- Jim Jatras: Forget Kim. It's Time For A Trump-Putin Summit…Now!
Authored by James George Jatras via The Strategic Culture Foundation,
In the aftermath of US President Donald Trump’s cancellation of his scheduled June 12 summit with North Korea’s Kim Jong-un, the gathering clouds of global conflict are getting thicker and darker:
Korea: The cancellation is a triumph for Trump’s national security team, most if not all of whom were horrified at the prospect of his meeting personally with Kim. (There was no telling what the Big Man might agree to if he met Little Rocket Man face to face. What if Korea actually were denuclearized? There would be no more excuse for keeping American troops on the peninsula! Disaster!) From the team’s perspective, scuttling the meeting altogether would be the best outcome, but derailing the date and cranking the nasty rhetoric back up will do for now. Talk of a Libyan model, even more than inclusion of B-52s in exercises with South Korea (which Trump reversed), got the job done. Now it’s imperative for the national security establishment to load Trump up with nonnegotiable demands (maybe patterned on Pompeo’s Iran provocation; see below) that Kim would have no choice but to refuse on the chance the summit gets rescheduled through the frantic efforts of South Korea’s Moon Jae-in – and maybe of Trump himself, if he still wants a shot at that Nobel Peace Prize. Pyongyang’s continued willingness to talk will register in Washington as desperation and an invitation for renewed pressure.
Iran: Secretary of State Mike Pompeo has delivered to Tehran what only can be deemed an ultimatum. It makes Austria’s 1914 demands on Serbia look mild in comparison. Ultimata are designed to be rejected, “justifying” whatever action the threatening power has already decided upon. Tehran is being told to dismantle its entire regional security presence – or else. The “or else” means initially a campaign of destabilization (assassinations, fomenting domestic unrest, and insurrections by disgruntled ethnic and religious communities; see Syria 2011) or, if that fails, direct military action (see Libya 2011 and Iraq 2003). To trigger the latter look for a false flag or contrived “Iranian attack,” such as a naval incident in the Persian Gulf (see Gulf of Tonkin 1964). Also targeted by the ultimatum are the European countries aghast at US withdrawal from the Iran nuclear deal. In addition to smacking secondary sanctions on our satellites (officially, “allies” and “partners”), the harshness of Pompeo’s terms is designed to spook the Europeans into the vain hope they can restrain a reckless US bent on war by meeting Washington halfway (or three-quarters of the way, or nine-tenths of the way…) in helping to corner Tehran. Watch to see who will crack first: London, Paris, or Berlin?
Syria: Despite Trump’s repeated assertion that he wants to get Americans out of Syria, there is reason to think we are digging in further. This has nothing to do with defeating ISIS. Rather, along with a planned buildup of Saudi and other foreign Sunni troops in the US- and Kurd-controlled zone, the principal target is Iran (see above). US policy in Syria is driven by Israeli and Saudi hostility to Iran, and Pompeo’s list of nonnegotiable demands includes withdrawal of Iranian (and Hezbollah) forces from that country. It is a mystery how the US, whose troop presence in Syria violates international law and probably American domestic law as well, has the right to demand the departure of forces present legally by invitation of the internationally recognized government. Punctuating US determination to confront Iran were new strikes this week against Syrian government forces, while Israel flaunted its first-ever combat use of the US F-35.
Ukraine: The level of fighting on the Donbas line of control has intensified. Meanwhile Kiev forces show off tests of the Javelin antitank missiles they received from the Trump administration, which the Obama administration had earlier declined to provide. Ostensibly intended to deter a Russian attack – in which case they would make little difference – the Javelins could be used in an offensive against Donbas forces (perhaps in concert with an attack on the Kerch bridge connecting mainland Russia to Crimea) followed by a call for insertion of international peacekeepers. Russia considers the FIFA World Cup from June 14 to July 15 a prime time window for such an assault. A Dutch report assigning blame to – surprise! – Russia for downing MH17 comes at an opportune moment.
