Aug 24

Today’s News 24th August 2018

  • The "Doom Loop" Exodus: Foreigners Liquidate Record Amounts Of Italian Bonds

    One month ago, we reported that in the aftermath of Italy’s political fireworks in May, which saw a record spike in Italian government bond yields, ECB data showed record buying of BTPs by Italian banks in May amounting to €28.4bn (chart below), a higher inflow than anything seen during the European sovereign debt crisis in 2012.

    And since local banks buying (to avoid a market crash with the backstop of the ECB), it meant foreign holders of Italian bonds were liquidating a record amount of bonds in the same period, and that Europe’s “doom loop” had just made a thunderous return.

    Or so we thought until we saw the June numbers.

    Because just one month later, we find that the exodus of foreign investors from Italy’s bond market accelerated, with net sales of Italian government debt climbing to a record level for the second month in a row. Specifically, holdings of Italian debt by foreign investors declined by a net €38bn in June, according to the latest ECB data, eclipsing the previous month’s net fall of €34bn, which was itself a record as the FT confirms.

    During this period, Italian bond yields remained elevated, with 10-year debt lingering near the peak it hit in May when the country’s two populist Eurosceptic political parties formed a coalition government. Incidentally, the selloff of Italian 10Y bonds has accelerated in recent weeks, with the 10Y reaching the May highs.

    Commenting on the June plunge, David Owen, chief European economist at Jefferies said that “we had suspected that net foreign selling of Italian debt securities had continued into June, but the June figure was still significantly more than we had expected.”

    Who bought this record amount of bonds sold in June? The same entity that stepped up in May: Italy’s banks. As the FT notes:

    “Italian banks were, to a large extent, on the other side of the deal: in the second quarter of 2018, domestic financial institutions increased their net holdings of the government’s debt by more than €40bn, the largest amount since the height of the eurozone debt crisis.“

    More narrowly as the following Citi excerpt reveals, Italy saw a record capital outflow of €76bn in the two months of May and June, larger than previous 2-month outflow record of €51bn hit in Jun-Jul 2011 and €56bn in Feb-Mar2012. These flows are shown in the charts below.

    https://platform.twitter.com/widgets.js

    What happens next and will the paniced liquidation continue?

    According to the FT, investors are currently mostly focused on the fiscal outlook for the eurozone’s third-largest economy, and the coalition’s debut budget, a draft of which is expected to be published by mid-October. The new government’s inclination to step up public spending could threaten to bust through Italy’s fiscal targets

    “Italy’s [economic] fundamentals are actually OK,” said Nick Gartside, international fixed income chief investment officer at JPMorgan Asset Management. “The budget flashpoint is what markets will focus on and when we are through that things should settle down a bit. A fair bit of volatility is now priced in.”

    Seaparetly, Allianz chief investment officer for fixed income, Mauro Vittorangeli, said Italian yields had “settled into” a “new range” and added that if the volatility of Italian yields steadies once the budget discussions are completed, then Italian retail investors and the nation’s banks will buy back into the market, which could help prices to bounce back somewhat.

    Of course, if the budget discussions disappoint and Italian bonds take another step lower, well then there’s always Italian banks to buy even more debt, knowing that they have the ECB to backstop them. The problem is that the ECB’s QE backstop runs out at the the end of the year.

    There are two more immediate threats: according to Vittorangeli, two key factors that markets would be watching are the eurozone’s growth outlook — because “Italian debt needs positive nominal growth” to be sustainable — and the continued presence in government of Giovanni Tria as finance minister.

    If Mr Tria departs, this could be read by investors as a confrontational move by the populist coalition, Mr Vittorangeli warned.

    The silver lining is that Italy’s woes, and the Italian sovereign bond liquidation have not spread to other eurozone markets, according to Mr Owen of Jefferies.

    “Net foreign buying of euro area equities resumed in June, after two consecutive months of declines, following what had been 17 straight months of purchases,” he said. “Arguably, this is because economic surprises for the region have turned positive again.”

    All that would take for that to change, however, is a few more month of record selling of Italian bonds before investors bail on Italy and – with the ECB set to end its QE in just over 4 months – reignite the European sovereign debt crisis.

  • Is Europe Making Plans For A New World Order?

    Authored by German foreign minister Heiko Maas, op-ed via Handelsblatt Global,

    Europe’s relationship with the US was changing even before Donald Trump and his provocative Tweets came along. Germany now sees the current trans-Atlantic antipathy as a historic opportunity to redefine the EU’s role…

    Henry Kissinger was recently asked if Donald Trump could not unintentionally become the force behind the birth of a new western order. His answer: It would be ironic but not impossible. Instead of narrowing our view across the Atlantic to the ever-changing whims of the American President, we should adopt the idea that this could be the start of something new. We can’t not hear what’s going on across the Atlantic every day via Twitter. But a tunnel view into the Oval Office distracts from the fact that America is more than Trump. “Checks and balances” work, as US courts and Congress demonstrate almost daily. The Americans are debating politics with new passion. That too is America in 2018.

    The fact that the Atlantic has widened politically is by no means solely due to Donald Trump. The US and Europe have been drifting apart for years. The overlapping of values and interests that shaped our relationship for two generations is decreasing. The binding force of the East-West conflict is history. These changes began well before Trump’s election — and will survive his presidency well into the future. That is why I am skeptical when some ardent trans-Atlanticist simply advises us to sit this presidency out.

    Since the end of the Second World War, the partnership with the US has brought Germany a unique phase of peace and security. America became a place of longing. For me too, when I traveled from New York to LA over a few months as a high-school graduate, with Paul Auster’s “New York Trilogy” in my pocket and Bruce Springsteen’s music in my ears. But looking back does not lead to the future. It is high time to reassess our partnership — not to leave it behind, but to renew and preserve it.

    Europe United

    Let’s use the idea of a balanced partnership as a blueprint, where we assume our equal share of responsibility. In which we form a counterweight when the US crosses the line. Where we put our weight when America retreats. And in which we can start a new conversation.

    If we go it alone, we will fail in this task. The outstanding aim of our foreign policy is to build a sovereign, strong Europe. Only by joining forces with France and other European nations can a balance with the US be achieved. The European Union must become a cornerstone of the international order, a partner for all those who are committed to it. She is predestined for this, because compromise and balance lie in her DNA.

