Jan 25

Today’s News 25th January 2018

  • Comey, Rosenstein, McCabe All Named In FISA Memo, According To First Leak

    A bombshell four-page “FISA memo” alleging egregious surveillance abuse by the FBI, DOJ and Obama administration, specifically names FBI Deputy Director Andrew McCabe, former FBI Director James Comey and Deputy Attorney General Rod Rosenstein, according to the Daily Beast. 

    The GOP-authored memo made waves last week after it was made available to the full House of Representatives for viewing. With over 60 GOP lawmakers calling for its release, Capitol Hill sources on both sides of the aisle tell The Daily Beast that it’s only a matter of time before the general public is allowed to view the document – which is likely to stoke already-inflamed tensions between GOP lawmakers and the individuals named in the leak. 

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    The facts contained in the Republican majority-authored report are said to be “jaw-dropping and demand full transparency,” according to Rep. Matt Gaetz (R-FL), while the top ranking Democrat on the House Intel Committee, Adam Schiff (D-CA) dismissed the memo as “profoundly misleading” talking points drafted by Republican staffers. 

    Several other GOP Congressmembers have weighed in. “I have read the memo,” tweeted Rep. Steve King (R-IA), adding “The sickening reality has set in. I no longer hold out hope there is an innocent explanation for the information the public has seen. I have long said it is worse than Watergate. It was #neverTrump & #alwaysHillary. #releasethememo.”

    Along with the four-page memo, Congressional investigators learned from a new batch of text messages between anti-Trump FBI investigators that several individuals within the Department of Justice and the FBI may have come together in the “immediate aftermath” of the 2016 election to undermine President Trump, according to Rep. John Ratcliffe (R-TX) who has reviewed the texts.

    This is particularly interesting since the memo allegedly names Deputy Attorney General Rod Rosenstein – who created Robert Mueller’s special counsel after former FBI Director James Comey was fired. 

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    While the “secret society” reference may have been in jest (“Are you even going to give out your calendars? Seems kind of depressing. Maybe it should just be the first meeting of the secret society,” Page wrote to Strzok), a whistleblower has allegedly confirmed the existence of clandestine, of high ranking U.S. intelligence officials which met “offsite” to conspire against a sitting President, according to Sen. Ron Johnson (R-WI). 

    “we have an informant talking about a group holding secret meetings off-site,” Johnson said.

    “We have to continue to dig into it,” he added. “This is not a distraction. This is biased, potentially corruption at the highest levels of the FBI.” –The Hill

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    On Monday night, Reps. John Ratcliffe (R-TX) and Trey Gowdy (R-SC) told Fox News what they had learned from the new batch of communications between FBI investigators Peter Strzok and Lisa Page – contained within a 384-page batch of text messages delivered to Congress from the DOJ last Friday. Of note Ratcliffe says that Strzok and Page were included in the clandestine anti-Trump cabal at the highest levels of the American intelligence community. 

    In response to the memo, Congressional Democrats led by Adam Schiff (D-CA) drafted a “counter-memo” to “correct the record” regarding alleged FISA abuse contained within the GOP memo. 

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    Schiff’s “counter-memo” came on the heels of an absurd letter written by Schiff and Dianne Feinstein (D-CA) to Facebook and Twitter executives, calling for the Social Media giants to combat “Russian bots” which were promoting the hashtag #ReleaseTheMemo.

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    The letter’s claims were immediately shot down by Facebook, which told the Daily Beast that #ReleaseTheMemo hashtag has been pushed by actual Americans. 

    a knowledgeable source says that Twitter’s internal analysis has thus far found that authentic American accounts, and not Russian imposters or automated bots, are driving #ReleaseTheMemo. There are no preliminary indications that the Twitter activity either driving the hashtag or engaging with it is either predominantly Russian.

    In short, according to this source, who would not speak to The Daily Beast for attribution, the retweets are coming from inside the country.

  • Supersonic Air Drills: Russia's Pacific Fleet Prepares For Enemy Incursion

    Russian military jets of the Pacific Fleet’s naval aviation unit (Pacific Fleet) in Kamchatka, a peninsula in the Russian Far East, have been drilling at supersonic speeds along the country’s Pacific coastline preparing for a rapid enemy incursion.

    Earlier this week, fighter-pilots conducted supersonic air battles as high as 20km (12.4274-miles) in the stratosphere, while they simulated intercepting enemy fighter aircraft at high rates of speed, said Itar-Tass. One of the fighter jets had to find and intercept the second, who played the violator, without using land-based technologies such as air defense weapons, the official representative of the Pacific Fleet, Nikolai Voskresensky, stated.

    “The high-altitude fighter-interceptor MiG-31, flying at an altitude of about 20 km, acted as a violator of the air border, before the crew of the ‘intruder’ was to penetrate at the maximum speed into the airspace of Russia, to go through the established line and escape from possible persecution. On the alert from the Yelizovo air base (Kamchatka Krai), the MiG-31 interceptor was raised . In order to complicate the task, the search for and destruction of the “offender” was ordered by the MiG-31 crew independently, without the involvement of ground agents Defense “

    – said the Resurrection via Itar-Tass.

    According to Itar-Tass, the pilots of the Mig-31s cruised at supersonic speeds of more than 2200 km/h (1367 mph) and located the “intruder” aircraft at an altitude of nearly 20km (12.4274-miles) in the stratosphere. The Russian paper further says all “intruders” were eliminated and the mission ended in success. Voskresenskiy said the intercepting aircraft fired on the intruding aircraft from a distance of 100km (60 miles). In pace of actual missiles, the planes used special electronic signaling to simulate the kill.

    The Mikoyan MiG-31 is a Cold War-era jet, designed by the Mikoyan and Gurevich Design Bureau, which is now called Russian Aircraft Corporation MiG. NATO codenamed the Mig-31 “Foxhound,” after its impressive acceleration and interception abilities to deter and attack high-altitude intruders.

    The air drill serves as a warning sign that Russia is preparing its air defenses for conflict, especially in the Russian far east. More importantly, the type of exercise signals that Russia is making adjustments for high altitude combat. Russian Pacific Forces on the Kamchatka peninsula, are some of the first lines of defense against an enemy incursion in the air or by sea on its Pacific Coast.

    While the Trump administration prepares the American people and its allies for war on the Korean Peninsula, the Russians have taken note and have conducted wartime preparations before the powder-keg ignites in North Korea. The countdown has started, the writing is on the wall, otherwise, why are militaries in the region all rushing at the same time to prepare for war?

  • ECB Preview: Why This May Not Be An Easy Press Conference For Draghi

    With RanSquawk

    • Unanimous expectations look for the ECB to leave its three key rates unchanged
    • Focus will fall on what hints/if any Draghi delivers on the future path of the Bank’s PSPP
    • Markets will also be looking out for any potential comments from the ECB President on the ongoing EUR appreciation

    During the last two weeks markets have reacted to every single comment from ECB speakers. As Bank of America writes, far from the “peace and quiet” the ECB probably thought it had bought itself last October, this clearly suggests the press conference this week will not be an easy one for Draghi. This reflects what some have highlighted before: changing one part of forward guidance opens the door to the market questioning every single bit of it.

    Communication risks will abound. Getting the right dosage in the successive changes in language will be tricky, especially if divisions appear within the Governing Council. Higher volatility is likely to be a side-effect as we have seen in recent days.  Hence, expect Draghi to emphasize two main messages.