Balkans: Prestigious think tanks call for “action” to intensify the same policies that have made a wreck of the Balkans for a quarter of a century. Why? To counter Russian influence, of course! The only shortcoming in US and European policy is that we haven’t been aggressive enough.
Sitting at the geographic and political junction of these seemingly disparate theaters of active or potential conflict is the US establishment’s entrenched hostility to Russia. Despite the accelerating unraveling of the anti-constitutional plot to dump Trump by elements of the US Deep State (in the CIA, FBI, Department of Justice, and elsewhere) together with their British counterparts (MI6 and GCHQ), the effort’s primary policy objective was achieved: President Trump has been blocked from his oft-stated desire to improve ties with Moscow. Addressing the regional issues above – any one of which could reach dangerous crisis proportion at any moment – would be far more feasible with Washington and Moscow working in cooperation instead of at cross-purposes or daggers drawn. But instead, we have a new cold war care of James Clapper, John Brennan, Christopher Steele, Peter Strzok, Stefan Halper, and their ilk – possibly even including Barack Obama.
In some ways this second Cold War is even more dangerous than the first one. The instincts of restraint and prudence that had been built up over decades of confrontation have atrophied. While both the US and Russia still maintain massive nuclear arsenals, new military technology has continued to make rapid progress in such areas as hypersonic weapons and cyber-warfare. Also, while during the first Cold War American and Soviet planners consciously sought to avoid direct contact between their forces in Third World proxy wars, today American and Russian forces come into perilous proximity to one another. Given Washington’s relentless determination to press Moscow to the brink in every theater, the consequences of even an unintended clash are not given the gravity they demand.
It is impossible to know from outside of Trump’s own mind to what extent he has abandoned his pledge to improve relations with Russia (or never meant it in the first place), or whether he might simply be biding his time to make his move. But it is clear what that move must be if there is any possibility of cutting the Gordian knot that binds shut the gate to rapprochement: Trump and Russian President Vladimir Putin should meet in a formal and substantive summit at the earliest possible date. A productive understanding between the United States and Russia must start at the top, on the personal level or it will not happen at all.
To that end, recently this analyst joined other activists in posting the following petition on the official White House website:
President Donald Trump should hold early summit with Russian President Vladimir Putin
Created by J.J. on May 21, 2018
‘Ronald Reagan famously said: “A nuclear war cannot be won and must never be fought. The only value in our two nations possessing nuclear weapons is to make sure they will never be used.” Unfortunately, today a new Cold War between the US and Russia again poses an existential threat to the people of both nations and to the whole world. Therefore, we urge President Trump to follow in the steps of Ronald Reagan and to start a direct dialogue with President Putin in search of solid and verified security arrangements. As President Trump said repeatedly “only haters and fools” do not understand that good US- Russia relations are also good for America. By all indications President Putin feels the same way for his country. A summit should be arranged as soon as possible.’
The petition is open for signature until June 20. When signing, use of Gmail is recommended to facilitate registration of your vote.
No one should imagine a White House petition can by itself change the direction of American policy. However, if there are elements on Trump’s team who are not entirely against the idea of a summit, a show of public support may serve to strengthen their case against those opposed.
Most important is a constituency of one: Mr. Trump himself. If Trump was at all willing to hold a summit with Kim because of his handful of nukes, he can certainly do so with the leader of the one country on the planet with enough nuclear weapons to destroy the US.
Obama got his Peace Prize presented to him on a platter simply for getting elected while being black. By contrast, if Trump wants his Peace Prize he’s going to have to work for it. With Kim off his dance card, he’s got plenty of time to take a spin with Putin.
- Visualizing U.S. Energy Consumption In One Chart
Every year, the Lawrence Livermore National Laboratory, a federal research facility funded by the Department of Energy and UC Berkeley, puts out a fascinating Sankey diagram that shows the fate of all energy that gets generated and consumed in the United States in a given year.
