comey and Rogers, both Obama appointees, to agree.
Comey and Rogers said that Russia was the main threat to the US, was working against our interests, and intends to harm us. Harming us includes opposing US hegemony and unilateralism. In other words, if the Russian government acts in the interests of Russia, the Russian government is harming the US. From the testimony it clearly emerged that any kind of opposition to anything Washington does is against American interests.
Both Comey and Rogers declared, falsely, that Russia had invaded Ukraine and seized Crimea by force. If Comey and Rogers are so poorly informed that they believe this, they are unfit for office. Crimea has been a part of Russia for 300 years. The population is almost entirely Russian. When the Soviet Union collapsed and Washington broke it apart, the Ukraine became independent for the first time in history. Crimea, which had been transferred by Khrushchev in 1954 from the Russian Soviet Socialist Republic to the Ukrainian Soviet Socialist Republic, was included in the transfer on the condition that Russia had a long term lease on the naval base in Crimea.
When Washington’s coup overthrew the democratically elected government in Ukraine, the Russian populations in Crimea, and in the new republics of Luhansk and Donetsk, were attacked and threatened by the neo-nazi elements in eastern Ukraine that had fought for Hitler against the Soviet Union. The populations of these areas voted overwhelmingly to reunite with Russia, from whence they had come. The votes were fair and open. As Crimea is the Russian Navy’s Black Sea base, Crimea was already occupied by Russian forces. For Comey and Rogers to call this an “invasion” displays either ignorance or a lack of integrity.
Indeed, the lack of integrity of the FBI, NSA, CIA, and Obama regime is evidenced by the sustained campaign of lies, distortions, and targeted “news leaks,” that is, stories planted on the presstitutes by the intelligence services about Russian interference in the presidential election. It is all about protecting the massive military/security budget and powers. Trump threatened both the budget and the power when he declared that his policy would be to normalize relations with Russia. If relations are normalized, the carefully orchestrated “Russian threat” disappears. The intelligence services are not willing for this to happen. The US intelligence services prefer the risk of nuclear Armageddon to a budget cut.
The Democrats are probably not sufficiently intelligent to understand that they are fanning the flames of war between nuclear powers. The Democrats are desperate to find someone on whom to pin their loss of the election. Moreover, by pinning it on a conspiracy between Trump and Putin, they hope to remove Trump from office. Although Pence, who is a Russophobe, is acceptable to the military/security complex, the Democrats have hopes of clearing out Pence as well, as his election resulted from the alleged conspiracy, and reinstalling themselves in the White House.
Americans need to understand that the political competition between the Democrats and Republicans is over which party gets to collect the money for being the whore for the One Percent. Traditionally, the party in the White House gets most of the money, so that is where both parties want to be.
Michael Morell, a supporter of Hillary Clinton and President Obama’s last CIA director in an acting capacity, who was slated to become CIA director under Hillary, said, “On the question of the Trump campaign conspiring with the Russians, there is smoke, but there is no fire, at all. There’s no little campfire, there’s no little candle, there’s no spark. And there’s a lot of people looking for it.”
Morell does believe that it was the Russians who hacked Hillary’s incriminating emails but not in collusion with Trump, although the evidence is that they were a leak from inside the Democratic National Committee by disaffected supporters of Bernie Sanders.
Obama’s Director of National Intelligence James Clapper said on Meet the Press on March 5 that he had seen no evidence of a Putin-Trump conspiracy when he left office on January 20.
Listening to Comey and Rogers yesterday, if they are not working against President Trump, what would classify as working against Trump? Trump supporters ask why Trump doesn’t fire these two men who are working to block a reduction in the dangerous tensions between Washington and Russia. Are the Democrats, Comey, Rogers, the CIA and their media whores so stupid that they don’t understand what it means when the President of Russia says, “the Americans have destroyed our trust in them?”
Trump doesn’t fire Comey and Rogers, because he cannot fire them. If he fires them, the Democrats and presstitutes will explain the firings as proof that Trump is a Russian agent and is covering up his treason by removing those investigating it.
Trump is trying to use Twitter to respond to the orchestrated media assault against him and to achieve some organization among his supporters, the working class that elected him. However, Trump cannot even count on the Republican Party. Most Republicans are also dependent on political contributions from the military/security complex, and Republicans know that the intelligence agencies have all the dirt on them. To fight for Trump is to expose themselves.
