Today’s News 27th November 2017

• Satoshi Secrets & Why Nearly 4 Million Bitcoins Are "Lost" Forever

  Authored by Jeff John Roberts and Nicolas Rapp via Fortune.com,

  Just as gold bars are lost at sea or $100 bills can burn, bitcoins can disappear from the Internet forever.

  

  When all 21 million bitcoins are mined by the year 2040, the actual amount available to trade or spend will be significantly lower.

  According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate – and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $9,000 each, are lost.

  While others have speculated about the number of lost bitcoins, the Chainalysis findings are significant because they rely on a detailed empirical analysis of the blockchain, where all bitcoin transactions are recorded.

  As the graphic above shows, Chainalysis’s conclusions rely on segmenting the existing bitcoin supply based on age and transaction activity. For some segments, the company used statistical sampling to determine the amount lost.

  The segment “Mined Coins” reflects bitcoins mined in 2017 (which are presumed not to be lost), while “transactional” refers to those that have moved or spent in the last year—very few of which are lost. Likewise, the category of “Strategic Investors,” who have held their bitcoins for 1-2 years represent a very small share of the losses.

  Here’s the data in another format, which shows how “Out of circulation” bitcoins – those mined 2-7 years ago and belonging to long-time investors known as “hodlers” – and those from the early days of bitcoin in 2009 and 2010 account for the vast majority of the lost coins:

  

  These figures reflect bitcoins that are truly lost, and not hacked or otherwise stolen – in these cases, of course, the bitcoin is not lost since the thief has control of them.

  Note the numbers above are based on the high estimate, and that the low estimate, which is based on only a 30% loss in “hodler” coins, puts the number of lost bitcoins at 2,767,468. Also, both estimates make a critical assumption that coins belonging to bitcoin’s inventor, Satoshi, are gone for good (more on that below).

  In the future, more bitcoins will be lost. But the rate at which they disappear will be much lower than in the past since, now that they’re so valuable, people will be more vigilant about keeping track of them (unlike this poor fellow out who threw away a hard drive with the key to 7,500 bitcoins). Meanwhile, there is a question of whether the Chainalysis findings mean bitcoin is more scarce than people assume—or if the market has already priced the missing coins into the currency’s current value.

  “That is a very complex question. On the one hand, direct calculations about market cap do not take lost coins into consideration. Considering how highly speculative this field is, those market cap calculations may make it into economic models of the market that impact spending activity,” said Kim Grauer, Senior Economist at Chainalysis. “Yet the market has adapted to the actual demand and supply available – just look at exchange behavior. Furthermore, it is well known monetary policy procedure to lower or increase fiat reserves to impact exchange rates. So the answer is yes and no.”

  Lost Bitcoins and the Secret of Satoshi

  Chainalysis, whose clients include the IRS and Europol, has made a name for itself in the bitcoin world because of its abundant data and sophisticated study of blockchain wallets. Law enforcement agencies rely on the company to provide detailed insights into who owns the currency and how it moves around.

  Chainalysis’s overall methodology is confidential, but a spokesperson shared certain details about how the company assesses which bitcoins are lost. An important clue comes when there is a “fork” in the blockchain, such as the one this summer which led to the creation of a bitcoin clone known as Bitcoin Cash. Such events can lead to the owners of wallets that have been inactive for years to conduct a transaction, providing an opportunity for statistical analysis.

  These sort of clues help inform the Chainalysis figure for the “hodler” category – wallets belonging to people who got into bitcoin before it hit the big time, and which represent the biggest source of uncertainty as to whether bitcoins are lost or just being hoarded.

  As for the 2% of “‘transactional” bitcoins that Chainalysis determined to be gone, the company says this is based on scraping the Internet for reports of lost coins. It added that the estimate of such losses, which can arise from a misdirected transaction or the loss of a private key through death or carelessness, is not based on statistical extrapolation and will be refined further in coming years.

  Finally, there’s the question of what became of the bitcoins belonging to Satoshi, the pseudonymous creator of the crypto-currency, who has not been not been heard from since 2011. Chainalysis says wallets associated with Satoshi represent about 1 million bitcoins (the company will provide a more specific figure later this year), and that its model assumes that those coins—which date from a time when it was easy to mine 50 bitcoin with a laptop—are gone forever. This assumption is a big one and, if it proves to be incorrect, the number of circulating bitcoins could suddenly increase significantly and deliver a shock to the market.

  Fortune asked Chainalysis about what was most surprising about the lost bitcoin findings.

  “Firstly, we floated our findings to a few people and they all had different reactions about how surprising the figure was. But what I found most surprising/interesting was how when you unpack what it means to be “lost” things get even more confusing.” Grauer said.

  

  

• Thanksgiving 2017 – David Stockman Explains Why There Is No Peace On Earth

  Authored by David Stockman via Contra Corner blog,

  After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow's White House, a dark era in human history came to an end.

  The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon.

  To wit, upwards of 8% of the human race was wiped-out during that span. The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam.

  We have elaborated more fully on this proposition in "The Epochal Consequences Of Woodrow Wilson's War", but the seminal point cannot be gainsaid. The end of the cold war meant world peace was finally at hand, yet 26 years later there is still no peace because Imperial Washington confounds it.

  In fact, the War Party entrenched in the nation's capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony.

  In short, there was a virulent threat to peace still lurking on the Potomac after the 77-year war ended. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

  So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world.

  In a word, the real threat to peace circa 1991 was that Pax Americana would not go away quietly in the night.

  In fact, during the past 26 years Imperial Washington has lost all memory that peace was ever possible at the end of the cold war. Today it is as feckless, misguided and bloodthirsty as were Berlin, Paris, St. Petersburg, Vienna and London in August 1914.

  Back then a few months after the slaughter had been unleashed, soldiers along the western front broke into spontaneous truces of Christmas celebration, singing and even exchange of gifts. For a brief moment they wondered why they were juxtaposed in lethal combat along the jaws of hell.

  The truthful answer is that there was no good reason. The world had stumbled into war based on false narratives and the institutional imperatives of military mobilization plans, alliances and treaties arrayed into a doomsday machine and petty short-term diplomatic maneuvers and political calculus. Yet it took more than three-quarters of a century for all the consequential impacts and evils to be purged from the life of the planet.

  The peace that was lost last time has not been regained this time for the same reasons. Historians can readily name the culprits from 100 years ago, such as the German general staff's plan for a lightening mobilization and strike on the western front called the Schlieffen Plan or Britain's secret commitments to France to guard the North Sea while the latter covered the Mediterranean.

  Since these casus belli of 1914 were criminally trivial in light of all that metastisized thereafter, it might do well to name the institutions and false narratives that block the return of peace today. The fact is, these impediments are even more contemptible than the forces that crushed the Christmas truces one century ago.

  Imperial Washington – Global Menace

  There is no peace on earth today for reasons mainly rooted in Imperial Washington – not Moscow, Beijing, Tehran, Damascus, Mosul or Raqqah. The former has become a global menace owing to what didn't happen in 1991.

  What should have happened is that Bush the elder should have declared "mission accomplished" and slashed the Pentagon budget from $600 billion to $200 billion; demobilized the military-industrial complex by putting a moratorium on all new weapons development, procurement and export sales; dissolved NATO and dismantled the far-flung network of US military bases; slashed the US standing armed forces from 1.5 million to a few hundred thousand; and organized and led a world disarmement and peace campaign, as did his Republican predecessors during the 1920s.

  Unfortunately, George H.W. Bush was not a man of peace, vision or even mediocre intelligence. He was the malleable tool of the War Party, and it was he who single-handedly blew the peace when he plunged America into a petty arguement between the impetuous dictator of Iraq and the gluttonous Emir of Kuwait that was none of our business.

  By contrast, even though liberal historians have reviled Warren G. Harding as some kind of dumbkopf politician, he well understood that the Great War had been for naught, and that to insure it never happened again the nations of the world needed to rid themselves of their huge navies and standing armies.

  To that end, he achieved the largest global disarmament agreement ever during the Washington Naval conference of 1921, which halted the construction of new battleships for more than a decade.

  

  And while he was at it, President Harding also pardoned Eugene Debs. So doing, he gave witness to the truth that the intrepid socialist candidate for president and vehement anti-war protestor, who Wilson had thrown in prison for exercising his first amendment right to speak against US entry into a pointless European war, had been right all along.

  In short, Warren G. Harding knew the war was over, and the folly of Wilson's 1917 plunge into Europe's bloodbath should not be repeated at all hazards.

  Not George H.W. Bush. The man should never be forgiven for enabling the likes of Dick Cheney, Paul Wolfowitz, Robert Gates and their neocon pack of jackals to come to power—-even if he has denounced them in his bumbling old age.

  Even more to the point, by opting not for peace but for war and oil in the Persian Gulf in 1991 he opened the gates to an unnecessary confrontation with Islam and nurtured the rise of jihadist terrorism that would not haunt the world today save for forces unleashed by George Bush's petulant quarrel with Saddam Hussein.

  We will momentarily get to the 45-year old error that holds the Persian Gulf is an American Lake and that the answer to high old prices and energy security is the Fifth Fleet. Actually, the answer to high oil prices everywhere and always is high oil prices—–a truth driven home in spades again two years ago when the Brent oil price plunged below $35 per barrel.

  But first it is well to remember that there was no plausible threat anywhere on the planet to the safety and security of the citizens of Springfield MA, Lincoln NE or Spokane WA when the cold war ended.

  The Warsaw Pact had dissolved into more than a dozen woebegone sovereign statelets; the Soviet Union was now unscrambled into 15 independent and far-flung Republics from Belarus to Tajikistan; and the Russian motherland would soon plunge into an economic depression that would leave it with a GDP about the size of the Philadelphia SMSA.

  Likewise, China's GDP was even smaller and more primitive than Russia's. Even as Mr. Deng was discovering the PBOC printing press that would enable it to become a great mercantilist exporter, an incipient threat to national security was never in the cards. After all, it was 4,000 Wal-Marts in America upon which the prosperity of the new red capitalism inextricably depended and upon which the rule of the communist oligarchs in Beijing was ultimately anchored.

  No Islamic Or Jihadi Terrorist Threat Circa 1990

  In 1991 there was no global Islamic threat or jihadi terrorist menace at all. What existed under those headings were sundry fragments and deposits of middle eastern religious, ethnic and tribal history that were of moment in their immediate region, but no threat to America whatsoever.

  The Shiite/Sunni divide had co-existed since 671AD, but its episodic eruptions into battles and wars over the centuries had rarely extended beyond the region, and certainly had no reason to fester into open conflict in 1991.

  Inside the artificial state of Iraq, which had been drawn on a map by  historically ignorant European diplomats in 1916, for instance, the Shiite and Sunni got along tolerably well. That's because the nation was ruled by Saddam Hussein's Baathist brand of secular Arab nationalism.

  The latter championed law and order, state driven economic development and politically apportioned distribution from the spoils of the extensive government controlled oil sector. To be sure, Baathist socialism didn't bring much prosperity to the well-endowed lands of Mesopotamia, but Hussein did have a Christian foreign minister and no sympathy for religious extremism or violent pursuit of sectarian causes.

  As it happened, the bloody Shiite/Sunni strife that plagues Iraq today and functions as a hatchery for angry young jihadi terrorists in their thousands was unleashed only after Hussein had been driven from Kuwait and the CIA had instigated an armed uprising in the Shiite heartland around Basra. That revolt was brutally suppressed by Hussein's republican guards, but it left an undertow of resentment and revenge boiling below the surface.

