- Slovak Police Arrest Suspects In Mafia Hit That Nearly Brought Down Government
Seven months after Slovak investigative journalist Jan Kuciak and his girlfriend Martina Kusnirova were assassinated in what’s believed to have been a paid hit organized by an Italian organized crime group with deep ties to the Slovakian government, local police have finally arrested eight who were suspected of being involved with the killings, according to Reuters.
The killings triggered a massive public backlash, as Kuciak had been working on a major story linking corrupt government officials, including former Prime Minister Robert Fico, to members of the ‘Ndrangheta, an organized crime group based in the Southern Italian region of Calabria. Thousands of Slovaks took to the streets to demand justice for Kuciak and Kusnirova, who were murdered in their apartment outside Bratislava back in February. The street demonstrations – the largest witnessed in the country since the 1989 revolution that brought down the former Communist regime – eventually forced Fico, his Interior Minister Robert Kalinak and police chief Tibor Gaspar from office.
However, the three-party ruling coalition led by Fico’s Smer party has managed to hang on to power, with Fico still serving as party chief.
Police confirmed reports of the arrests to Reuters, which was initially notified via a statement from a lawyer working for Kuciak’s family
“In the early morning hours today police detained suspects in the premeditated murder of Jan Kuciak and (his fiancee) Martina Kusnirova,” lawyer Daniel Lipsic said on Facebook.
Prime Minister Peter Pellegrini welcomed the arrests with a social media statement on Thursday. A spokesman for the prime minister’s office said they had no additional information.
“The investigation and punishment of those guilty of this murder is one of the priorities of my government,” Pellegrini wrote.
Meanwhile, the corruption probe sparked by the murders – which is now the largest investigation in the country’s history – continues, with Interior Minister Denisa Sakova saying on Thursday that investigators had interviewed more than 200 people.
A prosecutor said in March that the murders were likely related to Kuciak’s work. Police released a sketch of a possible witness and said they had narrowed down a list of possible motives to two. In the final story published before his murder, Kuciak published a story detailing links between figures reputedly involved an Italian organized crime figure with ties to two Slovaks who worked in Fico’s office. The men eventually resigned, but denied any links to the murder.
Kuciak had, among other things, investigated fraud cases involving businessmen with Slovak political ties. He had also looked into suspected mafia links between Italy and businesses in Slovakia.
Kuciak was found shot dead along with Kusnirova at their home outside Bratislava in February. They were both 27.
In his final story, published posthumously, he reported on an Italian living in Slovakia with past business links to two Slovaks who later worked in then-prime minister Robert Fico’s office.
Both of the Slovaks resigned but deny connections to the murder. Their Italian former business partner has also denied having connections with the mafia and the murder but was detained on a European drug trafficking warrant in March and extradited to Italy in May.
While the street demonstrations haven’t been held since March, organizers say they plan to maintain pressure on the ruling coalition.
- Serbian President Accuses West Of "Brutal Meddling" In Bosnia-Herzegovina's Elections
Authored by Aleksandar Pavic via The Strategic Culture Foundation,
Western interference in all things Bosnian is hardly news. Not today, not yesterday, not 26 years ago, when the then-US ambassador to Yugoslavia, Warren Zimmerman, encouraged Bosnian Muslim fundamentalist leader Alija Izetbegovic to reject a peace plan – accepted, incidentally, by the very same Bosnian Serb leaders soon to be demonized by the unipolar West as “aggressors” on their own land – that had a good chance of preventing the outbreak of a bloody, three-and-a-half-year civil war that produced about 100,000 dead and many more wounded and homeless people in this former federal republic of ex-Yugoslavia.
But it is news when such a charge comes out of the mouth of Serbia’s president, Aleksandar Vucic, who, although eager to keep and develop good relations with Russia and China, has over the years remade himself into an essentially pro-Western politician, whose main ambition is to integrate his country and the rest of the Balkans into the EU, torpedoes be damned.
