- Diplomacy For Peace Or Preparations For War?
Authored by Federico Pieraccini via The Strategic Culture Foundation,
After a series of high-level meetings between officials from Seoul and Pyongyang, the proposal for a face-to-face meeting between the American and North Korean leaders appeared before President Trump, who without much hesitation accepted, upsetting the last 50 years of relations between the countries.
Donald Trump tweeted:
“Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”
In the blink of an eye, fifty years of international relations were overturned in a tweet.
Skillful South Korean diplomacy had also been working towards this end for months. The meetings at the Olympics between Korean diplomats, and in general the good relations between the two countries, have facilitated a thawing of tensions, leading to dialogue that has come after months of insults and threats being thrown between Washington and Pyongyang.
The next move in the White House saw the dismissal of Rex Tillerson, with Mike Pompeo replacing him as Secretary of State. And National Security Advisor H.R McMaster was shown the door in what looks like a big shake-up within the White House, with two central matters looming in the coming months and years for the Trump presidency. The American president is focused on creating his legacy, seeking to eclipse that of his predecessors by achieving a peace agreement and trying to avoid a foreign country. The backdrop for these events is a weak American foreign policy exacerbated by the absence of strategic military planning, and a president who has the constant need to give the impression of being strong, in control, esteemed by his colleagues, and not in conflict with a portion of Washington’s security establishment.
Trump’s intention to seek political agreements with his opponents is offset by his inflammatory “fire and fury” statements and his shameful speech to the United Nations threatening to “totally destroy” North Korea (as the Americans already did in the Korean War during the 1950s). In line with this schizophrenic attitude, Tillerson has been removed from office to send two very important messages to Pyongyang and Tehran. If diplomacy fails, the military option remains on the table.
This military threat, however, is unrealistic if not unattainable, and its consequences unforeseeable. It is strongly opposed by many in Washington as well as by its allies and enemies. Trump, however, loves employing bombastic rhetoric and brinkmanship to reinforce the idea that even the unthinkable may be thinkable. Given the image that he has built in recent months, this madman strategy seems to dovetail with the strategic intentions of the White House.
The idea is to present Pyongyang with two options: a diplomatic opening and relative trust in negotiations, but at the same time leaving open the option of war if diplomacy fails. Kim for his part is certainly more rational and grounded in his actions than Trump. His father tried negotiating with Washington a couple of decades ago, only to see the United States allowing it to fail, thus forcing Kim Jong-un to embrace the only possible solution left to him to ensure survival of his country, namely nuclear weapons as a deterrent. While the sanctions and international isolation visited on the DPRK have played a role in bringing Pyongyang to the negotiating table, the acquisition of a credible nuclear deterrent has served to reassure Kim Jong-un, while also strengthening his negotiating hand vis-a-vis Washington.
As evidence of this theory, the proposal for a face-to-face meeting was put to the United States by South Korea, with Kim presumably assenting, even if Pyongyang has yet to respond. But the move is shrewd, showcasing the diplomatic skills of the North Koreans. If Washington were to sabotage the meeting, the blame would fall entirely on the United States, with Pyongyang being left off the hook as they are yet to accept.
There are big question marks over the topic of discussion and over what agreements can be reached in the first meeting.
Certain hypotheses can be made, and other requests can already be excluded.
For example, it is practically impossible for the peninsula to find itself free from the American presence. The United States is stationed in Korea especially to contain China and increase pressure around Russia, placing ABM systems that threaten the Sino-Russian nuclear deterrent. For the US the issue is much more than simply opposing a country like Pyongyang. The THAAD system is in fact directed at China and Russia, while it has little operational effectiveness against any missiles launched from North Korea.
The other hypothesis, currently unattainable, concerns the dismantling of Korean nuclear weapons. The request is impossible without an all-encompassing agreement that would see the the US relinquishing its presence on the peninsula. The argument plays in North Korea’s favor, because here is Pyongyang contemplating the abandonment of its nuclear weapons, while Washington refused to entertain any thought of abandoning its military position on the peninsula.
Realistically, an intense dialogue could put a halt to provocative exercises by South Korea and the United States, as well as halt Pyongyang’s testing of new nuclear-capable missiles. This would then open the way for a continuation of direct negotiations between Washington and Pyongyang while also allowing for the inclusion of other regional actors, namely, South Korea, China, Japan and Russia.
It would effectively be a return to the six-party negotiations, which for over a decade attempted to accommodate the concerns of all the parties in an effort to reach a peace deal.
Trump and Kim’s unpredictability could bring new twists and turns that further buck the norms and conventions governing international relations. This scenario is certainly dangerous, but it is also full of possibilities. The personalities of these two leaders could be what will ultimately make the difference.
- Caught On Camera: Israel Targets Civilians With A Chemical Weapon Drone
For the first time, Lebanon-based Al-Mayadeen TV released new dramatic footage showing Israeli forces using a weaponized unmanned aerial vehicle (UAV) against a Hamas rally in the Gaza Strip, according to the Times of Israel.
The short video clip published by Al-Mayadeen shows a weaponized unmanned aerial vehicle (UAV) targeting demonstrations in the southern Gaza Strip, controlled by the Palestinian militant group Hamas.
The UAV is seen flying through the skies above hundreds of protestors, while operators of the aircraft drop chemical weapons into the crowd. The Times of Israel states that the UAV released tear gas, formally known as a lachrymator agent, which causes severe eye and respiratory pain, skin inflammation, bleeding, and even blindness.
The intense footage could provide us with the early knowledge that governments are willing to use high-tech military technology against civilians in a non-combat environment…
Israeli Border Police Deputy Commissioner Yaakov Shabtai, the government official behind the deployment of the weaponized unmanned aerial vehicle (UAV), told Hadashot TV news that the tear gas drone provides security forces with an extended range to hurl chemical weapons at protestors.
“Beyond the fact that this equipment neutralizes any danger to the troops, it enables reaching places that until now we could not get to,” Shabtai told Hadashot TV news.