    “Europe United” means this: We act with sovereignty at those points where nation-states alone cannot muster the level of power a united Europe can. We are not circling the wagons and keeping the rest of the world out. We are not demanding allegiance. Europe is building on the rule of law, respect for the weaker, and our experiences that show that international cooperation is not a zero-sum game.

    A balanced partnership means that we Europeans take an equal share of the responsibility. Nowhere is the trans-Atlantic link more indispensable to us than in terms of security. Whether as a partner in NATO, or in the fight against terrorism, we need the US. We must draw the right conclusions from this. It is in our own interest to strengthen the European part of the North Atlantic Alliance. Not because Donald Trump is always setting new percentage targets, but because we can no longer rely on Washington to the same extent. But the dialectic of the trans-Atlantic also means this: If we take on more responsibility, then Americans and Europeans can continue to rely on each other in the future.

    The German government is following this path. The turnaround in defense spending is a reality. Now it is important to build a European security and defense union step by step — as part of trans-Atlantic security and as a separate European project for the future. Increases in defense and security spending make sense from this perspective.

    Exposing fake news

    Another crucial point: Europe’s commitment must be part of a rationale based on diplomacy and civil crisis management. In the Middle East, the Horn of Africa and Africa’s Sahel areas, we are also using non-military means to combat the collapse of government structures. For me, these are examples of trans-Atlantic cooperation – and a blueprint for joint involvement in other crises elsewhere.

    And where the USA crosses the line, we Europeans must form a counterweight – as difficult as that can be. That is also what balance is about.

    It starts with us exposing fake news. Like this: If the current account balance of Europe and the US includes more than just trade in goods, then it is not the US that has a deficit, it’s Europe. One reason is the billions in profits that European subsidiaries of Internet giants such as Apple, Facebook and Google transfer to the US every year. So when we talk about fair rules, we must also talk about the fair taxation of profits like that.

    It is also important to correct fake news because it can quickly result in the wrong policies. As Europeans, we have made it clear to the Americans that we consider the withdrawal from the nuclear agreement with Iran to be a mistake. Meanwhile, the first US sanctions have come back into force.

    In this situation, it is of strategic importance that we make it clear to Washington that we want to work together. But also: That we will not allow you to go over our heads, and at our expense. That is why it was right to protect European companies legally from sanctions. It is therefore essential that we strengthen European autonomy by establishing payment channels independent of the US, a European monetary fund and an independent SWIFT [payments] system. The devil is in thousands of details. But every day that the Iran agreement lasts, is better than the potentially explosive crisis that threatens the Middle East otherwise.

    A balanced partnership also means that, as Europeans, we bring more weight to bear when the US withdraws. We are concerned about Washington’s withdrawal of affection, in financial and other terms, from the UN — and not only because we will soon be on the Security Council. Of course we can’ t fill all the gaps. But together with others, we can cushion the most damaging consequences of the thinking that says success is measured in dollars saved. That is why we have increased funding for relief organizations working with Palestinian refugees and sought support from Arab states.

    We are striving for a multilateral alliance, a network of partners who, like us, are committed to sticking to the rules and to fair competition. I have made my first appointments with Japan, Canada and South Korea; more are to follow. This alliance is not a rigid, exclusive club for those with good intentions. What I have in mind is an association of states convinced of the benefits of multilateralism, who believe in international cooperation and the rule of the law. It is not directed against anyone, but sees itself as an alliance that supports and enhances a global, multilateral order. The door is wide open — above all to the US. The aim is to tackle the problems that none of us can tackle on our own, together — from climate change to fair trade.

    I have no illusions that such an alliance can solve all the world’s problems. But it is not enough just to complain about the destruction of the multilateral order. We have to fight for it, especially because of the current trans-Atlantic situation.

    Please, don’t abandon America

    One final point is elementary: We must begin a new dialogue with the people on the other side of the Atlantic. Not only in New York, Washington or LA, but also in middle America, where the coast is far away and Europe is even further away. Starting in October, we will be hosting a “German Year in the US” for the first time ever. Not to celebrate the German-American friendship as nostalgia but to enable encounters that make people feel that we are moved to ask similar questions, that we’re still close.

    Exchange creates new perspectives. I can’t let go of an encounter I had recently on one of my trips. A young US soldier used an unobserved moment to whisper to me: “Please, don’t abandon America.” An American soldier was asking a German politician not to let America down. The affection that lay in this request touched me deeply. Perhaps we now need to get used to the idea that Americans are going to say such things to us Europeans.

    Anyway, it would be a nice, historical irony if Henry Kissinger turned out to be right. If the White House’s tweets actually led to a balanced partnership, a sovereign Europe and a global alliance for multilateralism. We’re working hard on that to happen.

  • 15% Of Russians Think Putin Tried To Influence US Election

    Amid allegations that the Russian government disrupted the 2016 U.S. presidential election through tactics such as spreading disinformation on social media, a new poll has found that most Russians believe their government was not responsible.

    Infographic: Russians Say Putin Didn't Influence U.S. Election | Statista

    You will find more infographics at Statista

    The Pew Research Center found that 71 percent of Russians think their government did not try to influence the election with only 15 percent saying there was an attempt at interference.

  • In The New "Multipolar World" The Globalists Still Control All The Players

    Authored by Brandon Smith via Alt-Market.com,

    The greatest tool at the disposal of globalists is the use of false paradigms to manipulate public perception and thus public action. The masses are led to believe that at the highest levels of geopolitical and financial power there is such a thing as “sides.” This is utter nonsense when we examine the facts at hand.

    We are told the-powers-that-be are divided by “Left” and “Right” politics, yet both sides actually support the same exact policy actions when it comes to the most important issues of the day and only seem to differ in terms of rhetoric, which is meaningless and cosmetic anyway.  That is to say, it’s nothing but Kabuki theater.

    We are told that corporate power must be balanced by government power and that government power must be balanced by “free markets,” when in reality corporations are chartered and protected by governments and free markets simply don’t exist in today’s economy. In the case of social media “censorship,” we are told that the solution is to use government power to enforce “fairness” instead of simply launching our own alternative platforms.  Yet, social media corporations exist in the form of monopolies exactly because of  government power and intervention in business. The abuses of one “side” are being used to push us into the arms of the other side, which is just as abusive.