Thus, Vucic’s announcement that, as soon as the October 7 general elections in Bosnia were over, he would present “astonishing evidence of the most brutal interference of certain Western powers in the elections in Republika Srpska” (one of two entities in Bosnia and Herzegovina, with a majority Orthodox Serb population, taking up 49% of the country, the other being the Federation of Bosnia and Herzegovina, dominated by Muslims and Catholic Croats), is a fairly reliable sign that the West has truly outdone itself, even by its own standards of “democracy export,” going so far, in Vucic’s words, that certain Western ambassadors were calling opposition candidates and threatening them not to switch allegiances, otherwise they would “answer both for real and imagined crimes.”
The first accusations of US meddling in the upcoming Bosnian general elections could already be heard back in May, when the Bosnian Serb government presented evidence to the UN Secretary-General regarding US State Department and USAID media financing designed to influence the elections, to the tune of more than $12 million.
Then in June, President of Republika Srpska Milorad Dodik similarly accused the British government, referring to its decision to send 40 intelligence specialists to, as British Defence Secretary Gavin Williamson (he of the “go away and shut up” Russia fame) put it, counter “malign external influence” – as “meddling in internal affairs” and “an act that borders on intrusion into this country.”
In August, Dodik once again pointed his fingers at the Americans, charging that they were interfering in the upcoming elections by funneling “anti-corruption” funds to local, anti-government NGOs.
And then in the first days of September, Dodik reproached the outgoing US ambassador to B-H, Maureen Cormack for – you guessed it – “flagrantly meddling in political processes and elections in Bosnia,” having lobbied for US sanctions against the vice-president of Dodik’s party, Nikola Spiric and his family, for alleged corruption – during the 2014 (!) election campaign.
In Spiric’s own words, Cormack “made a desperate move 28 days before the general election in order to help her puppets from Sarajevo – the Alliance for Change.”
Dodik went even further, opining that Cormack was, in fact, the ambassador of George Soros, and that the real reason behind the sanctions against Spiric was his “refusal to support the anti-Serbian agenda of the B-H Intelligence-Security Agency… and participate in a commission that was supposed to legalize eavesdropping” of him, current Republika Srpska Prime Minister Zeljka Cvijanovic, Serbian President Vucic and other officials of Serbia and Republika Srpska. Earlier in the month, before the sanctions against Spiric had been announced, Zeljka Cvijanovic had already publicly accused the B-H agency of illegally eavesdropping on “around 70” officials from Serbia and Republika Srpska.
So the stage is set for, to say the least, eventful elections in the (former) unipolar world’s model democratic and multi-ethnic protectorate, Bosnia and Herzegovina, still “supervised” by a de facto viceroy in the form of a “High Representative,” with a “constitutional court” in which three of the nine judges are foreigners, and unwieldy and paralyzed institutions that are producing a “fatalistic cynicism” amongst its populace. That is, if regular elections even take place. For, there are increasing fears that there is a (naturally) Western scenario for preventing or voiding the elections in Republika Srpska in order to block the victory of Dodik and his ruling coalition.
According to sources cited by Serbian Sputnik, two scenarios are in play:
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according to the first, the elections would be sabotaged in advance if it was judged that Dodik is too strong,
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while, according to the second, the election results would not be recognized should Dodik’s party gain the majority of the vote. Mass demonstrations would be incited in either case, with the lead role being played by the British, due to the “weakening” of America’s Balkan policy under Donald Trump.
The mass demonstration scenario is not unrealistic.
Demonstrators in varying numbers have been occupying the main square of Banja Luka, the Republika Srpska capital, for months, accusing the government of complicity in the death of 21-year old David Dragicevic, even though they have yet to produce concrete evidence (doesn’t that sound familiar) for their claims. The victim’s father has even threatened that there would be “no election in Republika Srpska until the murder of David and other children is solved.”
The demonstrations are obviously well financed, and are supported and occasionally attended by members of the pro-Western opposition. And, considering that, on the eve of the elections, Dodik is slated to visit Russia and meet its president, Vladimir Putin (Russia has consistently upheld the integrity of B-H, as provided for by the Dayton Peace Accords of 1995, and the absolute equality of its three constituent peoples, which was reiterated during Sergey Lavrov’s recent visit to the country) it will indeed be exceedingly difficult for the end-of-history West to refrain from trying to “teach” the Balkan deplorables at least one more lesson in “democracy.” Because all the previous ones there and elsewhere – Syria, Libya, Iraq instantly come to mind – have produced such wonderful results…
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- China Slams Another "Provocative" US B-52 Flyover Above Disputed Seas
Another incident involving US military operations over disputed waters near China has resulted in Beijing issuing a scathing condemnation of Washington amidst already soaring trade war tensions.