It is undeniable that the CIA controls the media, both in Europe and in the US. Udo Ulfkotte’s book, Gekauftge Journalisten, exposed the CIA’s hold on European journalists when it was published in Germany in 2014. An English language edition, Journalists for Hire: How the CIA Buys the News, is due out in May. In the meantime Joel Whitney’s book, Finks: How the C.I.A. Tricked the World’s Best Writers, suffices to establish that America’s most respected journalists drank the CIA’s Kool-Aid “and thought they were saving freedom” by serving as propagandists. http://www.truthdig.com/avbooth/item/joel_whitney_cia_propaganda_cold_war_scheer_intelligence_20170317
People in the West need to understand that if the news they receive bears on the interests of the US military/security complex, the news is scripted by the CIA. The CIA serves its interests, not the interests of the American people or the interests of peace.
- Ivanka Trump Gets West Wing Office, Access To 'Classified Information'
Despite holding no official title, President Trump's 35-year-old daughter Ivanka is reportedly getting an office (and access to classified information and a government-issued phone) in the White House West Wing, stepping up her highly visible role in helping advise her father.
Reuters reports that a White House official on Monday confirmed reports that Trump's daughter would be getting her own West Wing space, as well as access to classified information and a government-issued phone.
She is not expected to have an official title and will not be paid a salary.
Ivanka Trump will be joining her husband, Jared Kushner, who is a chief adviser to the president and is a regular presence at his father-in-law's side.
When Kushner's job was announced earlier this year, aides said Ivanka would not take on a role in her father's White House but would focus on settling her family in Washington.
Since then, she has been a frequent behind-the-scenes adviser. Last Friday, she sat next to visiting German Chancellor Angela Merkel when Merkel visited the White House.
We are sure this 'access to classified information' will become a brief media narrative (all eyes still on Gorsuch and Comey) as Democrats raise 'conflict of interest' concerns, even though Ivanka has divested her 'Ivanka Trump' brand into a trust.
- South Korea Says North Korea Conducted Unsuccessful Missile Launches, US Officials Aware
Just hours after US military officials warned of a North Korea missile launch, Japanese media is reporting that Japanese officials said North Korea may have launched four missiles from the vicinity of Eastern Motoyama. Kyodo additionally reports that the missile launch may have failed, citing unnamed government officials.
- *SUGA RESPONDS TO REPORTS OF NORTH KOREA LAUNCHING MISSILES
- *SUGA: JAPAN HASN’T CONFIRMED MISSILES FLYING
- *N. KOREA MISSILE LAUNCH MAY HAVE FAILED: KYODO
- *KYODO SAYS DETAILS INCLUDING TYPE OF N. KOREA MISSILE UNKNOWN
Yonhap news is now reporting that:
- *S. KOREA SAYS N. KOREA MISSILE DIDN'T LAUNCH PROPERLY: YONHAP
- *YONHAP NEWS CITES UNIDENTIFIED S. KOREA MILITARY OFFICIAL
- *S. KOREA, U.S. AWARE OF N. KOREA-RELATED SITUATION: YONHAP
North Korea test-fired a salvo of missiles Wednesday, but it ended in failure, South Korea's military said. "South Korea and the United States are aware of the related issue," the defense ministry said in a one-sentence statement.
Bloomberg's Michael McDonough provides this excellent timeline of North Korean events and the South Korean Won…
* * *
As we detailed earlier, on the same day as Kim Jong Un threatens the US with "first-strike' nuclear ICBM and unveils propaganda showing the destruction of American forces, AP reports U.S. military officials expect another North Korean missile launch in the next several days.
Earlier today a Pyongyang envoy stated that North Korea will pursue "acceleration" of its nuclear and missile programs. This includes developing a "pre-emptive first strike capability" and an inter-continental ballistic missile, according to Choe Myong Nam, deputy ambassador at the DPRK (North Korean) mission to the United Nations in Geneva.
The latest development follows a previous report also from Reuters, in which it said the Trump administration is considering sweeping sanctions as part of a broad review of measures to counter North Korea's nuclear and missile threat. "I think this is stemming from the visit by the Secretary of State (Rex Tillerson) to Japan, South Korea and China…We of course are not afraid of any act like that," Choe told Reuters.
"Even prohibition of the international transactions system, the global financial system, this kind of thing is part of their system that will not frighten us or make any difference." He called existing sanctions "heinous and inhumane".