    In terms of geopolitics, we are told that national powers stand “at cross-purposes;” that they have different interests and different goals, which has led to things like “trade wars” and sometimes shooting wars. Yet, when we look at the people actually pulling the strings in most of these countries, we find the same names and institutions. Whether you are in America, Russia China, the EU, etc., globalist think tanks and international banks are everywhere, and the leaders in all of these countries call for MORE power for such institutions, not less.

    These wars, no matter what form they take, are a circus for the public. They are engineered to create controlled chaos and manageable fear.  They are a means to influence us towards a particular end, and that end, in most cases, is more social and economic influence in the hands of a select few. In each instance, people are being convinced to believe that the world is being divided when it is actually being centralized.

    The key to any magic show is to get the audience to participate in the lie; to get them to focus on the distracting hand, to assume that what they are seeing is actually what is really happening – to suspend their skepticism.

    Make no mistake, what we are seeing in geopolitics today is indeed a magic show. The false East/West paradigm is as powerful if not more powerful than the false Left/Right paradigm. For some reason, the human mind is more comfortable believing in the ideas of division and chaos, and it often turns its nose up indignantly at the notion of “conspiracy.” But conspiracies and conspirators can be demonstrated as a fact of history. Organization among elitists is predictable.

    Globalists themselves are drawn together by an ideology. They have no common nation, they have no common political orientation, they have no common cultural background or religion, they herald from the East just as they herald from the West. They have no true loyalty to any mainstream cause or social movement.

    What do they have in common? They seem to exhibit many of the traits of high level narcissistic sociopaths, who make up a very small percentage of the human population. These people are predators, or to be more specific, they are parasites. They see themselves as naturally superior to others, but they often work together if there is the promise of mutual benefit.

    The closest thing I can relate narcissistic sociopaths (and thus globalists) to in mythology would be vampires. I have often wondered if the concept of “vampires” was created as a way for the peasants of the dark ages to explain the soulless and monstrous behavior of the elites of their time. The notion that any person is capable of that kind if evil, let alone organized evil in the form of a cabal, is hard for people to accept to this day.

    Vampires in mythology are usually depicted as elites, hiding in plain site as leaders of communities in the upper echelons of society. They seek out a village, insert themselves as upstanding patrons and aristocrats, then feed until that village is destroyed. Afterward, they move on to the next village.  This is what they are. This is what they do, and they do it in organized fashion to make the process more efficient.

    It takes a village to feed a vampire, or a narcissistic sociopath.

    I relate this metaphor because I think it’s important for the average person to understand what we are really dealing with here. When some people recoil at the notion of a syndicate at the highest levels of finance and politics working towards nefarious purposes, they should know that this is easily explained not only in terms of historic myths and archetypes, but in well documented psychological study.

    Analysts and activists within the liberty movement have proven impressively immune to many of the narratives and lies of conspiratorial globalists, which is why they are now the main target of multiple propaganda campaigns. Globalists don’t feel comfortable climbing into their coffins to sleep during the day while so many Van Helsings are lurking about exposing their activities.

    The latest propaganda effort I have seen is the narrative of the “multipolar world” developing in the wake of what the IMF refers to as the “global economic reset.” In fact, the term “multipolar world” is being used in alternative media circles a lot these days, and this is once again a ploy designed to con us into believing that centralization is no longer a threat and that the divisions we see are real rather than fabricated.

    Under the multipolar narrative, we are told that the shift away from the U.S. dollar as the world reserve is now happening and that this is being led by Eastern political powers seeking alternatives. This is true, to a point.

    The lies surrounding this development are many, though. We are told that Eastern political powers are at odds with globalists and globalism — this is false. We are told that BRICS nations are seeking a decentralized system to replace dollar hegemony — this is false. We are told that Eastern leaders like Putin and Xi are countering the globalist power grab and are being targeted by the elites as if they are “rebelling” against the empire — this is also false. We are told that the trade war is a means for Donald Trump to disrupt globalization and throw a monkey wrench into the globalists plans — this is fantasy.

    Liberty activists and analysts are particularly susceptible to the idea because it plays on our desire to see the longstanding dollar-based empire of the Federal Reserve fall into the oblivion it deserves.  The problem is that the narrative is based on the fraudulent assumption that the globalist empire is rooted in the “American empire.”

    Here are the facts:

    Globalist influences are hyper-present in eastern nations. For example, Vladimir Putin, who is often depicted as some kind of anti-globalist hero in liberty movement discussions, is not anti-globalist at all. Putin was “discovered” by vocal new world order proponent Henry Kissinger decades ago in the early 1990s before he took on the role as acting president of Russia. Putin relates his first meeting with Kissinger and their longstanding friendship in the book First Person, his autobiographical account of his early career.

    Contrary to popular belief in the liberty movement, Putin DID NOT kick out international banks or remove their power structures during his presidential rise. In fact, Rothschild banks still operate in Russia to this day, while Goldman Sachs and JP Morgan continue to act as the largest investment banks in the country.

    The globalist presence in Russia is perhaps why the nation developed such a close relationship with the IMF after the fall of the Soviet Union, why they continue their ties to the IMF an the Bank for International Settlements to this day and why the Kremlin has in the past called for a new global currency system controlled by the IMF.

    China has also called for the same new monetary system, not decentralized, but completely centralized under the IMF. China has been under the influence of the Rockefeller Foundationsince around 1915, when they opened a university in the country based on the University of Chicago.  China continues its ties to the globalists through the BIS and IMF, and Goldman Sachsis heavily involved in Chinese government activities and business arrangements. Only last year, Goldman established a $5 billion deal with an arm of the Chinese government to make it easier to purchase companies and assets within the United States. Donald Trump praised the deal as beneficial to the U.S., which is not surprising considering the number of Goldman Sachs alumni Trump has involved in his cabinet.

    Trump has also had extensive dealings with the globalists, including Rothschild connected banking elites for the past 25 years. Wilber Ross, an investment banker working for the Rothschilds, was the primary agent that bailed Trump out of his considerable debts surrounding his Taj Mahal casino in Atlantic City. After Trump’s rise to the White House, he made Wilber Ross commerce secretary and Ross now heavily promotes the developing trade war.