    • First, that any changes to communication, the most relevant ones, will only be very gradual. The minutes were clearly laying the ground for a gradual change in communication.
    • Second, that the sequencing is an ironclad element of forward guidance. Reaffirmation of “sequencing” will be a recurring and crucial element of communication. And do not forget that today’s sequencing also states that rates would not rise before “well after” the end of the net purchases, not just “after”. At this stage, given the prevailing bearishness on inflation, the ECB will maintain this to stop the market from pricing the first hikes too quickly into late 2018/early 2019 and the currency from strengthening further.
    • BofA’s sees risks of a more hawkish outcome, but that does not affect the timing of the first rate hike but the speed of the hiking cycle once it starts. The need to avoid further tightening both through real rates and the currency, limits the extent to which hikes can be brought earlier in time. A smooth transition to a new normal with no net QE purchases and forward guidance transitioning from QE to rates requires credible communication. Reversing the sequencing would damage that credibility. Those expecting rate hikes at the end of this year may end up being disappointed.

    Do not expect any major change to forward guidance this week apart from the removal of the asymmetry in QE, which is not consequential.

    Will Draghi Talk The EUR Lower?

    In the run up to this weeks’ rate decision, a number of ECB officials have been vocal in their attempts to curb the recent rise in the EUR. These comments have coincided with the rally toward 1.23 in EUR/USD which appears to be a de facto line in the sand for many officials. The EUR/USD has benefitted from cyclical support as markets increasingly focus on ECB QE-exit and a shift in ECB forward guidance toward more conventional (rates focussed) guidance. While the December ECB Minutes have effectively consigned the QE era to history the cyclical outperformance of the EUR may have run its course and the single currency is vulnerable to comments from President Draghi during the Q&A session who may take the opportunity to address the recent appreciation.

    While much of the attention has been on the EUR/USD rate, it is worth emphasizing that the EUR TWI is less than 0.5% higher since the start of the year. In this context, the appreciation of EUR is less impressive than the 2% rally in EUR/USD against the backdrop of broad-based USD declines. This may be relevant for Draghi given the appreciation in EUR/USD was accompanied by a 9% appreciation of the EUR TWI January 2017 – September 2017, which prompted his comments that EUR performance required monitoring. Given the slew of comments from ECB officials last week, markets are probably expecting FX to be addressed by Draghi. The risks are that he sounds more sanguine. It also makes the up/downside of bearish EUR bets ahead of the ECB announcement especially attractive.

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    PREVIOUS MEETING: At the previous meeting, the ECB reiterated their existing guidance on asset purchases, upgraded 2017 through 2019 growth forecasts (2018 upgraded to 2.3% from 1.8%) with Draghi during his press conference stating that the ECB did not discuss a sudden end or an end date for asset purchases.

    ECB DECEMBER MINUTES: The key takeaway was the Bank announcing that forward guidance and the language surrounding their policy stance could be revisited in the early stages of this year. Furthermore, the minutes revealed that communication would need to change but without changing sequencing.

    SOURCE REPORTS: In the immediate aftermath of the December meeting, sources suggested that a minority of ECB Rate Setters wanted to signal guidance may change if inflation keeps accelerating but hawks were easily out-numbered and the debate was not heated. More recent source reports have suggested that the ECB are unlikely to drop the pledge this week to keep buying bonds until inflation heads towards target, with separate reports stating that the Governing Council are relatively relaxed about EUR appreciation; policy wording most likely changed in March.

    DATA: From a data perspective, RBC highlight that the growth picture has remained strong with Q3 GDP recently revised higher to 0.7% (Exp. 0.6%), with the real test for the ECB to come throughout the year given their mammoth 2018 growth upgrade from 1.8% to 2.3%. Further to growth prospects, December PMIs revealed growth in the manufacturing sector at an all-time high with services at the highest since 2011 with HSBC suggesting that EUR appreciation is yet to dent Eurozone exporters. On the inflation front, things are perhaps less upbeat with December core CPI stuck at 0.9% for the third consecutive month and the potential for EUR appreciation to cap upside in inflation in the coming months.

    CURRENT ECB FORWARD GUIDANCE (INTRODUCTORY STATEMENT)

    • RATES: We continue to expect them to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. (Dec 14th)
    • ASSET PURCHASES: From January 2018 we intend to continue to make net asset purchases under the asset purchase programme (APP), at a monthly pace of EUR 30bln, until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase the APP in terms of size and/or duration. (Dec 14th)
    • GROWTH: Risks surrounding the euro area growth outlook remain broadly balanced. (Dec 14th)
    • INFLATION: The strong cyclical momentum and the significant reduction of economic slack give grounds for greater confidence that inflation will converge towards our inflation aim. At the same time, domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend. An ample degree of monetary stimulus therefore remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term. (Dec 14th)

    POTENTIAL ADJUSTMENTS TO ECB FORWARD GUIDANCE (INTRODUCTORY STATEMENT)

    • RATES: Guidance on rates is likely to be maintained with RBC highlighting that the most recent ECB minutes stressed that there will be no changes to the current wording on the sequencing of policy changes i.e. that rates will not be lifted until asset purchase have concluded. As such, focus on rates may well take a back seat this time round.
    • ASSET PURCHASES: Despite the December minutes release stating that guidance could be ‘revisited in the early stages of this year’, many feel that January is perhaps too early an opportunity for the Bank to unveil any major changes on this front with March seen as a more opportune time. HSBC state that a January adjustment is unlikely due to 1) disappointing inflation levels 2) the ECB will wish to avoid an ‘unwarranted tightening of monetary policy conditions. However, Pictet suggest that this meeting could see the removal of the ‘in terms of size’ option from their guidance.
    • GROWTH: Unlikely to see much in the way of changes this time round with Pictet looking for current guidance to eventually change to ‘upside risks to the euro area growth outlook are building’ if the 2018 growth picture develops as expected.
    • INFLATION: In-fitting with recent data releases, ING look for Draghi to maintain his existing dovish tone on inflation, pointing to still weak inflationary pressures whilst emphasising the disinflationary impact from the stronger EUR. However, UBS note that Draghi will most likely have to pay some acknowledgement to the recent climb in oil prices (currently 12% above ECB 2018 assumptions) and the potential impact on CPI going forward.