  Needless to say, the younger Bush and his cabal of neocon warmongers could not leave well enough alone. When they foolishly destroyed Saddam Hussein and his entire regime in the pursuit of nonexistent WMDs and ties with al-Qaeda, they literally opened the gates of hell, leaving Iraq as a lawless failed state where both recent and ancient religious and tribal animosities are given unlimited violent vent.

  Likewise, the Shiite theocracy ensconced in Tehran was an unfortunate albatross on the Persian people, but it was no threat to America's safety and security. The very idea that Tehran is an expansionist power bent on exporting terrorism to the rest of the world is a giant fiction and tissue of lies invented by the Washington War Party and its Bibi Netanyahu branch in order to win political support for their confrontationist policies.

  Indeed, the three decade long demonization of Iran has served one over-arching purpose. Namely, it enabled both branches of the War Party to conjure up a fearsome enemy, thereby justifying aggressive policies that call for a constant state of war and military mobilization.

  When the cold-war officially ended in 1991, the Cheney/neocon cabal feared the kind of drastic demobilization of the US military-industrial complex that was warranted by the suddenly more pacific strategic environment. In response, they developed an anti-Iranian doctrine that was explicitly described as a way of keeping defense spending at high cold war levels.

  And the narrative they developed to this end is one of the more egregious Big Lies ever to come out of the beltway. It puts you in mind of the young boy who killed his parents, and then threw himself on the mercy of the courts on the grounds that he was an orphan!

  To wit, during the 1980s the neocons in the Reagan Administration issued their own fatwa again the Islamic Republic based on its rhetorical hostility to America. Yet that enmity was grounded in Washington’s 25-year support for the tyrannical and illegitimate regime of the Shah, and constituted a founding narrative of the Islamic Republic that was not much different than America's revolutionary castigation of King George.

  That the Iranians had a case is beyond doubt. The open US archives now prove that the CIA overthrew Iran’s democratically elected government in 1953 and put the utterly unsuited and megalomaniacal Mohammad Reza Shah on the peacock throne to rule as a puppet in behalf of US security and oil interests.

  During the subsequent decades the Shah not only massively and baldly plundered the wealth of the Persian nation; with the help of the CIA and US military, he also created a brutal secret police force known as the Savak. The latter made the East German Stasi look civilized by comparison.

  All elements of Iranian society including universities, labor unions, businesses, civic organizations, peasant farmers and many more were subjected to intense surveillance by the Savak agents and paid informants. As one critic described it:

  Over the years, Savak became a law unto itself, having legal authority to arrest, detain, brutally interrogate and torture suspected people indefinitely. Savak operated its own prisons in Tehran, such as Qezel-Qalaeh and Evin facilities and many suspected places throughout the country as well. Many of those activities were carried out without any institutional checks.

  Ironically, among his many grandiose follies, the Shah embarked on a massive civilian nuclear power campaign in the 1970s, which envisioned literally paving the Iranian landscape with dozens of nuclear power plants.

  He would use Iran’s surging oil revenues after 1973 to buy all the equipment required from Western companies – and also fuel cycle support services such as uranium enrichment – in order to provide his kingdom with cheap power for centuries.

  At the time of the Revolution, the first of these plants at Bushehr was nearly complete, but the whole grandiose project was put on hold amidst the turmoil of the new regime and the onset of Saddam Hussein’s war against Iran in September 1980. As a consequence, a $2 billion deposit languished at the French nuclear agency that had originally obtained it from the Shah to fund a ramp-up of its enrichment capacity to supply his planned battery of reactors.

  Indeed, in this very context the new Iranian regime proved quite dramatically that it was not hell bent on obtaining nuclear bombs or any other weapons of mass destruction. In the midst of Iraq's unprovoked invasion of Iran in the early 1980s the Ayatollah Khomeini issued a fatwa against biological and chemical weapons.

  Yet at that very time, Saddam was dropping these horrific weapons on Iranian battle forces – some of them barely armed teenage boys – with the spotting help of CIA tracking satellites and the concurrence of Washington. So from the very beginning, the Iranian posture was wholly contrary to the War Party’s endless blizzard of false charges about its quest for nukes.

  However benighted and medieval its religious views, the theocracy which rules Iran does not consist of demented war mongers. In the heat of battle they were willing to sacrifice their own forces rather than violate their religious scruples to counter Saddam’s WMDs.

  Then in 1983 the new Iranian regime decided to complete the Bushehr power plant and some additional elements of the Shah’s grand plan. But when they attempted to reactivate the French enrichment services contract and buy necessary power plant equipment from the original German suppliers they were stopped cold by Washington. And when the tried to get their $2 billion deposit back, they were curtly denied that, too.

  To make a long story short, the entire subsequent history of off again/on again efforts by the Iranians to purchase dual use equipment and components on the international market, often from black market sources like Pakistan, was in response to Washington’s relentless efforts to block its legitimate rights as a signatory to the Nuclear Nonproliferation Treaty (NPT) to complete some parts of the Shah’s civilian nuclear project.

  Needless to say, it did not take much effort by the neocon “regime change” fanatics which inhabited the national security machinery, especially after the 2000 election, to spin every attempt by Iran to purchase even a lowly pump or pipe fitting as evidence of a secret campaign to get the bomb.

  The exaggerations, lies, distortions and fear-mongering which came out of this neocon campaign are truly disgusting. Yet they incepted way back in the early 1990s when George H.W. Bush actually did reach out to the newly elected government of Hashemi Rafsanjani to bury the hatchet after it had cooperated in obtaining the release of American prisoners being held in Lebanon in 1989.

  The latter was self-evidently a pragmatist who did not want conflict with the United States and the West; and after the devastation of the eight year war with Iraq was wholly focused on economic reconstruction and even free market reforms of Iran's faltering economy.

  It is one of the great tragedies of history that the neocons managed to squelch even George Bush's better instincts with respect to rapprochement with Tehran.

  So the prisoner release opening was short-lived—especially after the top post at the CIA was assumed in 1991 by Robert Gates. He was one of the very worst of the unreconstructed cold war apparatchiks who looked peace in the eye, and elected, instead, to pervert John Quincy Adams' wise maxim by searching the globe for monsters to fabricate.

  In this case the motivation was especially loathsome. Gates had been Bill Casey's right hand man during the latter's rogue tenure at the CIA in the Reagan administration. Among the many untoward projects that Gates shepherded was the Iran-Contra affair that nearly destroyed his career when it blew-up, and for which he blamed the Iranian's for its public disclosure.

  From his post as deputy national security director in 1989 and then as CIA head Gates pulled out all the stops to get even. Almost single-handedly he killed-off the White House goodwill from the prisoner release, and launched the blatant myth that Iran was both sponsoring terrorism and seeking to obtain nuclear weapons.

  Indeed, it was Gates who was the architect of the demonization of Iran that became a staple of War Party propaganda after the 1991. In time that morphed into the utterly false claim that Iran is an aggressive would be hegemon that is a fount of terrorism and is dedicated to the destruction of the state of Israel, among other treacherous purposes.

  That giant lie was almost single-handedly fashioned by the neocons and Bibi Netanyahu's coterie of power-hungry henchman after the mid-1990s. Indeed, the false claim that Iran posses an “existential threat” to Israel is a product of the pure red meat domestic Israeli politics that have kept Bibi in power for much of the last two decades.

  But the truth is Iran has only a tiny fraction of Israel's conventional military capability. And compared to the latter's 200 odd nukes, Iran has never had a nuclear weaponization program after a small scale research program was ended in 2003.

  That is not merely our opinion. It's been the sober assessment of the nation's top 17 intelligence agencies in the official National Intelligence Estimates ever since 2007. And now in conjunction with a further study in conjunction with the nuclear accord that will straight-jacket even Iran's civilian program and eliminate most of its enriched uranium stock piles and spinning capacity, the IAEA has also concluded the Iran had no secret program after 2003.

  On the political and foreign policy front, Iran is no better or worse than any of the other major powers in the Middle East. In many ways it is far less of a threat to regional peace and stability than the military butchers who now run Egypt on $1.5 billion per year of US aid.

  And it is surely no worse than the corpulent tyrants who squander the massive oil resources of Saudi Arabia in pursuit of unspeakable opulence and decadence to the detriment of the 30 million citizens which are not part of the regime, and who one day may well reach the point of revolt.

  When it comes to the support of terrorism, the Saudis have funded more jihadists and terrorists throughout the region than Iran ever even imagined.

  Myth Of The Shiite Crescent

  In this context, the War Party’s bloviation about Iran’s leadership of the so-called Shiite Crescent is another component of Imperial Washington's 26-year long roadblock to peace. Iran wasn't a threat to American security in 1991, and it has never since then organized a hostile coalition of terrorists that require Washington's intervention.

  Start with Iran's long-standing support of Bashir Assad's government in Syria. That alliance that goes back to his father’s era and is rooted in the historic confessional politics of the Islamic world.

  The Assad regime is Alawite, a branch of the Shiite, and despite the regime’s brutality, it has been a bulwark of protection for all of Syria’s minority sects, including Christians, against a majority-Sunni ethnic cleansing. The latter would surely have occurred if the Saudi (and Washington) supported rebels, led by the Nusra Front and ISIS, had succeeded in taking power.

  Likewise, the fact that the Bagdhad government of the broken state of Iraq——that is, the artificial 1916 concoction of two stripped pants European diplomats (Messrs. Sykes and Picot of the British and French foreign offices, respectively)——–is now aligned with Iran is also a result of confessional politics and geo-economic propinquity.

  For all practical purposes, the Kurds of the northeast have declared their independence; and the now "liberated" western Sunni lands of the upper Euphrates have been physically and economically destroyed—- after first being conquered by ISIS with American weapons dropped in place by the hapless $25 billion Iraqi army minted by Washington’s departing proconsuls.

  Accordingly, what is left of Iraq is a population that is overwhelmingly Shiite, and which nurses bitter resentments after two decades of violent conflict with the Sunni forces. Why in the world, therefore, wouldn’t they ally with their Shiite neighbor?

  Likewise, the claim that Iran is now trying to annex Yemen is pure claptrap. The ancient territory of Yemen has been racked by civil war off and on since the early 1970s.  And a major driving force of that conflict has been confessional differences between the Sunni south and the Shiite north.

  In more recent times, Washington’s blatant drone war inside Yemen against alleged terrorists and its domination and financing of Yemen’s governments eventually produced the same old outcome. That is, another failed state and an illegitimate government which fled at the 11th hour, leaving another vast cache of American arms and equipment behind.

  Accordingly, the Houthis forces now in control of substantial parts of the country are not some kind of advanced guard sent in by Tehran. They are indigenous partisans who share a confessional tie with Iran, but which have actually been armed by the US.

  And the real invaders in this destructive civil war are the Saudis, whose vicious bombing campaign against civilian populations controlled by the Houthis are outright war crimes if the word has any meaning at all.

  Finally, there is the fourth element of the purported Iranian axis—–the Hezbollah controlled Shiite communities of southern Lebanon and the Bekaa Valley.  Like everything else in the Middle East, Hezbollah is a product of historical European imperialism, Islamic confessional politics and the frequently misguided and counterproductive security policies of Israel.

  In the first place, Lebanon was not any more a real country than Iraq was when Sykes and Picot laid their straight-edged rulers on a map. The result was a stew of religious and ethnic divisions—-Maronite Catholics, Greek Orthodox, Copts, Druse, Sunnis, Shiites, Alawites, Kurds, Armenians, Jews and countless more—– that made the fashioning of a viable state virtually impossible.