Choe said his country wants a forum set up to examine the "legality and legitimacy of the sanctions regime" and denounced joint annual military exercises currently being carried out by the United States and South Korea on the divided peninsula and criticized remarks by Tillerson during his talks with regional allies last week.
"All he was talking about is for the United States to take military actions on DPRK (the Democratic People's Republic of Korea," Choe said.
Additionally, North Korea rejects claims by Washington and Seoul that the military drills taking place at this moment are defensive. They involve strategic nuclear bombers and a nuclear submarine Columbus that recently entered South Korean ports, he said.
And then, just days after Kim threatened to reduce the US “to ashes” as tensions with North Korea continue to increase, which in turn followed a warning by Tillerson that the US is preparing for a "first strike" against the irrational dictator, while US special forces conduct drills in South Korea to "eliminate" the country's ruler, the Supreme Leader released his latest materpiece of propaganda, showing the USS Carl Vinson nuclear-powered aircraft carrier up in flames.
And now, AP reports that the U.S. military expects another North Korean missile launch in the next several days, American defense officials said Tuesday.
The officials said the U.S. has increased its surveillance over the isolated, communist country and has seen a North Korean missile launcher moving around, as well as construction of VIP seating in the eastern coastal city Wonsan.
The officials, who weren't authorized to discuss the matter publicly and spoke on condition of anonymity, said the new surveillance includes satellites, drones and other aircraft.
The U.S. officials on Tuesday said it's unclear what type of missile launch may be coming. North Korea previously has conducted tests in Wonsan of its medium-range ballistic Musudan missile.
White House press secretary Sean Spicer on Tuesday described the North Korean threat as "grave and escalating," and a National Security Council official told a nuclear conference that the administration is conducting a high-priority review of North Korea policy.
Christopher Ford, senior director for weapons of mass destruction and nonproliferation on the NSC staff, said reviewers are considering a "full spectrum of possibilities."
"There's this enormously broad continuum, and we are looking at that entire conceptual space," Ford told the Carnegie International Nuclear Policy Conference. He gave no concrete examples, but in an attempt to illustrate his point that the choices run the gamut, he said they range from "warm hamburger" to "war hammers."
- The True Legacy Of David Rockefeller
While often remembered for his philanthropy, the last surviving grandson of America’s first billionaire died today, leaving behind a dark legacy indicative of how American nobility often shape policy from behind the scenes.
No one person encapsulates the enduring legacy of the “robber barons” of the Industrial Age quite like David Rockefeller. Rockefeller, who died this week at the age of 101, was the last surviving grandson of John D. Rockefeller, the oil tycoon who became America’s first billionaire and the patriarch of what would become one of the most powerful and wealthiest families in American history. David Rockefeller, an undeniable product of American nobility, lived his entire life in the echelons of U.S. society, becoming symbolic of the elite who often direct public policy to a much greater extent than many realize, albeit often from the shadows.
Rockefeller made it clear that he preferred to operate out of public view despite his great influence in American – and international – politics. Due to his birthright, Rockefeller served as an advisor to every president since Eisenhower, but when offered powerful positions such as Federal Reserve chairman and Secretary of the Treasury – he declined, preferring “a private role.”
As evidenced by the numerous obituaries bemoaning the loss of the last of the Rockefeller’s grandsons, he was largely successful in hiding his most significant wrongdoings from public view, as evidenced by his characterization as a generous philanthropist and influential banker.
But as is often the case, Rockefeller’s true legacy is much more mired in controversy than major publications seem willing to admit. In addition to having the ear of every U.S. president for the better part of the last 70 or so years, Rockefeller – once again operating “behind the scenes” – was instrumental in shaping the more cringe-worthy aspects of U.S. policy during that time, as well as being a major force in establishing banking policies that led to debt crises in the developing world.
Rockefeller – as the head of Chase Manhattan Bank from 1969 to 1981 – worked with government and multinational corporations throughout the world to create a “global order” unequivocally dominated by the 1 percent, of which his family was a part. As the New York Times noted back in the 1970s, Rockefeller became embroiled in controversy when his constant trips overseas caused the bank to become less profitable, as he prioritized the bank’s influence on foreign politics over its actual business dealings.
During his time as Chase CEO, Rockefeller helped lay the foundation for repressive, racist and fascist regimes around the world, as well as architecture for global inequality. In addition, Rockefeller helped to bring the debt crisis of the 1980s into existence, in part by direct action through Chase Bank and also indirectly through his former employee-turned-Federal Reserve chairman Paul Volcker. Two years before the debt crisis erupted, Rockefeller, Volcker and other top bankers met at the International Monetary Conference in 1980s to argue for the establishment of a “safety net” for major banks – like Chase – that were embroiled in bad loans given largely to countries in the developing world.