    WHAT TO WATCH OUT FOR

    • DISCUSSIONS ON THE FUTURE OF THE PSPP: As discussed above, any changes to guidance in the Bank’s statement are likely to come at a later date or be minor at this stage. As such, a bulk of the focus instead will be on what/if any hints Draghi delivers on discussions about concluding the PSPP. Last time round, Draghi tried to downplay that such discussions took place and will most likely try and do the same this week in order to avert a tightening of monetary conditions. However, Draghi will have a tough time batting away questions from journalists given the December minutes which could see the ECB President pressed on the timing and scope of changes in guidance. HSBC highlight that at the October meeting, ‘Draghi had said that QE would not have stopped suddenly, but at the December one he refused to answer a similar question’. Therefore, any follow up to this will be closely watched by markets in an attempt to assess how much sway/if any the hawks are having on the debate at the Bank with recent rhetoric from uber-hawk Hansson continuing to bang the drum for a sudden conclusion to purchases. That said, ultimately, Morgan Stanley don’t expect any major shift in guidance until March (alongside ECB staff projections) with a clear statement on the timing of purchases not expected until June. Note: markets will also be on the lookout for source reports in the aftermath of the press conference if some of the hawks view Draghi’s communications as too dovish or not representative of the discussions that took place.
    • EUR EXCHANGE RATE: Another source of focus has been on recent EUR appreciation which has subsequently lead some of the bloc’s central bank heads to come out and comment on the matter. More specifically, the likes of Nowotny and Villeroy have suggested that the exchange rate must be monitored with Constancio adding that concern will only arise if movements in the EUR do not reflect market fundamentals. These comments were then followed up by source reports late last week suggesting that overall the ECB are relaxed about EUR appreciation. As such, the issue may not make it into the introductory statement but will likely be a topic of discussion in the Q&A (it is a rarity for the ECB to discuss the exchange rate in their introductory statement, additionally Draghi has often rebuffed questions on the matter by stating that the ECB does not target the exchange rate). If quizzed about the matter, Berenberg argue that Draghi is unlikely to raise too much alarm at this stage due to 1) the EUR only being 1.2% stronger than the rate used in December 2017 and 2) ECB calculations have shown that a stronger euro does not weigh on the Eurozone economy as much as in the past. Note, that if Draghi was to insert a comment on the EUR exchange rate into the statement, previous communication in September stated ‘the recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability’.
    • COMPOSITION OF PURCHASES: Another issue that Draghi could be quizzed on or feel the need to comment on is this year’s composition of purchases with the Bank yet to clarify the breakdown of purchases throughout the year. Berenberg highlight that based on purchase data this year, ‘data for January so far suggests that the cut in the purchase programme has fallen largely, if not completely on sovereign bonds –if one were to extrapolate the weekly data to the whole month, from currently EUR 50bln monthly down to EUR 20bln in 2018, with EUR 10bln monthly for the sum of corporate bonds, covered bonds and ABS.’ Therefore, journalists may chose to press the President on this issue to see if it is representative of the Bank’s purchases going forward.

    MARKET REACTION

    As ever with the ECB, markets can see multiple waves of reactions throughout the decision and press conference. As discussed above, two of the key factors for markets to look at are the future path of the PSPP and the Euro exchange rate. If Draghi avoids any mention of or bats away questions about the Bank’s intentions for curtailing purchases later in the year (possibly allied with a cautious tone on the Eurozone’s inflation prospects), markets could interpret this as a dovish factor and subsequently could lead to selling pressure in the EUR, with strength in fixed income markets and equities. Conversely, if Draghi tackles the issue head on and hints that announcements will come in March or that the hawks are having an increasing sway on the future path of policy at the bank, then the opposite reaction could be seen. If Draghi attempts to talk down the currency then this could naturally lead to some selling pressure in EUR (however, this will be subject to the broader tone of Draghi’s statement as his efforts to talk down the currency in September failed after he was simultaneously upbeat on inflation). Finally, as a reminder, watch out for source comments in the hours following the press conference.

    WHAT THE BANKS ARE SAYING

    • BARCLAYS: We do not expect any change in policy but we’ll scrutinize President Draghi’s comments on recent market developments and on the GC’s discussions regarding possible upcoming changes to the forward guidance, which we expect to happen at the April meeting.
    • HSBC: The minutes of the December ECB meeting noted that language on the policy stance and forward guidance would be “revisited” in early 2018, raising the question of whether this could be as early as 25 January. With the news on growth since December again surprising to the upside and the latest oil price rise helping lift near-term headline inflation, Mr Draghi has come under increasing pressure to start preparing markets for the imminent end of QE. However, underlying inflation remains sluggish and the euro has appreciated. With the ECB still concerned that inflation may not return to target in a sustainable manner, we expect no change in policy or language in January, although the meeting is clearly going to be more exciting than previously expected.
    • ING: We stick to our previous view that the ECB will not stop QE in September but will rather decide on another “lower for longer” beyond September, probably until the end of the year. Given that even the hawks are currently emphasising sequencing, a first rate hike will not be on the cards before mid-2019. Interestingly, the ECB has picked up the narrative from Draghi’s Sintra speech and is more and more focusing on growth, considering inflation only as a derivative of growth developments. For next week’s meeting, we expect Draghi to convey a rather dovish message, pointing to still weak inflationary pressure and also emphasizing the disinflationary impact from a stronger euro. The most important message to watch will be whether Draghi confirms the October statement that there will be no sudden end to QE. We expect him to do so as this would be the only way to – at least – temporarily get the genie back in the bottle. It would also show Draghi’s magic of how to guide financial markets with very few words and without any action.
    • MORGAN STANLEY: This week’s press conference will likely deliver a balanced message. The forward guidance will evolve, but gradually. We expect the next change in March. We see no more QE from October this year and the depo rate rising in March 2019. Waiting for the signal: The first monetary policy meeting of 2018 is likely to be scrutinised closely by market participants for clues on when the central bank’s forward guidance will change once again – and how. This will likely happen in March, when we project inflation to start rising again and the new ECB staff projections are likely to show higher inflation. A more clear-cut indication that QE will end from October as we forecast is likely to come in June, we think. Language evolution: We doubt that the Governing Council has already decided how to communicate the next policy shift to the market. Apart from the tone and content of future press conferences and speeches/interviews, we see two possibilities. The first one is to make the QE easing bias more symmetric, by saying that the ECB stands ready to increase the horizon of the asset purchases if needed, but dropping any reference to a potential increase of their monthly size once again. A second way, perhaps after this step, is to make the programme closed-ended, by no longer saying that it could buy beyond September. The exit sequence: Once QE comes to an end, the central bank – towards the end of this year – will probably change the forward guidance on rates too, and indicate that the depo rate will move some time after the net asset purchases are discontinued, rather than a long time after. We expect the first 15bp depo rate hike to -0.25% in March 2019. The market has more or less converged to this long-standing view of ours, and we now believe that the timing of the first hike is ‘correctly’ priced.
    • NOMURA: We are not expecting too much new information to emerge from next week’s ECB policy board meeting. The minutes from the December meeting surprised market participants in suggesting the Council plans to revisit the asymmetric nature of the forward guidance on QE early this year, sooner than was previously assumed. However, we think it more likely that the QE bias will be removed at the March meeting when the ECB will release its macroeconomic projections. Meanwhile, with recent inflation data subdued and a still high level of uncertainty about how tighter financial conditions might affect the economic outlook, we doubt whether the ECB will deliver further hawkish communications at present. Still, on a multi-month horizon we believe the region’s pace of growth and the level of inflation will surprise the ECB on the upside. And that will pave the way for a signal in the middle of the year that the APP will not continue beyond September. We believe that will then pave the way for some softening of the forward guidance on interest rates in Q3 and then a 10bp depo rate hike by the end of the year.
    • NORDEA: The ECB is unlikely to change its guidance next week. We see some downside potential for the EUR and bond yields. The start of the year has been characterized by a lot of speculation that the ECB was about to turn towards a less dovish stance. The speculation only increased after minutes from the December meeting suggested the language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year (i.e. this year). We interpret the message from the minutes very differently compared to the reaction in financial markets. The ECB has long talked about the need for its communication to change gradually. There was ample discussion on changing the forward guidance already last summer, while some Governing Council members pushed for changing the guidance further already in October (the reference to lower rates in the forward guidance was dropped last June).
    • RBC: We don’t expect the ECB to announce any major changes at its first meeting of 2018. That is despite the account of its December meeting saying that the ECB would make changes to its forward guidance ‘in coming months’. However, as we set out in our preview note, changes to the language are coming even if it’s difficult to pinpoint when. With the euro area economy humming along nicely and the threat of deflation having passed, the easing bias implied by elements of the current language seems increasingly obsolete. But, one crucial line in the accounts was that changes to the guidance would include what is currently said on the sequencing of policy changes. For that reason, we restate our current ECB call; we expect QE to continue to September as currently planned with a short taper of three months then taking purchases to the end of 2018 and rate rises coming only ‘well’ after that point, we think in Q3 2019.
    • TD SECURITIES: We look for the ECB to keep its 12:45pm press release unchanged, despite the growing speculation that it could start changing the language as soon as this meeting. However, we don’t think that we’ve seen enough progress on inflation to justify a change. If we do see a change in March, we think that it will be in the reaction function rather than in the language that ties QE to inflation, and almost certainly not in the sequencing or reinvestment plans. For the January meeting, we look for Draghi to push back against EUR strength in the press conference, but think that it would take more EUR appreciation than what we’ve seen so far for the ECB to go as far as adding more EUR language into the opening statement.
    • UBS: Bullish macro data, the recent hawkishly-perceived ECB minutes, an appreciating Euro, and higher yields and oil prices promise to make next week’s ECB meeting more interesting than previously anticipated. Indications are growing that the ECB will soon start to shift the focus of its communication away from QE and towards interest rates (forward guidance) as the key instrument to support the inflation recovery; this would also imply that the QE easing bias is becoming less important. While the focus on interest rate forward guidance is thus likely to increase, this in itself does not mean, in our view, that the first depo rate hike should be expected earlier than previously assumed – we still expect it for July 2019. Obviously, if the data were to remain strong, the ECB might eventually start hiking earlier, but this is not a decision it has to make soon – it can wait for another few quarters and then decide in a data-dependent way. Our monetary policy call is essentially unchanged: we expect the ECB to conduct monthly asset purchases of €30bn until September 2018, but then wind down QE. In light of very strong data, a final moderate extension of QE in Q4 2018 seems very unlikely by now. As before, we expect key interest rates to be hiked only after the end of QE, most likely as of July 2019; but we acknowledge that a continuation of very strong data could skew the risk towards a somewhat earlier rate hike.