China’s defense ministry on Tuesday denounced recent US-B52 bomber flyovers of the South China Sea and East China Sea, calling the military maneuvers “provocative”. Though Pentagon officials are downplaying this and prior such incidents, it demonstrates just how fast the currently escalating trade war could easily translate into a potential military “mishap” between the two countries.
“Regarding the provocative actions of US military aircraft in the South China Sea, we are always resolutely opposed to them, and will continue to take necessary measures in order to strongly handle (this issue),” Chinese defense ministry spokesman Ren Guoqiang said before reporters, according to the AFP.
A Pentagon spokesman quickly shot back, rejecting Chinese territorial claims which interpret its expanding man-made island chains as a natural extension of its sovereign space. The flights were part of “regularly scheduled operations,” said Pentagon spokesman Lieutenant Colonel Dave Eastburn.
The Pentagon further confirmed that its heavy bombers are operating in the area as part of combined exercises with Japan over the East and South China seas, and that flights were being conducted over recognized international airspace. US officials have over the past year repeatedly confirmed that the Air Force and Navy will “continue to fly, sail and operate wherever international law allows at times and places of our choosing.”
Under international law, a country’s airspace is considered to be 12 nautical miles distant from the coastline of the nation, but China has used its man-made islands — on which it’s frequently stationed military assets — to lay claim to vast swathes of the South China Sea as falling under its definition of what constitutes sovereign Chinese space.
Beijing’s so called “nine-dash line” encircles as much as 90 percent of the contested waters in the South China see and runs up to 2,000 kilometers from the Chinese mainland and within a few hundred kilometers of Malaysia, Vietnam, and the Philippines — all within this vaguely defined zone Beijing claims as within its “historical maritime rights”.
The UN estimates that one-third of global shipping passes through the expansive area claimed by China — and crucially there’s thought to exist significant untapped oil and natural gas reserves.
There’s been a series of incidents over the summer involving US aircraft and ships, as well as that of regional powers like the Philippines, which have involved Chinese military warning off the foreign vessels and aircraft.
Previously this week China denied a US warship’s planned port visit to Hong Kong in what was a stunning symbolic rebuke in response to new tariffs enacted by the Trump administration.
In statements to reporters on Wednesday, US Defense Secretary Jim Mattis downplayed the threat that routine military flights through the area would itself raise tensions with China. He said while referring to the US military base in the Indian Ocean “If it was 20 years ago and they have not militarized those features there, it would have just been another bomber on its way to Diego Garcia or whatever.”
Mattis added, “So there’s nothing out of the ordinary about it, nor about our ships sailing through there,” and said there is no “fundamental shift in anything.” He downplayed the whole incident: “We’re just going through one of those periodic points where we’ve got to learn to manage our differences,” he explained.
However, Mattis’ words aren’t too comforting when all of this comes within the context of a US-led trade war that Trump reportedly plans to make “unprecedentedly large” and “unbearably painful” for Beijing.
- The "Pivots" To The Coming Era Can Already Be Discerned
Authored by Alastair Crooke via The Strategic Culture Foundation,
In his autobiography, Carl Jung tells of “a moment of unusual clarity”, during which he had a strange dialogue with something inside him: In what myth does man live nowadays, his inner-self enquired? “In the Christian myth: Do you live in it?” (Jung asked of himself. And to be honest with himself, the answer that he gave was ‘no’): “For me, it is not what I live by.” Then do we no longer have any myth, asked his inner-self? “No”, Jung replied, “evidently not”. Then what is it, by which you live, his inner-self demanded? “At this point the dialogue with myself, became uncomfortable. I stopped thinking. I had reached a dead end”, Jung concluded.
Many today, feel similarly. They feel the void. The post-war era – perhaps it is the European Enlightenment phenomenon, itself – that has run its course, people believe. Some regret it; many more are disturbed by it – and wonder what is next.