David Rockefeller, center, then chairman of the Chase Manhattan Bank International Advisory Committee, receives the 1983 International Leadership Award presented by Dr. Henry A. Kissinger, left, and Ralph A. Pfeiffer, Jr. on, Dec. 9, 1983. (AP/Ron Frehm)
After the crisis brought financial ruin to Latin America and other developing areas throughout the world, Rockefeller – along with other bankers – created austerity programs to “solve” the debt crisis during subsequent IMC meetings, provoking inequality that still persists to this day. However, thanks to the “safety net” conveniently established years prior, Chase avoided the economic consequences for its criminal actions.
In addition, Rockefeller supported the bloody and ruthless dictatorships of the Shah of Iran and Augusto Pinochet of Chile while also supporting Israeli apartheid. Rockefeller then went on to found the influential Trilateral Commission while also serving as a major force on the Council on Foreign Relations that he, along with his close friend Henry Kissinger, would come to dominate.
Both of these organizations have come under fire for using their powerful influence to bring about a “one-world government” ruled by a powerful, ultra-wealthy elite – an accusation to which David Rockefeller confirmed as true in his autobiography. Far from the generous philanthropist he is made to be, David Rockefeller deserves to be remembered for his true legacy – one of elitism, fascism and economic enslavement.
- Perfect Example Of Why Job Losses From Minimum-Wage-Hikes Are Being Underestimated, 'Bigly'
Over the past several months, we’ve highlighted a number of economic studies analyzing the potential negative impact, in terms of job losses, that may be expected to result from the state-mandated minimum wage hikes that are currently being implemented around the country.
One such study came from the American Action Forum (AAF) and estimated that 2.6 million jobs will be lost around the country over the next several years as states phase-in minimum wage hikes that have already been passed (see “State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds“). Here were a few of the key takeaways:
- In isolation, the minimum wage increases in 2017 will cost 383,000 jobs;
- The entire minimum wage increases currently phasing-in will cost over 2.6 million jobs; and
- Each job lost only leads to an extra $6,900 in total wage earnings across all workers.
After running a lot of really complicated math using complex equations that most of us stupid people just wouldn’t understand, these studies ultimately come down to a simple economic premise: elasticity of demand (a.k.a. ‘the higher shit is priced the less people will buy of it’ rule). In fact, the AAF analysis even summarized their study by saying that each 10% increase in wages results in an proximate 0.3% – 0.5% decline in net job growth…a rule which they used to conclude the following:
While proposals to raise the minimum wage are well intended, it is important to consider the negative labor market consequences. Meer & West (2015) find that raising the minimum wage reduces job creation. Specifically, they find that a 10 percent increase in the real minimum wage is associated with a 0.3 to 0.5 percentage-point decline in the net job growth rate. As a result, three years later employment becomes 0.7 percent lower than it would have been absent the minimum wage increase.
While the Meer & West (2015) findings may not seem very problematic, when taking into account the magnitude of the minimum wage increases and the number of states implementing new laws, the negative labor market consequences add up. Let’s first examine the minimum wage hikes of 2017 in isolation, without considering previous or future minimum wage increases under the new state laws.
The problem is that these studies consistently underestimate the number of jobs that will be impacted by minimum wage hikes. For the most part, the economists simply tally up the number of jobs in a given market that currently fall beneath the new minimum wage threshold and then assume that a certain percentage of them will disappear.
In reality, minimum wage hikes trigger pay increases across the pay scale, not just for the employees earning minimum wage, because most people make employment decisions based on relative wages and not absolute wages.
Consider, for example, the folks working at a California McDonalds where the minimum wage was $10 per hour in 2016 but is set to increase to $15 over the coming years. Lets also assume that most of the customer service staff earns the minimum pay rate while managers earn $15. Under the methodology above, the manager would never be counted as an ‘at-risk’ position because his job would never technically fall below the new minimum wage. But, in reality, there’s no conceivable world where the manager will simply agree to keep his $15 per hour pay rate once all of his workers have received a 50% pay increase and now make the same as him…instead, he’ll run some basic math and conclude he needs to be making $22.50 per hour to have the same ‘relative’ compensation he had before or he’ll just go work as an order taker with less responsibility.