The weaponized unmanned aerial vehicle (UAV) “can carry up to six canisters at a time, and drop them individually, as clusters, or all at the same time,” said the Times of Israel.
The Israeli-based online newspaper did not provide the manufacture’s name of the UAV, but it is rumored that ISPRA Ltd in Herzelya, Israel, is the developer of the drone, dubbed Cyclone Riot Control Drone System.
ISPRA’s Anti Riot Drone provides law enforcement units with an extremely large range mode of work, enabling them to react against rioters and demonstrators at an early stage of the event, at a distance while avoiding direct confrontation with rioters. This unique and innovative solution, developed by Ispra, allows law enforcement units to react when a barrier or obstacle is separating between the parties. With several drones, a continuous presence over the rioters can be maintained, dispersing non-lethal ammunition and providing commanders with real-time video image of the situation on the ground.
Developers of ISPRA present a short informational video of how the chemical weapon drone works.
The Times of Israel adds that Israeli officials are preparing for months of border protests, which will lead to a large demonstration on May 15. According to an Israeli TV report, Hamas, a Palestinian Sunni-Islamic fundamentalist organization, has budgeted $10 million to fund the upcoming protests.
“We want to frighten the Israelis with the images of massive crowds of people who peaceably gather and sit close to the border,” Hamas spokesman Ahmed Abu Retaima recently told Bloomberg.
Retaima added, “We are working to bring out more than 100,000 people for the march.”
Meanwhile, Sputnik news agency states that Israel did not sign the Chemical Weapons Convention of 1993, which enables the Israel Defense Forces (IDF) to legally deploy chemical weapons such as tear gas against civilians.
“The use of tear gas in quelling civil disturbances is legal; however, the use of tear gas in warfare was banned by the Chemical Weapons Convention of 1993, to which Israel was not a signatory, but has acceded.”
Israel’s decision blend high-tech drone technology coupled with chemical weapons against civilians paints a turbulent outlook for spring uprisings in the region. Nevertheless, please do not mention this technology to the countless militarized police forces across the United States; otherwise, this dystopian technology is coming to a town near you.
- The Death Of Democracy
Authored by Alasdair Macleod via GoldMoney.com,
Anyone who thinks democracy doesn’t matter may be in for a rude shock later this year, when we know the result of America’s mid-term elections. The Deep State is on course to take control of Congress. If this happens, it will be the next step in a global trend of side-lining democracy in the West, driven in large part by American foreign policy. It has led to governments everywhere increasing control over their people, in an inversion of democratic principles.
It affects us all. Since the Twin Towers tragedy, American foreign policy has taken the lead in extending personal surveillance to every nation in the formerly free world. It has forced banks to divulge their customers’ private affairs in the name of preventing terrorism, crime and tax evasion. Governments that resist these moves have been destabilised, and independent agencies, such as the SWIFT banking system, have been forced to implement America’s foreign policy.
All countries have been made to go along with America’s imperatives, admittedly often willingly. Swiss banking confidentiality no longer exists, and over one hundred countries automatically swap financial information on their citizens and their businesses. The Americans routinely spy on their allies, as Mrs Merkel found out in 2015.
The erosion of democracy in America is a problem that was anticipated in its founding constitution. The rights enshrined in it are there to protect the individual from the Federal Government, yet the Federal Government chips away at those rights, as the founding fathers doubtless feared it would. The right to keep and bear arms in the Second Amendment, always a contentious issue, was framed by James Madison so that a local militia would be able to repel a standing [Federal] army. Americans still have the right to bear arms, due to the efforts of the National Rifle Association, but as the Bundy family discovered in Nevada, don’t expect the Federal government to respect your constitutional rights.
Few people think of freedom in these terms today, but a further erosion of democracy is an urgent issue facing American voters in November. It appears that a large number of former and current military and intelligence operatives are seeking nomination as Democrats for the 2018 mid-term elections. And if the Democrats succeed in getting a majority in the House of Representatives, which is the current prediction, they could comprise as much as half of the new members, in effect controlling Congress by holding the balance of power.
The Democratic Congressional Campaign Committee has identified 102 seats as “competitive” in its red-to-blue campaign programme. Eighty of these seats are vulnerable Republicans, and 22 are seats where the incumbent is retiring. 57 of the 221 candidates standing for the Democratic nomination in these 102 districts are current or past agents of the military-intelligence complex. And of those 102 districts, 44 have one of these candidates, 11 have two, and one has three. Furthermore, there are indications that the financial backers of the Democratic Party are supporting this influx of intelligence operatives, and that they are well-funded.
Why should we worry?
These candidates either represent or have strong links with the military-intelligence complex. This complex, the Deep State, has already regained a high degree of influence over the White House following the last Presidential election, to the point where it now appears to have gained control over foreign policy.
It also dictates homeland security. Unsatisfied with the degree of control it has over the White House, the Deep State now appears to be seeking to control Congress as well, by having politicians in its pocket on both sides of the House, thereby holding the balance of votes.
While the military-intelligence complex has had a tight grip on America’s foreign policy for some time, this is a new development. Whatever the merits or otherwise of the leading candidates for the Presidency, the CIA appears to have been managing the democratic process for decades, so that their preferred candidate wins. First, there was Papa Bush, ex-Director of the CIA. He was followed by Bill Clinton, Governor of Arkansas, where it has been alleged the CIA used Mena Intermountain Municipal Airport as a drop point for secret operations. Whether this was true or not, Clinton was followed by Bush Junior, when 9/11 became the justification for the second Iraq invasion. And there can be little doubt Obama quickly toed the CIA line with the appointment of a compliant Hillary Clinton as Secretary of State.
Following Obama, who was little more than a puppet president, Hillary was the anointed one, but then the voters rebelled and elected The Donald instead.
There can be no doubt that the chaos in the White House since Trump’s victory has reflected a fight behind the scenes for control of foreign policy, homeland security and military spending. It has been about the CIA’s ultimately successful attempts to ensure Trump backtracked on relevant electoral promises and complies with its own agenda. So far, Trump has backed down on Russia, North Korea, Iran and on military spending, suggesting he is well on the way to becoming the Deep State’s lackey. It now seems the CIA wants to control the balance of power in Congress.