  At length, an alliance of Christians and Sunnis gained control of the country, leaving the 40% Shiite population disenfranchised and economically disadvantaged, as well. But it was the inflow of Palestinian refugees in the 1960s and 1970s that eventually upset the balance of sectarian forces and triggered a civil war that essentially lasted from 1975 until the turn of the century.

  It also triggered a catastrophically wrong-headed Israeli invasion of southern Lebanon in 1982, and a subsequent repressive occupation of mostly Shiite territories for the next eighteen years. The alleged purpose of this invasion was to chase the PLO and Yassir Arafat out of the enclave in southern Lebanon that they had established after being driven out of Jordan in 1970.

  Eventually Israel succeeded in sending Arafat packing to north Africa, but in the process created a militant, Shiite-based resistance movement that did not even exist in 1982, and which in due course became the strongest single force in Lebanon’s fractured domestic political arrangements.

  After Israel withdrew in 2000, the then Christian President of the county made abundantly clear that Hezbollah had become a legitimate and respected force within the Lebanese polity, not merely some subversive agent of Tehran:

  “For us Lebanese, and I can tell you the majority of Lebanese, Hezbollah is a national resistance movement. If it wasn’t for them, we couldn’t have liberated our land. And because of that, we have big esteem for the Hezbollah movement.”^[

  So, yes, Hezbollah is an integral component of the so-called Shiite Crescent and its confessional and political alignment with Tehran is entirely plausible. But that arrangement—-however uncomfortable for Israel—–does not represent unprovoked Iranian aggression on Israel’s northern border.

  Instead, it’s actually the blowback from the stubborn refusal of Israeli governments—–especially the rightwing Likud governments of modern times—–to deal constructively with the Palestinian question.

  In lieu of a two-state solution in the territory of Palestine, therefore, Israeli policy has produced a chronic state of war with nearly half the Lebanese population represented by Hezbollah.

  The latter is surely no agency of peaceful governance and has committed its share of atrocities. But the point at hand is that given the last 35 years of history and Israeli policy, Hezbollah would exist as a menacing force on its northern border even if the theocracy didn't exist and the Shah or his heir was still on the Peacock Throne.

  In short, there is no alliance of terrorism in the Shiite Crescent that threatens American security. That proposition is simply one of the Big Lies that was promulgated by the War Party after 1991; and which has been happily embraced by Imperial Washington since then in order to keep the military/industrial/security complex alive, and justify its self-appointed role as policeman of the world.

  Washington's Erroneous View That The Persian Gulf Should Be An American Lake – The Root Of Sunni Jihaddism

  Likewise, the terrorist threat that has arisen from the Sunni side of the Islamic divide is largely of Washington's own making; and it is being nurtured by  endless US meddling in the region's politics and by the bombing and droning campaigns against Washington's self-created enemies.

  At the root of Sunni based terrorism is the long-standing Washington error that America’s security and economic well-being depends upon keeping an armada in the Persian Gulf in order to protect the surrounding oilfields and the flow of tankers through the straits of Hormuz.

  That doctrine has been wrong from the day it was officially enunciated by one of America’s great economic ignoramuses, Henry Kissinger, at the time of the original oil crisis in 1973. The 42 years since then have proven in spades that its doesn’t matter who controls the oilfields, and that the only effective cure for high oil prices is the free market.

  Every tin pot dictatorship from Libya’s Muammar Gaddafi to Hugo Chavez in Venezuela to Saddam Hussein, to the bloody-minded chieftains of Nigeria, to the purportedly medieval Mullahs and fanatical Revolutionary Guards of Iran has produced oil—-and all they could because they desperately needed the revenue.

  For crying out loud, even the barbaric thugs of ISIS milk every possible drop of petroleum from the tiny, wheezing oilfields scattered around their backwater domain. So there is no economic case whatsoever for Imperial Washington’s massive military presence in the middle east, and most especially for its long-time alliance with the despicable regime of Saudi Arabia.

  The truth is, there is no such thing as an OPEC cartel——virtually every member produces all they can and cheats whenever possible. The only thing that resembles production control in the global oil market is the fact that the Saudi princes treat their oil reserves not much differently than Exxon.

  That is, they attempt to maximize the present value of their 270 billion barrels of reserves, but ultimately are no more clairvoyant at calibrating the best oil price to accomplish that than are the economists at Exxon or the IEA.

  The Saudis over-estimated the staying power of China’s temporarily surging call on global supply; and under-estimated how rapidly and extensively the $100 per barrel marker reached in early 2008 would trigger a flow of investment, technology and cheap debt into the US shale patch, the Canadian tar sands, the tired petroleum provinces of Russia, the deep offshore of Brazil etc. And that’s to say nothing of solar, wind and all the other government subsidized alternative source of BTUs.

  Way back when Jimmy Carter was telling us to turn down the thermostats and put on our cardigan sweaters, those of us on the free market side of the so-called energy shortage debate said the best cure for high oil prices is high prices. Now we know.

  So the Fifth Fleet and its overt and covert auxiliaries should never have been there—–going all the way back to the CIA’s coup against Iranian democracy in 1953.

  But having turned Iran into an enemy, Imperial Washington was just getting started when 1990 rolled around. Once again in the name of “oil security” it plunged the American war machine into the politics and religious fissures of the Persian Gulf; and did so on account of a local small potatoes conflict that had no bearing whatsoever on the safety and security of American citizens.

  As US ambassador Glaspie rightly told Saddam Hussein on the eve of his Kuwait invasion, America had no dog in that hunt.

  Kuwait wasn’t even a country; it was a bank account sitting on a swath of oilfields surrounding an ancient trading city that had been abandoned by Ibn Saud in the early 20th century.

  That’s because he didn’t know what oil was or that it was there; and, in any event, it had been made a separate protectorate by the British in 1913 for reasons that are lost in the fog of diplomatic history.

  Likewise, Iraq’s contentious dispute with Kuwait had been over its claim that the Emir of Kuwait was “slant drilling” across his border into Iraq’s Rumaila field. Yet it was a wholly elastic boundary of no significance whatsoever.

  In fact, the dispute over the Rumaila field started in 1960 when an Arab League declaration arbitrarily marked the Iraq–Kuwait border two miles north of the southernmost tip of the Rumaila field.

  And that newly defined boundary, in turn, had come only 44 years after a pair of English and French diplomats had carved up their winnings from the Ottoman Empire’s demise by laying a straight edged ruler on the map. So doing, they thereby confected the artificial country of Iraq from the historically independent and hostile Mesopotamian provinces of the Shiite in the south, the Sunni in the west and the Kurds in the north.

  In short, it did not matter who controlled the southern tip of the Rumaila field—–the brutal dictator of Baghdad or the opulent Emir of Kuwait. Not the price of oil, nor the peace of America nor the security of Europe nor the future of Asia depended upon it.

  The First Gulf War – A Catastrophic Error

  But once again Bush the Elder got persuaded to take the path of war. This time it was by Henry Kissinger’s  economically illiterate protégés at the national security council and his Texas oilman Secretary of State. They falsely claimed that the will-o-wisp of “oil security” was at stake, and that 500,000 American troops needed to be planted in the sands of Arabia.

  That was a catastrophic error, and not only because the presence of crusader boots on the purportedly sacred soil of Arabia offended the CIA-trained Mujahedeen of Afghanistan, who had become unemployed when the Soviet Union collapsed.

  The 1991 CNN glorified war games in the Gulf also further empowered another group of unemployed crusaders. Namely, the neocon national security fanatics who had mislead Ronald Reagan into a massive military build-up to thwart what they claimed to be an ascendant Soviet Union bent on nuclear war winning capabilities and global conquest.

  All things being equal, the sight of Boris Yeltsin, Vodka flask in hand, facing down the Red Army a few months later should have sent them into the permanent repudiation and obscurity they so richly deserved. But Dick Cheney and Paul Wolfowitz managed to extract from Washington’s pyric victory in Kuwait a whole new lease on life for Imperial Washington.

  Right then and there came the second erroneous predicate. To wit, that “regime change” among the assorted tyrannies of the middle east was in America’s national interest.

  More fatally, the neocons now insisted that the Gulf War proved it could be achieved through a sweeping interventionist menu of coalition diplomacy, security assistance, arms shipments, covert action and open military attack and occupation.

  What the neocon doctrine of regime change actually did, of course, was to foster the Frankenstein that utlimately became ISIS. In fact, the only real terrorists in the world which threaten normal civilian life in the West are the rogue offspring of Imperial Washington’s post-1990 machinations in the middle east.

  The CIA trained and armed Mujahedeen mutated into al-Qaeda not because Bin Laden suddenly had a religious epiphany that his Washington benefactors were actually the Great Satan owing to America’s freedom and liberty.

  His murderous crusade was inspired by the Wahhabi fundamentalism loose in Saudi Arabia. This benighted religious fanaticism became agitated to a fever pitch by Imperial Washington’s violent plunge into Persian Gulf political and religious quarrels, the stationing of troops in Saudi Arabia, and the decade long barrage of sanctions, embargoes, no fly zones, covert actions and open hostility against the Sunni regime in Bagdad after 1991.

  Yes, Bin Laden would have amputated Saddam’s secularist head if Washington hadn’t done it first, but that’s just the point. The attempt at regime change in March 2003 was one of the most foolish acts of state in American history.

  The younger Bush’s neocon advisers had no clue about the sectarian animosities and historical grievances that Hussein had bottled-up by parsing the oil loot and wielding the sword under the banner of Baathist nationalism. But Shock and Awe blew the lid and the de-baathification campaign unleashed the furies.

  Indeed, no sooner had George Bush pranced around on the deck of the Abraham Lincoln declaring “mission accomplished” than Abu Musab al-Zarqawi, a CIA recruit to the Afghan war a decade earlier and small-time specialist in hostage-taking and poisons, fled his no count redoubt in Kurdistan to emerge as a flamboyant agitator in the now disposed Sunni heartland.

  The founder of ISIS succeeded in Fallujah and Anbar province just like the long list of other terrorist leaders Washington claims to have exterminated. That is, Zarqawi gained his following and notoriety among the region’s population of deprived, brutalized and humiliated young men by dint of being more brutal than their occupiers.

  Indeed, even as Washington was crowing about the demise of Zarqawi, the remnants of the Baathist regime and the hundreds of thousands of demobilized Republican Guards were coalescing into al-Qaeda in Iraq, and their future leaders were being incubated in a monstrous nearby detention center called Camp Bucca that contained more than 26,000 prisoners.

  

  As one former US Army officer, Mitchell Gray, later described it,

  You never see hatred like you saw on the faces of these detainees,” Gray remembers of his 2008 tour. “When I say they hated us, I mean they looked like they would have killed us in a heartbeat if given the chance. I turned to the warrant officer I was with and I said, ‘If they could, they would rip our heads off and drink our blood.’ ”

   

  What Gray didn’t know — but might have expected — was that he was not merely looking at the United States’ former enemies, but its future ones as well. According to intelligence experts and Department of Defense records, the vast majority of the leadership of what is today known as ISIS, including its leader, Abu Bakr al-Baghdadi, did time at Camp Bucca.

   

  And not only did the US feed, clothe and house these jihadists, it also played a vital, if unwitting, role in facilitating their transformation into the most formidable terrorist force in modern history.