And while these are simple concepts to most of us, even if we don’t understand the complicated econometrics equations, as the Associated Press points out today they’re completely foreign concepts to our elected officials who ignorantly passed minimum wage bills across the country without understanding the real economic consequences. As a perfect example, apparently New York Governor Andrew Cuomo was shocked to learn that home healthcare experts would rather take his new $15 per hour minimum wage job flipping burgers with no stress than to earn the same amount of money for a job that requires a ton of expensive education and stressful, long hours….who knew?
It’s a national problem advocates say could get worse in New York because of a phased-in, $15-an-hour minimum wage that will be statewide by 2021, pushing notoriously poorly paid health aides into other jobs, in retail or fast food, that don’t involve hours of training and the pressure of keeping someone else alive.
“These should not be low-wage jobs,” said Bruce Darling, executive director at the Center for Disability Rights. “We’re paying someone who gives you a burger the same as the person who operates your relative’s ventilator or feeding tubes.”
There are 2.2 million home health aides and personal care aides in the U.S., with another 630,000 needed by 2024 as the Baby Boomer generation ages, according to the nonprofit research and consulting group PHI. New York state employs about 326,000 home health workers but is predicted to need another 125,000 by 2024.
For now, home health aides in New York state earn an average of about $11 an hour, though wages are lower in upstate regions. Advocates say the system needs an overhaul that focuses on higher pay, worker retention and finding methods of compensation beyond what is provided through Medicaid.
Here’s an idea…how about we just let markets set wage rates?
- Noted Putin Critic Warns Of Confrontation Between Trump And Russia, Not Collaboration
Authored by Mike Krieger via Liberty Blitzkrieg blog,
One thing we should have learned over the past year or so is you can take any narrative being pushed by the corporate media and Democrats, and assume that the exact opposite is true. The current Trump-Russia hysteria could very well turn out to be the latest and most embarrassing example of this phenomenon. In fact, well known Putin-critic, Masha Gessen, recently warned in an interview with Politico that her biggest fear is a Trump-Putin conflict, not some imagined alliance.
Below I provide the excerpts from this lengthy interview which I believe are relevant to the topic.
From Politico:
Glasser: I want to talk a little bit about where we are right now. And then back up to why it is, in your life, you’ve figured out this expecting the unimaginable. But recently, you know, American politics has been consumed by Russia. Russia, Russia, Russia, Russia. And you wrote something that a lot of people were surprised by the other day, although I was not. And you said, “Beware the conspiracy trap.”
And that, in fact, the Russia scandal that now threatens to engulf President Trump’s very new presidency, you wrote, “In effect, could be actually helping President Trump and amount to a sort of a colossal distraction for us.” What did you mean by that?
Gessen: Well, a couple things. One is that, if you look at, you know, what we actually know about the Russia story, which changes every day, but what—at this point, what we actually know suggests that the likelihood that there’s going to be a causal link between the Russian interference in the American election and the outcome of the election. The likelihood that was a causal link, and that that causal link can be shown, is basically vanishingly small, right?
So—and I think that part of the reason—there are basically two reasons that a lot of journalists and a lot of activists have been focusing on Russia is because it serves as a crutch for the imagination. And again, I’m coming back to this topic of imagination, which obsesses me.
So one way in which it serves as a crutch for the imagination is that it allows us to imagine that, maybe, Trump will be so sullied by this Russia scandal, by this connection, even if he can’t prove a cause—causal link, just that the darkness of the scandal will be thick enough of a cloud that he will eventually be impeached by a Republican Congress.
That’s a huge leap. And it also, I think, doesn’t take into account the tools—the rhetorical tools that will have to be used to sully Trump in such a way, right? Which are basically xenophobic and, you know, corrosive to the public sphere. And the other way in which it serves as a crutch for the imagination is it also serves to explain how Trump could have happened to us, right? The Russians did it.
Glasser: That’s exactly right; if it’s an external thing. And you wrote that very, very early on. Actually, before this latest round, that the real threat to Trump would be to misunderstand where this comes from. And if it’s not Americans who voted for him, but somehow, it’s a wily, dark conspiracy theory. That leads you down a whole different set of responses to Trump.
Gessen: Right. Which—
Glasser: I think that’s your point.
Gessen: That is my point. And also that it’s destructive to politics. Politics is what happens out in the open. And there’s lots of politics happening, right? There’s this endless barrage of frightening bills being filed at this point. There are the Cabinet appointments. There’s the, you know, dismantling of the federal government as we have known it for generations.