  • Global Crisis Events: The Weird Keeps Getting Weirder

    Authored by Brandon Smith via Alt-Market.com,

    While the mainstream media and general public tend to assume that every new day is bringing us closer to a better future, many alternative analysts focus on the underlying weirdness of our world and all of the crisis factors that average people don’t want to think about. I have to say, in my view the “weirdness” has been escalating rather swiftly lately, and I don’t think that very many analysts, alternative or mainstream, appreciate the potential consequences.

     

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    The most important issue of course has always been the global economy. With nearly every sector of our system resting on massively inflated financial bubbles driven by central bank fiat printing and artificially low interest rates, there is only one question that really needs to be asked: How long before a geopolitical or economic shock event takes down the entire house of cards?

    The mainstream philosophy seems to be that the economy is now impervious to such events. As the media now argues often, stock markets in particular do not appear to care whenever international threats present themselves. I would argue that this is because nothing substantial has actually happened quite yet. We have had a steady build-up of domestic and global political tensions, but the markets have so far been presented with a world that is comfortably predictable. It is a dangerous world with numerous potential pitfalls, but still predictable nonetheless.

    And this is the very odd position we find ourselves in. A system which grows progressively more unstable year by year, and a society that has grown ignorantly used to it. To wake people up to the threats ahead would require a surprise, a slap to the face, something entirely unexpected.

    Here are a few developing powder kegs around the world that may present such a shock.

    U.S. Debt Ceiling And The Government Shutdown Battle

    I think a lot of people are missing some major points on the government shutdown situation. First, consider this — every new deal to keep the federal government funded offers a shorter stopgap than the last. The latest deal would only keep funding in place for three more weeks, then the same conflict over budget and spending initiatives happens all over again. It is not outlandish to expect that one day soon we will be faced with weekly or bi-weekly funding battles in D.C., while the greater problem of the U.S. debt ceiling is generally ignored.

    You see, the “fight” within the federal government is not so much over whether or not more debt is a “bad thing.” In fact, both sides support more debt and bigger government. Instead, the fight is over the allocation of funds (debt) to certain projects and away from others. Who gets the money? And how can a government shutdown be used as leverage to gain the upper hand politically?

    The thing is, this is all theater. There are no “sides” to the debate in Washington, and there is no battle. This is all designed to condition the American public into believing that the two parties are separate and opposed when they are in fact not. Beyond that, the shutdown battle also achieves a certain stress factor for the economy that many people are not aware of.

    Among alternative analysts, cynicism runs rampant over a government shutdown. “Who cares?!” many of them will say, “Let it shut down!” But there are some concerns here, primarily the concern of full faith in U.S. debt issuance.

    While I am all for the notion of the federal government going the way of the Dodo bird, I do not think many alternative analysts are considering the trade-off required when the system does in fact “reset.” For example, while the U.S. Treasury is supposed to remain functional during a government shutdown and certainly remains functional during stop gaps and debates over funding, this internal conflict though theatrical in nature can still produce a lack of faith in Treasury bonds and the dollar internationally. And frankly, faith is all that our economy has left to sustain itself.

    If the funding battle continues with ever shorter stop gaps or with an extended period of government shutdown, there is a possibility that the largest foreign investors in U.S. debt and the dollar will begin dumping their holdings. When this is done, it will be done quietly and will be fully denied if questions arise. If China, for example, begins decoupling from U.S. debt, we will not find out until it is far too late. The Chinese would seek to be the first to dump their holding in order to avoid a vast international rush for the exits. They would want to be the first to sell, not the last.

    Again, if the funding fight continues to become more aggressive and more absurd, eventually we will see a foreign dump of U.S. debt, and with it an unprecedented crisis. Whether or not this “needs” to happen is not what I am debating here, only that when it does happen, there will be consequences for us all, and being prepared for them is essential.

    Syria Back On The Table

    So, if you thought the Syrian situation could not get any weirder, the past week might have been a surprise.

    The last major development was Vladimir Putin’s orders to pull a large percentage of standing Russian troops from the region, leaving the Assad government particularly vulnerable. This move did not surprise me in the least. In fact, I predicted that Russia would step aside in Syria in interviews last year.   I also wrote about the possible problems this would cause in my article ‘A Review Of The Most Disturbing Events Of 2017’. One of these problems would be Putin leaving the door wide open for a foreign force to invade Syria, drawing in other nations like Iran or Lebanon into the fight and expanding the war tenfold.

    What did surprise me, though, was the brazen launch of forces into the region by Turkey in particular. Erdogen has been pecking away at Kurdish tribes in Syria for quite some time, but his latest measures are something entirely new. Keep in mind that Turkey is still technically a NATO member and an ally of the U.S., despite Erdogen’s anti-NATO rhetoric and threats to leave the multi-nation defense pact. Also keep in mind that the U.S. government is giving monetary and weapons support to the Kurds. So, to clarify, a U.S. ally is ignoring the tense situation in Syria and the possibility of triggering a wider regional war to hunt and destroy another U.S. ally, all while Saudi Arabia, Iran, Israel, Lebanon, Russia, etc., hover on the periphery waiting to jump into the fray.