    Clearly, there is no “division” between the world’s political leaders when it comes to who they are allied with. International banks  and globalist think tanks are involved with ALL of them. But what about the rest of the world in general? Isn’t the trade war causing division and decentralization among nations and economies? When you look at the very top of the pyramid, the divisions vanish.

    Consider Russia’s ongoing oil pipeline deal with Germany, or Russia’s latest deal to allow China to farm over 2.5 million acres of Russian land, helping directly combat U.S. sanctions. Or what about the Caspian Sea deal between Russia, Iran and multiple other countries to end the dispute over the region? And how about China’s defiance of sanctions on Iranian oil?  Or the EU’s growing protests over US interference in their oil trade with both Iran and Russia?

    These are just some of the latest examples of the rest of the world melding into a larger conglomerate in the wake of the trade war. The trade war is bringing all these supposedly disparate countries together in a way that is rather convenient for globalists. If we take into account the reality of globalist influence in all major economies, then we have to also take into account the possibility that the “global economic reset” is not about a “multipolar world,” but an even more centralized unipolar world. A world which sacrifices the U.S. model along with the dollar as world reserve and replaces it with something EVEN WORSE.

    In the meantime, liberty activists are lately being told that they should rally around the death of dollar and the global reset as if it is the end of globalism. In other words, we are supposed to stupidly believe that the shift to the new world order is “decentralization” simply because they call it “multipolar.” Just because the U.S. is no longer the face of the beast does not mean the beast is gone.

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  • Australia PM Turnbull Ousted, To Be Replaced With Morrison; Aussie Dollar Spikes

    One day after Australia slumped into a leadership crisis, when prime minister Malcolm Turnbull found that his support has collapsed, moments ago Liberal party lawmakers voted to oust Malcolm Turnbull, deepening political instability that’s seen six changes of prime minister in little more than a decade, Sky News reported. Turnbull will be replaced with Treasurer Scott Morrison, a far more market-friendly alternative than the more right-wing Peter Dutton, who had been cited as Turnbull’s most likely replacement.

    Malcolm Turnbull

    Morrison won 45 votes to 40 over former Cabinet minister Peter Dutton in a closed-door meeting of lawmakers, Sky said. Foreign Minister Julie Bishop was eliminated in the first round of voting.

    As Bloomberg notes, Morrison’s victory represents a defeat for the party’s right-wing, which advocated conservative policies similar to those that led to the rise of U.S. President Donald Trump and the vote for Brexit. He has a narrow window to unite the party and make up ground against the main opposition Labor party, which has benefited from the government’s inability to enact coherent policies from taxation to energy.

    Scott Morrison, Australia’s new Prime Minister

    News of Morrison’s ascent to the prime minister chair send the Aussie dollar higher by 0.5% to 0.7290 from 0.7250 before the news. The AUD dropped 1.4% on Thursday, the steepest slump since May 2017, as the political turmoil damaged sentiment toward the nation’s currency.

    Annette Beacher, head of Asia-Pac research at TD Securities issued the following note:

    “PM Morrison is the most market-friendly option, having successfully negotiated through multiple portfolios such as Social Security, Border Security, and more recently presiding over a substantial improvement in the budget balance as Treasurer.”

    “Parliament and the markets will be closely watching post-vote polls to gauge if Morrison can even up the balance towards the Liberal-National coalition and away from the Labor Party under Bill Shorten. The skew towards the Labor Party at this stage ensures they they will form government at the next election.”

    According to Bloomberg, Morrison has a narrow window to unite the party and boost its poll ratings, which slumped as Turnbull failed to craft coherent policies from taxation to energy. The government is trailing the main opposition Labor party by such a wide margin that defeat seems inevitable in elections due by May.

    The rotation at the top will hardly come as a shock: the change in leadership extends 11 years of political turmoil in Australia, with no prime minister serving a full term since 2007 (Australia has been lucky not to fall into a recession for the duration of time since then). This week’s crisis has infected the nation’s financial markets and prompted a string of business leaders to demand the government provide policy certainty.

    Some background on Australia’s new prime minister:

    The 50-year-old Morrison entered parliament in 2007, at the election that ended the Liberal’s 11-year rule under John Howard. After the party returned to power in 2013, Morrison was appointed immigration minister and charged with enacting ‘Operation Sovereign Borders’ aimed at stopping asylum seekers arriving in Australia by boat.

    Morrison was promoted to Treasurer in 2015, one of the most high-profile and powerful roles in government. While he has overseen a hiring boom and managed to shrink the budget deficit, the government has received little credit as wages stagnate and housing prices soar beyond the reach of many Australians.

  • Pentagon Prepares 2020 Production Of Upgraded Nuclear Bomb, Releases Video Of Test-Drop

    The B61 nuclear gravity bomb, deployed at most U.S. Air Force and North Atlantic Treaty Organization (NATO) military bases, has almost five decades of service, making it the oldest bomb in the US stockpile.

    Numerous programs have modified the B61 for safety, security, and reliability since it entered service in the late 1960s, including four B61 variants.

    However, the weapon system is quickly aging and has hit the upper extreme of its lifespan, as it seems the Pentagon is about to extend the life of the nuclear gravity bomb by another two decades.

    The upgraded, B61-12 LEP will replace all of the bomb’s nuclear and non‐nuclear components for another two decades, and improve the bomb’s safety, effectiveness, and security. This life extension program will address all age-related issues of the weapon, and enhance its reliability, field maintenance, safety, and use control.

    Los Alamos National Laboratory and Sandia National Laboratories are the design and engineering labs for the B61-12 LEP. In a recent presentation, the final design review will be conducted next month. Both firms indicated the first production unit would occur in FY 2020.

    In total, the bomb is 12 feet long and weigh approximately 825 pounds. The weapon will be air-delivered on current strategic (B-2A) and dual-capable aircraft (F-15E, F-16C/D & MLU, PA-200) as well as advanced aircraft platforms (F-35, B-21).