All of that is going on out in the open. And we only have so much bandwidth. If we’re not talking about what’s going on out in the open, if we’re talking about conspiracy instead, then we are, by doing that, destroying the politics that we should be preserving, right? I mean, how do we emerge out the other end, when Trump ends, and Trump will eventually end. Everything ends, right?
If we’ve engaged in conspiracy theorizing this whole time, instead of engaging in politics—and only by engaging in politics can we actually preserve the political space…
Gessen: I’m worried about Russia. I’m—this is—I mean, we’re already out of the honeymoon phase, and it’s been less than two months. And I think it’s—I mean, the danger of having these two unhinged power-hungry men at their—respective nuclear buttons cannot be overestimated. But—
Glasser: So you would see them as potential enemies as much as potential friends? That this scenario—
Gessen: Oh, absolutely.
Glasser: —we should worry about is Trump versus Putin, not just Trump and Putin uniting?
Gessen: Right. I’m actually worried about a collision with them.
She’s exactly right. I completely agree that the disaster scenario with Putin and Trump is if and when they actually clash. Once that happens, the corporate media and Democrats will pretend they had nothing to do with it, as they always do. As Mark Ames noted on Twitter:
All the worst Iraq war liars still have their fat media jobs—where they now tell us public distrust in Establishment is a Kremlin conspiracy
— Mark Ames (@MarkAmesExiled) March 20, 2017
//platform.twitter.com/widgets.js
Moving on, I want to once again turn to Robert Parry of Consortium News to highlight just how ridiculous the whole “Putin bought off Trump aides” conspiracy is. From yesterday’s piece, The Missing Logic of Russia-gate:
Democrats circulated a report showing that retired Lt. Gen. Michael Flynn, who served briefly as President Donald Trump’s national security adviser, had received payments from several Russia-related entities, totaling nearly $68,000.
The largest payment of $45,386 came for a speech and an appearance in Moscow in 2015 at the tenth anniversary dinner for RT, the international Russian TV network, with Flynn netting $33,750 after his speakers’ bureau took its cut. Democrats treated this revelation as important evidence about Russia buying influence in the Trump campaign and White House. But the actual evidence suggests something quite different.
Not only was the sum a relative trifle for a former senior U.S. government official compared to, say, the fees collected by Bill and Hillary Clinton, who often pulled in six to ten times more, especially for speeches to foreign audiences. (Former President Clinton received $500,000 for a Moscow speech from a Russian investment bank with ties to the Kremlin, The New York Times reported in 2015,)
Yet, besides Flynn’s relatively modest speaking fee, The Washington Post reported that RT negotiated Flynn’s rate downward.
Deep inside its article on Flynn’s Russia-connected payments, the Post wrote, “RT balked at paying Flynn’s original asking price. ‘Sorry it took us longer to get back to you but the problem is that the speaking fee is a bit too high and exceeds our budget at the moment,’ Alina Mikhaleva, RT’s head of marketing, wrote a Flynn associate about a month before the event.”
So, if you accept the Democrats’ narrative that Russian President Vladimir Putin is engaged in an all-out splurge to induce influential Americans to betray their country, how do you explain that his supposed flunkies at RT are quibbling with Flynn over a relatively modest speaking fee?
Of course, you’ll never hear any of this emphasized in the corporate media, they’re too busy pushing for a conflict between the U.S. and Russia. A conflict that once it happens, they will vehemently deny playing any role in propagating.
- PBOC Injects Hundreds Of Billions Into Chinese Banks After Sudden Defaults In Interbank Payments
As is customary virtually every time the Chinese central bank commences some form of tightening, overnight the PBOC injected “hundreds of billions of yuan into the financial system after some smaller lenders failed to repay borrowings in the interbank market”, according to people familiar with the matter.
According to a brief note by Bloomberg, Tuesday’s injections followed missed interbank payments on Monday, anonymous sources said; the matter is not made public over concerns of bank deposit flight risk. The institutions that missed payments included rural commercial banks. One of Bloomberg’s trader sources said a borrower failed to repay an overnight repo of less than 50 million yuan ($7.3 million). China’s smaller lenders have been squeezed by a rise in money market rates this week, with the benchmark seven-day repurchase rate jumping to the highest level since April 2015 on Tuesday. As we described last Wednesday, the PBOC for the second time in a month engaged in tightening by hiking the rate on reverse repos as well as various liquidity conduit operations such as the MLS.