   

  Early in Bucca’s existence, the most extreme inmates were congregated in Compound 6. There were not enough Americans guards to safely enter the compound — and, in any event, the guards didn’t speak Arabic. So the detainees were left alone to preach to one another and share deadly vocational advice.

   

  …….Bucca also housed Haji Bakr, a former colonel in Saddam Hussein’s air-defense force. Bakr was no religious zealot. He was just a guy who lost his job when the Coalition Provisional Authority disbanded the Iraqi military and instituted de-Baathification, a policy of banning Saddam’s past supporters from government work.

   

  According to documents recently obtained by German newspaper Der Spiegel, Bakr was the real mastermind behind ISIS’s organizational structure and also mapped out the strategies that fueled its early successes. Bakr, who died in fighting in 2014, was incarcerated at Bucca from 2006-’08, along with a dozen or more of ISIS’s top lieutenants.

  The point is, regime change and nation building can never be accomplished by the lethal violence of 21st century armed forces; and they were an especially preposterous assignment in the context of a land rent with 13 century-old religious fissures and animosities.

  In fact, the wobbly, synthetic state of Iraq was doomed the minute Cheney and his bloody gang decided to liberate it from the brutal, but serviceable and secular tyranny of Saddam’s Baathist regime. That’s because the process of elections and majority rule necessarily imposed by Washington was guaranteed to elect a government beholden to the Shiite majority.

  After decades of mistreatment and Saddam’s brutal suppression of their 1991 uprising, did the latter have revenge on their minds and in their communal DNA?  Did the Kurds have dreams of an independent Kurdistan that had been denied their 30 million strong tribe way back at Versailles and ever since?

  Yes, they did. So the $25 billion spent on training and equipping the putative armed forces of post-liberation Iraq was bound to end up in the hands of sectarian militias, not a national army.

  In fact, when the Shiite commanders fled Sunni-dominated Mosul in June 2014 they transformed the ISIS uprising against the government in Baghdad into a vicious fledgling state in one fell swoop. It wasn’t by beheadings and fiery jihadist sermons that it quickly enslaved dozens of towns and several million people in western Iraq and the Euphrates Valley of Syria.

  ISIS Is Washington's Frankenstein

  Its instruments of terror and occupation were the best weapons that the American taxpayers could buy. That included 2,300 Humvees and tens of thousands of automatic weapons, as well as vast stores of ammunition, trucks, rockets, artillery pieces and even tanks and helicopters.

  And that wasn’t the half of it. The newly proclaimed Islamic State also filled the power vacuum in Syria created by its so-called civil war. But in truth that was another exercise in Washington inspired and financed regime change undertaken in connivance with Qatar and Saudi Arabia.

  The latter were surely not interested in expelling the tyranny next door; they are the living embodiment of it. Instead, the rebellion was about removing Iran’s Alawite/Shiite ally from power in Damascus and laying gas pipelines to Europe across the upper Euphrates Valley.

  In any event, ISIS soon had troves of additional American weapons. Some of them were supplied to Sunni radicals by way of Qatar and Saudi Arabia. More came up the so-called “ratline” from Gaddafi’s former arsenals in Benghazi through Turkey. And still more came through Jordan from the “moderate” opposition trained there by the CIA, which more often than not sold them or defected to the other side.

  So that the Islamic State was Washington’s Frankenstein monster became evident from the moment it rushed upon the scene 18 months ago. But even then the Washington war party could not resist adding fuel to the fire, whooping up another round of Islamophobia among the American public and forcing the Obama White House into a futile bombing campaign for the third time in a quarter century.

  But if bombing really worked, the Islamic State would be sand and gravel by now. Indeed, as shown by the map below, it is really not much more than that anyway.

  The dusty, broken, impoverished towns and villages along the margins of the Euphrates River and in the bombed out precincts of Anbar province do not attract thousands of wannabe jihadists from the failed states of the middle east and the alienated Muslim townships of Europe because the caliphate offers prosperity, salvation or any future at all.

  What recruits them is outrage at the bombs and drones being dropped on Sunni communities by the US air force; and by the cruise missiles launched from the bowels of the Mediterranean which rip apart homes, shops, offices and mosques containing as many innocent civilians as ISIS terrorists.

  

  The truth is, the Islamic State was destined for a short half-life anyway. It was contained by the Kurds in the north and east and by Turkey with NATO’s second largest army and air force in the northwest. And it was surrounded by the Shiite crescent in the populated, economically viable regions of lower Syria and Iraq.

  So absent Washington’s misbegotten campaign to unseat Assad in Damascus and demonize his confession-based Iranian ally, there would have been nowhere for the murderous fanatics who pitched a makeshift capital in Raqqa to go. They would have run out of money, recruits, momentum and public acquiesce in their horrific rule in due course.

  But with the US Air Force functioning as their recruiting arm and France’s anti-Assad foreign policy helping to foment a final spasm of anarchy in Syria, the gates of hell have been opened wide. What has been puked out is not an organized war on Western civilization as Hollande so hysterically proclaimed in response to the mayhem in Paris.

  It was just blowback carried out by that infinitesimally small salient of mentally deformed young men who can be persuaded to strap on a suicide belt.

  Needless to say, bombing wont stop them; it will just make more of them.

  Ironically, what can stop them is the Assad government and the ground forces of its Hezbollah and the Iranian Revolutionary Guard allies. Its time to let them settle an ancient quarrel that has never been any of America’s business anyway.

  But Imperial Washington is so caught up in its myths, lies and hegemonic stupidity that it can not see the obvious.

  And that is why a quarter century after the cold war ended peace still hasn’t been given a chance and the reason that horrific events like November's barbarism in Paris still keep happening.

  Even the so-called "inspired" terrorists like the pair who attacked San Bernardino emerge episodically because the terror that the American military visits upon Muslim lands is actually what inspires them. After all, whatever the Koran has to say about purging the infidel, it inspired no attacks on American soil until Imperial Washington went into the regime change and military intervention business in the middle east.

  Another False Demon – Putin's Russia

  At the end of the day there now exists a huge irony. The only force that can effectively contain and eventually eliminate the Islamic State is the so-called Shiite Crescent – the alliance of Iran, Baghdad, Assad and Hezbollah.

  But since they are allied with Putin's Russia, still another unnecessary barrier to peace on earth comes into play.

  The fact is, there is no basis whatsoever for Imperial Washington's relentless campaign against Putin, and Washington-NATO's blatant intervention in Ukraine.

  Contrary to the bombast, jingoism, and shrill moralizing flowing from Washington and the mainstream media, America has no interest in the current spat between Putin and the coup that unconstitutionally took over Kiev in February 2014.

  For several centuries the Crimea has been Russian; for even longer, the Ukraine has been a cauldron of ethnic and tribal conflict, rarely an organized, independent state, and always a meandering set of borders looking for a redrawn map.

  Like everything reviewed above, the source of the current calamity-howling about Russia is the Warfare State–that is, the existence of vast machinery of military, diplomatic and economic maneuver that is ever on the prowl for missions and mandates and that can mobilize a massive propaganda campaign on the slightest excitement.

  The post-1991 absurdity of bolstering NATO and extending it into eastern Europe, rather than liquidating it after attaining “mission accomplished”, is just another manifestation of its baleful impact. In truth, the expansion of NATO is one of the underlying causes of America’s needless tension with Russia and Putin’s paranoia about his borders and neighbors. Indeed, what juvenile minds actually determined that America needs a military alliance with Slovenia, Slovakia, Bulgaria and Romania, and now Montenegro!

  So the resounding clatter for action against Russia emanating from Washington and its house-trained media is not even a semi-rational response to the facts at hand; its just another destructive spasm of the nation’s Warfare State and its beltway machinery of diplomatic meddling, economic warfare and military intervention.

  Memo To Obama: It’s Their Red Line

  Not only does Washington’s relentless meddling in the current Russian- Ukrainian food fight have nothing to do with the safety and security of the American people, it also betrays woeful disregard for the elementary facts of that region’s turbulent and often bloody history.

  In fact, the allegedly “occupied” territory of Crimea was actually annexed by Catherine the Great in 1783, thereby satisfying the longstanding quest of the Russian Czars for a warm-water port. Over the ages Sevastopol then emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home to the mighty Black Sea Fleet of the Czars and then the commissars.

  For the next 171 years Crimea was an integral part of Russia—a span that exceeds the 166 years that have elapsed since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego.

  While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian and Polish rifles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854; they were Russians defending the homeland from Turks, Europeans and Brits.

  And the portrait of the Russian “hero” hanging in Putin’s office is that of Czar Nicholas I—whose brutal 30-year reign brought the Russian Empire to its historical zenith, and who was revered in Russian hagiography as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans.

  At the end of the day, it’s their Red Line. When the enfeebled Franklin Roosevelt made port in the Crimean city of Yalta in February 1945 he did at least know that he was in Soviet Russia.

  Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev in honor of the decision by their ancestors 300 years earlier to accept the inevitable and become a vassal of Russia.

  Self-evidently, during the long decades of the Cold War, the West did nothing to liberate the “captive nation” of the Ukraine—with or without the Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990’s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of the Crimea to an equally pauperized Russia.

  In short, in the era before we got our Pacific port in 1848 and in the 166-year interval since then, our national security has depended not one wit on the status of the Russian-speaking Crimea.

  That the local population has now chosen fealty to the Grand Thief in Moscow over the ruffians and rabble who have seized Kiev is their business, not ours.

  The real threat to peace is not Putin, but the screeching sanctimony and mindless meddling of Susan Rice and Samantha Power. Obama should have sent them back to geography class long  ago——-and before they could draw anymore new Red Lines.

  The one in the Ukraine has been morphing for centuries among the quarreling tribes, peoples, potentates, Patriarchs and pretenders of a small region that is none of our damn business.

  The current Ukrainian policy farce emanating from Washington is not only a reminder that the military-industrial-beltway complex is still alive and well, but also demonstrates why the forces of crony capitalism and money politics which sustain it are so lamentable. The fact is, the modern Warfare State has been the incubator of American imperialism since the Cold War, and is now proving itself utterly invulnerable to fiscal containment, even in the face of a $19 trillion national debt.

  So 101 years after the Christmas truces along the Western Front there is still no peace on earth. And the long suffering American taxpayers, who foot the massive bills generated by the War Party's demented and destructive policies, have no clue that Imperial Washington is the principal reason.

  

  

• Chinese Liquidity Dries Up: Stocks Hit 3-Month Lows, Tumble Most Since June 2016

  It appears The National Team is taking a well-earned break as Chinese stocks extend their losses from late last week in the biggest 3-day drop since June 2016.

  

   

  Breaking below a key technical support level…

  

  Chinese shares were already on a shaky footing after last week when investor confidence was sapped by fresh government steps to reduce financial risks, and a rout in the bond market; but three straight days down with no aggressive 'management' buying is unusual…

  

   

  With the Shanghai Composite back to its lowest since August (when China's National Team – aka state-backed investor China Securities Finance Corp – announced it had boosted its stake in the entire brokerage sector)…

  

   

  At the same time, short-term liquidity markets are showing serious signs of strain as 1-month HKD HIBOR spikes to its highest since Dec 2008…

  

   

  And South Korean stocks plunged most in 3 months…as tech shares slumped following an analyst’s report suggesting the memory chip “super cycle” would soon fade, led lower by Samsung Electronics.

  

   

  Something has changed!

  

  

• Aussie Government Unleashes Counter-Terror Unit To Halt Youth Crime Storm

  The Northern Territory (abbreviated as NT) is a federal Australian territory covering 520,902 square miles with a total population size of 245,000 (8th largest in Australia).