    An F-15E drops a B61-12 test unit during a development flight test (Source/ National Nuclear Security Administration (NNSA))

    An F-15E conducts a vibration fly-around test with B61-12 bombs (Source/ NNSA) 

    Last week, Sandia National Laboratories released an unclassified five-minute video showing the entire preparation process and the actual drop of inert B61-3/4 tactical nuclear bombs at the Tonopah Test Range in Nevada back in July 2017. The data compiled from the test is expected to be submitted into a report for the final design review next month before the first production unit is manufactured sometime in 2020.

    F-15E Strike Eagle jet dropping the first inert B61-3/4 tactical nuclear bomb (Source/  Sandia National Labs YouTube)

    The ultra-high-definition video centered around two McDonnell Douglas F-15E Strike Eagle jets deploying spin-stabilization rockets to drop B61-12 test bombs. A few seconds after the drop, parachutes open and the GPS-guided the dud slowly to the ground. The video shows a large team using sophisticated sensors to monitor the tests.

    A land-based sensor monitors bomb drop (Source/  Sandia National Labs YouTube)

    The video closes with ground crews retrieving one of the inert nuclear bombs. It also shows a bunker where three B61-12 test bombs appear to have recently been dropped, as the video only showed two. The bomb’s yield ranges from 0.3 to 50 kilotons. The first of the two nuclear weapons ever used, against the Japanese city of Hiroshima, had a 15-kiloton yield.

    The tests are part of a $7.6 billion life extension program of the B61s, which as we described above, aims to “refurbish, reuse, or replace all of the bomb’s nuclear and non‐nuclear components” and extend the service of the bomb by at least two decades. With the “first production unit” scheduled for completion in 2020, perhaps the Pentagon is preparing for future military conflict with Russia and or China.

  • "No Further Talks Scheduled": China-U.S. Trade Negotiations A Complete Bust

    When reports emerged last week of a low-level Chinese delegation coming to meet with members of the Treasury department ahead of what the WSJ described would be a November trade summit in the US, stocks spiked and yields ran up (they have since tumbled with the 2s10s yield curve collapsing to just 20 basis points) on hopes that the long-running trade feud between the US and China may finally be coming to an end.

    Skeptics laughed and said that after three rounds of failed trade talks, the fourth one would be no different.

    The skeptics were right because after the conclusion on Thursday of the second day of the closely watched trade talks between the U.S. and China, there was “no major progress” according to Bloomberg, with the stage once again set for further escalation of the trade war between the US and China.

    Worse, according to the Bloomberg source, not only are no further talks scheduled at this point but the Chinese officials have reportedly raised the possibility that no further negotiations could happen until after November’s mid-term elections in the U.S.

    The White House issued a statement which said the countries “exchanged views on how to achieve fairness, balance, and reciprocity in the economic relationship, including by addressing structural issues in China” identified by the U.S. in an investigation into Chinese intellectual-property practices. The Chinese commerce ministry was even more terse, stating that two nations had “constructive, candid” communication, and will keep in touch about the next steps.

    Translation: nobody was willing to compromise by even an inch.

    Here’s what happened according to the Bloomberg source:  the U.S. Treasury presented a revised version of the “provocative” list of demands presented by the Trump administration when the two sides had their first high-level meetings in May. The Chinese delegation, meanwhile, showed no signs of bringing any significant compromises to the table this week

    Even relative doves inside the Trump administration have begun pressing for China to make significant structural reforms by unwinding industrial subsidies and at least scaling back its “Made in China 2025” plan to lead the world in industries such as artificial intelligence and robotics.

    Yet the Chinese side has continued to offer only increased purchases of American commodities aimed at reducing the U.S. trade deficit, believing that is the best tactic to try and see off further U.S. tariffs, said the person familiar with the discussions.

    In other words, back to square one.

    The lack of any progress is understandable: as we reported earlier, Trump is convinced he is winning the trade war by simply observing the level of the stock market and the bear market in Chinese stocks.

    Meanwhile, for China “resistance” to Trump has become an issue of nationalistic pride with local media issuing increasingly more harsh and acerbic comments aimed at the White House; furthermore China may be observing the political fiascos engulfing the US president and may be growing more confident that it is only a matter of time before Trump is forced to fold. Beijing is also confident that after a humiliating – for Trump – midterm election outcome, the president will have no choice but to come to the negotiating table waving a white flag.

    Whatever the case, the Chinese came, saw, and nothing happened.

    The conclusion of the pointless two-day talks came just hours after Beijing and Washington rolled out their latest round of tit-for-tat tariffs on Thursday in which $16 billion in imports hit by each side took the total value of goods covered as a result of President Donald Trump’s trade war with China to $100 billion.

    And with no progress on trade war negotiations, the Trump administration is now set to enact a far larger tranche of tariffs covering some 6,000 products from China with an annual import value of $200 billion that are expected to take effect as early as next month.

    But while the US stock market has so far ignored the threat of a global economic slowdown as a result of relentless trade war escalation, this time it may be forced to pay attention:

    That move and the anticipated retaliation from the Chinese would mark the largest escalation so far of the trade war between the two economies and take it into new territory in terms of both scale and by starting to hit American consumers more directly.

    Clearly oblivious of any downside risk from further escalation, Trump on Thursday highlighted new tougher restrictions aimed at Chinese investment in the U.S. at a White House event and said he was committed to continuing his trade fight against China.

    “We can’t allow the things that were happening to happen,” Trump said during a meeting with legislators.

    Pouring fuel on the fire, Trump further accused Beijing of engaging in currency manipulation, long one of the most sensitive points of friction between the two countries.

    What are the immediate next steps?

    According to Bloomberg, U.S. officials will next meet in Washington on Friday with delegations from the European Union and Japan “to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and the conduct of its state-owned enterprises.” How China will respond to the US trying to gang up on it is unclear, but it will hardly welcome the pivot.

    But of greater concern for risk assets is that trade hawks including US trade rep Robert Lighthizer are eager to move forward with plans to impose tariffs on the additional $200 billion in Chinese imports: the goods to be covered in the next round of tariffs range from chemicals, raw materials and seafood to vacuums, bicycles and furniture. The U.S. could impose the duties after a comment period ends Sept. 6.