While the tightening of liquidity reflects factors including quarter-end regulatory checks and a wall of maturing certificates of deposit, BBVA said the People’s Bank of China may also be sending a message to over-leveraged firms to rein in borrowing.
“The PBOC wants to warn the smaller lenders not to play the leverage game excessively,” said Xia Le, chief economist at BBVA in Hong Kong. “It’s a tug of war between the central bank and the financial institutions.”
And while some smaller banks were on the verge of failure, overnight virtually everyone felt the surge in the 7-day repo fixing to the highest since 2014, driven by China’s liquidity squeeze amid policy tightening and continued high leverage
As Goldman’s MK Tan explains, China’s 7-day repo fixing interest rate rose to 5.5% on Tuesday, the highest level since late 2014. This followed PBOC’s statement last Thursday signaling a deviation from the previous framework of regarding interbank rates as de facto “policy rates”. Reflecting the prospective quarter-end MPA (macro-prudential assessment) examination and continued tightening bias from the PBOC, interbank rates may remain fairly volatile in the coming days, although most analysts do not expect such elevated rates to be sustained, especially since the PBOC will promptly have to bail out any banks suffering a liquidity squeeze.
Some more details for those unfamiliar with China’s stealth tightening process.
Interbank interest rates had been more clearly drifting higher in the past month, especially following the PBOC’s OMO rate increase last Thursday. In particular, the gap between R007 (general repo rate covering all counterparties including funds) and DR007 (covering only banks) has widened again in recent days, suggesting tight liquidity conditions faced by non-bank financial institutions (NBFIs) (Exhibit 1).
Exhibit 1: Interbank rates spiked as liquidity scramble by NBFIs intensified (as seen in the widened R007-DR007 spread)
Tuesday’s fixing rate (set at 11:30am based on morning transactions) spiked, although funding conditions in the afternoon seem to have moderated somewhat (fixing is non-weighted average interest rate; see the appendix below for more on the fixing process). The rate surge reflects a combination of:
- A tightening bias by the PBOC. The central bank has shifted policy stance since autumn last year, but the clearer interbank rate rise in recent days suggests that the hawkish bias has stepped up further.
- Diminished clarity of the role of interbank rates in the PBOC’s policy framework. Since mid-2015, interbank rates had been kept largely steady, partly reflecting the PBOC’s efforts to build up a policy rate framework centering on interbank rates. The PBOC has also introduced SLF (standing lending facility), which is understood as a tool to keep volatility in interbank funding conditions low. However, in a signal that deviates from these previous efforts, the PBOC last Thursday tried to dissociate interbank rates from “policy rates”, which the PBOC said should mean benchmark bank lending and deposits rates. The comment appeared to open up a bigger scope for the PBOC to allow interbank rates to move higher (with the possible intention to avoid conflict with its official “stable and neutral” policy stance or potential pushback from other policy authorities).
- The SLF mechanism appears to have not functioned effectively in recent days. There have been occasional breaches of the general 7-day repo rate above the SLF rate (3.35% per PBOC’s official communication, although it was reportedly raised to 3.45% last week). This suggests that SLF has not effectively fulfilled its supposed function of imposing a ceiling to interbank rates. One possible reason is that SLF is accessible only by banks, and much of the spikes of the general 7-day repo rate have been a result of liquidity scramble by NBFIs (which have no SLF access), while banks’ interbank funding cost (as measured by DR007; Exhibit 1) has remained more moderate and still below the SLF rate (note that the 7-day repo fixing rate is partly based on funding cost of NBFIs as well). Nevertheless, the apparent lack of effectiveness of SLF in suppressing interbank rate volatility might have weakened the anchoring of the market’s rate expectations in the near term, and such uncertainty could have compounded the liquidity squeeze.
- Continued high interbank repo borrowing by funds. The wide gap of R007-DR007 reflects continued stress imposed by NBFIs, likely particularly funds, on the funding market. Indeed, as of end-Feb, interbank repo borrowing by funds remained high at over 30% of the interbank repo borrowing (Exhibit 2) despite the increased pressure on the commercial viability of repo trades (borrowing via interbank repo to finance long-dated bond holdings).
- Regulatory impact. The PBOC has tightened the prudential requirements (particularly on the growth of banks’ balance sheet) under its MPA examination, which is to be conducted at quarter-end. This has likely further contributed to, and amplified the impact of, a tightening in the interbank market.