This should be deeply troubling for Americans looking to draw a line under the erosion of their democracy. The US is already on its way to becoming a hidden dictatorship, where even the President is a captive of an unelected secret agency pursuing its own belligerent agenda. America’s allies should also be worried about taking direction from America’s intelligence community, no longer pursuing a balanced diplomatic itinerary, but one of geopolitical warmongering.
Seeking to control Congress is a logical extension of pre-existing Deep State policies. We have gone from the invention of weapons of mass destruction as an excuse to topple Saddam Hussein, to false-flag operations and other wars in the Middle East and Eurasia. And how much of the current anti-Russia rhetoric is concocted by American intelligence agencies, we may never know, but given the intelligence services’ stock in trade is disinformation and propaganda, it is hard to believe indisputable facts are involved.
There can be little doubt that moving missile systems towards Russia’s borders in the years after the collapse of the old Soviet Union has ensured America would continue to be seen by the Russians as an aggressor. The better, more democratic course, would have been to open borders to trade and cultural influence. And who knows, the need for a nationalistic strong man may not have arisen and Putin, if he continued in power in these altered circumstances, might be behaving very differently. But that would have meant the intelligence-military complex would have no purpose, beyond America’s diminishing domestic security.
Money is the root of this evil
For a long time, the senior operators at the top of the CIA must have felt that they are the masters of the human race. Regimes came and went at the CIA’s behest, but the CIA carried on regardless. To maintain this power, at a time when China and Russia are emerging as the powerhouses of Asia, requires more money, and lots of it. Money to bribe and subsidise foreign states: China is now the greatest source of funds for the world’s independent regimes. Money for technology and hardware: Russia’s military technology and missile capability is now potentially more advanced than America’s.
Therefore, the Deep State has a looming funding problem if it is to keep up with Russia and China on its accustomed terms. Government military funding is by means of the discretionary spending allocation that is set by Congress through the annual appropriations process. As well as that, there’s a classified amount allocated for the main intelligence departments, including the CIA. Taken together, Department of Defense and Overseas Contingency Operations, which includes funding wars on foreign soil, are budgeted at $886bn for 2019, a minor increase over 2018.
These amounts will have to be increased significantly for 2020, if the Deep State is to pursue its objectives. President Trump is now onside, but Congress will need to be compliant in order to ensure the funds required will be available. That appears to be the explanation why the Deep State is seeking to take control of Capitol Hill.
This will take the geopolitical conflict with China and Russia to a new level. Their own intelligence services will almost certainly be fully aware of the American Deep State’s congressional manoeuvres. It might explain the timing of Russia’s pre-emptive announcement, that it has missiles capable of delivering a punch at Mach 20. It might also explain China’s recent announcement of its intention to increase military spending, even though the timing is likely to have been set by the recent National Peoples’ Congress.
If the US military-intelligence complex manages to pack out Congress, it will be the killer blow for any democracy remaining in America. It will clear the field for a secret state organisation, which has shown little or no regard for human life and the rule of law, to accelerate its warlike agenda. It will have unfettered access to the national finances to accelerate its programme of global aggression, and damn the consequences for anyone else.
The stakes could hardly be higher.
- Yahoo Japan Plans To Launch Cryptocurrency Exchange Amid FSA Crackdown
Japanese crypto regulators sent crypto prices spiraling lower earlier this month when they announced a heavy-handed crackdown on seven local cryptocurrency exchanges (and ordered month-long suspensions for two more).
As CoinTelegraph reports, the Japanese Financial Services Agency (FSA) has sent “punishment notices” to seven crypto exchanges and temporarily halted the activities of two more after a round of inspections prompted by January’s Coincheck hack, CNBC reports Thursday, March 8.
The FSA issued business improvement orders for a lack of “the proper and required internal control systems” to seven exchanges, including Coincheck, which was specifically cited as lacking a system for preventing money laundering and the financing of terrorism.
The crackdown followed a historic theft of more than $500 million of NEM tokens from the Japanese exchange CoinCheck, which had been attributed to the fact that the exchange stored its customers’ funds in a low-security wallet. Regulators also discovered that an employee at unlicensed exchange Bit Station had improperly accessed customers’ coins.
And yesterday, the FSA warned Binance, a popular Hong Kong based exchange that was launched last year after issuing an initial coin offering, that it must either obtain a license or cease operating in Japan.
Meanwhile, in what appears to be a bid to avoid scrutiny from the FSA, Japan’s 16 licensed cryptocurrency exchanges are planning to launch a self-regulatory body similar to FINRA.
Perhaps sensing an opening, Yahoo Japan is planning to launch a regulated bitcoin exchange, according to a Nikkei report published Friday. Instead of building the exchange from scratch, Yahoo Japan plans to acquire a 40% stake in BitARG Exchange Tokyo, one of the 16 licensed exchanges, and use its technology to build a new exchange, to be launched in April 2019, or later.
The shares will be purchased for 2 billion yen ($19 million) via BitARG’s subsidiary YJFX, a forex trading platform.
The news had no discernible impact on crypto prices, which continued to drift lower Friday morning.
Earlier this week, Japanese officials attending the G-20 summit in Buenos Aires defended cryptocurrencies, arguing they were not a threat to broader financial stability…
Unlike so many of his peers, BOJ Governor Haruhiko Kuroda has refused to slam cryptocurrencies – instead choosing to highlight the crypto “wealth effect” which he said could have a positive impact on GDP.
Japan became the first G-10 country to adopt a comprehensive regulatory framework for cryptocurrencies last year when legislation recognizing bitcoin as money – and clearing the way for financial institutions to deal in crypto – was signed into law.
- American Adults Have Never Been Fatter
40% of American adults are obese, a sharp increase from a decade earlier and a record high. according to federal health officials.