    The next escalation round – which is now virtually assured – takes place even as US corporations are becoming increasingly vocal against the ongoing feud, amid concerns for their profitability: in hearings this week in Washington, U.S. companies and industry lobbyists have been offering their mostly negative feedback on the proposed additional duties of as much as 25 percent.

    “This is a political game being played with my company as the game piece,” Ross Bishop, president of BrightLine Bags Inc., testified on Monday. The California-based company makes nylon gear bags for pilots and other customers, and Bishop pleaded with the trade panel to “help me keep my company alive.”

    All of that is irrelevant, however, as long as the US stock market keeps rising, which it will: recall that August is the peak month for buybacks…

    … while Chinese stocks drop further into bear territory and the yuan resumes it slide to 7.00 and beyond: a number, which based on the latest price action – despite the recent interventions by the PBOC aimed at crippling the shorts – should be hit in very short notice.

  • Whitehead On 'Battlefield America': The Ongoing War On The American People

    Authored by John Whitehead via The Rurtherford Institute,

    “A government which will turn its tanks upon its people, for any reason, is a government with a taste of blood and a thirst for power and must either be smartly rebuked, or blindly obeyed in deadly fear.”—John Salter

    Police in a small Georgia town tasered a 5-foot-2, 87-year-old woman who was using a kitchen knife to cut dandelions for use in a recipe. Police claim they had no choice but to taser the old woman, who does not speak English but was smiling at police to indicate she was friendly, because she failed to comply with orders to put down the knife.

    Police in California are being sued for using excessive force against a deaf 76-year-old woman who was allegedly jaywalking and failed to halt when police yelled at her. According to the lawsuit, police searched the woman and her grocery bags. She was then slammed to the ground, had a foot or knee placed behind her neck or back, handcuffed, arrested and cited for jaywalking and resisting arrest.

    In Alabama, police first tasered then shot and killed an unarmed man who refused to show his driver’s license after attempting to turn in a stray dog he’d found to the local dog shelter. The man’s girlfriend and their three children, all under the age of 10, witnessed the shooting.

    In New York, Customs and Border Protection officers have come under fire for subjecting female travelers (including minors) to random body searches that include strip searches while menstruating, genital probing, and forced pelvic exams, X-rays and intravenous drugs at area hospitals.

    At a California gas station, ICE agents surrounded a man who was taking his pregnant wife to the hospital to deliver their baby, demanding that he show identification. Having forgotten his documents at home in the rush to get to the hospital, the husband offered to go get them. Refusing to allow him to do so, ICE agents handcuffed and arrested the man for not having an ID with him, leaving his wife to find her way alone to the hospital. The father of five, including the newborn, has lived and worked in the U.S. for 12 years with his wife.

    These are not isolated incidents.

    These cases are legion.

    This is what a state of undeclared martial law looks like, when you can be arrested, tasered, shot, brutalized and in some cases killed merely for not complying with a government agent’s order or not complying fast enough.

    This isn’t just happening in crime-ridden inner cities.

    It’s happening all across the country.

    America has been locked down.

    This is what it’s like to be a citizen of the American police state.

    This is what it’s like to be an enemy combatant in your own country.

    This is what it feels like to be a conquered people.

    This is what it feels like to be an occupied nation.

    This is what it feels like to live in fear of armed men crashing through your door in the middle of the night, or to be accused of doing something you never even knew was a crime, or to be watched all the time, your movements tracked, your motives questioned.

    This is what it feels like to have your homeland transformed into a battlefield.

    Mind you, in a war zone, there are no police – only soldiers. Thus, there is no more Posse Comitatus prohibiting the government from using the military in a law enforcement capacity. Not when the local police have, for all intents and purposes, already become the military.

    In a war zone, the soldiers shoot to kill, as American police have now been trained to do. Whether the perceived “threat” is armed or unarmed no longer matters when police are authorized to shoot first and ask questions later.

    In a war zone, even the youngest members of the community learn at an early age to accept and fear the soldier in their midst. Thanks to funding from the government, more schools are hiring armed police officers—some equipped with semi-automatic AR-15 rifles—to “secure” their campuses.

    In a war zone, you have no rights. When you are staring down the end of a police rifle, there can be no free speech. When you’re being held at bay by a militarized, weaponized mine-resistant tank, there can be no freedom of assembly. When you’re being surveilled with thermal imaging devices, facial recognition software and full-body scanners and the like, there can be no privacy. When you’re charged with disorderly conduct simply for daring to question or photograph or document the injustices you see, with the blessing of the courts no less, there can be no freedom to petition the government for a redress of grievances.

    And when you’re a prisoner in your own town, unable to move freely, kept off the streets, issued a curfew at night, there can be no mistaking the prison walls closing in.

    This is happening and will happen anywhere and everywhere else in this country where law enforcement officials are given carte blanche to do what they like, when they like, how they like, with immunity from their superiors, the legislatures, and the courts.

    You see, what Americans have failed to comprehend, living as they do in a TV-induced, drug-like haze of fabricated realities, narcissistic denial, and partisan politics, is that we’ve not only brought the military equipment used in Iraq and Afghanistan home to be used against the American people.

    We’ve also brought the very spirit of the war home.

    “We the people” have now come full circle, from being held captive by the British police state to being held captive by the American police state.

    In between, we have charted a course from revolutionaries fighting for our independence and a free people establishing a new nation to pioneers and explorers, braving the wilderness and expanding into new territories. 

    Where we went wrong, however, was in allowing ourselves to become enthralled with and then held hostage by a military empire in bondage to a corporate state (the very definition of fascism). 

    No longer does America hold the moral high ground as a champion of freedom and human rights. Instead, in the pursuit of profit, our overlords have transformed the American landscape into a battlefield, complete with military personnel, tactics and weaponry.

    To our dismay, we now find ourselves scrambling for a foothold as our once rock-solid constitutional foundation crumbles beneath us. And no longer can we rely on the president, Congress, the courts, or the police to protect us from wrongdoing. 

    Indeed, the president, Congress, the courts, and the police have come to embody all that is wrong with America.

    For instance, how does a man who is relatively healthy when taken into custody by police lapse into a coma and die while under their supervision?

    What kind of twisted logic allows a police officer to use a police car to run down an American citizen and justifies it in the name of permissible deadly force?