Today’s visualization is the summary of energy consumption for 2017, but you can see previous years going all the way back to 2010 on their website.
Courtesy of: Visual Capitalist
DEALING IN QUADS
As Visual Capitalist’s Jeff Desjardins explains, the first thing you’ll notice about this Sankey is that it uses an unfamiliar unit of measurement: the quad.
Each quad is equal to a quadrillion BTUs, and it’s roughly comparable to the following:
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8,007,000,000 gallons (US) of gasoline
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293,071,000,000 kilowatt-hours (kWh)
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36,000,000 tonnes of coal
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970,434,000,000 cubic feet of natural gas
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25,200,000 tonnes of oil
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252,000,000 tonnes of TNT
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13.3 tonnes of uranium-235
Put another way, a quad is a massive unit that only is useful in measuring something like national energy consumption – and in this case, the total amount of energy used by the country was 97.7 quadrillion BTUs.
ENERGY WASTED
On the diagram, one thing that is immediately noticeable is that a whopping 68% of all energy is actually rejected energy, or energy that gets wasted through various inefficiencies.
It’s quite eye-opening to look at this data sorted by sector:
The transportation sector used 28.1 quads of energy in 2017, about 28.8% of the total consumption. However, it wasted 22.2 quads of that energy with its poor efficiency rate, which made for more rejected energy than the other three sectors combined.
This wastage and inefficiency in the transportation sector provides an interesting lens from which to view the green energy revolution, and it also helps explain the vision that Elon Musk has for the future of Tesla.
A WAYS TO GO
The last time we posted a version of this visualization was for the 2015 edition of the diagram, and we noted that renewables had a ways to go as a factor in the whole energy mix.
Here are how things have changed over the last two years:
As you can see, solar and wind consumption are jumping considerably – but in absolute terms, our note from two years ago still remains true.
To make the desired impact, renewable energy still has a ways to go.
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- Is The Government Building Secret Tunnels Under America To Prepare For WW3?
Authored by Mac Slavo via SHTFplan.com,
Mysterious booms and strange lights in have been reported all over the country and have recently sparked fears that the United States government is building tunnels underground in preparation for a potential nuclear third world war. Residents are convinced that they are hearing sounds and seeing the odd lights, and they are not isolated events.
One man in the Cincinnati area caught the lights on his camera and was even able to capture his son’s reaction.
Kimberly Kempke, a concerned resident from Anderson Township in Cincinnati, Ohio, is convinced the sounds she heard earlier this week were more than fireworks.
“The sounds were like true booms. They sounded like a powerful explosion,” said Kempke.
“It’s unlike anything I’ve ever seen or felt before and I’ve been very up close with fireworks many times.”
According to The Daily Star, YouTube channel secureteam10, run by Tyler Glockner, claims that the unexplainable sounds are coming from underground.
He also revealed that just days ago a seismograph recorded something moving from the east to the west coast of the US in just 19 seconds. And since he has uploaded it, viewers have been quick to speculate that something is secretly going on below the surface.
Only last month, mystery “trumpet” sounds in New York left residents convinced a secret tunneling program had commenced. And before that, we saw similar scenes in Ohio. The odd booms have been heard in Pennsylvania too, and even triggered an FBI investigation. Read more here.
The booms seem to be returning en masse. Most sound metallic in nature; almost as if a giant machine is doing something or a large piece of sheet metal is being hammered. Listen to them all yourself and see what you think. Is the government building secret shelters underground to protect the elites in preparation for World War 3? Could it be something else?
In the video below, the narrator speculates that it could be a massive earthquake of apocalyptic proportions coming:
All we really know is that no government agency is clarifying what could possibly be causing these lights and booms to pop up and be heard across the country. All we have is speculation at this point. But you can prepare yourself. Besides, if the government is really building underground bunkers and tunnels to protect themselves from an apocalyptic situation, shouldn’t you be prepared too?