    This is not a recipe for diplomatic discourse. This is a recipe for disaster.  Will Syria lead to WWIII as some people suggest?  Probably not in the way most of them imagine.  War takes many forms, including sporadic region by region conflicts, as well as economic conflicts.  Global nuclear war is unlikely considering such an event would virtually vaporize decades of investment by the elitist establishment in control grids around the world.  But, constant regional combat and financial disasters? THAT is a strategy that benefits them greatly.

    North Korea And The Olympic-Sized Target

    First let me say that the very fact that South Korea and the Olympic committee feels compelled to continue the games in the region at a time of such heightened tensions is extremely odd to me.  The notion may simply be that the games will “heal” divisions in the Korean peninsula.  I am not so sure about that…

    I recently wrote about the North Korean war scenario and the potential false flag event during the Olympics in my article ‘Olympic Games In South Korea – Perfect Opportunity For A False Flag Attack?’. I would add to my analysis another interesting development; the negative response by South Koreans to the North’s participation in the Olympic games.

    I have continually had to remind people that a war in North Korea would be the most effective trigger event for economic downturn and global distraction, though some skeptics seem to think the situation is going nowhere. Yet, all the elements are now present, including an array of naval forces ready for kinetic response, the escalation of North Korea’s missile technology to include ICBMs capable of striking the U.S. mainland, the war rhetoric grows on both sides, with the Department of Defense being the most aggressive, and now even the South Korean citizenry seems to be shunning diplomacy as they burn photos of Kim Jong Un during Olympic processions and demand a stop to cooperation with the North during the games.

    This is a rather sharp break from the mainstream narrative in the U.S., which has told us that South Koreans are seeking generally passive and diplomatic relations with the North, and that the US involvement is universally unwanted.  That is to say, the desire for conflict is not limited to U.S. warhawks and North Korean “fanatics,” it is also a large portion of the South Korean population that appears to prefer less-than peaceful solutions.

    Add to this the latest CIA claims that North Korea’s nuclear weapons technology will be a full threat to the U.S. in a matter of months, and the news that North Korea’s armies are confiscating food stores from the citizenry at a greater rate than usual, and anyone with any sense can see what is developing here.  CIA director Mike Pompeo has asserted that the Trump Administration will act to prevent North Korea from developing an arsenal of ICBMs capable of striking the U.S.

    I’ve said it before and I’ll say it again: This is going to end in war. There is no way around it.

    The U.S. Dollar Continues Its Rapid Decline

    I outlined this interesting development a couple weeks ago in my article ‘The Strange Case Of The Falling Dollar – And What It Means For Gold’, and so far it seems that the downward spiral of the dollar is continuing, now falling at a speed not seen since 2003.

    This trend is very strange for a number of reasons – the most prominent being the fact that the dollar index is ignoring policy moves by the Federal Reserve to hike interest rates and reduce its balance sheet.  Under normal economic conditions, this should trigger a dollar spike, not a dollar collapse.  I predict that the Fed, under “new leadership” through Jerome Powell, will pursue highly aggressive fiscal tightening measures in 2018, including expanded interest rate hikes in the name of tempering the dollar’s decline.

    If this takes place, the insane stock market bubble now in full steroid mode will feel a sudden swift kick to the nether regions.  However, such a move may still not stop the dollar’s decline.  This could be the first stage of the stagflationary crisis I and a few other alternative analysts have been warning about for years.

    Growing Accustomed To The Weird

    I think if you asked most people if they would have believed the developments of today were possible 5 to 10 years ago, they would say no. The danger is that when a society becomes too accustomed to instability and conflict, they become complacent in terms of their own security and their own freedoms. They might not even notice until it is too late that both necessities have been stolen away from them.

    That great global slap in the face is coming, make no mistake, but the question is, can we prepare enough people for it in time to make a difference in the outcome? Reporting on these issues is often compared to “doom and gloom,” but really, it is an act of optimism. I and many other analysts are operating on the assumption that we can tip the balance by informing the public and creating a shield against calamity. Maybe this is a foolish assumption, maybe not. We shall see in due course.

  • DOJ Has Reportedly Started Recovering Missing Strzok-Page Texts

    The Department of Justice (DOJ) is in the process of recovering five months worth of missing text messages between two FBI employees accused of bias in their investigations of both Hillary Clinton and President Trump, according to Fox News.

    On Tuesday, President Trump tweeted “Where are the 50,000 important text messages between FBI lovers Lisa Page and Peter Strzok? Blaming Samsung!” in reference to the fact that the DOJ blamed the five-month missing text gap on technical difficulties. 

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    The missing texts – which span the period of December 14, 2016 to May 17, 2017, were reported to Congressional investigators last Friday in a cover letter accompanying a 384-page document delivery, igniting a firestorm of speculation that the contents of the communications between the two Trump-hating FBI investigators was particularly damning. The two agents had previously discussed an “insurance policy” before the election in the event of a Trump win.

    And now this from Hannity – word that the five months of missing texts, which are apparently in the process of being successfully recovered. 

    Sources are exclusively telling me tonight, multiple sources, that the Department of Justice is as we speak in the process of successfully recovering many of those text messages in that five month period of time from the Trump-hating FBI officials Peter Strzok and Lisa Page.

    The DOJ is also trying to track down their mobile phones. This is huge because those texts are during that critical time during the so-called Russia investigation. 

    Here’s a big question tonight: was the deputy FBI director, Andrew McCabe cell phone impacted by this so-called glitch? McCabe, he was Lisa Page’s boss, and both she and Strzok talked about “the insurance policy in Andy’s office,” we believe that was McCabe.

    The Fox News anchor also notes that former FBI Director James Comey may be in hot water over leaking a memo he says he wrote containing his concerns over President Trump pressuring him to go easy on former National Security Advisor Mike Flynn. 

    Also brand new tonight we have new revelations about one of the lawyers that is now representing disgraced former FBI director, soon to be probably investigated, national embarrassment James Comey. According to Buzzfeed, one of Comey’s attorneys turns out as his Columbia law professor buddy – the guy he leaked the memo to to the New York Times because he wanted a special counsel appointed, which turned out to be “oh, Comey’s other BFF Robert Mueller” You can’t make this up in a spy novel! 

    It’s one giant incestuous circle of corruption. And we have even more proof; James Comey testified that he gave his classified memos To Robert Mueller. And according to the reports, special counsel interviewed Comey about his memos last year. By the way, they also collaborated before he testified. Those memos contain classified information. They were created on government computers, so Comey broke the law by removing them from the FBI, but it’s clear that Mueller didn’t care about any of that. 

    Mueller’s main focus is, has been, and continues to be carrying out a witch-hunt to unseat a duly elected President of the Untied States – President Trump. It’s ridiculous and it’s an abomination to our constitution and the rule of law. 

    To recap: right before the election, Strzok and Page texted about an “insurance policy” against Donald Trump becoming President. 

    “I want to believe the path you threw out for consideration in Andy’s office – that there’s no way he [Trump] gets elected – but I’m afraid we can’t take that risk.” writes FBI counterintelligence officer Peter Strzok to FBI lawyer Lisa Page, with whom he was having an extramarital affair while spearheading both the Clinton email inquiry and the early Trump-Russia probe, adding “It’s like a life insurance policy in the unlikely event you die before you’re 40.” 

