- Michael Hudson: U.S. Economic Warfare And Likely Foreign Defenses
Authored by Michael Hudson via Counterpunch.org,
Today’s world is at war on many fronts. The rules of international law and order put in place toward the end of World War II are being broken by U.S. foreign policy escalating its confrontation with countries that refrain from giving its companies control of their economic surpluses. Countries that do not give the United States control of their oil and financial sectors or privatize their key sectors are being isolated by the United States imposing trade sanctions and unilateral tariffs giving special advantages to U.S. producers in violation of free trade agreements with European, Asian and other countries.
This global fracture has an increasingly military cast. U.S. officials justify tariffs and import quotas illegal under WTO rules on “national security” grounds, claiming that the United States can do whatever it wants as the world’s “exceptional” nation. U.S. officials explain that this means that their nation is not obliged to adhere to international agreements or even to its own treaties and promises. This allegedly sovereign right to ignore on its international agreements was made explicit after Bill Clinton and his Secretary of State Madeline Albright broke the promise by President George Bush and Secretary of State James Baker that NATO would not expand eastward after 1991. (“You didn’t get it in writing,” was the U.S. response to the verbal agreements that were made.)
Likewise, the Trump administration repudiated the multilateral Iranian nuclear agreement signed by the Obama administration, and is escalating warfare with its proxy armies in the Near East. U.S. politicians are waging a New Cold War against Russia, China, Iran, and oil-exporting countries that the United States is seeking to isolate if cannot control their governments, central bank and foreign diplomacy.
* Keynote Paper delivered at the 14th Forum of the World Association for Political Economy, July 21, 2019.
The international framework that originally seemed equitable was pro-U.S. from the outset. In 1945 this was seen as a natural result of the fact that the U.S. economy was the least war-damaged and held by far most of the world’s monetary gold. Still, the postwar trade and financial framework was ostensibly set up on fair and equitable international principles. Other countries were expected to recover and grow, creating diplomatic, financial and trade parity with each other.
But the past decade has seen U.S. diplomacy become one-sided in turning the International Monetary Fund (IMF), World Bank, SWIFT bank-clearing system and world trade into an asymmetrically exploitative system. This unilateral U.S.-centered array of institutions is coming to be widely seen not only as unfair, but as blocking the progress of other countries whose growth and prosperity is seen by U.S. foreign policy as a threat to unilateral U.S. hegemony. What began as an ostensibly international order to promote peaceful prosperity has turned increasingly into an extension of U.S. nationalism, predatory rent-extraction and a more dangerous military confrontation.
Deterioration of international diplomacy into a more nakedly explicit pro-U.S. financial, trade and military aggression was implicit in the way in which economic diplomacy was shaped when the United Nations, IMF and World Bank were shaped mainly by U.S. economic strategists. Their economic belligerence is driving countries to withdraw from the global financial and trade order that has been turned into a New Cold War vehicle to impose unilateral U.S. hegemony. Nationalistic reactions are consolidating into new economic and political alliances from Europe to Asia.
We are still mired in the Oil War that escalated in 2003 with the invasion of Iraq, which quickly spread to Libya and Syria. American foreign policy has long been based largely on control of oil. This has led the United States to oppose the Paris accords to stem global warming. Its aim is to give U.S. officials the power to impose energy sanctions forcing other countries to “freeze in the dark” if they do not follow U.S. leadership.
To expand its oil monopoly, America is pressuring Europe to oppose the Nordstream II gas pipeline from Russia, claiming that this would make Germany and other countries dependent on Russia instead of on U.S. liquified natural gas (LNG). Likewise, American oil diplomacy has imposed unilateral sanctions against Iranian oil exports, until such time as a regime change opens up that country’s oil reserves to U.S., French, British and other allied oil majors.
U.S. control of dollarized money and credit is critical to this hegemony. As Congressman Brad Sherman of Los Angeles told a House Financial Services Committee hearing on May 9, 2019: “An awful lot of our international power comes from the fact that the U.S. dollar is the standard unit of international finance and transactions. Clearing through the New York Fed is critical for major oil and other transactions. It is the announced purpose of the supporters of cryptocurrency to take that power away from us, to put us in a position where the most significant sanctions we have against Iran, for example, would become irrelevant.”
The U.S. aim is to keep the dollar as the transactions currency for world trade, savings, central bank reserves and international lending. This monopoly status enables the U.S. Treasury and State Department to disrupt the financial payments system and trade for countries with which the United States is at economic or outright military war.
Russian President Vladimir Putin quickly responded by describing how “the degeneration of the universalist globalization model [is] turning into a parody, a caricature of itself, where common international rules are replaced with the laws… of one country.” That is the trajectory on which this deterioration of formerly open international trade and finance is now moving. It has been building up for a decade. On June 5, 2009, then-Russian President Dmitry Medvedev cited this same disruptive U.S. dynamic at work in the wake of the U.S. junk mortgage and bank fraud crisis.
Those whose job it was to forecast events … were not ready for the depth of the crisis and turned out to be too rigid, unwieldy and slow in their response. The international financial organisations – and I think we need to state this up front and not try to hide it – were not up to their responsibilities, as has been said quite unambiguously at a number of major international events such as the two recent G20 summits of the world’s largest economies.
Furthermore, we have had confirmation that our pre-crisis analysis of global economic trends and the global economic system were correct. The artificially maintained uni-polar system and preservation of monopolies in key global economic sectors are root causes of the crisis. One big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks – these are all factors that led to an overall drop in the quality of regulation and the economic justification of assessments made, including assessments of macroeconomic policy. As a result, there was no avoiding a global crisis.
That crisis is what is now causing today’s break in global trade and payments.
Warfare on many fronts, with Dollarization being the main arena
Dissolution of the Soviet Union 1991 did not bring the disarmament that was widely expected. U.S. leadership celebrated the Soviet demise as signaling the end of foreign opposition to U.S.-sponsored neoliberalism and even as the End of History. NATO expanded to encircle Russia and sponsored “color revolutions” from Georgia to Ukraine, while carving up former Yugoslavia into small statelets. American diplomacy created a foreign legion of Wahabi fundamentalists from Afghanistan to Iran, Iraq, Syria and Libya in support of Saudi Arabian extremism and Israeli expansionism.
The United States is waging war for control of oil against Venezuela, where a military coup failed a few years ago, as did the 2018-19 stunt to recognize an unelected pro-American puppet regime. The Honduran coup under President Obama was more successful in overthrowing an elected president advocating land reform, continuing the tradition dating back to 1954 when the CIA overthrew Guatemala’s Arbenz regime.
U.S. officials bear a special hatred for countries that they have injured, ranging from Guatemala in 1954 to Iran, whose regime it overthrew to install the Shah as military dictator. Claiming to promote “democracy,” U.S. diplomacy has redefined the word to mean pro-American, and opposing land reform, national ownership of raw materials and public subsidy of foreign agriculture or industry as an “undemocratic” attack on “free markets,” meaning markets controlled by U.S. financial interests and absentee owners of land, natural resources and banks.
A major byproduct of warfare has always been refugees, and today’s wave fleeing ISIS, Al Qaeda and other U.S.-backed Near Eastern proxies is flooding Europe. A similar wave is fleeing the dictatorial regimes backed by the United States from Honduras, Ecuador, Colombia and neighboring countries. The refugee crisis has become a major factor leading to the resurgence of nationalist parties throughout Europe and for the white nationalism of Donald Trump in the United States.
Dollarization as the vehicle for U.S. nationalism
The Dollar Standard – U.S. Treasury debt to foreigners held by the world’s central banks – has replaced the gold-exchange standard for the world’s central bank reserves to settle payments imbalances among themselves. This has enabled the United States to uniquely run balance-of-payments deficits for nearly seventy years, despite the fact that these Treasury IOUs have little visible likelihood of being repaid except under arrangements where U.S. rent-seeking and outright financial tribute from other enables it to liquidate its official foreign debt.