- Here's When China Will Win The Arms Race With The US, And How BofA Is Trading It
For all the talk of the escalating confrontation between the US and China, Bank of America’s Mike Hartnett writes that the “trade war” of 2018 should be recognized for what it really is: the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.
This is hardly a secret, as the China strategy is laid out in its “Made in China 2025” blueprint: It aims to transform “China’s industrial base” into a “smart manufacturing” powerhouse via increase competitiveness and eroding of tech leadership of industrial trading rivals, e.g. Germany, USA, South Korea; this is precisely what Peter Navarro has been raging against and hoping to intercept China’s ascent early on when it’s still feasible.
At the forefront of China ambitious growth plan, Beijing’s investments in “advanced internet and communication technologies, embedded systems and intelligent machines” aim to ensure that 40% of China’s mobile phone chips, 70% of industrial robots, 75% of basic core components and 80% of renewable energy equipment are “Made in China” by 2025.
Meanwhile, the China First strategy will be met head-on by an America First strategy. Hence the “arms race” in tech spending which in both countries is intimately linked with defense spending. Note military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is that by 2050, China is set to overtake the US, spending $4tn on its military while the US is $1 trillion less, or $3tn.
This means that some time around 2038, roughly two decades from now, China will surpass the US in military spending, and become the world’s dominant superpower not only in population and economic growth – China is set to overtake the US economy by no later than 2032 – but in military strength and global influence as well.
And, as Thucydides Trap clearly lays out, that kind of unprecedented superpower transition – one in which the world’s reserve currency moves from state A to state B – always takes place in the context of a war.
Which explains BofA’s long-term strategic recommendation: “We believe investors should thus own global defense, tech & cybersecurity stocks, particularly companies seen as “national security champions” over the next 10-years.”
And here’s the reason why:
Because one might as well make some money before the next world war breaks out…
- Bill Ryerson – Dealing With The Elephant In The Room: Overpopulation
Authored by Adam Taggart via PeakProsperity.com,
Worldwide, three new humans are born every second. Every day, 225,000 more mouths are added to the global dinner table.
That adds up to 80 million new people per year — the population equivalent of the five largest cities in the world. That’s like a new Shanghai, a new Beijing, a new New Delhi, a new Lagos, and a new Tianjin being added every year.
This growth trajectory is simply not sustainable from a planetary resources standpoint. As the global population continues to grow at an exponential rate, its demand is causing key resources like fresh water aquifers, rainforest canopies, fishing stocks, fertile topsoils, etc to similarly deplete exponentially. These oppositional exponentials, mathematically, can only result in an evitable planetary ‘overshoot’ — which many argue we are already well into.
What can be done? Bill Ryerson, president of the Population Institute, joins us to discuss the work of the Population Media Center in addressing the interconnected issues of the full rights of women and girls, population, and the environment. It’s mission is to empower people to live healthier and more prosperous lives and to stabilize global population at a level at which people can live sustainably with the world’s renewable resources.
Our earlier podcast with Bill focused on the existential dangers of overpopulation (you can listen to it here). This week’s podcast focuses on the strategies that show the most promise for slowing, or perhaps even reversing, world population growth, should we be willing to pursue them:
All of those new people on the planet have needs for food, shelter, housing, and clothing. When you look at their environmental impact, the number of new people is a major driver of lost biodiversity, and it’s a significant factor in climate change.
Now, I’ve heard a lot of environmentalists say ‘Well, population doesn’t matter’ because the real culprits in climate change are the high consumers of the West who each have a huge carbon footprint. But in fact, if you take the median projection of population growth by the UN Population Division from now to 2050 — an additional 2.5 billion people — and multiply that times the admittedly low per capita carbon emissions of a citizen in the developing world, it’s the climate equivalent of adding two United States to the planet.