  A brand new report from the NT Police Commissioner indicates an elite unit of the Australian Federal Police called Territory Response Group (TRG) will be using military grade weapons to patrol Alice Springs and Darwin at night.

  

  Commissioner Reece Kershaw confirms TRG’s deployment to the area and said, it’s in response to concerned communities as the youth crime wave spirals out of control.

  Timing of the deployment is for the holiday season, as many local officials believe crime will surge.

  Police estimate more than 50 percent of property break-ins in NT are from youths as young as 10 to 12-years old. TRG will be using military grade equipment and weapons to monitor people  kids “acting suspiciously”.

  “We’ve had information around Alice Springs of kids jumping onto roofs of hotels and stealing people’s wallets and all sorts of things. TRG will be there to act as surveillance, and what we call the night-time assessment team”, Mr Kershaw said.

  According to ABC Australia,

  The announcement came a week to the day since a royal commission delivered its report on youth detention and child protection systems in the Northern Territory. The report published damning findings about police over-arresting and over-charging children and youth.

   

  A recommendation to raise the age of criminal responsibility from 10 to 12 years of age has so far been accepted by the NT Government “in principle”. Legal groups have called for an immediate moratorium on child arrests, but so far the Government has not provided a timeframe on when the recommendation would come into effect.

  Earlier this year, A Current Affair, an Australian TV media outlet, launched an investigative report called ‘Aboriginal Youth Crime Storm In NT’.

  The mind blowing report highlights the out of control crime by youths breaking into commercial and residential properties.

  TRG will be providing protection and surveillance to community members in Darwin, the capital of NT, and Alice Springs, a community in the most southern point of the territory through the holiday season.

  

  The Australian Bureau of Statistics says the “youth offender rate, as measured per 100,000 persons aged 10–17 years, was highest in the Northern Territory”.. As noted on the chart below, theft is the most popular by youth offenders.

  

  Mr Kershaw did not provide concrete evidence of what started the youth crime wave, but offered to give his opinion on broken families and domestic violence.

  We’d rather prevent crime before it occurs, and some of these kids are out on the streets because of things like domestic violence.

   

  We know that because of studies of repeat young offenders and some of their history. We’re going to be working with Territory Families and other agencies and NGOs to answer how do we provide that safe place for these kids to go to, and keep them on the right path.

   

  At the moment, we’re bringing these children and youth before the courts, and nothing has come to me to say we’re breaking the law — we’re here to uphold and maintain social order.

  And lastly according to ABC Australia, TRG officers would be approaching children as young as 10 while camouflaged and carrying assault weapons, Mr Kershaw said it was up the response group to determine how they conducted their operation.

  

  

  

• Russiagate Explained

  Authored by Caitlin Johnstone via Medium.com,

  Michael Flynn is in the news again.

  

  Russiagaters are gushing with excitement at the revelation that Flynn’s lawyers are no longer sharing information with the president’s legal team now that Robert Mueller’s investigation is looking more closely at the former National Security Advisor’s involvement in the production of a film about an exiled cleric from Turkey. The story goes that this separation means that Flynn has struck a deal with Mueller, which Mueller wouldn’t permit him to do if he didn’t have damning information on Trump.

  Of course this excitement is dependent on the false belief that Mueller’s job is to get the president impeached, and that he would only cut deals toward that ultimate end. It is also dependent on the false belief that there is any evidence to be found that Trump illegally colluded with the Russian government to steal the 2016 election. And, like the rest of the Russiagate enthusiasm around Flynn, it is also somewhat dependent on compartmentalizing away from the fact the Turkey and Russia are two completely different countries.

  This is all par for course in the interminable dance of soaring excitement followed by thinly veiled disappointment that Russiagaters have been engaged in for over a year. I’ve been receiving some complaints that I don’t recap enough on the specific details of why I reject the establishment Russia narrative so aggressively, so if you’re just tuning in, what follows is a quick synopsis of how this weird thing has been going so far.

  At the beginning of 2015 Hillary Clinton was already scaring people with her intensely hawkish positions on Russia, long before she went all-in on her horrifying support for a no-fly zone in a region where Russian military planes were conducting operations. Coincidentally this same nation Clinton wanted to fight happens to be the nation everyone in her political party is supporting new cold war escalations with today.

  When WikiLeaks began releasing Democratic party emails, those ever-trustworthy truth angels collectively known as the US intelligence community began asserting that the leaks were provided by Russian hackers, a claim WikiLeaks denies. Clinton, still widely expected to win the presidency, used that opportunity to call for “military responses” to cyber intrusions, saying as president she would “make it clear that the United States will treat cyber attacks just like any other attack.”

  In a debate with Trump in October of 2016, Clinton asserted that “17 intelligence agencies” had all concluded that Russia was behind the WikiLeaks releases, which this year we learned was actually four agencies, which was actually three agencies plus Director of National Intelligence James Clapper, which was actually two dozen agents from the CIA, FBI and NSA that Clapper hand-picked himself.

  James Clapper is a known Russophobic racist who has said that Russians “are almost genetically driven to co-opt, penetrate, gain favor, whatever,” and that “It is in their genes to be opposed, diametrically opposed to the United States and to Western democracies.”

  Clinton has continued to repeat the “17 intelligence agencies” lie long after it was conclusively debunked, and Democratic party loyalists continue to repeat it to this day. They do this to manufacture the illusion that this is something agreed upon by the entire US intelligence community and not two dozen analysts picked by a man with a seething eugenicist hatred of Russians.

  To be clear: Donald Trump, president of the United States, does NOT believe the 17 American agencies that make up the U.S. intelligence community re Russian meddling in the election. But he DOES believe former KGB agent Vladimir Putin. Let that sink in. https://t.co/FR2oY4Pk21

  — Joy Reid (@JoyAnnReid) November 11, 2017

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

  Russia, incidentally, functions with regard to the United States as the right arm of China, the chief rival of the US power establishment Clinton has spent her career immersed in.

  In January Clapper’s ODNI released its much anticipated intelligence report on the Russian hacking allegations to the public, which spent much of its space bizarrely talking about the fact that RT America covers third party presidential candidates and Occupy Wall Street. It ties Guccifer 2.0 to the WikiLeaks releases on very shaky grounds, despite an abundance of evidence that “Guccifer 2.0” is in fact an US establishment psyop and not a hacker at all.

  To this day we’ve seen no hard evidence of Russian hacking the Democratic party emails despite assurances from NSA veterans that if such evidence exists it can surely be found on NSA records and safely shared with the public without exposing any sources or compromising any methods that aren’t public knowledge already. And yet the anti-Russia sentiment that assertion sparked has been used to manufacture support for sanctions, troops along Russia’s border, NATO expansionism and proxy conflicts. This is simply unacceptable in a post-Iraq invasion world. When it comes to assertions which lead to war, including cold war, the US intelligence community must be considered guilty until proven innocent. They have lost the trust of every sensible person forever.

  The many, many gaping plot holes in the Russian hacking narrative are likely why as 2017 has worn on, establishment loyalists have been opting to focus more on allegations that Russia used a pervasive propaganda campaign to get Trump elected.

  This includes RT America, which has the temerity to air the anti-establishment opinions of Americans whom mainstream media outlets refuse to platform, Pikachu-gate, and a narrative about $100,000 in Facebook ads somehow influencing a $6.8 billion election despite the fact that the ads in question rarely mentioned the election and most of them not being seen until after it was over.

  Most disturbingly, the “Russian propaganda” angle has led to a large percentage of the US population supporting and promulgating the narrative that Americans need to be protected from ideas or information, which has led to enormous increases in corporate censorship across all major social media platforms. Which of course works out nicely for the unelected power establishment which has a vested interest in manipulating the ideas and information that Americans consume.

  So that’s the narrative about Russia’s half of Russiagate. The story about Trump’s half is even more absurd.

  The notion that Democrats may be able to get Trump impeached for colluding with Russia really took hold in January with the release of the now-infamous Christopher Steele dossier, which alleges that Russians have been blackmailing Trump into compliance with their agendas using a video they took years prior of Trump paying a bunch of prostitutes to urinate on a bed the Obamas once slept in. Apart from the obvious fact that nothing about this is even remotely believable, the dossier itself is riddled with significant errors and mostly unverified, and Steele himself has been distancing himself from parts of it. Some of the more high-octane Russiagaters have claimed that since some small parts of the Dossier have been confirmed to contain accurate basic information it must therefore all be true, which is the same as claiming that since Alex Jones was right about Iraq WMDs he’s definitely right about everything else he says as well.

  Oh, and the position on Ukraine that the dossier alleges Trump was blackmailed into espousing? It’s virtually identical to Obama’s, and arguably more anti-Russia.

  You’ll also hear a lot of talk about how Trump has “financial ties to Russia”, meaning he is necessarily therefore financially beholden to the Kremlin.

  This story of course requires that you ignore the many, many other foreign countries with which Trump has financial ties in order to view this as significant. Why would Trump exclude Russia from his map of business deals when the arm-waving hysteria about that country didn’t start until last year? In order to make Russian business ties look significant amid a sea of other foreign business ties you need to make the case that Russia is uniquely nefarious among nations, and few Americans saw it that way until the anti-Russia propaganda campaign began last year.

  There’s talk about how some campaign officials met with Russians, which is only suspicious if you ignore all the other foreign nationals they met with and doublethink your way into believing that Russia has always been viewed as uniquely malicious among nations. Manafort and Gates were indicted for stuff that had nothing to do with Trump or Russia, and back in August the Washington Post ran a story explicitly stating that Papadopoulos was a very low-level aide whose attempts to arrange meetings between campaign officials and Russians were consistently rejected by the Trump campaign.

  Taken individually, parts of Russiagate look like they could maybe possibly somehow lead somewhere plausible. Taken together, it’s obvious that the American people are being manipulated toward an anti-detente agenda by the Democrats who just want Trump impeached and the US power establishment which wants to secure geopolitical power by aggressively undermining its potential rivals.

  The term Gish gallop refers to a fallacious debate tactic in which one barrages one’s opposition with a deluge of individually weak arguments which take far too long to debunk individually in a way that sustains the audience’s interest. This is all Russiagate amounts to. When Russiagaters tell you that there’s “too much smoke for there not to be fire”, they are unwittingly telling you “I’ve been won over by a Gish gallop fallacy.”

  Every single aspect of their argument can be easily debunked without exception, but since there’s so much of it and since pundits are assuring them of its reality so confidently, they believe.

  Since the first day I took office, all you hear is the phony Democrat excuse for losing the election, Russia, Russia,Russia. Despite this I have the economy booming and have possibly done more than any 10 month President. MAKE AMERICA GREAT AGAIN!

  — Donald J. Trump (@realDonaldTrump) November 26, 2017

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

  Every few weeks there’s some major new “bombshell” revelation which Russiagaters get all excited about, only to have people read the actual information in the “bombshell” and find out it’s not actually anything incriminating or particularly remarkable. Take all those “bombshells” together, though, and you create the illusion of something real. That’s all this nonsense is.

   

  *  *  *

  Hey you, thanks for reading! My work is entirely reader-funded so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following me on Twitter, and maybe throwing some money into my hat on Patreon.