We live in a moment of the waning of two major projects: the decline of revealed religion, and – simultaneously – of the discrediting of the experience of secular Utopia. We live in a world littered with the debris of utopian projects which – though they were framed in secular terms, that denied the truth of religion – were in fact, vehicles for religious myth.
The Jacobin revolutionaries launched the Terror as a violent retribution for élite repression — inspired by Rousseau’s Enlightenment humanism; the Trotskyite Bolsheviks murdered millions in the name of reforming humanity through Scientific Empiricism; the Nazis did similar, in the name of pursuing ‘Scientific (Darwinian) Racism’.
The American millenarian ‘myth’, then and now, was (and is), rooted in the fervent belief in the Manifest Destiny of the United States, and is, in the last resort, nothing other than one particular example in a long line of attempts to force a shattering discontinuity in history (through which human society would then subsequently, be re-made).
In other words, all these utopian projects – all these successors to apocalyptic Judaic and Christian myth – saw a collective humankind pursuing its itinerary to a point of convergence, and to some sort of End Time (or End to History).
Well … we do not live these myths now: Even secular utopia will no longer ‘do’. It will not fill the void. The optimistic certitudes connected with the idea of linear ‘progress’ have become particularly discredited. So, by what will we live? This is no esoteric debate. These are questions of history, and destiny.
The élites decry anything ‘alt’ – as ‘populism’ or ‘illiberalism’. Yet they decline to see what is before them: Certain values are emerging. What are they? And from where do they come? And how might they change our World?
The most obvious ‘value’ is the emerging global desire to live in, and by, one’s own culture — to live, as it were, in a differentiated cultural way. It is a notion of cultures, autonomous and sovereign, which seek to re-capture a particular culture – in its traditional setting of history, religiosity, and ties of blood, land and language. The immigration issue, which is rending Europe apart, is the obvious example of this.
What this ‘value’ is intimating however, is not simple tribalism, but also a different way of envisaging sovereignty. It encompasses within it the idea that sovereignty is acquired, through acting, and thinking sovereign. That sovereign power grows out from the confidence of a people having its own distinct and clear history, its intellectual legacy and its own spiritual storehouse on which to draw – by which to differentiate itself.
We are talking here, of a secure ‘alive’ culture being the root to both personal and communal sovereignty. It is a clear rejection of the idea that ‘melting pot’ cosmopolitanism, can procreate any true sovereignty.
It is, of course, the converse to the globalist notion of a ‘mankind’ converging on common values, converging on a single, neutral, apolitical ‘way of being’. ‘Man’ – in that way – in the old European tradition, simply did not exist. There were only men: Greeks, Romans, barbarians, Syrians, and so on. This notion stands in obvious opposition to universal, cosmopolitan ‘man’. The recovery of this type of thinking, for example, lies behind Russia and China’s Eurasian notion.
A second emerging value is derived from the global disenchantment with the western style of mechanical, single-track thinking that attenuates all things to an (supposedly empirically derived) singularity of meaning, which, when seated in the ego, lends an unshakeable sense of one’s own certainty and conviction (to the West European thinker, at least): ‘We’ speak ‘truth’, whereas others, babble and lie.
The obverse – the old European tradition – is conjunctive thinking. Do guilt, injustice, contradiction and suffering exist in this world? They do, proclaims Heraclitus, but only for the limited mind that sees things apart (disjunctively), and not connectedly, and notcon-tuitively linked: a term which implies not a ‘grasping’ for meaning but, rather, to be gently and powerfully ‘grasped’ by meaning.
What has this to do with today’s world? Well this is how the neo-Confucianist, Chinese leadership think today. The idea of Yin and Yang, and their latency for creating and being in harmony, still underlies Chinese notions of politics, and conflict resolution. Ditto for Shi’a philosophy and Russian Eurasianism. This used to be how Europeans thought, too: For Heraclitus, all polar opposites co-constitute each other, and run into harmony in ways that are invisible to the human eye.