The United States is the only nation that can run sustained balance-of-payments deficits without having to sell off its assets or raise interest rates to borrow foreign money. No other national economy in the world can could afford foreign military expenditures on any major scale without losing its exchange value. Without the Treasury-bill standard, the United States would be in this same position along with other nations. That is why Russia, China and other powers that U.S. strategists deem to be strategic rivals and enemies are looking to restore gold’s role as the preferred asset to settle payments imbalances.
The U.S. response is to impose regime change on countries that prefer gold or other foreign currencies to dollars for their exchange reserves. A case in point is the overthrow of Libya’s Omar Kaddafi after he sought to base his nation’s international reserves on gold. His liquidation stands as a military warning to other countries.
Thanks to the fact that payments-surplus economies invest their dollar inflows in U.S. Treasury bonds, the U.S. balance-of-payments deficit finances its domestic budget deficit. This foreign central-bank recycling of U.S. overseas military spending into purchases of U.S. Treasury securities gives the United States a free ride, financing its budget – also mainly military in character – so that it can taxing its own citizens.
Trump is forcing other countries to create an alternative to the Dollar Standard
The fact that Donald Trump’s economic policies are proving ineffective in restoring American manufacturing is creating rising nationalist pressure to exploit foreigners by arbitrary tariffs without regard for international law, and to impose trade sanctions and diplomatic meddling to disrupt regimes that pursue policies that U.S. diplomats do not like.
There is a parallel here with Rome in the late 1st century BC. It stripped its provinces to pay for its military deficit, the grain dole and land redistribution at the expense of Italian cities and Asia Minor. This created foreign opposition to drive Rome out. The U.S. economy is similar to Rome’s: extractive rather than productive, based mainly on land rents and money-interest. As the domestic market is impoverished, U.S. politicians are seeking to take from abroad what no longer is being produced at home.
What is so ironic – and so self-defeating of America’s free global ride – is that Trump’s simplistic aim of lowering the dollar’s exchange rate to make U.S. exports more price-competitive. He imagines commodity trade to be the entire balance of payments, as if there were no military spending, not to mention lending and investment. To lower the dollar’s exchange rate, he is demanding that China’s central bank and those of other countries stop supporting the dollar by recycling the dollars they receive for their exports into holdings of U.S. Treasury securities.
This tunnel vision leaves out of account the fact that the trade balance is not simply a matter of comparative international price levels. The United States has dissipated its supply of spare manufacturing capacity and local suppliers of parts and materials, while much of its industrial engineering and skilled manufacturing labor has retired. An immense shortfall must be filled by new capital investment, education and public infrastructure, whose charges are far above those of other economics.
Trump’s infrastructure ideology is a Public-Private Partnership characterized by high-cost financialization demanding high monopoly rents to cover its interest charges, stock dividends and management fees. This neoliberal policy raises the cost of living for the U.S. labor force, making it uncompetitive. The United States is unable to produce more at any price right now, because its has spent the past half-century dismantling its infrastructure, closing down its part suppliers and outsourcing its industrial technology.
The United States has privatized and financialized infrastructure and basic needs such as public health and medical care, education and transportation that other countries have kept in their public domain to make their economies more cost-efficient by providing essential services at subsidized prices or freely. The United States also has led the practice of debt pyramiding, from housing to corporate finance. This financial engineering and wealth creation by inflating debt-financed real estate and stock market bubbles has made the United States a high-cost economy that cannot compete successfully with well-managed mixed economies.
Unable to recover dominance in manufacturing, the United States is concentrating on rent-extracting sectors that it hopes monopolize, headed by information technology and military production. On the industrial front, it threatens disrupt China and other mixed economies by imposing trade and financial sanctions.
The great gamble is whether these other countries will defend themselves by joining in alliances enabling them to bypass the U.S. economy. American strategists imagine their country to be the world’s essential economy, without whose market other countries must suffer depression. The Trump Administration thinks that There Is No Alternative (TINA) for other countries except for their own financial systems to rely on U.S. dollar credit.
To protect themselves from U.S. sanctions, countries would have to avoid using the dollar, and hence U.S. banks. This would require creation of a non-dollarized financial system for use among themselves, including their own alternative to the SWIFT bank clearing system. Table 1 lists some possible related defenses against U.S. nationalistic diplomacy.
As noted above, what also is ironic in President Trump’s accusation of China and other countries of artificially manipulating their exchange rate against the dollar (by recycling their trade and payments surpluses into Treasury securities to hold down their currency’s dollar valuation) involves dismantling the Treasury-bill standard. The main way that foreign economies have stabilized their exchange rate since 1971 has indeed been to recycle their dollar inflows into U.S. Treasury securities. Letting their currency’s value rise would threaten their export competitiveness against their rivals, although not necessarily benefit the United States.
Ending this practice leaves countries with the main way to protect their currencies from rising against the dollar is to reduce dollar inflows by blocking U.S. lending to domestic borrowers. They may levy floating tariffs proportioned to the dollar’s declining value. The U.S. has a long history since the 1920s of raising its tariffs against currencies that are depreciating: the American Selling Price (ASP) system. Other countries can impose their own floating tariffs against U.S. goods.
Trade dependency as an aim of the World Bank, IMF and US AID
The world today faces a problem much like what it faced on the eve of World War II. Like Germany then, the United States now poses the main threat of war, and equally destructive neoliberal economic regimes imposing austerity, economic shrinkage and depopulation. U.S. diplomats are threatening to destroy regimes and entire economies that seek to remain independent of this system, by trade and financial sanctions backed by direct military force.
Dedollarization will require creation of multilateral alternatives to U.S. “front” institutions such as the World Bank, IMF and other agencies in which the United States holds veto power to block any alternative policies deemed not to let it “win.” U.S. trade policy through the World Bank and U.S. foreign aid agencies aims at promoting dependency on U.S. food exports and other key commodities, while hiring U.S. engineering firms to build up export infrastructure to subsidize U.S. and other natural-resource investors. The financing is mainly in dollars, providing risk-free bonds to U.S. and other financial institutions. The resulting commercial and financial “interdependency” has led to a situation in which a sudden interruption of supply would disrupt foreign economies by causing a breakdown in their chain of payments and production. The effect is to lock client countries into dependency on the U.S. economy and its diplomacy, euphemized as “promoting growth and development.”
U.S. neoliberal policy via the IMF imposes austerity and opposes debt writedowns. Its economic model pretends that debtor countries can pay any volume of dollar debt simply by reducing wages to squeeze more income out of the labor force to pay foreign creditors. This ignores the fact that solving the domestic “budget problem” by taxing local revenue still faces the “transfer problem” of converting it into dollars or other hard currencies in which most international debt is denominated. The result is that the IMF’s “stabilization” programs actually destabilize and impoverish countries forced into following its advice.
IMF loans support pro-U.S. regimes such as Ukraine, and subsidize capital flight by supporting local currencies long enough to enable U.S. client oligarchies to flee their currencies at a pre-devaluation exchange rate for the dollar. When the local currency finally is allowed to collapse, debtor countries are advised to impose anti-labor austerity. This globalizes the class war of capital against labor while keeping debtor countries on a short U.S. financial leash.
U.S. diplomacy is capped by trade sanctions to disrupt economies that break away from U.S. aims. Sanctions are a form of economic sabotage, as lethal as outright military warfare in establishing U.S. control over foreign economies. The threat is to impoverish civilian populations, in the belief that this will lead them to replace their governments with pro-American regimes promising to restore prosperity by selling off their domestic infrastructure to U.S. and other multinational investors.
There are alternatives, on many fronts
Militarily, today’s leading alternative to NATO expansionism is the Shanghai Cooperation Organization (SCO), along with Europe following France’s example under Charles de Gaulle and withdrawing. After all, there is no real threat of military invasion today in Europe. No nation can occupy another without an enormous military draft and such heavy personnel losses that domestic protests would unseat the government waging such a war. The U.S. anti-war movement in the 1960s signaled the end of the military draft, not only in the United States but in nearly all democratic countries. (Israel, Switzerland, Brazil and North Korea are exceptions.)
The enormous spending on armaments for a kind of war unlikely to be fought is not really military, but simply to provide profits to the military industrial complex. The arms are not really to be used. They are simply to be bought, and ultimately scrapped. The danger, of course, is that these not-for-use arms actually might be used, if only to create a need for new profitable production.