  

  

• Saudi Coalition Crumbles In Yemen: Sudanese Mercenaries On Front Lines, Foreign Officers, Proxies In Revolt

  Most Americans might be forgiven for having no clue what the war in Yemen actually looks like, especially as Western media has spent at least the first two years of the conflict completely ignoring the mass atrocities taking place while white-washing the Saudi coalition's crimes. Unlike wars in Iraq, Libya, and Syria, which received near daily coverage as they were at their most intense, and in which many Americans could at least visualize the battlefield and the actors involved through endless photographs and video from on the ground, Yemen's war has largely been a faceless and nameless conflict as far as major media is concerned.

  Aside from mainstream media endlessly demonstrating its collective ignorance of Middle East dynamics, it is also no secret that the oil and gas monarchies allied to the West are rarely subject to media scrutiny or criticism, something lately demonstrated on an obscene and frighteningly absurd level with Thomas Friedman's fawning and hagiographic interview with Saudi crown prince MBS published in the New York Times.

  
  Saudi Arabia's hired help in Yemen: Sudanese fighters headed to the front lines. Image souce: al-Arabiya

  But any level of meticulous review of how the Saudi coalition (which heavily involves US assistance) is executing the war in Yemen would reveal a military and strategic disaster in the making. As Middle East Eye editor-in-chief David Hearst puts it, "All in all, the first military venture to be launched by the 32-year-old Saudi prince as defense minister is a tactical and strategic shambles."  

  And if current battlefield trends continue, the likely outcome will be a protracted and humiliating Saudi coalition withdrawal with the spoils divided among Houthi and Saudi allied warlords, as well as others vying for power in Yemen's tenuous political future. But what unsurprisingly unites most Yemenis at this point is shared hatred for the Saudi coalition bombs which rain down on civilian centers below. For this reason, Hearst concludes further of MBS' war: "The prince, praised in Western circles as a young reformer who will spearhead the push back against Iran, has succeeded in uniting Yemenis against him, a rare feat in a polarized world. He has indeed shot himself, repeatedly, in the foot."

  So how has this come about, and how is the war going from a military and strategic perspective?

  First, to quickly review, Saudi airstrikes on already impoverished Yemen, which have killed and maimed tens of thousands of civilians (thousands among those are children according to the UN) and displaced hundreds of thousands, have been enabled by both US intelligence and military hardware. Cholera has recently exploded amidst the appalling war-time conditions, and civilian infrastructure such as hospitals and schools have been bombed by the Saudis. After Shia Houthi rebels overran Yemen’s north in 2014, embattled President Abd-Rabbu Mansour Hadi vowed to “extract Yemen from the claws of Iran” something which he's repeatedly affirmed, having been given international backing from allies in the West, and a major bombing campaign began on March 2015 under the name "Operation Decisive Storm" (in a cheap mirroring of prior US wars in Iraq, the first of which was "Desert Storm").

  Saudi Arabia and its backers fear what they perceive as growing Iranian influence in the region, something grossly exaggerated, and seek to defend at all costs Yemeni forces loyal to President Hadi. The coalition includes Bahrain, Kuwait, UAE, Egypt, Sudan, and the US and UK, and the Saudi initiated war has also lately received behind the scenes political support from Israel, something recently confirmed by Israeli officials. Concerning the supposed Iran threat in Yemen, an emergency session of the Arab League recently doubled down on its shared commitment to wage war against Iranian interests after it blamed Tehran for a November 4 ballistic missile attack from Shia Houthi rebels against the Saudi capital, which Iran denies playing a role in.

  But the Saudi coalition is now in shambles according to a new Middle East Eye investigation. The report highlights some surprising facts long ignored in mainstream media and which give insight into how the Saudi military campaign is likely to end in total failure as "more than two years into a disastrous war, the coalition of ground forces assembled by the Saudis is showing signs of crumbling."

  
  The multi-national Saudi coalition is "showing signs of crumbling" while increasingly relying on mercenaries fighting on the ground in Yemen.

  * * * * *

  Below are 5 key takeaways from the full report.

  1) Saudi coalition ground forces have a huge contingent of foreign fighters, namely Sudanese troops with UAE officers, suffering the brunt of the battle on the front lines.

  Sudanese forces, which constitute the bulk of the 10,000 foreign fighters in the Saudi-led coalition, are suffering high casualty rates. A senior source close to the presidency in Khartoum told Middle East Eye that over 500 of their troops had now been killed in Yemen.

   

  Only two months ago, the commander of the Sudanese Army's rapid support force, Lieutenant General Mohammed Hamdan Hamidati, quoted a figure of 412 troops killed, including 14 officers to  the Sudanese newspaper Al Akhbar. "There is huge pressure to withdraw from this on-going fight," the Sudanese source told MEE. A force of up to 8,000 Sudanese troops are partly led by Emirati officers. They are deployed in southern Yemen as well as to the south and west of Taiz in al Makha.

  2) Sudan's President Omar al-Bashir has been dubbed "president of the mercenaries" for accepting over $2.2 billion from Saudi Arabia and Qatar in order to provide canon fodder for the Saudi ground war in Yemen in the form of thousands of young Sudanese troops, but he's threatening revolt. To escape his untenable position, he is reportedly seeking help from Putin.

  At home, Sudan's President Omar al-Bashir is also having second thoughts. He remembers the lifeline he got when Riyadh deposited $1bn in Sudan's Central Bank two years ago, followed by Qatar's $1.22bn. But he hardly enjoys being known as "president of the mercenaries," and he has other relationships to consider.

   

  On Thursday, Bashir became the latest of a procession of Arab leaders to beat a path to Vladimir Putin's door. He told the Russian president he needed protection from the US, was against confrontation with Iran, and supported the policy of keeping Syrian President Bashar al-Assad in power. This follows an incident at home, which was variously described as espionage and a coup attempt. Taha Osman Ahmed al-Hussein was dismissed as the director of the Office of the Sudanese President after he was discovered carrying a Saudi passport and a residency permit for the UAE. He was caught maintaining secret contact with both.

  3) Saudi-backed Yemeni fighters are increasingly mutinying and fear local mass push back from Yemen's civilian population due to the unpopular bombing campaign.

  Mutiny is also stirring in the ranks of Yemenis who two and a half years ago cheered the Saudi pushback against the Houthis who were trying to take over the entire country.

   

  The Saudi relationship with Islah, the largest group of Yemeni fighters in the ground force employed by the coalition, has at best been ambivalent. The Crown Prince Mohammed bin Salman's closest partner in Yemen, Mohammed bin Zayed, Crown Prince of Abu Dhabi, is openly hostile to the Muslim Brotherhood-affiliated Yemeni party… They [Islahi leadership] are feeling the political price they are paying for supporting a campaign that turned in Yemeni eyes from liberation to occupation… Enough is enough. The regional Islahi leadership are now talking of starting direct negotiations with the Houthis, a senior Islah source told MEE.

  4) Saudi proxy fighters are at war with each other: an Emirati-backed militia fighting under the Saudi coalition is assassinating other members of the Saudi coalition in what's increasingly an internal coalition civil war. 

  They are also paying a physical price. A number of Islahi sheikhs and scholars as well as Salafis who rejected Emirati leadership have been killed or targeted by assassination attempts. The list is growing: there have been assassinations of Khaled Ali al-Armani, a leader in the Islah Party, on 7 December 2016; Sheikh Abdullah Bin Amir Bin Ali Bin Abdaat al-Kathri, on 23 November 2017 in Hadhramaut; Abdelmajeed Batees (related to Saleh Batees) a leader in the Islah Party on 5 January 2017 in Hadhramaut; Mohammed Bin Lashgam, Deputy Director of Civil Status, on 17 January 2017; Khaled Ali al-Armani, a leader in the Islah Party, on 7 December 2016…

   

  "The Emiratis do not conceal their hostility to Islah. Islahi sheikhs and scholars are being assassinated, and this is being co-ordinated by the pro-Emirati militia. In addition, the UAE is clearly enforcing the blockade of Taiz, and withholding support for our fighters in the city," the source said.

  5) Oman is entering the fray, which will further fragment the Saudi coalition as rivalries for territorial control develop.

  As if the balance of competing outside forces  in Yemen is not complicated enough, enter Oman. Oman, too, regards southern Yemen as its backyard. It is particularly worried about the takeover of a series of strategic ports and islands off Yemen by the Emiratis. A Qatari diplomatic source described this as the Emiratis' "seaborn empire," but the Omanis are upset by this too.

   

  The Omanis are understood to be quietly contacting local Yemeni tribal leaders in south Yemen, some of them separatist forces, to organize a more "orchestrated response" to the militias paid for and controlled by Abu Dhabi.

  Like the proxy war in Syria, it appears that Gulf/US plans have backfired, and we are perhaps in for a long Saudi coalition death spiral fueled by delusion and denial. Sadly, it is primarily Yemeni civilians and common people in the region that will continue to bear the brunt of suffering wrought by such evil and delusional stupidity.

  

  

• The Blob? Inside The Murky Mirepresentations Of Alibaba

  Via Deep Throat IPO blog,

  As many of you know, I've been off the grid in rural India for the last few weeks.  As I've also mentioned, I love my trips to India….I get a chance to regroup, reset, meet wonderful people and think about things I rarely take the time to think about.  It's all about perspective.

  Anyway, while I was traveling, I had a chance to peruse the Alibaba September Quarter figures, Press Release, 6K, Investor Presentation and of course, took some time to listen to the always entertaining Investor Call.  Shortly thereafter, Alibaba had reported their amazing "Singles Day" sales figure of  $25.3 Billion of fake GMV.

  

  To put this figure in perspective,  this year, "Singles Day" GMV came in at just a few billion more than the annual revenue of Sears/K-Mart (140,000 employees and 1,500 locations world-wide)….. again, I'll repeat that….. Alibaba sold, shipped and delivered the annual, global, sales volume of Sears/K-Mart in just one day!  ….800 Million orders to deliver!  Incredible!  Bravo!…..all those guys on the tuk-tuks, scooters and bicycles must be exhausted…

  

  The Alibaba business model has triumphed once again.  It's now obvious that UPS, FedEx, DHL, et al, have it all wrong.  Why in the world would anyone invest in all of that expensive GPS, scanning, package tracking automation and logistics hardware when you can just dump your packages on the sidewalk and let homeless people figure out how to get them where they are supposed to go?  Again, the wizardry of Alibaba's ecosystem  has rewritten the global-logistics playbook.  Absolute genius…

  The Investor Call

  The Investor Call, with all of its suspense, of course, reminded me of one of the greatest motion picture epics of all time.  Many Cinephiles consider this flick to be the late, great, Steve McQueen's quintessential work. That's right, I am of course referring to that trans-generational, 1958 classic, "The Blob"

  From the trailer:…"It's kinda like a mass that keeps getting bigger and bigger…."

  Like the Blob, Alibaba's financial misrepresentations, as absurd as they are, have grown to the point where its oozing tentacles of slime have crept into every corner the world's financial system.

  I won't bother to dissect the numbers any more than I have in the past, but suffice it to say that the same accounting shenanigans I've discussed herein, every quarter since the IPO in September of 2014 are still alive and well.  (See my last 20F analysis for a little more detail: "Finding Inner Peace in Dharamsala….and thoughts on the Alibaba 20F….")

  Everything is steady as she goes…..Gigantic, unbelievable "asset-lite" growth, huge fake efficiencies and synergies abound.  Asset write-ups and inflated carrying values of "Questionable Assets" scattered across the books of more than six hundred (600) un-auditable, consolidated entities are omnipresent.  Alibaba Pictures and Alibaba Health are carried on the books at roughly $3 Billion more than their current, publicly traded market caps would support.  A Billion dollars of loans to insiders (See: Wasu Holdings, Simon Xie & Shi Yuzhu) are outstanding with a good chance that they will be looking for even more Alibaba shareholder money soon.