This ‘other’ perspective precisely lies behind the multilateral Global Order value. The acceptance of a multi-aspectual quality to any person, or people, escapes the prevailing obsession to reduce every nation to a singularity in value, and to a singularity of ‘meaning’. The ground for collaboration and conversation thus widens beyond ‘the either-or’ – to the differing strata of complex identities (and interests). It is, in a word, tolerant.
Then there are other values: Pursuit of justice, truth (in a metaphysical sense), integrity, dignified, manly conduct and knowing and accepting who you are. These were all eternal values.
And here is the point: The disappearance in modernity of any external norm or ‘myth’, beyond civic conformity, which might guide the individual in his or her life and actions; and the enforced eviction of the individual from any form of structure (social classes, Church, family, society and gender) has made a ‘turning back’ to that which was always latent, if only half remembered, somehow inevitable.
The yearning for these ancient norms – even if only poorly understood, and articulated – represents a ‘reaching down’ into those ancient ‘storehouses’, still lingering at the deepest levels of the human being — A ‘turning back’ to being ‘in, and of’ the world, again. This is happening in diverse modes, across the globe.
Of course, ‘the Ancient’ cannot be an ad integrum return. It cannot be the simple restoration of what once was. It has to be brought forward – as if ‘a youth’ who is coming ‘home’ again – the eternal return – out of our own decomposition; from amidst our ruins.
True, but nonetheless these new-old ideas will impinge, will challenge the existing liberal world. Our present economic framework largely was inherited from Adam Smith. And what was it if nothing other than a direct translation of the political philosophy of John Locke and John Hume (Smith’s close friend)? And what was Locke and Hume’s thinking, if not the narrative, in political and economic terms, of the Protestant victory over the Catholic idea of a religious community – in the wake of Westphalia?
Inevitably then, different values dictate different models: What sort of models do the emerging values then foreshadow?
Firstly, we can see a shift in the non-West, away from ‘identity and gender’ blurring, and a return to a differentiated clarity in these aspects, to the centrality of family, and of the need to give esteem to all, whatever their place, in the hierarchy of life. In governance, as in economics, the guiding ‘value’ is a different understanding of power. The Latin Christian myth of love, turning the other cheek, humility, and retreat from worldly-power stands in contradistinction to the ancient notion of ‘manly’ conduct that preached something quite different: Resist injustice, and pursue your ‘truth’. It was therefore naturally political, and was possessed of an ethos in which power was a normal attribute.
This ancient expression of power has arisen today through the insight that a people which is mentally ‘active’ has activated its vitality and has cultural strength, may prevail against a hugely richer and better armed state – yet one, that has put its people into gentle sleep – and robbed it of vitality.
Thus, whether in governance or in economics, the structures are likely to reflect the principles of autonomy and the re-sovereigntisation of nation and people, and the notion that the organisation of society was always intended to be the natural field for the self-expansion of a man or a woman – a man capable of finding his own power, and finding himself – as his own project.
What is striking is that we see that these last twin principles (which may seem ostensibly in tension), precisely are instantiating themselves in current politics – albeit coming from totally different quarters: In Italy, the Five Star movement (seen as Leftish) is in government with the Lega (viewed as Rightish).
Of course many will say simply TINA (there is no alternative). But plainly there is – and that ‘train’ is already arriving at our station now.
- Mapping The Most Profitable Industry In Each US State
Diversification is a broadly accepted investment strategy designed to hedge against risk. If you invest all your money in one company or one industry, you flirt with disaster during an economic downturn. With that in mind, HowMuch.net asks, does the US have a diverse economy? Their new map reveals that the answer is both yes and no…
We found the numbers for our visualization from GoBankingRates, which analyzed 2017 US Census Bureau data to determine the value of each industry’s products. They defined industries using Harmonized System (HS) codes from the World Customs Organization. We color-coded each state based on its most lucrative sector, and we added a nice logo and the dollar amount for easy reference. The output is an intuitive map with a few surprising, and a few predictable, results.
Let’s start by pointing out the industries you might expect to predominate in certain states. Michigan, Ohio, and Indiana significantly benefit from car manufacturing in and around the Motor City. South Carolina and Alabama also stand out as states with a strong automotive presence since they are destinations for in-sourcing as car makers look for cheaper (non-unionized) labor. A few states surrounding Nebraska are major meat producers, which shouldn’t catch anyone by surprise, given the region’s strong agricultural bent. Alaska and Maine likewise benefit from a substantial fishing industry. Nevada is the only state where the most profitable industry involves accommodations and food service. Viva Las Vegas!