Likewise, foreign holdings of dollars are not really to be spent on purchases of U.S. exports or investments. They are like fine-wine collectibles, for saving rather than for drinking. The alternative to such dollarized holdings is to create a mutual use of national currencies, and a domestic bank-clearing payments system as an alternative to SWIFT. Russia, China, Iran and Venezuela already are said to be developing a crypto-currency payments to circumvent U.S. sanctions and hence financial control.
In the World Trade Organization, the United States has tried to claim that any industry receiving public infrastructure or credit subsidy deserves tariff retaliation in order to force privatization. In response to WTO rulings that U.S. tariffs are illegally imposed, the United States “has blocked all new appointments to the seven-member appellate body in protest, leaving it in danger of collapse because it may not have enough judges to allow it to hear new cases.”[5] In the U.S. view, only privatized trade financed by private rather than public banks is “fair” trade.
An alternative to the WTO (or removal of its veto privilege given to the U.S. bloc) is needed to cope with U.S. neoliberal ideology and, most recently, the U.S. travesty claiming “national security” exemption to free-trade treaties, impose tariffs on steel, aluminum, and on European countries that circumvent sanctions on Iran or threaten to buy oil from Russia via the Nordstream II pipeline instead of high-cost liquified “freedom gas” from the United States.
In the realm of development lending, China’s bank along with its Belt and Road initiative is an incipient alternative to the World Bank, whose main role has been to promote foreign dependency on U.S. suppliers. The IMF for its part now functions as an extension of the U.S. Department of Defense to subsidize client regimes such as Ukraine while financially isolating countries not subservient to U.S. diplomacy.
To save debt-strapped economies suffering Greek-style austerity, the world needs to replace neoliberal economic theory with an analytic logic for debt writedowns based on the ability to pay. The guiding principle of the needed development-oriented logic of international law should be that no nation should be obliged to pay foreign creditors by having to sell of the public domain and rent-extraction rights to foreign creditors. The defining character of nationhood should be the fiscal right to tax natural resource rents and financial returns, and to create its own monetary system.
The United States refuses to join the International Criminal Court. To be effective, it needs enforcement power for its judgments and penalties, capped by the ability to bring charges of war crimes in the tradition of the Nuremberg tribunal. U.S. to such a court, combined with its military buildup now threatening World War III, suggests a new alignment of countries akin to the Non-Aligned Nations movement of the 1950s and 1960s. Non-aligned in this case means freedom from U.S. diplomatic control or threats.
Such institutions require a more realistic economic theory and philosophy of operations to replace the neoliberal logic for anti-government privatization, anti-labor austerity, and opposition to domestic budget deficits and debt writedowns. Today’s neoliberal doctrine counts financial late fees and rising housing prices as adding to “real output” (GDP), but deems public investment as deadweight spending, not a contribution to output. The aim of such logic is to convince governments to pay their foreign creditors by selling off their public infrastructure and other assets in the public domain.
Just as the “capacity to pay” principle was the foundation stone of the Bank for International Settlements in 1931, a similar basis is needed to measure today’s ability to pay debts and hence to write down bad loans that have been made without a corresponding ability of debtors to pay. Without such an institution and body of analysis, the IMF’s neoliberal principle of imposing economic depression and falling living standards to pay U.S. and other foreign creditors will impose global poverty.
The above proposals provide an alternative to the U.S. “exceptionalist” refusal to join any international organization that has a say over its affairs. Other countries must be willing to turn the tables and isolate U.S. banks, U.S. exporters, and to avoid using U.S. dollars and routing payments via U.S. banks. To protect their ability to create a countervailing power requires an international court and its sponsoring organization.
Summary
The first existential objective is to avoid the current threat of war by winding down U.S. military interference in foreign countries and removing U.S. military bases as relics of neocolonialism. Their danger to world peace and prosperity threatens a reversion to the pre-World War II colonialism, ruling by client elites along lines similar to the 2014 Ukrainian coup by neo-Nazi groups sponsored by the U.S. State Department and National Endowment for Democracy. Such control recalls the dictators that U.S. diplomacy established throughout Latin America in the 1950s. Today’s ethnic terrorism by U.S.-sponsored Wahabi-Saudi Islam recalls the behavior of Nazi Germany in the 1940s.
Global warming is the second major existentialist threat. Blocking attempts to reverse it is a bedrock of American foreign policy, because it is based on control of oil. So the military, refugee and global warming threats are interconnected.
The U.S. military poses the greatest immediate danger. Today’s warfare is fundamentally changed from what it used to be. Prior to the 1970s, nations conquering others had to invade and occupy them with armies recruited by a military draft. But no democracy in today’s world can revive such a draft without triggering widespread refusal to fight, voting the government out of power. The only way the United States – or other countries – can fight other nations is to bomb them. And as noted above, economic sanctions have as destructive an effect on civilian populations in countries deemed to be U.S. adversaries as overt warfare. The United States can sponsor political coups (as in Honduras and Pinochet’s Chile), but cannot occupy. It is unwilling to rebuild, to say nothing of taking responsibility for the waves of refugees that our bombing and sanctions are causing from Latin America to the Near East.
U.S. ideologues view their nation’s coercive military expansion and political subversion and neoliberal economic policy of privatization and financialization as an irreversible victory signaling the End of History. To the rest of the world it is a threat to human survival.
The American promise is that the victory of neoliberalism is the End of History, offering prosperity to the entire world. But beneath the rhetoric of free choice and free markets is the reality of corruption, subversion, coercion, debt peonage and neofeudalism. The reality is the creation and subsidy of polarized economies bifurcated between a privileged rentier class and its clients, eir debtors and renters. America is to be permitted to monopolize trade in oil and food grains, and high-technology rent-yielding monopolies, living off its dependent customers. Unlike medieval serfdom, people subject to this End of History scenario can choose to live wherever they want. But wherever they live, they must take on a lifetime of debt to obtain access to a home of their own, and rely on U.S.-sponsored control of their basic needs, money and credit by adhering to U.S. financial planning of their economies. This dystopian scenario confirms Rosa Luxemburg’s recognition that the ultimate choice facing nations in today’s world is between socialism and barbarism.
- These Are The Hardest-Working Cities In America
Productivity in the US has been a hot topic among economists over the past few years, as the Fed and other academics have puzzled over how the longstanding correlations between unemployment & inflation have unraveled in the years since the financial crisis.
Americans are working longer hours than ever before. Yet, wage growth remains stagnant, and automation is killing more jobs than ever before.
Still, the US has perennially ranked as one of the hardest-working countries in the world as American workers clock in more hours than almost any of its peers in both the developed and developing world classifications.
But, in order to drill down and collect more data on the subject, Kempler Industries carried out a study to rank the 200 hardest working cities in the US. In order to compare apples to apples, Kempler ignored cities with populations below 150,000.
A map below shows the top 10 hardest working cities.
Washington DC takes the top spot, scoring 90 points out of 100. But although DC takes the top spot, seven out of the top ten hardest-working cities on the list could be found in the Lone Star state.
One reason why Texas had so many of the hardest working cities: Across Texas, roughly 20% of the state is of retirement-age.
And not only were workers in these cities working longer hours than Americans elsewhere, they were also commuting longer. With the exception of Irving, every Texas city within the top 10 had an average commute that is longer than the national average.
In terms of population, the largest cities on our list are Chicago and New York City while Pembroke Pines, Florida and Grand Prairie, Texas are the smallest cities on our list.
Taking a step back, as the chart below shows, productivity in the US has been declining since the mid-aughts
Theories about the underlying causes of this slowdown in productivity abound: one explanation holds that institutions and corporations are not deploying the new technologies very effectively for a variety of reasons: the cost of integrating legacy systems, insufficient training of their workforce, and finally, ill-planned investments by some companies utilizing these technologies scaring off others from following suit (perhaps more successfully).
To be sure, after years of declines, productivity posted its best quarterly growth during Q4 of 2018, according to BLS.
Remember: Productivity is important because producing more value with every unit of energy, every tool and every hour of labor helps drive higher wages, profits, taxes and general prosperity.