    Seeming to support the theory that the Trump-Russia investigation is the “insurance policy,” text messages released last Monday make reference to a “secret society” of FBI and DOJ officials who held clandestine meetings “offsite” in order to solidify their plot to take down President Trump – while a whistleblower has allegedly confirmed this to GOP Congressional investigators. 

    If the five months of missing text messages are recovered in their entirety, it should shed valuable light on the mechanics of both the “insurance policy” and the “secret society” formed to effectuate it. 

  • Ken Rogoff Warns "China Will Be At The Center Of The Next Global Financial Crisis"

    Having warned in Davos today that:

    “If interest rates go up even modestly, halfway to their normal level, you will see a collapse in the stock market,”

     “I don’t know how everything from art and bitcoin to stock prices will react as interest rates go up.”

    Kenneth Rogoff, Professor of Public Policy at Harvard University, explains to Finanz Und Wirtschaft’s Christoph Gisiger why the long economic slump is finally over and what the biggest risks for the future are.

    Few people know as much about financial crises as Kenneth Rogoff. Together with his colleague Carmen Reinhart, the highly influential professor at Harvard University is the author of «This Time Is Different: Eight Centuries of Financial Folly», one of the most important studies on the financial crisis of 2008 and its impact on the economy and society. So what’s the big lesson nearly ten years after the traumatic fall of the investment bank Lehman Brothers? In which way was this crisis different than other big shocks in the history of finance? Und most importantly: What’s next for the global economy?

     

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    Professor Rogoff, since the outbreak of the financial crisis nearly ten years have passed. How do grade this recovery when you look at other big busts in the history of finance?
    In my research with Carmen Reinhart we found that after a deep systemic financial crisis, it often takes the economy eight to ten years to recover. Now, it’s been a decade and I think we are in a recovery period where we are going to get some reversion to mean in terms of productivity growth and other things. That means we are going to get above average productivity growth and rising investments for several years as the economy normalizes.

    That sounds encouraging. Is this long period of anemic growth finally behind us?
    I feel that the OECD and the IMF are going to be marking up their global growth forecast most of the time in the next few years. They have been marking down their forecasts for nine years in a row. For example, the IMF marked its global growth forecast 27 times in a row down and this October was the first time they raised their outlook.

    What’s the most important thing to watch now?
    The single most important thing is that investment continues to pick up. Seeing some recovery in investment would support the idea that there is more life in the recovery. There has been a deep, long lasting dip in global investment. That’s a big part of the explanation why interest rates are so low. So the most important question is whether the recent pick up in investment will continue.

    In the US, the last recession ended nearly nine years ago. Aren’t we already in the late stage of this economic cycle?
    I think that’s nonsense. A financial crisis has a very unusual recovery. So you can’t just count years and compare it to a typical recession. Also, if we had a recession right now it would be a much more normal recession. In any given year, there is a probability of around 15% for a recession and there is no reason to suppose that the odds are greater than 15% today. On the contrary: There is a very good chance that growth outperforms most of the time the next few years.

    So is there nothing that was different with this financial crisis?
    No, it fit right in. Financial crises leave such distinctive footprints in the data that you see very similar characteristics across time. In many ways, this was a garden variety of a systemic financial crisis: The way it happened, focused on the housing market, and the very slow recovery. In many quantitative benchmarks this financial crisis was very normal compared to other deep systemic financial crises. But if there was something different it was the European debt crisis. It was another whole layer on top of the financial crisis.

    What do you mean by that?
    This was absolutely the biggest financial crisis since the Great Depression when some countries experienced very bad crises. In this context, the very slow recoveries in Europe are significant. For instance, the Greek financial crisis ranks comfortably in the top 15 worst financial crises during the last hundred years. Greece’s experience was as bad as anything anyone experienced in the Great Depression. Also, the crisis that Italy, Spain, Portugal and Ireland experienced fit into the hundred biggest financial crises on record. On the other hand, it’s important to note that these countries are very wealthy compared to where the world was in the 1920s and 1930s. So even these financial crises were very severe, they took place on a much higher wealth level. What’ more, all in all this time they were handled better.

    A big part of the response to the financial crisis were the bailouts of big banks like Citigroup, Royal Bank of Scotland or UBS. How healthy is the financial system today?
    In most countries the banking system is pretty sound today. But then again, the level of regulation has tightened up so much that banks are not making loans as easily as they did. That makes it hard for medium and small businesses to get loans as easily as they did in the past. So the banking system is healthy in the sense that it’s less fragile than it was in 2007. But it’s less healthy in terms of being able to fund growth. Therefore, we need to improve the regulation of banks. In this respect, I like the ideas of Stanford Professor Anat Admati, and her German co-author Martin Hellwig who advocate having a much simpler regulation for banks but requiring more equity financing. I think that’s an extremely good idea and it would be much better than the way we’re doing things right now.

    Does that mean we don’t have to worry anymore of another financial crisis?
    Of course, there are still issues with the Eurozone. But the only country which is sort of in a different place in the cycle and which is important is China. China is probably the place most at risk of having a significant downturn in the near term. It’s certainly the leading candidate for being at the center of the next big financial crisis.

    Why does China concern you so much?
    I have great respect for the Chinese authorities and they are working very hard to not have a financial crisis. Also, it will be different because there is no truly private company in China. So government guarantees are triggered much more quickly than they are in the western economy. Nevertheless, I still think that’s the most fragile large region in the world at the moment. The big problem is that the Chinese economy is still very imbalanced, relying much too heavily on investment and exports. In addition to that, China is very credit dependent. So if China were to run into financial difficulties or just experience a slowdown in the rate of credit growth that could produce a lot of problems. And if China were to run into its own kind of financial crisis it would probably produce a growth crisis which could produce a political crisis.

    But high levels of debt are not only a problem in China. Today, the debt levels in most western countries are even higher than at the eve of the financial crisis.
    The debt levels are very high, but we also have phenomenally low interest rates. So the debt levels are highly sustainable if interest rates stay this low. I’m talking about real interest rates, inflation adjusted interest rates. And the likelihood is that they will stay very low for a long time. That’s what the markets are predicting. So if real interest rates stay very low, I don’t think there is any near-term vulnerability outside of China.

    Why are interest rates still so low?
    Economists don’t fully understand why interest rates have fallen as far as they have. We have lots of papers, lots of studies on it. But there is a large part we don’t know. For example, let’s suppose the United States and Europe, meaning Germany, France and northern Europe, started growing much faster. That could raise global interest rates. In this case, what could happen to countries like Italy if they didn’t grow as fast as the rest of the world? In such an environment we could certainly see big debt problems in countries like Italy. That’s a classic debt crisis pattern like in the 1980s when Latin America ran into trouble. It happened because the rich world was growing very fast and the highly indebted Latin American countries suddenly couldn’t meet their payments. But at the moment, Italy doesn’t have such problems because interest rates are so low. So no one cares.

    There’s also a lot of complacency among investors at the stock market. How imminent is the risk of a correction with equity valuations as rich as they are today?
    Most of it is interest rates being so low. You can do some simple calculations that suggest the low level of interest rates explains a large part of the high stock market valuation. The stock market is vulnerable to having real interest rates go up. But I don’t think it’s an exceptionally high risk right now. The stock market is high for the same reason debt is high which is that interest rates in many ways are at record lows compared to free market areas. We also had very low interest rates in other periods like in the 1950s and in the 1960s. But at that time, there was tremendous financial repression and control of the markets by governments. That’s much less true today.