A National Health and Nutrition Examination Survey (NHANES) sampling of 27,449 adults with a BMI between 30 and 40 found that among those aged 20 years and older, obesity went from 33.7% in 2007-2008 to 39.6% in 2015-2016. Severe obesity – those with a BMI above 40, jumped from 5.7% to 7.7% over the same period.
The increase in obesity among the 16,875 youth sampled was much lower, going from 16.8% a decade ago to 18.5% in 2015-2016. Still pretty bad.
For reference, this kid was considered fat in 1985…
National trends
The CDC has prepared handy list of statistics as well as maps of average obesity by state, as well as by race. In a nutshell, the south is a hotbed of obesity.
Of note:
- Obesity decreased by level of education. Adults without a high school degree or equivalent had the highest self-reported obesity
- Young adults were half as likely to have obesity as middle-aged adults.
Obesity Prevalence in 2016 Varies Across States and Territories
- All states had more than 20% of adults with obesity.
- 35% or more adults had obesity in 5 states (Alabama, Arkansas, Louisiana, Mississippi, and West Virginia).
- The South had the highest prevalence of obesity (32.0%), followed by the Midwest (31.4%), the Northeast (26.9%), and the West (26.0%).
Overall:
White adults:
Black adults
Hispanic adults
Public health experts said that they were alarmed by the continuing rise in obesity among adults and by the fact that efforts to educate people about the health risks of a poor diet do not seem to be working. –Miami Herald
“Most people know that being overweight or obese is unhealthy, and if you eat too much that contributes to being overweight,” says Dr. James Krieger, clinical professor of medicine at the University of Washington and executive director of the advocacy group Healthy Food America. “But just telling people there’s a problem doesn’t solve it.”
Unfortunately, as The Herald notes, the recent reports on American “greatness” comes at a time when the food industry’s pushback against nutritional labeling was answered by a Trump administration proposal during recent NAFTA negotiations which would limit the ability for the U.S., Mexico and Canada to require prominent labels warning of health risks.
So transparency over nutrition looks to be shrinking…
Meanwhile, here’s a 2011 map of states in which U.S. adults are meeting aerobic and muscle-strengthening guidelines, courtesy of the CDC.
And as The Herald also notes, Americans are cramming their craws with more fast food than ever…
While the latest survey data do not explain why Americans continue to get heavier, nutritionists and other experts cite lifestyle, genetics and, most importantly, a poor diet as factors. U.S. fast-food sales rose 22.7 percent from 2012-2017, according to Euromonitor, while packaged-food sales rose 8.8 percent. –Miami Herald
In other words, Novo Nordisk is probably going to sell a lot of insulin in the coming decades, notwithstanding the development of a lab-grown pancreas or similar scientific breakthroughs.
- Jamie Dimon Makes His Average Employee's Annual Salary In One Day
It should come as no surprise that Jamie Dimon makes a lot of money; after all, one of the trademark statements by the CEO of the bank that was first handed Bear Stearns on a silver platter for pennies on the dollar and just a few months later was bailed out by the government, is “that’s why I am richer than you.“
To underscore this, in 2015 Dimon, whose bank was forced to disclosure to clients and investors that it was caught rigging the FX market…
… officially became a billionaire, largely thanks to JPM’s soaring stock price.
“The odds are much, much lower for a bank CEO becoming a billionaire than a guy going to a hedge fund or private equity,” said Roy Smith, a professor at New York University Stern and a former Goldman partner who started on Wall Street in 1966. “The real lucre in this business has always been on the transactional side. The CEOs of Wall Street have to deal with litigation, regulation and the relatively short tenures you have at the top of the pile.”
However, the odds soar when JPM, like every other bank, got a multi-billion bailout courtesy of US taxpayers after it – and its other bank peers – had taken on so much risk the entire system imploded. One wonders what Jamie’s net worth would have been had Americans not collectively “decided” it is time to make Jamie the richest bank CEO currently to have a job.
And while one can debate “what would have been” until one is blue in the face, there is no debating that last year Jamie Dimon went from stinking rich to stinking richer, by $28.3 million to be precise.
None of the above is new. What may comes as news to some, however, is that Dimon makes 364 times the median JP Morgan employee who received $77,799 last year, including firm-paid benefits. In other words, in one day Jamie Dimon earned as much as a typical JPM employee made in one whole year.
The only bank CEO who makes more relative to their employees is Citigroup chief Mike Corbat, whose 2017 take of $17.8 million was 369x the median employee at $48,249, according to the FT.
As the FT breaks down, “Dimon’s total award of $28.3m included perks such as personal use of corporate aircraft ($73,921), personal use of cars ($29,848) and the cost of “residential and related security” ($48,259). But the bulk of his pay came in stock awards ($21.5m), bumped up after a year of record annual net income of $26.5bn, excluding the effects of the tax reform, on record revenues of $104bn.”
Third in line is Charlie Scharf of Bank of New York Mellon – Dimon’s protégé, who raked in nearly $20 million after becoming BNYs CEO last July. Scharf’s payout puts him at 354x the average BNY Mellon employee.
The median ratio for all listed U.S. banks is 135x according to Autonomous.
The disclosures of pay multiples, mandated by the Dodd-Frank Act of 2010, finally came into effect for all listed US companies this year. Critics say such figures are a crude metric, telling investors very little about the composition of a company’s workforce or the particular ways in which it has identified the “median” worker. But advocates say the tool is necessary as a way to restrain pay for top executives, which has consistently outpaced gains for lower-ranked workers. –FT
The pay ratio figures – mandated by the Dodd-Frank act, were arrived at by taking its top 10 most populous countries – which constitute approximately 97% of JPMorgan’s employee headcount of 253,500. Salaries of employees hired during 2017 were annualized.
As FT reports, JP Morgan began using so-called “performance share units” as part of variable pay for management following a 2015 challenge by investor advocacy groups calling for a stronger tie between compensation and performance. JP Morgan’s three-person compensation committee led by former ExxonMobil CEO Lee Raymond said “In determining Mr. Dimon’s compensation, the independent members of the Board took into account the Firm’s strong performance in 2017 and through the cycle, across four broad categories: Business Results; Risk, Controls & Conduct; Client/Customer Focus; and Teamwork & Leadership.”