Then again, there’s another explanation that has been catching on recently: Social media is helping to distract workers at unprecedented rates. According to one study, Americans are spending nearly 6 hours a day on their phones, facebooking, snap-chatting, insta-graming and interacting with their friends and others via social media networks.
That time has got to come from somewhere.
- Radicalization Of Kids: A Global Threat
Authored by Raheel Raza via The Gatestone Institute,
On July 12, a 13-year-old boy blew himself up in a suicide bombing at a wedding in eastern Afghanistan’s Nangarhar province, killing five people and injuring 40, local officials said.
The issue of child radicalization has become a global horror-show.
Radicalization is now easy for the extremists, thanks to technology, the new weapon being brandished by Islamist terrorists in accordance with the mandate of the Muslim Brotherhood to “weaken the West from within”.
Kids today, as early as three years old, are on YouTube watching videos. Unfortunately, it has never been easier for extremists — from white supremacists to radical Islamists — to target vulnerable children and penetrate a child’s consciousness.
According to the UN, there are more than 250,000 child soldiers fighting around the world in more than 20 different conflicts. The Combating Terrorism Center reports that ISIS had more than 1,500 kids on the front lines and trained 1,000 kids to become suicide bombers in the first six months of 2015.
This problem has spilled over into North America. CNN reported last year that about 1,000 investigations of connections with ISIS were open in all 50 states.
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In August 2018, 11 children were found in a compound in New Mexico being trained by an American radical Islamist to commit school shootings
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In Minneapolis, 45 boys and young men have left the local Somali community to join al-Shabab or ISIS. Dozens more were stopped in 2018 from traveling.
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In June 2019, a 22-year-old Bangladeshi living in New York was arrested for plotting an attack on Times Square
These are only a part of the statistics that tell us we are facing a huge crisis; very few people are willing to speak about the dangers of the radicalization of youths.
On July 18, leaders and experts with the Clarion Project gathered in Washington DC to hold an exclusive pre-release Congressional screening of the new documentary, “Kids Chasing Paradise” (currently in post-production). The organization flew in key experts and other leaders fighting against radical extremism and who are affiliated with the film to educate Congress, hold media briefings and present its program to Prevent Violent Extremism at the National Press Club.
Kids Chasing Paradise tells the incredible story of ordinary people that have been directly affected by this radicalization and are now trying to prevent it from happening to others.
Apart from some in-depth coverage of youths being taught hate, violence and radicalization, the film features:
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Christianne Boudreau, a Canadian mother who was personally affected by the impact of the violent radicalization process; her son, Damian, was killed while fighting for ISIS. She now coordinates the Mothers for Life Network, which brings together mothers of radicalized jihadis to support one another and combat radicalization.
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Tania Joya, a former extremist who is now working out of Texas on deradicalization. Tania Joya’s ex-husband was radicalized in Texas as a teenager and became ISIS’ main propagandist in Syria. Originally British, Tania Joya and her four children now live in Texas. Tania used to want her children to grow up to be jihadists. Now she embraces human rights and Western values.
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Nicola Benyahia is a British woman who founded Families for Life, a nonprofit organization focused on deradicalization and support for families of young extremists. When Nicola’s son, Rasheed, unexpectedly joined ISIS, she found Christianne and they started both a professional collaboration and personal friendship
The movie is accompanied by a workshop called Preventing Violent Extremism, based on the concept that no one is born a terrorist or extremist. Individuals are manipulated into being radicalized. Therefore, we feel that prevention is possible. The workshop is a way of understanding the path to youth radicalization and suggestions on how to prevent it before it happens.
As people who care deeply about human rights, we are extremely concerned about the way these children are being subverted and abused, as well as about the future of our next generation, and creating awareness is of utmost importance.
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- Washington State Releases Hundreds Of Illegal Aliens Charged With Crimes, Including Felonies
King County Washington, which identifies as a sanctuary county, has spent the last two years releasing hundreds of illegal aliens charged with crimes, including felonies such as homicide, sexual assault and kidnapping, according to Breitbart, citing records obtained by the Immigration Reform Law Institute (IRLI).
The county, which includes Seattle, refused to honor over 370 detention requests by Immigration and Customs Enforcement (ICE) for a 27-month period ending on December 31, 2017.
Of those, 290 of which were classified by ICE as under suspicion of threat level 1 or 2 offenses.
According to ICE.gov:
Level 1 offenses include the following state or federal crimes: national security violations, homicide, kidnapping, sexual assault, robbery, aggravated assault, threats of bodily harm, extortion or threat to injure a person, sex offenses, cruelty toward child or spouse, resisting an officer, weapons violations, hit and run involving injury or death, and drug offenses involving a sentencing to a term of imprisonment greater than one year.
Level 2 offenses are primarily property crimes and Level 3 offenses are other crimes, primarily misdemeanors.
According to RLI Executive Director Dale Wilcox: “State and local elected leaders like to congratulate themselves for the compassion of their sanctuary policies, but they are actually bringing violent crime and even death to their residents. The people of King County should be outraged and demand accountability from their leaders. Refusing ICE detainer requests means releasing dangerous criminals into the community, period.”
Breitbart‘s John Binder notes that “recently in King County, a 32-year-old woman who is bound to a wheelchair was allegedly raped by 35-year-old illegal alien Francisco Carranza Ramirez, as Breitbart News reported.”
Sanctuary City: Illegal Alien Wanted for Attacking His Rape Victim After Being Releasedhttps://t.co/yK02JvrJzE
— John Binder 👽 (@JxhnBinder) June 21, 2019
The victim pleaded with the court to give the illegal alien the highest penalty possible, but instead, he was given just 12 months in prison which had already been served and he was released and ordered deported to Mexico.
Just three days after being released from prison, Ramirez found his rape victim and attacked her while she was with her three-year-old son, pushing her out of her wheelchair and fleeing the scene. Today, Ramirez is wanted by local and state officials and is now an illegal alien fugitive. –Breitbart
According to former ICE Acting Director Tom Homan, “ICE’s ability to access a jail to speak with an illegal immigrant who’s in violation of federal law and has been locked up for a crime presents no danger at all to victims or witnesses. The fact is if you look up recidivism rates, 50 percent of those criminals will re-offend within the first year, and as many as 75 percent will re-offend within five years.”
- The Five Faulty Premises Of Russiagate
Authored by Doug “Uncola” Lynn via TheBurningPlatform.com,
Having watched some of the questions to former Special Counsel Robert Mueller by congress on Wednesday July 24, 2019, as well as Mueller’s dithering deflections – it was obvious the entire affair was another distraction; more of the same ongoing circus show.
Of course, no minds were changed. Those on the Left still consider Trump to be a comprised capitalist pig guarding his tax returns with all the fervor of any good Manchurian Candidate and those on the Right still viewing Mueller as a tyrannical tool of the Deep State.
After Mueller’s live testimony, this blogger listened to roughly thirty Americans calling into CNN with their comments. Of those callers, only three were in support of Trump and with the rest of them effusively expressing gratitude to Mueller for his service in revealing Trump’s threat to American Democracy.
Many conservatives, including talk-radio host Rush Limbaugh and some his callers, agreed that Mueller didn’t seem familiar with the contents of his report, let alone the Steele Dossier, Fusion GPS, and other points-of-factbrought up by the Republicans as they were grilling the former special counsel. To be sure, Limbaugh commented on Mueller’s less-than-stellardemeanor and lack of preparedness – even going so far as to say Mueller deserved absolutely zero sympathies for his contributory efforts in the never-ending farce that the former special counsel has perpetrated on the American people.
But, at the same time, L-Rushbo painted a picture of Mueller simply being (for lack of better terminology) parochial in his search for justice; as if Mueller was simply a Never-Trumper like Mittens Romney or John Kasich.
In fact, at the close of the Mueller hearing, even House Republican Devin Nunes complimented Mueller, thanked him for his service, and refused to scorch the doddering old fool in the end.