In total, the interbank rate volatility may remain quite high in the coming days, especially in light of the near-term consideration of MPA examination at quarter-end and the PBOC’s apparent deviation from the previous monetary policy framework. Alternatively, today’s plunge in the dollar may have had a secondary purpose of easing Chinese financial conditions, where the ongoing dollar rally has pushed the local financial sector to the brink of illiquid collapse.
Analysts – Goldman included – expect the PBOC policy stance to remain in tightening mode, but do not expect interbank interest rates to remain at today’s elevated levels in the weeks ahead. Sustained elevated rates could cause significant volatility in financial markets–particularly the bond market–given still-significant repo leverage of funds. More importantly, the recent rise in interbank rates will contribute to a moderation in growth later this year, and bank lending rates might also face upward pressures amid higher market rates and thereby increase corporates’ borrowing cost (Exhibit 3).
Exhibit 2: Funds’ borrowing still accounts for a large share of the interbank repo market
Exhibit 3: The ongoing rise in market rates may feed through to banks’ lending rates (and corporates’ funding cost) in the months ahead .
For now, however, the PBOC may have come up with a deus ex machina again: moments ago the first print of the recently soaring seven-day money rate tumbled 64 bps from a two-year high tp 2.45%, affording banks some time to get their financial matters in order. Of course, none will, which means the next time repo rates soar again, it will be up to the PBOC to bail out the local banking system, all over again.
- Ally Financial Slashes Guidance As Used Car Prices Suffer "Worst Decline In 20 Years"
For those of you holding out hope that the North American auto market is anything but a massive debt-fueled bubble on the verge of imminent collapse, you may want to avert your eyes now. For the rest of us who prefer to live in reality, as painful as it can be, today’s FY2017 earnings warning from Ally Financial offers a stinging wakeup call to auto investors.
And while Ally’s CEO, Chris Hanley, tried to downplay the company’s 2017 earnings guidance cut to “5% – 15%” on today’s call by saying that it was “generally in line with a 15% EPS growth path that we previously described to analysts and investors,” the market didn’t buy it.
And, for an equity market that often, at least to us, seems to be math-challenged, we take some solace from the fact that investors were able to quickly decide that “5% – 15%” earnings growth is not quite the same as “15%” growth.
Unfortunately for the rest of the auto industry, the reasoning behind Ally’s earnings cut was in no way company specific and was instead attributed to all the warning signs we’ve been writing about for months now, including: sinking used car prices courtesy of a flood of lease returns, spiking consumer delinquencies and rising OEM incentives.
“As mentioned on the last earnings call, the lease portfolio and used vehicle declines and transition of the retail loan book with respect to provision are some things we need to work through, and makes 2017 a bit of a transition year.”
“As you’ve heard from many lenders, we’re closely watching the environment, and we’ve seen some more noticeable shifts recently.”
“Consumer losses have also been drifting higher, and most notably in lower credit tiers. You’ve heard back from others as well. We have seen some additional deterioration in the first quarter, and we believe that the
delayed tax refunds may have had an impact here.”“Used vehicle prices continue to decline at a manageable rate, but a bit higher than last year’s pace. We’ve seen manufacturer incentive levels creep up, so we’re watching that closely, and we’ve seen captives continuing to increase their lease presence.”
All of which seems to align perfectly with the data presented in J.D. Power’s latest “NADA Used Car Guide Industry Update” which recently revealed that wholesale prices of used vehicles dropped 1.6% sequentially in February 2017, marking the biggest February decline in at least 20 years.
In a reversal of what typically occurs in February, wholesale prices of used vehicles up to eight years old fell substantially last month, dropping 1.6% compared to January. The drop was counter to the 1% increase expected for the month and marked just the second time in the past 20 years prices fell in February (last years’ scant 0.2% being the other instance).
NADA Used Car Guide’s seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8% from January to 110.1. The drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble. February’s index figure was also 8% below February 2016’s 119.4 result and marked the index’s lowest level since September 2010.
Of course, cars continue to be the hardest hit segment while trucks and SUV’s are holding up slightly better (you know, because oil will trend to $0 over the long-term).
Meanwhile, the OEM’s continue to undermine their own pricing by increasing incentives YoY by 15-25% in order to prop up new car volumes…
…even though it still hasn’t been enough to keep inventory under control.
But, it’s all probably nothing…those tier 2 auto suppliers probably do deserve to be trading at all-time highs.
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