  In the call, management reinforced their philosophy that they never manage a business to a profit/margin or apparently any sort of target/metric so they, of course, never feel compelled to offer any detailed explanation or meaningful guidance on the numbers, product mix or how they make their money……. except that everything will most likely be really good forever.  It's all about delivering nebulously defined "value".  The call was, of course, capped off with the usual, odd, irrelevant, softball questions posed by the religiously devoted cadre of analysts.  Note that the analysts all refer to the business as "our segments" or "our strategy" or "how are we going to expand…."….as though they are part of the Alibaba management team.  Call transcript posted below courtesy of Seeking Alpha.  Using our patented Dick Fuld Banker-Speak Translator (BST), I'll just take a minute to analyze the first analyst's question.  I'm not necessarily picking on Eddie Leung here, he seems like a really nice guy, but he happened to ask the first question. 

  No need to go deeper into the Q&A unless you are a glutton for punishment, It just gets worse from here:

  Eddie Leung – Bank of America Merrill Lynch

   

  Good evening. Thank you for taking my questions. I have two questions. One is on Cainiao. Could you share your thought on the long-term positioning of Cainiao? Again, as the professional logistic service providers in China and globally, how to differentiate and perhaps cooperate in logistics?

   

  And then secondly, on New Retail, have we seen any change in the way that we cooperate with some of our brands and merchants across our multiple channels after we developed our offline channel recently? Thank you.

  Translation: "First, how the hell are you going to deliver $25 Billion of merchandise using push carts, bicycles and homeless people?  When you dump the packages on the sidewalk, what percentage of the merchandise is stolen?  Second, this is the first full quarter you've consolidated InTime as your "new retail"… the InTime acquisition?…. you know, where you just paid $3 Billion for a bunch of broken down department stores and vacant shopping malls?…. so you can dump fake knock-off merchandise and overstock junk in these stores?….that way photographers from the New York Times won't snap pictures of homeless people picking through the stuff scattered all over the sidewalks?"

  DT Note:  The correct response to this question should have been:  "Regarding Cainiao, I'll refer you to the detailed schedule XX of the 6K (which unfortunately doesn't exist) describing, by region/zone the packages/deliveries, product mix and associated costs by product category.  As for Intime, I'll refer you to the segment P&L's & Balance Sheets in Appendicix XX of the 6K (also doesn't exist) which describe, in detail the breakdown between On-Line and Off-Line GMV, Revenue and cost of operations, showing precisely what we're selling, where we're selling it and how profitable it is compared to our detailed projections. (which also don't exist)" 

  This is what we got:

  Response: CEO Daniel Yong Zhang – Alibaba Group Holding Ltd.

   

  "Eddie, this is Daniel. I'd like to answer your questions. For the first one, Cainiao. Actually, Cainiao is positioned as a smart logistic platform. Why smart is because this should be a data-driven logistics platform. We truly believe that the data is the most important asset which can generate value for the partners in the Cainiao ecosystem. And so what we do is that we work closely with our partners in not only warehousing, but also delivery network to enable them to optimize their operation. So we will continue this strategy and which is the partnership strategy and continue to work closely with our partners in China and in the world.

   

  And the key thing is that the data-driven logistic network, actually we are – Cainiao is not going to be a logistic company and we are not interested into building another logistics company. Instead, we will work with a lot of logistic companies, delivery companies to build a network across the world.

   

  And for your second question, New Retail, I would say actually, our New Retail strategy is very clear and we will continue to execute our New Retail strategy and to partner with the offline retailers in key categories such as in fashion categories, we work with Intime. In consumer electronics, we work with Sony. In food and FMCG categories, we work with Bailian and Sanjiang. And recently, we invest another regional retailer, which is (29:13) and we will work closely with them to empower them with our prospective (29:19) technology.

   

  Second is about – is a valid New Retail form or format to enable them to operate efficiently. So I think this is our New Retail strategy, but we're still in early stage. And our goal is to help the whole New Retail (29:40) world to be upgraded into a digital operation. So actually we are on our way. Thank you."

  Translation: "I have no F-ing idea what I'm talking about and I can't give you any detailed information because it doesn't exist, all of these numbers are made up, so I'll just use words like 'partner', 'digital', 'data' and hope that you think I'm brilliant.  We don't need to build a logistics company since our homeless people on bicycles are doing just fine. Our retail strategy is very clear, you should already know what it is, I think, maybe not, but anyway, it's all about data…..data, data, data.  We have lots of smart, logistics data, and on-line, off-line data logistics partners and we are global across the world because of  our data.  We are going to ship things to all sorts of dumpy convenience stores, kiosks and partners for people to pick up.  It's a better model than dumping the stuff on sidewalks. When it rains, packages get soggy and customers bitch.  We're going to ship $25 billion of fake GMV in one day next week, Nicole Kidman will be at the party, we paid her big bucks to show up, ooopsss Jack told me to not to say that, but we are at the beginning stages of helping the world.  Our on-line, off-line data-driven-big-data will allow us to sell more data-driven fake junk to everyone on the planet on mobile apps, which will track everyone so the CCP knows exactly where they are and what they are doing.  Did I mention that we are experts at big data?  Oh….and Amazon sucks.  Thank you."  

  So really, what is this gigantic "blob" of "China Commerce" GMV  and the related revenue comprised of?  Who knows?

  Alibaba management incessantly references their huge investment in infrastructure that enables them to sell supposedly gigantic volumes of Consumer Electronics, Fast Moving Consumer Goods, Clothing, Grocery, etc. yet they have never disclosed how much of same is sold through their platform(s).  How can they publish a gigantic $25.3 Billion, one day GMV total and not know what its components are?  I thought that Joe, Daniel and Maggie were the ring masters of this big-data circus?  They should know these numbers off the top of their head and disclose them.

  For example…

  You can buy a million dollar yacht.…..just put it on your MasterCard/Visa or Alipay…..it would be nice to know how many yachts they sell on-line.

  

  Or perhaps you'd like a luxurious Prada hand bag…..apparently sold by authorized and licensed Prada distributors like "wishload flagship store" and "buyfine overseas flagship store".

  

  Or maybe you need a few hundred tons of steel pipe…

  

  …or sheet steel...

  

  Perhaps a new building?…put a skyscraper on Visa/Mastercard!

  

  Or land for sale in Estonia or Iran?….note the "smart data" algorithm on the right of the page…..people who liked "land in Estonia" also apparently liked "kitchen cleaners and car wash soap"….and I actually could have "chatted" with the creepy looking guy shown in this listing, but my IT Department advised against it…..

  

  None of the above ridiculous transactions have anything to do with consumer goods and never "close" on the platform, yet they are there for a reason.  They are included in GMV.  They are "reported" by the seller (presumably for a fee?)…..Think Craig's List….not Amazon.

  The SEC correspondence from 2014 was illuminating…

   

  …everything about this business is a misdirection or a half truth…

   

  ...See pg 5, where Alibaba management opines that the GMV metric is a critical part of their fake operating/reporting framework and that it's perfectly legitimate for them to report transactions that were never shipped or closed.

  We might ask, if GMV is so important, why have they never provided any detail as to its composition/mix, or oddly enough, are only reporting GMV twice a year now. (on "Singles Day" and an annual "Blob" in the 20F)   Is it somehow no longer important?

  In fact, back in 2016 under Mary Jo White, the SEC started looking into, among other things, the possibility that there are issues with Alibaba's GMV reporting.  You'll also notice that, on page 60 of the above answers to the SEC correspondence, one of the signor/architects of the aforementioned, dubious Alibaba responses, was a Sullivan & Cromwell Attorney by the name of Jay Clayton, who also now happens to be the newly appointed Chairman of the SEC.  As they say….a fortuitous coincidence indeed.

  I'd invite all of my readers to check this out for yourselves…..take a few minutes to browse the Alibaba sites, Tmall, Taobao, Alibaba.com, AliExpress, 1688, and type in luxury brands (Gucci, Prada, Coach, etc.) industrial goods, etc., sort by price (high to low) and see what you get.  It's a hoot….you can buy single malt Scotch and Kentucky bourbon made in China!…..who knew?  Let your eyes be the judge as to whether Mr. Clayton's position, while representing Alibaba, had any merit at all.

  My guess is that "real" consumer goods GMV actually delivered is probably less than a third of what they report……yet investors believe these inflated numbers.….. I suppose, because it's "China"….and in hindsight, perhaps because Jay Clayton got a (presumably) sizable paycheck to sign off on it.

  Show Me The Money!

  Finally, with all of this Revenue and activity, all of this purported income and cash flow….a little bird told me that Alibaba will be looking to the US Bond Market for more funding in the very near future, riding the wave of the latest fake numbers. 

  They'll be looking for something in the range of $5 Billion to $8 Billion.  The big question is, if the business is actually generating dump trucks full of money as they claim, why have they maxed out their bank lines of credit and why do they once again need to go running to the US credit markets for cash ???….in addition, why in the world don't Chinese Banks want a piece of this gold mine?  They should be clamoring to lend money to this national treasure.  There isn't one Chinese Bank materially involved in financing this mess, at least that I can see.  This, to me, is incredible.  Ninety percent (90%) of Alibaba's business is in China, they need RMB….not dollars….what gives?

  Perhaps their "Authorized Representative" Don Puglisi would know the answers.  Every foreign company listed on a US Exchange must have an Authorized Representative in the United States and Don is Alibaba's man, per the original F-1.  

  Per Bloomberg, Don also seems to be a serial "Authorized Representative", collecting checks to represent dozens of foreign businesses in the United States, all run out of his three (3) person office in Newark, Delaware.    Lots of irons in the fire.  I can't imagine how, at his age, he can keep it all straight.  He's a busy man.  If I were him I would have retired long ago, but apparently "80 is the new 50"!  On the other hand, I, for one, think it's absolutely marvelous that a gigantic global enterprise like Alibaba was able to give a "little guy" like Don the chance to become a big time international player.  It must be a dream come true for him.

  Looking at the big picture, perhaps Don's job as an Authorized Representative was just the first of the "Million US Jobs" that Jack told the White House he was going to create!  Only 999,999 to go! Of course, Don's great new Alibaba administrative job pales in comparison to the half dozen or so high paying executive jobs that Jack had already created at his new (2014) Alibaba headquarters in the Caymans.  As our political leaders often say, "it's all about the jobs".  I couldn't agree more.

  Anyway, I'm sure that Don is a great old guy and if asked, he could bring some clarity to what Alibaba is up to. Perhaps Mr. Clayton (after waiving attorney/client privilege) could lend some insight as well. 

  After all, if you are representing someone, I'd think you should have at least some idea as to what's going on with their business.

  

  

• Fake Market Narratives Are Masking The Roots Of The Next Crisis

  During the second half of an interview with MacroVoices host Erik Townsend, Fasanara Capital fund manager Francesco Filia explained how the trillions of dollars in post-crisis asset purchases by central banks have bred a dangerous trend-following mentality that ultimately undermines the stability of markets and leaves stocks and bonds vulnerable to a vicious reversal.

  Passive, trend following funds – which account for the bulk of daily flows across financial markets – have only helped exacerbate the situation. But what’s worse is market strategists’ refusal to acknowledge how these flows, which create destabilizing feedback loops, tend to drive trading. Instead, sell-side “experts” employ flimsy fake narratives ex post to explain trading activity. These narratives are often accepted without question or criticism by financial reporters at CNBC, the Wall Street Journal, Bloomberg…the list goes on.  