    Then again, since the financial crisis central banks intervene heavily in the markets with policies like negative interest rates and bond buying programs like QE. Now, they want to unwind these measures. Will that go well?
    Central banks aren’t to blame for low interest rates. This is a case of global real factors that affect investment and savings which have led to these very low interest rates. Also, quantitative easing in the United States is smoke and mirrors. It’s almost meaningless. The first round of quantitative easing where the Federal Reserve was buying car loans and all sorts of private debt was significant because that’s a fiscal transfer. But simply buying treasury bonds is smoke and mirrors because it’s just the Treasury owing money to the Fed. So it’s absolutely an illusion and I don’t think it matters when they change it either.

    What do you expect from incoming Fed chief Jerome Powell?
    I wouldn’t expect any major changes at the Federal Reserve. Janet Yellen would have done what Jay Powell will try to do. I talked to him many times over the years and even though he’s a lawyer he really has excellent command of economic and regulatory issues. I think he’s a perfectly fine appointment, especially given that there are so many economists already on the board of the Fed. But it’s also a fact that President Trump would like to keep interest rates very low. He doesn’t want anyone to ruin his «beautiful» stock market. So the real question will be, what happens when inflation rises and the Fed feels a lot of pressure to raise rates. Will suddenly President Trump start treating Mr. Powell the way he’s treating Secretary of State Rex Tillerson, constantly undermining him? I think that would be very bad institutionally and I’m very concerned about that risk.

    And what about monetary policy in Europe?
    The biggest challenge facing the ECB is that quantitative easing in the Eurozone is not the same as in the United States. It’s basically a subsidy from the northern countries to the southern countries. Places like Spain, Portugal and Italy have received massive loans from Germany and France under the table through the ECB. If the ECB changes its quantitative easing, Europe is going to need some vehicle to substitute QE and support these countries, maybe some form of an Eurobond or something. So it’s going to be quite a challenge if quantitative easing stops in the Eurozone.

    Also, in many parts of Europe interest rates are still negative. Will that leave permanent damages to the economy?
    I think that’s nonsense. There isn’t any particular evidence that negative interest rates are leading to permanent damages or that the risk of a crisis are higher. But eventually, we’re going to have another deep recession or financial crisis. Not tomorrow, not soon I hope, but it’s going to happen. And if countries don’t prepare for it it’s going to be much worse than the last time because interest rates are already near zero, quantitative easing is ineffective and helicopter money is a silly idea. That’s why I think that in the future we will see the major central banks and Treasuries of the world all prepare for having much deeper negative interest rates the next time we have a financial crisis. It’s a much, much more elegant solution than anything that’s been proposed. So I think many countries will prepare for negative interest rates and I would say within the next decade it will be in every central bank’s tool kit.

    How will these preparations look like?
    Right now, central banks are very limited because if you set interest rates too negative big players will hoard cash. But it’s not very hard to do: Without getting into the weeds, the core of it is that physical currencies are becoming increasingly unimportant in the real economy. Cash is not disappearing, and I only advocate a cash lite society not cashless society. But as cash becomes less important in the legal economy, the different measures that you need to take, ranging from eliminating large bills to potentially taxing deposits into the financial system become very easy to do. You’re also having an effect on tax evasion which is not really affecting normal people. And by the way, for all these ideas, you can exclude small savers with no particular difficulty.

    But already today, people can circumvent such measures with cryptocurrencies.
    But if we interpret cryptocurrency to be anonymous or nearly anonymous currencies, governments can’t allow that on a large scale. If you look at the history of coinage and paper currency, the private sector invented everything at different times at different places. But the government eventually regulates and appropriates. That’s going to happen here, too. Governments have taken a deliberately hands-off attitude, thinking that the benefits of the innovation outweigh the risks and that the risks are not systemic. But as cryptocurrencies make it easier for tax evasion, crime and corruption to take place around the world, anti-money-laundering laws are going to have to step in and shut them down. That’s coming. There is no doubt about it.

    So what’s going to happen with Bitcoin?
    Bitcoin is a classic bubble. There are things in the technology that are valuable. But Bitcoin is more likely to be worth $10 than $10’000 in a decade. It’s very likely that it will get regulated and regulations will eventually undercut it. Even in the best-case scenario Bitcoin will probably be like MySpace. Remember that before Facebook? When they were first in but eventually a better competitor came along? When the private currency gets too big then the government has to do something and that’s the case here. You can have blockchain currencies that are not anonymous. That’s a different matter. They will live forever. But those are not the cryptocurrencies where all the speculation is taking place.

  • Congressional Republicans Are Escalating Their Feud With The FBI

    The GOP’s feud with the FBI is escalating to absurd new heights, Politico reported.

    As Special Counsel Robert Mueller pivots his investigation to focus on whether President Donald Trump committed obstruction of justice after finding no “there” there during his probe into possible collusion between the Trump campaign and Russia, the GOP is pushing back against political bias in the FBI, triggering outrage among Congressional Democrats. 

    Politico pointed out that Tuesday brought several dramatic developments in the ongoing investigative saga.

    The New York Times reported that Mueller had recently emailed Attorney General Jeff Sessions, and last year interviewed FBI Director James Comey.

    Meanwhile, Rep. Bob Goodlatte, chairman of the House Judiciary Committee, accused FBI agents of engaging in a “conspiracy” to support Clinton and damage Trump, hinting that some of this behavior could’ve itself been criminal. Goodlatte took aim at a text messages between FBI Special Agent Peter Strzok and and FBI lawyer Lisa Page, with whom he was having an affair.

     

    Goodlatte

    Goodlatte

    Not all of the text messages have been released, but they are slowly being turned over the Congress in batches. Though the bureau recently confessed that it had lost 50,000 messages sent between the two FBI employees during a five-month period in 2016. The FBI has blamed the erasure on Samsung. The DOJ has launched a probe into the missing messages, but some Republicans, including House Freedom Caucus chief Mark Meadows, have revived calls for a second special counsel to investigate the FBI.

    “Some of these texts are very disturbing,” Goodlatte said, adding, “they illustrate a conspiracy on the part of some people, and we want to know a lot more about that.”

    As we reported earlier today, some of the texts that have been turned over suggested that in the “immediate aftermath” of the election, a “secret society of folks” within the DOJ and FBI came together to try to undermine President Trump.

    Wisconsin Sen. Ron Johnson called the text messages “jaw dropping.”

    But views on the FBI’s purported misconduct, unsurprisingly, diverge along partisan lines, as the Hill points out. Democrats have painted investigations of the FBI’s conduct by the Senate Homeland Security and Governmental Affairs Committee and the House Intelligence, Oversight and Government Reform, and Judiciary committees as efforts to discredit Mueller and the Department of Justice.

    Democrats and the FBI have joined together in criticizing Congressional Republicans, who have so far refused to release a memo detailing what some Congressmen have described as a coordinated effort by the Obama administration to monitor members of the Trump campaign. Some conservatives have also joined in the chorus of people demanding the memo be released. But the lawmakers have so far denied a copy to everybody who’s asked – including the FBI.

    Republican Trey Gowdy, chairman of the House Oversight and Government reform committee, said this refusal is justified because the memo’s contents were gleaned from documents turned over by the FBI, according to Fox News.

    “To say we want to see your memo when for months and months they haven’t let us see lots of stuff we wanted to see — the memo came from what you gave us, FBI,” Gowdy told Fox News. “There is nothing new in there other than what you gave us and you showed us.”