There are a number of surprises on our map, too. Who knew that the most profitable industry in Kansas is aerospace ($2.6B)? The same goes for Arkansas, Georgia, and Kentucky. And take a look at all the states colored purple, where machinery and mechanical appliances predominate – who knew that Florida, Idaho, and Illinois have so much in common?
The overarching takeaway from our map is a little unnerving. We read all the time about how diversification is the best guard against risk. And based on our map, the US economy is diverse in some regions but not very diverse in others. In fact, 27 out of 50 US states are led by only three industries (machinery, aerospace, and mineral products), accounting for just under $1.7T in value. That means that when certain segments undergo technological disruption or economic downturns, it can disproportionately impact sections of the country in ways people don’t expect.
Data: Table 1.1
- Senate Insider: Kavanaugh Votes Secured
After an emotional day of testimony on Capitol Hill, a late Thursday report from Townhall citing a Senate insider reveals that Brett Kavanaugh has the votes to make it out of committee and will be confirmed on the floor for a seat on the U.S. Supreme Court.
Sens. Flake (R-AZ), Collins (R-ME), Murkowski (R-AK), and Manchin (D-WV) are expected to vote in favor of Kavanaugh. All the Republicans are voting yes. Also, in the rumor mill, several Democrats may break ranks and back Kavanaugh. That’s the ball game, folks. –Townhall
Thursday’s proceedings saw a rollercoaster of emotions from both Brett Kavanaugh and his accuser, Christine Blasey Ford – who claims he groped her at a high school party in 1982.
Ford’s testimony was considered compelling, with Senator Orrin Hatch (R-UT) calling her an “attractive, good witness,” however betting site PredictIt showed Kavanaugh’s odds of confirmation steadily climbing after ranking minority leader Dianne Feinstein (D-CA) laid out Ford’s case. He stands at 74% as of this writing.
PredictIt Kavanaugh, on the other hand, shook the building with righteous indignation – slamming Democrats for smearing his family name and his lifetime of achievements. His opening statement was gripping and emotional – with Kavanaugh breaking down into tears several times, and seething with rage during other pivotal moments – such as when he excoriated Feinstein for withholding Ford’s letter from the committee for several weeks before it was leaked to the press.
Feinstein was taken aback, and immediately pivoted to a softer tact which was ultimately not convincing. The Democrats attempted several times to corner Kavanaugh on why he hasn’t advocated for an FBI investigation into the allegations against him, to which Kavanaugh stated several times that this would ultimately be unproductive since the agency doesn’t render an opinion, which was the Judiciary Committee’s job.
Kavanaugh’s opening statement has already been made into a commercial:
Kavanaugh’s opening is already in a new commercial. https://t.co/nVxIsE2luO
— Erick Erickson (@EWErickson) September 28, 2018
https://platform.twitter.com/widgets.js
And his entire opening statement:
Undoubtedly contributing to pro-Kavanaugh sentiment among GOP Committee members was Senator Lindsey Graham’s fiery condemnation of the Democrats for turning the Supreme Court hearing into a circus.
Democrats are now suggesting that Kavanaugh isn’t fit for the Supreme Court because of his emotional testimony over accusations that will hang over his head for the rest of his life, confirmed or not.
With no evidence, no corroborating witnesses, and the timing of the allegation, these allegations against an eminently qualified judge were just too thin to stop the Kavanaugh train. Remember Sen. Dianne Feinstein’s (D-CA) office had Ford’s letter since July. They sat on it for weeks. They kept it from Senate colleagues. And then they dropped it at the 11th hour in the hope of derailing the nomination. It was a Hail Mary pass—and it failed miserably. –Townhall
Kavanaugh’s Senate confirmation vote is scheduled for Friday morning at 9:30 a.m.
- What Was In The Envelope That Rep. Sheila Jackson Lee Slipped To Kavanaugh Accuser's Lawyer?