Unfortunately, a majority of Americans today, including many conservatives, have swallowed hook, line, and sinker one or more of the following five (5) faulty premises of Russiagate:
1.) The Russians actually hacked the 2016 elections
The Mueller Report, as well as most of the Democrats who questioned Robert Mueller on July 24, 2019 claimed Russia interfered in the 2016 Presidential Election in a “sweeping and systematic fashion”.
This is not true. It did not happen; at least not sweepingly or systematically.
What did happen one year ago, on July 13, 2018, was Mueller’s boss at the time, Deputy Attorney General Rod Rosenstein, announced the Mueller Investigation’s single indictment of Twelve Russian intelligence officers for alleged election hacking under President Obama’s watch. Of course, this was done in an effort to divert publicity away from the July 12, 2018 Capitol Hill testimony of disgraced FBI agent Peter Strzok and to subvert President Trump’s impending Russian summit on July 16, 2018.
Even so, in his very conveniently-timed press conference, Rosenstein acknowledged that “no American was a knowing participant” in the Russian efforts to influence the 2016 election and there was “no allegation in the indictment of any effect on the outcome of the election”.
In other words, much ado about nothing, in the same way the Mueller Report offered zero forensic evidence other than the reliance of the two (2) now discredited Democratic National Committee (DNC) contractors: CrowdStrike and “Russian dossier compiler Christopher Steele”.
Furthermore, other so-called “established” and “confirmed” claims in Mueller’s bogus report cited the Russian company, Concord Management, as “sowing discord” throughout U.S. social media prior to the 2016 Presidential Election – and this was shot down by U.S. District Judge Dabney L. Friedrich’s May 28, 2019 ruling which concluded that Mueller had “no evidence”.
Did you get that? No evidence.
Squat. Zip. Nada. Zilch.
2.) Wikileaks was affiliated with Russia
Another key premise of Democrats, the U.S. Corporate Media, and The Mueller Report, is that Russian Intelligence hacked into the DNC servers and provided stolen e-mails to WikiLeaks through (according to the Mueller Report) “fictitious online personas including DCLeaks” and Guccifer 2.0”.
Again, this did not happen because reporting as far back as 2017 indicated that WikiLeaks founder Julian Assange possessed the DNC e-mails beforeDCLeaks and Guccifer 2.0 were created, yet Assange used these entities to obfuscate his true source.
Veteran intelligence whistleblowers also reported in 2017 on how the Democratic National Committee (DNC) servers were not hacked by Guccifer 2.0 and released to WikiLeaks but, instead, the data actually originated via an external storage device.
All of this means the “fictitious online personas” allegedly linked to Russian intelligence, according to the Mueller Report, were created after-the-fact in order to conceal the true source of the DNC leaks.
Additionally, when WikiLeaks released the password to Vault 7, also known as: “The Largest Publication of Confidential CIA Documents Ever”, a program entitled UMBRAGE was revealed. This was a formerly top-secret initiative whereby American intelligence agencies could mimic internet hacks from other countries, including Russia.
Yet, none of that information was revealed in Robert Mueller’s report, was it? Why? Probably, for the same reason Team Mueller refused to interview Julian Assange. Because, had Mueller done so, he might have been asked later by congress why WikiLeaks offered a $20,000 reward for information in the case involving Seth Rich. Rich was the former voter expansion data director for the DNC who was murdered in Washington DC on July 10, 2016.
But Team Mueller didn’t care about any of that and, instead, disseminated false conclusions regarding Russian election meddling.
Are you surprised?
3.) Robert Mueller is an honorable guy
Even in light of Robert Mueller’s doddering downfall on Congressional Hill, there are those on both sides of the political aisle who consider him, still, as an ethical and honorable man.
He is neither.
Former Texas State Court judge, and now sitting Congressman, Louis Buller Gohmert Jr (R-Texas), has unmasked Mueller’s “long and sordid history of illicitly targeting innocent people that is a stain upon the legacy of American jurisprudence”, citing 18 specific examples, including:
– Collusion with Boston mobster Whitey Bulger in criminality and framing innocent men for murder that resulted eventually in the release of innocent parties and 100 million dollars in compensation for DOJ Boston Office misconduct.
– The FBI with Mueller as director harassed and hounded Congressman Curt Weldon in revenge for criticizing FBI failures related to 9-11.
– Dishonest prosecutions of Senator Ted Stevens.
– Prosecutorial abuses in the anthrax murder investigations post 9-11, producing one suicide and one award of 6.8 million dollars to the other innocent target.
– Mueller’s unethical acceptance of the special prosecutor position when he was conflicted by his longtime personal and professional relationship with James Comey.
– Mueller hired extremely partisan, biased, and conflicted attorneys for his special counsel team.
– Mueller’s investigation ignored that FISA applications evidence presented to justify warrants to surveil Trump associates were not verified and thus a fraud on the court and illegal.
As was adequately revealed by the Republicans who grilled Robert Mueller during his congressional hearing, the entire special counsel investigation (and it’s ensuing report) amounted to little more than political opposition research on behalf of the Democratic Party; and a concerted effort to gaslight the American public via it’s bizarre, and even Orwellian, deceptions.
Congressman Tom McClintock (R-California) asked Mueller why he couldn’t provide connecting evidence of Russian trolls to the Russian government. Chris Stewart (R-Utah) questioned Mueller on why his team of angry Democrats always leaked information detrimental to Trump but never a single leak of anything placing Trump in a positive light. And other Republicans wondered why Hillary Clinton’s “Dirty Dossier” received such extra-special “kid-glove” treatment by Team Mueller.
Indeed, we now know the following: In spite of the Mueller probe breaking multiple prosecutorial rules that ensured justice, they were “outfoxed” by Trump’s legal team beginning as far back as June, 2018 – when none other than William Barr sent a 19-page memorandum to Deputy Attorney General Rod Rosenstein checkmating Mueller’s apparent “interpretation of a single subsection of a single obstruction-of-justice statute:18 U.S.C. § 1512(c)(2)“. It was Barr’s contention that Trump could not have violated that particular statute because “he [Trump] was not accused of engaging in any wrongful act of evidence impairment”.
In his memo to Rosenstein, Barr also claimed Mueller was giving the statute a “new unbounded interpretation” that “would have potentially disastrous implications” for the Executive Branch of government.
Oh, that Robert Mueller. What a guy. He folded on collusion and conspiracy before upping the stakes on obstruction via volume two of his report which presented like a legal Chinese finger-trap or Gordian Knot. Mueller’s “not exonerating” Trump inverted “innocent until proven guilty” into “guilty until proven innocent” and demonstrated the special counsel investigation’s very palpable political prejudice – which was further proven by the specific misrepresentations and selective editing in the final Mueller Report.
Even, now, if it appears Robert Mueller was a moderately senile figurehead for Andrew Weissmann & Company’s attempted takedown of a sitting president, certainly, history will not be kind to the former special counsel who lent his name to the farce. Undeniably, the former special counsel’s recent fiasco before congress was just the beginning of his once illustrious and ill-deserved reputation becoming a national joke.
4.) The Democrats actually care about Democracy
The Democratic Party does not have a political platform beyond Santa Clausian economic initiatives, genitalia, skin color, and disproven conspiracy theories rooted in fraudulent Russiaphobia. They do not care to secure American elections. On the contrary. Why else would they be seeking to turn Texas into a blue state via ILLEGAL IMMIGRATION? Right?
In truth, the Socialist Party cares only about power; even (as the Mueller hearing demonstrated) to the point of weaponizing their own hypocrisy.
All throughout The Robert Mueller Show on Wednesday, the former special counsel’s bias and the hypocrisy of the Democrats and sycophants in the media, could not have been more obvious. Mueller’s appearance was meant to provide amplification on behalf of Trump’s political opponents for impeachment, more hearings, and additional investigations.
Although Mueller received top billing, the Dems and their enablers in the media were always going to be the stars. Mueller was called to testify in order to expand the audience in order to resurrect the dying efforts of Trump’s enemies.
And it all backfired yugely.
Even so, during his testimony, Mueller “included some stark warnings” of how the Russians were already attempting to interfere in the 2020 elections. This allowed the Democrats to continue their Chicken Little cries of how the “sky is falling” while citing Trump’s lackadaisicalness as proof of the president’s political puppetry under Putin.