Put another way, projections show that whether we have a major effort to promote family planning and small family norms and delayed marriage and stopping child marriage, or a minor effort, that will result in a difference, from a climate standpoint, of 2 United States by 2050.
I would venture that the leaders of virtually every environmental group, if spoken to privately, would clearly recognize that population growth is a major threat to the environmental goals of their organization. And yet, publicly, they’ve made a decision not to touch that issue for fear that they’ll get themselves in trouble. And part of the reason for that I think has to do with their approach to environmental issues.
Many environmentalists think in terms of regulation as the solution to everything: if we have a climate problem, let’s have a carbon tax; if we have a pollution problem, let’s have pollution laws and regulations. But if we have a population problem — oops, what does that mean? Does that mean we have to tell people how many children to have? Therefore they conclude they better stay away from population because telling people how many children to have would obviously get them into trouble.
But what’s very clear is that coercion, in addition to being a human rights violation, is not effective. Persuasion and modeling of behavior that helps people understand the benefits to them, of educating their daughters rather than selling them into marriage, of allowing women to have say in how many children to have and allowing women equal rights in the workplace outside the home and various other goals including information and access to family planning services – that all this, within a human rights context, has been the reason that countries like Thailand have moved from rapid population growth to below replacement-level fertility. Environmentalists just haven’t come to grips with the fact, or realized that, indeed, the population problem can be much better resolved through human rights-based approaches.
Click the play button below to listen to Chris’ interview with Bill Ryerson (41m:14s).
- Secretive Russian Surface-To-Air Missile Test Is World's Longest Ever
CNBC has just announced, citing an anonymous military source, that Russia quietly conducted the world’s longest anti-air missile system test, destroying mock enemy targets at record range.
If and when this missile system becomes deployed, it could be a gamechanger for the Russian military, with increased area denial capabilities in Europe, East Asia, and the Middle East – that will undoubtedly frighten Washington.
Futuristic drawing of the S-500 air defense missile system. (Source: Almaz-Antey)
The source with direct knowledge of U.S. intelligence regarding the S-500 Prometey, also known as 55R6M “Triumfator-M,” a surface-to-air missile/anti-ballistic missile system intended to replace the A-135 missile system and supplement the S-400, said the missile test struck a target 299 miles away — 50 miles further than the existing S-400 system.
Components of the S-500 system
Moscow claims the S-500 is a new-generation surface-to-air missile system and has the capability of “intercepting hypersonic missiles, drones and aircraft as well as stealth warplanes like the F-22 and the F-35. The S-500 system would expand the Kremlin’s capabilities to engage multiple targets with precision strikes,” said CNBC.
Russia’s 2016 S-400 air defense system range in Europe, the Middle East, and Russia.
Besides ballistic and hypersonic missiles, Moscow also claims the S-500 has a range capable of intercepting low-orbit satellites, space weapons launched from hypersonic aircraft, and hypersonic orbital platforms.
However, the anonymous military source neglected to provide CNBC with specific knowledge of timing and location of the test.
The video below is of a test of the S-400 anti-ballistic missile system
Earlier this month, Russian President Vladimir Putin said Almaz-Antey, the weapon’s designer, had been alerted to prepare the S-500 missile systems for mass production.
“One of the key tasks is to improve anti-precision warfare means. It is necessary to develop and build up technological groundwork in the area of air defense, to continue modernization of Pantsir systems, to finish the development and preparations for mass production of the S-500 newest systems capable of hitting targets at super-high altitudes, including near-the-earth space,” Putin said at a meeting with Russia’s top brass and executives of defense-sector enterprises.
Although neither Putin nor the weapon designer have yet made any official statements about the tests, it seems as production for the missile system is about to ramp up for the 2020 deployment date. Meanwhile, with the longest surface-to-air missile range in the world, coupled with a claim that it can destroy American stealth fighters and hypersonics, the S-500 missile system has undoubtedly shocked Washington. What will Trump’s response be? Well, of course, more defense spending until the country goes bankrupt.