  While it’s much easier for strategists and traders to latch on to the narrative of the day during interviews and conversations with clients, Filia posits that both professional and retail investors are ignoring these fundamental trends at their own peril.

  There was a moment in the market a couple of years ago where, whenever we saw bad data, the market was rallying, because they were expecting more monetary printing and more interventionism from the side of central banks.

   

  A little bit later, when rates were falling because of deflation, the narrative was chasing yields. So the narrative was not that there is deflation, therefore there will be a recession, therefore there will be a deflationary bust. The narrative was that there will be a deflationary boom. So the narrative was chase yields. So go into bonds even if the yields are low (whenever there is some yields left), go into equity to get some yield, and so make equities more expensive.

   

  

   

  Then later on, pretty much about when Mr. Trump won the elections, you had a new narrative coming in, which was chasing growth and chasing reflation. And the whole market was repositioning for that, going long banks and short utilities, and so forth.

   

  …

   

  At some point the reflation story was challenged, because it was all too clear that it was not really happening. You could see that the big pickup in soft data was closing the gap down to the downside on hard data. And you could see that the hard data were always very weak, and soft data went up and then came back down. So the reflation story was not there anymore.

   

  But then there was another story that could convince investors that what was happening was making sense, which was to chase earnings. Earnings around the middle of this year, after the second quarter, they were the one bit of positive information out there. So the market was focusing a laser focus on that only, and that was becoming the driving narrative. But it was a fake narrative. Because, in reality, it was really about flows, in our opinion.”

  Which brings us to the narrative strategists have ascribed to this year’s rally: The myth of synchronized global GDP growth.

  But investors who believe this to be true are overlooking the fact that most of this “growth” has been fueled by debt and money printing. As Erik Townsend points out, “it shouldn’t come as a surprise that there’s global synchronized growth when there’s global synchronized money printing.”

  The current narrative nowadays is synchronized global GDP growth. How many times have you heard that? And then, we see it all the time, and that is justifying the fact that the indices are reaching new heights. Except nobody is discussing about how this growth is achieved for much debt. And the debt on GDP that is on the shoulders of governments that is unheard in modern financial history.

   

  

   

  So our point in this slide is that the fake market cycle is trying to prove that it is not really about narratives. The narratives are exposed and they’re just handy excuses. But the point of this – market is about flows: the passive flows from the public central banks, from the private investment community, from the EFTs, to all the new investment strategies. And our point here is to challenge our assumptions about the market and be prudent because, you know, the future is really wide open. Anything could happen now that flows are coming back and for the first time we see tapering and quantitative tightening.

  The discussion soon turned to a concept that Filia famously helped pioneer: The notion that markets in recent years have succumbed to a positive feedback loop that has undermined their credibility and stability, as investors – spurred by overly generous and meddlesome central banks – have embraced high-beta, long-only positioning.

  As markets become increasingly fragile thanks to this lopsided positioning, small changes in circumstances can have an outsize impact on markets.

  Whenever there are positive feedback loops – and that is true in engineering, in cybernetics, in chemistry, in biology – whenever you have that you have the possibility of a self-fulfilling prophecy and a reinforcing process. You have reflexivity. You have a number of things that provoke a further diversion from fundamentals, or call it from general equilibrium, and system instability.

   

  

   

  And this is the case right now, in my opinion. The system instability is further defined as a state in the markets in which a small disturbance is able to produce a very large adjustment.

  So whenever – you said before what is the catalyst? And I said there could also not be a catalyst, that things could happen all of a sudden because of this very fragile state of affairs and because of the fact that it’s very unstable, this equilibrium.

   

  And, to use an analogy, when you talk about an unstable equilibrium, you should think of a pendulum which is held in the vertical position. And the pendulum that is held in the vertical position stands still, it looks really stable. But a small disturbance is able to crash it down left or right.

   

  When the equilibrium is stable instead of unstable, you should think of it as a painting which is attached to the nail – and it can move a little bit left and then goes back to the original position, a little bit right and then goes back to the original position. The market is like a pendulum held in vertical position, in our opinion.

   

  So what happens? There are these massive public passive flows, these are central banks. In the last ten years, roughly, they printed $15 trillion. And they’ve spent that money to buy financial assets. Primarily government bonds, but also some risky assets like mortgages. And in some countries, as I said, Switzerland and Japan, also directly equities. Japan owns the majority of the ETF industry in Japan for $200 billion (equivalent). And the Swiss central bank owns $100 billion worth of stocks, primarily US stocks.

  Private investors, of course, aren’t blind to activities of central banks.

  They see the writing on the wall and adjust to account for the massive central-bank put that has buoyed markets since the crisis. However, this has created an environment where the entire market is effectively long – either by shorting volatility or by betting on the trend to continue. Meanwhile, fashionable trend-following investment strategies like risk parity have only helped exacerbate this weakness.

  Now, we live through the peak QE. What are the two major factors that were originated by this $15 trillion printing and these huge monumental money flows? There are two. There is a factor trend and there is a factor volatility. The two consequences of those flows were trending markets – upward, obviously, because of all those flows. And financial repression of volatility, which means, really, volatility being killed to the ground and going into new all-time lows.

   

  Those are two consequences of those monumental money flows. Those two factors have an impact. A reflective impact on the private community. Because the whole private community adjusts to those two factors.

   

  So here we have a cursory look at all the players involved – some of the players involved – going from ETF and positive index files to all the fashionable investment strategies nowadays of risk parity, risk premia, algorithmic short volatility, machine learning, etc. And you can see that 90% of the investment community is affected by either one of those factors – volatility or trend – or both of them. 90% of the most fashionable investment community, and the most successful at present, is either going long trend – so long only – or it is shorting volatility or benefiting from low levels of volatility.

  The popularity of passive ETFs has contributed immensely to this…

  So, if I can spend a minute on this, a minute more, I will say that ETFs are the most – what you would expect – rates are going down, so it is very difficult for managers to make a performance and to justify fears. Therefore, there is from the investment community an obsession for fears. Therefore these ETFs are able, obviously, to be produced for very little cost, for total expense ratios of less than half a point and for management fees of 9 basis points or even smaller than that. Even we have seen some ETFs for 3 basis points of management fees. So they are a byproduct of the current environment of lower and lower interest rates which is produced by central banks.

   

  What do they do, the ETFs? They obviously go long only. By definition. They don’t price any risk inside portfolios. ETFs, when you buy a certain subset of the market through an ETF, that ETF will not decide to be underweight for any reason. Not because there is a big election coming up, not because there is a potential nuclear strike in North Korea, not because there is a valuation problem – that investment will be mindless and will be long only and will be fully invested.

   

  And this is number one: Now the ETFs alone represent close to 90% of the equity flows daily on the S&P these days. And this is an estimation coming from Vanguard, which is the number one shopper for ETFs. A different estimation from Bank of America sees 70% of the flows due to ETFs. But, you know, you are talking about a very big percentage.

  …Short-vol ETFS in particular – as the Macro Tourist Kevin Muir pointed out in a post-game interview with Townsend – pose a major threat to market stability. Short-volatility positioning is so overwhelming, that a modest reversal in stocks and bonds (remember, it’s been more than a year since we’ve seen a 3% intraday drop in the S&P 500) could cause the VIX to spike. If the VIX were to double from its current levels – say it goes from nine to 18 during a particularly volatile trading day – these funds run the risk of being totally wiped out.

  So, if I can spend a minute on this, a minute more, I will say that ETFs are the most – what you would expect – rates are going down, so it is very difficult for managers to make a performance and to justify fears. Therefore, there is from the investment community an obsession for fears.

   

  Therefore these ETFs are able, obviously, to be produced for very little cost, for total expense ratios of less than half a point and for management fees of 9 basis points or even smaller than  that. Even we have seen some ETFs for 3 basis points of management fees. So they are a byproduct of the current environment of lower and lower interest rates which is produced by central banks.

   

  

   

  What do they do, the ETFs? They obviously go long only. By definition. They don’t price any risk inside portfolios. ETFs, when you buy a certain subset of the market through an ETF, that ETF will not decide to be underweight for any reason. Not because there is a big election coming up, not because there is a potential nuclear strike in North Korea, not because there is a valuation problem – that investment will be mindless and will be long only and will be fully invested.

   

  And this is number one: Now the ETFs alone represent close to 90% of the equity flows daily on the S&P these days. And this is an estimation coming from Vanguard, which is the number one shopper for ETFs. A different estimation from Bank of America sees 70% of the flows due to ETFs. But, you know, you are talking about a very big percentage.

  One of the most harmful byproducts of central banks’ nearly decade-long post-crisis monetary experiment has been to exacerbate income inequality by failing to produce inflation, except in financial assets. Instead of creating a wealth effect that would help boost consumer spending and, by extension, boost economic growth, the central banks have instead created an inequality effect that has numerous unintended consequences – the rise of populism in Europe and the US is perhaps the most striking example.

  Self-congratulatory central bankers like Janet Yellen have never hesitated to defend how the Fed and its peers in Japan, Europe and the UK responded to the crisis. But the great policy experiment that began ten years ago is nearing its end. As Filia points out, as the Fed raises interest rates and starts paring its $4.5 trillion balance sheet and the ECB continues to taper, markets will experience a liquidity drawdown of nearly $1 trillion next year alone.

  This drawdown will represent the first real challenge to financial markets in ten years.

  How passive investors react to this paradigm shift will ultimately steer the broader market’s response.

  

  

• Airports Close, Thousands Flee As Bali's Mt Agung Volcano Erupts: Live Feed

  Bali’s Mount Agung has been trembling and spewing ash into the sky for months, warnings that prompted the government to steadily evacuate more than 75,000 people living around the base of the active volcano. Now the long-anticipated eruption is finally happening.

  As the eruption began, Indonesia’s disaster management agency mandated an evacuation zone of 10 kilometers around the volcano and raised its alert status to 10, the highest level. More than 24,000 residents were evacuated over the past two days as the airport in Bali canceled flights as a thick cloud of ash shot 6,000 meters into the sky and drifted east and southeast of the archipelago. Lombok International Airport on Pulau Lombok, the island due east of Bali, has also closed.

  

  According to CNN, residents were evacuated from 224 points around the island, said Ari Ahsan, spokesman for Ngurah Rai International Airport in Bali.

  The closures came as Indonesia upgraded its Volcano Observatory Notice for Aviation (VONA) to red, its highest warning, and said the ash-cloud top could reach 19,654 feet or higher.

  

  The cancellations at Ngurah Rai, Bali's main airport, stranded roughly 7,000 domestic and international passengers, according to the airport's latest report.

  

  Indonesia's Center for Volcanology and Geological Hazard Mitigation raised its aviation notice from an orange alert to a red one Sunday.

  According to Reuters, ash covered roads, cars and buildings near the volcano, which is situated in the northeast of the island, while the red glow of what appeared to be magma could be seen in photographs taken by the state news agency.

  “The activity of Mount Agung has entered the magmatic eruption phase. It is still spewing ash at the moment but we need to monitor and be cautious over the possibility of a strong, explosive eruption,” said Gede Suantika, an official at the volcanology and geological disaster mitigation agency.

  

  At a height of just over 3,000 meters, Agung looms over eastern Bali. The most recent eruption, which happened in 1963, killed 1,000 people. The eruption surprised the local community, and some residents had only minutes to flee.

  

  

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