Dimon has never sold a share of JP Morgan in his 14-year career at the bank. In fact, as FT reports, sometimes he buys more during dips, and famously purchased 500,000 JPM shares in February 2016, the so-called “Dimon Bottom“, just before the Shanghai Accord, which sent global stocks soaring, and more than doubled the value of his $26.6 million investment.
* * *
Of course, being a shrewd investor with a remarkable sense of imminent central bank bailouts – or simply the recipient thereof – is not the only reason why Jamie makes tens of millions each year and is a billionaire. Here are some other reason why, from the bank which has paid hundreds of millions in legal settlements and criminal charges over the years:
Misleading CDO Investments
Quick Stats
- JP Morgan fined $153.6 million
- Settled on 6/21/2011
- Case Details
The SEC settled with JP Morgan after it was discovered that the company misled investors on the complexity of a number of CDOs that were being offered. Specifically, the firm failed to notify investors that it had taken short positions in more than half of the assets bundled in said CDOs. The company did not admit to any wrongdoing or deny the allegations, but it agreed to pay $18.6 million in disgorgement, $2 million in prejudgment interest, and $133 million as a penalty. It was also required that the company change how it reviews and approves certain mortgage securities.
Anticompetitive Conduct in Municipal Bonds
Quick Stats
- JP Morgan fined $228 million
- Settled on 7/7/2011
- Case Details
JP Morgan settled an anticompetitive case with the U.S. Department of Justice (DOJ) in which it was forced to admit wrongdoing and knowledge of its illegal actions. “By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled” said Assistant Attorney General Christine Varney of the case. The charges stemmed from actions the company took from 2001 to 2006.
Foreclosure Abuses and “Robo-Signing”
Quick Stats
- JP Morgan fined $5.29 billion
- Settled on 2/9/2012
- Case Details
This gargantuan settlement came as the DOJ fined the five largest mortgage servicers in the nation. The entire suit was for $25 billion and was centered around “robo-signing” affidavits in foreclosure proceedings, “deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.” All banks involved, including JP Morgan, have until 2/9/2015 to comply with the settlement [see also The Unofficial Dividend.com Guide to Being an Investor].
More Mortgage Misrepresentation
Quick Stats
- JP Morgan fined $269.9 million
- Settled on 11/16/2012
- Case Details
Settled with the SEC, this case focused on JP Morgan misstating the delinquency status of mortgage loans that were collateral for residential mortgage-backed securities in which JP Morgan was the underwriter. It was found that investors lost $37 million on undisclosed delinquent loans. “Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed” said Robert Khuzami, Director of SEC’s Division of Enforcement.
Improper Foreclosures Pt. 2
Quick Stats
- JP Morgan fined $1.8 billion
- Settled in 01/2013
- Case Details
Continuing from the 2/9/2012 fine, JP Morgan tacked on another $1.8 billion to its already massive fine of $5.29 billion, totaling just over $7 billion. Combined, it is the company’s largest fine ever up to that point. That record would not stand for long, as the latter half of 2013 had other plans for the financial blue chip.
Electricity Trading Scandal
Quick Stats
- JP Morgan fined $410 million
- Settled on 7/30/2013
- Case Details
This fine was brought on by the Federal Energy Regulatory Commission (FERC) as it was discovered that JP Morgan was manipulating energy markets in California and the Midwest. In total, $125 million of unjust profits were returned and $285 million came as a civil penalty to be sent back to the U.S. Treasury.
Illegal Credit Card Practices
Quick Stats
- JP Morgan fined $389 million
- Settled on 9/19/2013
- Case Details
This fine was the result of JP Morgan deceiving customers into signing up for costly, unnecessary services when opening a new credit card. Broken down, $309 million of that figure was dedicated to repaying consumers, there was a $60 million civil penalty, and a separate $20 million penalty from the Consumer Financial Protection Bureau.
The London Whale
Quick Stats
- JP Morgan fined $920 million
- Settled on 9/19/2013
- Case Details
One of the most infamous cases over the last few years is the “London Whale,” which refers to two former JP Morgan traders who committed fraud to cover up massive losses (approximately $6 billion) in a trading portfolio. “JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. The SEC slapped JP Morgan with the fine and also forced the firm to admit to wrongdoing.
The Fannie and Freddie Fines
Quick Stats
- JP Morgan fined $5.1 billion
- Settled on 10/25/2013
- Case Details
The Federal Housing Finance Agency (FHFA) acted as a conservator for Fannie Mae and Freddie Mac in this settlement. The fine included a $4 billion charge to address infractions of both state and federal laws while another $1.1 billion went to Fannie and Freddie themselves – $670 million to the former and $480 million to the latter. Yet another case that was based on mortgage-related securities at its core, which is something of a theme for the company.
Institutional Mortgage Securities
Quick Stats
- JP Morgan fined $4.5 billion
- Settled on 11/15/2013
- Case Details
No surprises here, yet another case where JP Morgan was accused of shelling out less-than-stable mortgages. This time, however, the focus was on 21 institutional investors as opposed to a mass of retail investors. The $4.5 billion settlement covers the losses incurred from instruments that were sold between 2005 and 2008. Shortly before this case settled, the company disclosed for the first time that it had $23 billion set aside for legal expenses and penalties.
The Big One: Misleading “Toxic Mortgages”
Quick Stats
- JP Morgan fined $13 billion
- Settled on 11/19/2013
- Case Details
In the largest fine (of any single company) in corporate history, JP Morgan settled for $13 billion in November of 2013. The charges stemmed from misleading investors on what regulators dubbed “toxic mortgages.” The settlement also dictated that the company had to admit wrongdoing in that it knowingly misled investors on the quality of these securities. This has been one of the few times in recent memory that the company has actually offered a “mea culpa.” Of the $13 billion, $9 billion will be used to settle federal and state civil claims while $4 billion will be used as relief to aid consumers harmed by the unlawful practice.