- Everything You Need To Know About GDPR
You’ve likely heard about the General Data Protection Regulation act (GDPR) pushed out by the EU recently. If you’re from Europe then chances are you’ve been bombarded with boring emails about it.
However, this new European privacy law, which took effect today, has caused several major U.S. news websites to suspend access across the region as privacy activists filed complaints and data-protection regulators prepared to brandish their new enforcement powers.
Sites including the Chicago Tribune, the New York Daily News, and the Los Angeles Times were inaccessible for millions of European users after missing the May 25 deadline to be GDPR compliant.
At the time of writing, LiveLeak reports that users in the European Union were met with the following message when trying to access their websites:
“Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism.”
As boring as it might be, it’s still a very important piece of legislation and it’s one you should know about. With that in mind, here’s everything you need to know about GDPR.
Let’s start with the obvious and explain just what the GDPR are. It’s a piece of legislation that the European Commission passed in April 2016. Companies were given two years to comply with the legislation, which goes into effect on May 25, 2018.
GDPR was designed to replace the previous law known as the Data Protection Directive and it aims to create a single set of rules for European Union member states. It aims to give consumers more control over the personal data companies collect about them. Not only does the legislation affect organizations based within the EU itself, but it also applies to companies outside of the EU if they provide services to – or monitor the activities of – EU citizens. As you can see, it’s going to have a major impact felt around the world.
How Did All This Come About?
The GDPR is one of the latest EU parliamentary measures designed to protect personal data as much as possible. The EU Charter itself states that protection of personal data is a fundamental right associated with protection of one’s natural person.
While American laws tend to be in favor of businesses more so than consumers, the EU takes a consumer-first approach. The Data Protection Directive and the Organization for Economic Co-Operation and Development (OCED) started the process and now the GDPR continues it.
Make no bones about it; the EU cares a lot about protecting consumer privacy and they always have. It has now paved the way for this approach to be taken globally thanks to the GDPR, it’s policies, and the punishments for those that break them.
What are the Key Policies?
A key focus of the legislation is strengthening the conditions of consent. This means that companies are no longer able to get your data out of you by using vague and confusing statements. They will also no longer be able to make users consent to several things at once. Users should be able to consent to individual things individually, rather than being presented with a list of things and then being asked to consent to everything at once. On top of this, a parent or guardian must consent to data collection on children aged under 16.
Another GDPR rule says that companies must notify their data protection authority about any breaches within 72 hours of them becoming aware it happened. Those in charge of processing data must notify customers as soon as possible once the breach has been discovered.
Consumers will also be given more control over their user data. They will have the right to access the personal information that companies store on them and find out what the data is being used for and where it is being kept. It also gives users the right to be forgotten. That means that you have the right to ask people to delete the information they have on you and prevent third parties from getting access to it. It also allows for people to transfer their information between service providers easily.
How Will it Affect Individuals?
While consumers are given more control over their information and are given the right to be forgotten, there are some gray areas about how all this applies in reality. In theory, the law would allow for people to demand that social networks such as Facebook completely delete their profile permanently. How feasible this is remains to be seen. There are also other problems, such as the freedom of expression. Laws built around the freedom of expression prevent this right to be forgotten from extending to news articles.
Will There Be Punishments for Breaking GDPR?
There will be some potentially major fines associated with breaking the rules of the GDPR. Organizations that breach the rules will be subject to fines of up to 4% of their annual global turnover or 20 million euros (around $25 million), whichever figure is higher. Given that some tech companies such as Facebook and Google make billions of dollars each year, this could be a potentially massive fine.
How Does GDPR Affect Firms?