A curious thing happened on Christine Blasey Ford’s way out of Congressional testimony today – when Rep. Sheila Jackson Lee (D-TX) handed Ford’s lawyer, Michael Bromwich, a thick envelope after shaking hands.
Watch:
Ford’s attorneys told the Senate Judiciary Committee on Thursday that they are representing her on a pro bono basis.
During questions from staff lawyer Rachel Mitchell as to who was paying her legal bills, Bromwich interjected “Both her counsel are doing this pro bono.” Furthermore, Ford was unable to explain who paid for – or will pay for – her polygraph.
Update: According to Lee’s office and reported by Houston’s KHOUhttps://www.khou.com/article/news/politics/whats-in-the-envelope-rep-sheila-jackson-lee-gave-to-fords-attorney-during-kavanaugh-hearings/285-598884783, “Simply, what was passed were unopened stationery notes to counsel for Dr. Ford from women who wanted to enter the hearing room but were not allowed to enter the hearing room.”
- Regulator Tasked With Preventing Another Crisis Is Slashing Headcount
The Commodity Futures Trading Commission (CFTC), tasked with monitoring the complex derivatives that catalyzed the 2008 financial crisis, is now being forced to shrink its headcount due to lack of funding. The CFTC is reportedly offering some of its employees buyouts and early retirements after it has been refused years of requests for increased funding. The agency reportedly has over 700 employees.
The CFTC started to inform some workers last month that it would be giving them as much as $25,000 to leave. These email communications were reported by Bloomberg. The agency is also trying to encourage some employees to consider an early retirement which would, in some cases, allow employees to keep their benefits.
Prior to the 2008 collapse, the CFTC was widely held to be somewhat of an afterthought. Back then, it was only primarily in charge of regulating agricultural futures. This changed after Congress bestowed upon the agency the responsibility of overseeing the swaps market after a global economic near-meltdown made it clear how dangerous these derivatives could be. The government likely felt like it had to do – well, something – to help justify almost $1 trillion in bailouts.
The CFTC’s $249 million budget, however, hasn’t grown in size proportion what what the agency is responsible for today. For instance, the agency is now also tasked with regulating cryptocurrency derivatives after CME and CBOE both started to offer bitcoin futures last December. The head of the agency, Chairman J. Christopher Giancarlo, who was put into his position by President Trump, hasn’t been able to successfully lobby for more money since he started last year.
Erica Elliott Richardson, the CFTC’s director of public affairs, told Reuters back in May:
“We are absolutely astounded by the decrease in the CFTC’s budget. Chairman Giancarlo takes this budget decrease incredibly personally, and is currently meeting with our finance team to figure out a path forward for the agency.”
That path forward seems to now be forcing employees out the door. According to Bloomberg, agency buyouts are only eligible for those who have had three years of continuous service in the federal government. Early retirement can be qualified for by having at least 20 years of government experience and being at least 50 years old. Additionally, any worker with 25 years of government service is eligible, regardless of age.
Back in July of this year, we reported on the CFTC’s award of $30 million to a J.P. Morgan whistleblower who pointed out information proving that the bank neglected to inform its wealthy asset-management clients about conflicts of interest involving the bank’s investment recommendations.
Once again, the Achilles heel of over-regulation rears its head: everything costs money. Theoretically, the more the government chooses to police the markets, the less effective and less cost efficient they may become. The CFTC making staff cuts with arguably the most responsibility its ever had is just another soon-to-be-forgotten brick in the wall of examples.
- The Global Housing Bubble Is Biggest In These Cities
Three years ago, when UBS looked at the world’s most expensive housing markets, it found that London and Hong Kong were the only two areas exposed to bubble risk.
What a difference just a few short years makes, because in the latest report by UBS Sealth Management which compiles the bank’s Global Real Estate Bubble Index, it found that six of the world’s largest cities are now subject to a massive speculative housing bubble. And while still unnaturally low mortgage rates are to blame for the rapid ascent of home prices, investors and offshore money laundering operators – especially in Canada – continue to play a role, as their favorite markets of Vancouver, Toronto and Hong Kong all made this year’s list.
Bubble risk appears greatest in Hong Kong, Munich, Toronto, Vancouver, London and Amsterdam. Major imbalances also characterize Stockholm, Paris, San Francisco, Frankfurt and Sydney.