Libor Rigging Scandal
Quick Stats
- JP Morgan fined $108 million
- Settled on 12/4/2013
- Case Details
The alleged manipulation of the London Interbank Offered Rate (Libor) was one of the biggest European cases in recent memory. When the dust finally settled, it was found that a number of banks, including Citigroup (C ) and JP Morgan were involved. JP Morgan settled for $108 million as the investigation could not find any evidence that management had knowledge of the actions of the two traders who committed the act [see also The Ten Commandments of Dividend Investing].
Madoff Retribution
Quick Stats
- JP Morgan fined $1.7 billion
- Settled on 1/6/2014
- Case Details
The Bernie Madoff ponzi scheme is one of the most infamous in the history of the investing world. After faking portfolio gains and eventually losing billions for his clients, Madoff was sentenced to 150 years in prison (after pleading guilty) and had to forfeit $17.179 billion. His scheduled release from Federal prison is on 11/14/2139. The high profile case cost JP Morgan $1.7 billion along with an onslaught of negative press.
Currency Manipulation
Quick Stats
- JP Morgan fined $1.34 Billion
- Settled on 11/21/2014
- Case Details
JP Morgan joined the likes of UBS, Citigroup, and Royal Bank of Scotland in being fined for currency manipulation and collusion-like efforts on the part of the financial institutions. Investigations revealed instant messages between traders of the institutions showing plans to buy and sell currencies after market close in order to manipulate foreign exchanges in their favor. JP Morgan was fined $996 million by U.S. and U.K. regulators along with an additional $350 million dollar fine from the Office of the Comptroller of the Currency (OCC).
And so on, and so on, and so on…
- JPMorgan: "We See Risk Of Institutional Capitulation"
One week ago, JPMorgan – which at the start of March warned that based on the recent “erratic behavior of retail investors” the idea that retail investors will serve as the marginal buyer of equities in the current environment was in jeopardy – found some solace in that week’s record equity ETF inflows of over $40 billion, which suggested to the bank that retail investors are once again the “marginal buyer of equities” even as institutional investors continued to quietly sell their equity holdings.
However, being a fickle, momentum-chasing bunch, it did not take long for mom and pop retail investor to pull a 180 and for record inflows to turn into near-record outflows, because as we reported yesterday using the latest EPFR data, last week saw $20 billion in equity fund outflows, the second highest on record, and only smaller compared to the record outflows observed in the February 5 VIXplosion week when countless retail vol-sellers were crucified instantly when XIV experienced an “acceleration event.”
Meanwhile, more ominously, JPM had noted that no matter what retail investors did, institutions appeared to have no interest in re-entering the market, on the contrary, they appeared to be quietly liquidating to retail investors, a trend which incidentally started around the time of the last market peak in 2007, and hasn’t changed since.
Well, it’s only logical that if institutions didn’t like the market last week when it was levitating on no volume back to all time high, then they certainly would not like it this week, when the Dow Jones reentered a correction, down over 10% from the January 26 high.
And, as JPM’s NIck Panigirtzoglou wrote late on Friday in his latest “Flows and Liquidity” report, “Institutional investors continued to act as a drag for the equity market and if anything they appear to have turned even more cautious over the past week.” This is shown in the table below which lays out the equity beta for various institutional investors, from Equity L/S, to Macro, to CTA, to risk parity and concludes with balanced (60/40 equity bond) mutual funds.
The table shows that all betas declined in the most recent period between March 13th to March 21st, indicating ongoing equity unwinds and deleveraging. More notably, Risk Parity funds saw a sharp decline in their beta over the past week in response to the rise in volatility, while both Macro and CTA funds now appear to have taken an outright net short position as their betas turned negative in the last week.
Here JPMorgan asks what has made institutional investors so cautious over the past month, and responds that “there are three main reasons cited by clients in our conversations”:
- Macro forces have turned less supportive. The cyclical momentum of the global economy appears to be downshifting as suggested by this week’s flash PMIs. And an apparent escalation of trade wars is increasing macro downside risks.
- Institutional investors think upward momentum in equity markets appears broken. As a result, chasing long-term equity momentum no longer looks as attractive as an investment strategy.
- Equity valuations are still frothy, and therefore the 9% correction so far since the Jan 26th peak appears not enough to trigger “buy the dip” flows.
Whatever the reasons for this stubbornly cautious stance by institutional investors, Panigirtzoglou warns that it is emerging as a headwind for equity markets. Here JPM’s flows expert picks up where JPM’s chief technical analyst, Jason Hunter, left off yesterday, when as a reminder Hunter cautioned that should the S&P slide below 2,610, that clients should reduce exposure to the S&P (the S&P closed Friday at 2,588, just above the 200DMA of 2,585).
So what happens next according?
According to the JPM strategist “the biggest near-term risk for equity markets is a breach of the lows we saw on Thursday, Feb 8th” and adds that “anecdotally, during that Thursday, fundamental equity investors came close to capitulation, so revisiting these lows raises the risk of capitulation, in our view, and thus of a more serious correction beyond the 10% decline seen between January 26th and February 8th.“
As the chart below shows, we are nearly there.
What about retail investors: could they again step in and provide an offset to the “cautious” stance of institutional investors? Unlikely: according to JPM, when looking through the volatility of weekly equity ETF flows, the big picture is that following an interruption in February, retail investors have resumed their equity ETF buying in March. However as we noted up top, March’s buying pace is not only increasingly extreme in both directions, but also “looks too weak to propel the equity market, especially compared to previous months before the February correction” according to JPM.
As such, with both institutions and retail investors out, and corporate bond yields jumping making buybacks increasingly expensive, suddenly the question of who will buy as everyone else sells has no satisfactory answer.
To summarize, JPM is becoming increasingly worried that “the stubbornly cautious stance by institutional investors is emerging as an important headwind for equity markets in the near term”, and what’s worse, should the S&P drop another 1-2%, and take out not only the 200DMA but also the early Feb lows, it looks virtually certain that institutions, which refused to liquidate during the vol explosion last month, will not show similar patience this time around.