Yet, if the Democrats were concerned in the least over alleged Russian election hacking, then why are they not interviewing those who allowed it to happen under the Obama Administration’s watch? They won’t because they don’t care about democracy or to secure America’s elections. Instead, they desire to undermine the U.S. electoral process.
The Democrats currently serving in congress are liars who seek America’s demise. Sadly, that is the truth.
5.) Intelligence Agencies under the Obama Administration were working to ensure secure elections
Anyone even remotely paying attention over the past few years knows that Hillary Clinton and the DNC financed the Russian Dossier on Trump. According to former FBI Deputy Director Andrew McCabe, the dossier was then used to obtain the FISA warrant required to spy on Team Trump. A 90-day surveillance warrant on Carter Page was then renewed three times and this was done in order to dig up political dirt and diminish Trump’s chances of winning the 2016 Presidential Election. Then, later, the FISA warrants were illegally issued to undermine Trump’s presidency.
At the same time, the now well-known culprits in the Obama Administration (i.e. James Comey, Andrew McCabe, Peter Strzok, Lisa Page, and Bruce Ohr) were actively concealing the multifarious crimes of Hillary Clinton.
A mole in Trump’s campaign was also later revealed as Stefan Halper, a 73-year-old Oxford University professor and former U.S. government official who was paid over $1 million by the Obama administration including $411,575 that was made in two payments by September 26, 2016. That date was three days after a Yahoo News article was published by Michael Isikoff on Trump aide, Carter Page; which the FBI later illicitly used as supporting evidence in the FISA warrant application for Page.
Then, after Trump won the election, the phony Russian conspiracy was utilized:
– By online social networks to censor the alternative media
– By President Obama to sign into law the “Countering Disinformation And Propaganda Act”
– By Obama’s National Security Advisor, Susan Rice, to feloniously unmaskTrump administration officials
– By Democrats and the Media to pressure the new president’s National Security Advisor to resign and the nation’s new Attorney General to recuse himself from the Russia investigation
– By deputy Attorney General, Rod Rosenstein, to appoint his trusted, dear friend and collaborator, Robert Mueller, as Special Counsel to investigate President Trump’s non-existent collusion with Russia
– By Robert Mueller to transition the imaginary Russiagate Collusion into illusions of Obstruction of Justice against Trump
– By Robert Mueller to obtain minor process crimes on Paul Manafort(Trump’s former campaign chairman), Rick Gates (business associate of Manafort), George Papadopoulos (Trump’s former foreign policy advisor) and Michael Flynn (Trump’s former national security advisor) and others
– By AP reporters and FBI agents to collude in a conspiracy against Trump’s former campaign chairman, Paul Manafort
– By Team Mueller to falsely accuse Russia of meddling in order to undermine the trust of Americans in their electoral process
– In order to summarily rescind a sitting president’s attorney-client privilege; as well as his presumption of innocence through the special counsel’s “lack of exoneration”.
– To allow the Democratic candidates in the 2018 Midterm Elections to leverage the issue of election hacking and illegitimately win key senate races as well as control of the U.S. House
All this from America’s “heroes” who swore an oath to defend America’s constitution.
Thanks for nothing, you treasonous tribe of traitors.
Conclusion
As long as even some of the premises of those who oppose the U.S. Constitution are swallowed hook, line, and sinker by a significant percentage of the U.S. body politic – then these may, in the end, present as evidence in the historical record delineating the downfall of our once-great republic.
One would like to believe this sordid chapter of corruption will result in the ultimate draining of the American swamp. The nation now awaits reports from Inspector General Michael Horwitz on FISA Abuse and corruption in the Department of Justice; U.S. Attorney John Huber on Clinton Foundation illegalities; and U.S. Attorney John Durham on the malevolent origins of Russiagate.
Godspeed gentlemen. Because a very significant percentage of the American public is growing more impatient by the day. Time is of the essence. Tick tock.
- MbS Goes Elon Musk On Steroids: Seeks Flying Cars, Electric Dinosaurs, Robot Maids, & Glowing Sand For Barren Saudi Desert
In northwest Saudi Arabia, where most people see a barren wasteland, Saudi crown prince Mohammed bin Salman has envisioned the future, and according to the Wall Street Journal, it is something straight out of an Elon Musk wet dream, complete with flying taxis, robot maids, robot dinosaurs, robot martial arts, endless booze and glow-in-the-dark sand, among other things.
Perhaps MbS has been following Elon Musk’s Twitter account a little too closely. Or perhaps he has joined him in a microdosing regimen. Regardless, MbS has hatched a $500 billion plan to cover 10,000 square miles of this desert to attract the “world’s greatest minds and best talents” to the world’s best paying jobs in the world’s most livable city.
A true modern day, pardon, future Shangri-La.
The ideas have been laid out in 2300 pages of confidential documents at Boston Consulting Group, McKinsey and Company and Oliver Wyman that the Wall Street Journal was able to review. The project is called “Neom”, which – it will come as no surprise – is a mash up of the Greek word for “new” and the Arabic word for “future”. The documents were dated September 2018.
The consultants employed an expansive (and expensive) mix of science fiction and corporate buzzwords to turn the Prince’s imaginary city into a reality. Local tribes would have to be forcibly relocated and a court system developed by law firm Latham & Watkins would have judges reporting directly to the king and operating under Sharia law.
Neom’s MbS-led founding board said: “This should be an automated city where we can watch everything. A city where a computer can notify crimes without having to report them or where all citizens can be tracked.”
Perhaps the inspiration was not the Jetsons, but rather 1984. Also, it sounds like what the US is desperately trying to become. The board has adopted the recommendations of its consultants and people familiar with the project say they don’t know how much the plan will become a reality due to both funding issues and potential technological limitations.
Neom Chief Executive Nadhmi al Nasr said: “Neom is all about things that are necessarily future-oriented and visionary. So we are talking about technology that is cutting edge and beyond—and in some cases still in development and maybe theoretical.”
Perhaps inspired by the movie Syriana, the project marks the centerpiece of MbS’s effort to transform Saudi Arabia from an oil-dependent desert wasteland to a forward looking diversified economy. Rather than relying on just petroleum revenue, MbS has stated that he wants Saudi Arabia to produce goods and services that it currently buys abroad (such as chainsaws and sulfuric acid?) He also proposed Neom as a way to keep Saudis spending domestically.
To ensure that his vision of Future World is truly unique, MbS plans to roll out the following :
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1. Flying Taxis: Scientists might take a flying taxi to work. “Driving is just for fun, no longer for transportation (e.g. driving Ferrari next to the coast with a nice view),” planning documents show.
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2. Cloud Seeding: The desert won’t always feel like the desert. “Cloud seeding” could make it rain.
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3. Robot Maids: Don’t worry about household chores. While scientists are at work, their homes would be cleaned by robot maids.
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4. State-of-the-Art Medical Facilities: Scientists would work on a project to modify the human genome to make people stronger.
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5. World Class Restaurants: There would be fine dining galore in a city with the “highest rate of Michelin-starred restaurants per inhabitant.”
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6. Dinosaur Robots: Residents could visit a Jurassic Park-style island of robot reptiles.
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7. Glow-in-the-Dark Sand: The crown prince wants a beach that glows in the dark, like the face of a watch.
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8. Alcohol: Alcohol is banned in the rest of Saudi Arabia. But it likely won’t be here, say people familiar with the plan.
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9. Robot Martial Arts: Robots would do more than just clean your house. They also could spar head to head in a “robo-cage fight,” one of many sports on offer.
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10. Security: Cameras, drones and facial-recognition technology are planned to track everyone at all times.
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11. Moon: A giant artificial moon would light up each night. One proposal suggests it could live-stream images from outer space, acting as an iconic landmark.
For those concerned about their safety there, fear not – the Saudi state will have everything under control. Cameras, drones and facial-recognition technology will allow state intelligence to track every single person there. “Everything can be recorded,” the founders’ Board stated. Neom has already engaged IBM for potential facial recognition software.
The Board even thought of offering Tesla billions in subsidies to move to Neom, while giving the kingdom a stake.