Organizations have had two years now to prepare for GDPR, so hopefully the impact won’t be as big. Big tech firms such as the aforementioned Facebook and Google have already opened up about what they plan to do. These are organizations that handle huge amounts of data and so preparation has been key. Facebook in particular released a new set of privacy tools to help their organization comply with GDPR and other companies have released their own plans and tools.
Is There Anything Else Businesses Should be Aware Of?
The Information Commissioner’s Office of the UK recently released their own set of guidelines in order to help businesses prepare for the move. One thing that they recommended was that companies should review their privacy policy notices. It’s also recommended that businesses make the changes now so that they comply with the law. Many businesses are already doing this, as discussed above.
Don’t be too worried about the changes though. The Information Commissioner’s Office insists that these new measures will retain many of the same principles and concepts as the current Data Protection Act. Not many things are going to change, but it still helps to know what is changing. Even so, most companies that already abide by the old legislation are likely already complying with the new one. Of course, it never helps to hire a data protection officer to ensure complete compliance and have the right people ready when they are needed. Betipy have created the below infographic titled “55 Things You Need To Know About GDPR”, and offers business owners and members of the public a detailed look at the main points.
Still don’t get it? This should help…
This is my favorite. #GDPRday pic.twitter.com/fQrz2K6NHQ
— Whitney Merrill (@wbm312) May 25, 2018
- "Massacre" As Caribbean Pirate Attacks Up 160%
Modern-day pirate attacks in the Caribbean and Latin America are out of control, according to a Wednesday report which found a 163% spike in pirate activity that led to the loss of $948,690 in stolen goods. The report, produced by nonprofit group Oceans Beyond Piracy, found that 59% of the attacks involved robberies on yachts.
“We have observed a significant increase in violent incidents and anchorage crime, particularly in the anchorages of Venezuela and the recent violent incidents off Suriname in the first part of this year,” says Maise Pigeon, the report’s lead author. “Pirate activity in 2017 clearly demonstrates that pirate groups retain their ability to organize and implement attacks against ships transiting the region.”
Pirates have hit waters off the coast of Suriname hard.
In April, at least a dozen fishermen from Guyana went missing or were feared dead following a pirate attack in the area.
Guyana President David Granger called the attack a “massacre.”
And a fishing boat captain was shot dead after his ship was attacked in May. The rest of his crew survived.
The buccaneers also attacked anchorages in Venezuela, Saint Vincent and the Grenadines, Colombia and St. Lucia. –Marketwatch
According to the report, “854 seafarers were affected by piracy and armed robbery in Latin America and the Caribbean; an increase from 527 impacted seafarers in 2016. A significant increase was observed in failed boardings and attacks, as well as robberies.”
Read the entire report covering pirate activity around the world below:
Here’s how they deal with pirates off the coast of Somalia (sound warning):
Then there’s the British Royal Navy:
Then there’s Russia’s approach:
- When The U.S. Government Defaulted
One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts.
There’s just one problem: it’s not true, and while few people remember the “gold clause cases” of the 1930s, that episode holds valuable lessons for leaders today. – Sebastian Edwards, Project Syndicate, May 21, 2018
My friend, UCLA professor, Sebastian Edwards, is out with a must-read summer book, American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold.
Sebastian has also published an excellent synopsis of the the book, Learning from America’s Forgotten Default, on the Project Syndicate (PS) website. It is an excellent introduction to the subject material but only scratches the surface and should not be a substitute or excuse for not purchasing the book.
Money quotes from the Project Syndicate piece:
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There was a time, decades ago, when the US behaved more like a “banana republic” than an advanced economy, restructuring debts unilaterally and retroactively
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In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar.
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…this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.”
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These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge.
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…the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.
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Congress passed a joint resolution on June 5, 1933, annulling all gold clauses in past and future contracts.
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Republicans were dismayed that the country’s reputation was being put at risk, while the Roosevelt administration argued that the resolution didn’t amount to “a repudiation of contracts.”
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On January 30, 1934, the dollar was officially devalued. The price of gold went from $20.67 an ounce – a price in effect since 1834 – to $35 an ounce.