- The West's "Guilty Until Proven Innocent" Mantra Is Wrecking Lives & International Relations
Authored by Robert Bridge, op-ed via RT.com,
Western society is flirting with a disturbing trend where people are being denied the time-honored ‘presumption of innocence’. The same undemocratic method is even being used against nations in what is becoming a dangerous game.
Imagine the following scenario: You are a star football player at the local high school, with a number of college teams hoping to recruit you. There is even talk of a NFL career down the road. Then, overnight, your life takes an unexpected turn for the worse. The police show up at your house with a warrant for your arrest; the charges: kidnapping and rape. The only evidence is your word against the accuser’s. After spending six years behind bars, the court decides you were wrongly accused.
That is the incredible story of Brian Banks, 26, who was released early from prison in 2012 after his accuser, Wanetta Gibson, admitted that she had fabricated injurious claims against the young man.
Many other innocent people, however, who have been falsely accused in the West for some crime they did not commit, are not as fortunate as Brian Banks. Just this week, for example, Ross Bullock was released from his private “hell” – and not due to an accuser with a guilty conscience, but by committing suicide.
“After a ‘year of torment’… Bullock hanged himself in the garage of the family home, leaving a note revealing he had ‘hit rock bottom’ and that with his death ‘I’m free from this living hell,’” the Daily Mail reported.
There is a temptation to explain away such tragic cases as isolated anomalies in an otherwise sound-functioning legal system. After all, mistakes are going to happen regardless of the safeguards. At the same time, however, there is an irresistible urge among humans to believe those people who claim to have been victimized – even when the evidence suggests otherwise. Perhaps this is due to the powerful emotional element that works to galvanize the victim’s story. Or it could be due to the belief that nobody would intentionally and unjustly condemn another human being. But who can really say what is inside another person’s heart? Moreover, it can’t be denied that every time we attempt to hunt down and punish another people, tribe, sex, religion, etc. for some alleged crimes against victims, there is a real tendency among Westerners to get carried away with moralistic zeal to the point of fanaticism.
A case in point is last year’s scandal that rocked the entertainment industry as the movie mogul Harvey Weinstein was accused of sexually assaulting numerous women over the span of a 30-year career. Eventually, over 80 females, emboldened by the courage displayed by their peers, drove Weinstein straight out of Hollywood and into the rogue’s gallery of sexual predators. Few could deny this was a positive thing.
But then something strange began to happen that has been dubbed the ‘Weinstein effect.’ Powered by the social media #MeToo movement, women from all walks of life began to publicly accuse men for all sorts of sexual violations, some from decades ago. Certainly, many of the claims were legitimate. However, in many cases they were not. Yet the mainstream media, which has taken great delight in providing breathless details of every new accusation, has shown little interest in pursuing those stories of men who went on to suffer divorce, ruined reputations, and the loss of jobs without so much as a fair hearing in a court of law.
As far as the mainstream media is concerned, and to be fair they don’t seem that concerned, the victim’s story is the only story that matters. Indeed, it was almost as if the victim had become judge, jury and executioner. This is, in reality, just one step from mob rule, and woe to anyone who questions the motives of the movement, as French star Catherine Deneuve discovered.
The (female) writer, D.C. McAllister, described the poisonous “environment of suspicion” that has beset relations between men and women.
“While women’s willingness to hold men accountable for criminal sexual behavior is to be applauded, the scorched-earth approach we are seeing today is destructive because it undermines trust,” McAllister wrote in The Federalist.
“When anything from a naive touch during a photo shoot to an innocent attempt at a kiss is compared to rape and sexual abuse, we are not healing society but infecting relationships with the poison of distrust.”
In other words, neither men nor women have gained anything from this otherwise-well-intended campaign against sexual improprieties. However, this is not the first time the West has allowed raw emotions to knock the train of progress right off the tracks. History books are replete with examples of Western campaigns rising out of sheer mass hysteria. But at least in those wild times there was still some semblance of justice, complete with trials and investigations. Now compare that with our ‘modern’ times, when all it took for the United States to win approval for an illicit attack on Iraq was for Colin Powell to shake a vial of faux anthrax in front of the UN General Assembly.
With these historical hiccups in mind, it is possible to argue that the West has truly forgotten the lessons of history because they are certainly repeating them today.
By way of example, consider where the great bulk of US troops are encamped today – in and around the Middle East – and then ask yourself how they got there.
The answer is by hook and by crook, and not a little public manipulation and chicanery. That is because, in our insatiable desire to defend victims – the good guys, we are told – we are allowing ourselves to ignore crucial evidence while placing blind faith in what we are being told is the truth. Clearly that has not been the case to date.
From the accusations that Iraq was harboring weapons of mass destruction to launch against innocent people, to the current claims that the Syrian government of Bashar Assad is using chemical weapons against his own people, the West is gambling that claims based on zero evidence will always work to fulfill ulterior motives. So far, the ploy seems to be working with the gullible public, but sooner or later truth will catch up, indeed, as truth usually does.
Just this month, for example, an assassination attempt was made against Sergei Skripal – a former double agent who had moved to Salisbury, England following a spy-swap in 2010. Any guesses as to who the British authorities have ruled – without a trial, evidence or motivating factor – is the main culprit? Yes, Russia. Yet, even the usually loyal British press has started expressing reservations over the dubious claims.
This should come as no surprise since the UK, a member of the Organization for the Prohibition of Chemical Weapons (OPCW), has staunchly refused to provide samples of the alleged nerve agent to Russia for analysis. Why would it do that? Would anyone be surprised if this investigation goes the same way it did for all those Russian athletes who were, unjustly, banned from the Winter Olympic Games this year?
Or perhaps the same way it went following the 2016 US presidential elections, when Russia was accused of meddling on behalf of Donald Trump – zero evidence to back up the slanderous accusations, which are responsible for putting US-Russia relations into a free fall.