    For what it’s worth, some Republicans are still willing to give the bureau the benefit of the doubt, particularly regarding the lost text messages.

    Senate Intelligence Committee Chairman Richard Burr (R-N.C.), whose panel is also investigating Russia’s election interference, told CNN Tuesday that the FBI had been cooperative in providing documents to Congress.

    “I’m not going to read anything into it other than it may be a technical glitch at the bureau,” Senate Intel Committee Chairman Richard Burr told the Hill. “The fact that they have provided the rest of them certainly doesn’t show an intent to try to withhold anything.”

    President Trump has been somewhat less forgiving…

     

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    The pressure on the FBI has made even Trump allies nervous. Last night, Axios reported that Christopher Wray, Trump’s pick to lead the bureau, threatened to resign amid pressure from Trump and Sessions to fire Andrew McCabe, deputy director of the bureau and a close Clinton ally whose wife received money from the Clinton machine during a recent campaign for office.

    After spending hours of closed-door Congressional testimony last month, McCabe announced that he would resign early this year.

    Gowdy, who spearheaded questioning of McCabe, told reporters that his testimony contained “numerous conflicts.”

    But regardless of what Congress does – or how much questionable behavior their investigations into the FBI uncover – without a special counsel, Mueller will continue to have the upper hand. After all, Mueller has the power to call a grand jury, which can approve indictments – evidenced by the charges he’s brought against at least four former Trump campaign officials. While it has subpoena power, Congress can’t arrest anybody…

    …So without a special counsel, Republicans’ options for holding the bureau accountable remain limited…

  • Would Rural Areas Be Safer In A SHTF Situation?

    Authored by Tom Chatham via Project Chesapeake,

    In a situation where national infrastructure and life sustaining resources are suddenly cut off , population density will have a lot to do with how well you get by in the days following the crisis. When it happens, what you have on hand will likely be all you have to work with for an extended time. Those that lack supplies will seek out and take what they need in an increasingly hostile manner as time goes on. This is why being in a large city will likely be hazardous to your well being.

     

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    Very few will argue that being in a rural area when something catastrophic happens will greatly increase your chances of survival. A lower population density and more available natural resources to help you get by will make long term survival much easier. This is why so many people advocate heading for a rural area when something happens. The problem is unless you are already established in a rural area, survival will not necessarily be easier.

    Leaving the city when supplies and infrastructure are shut down would work only up to a point. Rural areas are like anywhere else. They have infrastructure designed to service a certain number of people that normally live there. The housing, restaurants, roadways, water systems and grocery stores will only handle a small excess of people even in the best of times. When the city dwellers suddenly evacuate to the rural areas in mass, they will simply be taking many of their big city problems with them. They will likely find no housing, food supplies or other infrastructure they need to live.

    Because of this many small towns will likely close their roads at some point and prevent entry to anyone who does not live there. They will suddenly realize their already finite resources will not be enough for themselves much less thousands of new people. This realization will likely come only after they have been inundated with strangers demanding supplies and housing. It is for this reason that rural dwellers should hope cities are locked down fairly quickly to prevent people from leaving.

    When Henry Kaiser built a new shipyard in Richmond, Ca. in the 1940’s the town was suddenly overwhelmed with new workers. People lived in shoddy trailers they towed in, some slept in boarding houses in shifts and the schools ran three shifts a day. Eventually they built the new infrastructure they needed and life went on but this only happened because they were living in normal times when everything was working properly. Imagine an influx of people into a small town when supplies are already limited and likely to get worse as time goes on.

    That is why it is essential that you establish yourself in a rural area before something happens. Simply hoping to show up following an event is no plan and will likely cause resentment by the locals when supplies run low.

    Rural areas offer the opportunity to be much more self reliant than city spaces. This is the reason rural areas offer people a better chance to survive something like a grid down scenario. This is only true until the carrying capacity of the rural area is breached. That is when the city problems become rural problems. Simply moving a mass of unprepared people to another area with even less infrastructure will not solve the problem, it will only change the surroundings and create other problems.

    There is an old saying that you never eat your seed stock. Self sufficient people know this because if they eat their seeds or butcher their breeding stock they will not have anything to raise the following year which will lead to eventual starvation or loss of future income. To an unprepared person that thinks food is produced in a factory, preserving seed stock makes no sense when they are hungry right now. They do not care about next year, they only care about today which is why they got into their situation in the first place. This is the type of situation that can doom a society if they lose the ability to produce future crops, even on a small scale.

    Will rural areas be safer in a SHTF situation? Only if they can maintain order and protect the resources they have to insure long term sustainability of the community. Most communities are not prepared for this type of situation and will need a steep learning curve if they are to survive it. Many will likely not survive it.

    Modern farming communities do not have the infrastructure to maintain themselves like many once did. Factory farming has moved much of the local production to central locations around the nation and few farmers produce their own seed locally. These and other modern systems will make it difficult for many farm communities to even care for their own much less thousands of new arrivals.

    The only communities that are likely to survive in tact are the ones that are mostly self sufficient already and have a plan to maintain production and protect themselves from looters and overcrowding. Simply running to a rural area in a time of crisis is no cure all. Wherever you are, the key to survival will be advance preparation and a good plan.

  • Dollar Resumes Nosedive As China Threatens US With "Appropriate Measures" Over Trade

    The war of words (China) and deeds (US) is hotting up once again tonight, sending the Dollar Index careening back to new cycle lows…

     

    Following Wilbur Ross’ “China’s direct threat” comments today in Davos, China’s MOFCOM has responded with the most aggressive rhetoric yet..

    • CHINA SAYS USTR REPORT OVERLOOKS FACT, SHOWS UNILATERALISM
    • CHINA “STRONGLY OPPOSES” USTR REPORT: COMMERCE MINISTRY
    • CHINA DOESN’T WANT ESCALATION OF TRADE SPATS WITH U.S.: MOFCOM
    • CHINA ALWAYS OPEN TO DIALOGUE, COOPERATION WITH U.S.: MOFCOM
    • CHINA TO TAKE APPROPRIATE MEASURES AGAINST UNILATERAL MOVES
    • MOFCOM SAYS CHINA TRADE FRICTIONS OUTLOOK STILL SEVERE IN 2018
    • CHINA HOPES TO HANDLE FRICTIONS WITH US IN PROPER MANNER:MOFCOM

    Which has sparked another leg down in the relentless dollar dump…

     

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    The collapse in the dollar has sent the Yuan back up near its pre-2015-devaluation levels…

     

    https://www.zerohedge.com/sites/default/files/inline-images/20180124_dollar1.jpg

    The rapid appreciation against the dollar has fueled speculation policy makers will take additional steps to slow the the pace of gains, although its relatively slower ascent against a basket of peers may make the strength less of an issue than last time round.

    “The rapid strengthening has triggered a panic in the market, aggravating the sentiment to sell the dollar,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. “Apart from the weakening dollar, high onshore funding rates and strong demand for cross-border financing will both take foreign currencies back to China.”

    Perhaps more notable is the fact that the world’s most overheated market has at last succumbed to gravity.

     

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    The Hang Seng China Enterprises Index slumped as much as 2.1 percent on Thursday, heading for its first down day since Dec. 27, with financial shares leading losses. The gauge, which tracks Chinese stocks listed in Hong Kong, is still up 14 percent for the year and beating virtually all other equity benchmarks in the world.

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