This year’s study highlights increasingly strained affordability. Buying a small apartment in most world cities exceeds the budget of most people who earn the average annual income paid in the highly skilled service sector.
Prices continue to soar, but in half of the cities in the study, housing markets are booming with inflation-adjusted prices rising at least 5% in the last four quarters. However, in the other half of the cities house prices were stalling or declining.
According to UBS – if not Ben Bernanke – the typical signs of a housing bubble include real estate prices rising out of sync with incomes, as well as economic imbalances like excessive lending and construction activity. However, unlike the boom of the mid-2000s, there’s no evidence of simultaneous excesses in lending and construction, the report said, and outstanding mortgage volumes are growing at about half of the rate of the pre-crisis period.
“Although many financial centers remain at risk of a housing bubble, we should not compare today’s situation with pre-crisis conditions,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a statement.
That will hardly comfort all those millions of residents in the bubble cities who continues to find themselves priced out of the market. That said, there was some good news: while housing bubbles are still pervasive, the rate of price increases is slowing:
Inflation-adjusted city prices increased by 3.5% on average over the last four quarters, considerably less than in previous years but still above the 10-year average. They remained on an explosive uptrend in the largest Eurozone economic centers, as well as in Hong Kong or Vancouver. But the first cracks in the boom’s foundation have begun appearing: house prices declined in half of last year’s bubble risk cities.
As UBS warns, fewer and fewer resident households can afford to buy their own home. The crowding out of long-time residents from their local housing markets by foreign investors is triggering political reactions. This is observed most directly in Canada, Australia and New Zealand where recent regulations have emerged making it difficult for foreign buyers to snap up local real estate.
Foreign and buy-to-let investors are the main group being targeted by new regulatory measures. It is becoming more difficult, more expensive and in some cases outright impossible for them to acquire residential space. Especially in the luxury market, regulatory intervention can bring demand to a standstill and trigger a price correction.
So if not regular people then who is buying up the real estate? Answer: investors, who have outperformed stocks by buying housing and renting it back out.
Over the past five years, owner-occupied homes have been a good investment: the median total return of the most important financial centers was 10% annually, accounting for an imputed rental income and book profits from rising prices. So “golden concrete” has seemingly outperformed the stock markets.
According to UBS, Chicago was the only undervalued housing market in the 20-city index, while Milan, Singapore and Boston are deemed fairly valued. Ten cities, from New York to Sydney to Stockholm, are overvalued, while six are in bubble-risk territory, with Hong Kong’s market the most inflated. Still, some questions about the methodology linger: just a year ago, New York had been scored as fairly valued (it is now seen as “overvalued”).
As UBS further notes, last year the house price boom in key cities was already losing intensity and scope. Inflation-adjusted prices declined in almost half of the cities analyzed, which prompted UBS to warn that returns of owner-occupied homes in the next few years is questionable.
Yet while home prices may not be rising quite as fast as in recent years, houses in these cities remain out of reach for most ordinary homebuyers as prices in major cities have increased by 35% on average in the last 5 years:
Over the course of the last five years, house prices in major cities have increased by 35% on average. In San Francisco, Munich and Vancouver price growth was double the average. Overall, the price boom has not been spectacular, but it has been broad-based. Until recently nearly all the cities enjoyed rising house prices, something seen in the late 1980s and before the 2008 market crash. This exceptional breadth of the current house price boom has various roots. Easy financing conditions boosted demand almost everywhere. Major cities profited from the growing importance of the digital economy and the wider trend toward urbanization. Finally, the number of wealthy households searching for safe assets in the most attractive residential areas surged.
Why are most housing market inaccessible to mere mortals? Simple: incomes aren’t climbing fast enough to keep up with the price appreciation in many areas. For example, it would take a skilled service worker in Hong Kong 22 years of their average annual income to buy a 60-square-meter (650-square-foot) apartment near the city center. A decade ago it was 12 years.
Meanwhile, the U.S. has managed to avoid UBS’s bubble territory, and a repeat of the 2007 housing crisis, for now…even though markets like San Francisco and Los Angeles look set to give it another try…
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