Clearly, since it is deep in the realm of science fiction, MbS also considered partnering with unicorn-specialist SoftBank on its “Apollo” project, which seeks to create “a new way of life from birth to death reaching genetic mutations to increase human strength and IQ.”
Unfortunately, the $500 billion futuristic nirvana doesn’t come without headwinds.
According to the Journal, the Saudi government plans to forcibly relocate more than 20,000 people, many whose families have inhabited the area for generations. One resident of the area said “You are dismembering an entire society. For us, it’s like death.”
Additionally, companies have often avoided investing in Saudi Arabia due to the country’s opaque legal system, corruption, alcohol ban and rules that require women to get a male relative’s permission to travel. MbS has adopted the stance that these rules are so difficult to change because they are so ingrained in existing Saudi cities, that it is simply easier to just develop a new city and start over.
“Starting Neom from scratch, with independent systems and regulations, will ensure the availability of best services without social limitations,” MbS said at Neom’s first board meeting.
None of this is hindering MbS’ enthusiasm to come up with a Disney World for the world’s richest and most powerful. Construction on Neom is under way using thousands of foreign workers that in one section of the development were housed six to a tiny room as of June 17. Earlier this year, MBS issued a decree about an area called Silver Beach. “I want the sand to glow,” he said, according to two people familiar with the project. Engineers haven’t figured out a safe way to do it, the WSJ adds sardonically.
Each night, he told underlings, a fleet of drones should create the illusion of a rising moon—crescent, half, full. “That’s what he wants this future to be,” a former executive said.
To make that happen, Boston Consulting Group suggested partnering with NASA to make the fake moon “the biggest in the world.”
Read the full longform WSJ writeup here.
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- Escobar: US And Iran Stuck At Negotiation 'Ground-Zero'
Authored by Pepe Escobar via ConsortiumNews.com,
All bets are off in the geopolitical insanity stakes when we have the President of the United States (POTUS) glibly announcing he could launch a nuclear first strike to end the war in Afghanistan and wipe it “off the face of the earth” in one week. But he’d rather not, so he doesn’t have to kill 10 million people.
Apart from the fact that not even a nuclear strike would subdue the legendary fighting spirit of Afghan Pashtuns, the same warped logic – ordering a nuclear first strike as one orders a cheeseburger – could apply to Iran instead of Afghanistan.
Trump once again flip-flopped by declaring that the prospect of a potential war in the Persian Gulf “could go either way, and I’m OK either way it goes,” much to the delight of Beltway-related psychopaths who peddle the notion that Iran is begging to be bombed.
No wonder the whole Global South – not to mention the Russia-China strategic partnership – simply cannot trust anything coming from Trump’s mouth or tweets, a non-stop firefight deployed as intimidation tactics.
At least Trump’s impotence facing such a determined adversary as Iran is now clear: “It’s getting harder for me to want to make a deal with Iran.” What remains are empty clichés, such as Iran “behaving very badly” and “the number one state of terror in the world” – the marching order mantra emanating from Tel Aviv.
Even the – illegal – all-out economic war and total blockade against Tehran seems not to be enough. Trump has announced extra sanctions on China because Beijing is “accepting crude oil” from Iran. Chinese companies will simply ignore them.
Okay With ‘OK Either Way’
“OK either way” is exactly the kind of response expected by the leadership in Tehran. Prof. Mohammad Marandi of the University of Tehran confirmed to me that Tehran did not offer Trump a “renegotiation” of the JCPOA, or Iran nuclear deal, in exchange for the end of sanctions: “It’s not a renegotiation. Iran offered to move forward ratification of additional protocols if Congress removes all sanctions. That would be a big win for Iran. But the US will never accept it.”
Dehghan: U.S. bases would be targeted. (Wikimedia Commons)
Marandi also confirmed “there is nothing big going on” between Iranian Foreign Minister Javad Zarif and tentative Trump administration negotiator Sen. Rand Paul: “Bolton and Pompeo remain in charge.”
The crucial fact is that Tehran rejects a new negotiation with the White House “under any circumstances,” as expressed by Hossein Dehghan, the top military adviser to Supreme Leader Ayatollah Khamenei.
Dehghan once again made it very clear that in case of any sort of military adventure, every single base of the U.S. Empire of Bases across Southwest Asia will be targeted.
This neatly ties in with Iran’s by now consolidated new rules of engagement, duly detailed by correspondent Elijah Magnier. We are well into “an-eye-for-an-eye” territory.
And that brings us to the alarming expansion of the sanctions dementia, represented by two Iranian ships loaded with corn stranded off the coast of southern Brazil because energy giant Petrobras, afraid of U.S. sanctions, refuses to refuel them.
Brazilian President Jair Bolsonaro, a fervent Trump groupie, has turned the country into a tropical U.S. neo-colony in less than seven months. On U.S. sanctions, Bolsonaro said, “We are aligned to their policies. So we do what we have to.” Tehran for its part has threatened to cut its imports of corn, soybeans and meat from Brazil – $2 billion worth of trade a year – unless the refueling is allowed.
This is an extremely serious development. Food is not supposed to be — illegally — sanctioned by the Trump administration. Iran now has to use mostly barter to obtain food — as Tehran cannot remit through the CHIPS-SWIFT banking clearinghouse. If food supplies are also blocked that means that sooner rather than later the Strait of Hormuz may be blocked as well.
Beltway sources confirmed that the highest level of the U.S. government gave the order for Brasilia to stop this food shipment.
Tehran knows it well – as this is part of the “maximum pressure” campaign, whose goal is ultimately to starve the Iranian population to death in a harrowing game of chicken.
Chokepoint: The Strait of Hormuz. (Flickr)
How this may end is described by an ominous quote I already used in some of my previous columns, from a Goldman Sachs derivatives specialist: “If the Strait of Hormuz is closed, the price of oil will rise to a thousand dollars a barrel representing over 45 percent of global GDP, crashing the $2.5 quadrillion derivatives market and creating a world depression of unprecedented proportions.”
At least the Pentagon seems to understand that a war on Iran will collapse the world economy.
And Now for Something Completely Different
But then, last but not least, there’s the tanker war.
Dutch analyst Maarten van Mourik has noted significant discrepancies involving the UK piracy episode in Gibraltar – the origin of the tanker war. The Grace 1 tanker “was pirated by the Royal Marines in international waters. Gibraltar Straits is an international passage, like the Strait of Hormuz. There is only 3 nautical miles of territorial water around Gibraltar, and even that is disputed.”
Mourik adds, “The size of the Grace 1 ship is 300,000 MT of crude oil, it has a maximum draught of about 22.2 meters and the latest draught via AIS indicated that she was at 22.1 meters, or fully laden. Now, the port of Banyas in Syria, which is where the offshore oil port is, has a maximum draft of 15 meters. So, in no way could the Grace 1 go there, without first having to offload elsewhere. Probably a very large quantity to get within max draught limitations.”
Zarif (r.) negotiating nuclear deal with then US Secretary of State John Kerry in July, 2015. (Wikimedia Common)
That ties in with Foreign Minister Javad Zarif refusing on the record to say where Grace 1 was actually heading to, while not confirming the destination was Syria.
The tit-for-tat Iranian response, with the seizure of the Stena Impero navigating under the British flag, is now evolving into Britain calling for a “European-led maritime protection mission” in the Persian Gulf, purportedly to protect ships from Iranian “state piracy.”
Observers may be excused for mistaking it for a Monty Python sketch. Here we have the Ministry of Silly Seizures, which is exiting the EU, begging the EU to embark on a “mission” that is not the same mission of the U.S. “maximum pressure” campaign. And on top of it the mission should not undermine Britain’s commitment to keep the JCPOA in place.
As European nations never recede on a chance to flaunt their dwindling “power” across the Global South, Britain, Germany and France now seem bent on their “mission” to “observe maritime security in the Gulf,” in the words of French Foreign Minister Jean-Yves Le Drian. At least this won’t be a deployment of joint naval forces – as London insisted. Brussels diplomats confirmed the initial muscular request came from London, but then it was diluted: the EU, NATO and the U.S. should not be involved – at least not directly.