    And what country are we living in where the police can beat, shoot, choke, taser and tackle American citizens, all with the protection of the courts?

    Certainly, the Constitution’s safeguards against police abuse means nothing when government agents can crash through your door, terrorize your children, shoot your dogs, and jail you on any number of trumped of charges, and you have little say in the matter. For instance, San Diego police, responding to a domestic disturbance call on a Sunday morning, showed up at the wrong address, only to shoot the homeowner’s 6-year-old service dog in the head.

    Rubbing salt in the wound, it’s often the unlucky victim of excessive police force who ends up being charged with wrongdoing. Although 16-year-old Thai Gurule was charged with resisting arrest and strangling and assaulting police officers, a circuit judge found that it was actually the three officers who unlawfully stopped, tackled, punched, kneed, tasered and yanked his hair who were at fault. Thankfully, bystander cell phone videos undermined police accounts, which were described as “works of fiction.”

    Not even our children are being spared the blowback from a growing police presence.

    As one juvenile court judge noted in testimony to Congress, although having police on public school campuses did not make the schools any safer, it did result in large numbers of students being arrested for misdemeanors such as school fights and disorderly conduct. One 11-year-old autistic Virginia student was charged with disorderly conduct and felony assault after kicking a trashcan and resisting a police officer’s attempt to handcuff him. A 14-year-old student was tasered by police, suspended and charged with disorderly conduct, resisting arrest and trespassing after he failed to obey a teacher’s order to be the last student to exit the classroom.

    There is no end to the government’s unmitigated gall in riding roughshod over the rights of the citizenry, whether in matters of excessive police powers, militarized police, domestic training drills, SWAT team raids, surveillance, property rights, overcriminalization, roadside strip searches, profit-driven fines and prison sentences, etc.

    The president can now direct the military to detain, arrest and secretly execute American citizens. These are the powers of an imperial dictator, not an elected official bound by the rule of law. This mantle is worn by whomever occupies the Oval Office now and in the future.

    A representative government means nothing when the average citizen has little to no access to their elected officials, while corporate lobbyists enjoy a revolving door relationship with everyone from the President on down. Indeed, while members of Congress hardly work for the taxpayer, they work hard at being wooed by corporations, which spend more to lobby our elected representatives than we spend on their collective salaries. For that matter, getting elected is no longer the high point it used to be. As one congressman noted, for many elected officials, “Congress is no longer a destination but a journey… [to a] more lucrative job as a K Street lobbyist… It’s become routine to see members of Congress drop their seat in Congress like a hot rock when a particularly lush vacancy opens up.”

    As for the courts, they have long since ceased being courts of justice. Instead, they have become courts of order, largely marching in lockstep with the government’s dictates, all the while helping to increase the largesse of government coffers. It’s called for-profit justice, and it runs the gamut of all manner of financial incentives in which the courts become cash cows for communities looking to make an extra buck. As journalist Chris Albin-Lackey details, “They deploy a crushing array of fines, court costs, and other fees to harvest revenues from minor offenders that these communities cannot or do not want to raise through taxation.” In this way, says Albin-Lackey, “A resident of Montgomery, Alabama who commits a simple noise violation faces only a $20 fine—but also awhopping $257 in court costs and user fees should they seek to have their day in court.”

    As for the rest—the schools, the churches, private businesses, service providers, nonprofits and your fellow citizens—many are also marching in lockstep with the police state.

    This is what is commonly referred to as community policing.

    After all, the police can’t be everywhere. So how do you police a nation when your population outnumbers your army of soldiers? How do you carry out surveillance on a nation when there aren’t enough cameras, let alone viewers, to monitor every square inch of the country 24/7? How do you not only track but analyze the transactions, interactions and movements of every person within the United States?

    The answer is simpler than it seems: You persuade the citizenry to be your eyes and ears.

    It’s a brilliant ploy, with the added bonus that while the citizenry remains focused on and distrustful of each other, they’re incapable of focusing on more definable threats that fall closer to home—namely, the government and its militarized police. 

    In this way, we’re seeing a rise in the incidence of Americans being reported for growing vegetables in their front yard, keeping chickens in their back yard, letting their kids walk to the playground alone, and voicing anti-government sentiments. For example, after Shona Banda’s son defended the use of medical marijuana during a presentation at school, school officials alerted the police and social services, and the 11-year-old was interrogated, taken into custody by social workers, had his home raided by police and his mother arrested.

    Now it may be that we have nothing to worry about.

    Perhaps the government really does have our best interests at heart.

    Perhaps covert domestic military training drills really are just benign exercises to make sure our military is prepared for any contingency. 

    Then again, while I don’t believe in worrying over nothing, it’s safe to say that the government has not exactly shown itself to be friendly in recent years, nor have its agents shown themselves to be cognizant of the fact that they are civilians who answer to the citizenry, rather than the other way around.

    As Aldous Huxley warned in Brave New World Revisited, “Liberty cannot flourish in a country that is permanently on a war footing, or even a near-war footing. Permanent crisis justifies permanent control of everybody and everything by the agencies of the central government.”

    Whether or not the government plans to impose some more overt form of martial law in the future remains to be seen, but there can be no denying that we’re being accustomed to life in a military state. 

    The malls may be open for business, the baseball stadiums may be packed, and the news anchors may be twittering nonsense about the latest celebrity foofa, but those are just distractions from what is really taking place: the transformation of America into a war zone.

    As I document in my book Battlefield America: The War on the American People, if it looks like a battlefield (armored tanks on the streets, militarized police in metro stations, surveillance cameras everywhere), sounds like a battlefield (SWAT team raids nightly, sound cannons to break up large assemblies of citizens), and acts like a battlefield (police shooting first and asking questions later, intimidation tactics, and involuntary detentions), it’s a battlefield.

    Indeed, what happened in Ocala, Florida, is a good metaphor for what’s happening across the country: Sheriff’s deputies, dressed in special ops uniforms and riding in an armored tank on a public road, pulled a 23-year-old man over and issued a warning violation to him after he gave them the finger. The man, Lucas Jewell, defended his actions as a free speech expression of his distaste for militarized police.