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…those holding securities protected by the gold clause claimed that the abrogation was unconstitutional.
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Lawsuits were filed, and four of them eventually reached the Supreme Court; in January 1935, justices heard two cases that referred to private debts, and two concerning government obligations.
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On February 18, 1935, the Supreme Court announced its decisions. In each case, justices ruled 5-4 in favor of the government – and against investors seeking compensation.
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Justice James Clark McReynolds… wrote the dissenting opinion – one for all four cases… He ended his presentation with strong words: “Shame and humiliation are upon us now. Moral and financial chaos may be confidently expected.”
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…the 1935 ruling is invoked [today] when attorneys are defending countries in default (like Venezuela). And, as more governments face down new debt-related dangers – such as unfunded liabilities associated with pension and health-care obligations – we may see the argument surface even more frequently.
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…the US government’s unfunded liabilities are a staggering 260% of GDP – and that does not include conventional federal debt and unfunded state and local government liabilities.
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A key question, then, is whether governments seeking to adjust contracts retroactively may once again invoke the legal argument of “necessity.”
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The US Supreme Court agreed with the “necessity” argument once before. It is not far-fetched to think that it may happen again. – Sebastian Edwards
A Roadmap?
There you have it, folks.
The good professor lays it all out, which may or may not be the roadmap for how the U.S. and other highly indebted governments resolve their ,massive and almost impossible to fulfill contractual obligations to both creditors and its citizens. The Supremes have already ruled in favor of the government under the “necessity” argument.
Modern Monetary Theory (MMT)
Sebastian’s material gives us much ammunition in arguing with the Modern Monetary Theory crowd, who believe a sovereign government cannot and will never default on its local currency obligations if it has an independent central bank. Of course, they will argue that FDR and the U.S. didn’t have an independent monetary policy because of its link to the gold standard.
Russia 1998
When we bring up Russia’s 1998 default on local currency GKO debt (David Tepper’s worst trade, BTW) the MMTs argue “special case.”
It seems to us the MMT crowd believe that because a government has an independent central bank and can always print money to payoff debt, they will never, ever experience rollover risk. Complete nonsense.
Can you say Venezuela?
When a government experiences financing problems through a sudden stop in funding, the leaders must make a political decision on whom to inflict the pain.
Either default, which hurts their creditors, and who may be predominantly made up of foreigners, as was the case in Russia in 1998; and is the case with the U.S. federal government marketable debt in 2018; or monetizing the rollover, resulting in hyperinflation and wiping out domestic residents.
We have the first-hand experience of the latter and have written many posts about it,
We’ll also never forget being in the Bulgarian central bank in 1996 just before some very large maturities of treasury bills were coming due. The market had lost confidence in the government and a high ranking central bank official looked us straight in the eye and said “we will not let the government default.”
We knew instantly a massive amount of liquidity was about to hit the local markets, the demand for the currency was going to collapse, and the country was headed for hyperinflation. Rioting broke out, the government fell, and the country eventually implemented a currency board, not too dissimilar from that of the Euro, in order to enforce fiscal discipline upon the government. – GMM, November 2011
We suspect when the day of reckoning comes for the United States to pay for its debt profligacy, it won’t be such a simple binary choice. There will be many and various types of public sector obligations in the queue to be paid, which may require differential treatment.
Sebastian’s example of the U.S. government default in the 1930’s is a combination of both. The default on the contractual gold clause and the inflating away of much of the debt through devaluation.
This is tantamount to an emerging market government unilaterally and retroactively converting its foreign currency debt into local currency and then monetizing it, and supported by the legal system.
How would that work out for, say, Venezuela dollar denominated bond holders?
Let’s hope our political leaders and policy makers come to their senses before that dreadful day is upon us.
Now take the few minutes to read the full article and go buy the book for some excellent beach reading. .
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