In conclusion, the unsightly spectacle of Western capitals backtracking on legal precedent – from domestic cases to international – makes it all the more clear why it is so anxious to win back the media mountaintops – it has no evidence whatsoever to support the reasons behind its increasingly illicit behavior. It is therefore incumbent upon them to own the narrative, as well as the justice system. How long this democratic charade can last is anybody’s guess.
- "The Obama People Better Start Packing Their Shit" – John Bolton Expected To "Clean House" At The NSC
The cautious and considered HR McMaster is leaving the White House to be replaced by one of the most polarizing, irascible figures operating in contemporary national security circles: Former UN Ambassador John Bolton.
Bolton, who recently penned an op-ed in the Wall Street Journal arguing that a preemptive strike against North Korea would be both legal AND desirable, is widely believed to be one of the most interventionist figures to ever hold a senior position in the US government. Case in point: Before 9/11, Bolton helped found a group calling for the unilateral overthrow of Saddam Hussein. Rand Paul declared that Trump was wrong to trust someone who is “unhinged as far as believing in absolute and total intervention.”
So it should hardly come as a surprise that Bolton plans to shake up the National Security Council staff when he arrives in the West Wing. Foreign Policy reports that Bolton, Trump’s third NSA in 15 months, is preparing to begin firing staff and replacing them with his own allies, as well as a few allies of former NSA Michael Flynn, who share Bolton’s hawkish views.
As one might expect, the Obama holdovers and McMaster loyalists will be the first to go. But they won’t be the only ones: Those targeted for removal include officials believed to have been disloyal to President Donald Trump – especially those who have leaked about the president to the media.
“Bolton can and will clean house,” one former White House official said.
Another source said “He is going to remove almost all the political [appointees] McMaster brought in.”
A second former White House official offered a blunt assessment of former Obama officials currently detailed or appointed to the NSC: “Everyone who was there during Obama years should start packing their shit.”
The circumstances surrounding McMaster’s departure will only embolden his successor to make sweeping changes. As FP reports, McMaster was reportedly planning to hang on for a few more months, but a recent leak about Trump’s decision to congratulate Russian President Vladimir Putin.
McMaster’s departure may have been hastened by leaks emanating from the White House. Two sources familiar with the matter said McMaster was going to stay on until early summer.
But when the Washington Post reported this week that Trump had congratulated Putin in a phone call on his fraudulent election win — after receiving written briefing materials from the NSC instructing him not to congratulate Putin — the president reacted furiously and blamed McMaster. The story caused Trump to speed up McMaster’s departure, the sources said.
Bolton is already in talks with certain longtime advisors and is likely preparing to offer several of them jobs in the West Wing. One such advisor is Matthew Freedman, a Republican consultant who previously advised Bolton at the State Department and the United Nations. Freedman and many other Bolton allies are pushing the incoming national security advisor to make sweeping changes (changes that will, of course, benefit them).
On Thursday evening, just hours after Trump tapped him for the job, Bolton held a call with longtime advisors, including Matthew Freedman, a Republican consultant who once advised Bolton at the State Department and the United Nations. Freedman is currently helping manage the transition, according to a source familiar with the call.
“Freedman is a very political guy that Bolton likes,” one Republican source said. “He is overly ambitious about cleaning house.”
Freedman disputed that account, saying he was not aware of the Thursday phone call. “I can tell you there is no list,” he said.
Another source close to Bolton said it was premature to be talking about personnel changes.
While Trump might object to Bolton’s mustache (the president has a distaste for men with facial hair), the two at least see eye to eye on policy issues. In a way, Bolton could be considered a “proto-Trumpian” figure due to his criticism of the United Nations and the European Union – positions that Trump has also embraced.
Bolton’s friends believe this closeness will allow Bolton to make swift changes at the White House. Indeed, Bolton’s allies already have two names that should be at the top of Bolton’s list of staff to fire: Deputy NSA Nadia Schadlow and former McMaster deputy Ricky Waddell.
Among the officials Bolton’s allies are urging him to fire is Nadia Schadlow, currently the deputy national security advisor for strategy. Schadlow was the primary author of the administration’s recently released National Security Strategy, which was viewed as a surprisingly mainstream document that reaffirmed many traditional U.S. foreign-policy positions. Another official likely to be targeted in a Bolton purge is McMaster’s deputy, Ricky Waddell.
It wouldn’t be the first purge to follow a change in Trump’s national security advisor. When Lt. Gen. H.R. McMaster replaced retired Lt. Gen. Michael Flynn in the job last year, McMaster systematically eliminated officials seen as loyal to his predecessor. According to four sources close to the White House, those so-called “Flynnstones” – advisors loyal to Flynn – are believed to be plotting their return to the NSC.
Whether Bolton will sign off on the staff purge his allies and advisors are pushing is less clear, though he has been insistent about ousting so-called Obama holdovers. “You could easily say that people close to Bolton want these people to go,” one source said. Other sources stress that Bolton, a veteran bureaucratic infighter, makes his own decisions.
A source close to Bolton cautioned that any staffing changes would take time, given the need to process security clearances. That means Bolton will likely be stuck with his current staff for the May summit meeting between Trump and North Korean leader Kim Jong Un.
Trump and Bolton have reportedly discussed staffing changes since at least last July, when Bolton was offered the job as McMaster’s deputy – a position currently held by Waddell. Trump told Bolton that the deputy job would lead to the top post, but Bolton declined, saying he’d rather wait until he was offered the national security advisor job.
However, there are two factors that Bolton’s allies believe could make life difficult for the former ambassador to the UN.
One is his hawkishness toward Russia – which puts him at odds with Trump (though Trump, who is planning to expel dozens of Russian diplomats over the Skripal incident).
Another is whether he manages to get along with Chief of Staff John Kelly – very much a supporter of the establishment view of American foreign policy. Bolton also has Trump’s ear, which could lead to tensions between the two men. Since he arrived in the West Wing, Kelly has proven incredibly effective at keeping his job, and has helped dispatch many West Wing rivals.
Bolton will need to tread carefully if he wants to outlast his two predecessors.
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