    Translation: “We the people” are being hijacked on the highway by government agents with little knowledge of or regard for the Constitution, who are hyped up on the power of their badge, outfitted for war, eager for combat, and taking a joy ride—on taxpayer time and money—in a military tank that has no business being on American soil.

    Rest assured, unless we slam on the brakes, this runaway tank will soon be charting a new course through terrain that bears no resemblance to land of our forefathers, where freedom meant more than just the freedom to exist and consume what the corporate powers dish out.

    Rod Serling, one of my longtime heroes and the creator of The Twilight Zone, understood all too well the danger of turning a blind eye to evil in our midst, the “things that scream for a response.” As Serling warned, “if we don’t listen to that scream – and if we don’t respond to it – we may well wind up sitting amidst our own rubble, looking for the truck that hit us – or the bomb that pulverized us. Get the license number of whatever it was that destroyed the dream. And I think we will find that the vehicle was registered in our own name.”

    If you haven’t managed to read the writing on the wall yet, the war has begun.

  • More Americans Forced to Drop Traditional Health Insurance In Favor Of Cheaper Alternatives

    More and more cash-strapped Americans are reportedly seeking “alternative” ways to cover themselves with cheaper healthcare, as an exodus from traditional health insurance plans continues.

    Traditional health plans are now pricing people out of the market and consumers are looking closely at alternatives. Many consumers are finding cost relief in alternatives like healthcare-sharing ministries, which are cost sharing plans usually rooted in local religious communities. A Bloomberg report found that the number of people joining these sharing ministries was up 74% from 2014 to 2016. More than 1 million people are participants in these programs.

    The report details the story of one family, the Bergevins, who realized that they had to make some big changes in their healthcare when they were charged $7,000 in out-of-pocket expenses that their insurance didn’t cover after their son was born. Two years after the birth of their son, the couple ditched their health insurance plan, a move that helped them pay off the $7,000 debt.

    As the couple prepares to have their second child, they have since decided not to go back to traditional coverage and instead to use a combination of a religious group and a primary care doctor that they can pay monthly. “I was so jaded with the whole health-care insurance situation,” the mother, Lindsie, told Bloomberg.

    These monthly payment-style primary care clinics are also popping up more often. There are now almost 900 of them, up from “just a handful” in the early 2000‘s.

    The sea change in plans for Americans comes at the same time that the number of people without traditional insurance is expected to increase as a result of the Trump administration‘s latest modification of the Affordable Care Act (“ACA”). Eliminating the penalty for those who go without insurance, combined with pushing for shorter term healthcare products, have both acted as catalyst for people to leave their traditional plans.

    Even though the ACA expanded coverage to 19 million Americans, 28 million people still remain uninsured.

    The Bergevins utilized a calculator provided by insurer Aetna, prior to the birth of their first son, to estimate costs. They were initially informed that it would probably cost $3,000-$4,000 out-of-pocket. The actual bills wound up being almost double that. The couple then had another hardship in 2016, when Lindsie needed to have surgery of her own, tacking on several thousand dollars more in bills. The couple put these bills on a credit card that they are paying $300 a month toward.

    There finally came a breaking point where the couple just couldn’t reconcile maintaining their traditional coverage:

    “I couldn’t justify it,” she says. The cheapest policy she could find through the Affordable Care Act, she recalls, was $547 a month—more than half the family’s $875 monthly rent at the time. It had a high deductible that could leave them with out-of-pocket costs of more than $10,000.

    “If something were to happen to us, we would have been in trouble,” she acknowledges. To hedge, the couple bought an inexpensive accident policy from Aflac that would cover some costs from an injury if, for example, Chris hurt himself working.

    The couple instead enlisted the help of a small primary care clinic that was local to them. The doctor at the clinic, Julie Gunther, had also grown tired of the traditional healthcare system. Gunther was tired of working for a large hospital system and didn’t like the fact that she was paid based on the volume of her patients and services billed. The 15 minute appointment times made her feel “like a factory worker“ and she eventually got tired of apologizing to her patients for not having enough time for them.

    “I was saying ‘I’m sorry’ all the time,” Gunther, 42, recalls. “I’m sorry I’m late, I’m sorry this didn’t get called in, I’m sorry this got forgotten, I’m sorry they didn’t give me the message.”

    Gunther eventually quit her job and started her own practice, where the Bergevin and family wound up. Gunther cares for about 600 patients, which is about 30% to 50% of the workload that a normal primary care physician cares for. Families like the Bergevins like the increased time that the doctor can spend with them as a result. “It was amazing. She sat down with me for an hour and talked about everything,” Lindsie told Bloomberg.

    And while the Gunther isn’t able to deal with severe injuries…

    Gunther tells her patients that belonging to her practice is not a replacement for having health insurance.

    “There’s a whole bunch of things I can’t take care of,” Gunther says. “If you’re not standing upright, or bleeding doesn’t stop, do not call me.”

    …something as simple as an ear infection was dealt with quickly and on the cheap when it became an issue for the Bergevin family last year:

    Last year, Lindsie Bergevin had a bad fever and what she described as “the worst pain I think I ever had in my head.” She called Gunther at 9:30 p.m. on a Saturday. Gunther met her at the clinic 15 minutes later. “She’s like, ‘Girl, you have a double ear infection, and the worst I’ve ever seen.’”

    Bergevin walked out with an antibiotic and says that if Gunther hadn’t seen her, she would’ve gone to the emergency room, which could have resulted in a bill for hundreds or thousands of dollars.

    But religious-based non-profits like Liberty HealthShare, the organization that the Bergevins joined, also come with their own sets of caveats. For instance, they won’t cover medical expenses from behaviors that they deem immoral, like drunk driving car crashes. They also won’t pay for contraception. In addition, they also limit coverage of pre-existing conditions for up to three years. Despite this, their deductible of $2,250 was found to be “a ton cheaper than a typical deductible“ by the family. Liberty also caps reimbursements at $1 million, while traditional insurers are not allowed to set such limits.

    With the government obviously unable to provide the best course of action for everybody given their unique sets of circumstances, stories like the Bergevins seem to lend credence to the argument that each individual and each family should “buy their own” and do what they deem best for their own personal situations. 

    “You have to find something that’s going to work for you,” Lindsie told Bloomberg.

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