Now compare this with the phone call last week between Iranian President Hassan Rouhani and French President Emmanuel Macron, with Tehran expressing the determination to “keep all doors open” for the JCPOA. Well, certainly not open to the Monty Python sketch.
That was duly confirmed by Iranian Deputy Foreign Minister Abbas Araghchi, who said Iran will “not allow disturbance in shipping in this sensitive area,” while Iranian vice-president Eshaq Jahangiri rejected the notion of a “joint European task force” protecting international shipping: “These kinds of coalitions and the presence of foreigners in the region by itself creates insecurity.”
Iran has always been perfectly capable, historically, of protecting that Pentagonese Holy Grail – “freedom of navigation” – in the Persian Gulf and the Strait of Hormuz. Tehran certainly doesn’t need former colonial powers to enforce it. It’s so easy to lose the plot; the current, alarming escalation is only taking place because of the “art of the deal” obsession on imposing an illegal, total economic war on Iran.
- For The First Time In 6 Years, No Central Bank Is Hiking
The global central bank experiment with renormalization is officially over.
After roughly half the world’s central banks hiked rates at least once in 2018, the major central banks have returned to easing mode, and as the chart below shows, for the first time since 2013, not a single central bank is hiking rates.
Commenting on the violent reversal away from tightening financial conditions which emerged following the Q4 2018 selloff, Goldman’s Jan Hatzius writes that “The FOMC looks set to cut the funds rate next week, the ECB today sent a strong signal that action in September is likely, and China has resumed easing policy after a spring pause. With global growth running at a below-trend rate of 2¾%—down from about 4% a year ago—a synchronized tilt towards easing looks like a natural response to a weaker outlook.”
Yet even Goldman can’t help but ask just why the Fed is rushing to commence the first easing cycle in years, pointing out that “the US economy is in decent shape, with a tight labor market, inflation close to target and— in our forecast— growth running a little above 2% both this year and next. We are modestly above consensus because we expect the negative inventory cycle to end and final demand to continue growing robustly on the back of easier financial conditions.”
This, according to the Goldman economist, should limit Fed easing to two 25bp insurance cuts, one next week and another in September, although the bank, which until very recently did not expect any rate cuts at all, fails to justify just why the Fed is doing what it is about to do, unless of course Powell is merely folding to Trump pressure.
But if the Fed’s upcoming rate cut remains a mystery, what the ECB is about to do is relatively straightforward, as the European picture has continued to deteriorate, and as Draghi defined it yesterday, the outlook is “getting worse and worse.” Following the weak manufacturing flash PMIs, Goldman’s Current Activity Indicator for Europe in July stood at just +0.5% on an area-wide basis, and at -0.6% in Germany. Underlying inflation remains stuck at 1% “and the slide in inflation expectations points to risks of de-anchoring.” Moreover, fears of a “no deal” Brexit have re-intensified and volatility is likely to return in Italy as the 2020 budget is prepared. Therefore, Goldman expects forceful action from the ECB in September, “including a 20bp deposit rate cut (flanked by a move to a tiered reserve system), a return to QE (including corporate and sovereign debt) and a further strengthening of forward guidance.”
Elsewhere the picture is similar, and after what looked like a strong Q1 rebound, Goldman notes that Chinese growth has slowed again to the bottom end of the government’s 6-6½% target range, with the “slower growth and the threat of trade war escalation have persuaded policymakers to return to a gradual easing path.” As a result, short-term interest rates remain in the mid-2% range, fiscal borrowing has stepped up, and credit growth beat expectations in June. Finally, with the 70th anniversary of the founding of the People’s Republic coming up in October, Goldman expects policy settings to stay supportive in coming months, “likely easing slightly further on the margin.”
Additionally, in a world where China has long become the marginal source of growth for much of the emerging world, EM growth outside of China remains sluggish as well, and most large EMs are growing below Goldman’s estimates of long-term potential, and well below policymakers’ aspirations, to wit:
Exports have decelerated sharply (mainly due to weak DM growth) and domestic demand has disappointed (reflecting tighter financial conditions, especially where policy tightened in 2018). That said, we see slightly brighter prospects for the second half, as low inflation and a dovish Fed will allow EM policymakers to ease policy and support growth.
And visually:
Finally, the risk of a no deal Brexit has returned to center stage as Boris Jonson took over as Prime Minister, pledging that the UK will leave the EU by October 31 with “no ifs, no buts” according to Hatzius, who expects the tail risks to intensify into Q4 and raised Goldman’s odds of a no deal Brexit to 20%. Even so, Goldman thinks PM Johnson will, on balance, seek to avoid a general election before having delivered Brexit. The only way to avoid a general election may be to avoid a no deal Brexit, and the only way to avoid a no deal Brexit may be to deliver Brexit with a deal. From this perspective, the scope for the new Prime Minister to depart from his predecessor looks very limited, and Goldman’s base case remains a negotiated Brexit deal (with a 45% probability).
So with the entire world now in easing mode, it is relative easy to predict that Goldman expects smooth sailing. As Hatzius summarizes, “following the sharp rally in most asset prices this year, our near-term market views are fairly neutral.
- On the rates side, we see scope for a further duration rally as the ECB over-delivers relative to current market pricing, but ultimately see rates drifting higher again as the Fed only delivers two insurance cuts and returns to tightening policy after the presidential election.
- Pressure on the Euro looks likely in the near term, but we do not expect a large move given that the Euro is already undervalued relative to long-run fundamentals.
- On the equity side, the S&P 500 trades near fair value relative to interest rates, although we believe policy uncertainty and negative revisions to 2020 earnings forecasts will limit the upside from here.
- Finally, we see commodity prices stuck in a mid-cycle pause, with no strong near-term direction.
And now we look ahead to next week’s historic catalyst: the Fed’s first rate cut in over a decade… just as the S&P closes at 3,205 – a new all time high.
- IRS Sends 1000s Of "Fishing" Letters To Crypto Users
Authored by Marie Huillet via CoinTelegraph.com,
The United States Internal Revenue Service (IRS) is sending letters to crypto investors to apparently scare them into accurately reporting their crypto-related income.
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” IRS Commissioner Chuck Rettig said in a statement.
“The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
‘Don’t Panic’
According to a Forbes report by crypto tax attorney Tyson Cross, published on July 26, a number of Cross’s clients have received a letter “6174-A” from the IRS, threatening “future civil and criminal enforcement activity” if they fail to fully comply with reporting requirements.
IRS Letter 6174-A. Source: Tyson Cross via Forbes
While Cross notes that the letter may give the impression that it is a personally targeted enforcement action, he argues that it is much more likely to be a generic mailing campaign intended to encourage voluntary compliance — one year after the IRS first launched its cryptocurrency compliance push.
Although the agency could feasibly have identified tax cheats and sent the letter to specific individuals, Cross notes that over a dozen of his clients — all of whom accurately reported their crypto-derived income — had received the letter.
Much more likely, he claims, is that the IRS has used its list of taxpayers identified in 2017 by Coinbase and conducted a blanket campaign to exert psychological pressure on investors. He notes:
“This would seem to indicate the IRS is sending these letters to taxpayers as a fishing attempt without any real belief that each recipient has under-reported.”
Cross writes that several other tax professionals have revealed to him that their own clients — despite accurate reporting — had also received Letter 6174-A.
image courtesy of CoinTelegraph
The IRS hopes to tighten the noose
Cross advised investors not to panic should they receive the letter, but to thoroughly ensure the accuracy of their tax returns, given that at the very least it means they are on the agency’s radar.
As previously reported, data released ahead of the close of the preceding tax year indicated that just 0.04% of tax filers were reporting capital gains from crypto investments to the IRS.
Back in July 2017, the IRS had required that major U.S. crypto exchange Coinbase hand over detailed information on every one of its then 500,000+ users in an attempt to prevent tax evasion. However, a court order in November 2017 reduced this number to around 14,000 “high-transacting” users, which the platform later reported as 13,000.
An alleged presentation by the agency earlier this month reportedly revealed that the IRS hopes to use Grand Jury subpoenas on firms such as Apple, Google and Microsoft to check taxpayers’ download history for crypto-related applications.
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